UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K405
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended January 28, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
Commission File Number 1-4844
ECKERD CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 13-3302437
(State of incorporation) (I.R.S. Employer Identification No.)
8333 Bryan Dairy Road
Largo, FL 34647
(Address and zip code of principal executive offices)
(813) 399-6000
(Registrant's telephone number including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock, par value $.01 New York Stock Exchange
11 1/8% Subordinated Debentures Due 2001 American Stock Exchange
9 1/4% Senior Subordinated Notes Due 2004 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 the filing requirements for the
past 90 days. Yes X No .
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of
this Form 10-K405 or any amendment to this Form 10-K405. [ X ]
The aggregate market value of the voting stock held by non-affiliates
of the Company as of March 31, 1995 was $555,182,153 (Calculated on
the assumption that all directors, all executive officers, and the
Merrill Lynch Investors are affiliates).
As of March 31, 1995, 32,127,007 shares of common stock, par value
$.01, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
(1) Certain portions of the Annual Report
to Stockholders for the fiscal year
ended January 28, 1995 Parts II & IV
(2) Certain portions of the Definitive Proxy
Statement for Stockholder Meeting to
be held on May 24, 1995 Part III
ECKERD CORPORATION
JANUARY 28, 1995 FORM 10-K405 ANNUAL REPORT
Table of Contents
PART I
Item Page
1. Business 3
2. Properties 13
3. Legal Proceedings 13
4. Submission of Matters to a Vote of Security Holders 14
Executive Officers of the Registrant 14
PART II
5. Market for the Registrant's Common Equity and Related
Stockholder Matters 15
6. Selected Financial Data 16
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 16
8. Financial Statements and Supplementary Data 16
9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 16
PART III
10. Directors and Executive Officers of the Registrant 17
11. Executive Compensation 17
12. Security Ownership of Certain Beneficial Owners
and Management 17
13. Certain Relationships and Related Transactions 17
PART IV
14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K 17
PART I
Item 1. Business
General
Eckerd Corporation (the "Company" or "Eckerd") operates the Eckerd
Drug store chain, which is one of the largest drug store chains in
the United States. At January 28, 1995, the Eckerd Drug store chain
consisted of 1,735 stores in 13 states located primarily in the
Sunbelt, including 553 stores in Florida and 490 stores in Texas.
Over its 42-year history, the Eckerd Drug store chain has built a
strong market position in areas where demographic characteristics are
favorable to drug store growth. The Company's stores are concentrated
in 10 of the 12 metropolitan statistical areas with the largest
percentage growth in population from 1980 to 1990, and, according to
industry sources, the Company ranks first or second in terms of drug
store sales in 12 of the 14 major metropolitan markets in which it
operates.
The primary focus of Eckerd Drug stores is the sale of prescription
and over-the-counter drugs, which, during fiscal 1994, generated
approximately 61% of the Company's drug store sales. Another
significant focus of Eckerd Drug stores is photofinishing. The
Company offers overnight photofinishing services in all Eckerd Drug
stores and operates Eckerd Express Photo centers, which are one-hour
photofinishing mini-labs. Eckerd Express Photo centers were located
in 481 Eckerd Drug stores at January 28, 1995.
The Company was formed in 1985 by Merrill Lynch Capital Partners,
Inc. ("Merrill Lynch Capital Partners"), an affiliate of Merrill
Lynch & Co., Inc. ("ML & Co."), for the purpose of acquiring the
former Jack Eckerd Corporation ("Old Eckerd"), in April 1986 (the
"Acquisition"). Merrill Lynch Capital Partners formed EDS Holdings
Inc. ("EDS") and its wholly owned subsidiary, Eckerd Holdings II,
Inc. ("EH II"), to acquire certain additional drug stores in July
1990. On August 12, 1993, the Company completed an initial public
offering (the "IPO") in which it issued and sold 5,175,000 shares of
Common Stock for $14.00 per share. In connection with the
consummation of the IPO, the holders of EDS common stock exchanged
their shares for shares of Common Stock. Immediately thereafter, EDS
was merged into Eckerd with EH II becoming a wholly owned subsidiary
of Eckerd. All references in this Form 10-K405 to the "Company" for
periods prior to such acquisition mean the Company, EDS and their
respective subsidiaries. In connection with the IPO the Company also
amended its Restated Certificate of Incorporation to effect, among
other things, (i) the reclassification of its Class A common stock
and Class B common stock into Common Stock at certain specified
rates, (ii) a 2-for-3 reverse stock split (the "Stock Split"), (iii)
the adoption of certain provisions such as a classified board of
directors and the prohibition of stockholder action by written
consent, which could make non-negotiated acquisitions of the Company
more difficult and (iv) the change of the Company's name from "Jack
Eckerd Corporation" to "Eckerd Corporation." None of the Company's
stockholders sold any shares of Common Stock in the IPO. On May 2,
1994, the company completed an underwritten secondary offering of
3,199,056 shares of Common Stock for $19.00 per share. The secondary
offering only included shares of Common Stock owned by the Merrill
Lynch Investors and certain institutional investors. Stockholders of
the Company include (i) certain partnerships affiliated with Merrill
Lynch Capital Partners and, (ii) certain other affiliates of ML & Co.
((i) and (ii), collectively, the "Merrill Lynch Investors") who
beneficially owned 38.3% of the Common Stock of the Company as of
March 31, 1995.
The Drug Store Industry
Prescription and over-the-counter medications have traditionally been
sold by independent drug stores as well as conventional drug store
chains, such as Eckerd Drug stores, and purchased by consumers with
cash or credit cards. The drug store industry has recently undergone
significant changes as a result of the following important trends:
(i) the increase in third-party payments for prescription drugs, (ii)
the consolidation within the drug store industry, (iii) the aging of
the United States population and (iv) the increase in competition
from non-traditional retailers of prescription and over-the-counter
drugs.
During the last several years, a growing percentage of prescription
drug volume throughout the industry has been accounted for by sales
to customers who are covered by third-party payment programs
("third-party sales"). In a typical third-party sale, the drug store
has a contract with a third-party payor, such as an insurance
company, HMO, PPO, other managed care provider, government agency or
private employer, which agrees to pay for part or all of the
customer's eligible prescription purchases. Although these
third-party sales contracts often provide a high volume of
prescription sales, such sales typically generate lower
gross margins than non third-party sales due principally to the
highly competitive nature of this business and recent efforts by
third-party payors to contain costs. Larger drug store chains, such
as Eckerd Drug stores, are better able to service the growing
third-party segment than independent drug stores and smaller chains
as a result of the larger chains' more sophisticated technology
systems, larger number of stores and greater penetration within their
markets.
As a result of the economies of scale from which larger drug store
chains benefit as well as the third-party payment trend, the number
of independent drug stores and smaller drug store chains has
decreased as many of such retailers have been acquired by larger drug
store chains. This trend is expected to continue because larger
chains are better positioned to handle the increased third-party
sales, purchase inventory on more advantageous terms and achieve
other economies of scale with respect to their marketing,
advertising, distribution and other expenditures. The Company
believes that the number of independent drug stores and smaller drug
store chains remaining in operation may provide significant
acquisition opportunities for larger drug store chains, such as the
Company.
Strong demographic trends have also contributed to changes in the
drug store industry, as the group of persons over age 50 is the
fastest growing segment of the United States population. This trend
has had, and is expected to continue to have, a marked effect on the
pharmacy business in the United States because consumer prescription
and over-the-counter drug usage generally increases with age. The
Company's markets have large concentrations of, and are continuing to
experience significant growth in, the number of persons over age 65.
In 1994, drug store chains and independent drug stores represented
approximately 37% and 31%, respectively, of all pharmacy sales in
the United States. In response to a number of factors, including the
aging of the United States population, mass merchants (including
discounters and deep discounters), supermarkets, combination food and
drug stores, mail order distributors, hospitals, HMO's and other
managed care providers have entered the pharmacy industry.
Supermarkets, including combination food and drug stores, and mass
merchants each represented approximately 11% of all pharmacy sales
in the United States in 1994. Although the Company currently faces
increased competition from these retailers, industry studies show
that consumers in the over 65 age group tend to make purchases at
traditional drug stores, such as Eckerd Drug stores, and maintain
strong store loyalty.
Eckerd Drug Stores
In 1992, the Company celebrated the 40th anniversary of the opening
of the first Eckerd Drug store. The Company has grown to its present
size and developed its leading position in the industry through both
internal expansion and acquisitions. As of January 28, 1995, the
Company operated the number of Eckerd Drug stores and Eckerd Express
Photo centers indicated below in each of the following states:
Drug Stores
Eckerd With Eckerd
Drug Express Photo
Stores Centers
Florida 553 225
Texas 490 132
North Carolina 192 45
Georgia 164 44
Louisiana 110 17
South Carolina 82 13
Tennessee 35 1
New Jersey 27 1
Mississippi 26 -
Oklahoma 26 -
Alabama 18 3
Delaware 11 -
Maryland 1 -
Total 1,735 481
Over the past five years, the Company has implemented several
initiatives designed to increase the size, and improve the quality
and operating performance, of the Company's store base. Among such
initiatives are the opening and acquisition of new stores, the
closure or divestiture of underperforming stores and an extensive
remodeling program. Since 1986, 500 Eckerd Drug stores have been
opened or acquired within the Company's existing markets, more than
300 underperforming stores have been closed or divested, and
substantially all of the Company's remaining stores have been
remodeled. In addition, the Company opened more than 450 Express
Photo centers. The Company has also increased the degree to which
merchandise is tailored to specific markets, instituted a chainwide
shrinkage reduction program and made a significant investment in its
management information systems. As a result of, among other things,
these actions, aggregate sales have increased from $2.73 billion in
fiscal 1987 to $4.55 billion in fiscal 1994.
The following table summarizes the number of Eckerd Drug stores
operated by the Company and the sales on an aggregate and per store
basis for the last five years.
<TABLE>
Fiscal Years
<S> <C> <C> <C>
<C> <C>
1994 1993 1992
1991 1990
Number of Eckerd Drug stores at
beginning of period 1,718 1,696 1,675
1,673 1,630
Stores opened or acquired(3) 39 52 50
22 139 (1)
Stores sold or closed (22) (30)
(29) (20) (96)(2)
Number of Eckerd Drug stores
at end of period 1,735 1,718 1,696
1,675 1,673
Number with Express Photo centers 481 413 378
321 258
Sales of Eckerd Drug stores $4,396,440 4,014,094 3,722,523
3,594,037 3,330,062
Average annual sales per Eckerd
Drug store $ 2,561 2,365 2,222
2,142 2,036
</TABLE>
(1) Includes 96 stores acquired by, and managed on behalf of, EH II
(two of which were closed in fiscal year 1991). Excludes 127
stores acquired by EH II that were liquidated or sold.
(2) Includes 14 Eckerd Drug stores closed as a result of the
acquisition of drug stores by EH II.
(3) Excludes relocations.
The Company intends to continue to expand its business through
both internal expansion and acquisitions of smaller drug store chains
and independent drug stores. Although the Company currently plans to
expand Eckerd Drug stores within the Company's existing markets, the
Company also considers strategic acquisitions in other markets.
The Company opened or acquired 55 drug stores, including relocations,
in fiscal 1994 and has a goal of opening (including relocations) 90
drug stores in fiscal 1995 and 100 drug stores per year in fiscal
1996 through 1999. In addition to such openings and acquisitions, the
Company expects to sell or close a small number of drug stores per
year in fiscal 1995 and thereafter through 1999, which would be
intended to improve the quality of the Company's store base. In the
fourth quarter of fiscal 1994, the Company decided to accelerate the
closing of approximately 90 geographically dispersed,
under-performing stores over the next twelve to eighteen months, and
established a $49.0 million reserve for future store closings. These
closings are in addition to the small number of stores the Company
closes in the normal course of business. The cash costs associated
with opening a drug store are estimated to be approximately $490,000,
which includes initial inventory costs of approximately $260,000. The
Company intends to use cash flow from operations to finance the cash
costs of this growth, although borrowings may also be available to
finance such growth. See "Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations-Liquidity
and Capital Resources."
In determining the areas in which to open or acquire drug
stores, the Company evaluates a number of demographic considerations,
including the size, growth pattern and per capita income of the
population, as well as the competitive environment and the
accessibility of a proposed site to the customer and to the
Company'swarehouse and distribution facilities. The Company also
continually reviews these factors and the performance of individual
stores in determining whether to close or relocate certain stores.
Products and Services
Pharmacy
The primary focus of Eckerd Drug stores is the sale of
prescription and over-the-counter drugs. During fiscal 1994, Eckerd
Drug Stores filled more than 89 million prescriptions, and sales of
prescription and over-the-counter drugs generated approximately 61%
of the Company's drug store sales. During the period from fiscal 1990
to fiscal 1994, the dollar volume of sales of prescription drugs by
the Company increased 62.8%.
The Company seeks to position pharmacists as health-care
professionals who build relationships with their customers. Over the
years, marketing and advertising campaigns have been focused on
reinforcing the professionalism of the Company's pharmacists and
positioning them as a key factor to high quality pharmacy service.
The Company has also instituted several health-related programs such
as health screenings, education and outreach programs, and customer
relationship programs. The Company provides to prescription drug
customers, the "Rx Advisor," a personalized easy-to-read publication,
for each new prescription, which advises the customer of the specific
dosages, drug interactions and side effects of his or her new
prescription medicine.
Eckerd Drug store pharmacy departments are modern, clean and
clearly identified by attractive signs. The pharmacy areas in many of
the Company's newer and remodeled stores provide a consultation area
and a waiting area with comfortable seating, informational brochures
and free blood pressure testing. The pharmacy areas are designed to
be conducive to customer service and counseling by the pharmacists.
The Company has devoted substantial resources to marketing to
third party payors, such as insurance companies, health maintenance
organizations, preferred provider organizations and other managed
care providers and government agencies. In addition, the Company's
computer systems provide on-line adjudication which permits the
Company and the third-party payor to determine electronically, at the
time of sale, eligibility of the customer, coverage of the
prescription and pricing and co-payment requirement, if any, and
automatically bills the respective plan. On-line adjudication reduces
losses from rejected claims and eliminates a portion of the Company's
paperwork for billing and collection of receivables and costs
associated therewith. During the past five years, the Company has
reduced the average number of days that receivables from third-party
sales were outstanding from 48 days in fiscal 1990 to 22 days in
fiscal 1994 (or more than 50%) while increasing sales by 187% during
the same period. Third-party prescription sales accounted for
approximately 64.6%, 58.0%, 49.6%, 43.1% and 36.0% of the Company's
prescription sales in fiscal 1994, fiscal 1993, fiscal 1992, fiscal
1991 and fiscal 1990, respectively.
Nonpharmacy Merchandise
In addition to prescription and over-the-counter drugs, Eckerd
Drug stores sell a wide variety of nonpharmacy merchandise, including
health and beauty aids, greeting cards and numerous other convenience
products. Eckerd-brand products, which are attractively priced and
provide higher margins than similar national brand products,
represent a growing segment of products offered by Eckerd Drug
stores.
Health. Eckerd Drug stores offer a broad assortment of popular
national brands as well as private label over-the-counter drugs and
other products related to dental care, foot care, vitamins and
nutritional supplements, feminine hygiene, family planning and baby
care. Eckerd Drug stores provide a helpful environment in which
consumers can obtain product information from professional
pharmacists, knowledgeable sales associates and store managers or
from literature available throughout the store.
Beauty. Eckerd Drug stores offer an assortment of popular brand
name cosmetics, fragrances and other beauty products. Management
believes that Eckerd Drug stores provide the customer with
a convenient format in which to purchase the lines of beauty products
offered in its stores. Skin care products are an increasingly
important component of the beauty category due to the aging
population and growing concern about the effects of the environment
on the skin. The Company has recently completed an expansion which
devoted more shelf space to this product category.
Greeting Cards. The greeting card department in Eckerd Drug
stores offers a wide selection of contemporary and traditional cards,
gift wrap, bows and novelties. The Company believes that the
locations of its stores together with the wide selection offered by
Eckerd Drug stores enable customers to satisfy their card and gift
needs more conveniently than at traditional card stores. The Company
has increased the space devoted to its greeting card department
because of the profitability of such merchandise and because the
Company believes that the demand for such merchandise will increase
traffic in its stores.
Convenience Products. This merchandise category consists of an
assortment of items, including candy, food, tobacco products, books
and magazines, household products, seasonal merchandise and toys.
These items are carefully positioned to provide optimum convenience
to the customer with easy access in the front part of the store. The
Company also seeks to serve its customers' needs by specifically
tailoring items in this category to meet the needs of its customers
in specific store locations. This strategy includes the introduction
and further expansion of the food mart section offering convenience
food items such as staple grocery shelf items, staple and chilled
beverages, snack foods and specialty items in approximately 550
locations. The Company plans to add food mart sections to an
additional 400 stores in fiscal 1995. For example, souvenirs and
select summer products are offered in beach and tourist locations
while convenience food is stressed in urban areas and malls.
Photofinishing
Another significant focus of Eckerd Drug stores is
photofinishing. The Company offers overnight photofinishing services
in all Eckerd Drug stores and operates Eckerd Express Photo centers,
which are one-hour photo processing mini-labs. Eckerd Express Photo
centers were located in 481 Eckerd Drug stores at January 28, 1995.
The Company is among the top three vertically integrated retail
photofinishers in the United States, and the Company believes that it
is the leading source of photofinishing in all of the major markets
in which it operates. The Company processed over 28 million rolls of
film in fiscal 1994 in its own photo labs and has several well known
branded processing programs, including System 2(R) (two prints for
the price of one), Ultralab 35(R) (larger size, higher quality
prints) and Express Print 60 (one-hour processing). The Company
believes that its branded processing programs, which emphasize
quality and service, have helped position the Company as a leader in
photofinishing. The Company currently intends to continue to expand
its one-hour photofinishing business, with a goal of adding
approximately 270 new Express Photo centers by 1999.
The Company's photo departments also offer camera and photo
accessories, small electronics, batteries and audio and video tapes.
The entire photo department, including photofinishing, represented
approximately 9.2% of the Company's total drug store sales in fiscal
1994.
Store Operations
Eckerd Drug stores are located and designed to maximize customer
service and convenience and are situated in areas of high customer
traffic, typically in neighborhood shopping centers with strong
supermarket co-tenants or in strategically located free-standing
stores. Eckerd Drug stores are designed to facilitate customer
movement and feature well-stocked shelves, clearly identified aisles
and well-lit interiors to maximize product visibility. Pharmacy
departments are generally located near the back of the store to
maximize customer exposure to the store. The stores are equipped
with modern fixtures and equipment and most of them range in size
from 8,200 to 10,800 square feet. About 85% of the floor space is
selling area, with the remainder used for storeroom and office
space.
To enhance productivity per square foot and maintain consistent
merchandising, the Company utilizes centrally prepared formats for
the display and stocking of products in the Company's stores, while
continuing to allow some flexibility to store managers to modify the
merchandise assortment based upon the Company's program of tailoring
merchandise offerings to the markets in which the stores operate.
The typical Eckerd Drug store is open every day of the year
except Christmas, with store hours geared to the needs of the
specific markets. A select number of strategically located stores
stay open until midnight or 24 hours a day.
Eckerd Drug stores are currently grouped under six operating
regions located in or near Orlando and Deerfield Beach, Florida;
Atlanta, Georgia; Charlotte, North Carolina; and Dallas and Houston,
Texas. Each operating region is headed by a vice president who
supervises the various districts comprising the region. Within each
district, there are managers who are responsible for the drug stores
in their districts and regularly visit their stores to assure quality
of service and merchandising. District pharmacy managers supervise
the pharmacy operations and district Express Photo managers supervise
the Express Photo operations in the drug stores. Each drug store is
individually supervised by a manager who receives training in the
Company's merchandise offerings, customer service and management
strategy.
The Company has implemented various initiatives designed to
reduce shrinkage expense. These initiatives include training and
awareness programs, tailored audit programs for district managers,
hiring of internal auditors and loss prevention specialists, and
computerized exception reporting for, among other things, customer
refunds, voids and cash overages and shortages from daily register
check-outs.
Purchasing and Distribution
Merchandising and buying are generally, as are all supplier
payments, centralized at Company headquarters to assure consistency
of marketing approach and efficiency in supplier relations. The
Company has implemented an enhanced electronic buying system to
improve inventory management and gross profit by enabling the Company
to take better advantage of quantity discounts and forward buying
opportunities, which the Company believes will lower the average cost
of inventory. Additionally, it is anticipated that this buying system
and its improved forecasting ability will improve service levels to
the stores and will reduce average inventory required in the
Company's distribution centers.
Approximately 85% of store merchandise is purchased centrally
and distributed, principally by Company-operated trucks, through the
Company's five centrally located distribution facilities located in
or near Orlando, Florida; Atlanta, Georgia; Charlotte, North
Carolina; and Dallas and Houston, Texas. The remainder of store
merchandise is distributed directly to the stores, some of which is
purchased at the store level.
Advertising and Marketing
A combination of newspaper advertising and TV and radio spot
commercials is carried on throughout the year to promote sales.
During the fiscal year ended January 28, 1995, these net advertising
expenses totaled approximately 0.5% of Company sales. The Company's
concentration of stores within its markets enables it to achieve
economies of scale in its advertising and marketing expenditures and
also enables the Company to negotiate favorable rates for advertising
time and print production. From the time of the Acquisition through
fiscal 1994, the Company reduced its net advertising expense as a
percentage of sales by more than 70%. In addition, the Company has
derived additional cost savings through a rationalization of its
advertising expenditures. Certain advertising expenditures related
to the Company's overall corporate image have been reduced in favor
of advertising efforts such as newspaper circulars. This change in
advertising strategy has resulted in increased financial support from
the Company's vendors and a more direct impact on sales. The Company
believes that its current level of advertising expenditures is
appropriate to support its existing marketing strategies.
The Company's communications and marketing programs are based
upon an ongoing commitment to consumer research. Through regular
telephone surveys in all major markets, exit interviews in its
stores, and studies of various consumer groups, the Company is able
to monitor changes in customer attitudes and shopping habits and
adjust its marketing strategies accordingly.
Information and Technology
The Company intends to continue to invest in information systems
to improve customer service, reduce operating costs, provide
information needed to support management decisions and enhance the
Company's competitive position with third-party payors. The
Company's Comp-U-Care System, installed in each pharmacy location,
provides support for the pharmacy and assists pharmacists in their
prescription processing activities, which in turn enhances the
pharmacy's ability to service customers. The system's transfer of
information between headquarters and each of the in-store pharmacy
terminals allows central monitoring of prescription sales activity by
store and item, centralized billing of third-party sales and daily
updates to the stores' data files. The Comp-U-Care System performs
on-line adjudication of customer and claim eligibility and
reimbursement for the majority of the third-party payment plans in
which the Company participates. On-line adjudication reduces losses
from rejected claims and eliminates a portion of the Company's
paperwork for billing and collection of receivables and costs
associated therewith. The Company believes that such systems are
essential to service the increasing volume of third-party sales.
The Company is currently developing its advanced Comp-U-Care
2000 System, which is scheduled to be introduced in Eckerd Drug
stores in fiscal 1995. The Comp-U-Care 2000 System will improve
speed and productivity in the pharmacy; decrease customer wait time;
enhance functionality, including expanded drug utilization reviews;
and will ultimately in fiscal 1996 permit the transfer of information
directly from one drug store to another enabling customers to fill
and refill prescriptions at any Eckerd Drug store.
During fiscal 1994 the Company installed a satellite
communications network, enhanced the point-of-sale ("POS") system and
upgraded the merchandise buying system.
The Company currently has POS product scanning equipment in
approximately 530 stores and expects to expand scanning to
approximately 590 additional stores by the end of fiscal 1995. The
Company has been expanding scanning to its higher volume stores and
the over 1,100 stores installed by the end of fiscal 1995 will
represent approximately 75% of front-end sales. Scanning systems
will provide more and better merchant and store level information to
facilitate inventory management, automatic re-ordering, product sales
and gross profit analysis and inventory shrinkage control. The
Company believes that broader use of scanning throughout the chain
will improve customer service by decreasing customer check-out time
and improving adherence to advertised sale or promotional prices.
The Company is expanding its use of electronic data interchange
("EDI") systems with certain of its major suppliers. EDI allows for
the paperless ordering of products with immediate confirmation from
the vendor on price, delivery terms and amount of goods ordered. The
Company is also experimenting with automatic replenishment buying in
connection with its warehouse and distribution systems, which
includes the computer generation of purchase orders for certain
vendors. These systems should also allow the Company to reduce lead
time on orders and improve cash flow by reducing the amount of
inventory required to be kept on hand. EDI will be expanded as the
Company expands its scanning system.
The Company is also developing or purchasing software with
applications in the human resources area to improve personnel
scheduling; to expand the merchandise and store information data base
systems to enable the Company to more efficiently manage its
business; and to start the initial roll out of the warehouse
management system to provide improved control and management of
inventory and personnel.
In 1993, the Company and Integrated Systems Solutions
Corporation ("ISSC"), a wholly-owned subsidiary of IBM, entered into
a Systems Operations Service Agreement pursuant to which the Company
and ISSC are developing a state of the art information systems
operation to include pharmacy and POS systems for the Company's drug
stores. Under the Company's supervision, ISSC manages the entire
information systems operation and is responsible for providing
technology services to the Company. The Systems Operations Services
Agreement has a 10-year term, and the total payments to be made by
the Company thereunder are currently expected to be between $400.0
million and $440.0 million over such term, depending on optional
services utilized. The Company believes that this arrangement has
and will continue to enable the Company to further improve customer
service, replace the Company's existing systems, reduce operating
costs and capital expenditures for hardware, obtain information
needed to support management decisions on an improved basis and
increase the Company's focus on its core business.
Competition
The Company's retail drug stores operate in a highly competitive
industry. The Company's drug stores compete primarily on the basis
of customer service, convenience of location and store design, price
and product mix and selection.
In addition to traditional competition from independent drug
stores and other drug store chains, the Company faces competition
from mass merchants (including discounters and deep discounters),
supermarkets, combination food and drug stores, mail order
distributors, hospitals and HMOs.
These other formats have experienced significant growth in their
market share of the prescription and over-the-counter drug
business.
The Company's Express Photo centers compete with a variety of
photo processors including other mini-labs, retail stores and photo
specialty stores. The Company's Express Photo business competes
primarily on the basis of quality of processing, quality and speed of
service and value.
Regulation
All of the Company's pharmacists and stores are required to be
licensed by the appropriate state boards of pharmacy. The Company's
drug stores and distribution centers are also registered with the
Federal Drug Enforcement Administration. Most of the stores sell
beer and wine and are subject to various state and local liquor
licensing requirements. By virtue of these license and registration
requirements, the Company is obligated to observe certain rules and
regulations, and a violation of such rules and regulations could
result in a suspension or revocation of a license or registration.
The Company has a number of third-party payor contracts pursuant
to which the Company is a provider of prescription drugs. "Freedom
of choice" state statutes, pursuant to which all pharmacies would be
entitled to be a provider under such a contract, have been enacted in
certain states, including Alabama, Georgia, New Jersey, North
Carolina, Louisiana, Tennessee and Texas, and may be enacted in
others. Although such statutes may adversely affect certain of the
Company's third-party contracts, they may also provide the Company
with opportunities regarding additional third-party contracts.
The Clinton Administration has stated that health care reform is
one of its priorities. A health care reform plan by President
Clinton as well as a number of competing health care reform proposals
were introduced in Congress, and some may be introduced again this
year. The Company cannot predict whether any federal health care
reform legislation will eventually be passed and, if so, the impact
on the Company's financial position or results of operations.
In 1993, the State of Florida enacted health care legislation
that is applicable to state employees, small businesses with fewer
than 50 employees and Medicaid recipients. Such legislation, which
began to be implemented in 1994, created 11 health care purchasing
cooperatives, which accepted bids from groups of health care
providers (which include certain of the Company's managed health care
clients) to provide goods and services to the cooperatives members.
The Company expects to provide prescription drugs to the cooperatives
members through its existing managed health care clients. However,
the Company is unable to predict whether its efforts will be
successful or whether the Florida legislation will have an adverse
impact on the Company's financial position or results of operations.
Other Operations
On March 31, 1994, the company closed on the sale of its Vision
Group retail optical operations which was sold effective January 30,
1994 for an amount in cash and notes approximately equal to the book
value of the related assets. In fiscal 1993, Vision Group sales were
approximately $61 million and earnings before interest and taxes were
approximately $3 million.
On November 15, 1994, the company closed on the sale of its
Insta-Care Pharmacy Services (Insta-Care) institutional pharmacy
services operations for a total consideration of $112 million in
cash. The net proceeds after certain closing adjustments was
approximately $94 million. In fiscal 1994, Insta-Care sales were
approximately $89 million and earnings before interest and income
taxes were approximately $3 million. The Company recognized a gain
on the sale of Insta-Care of $49.5 million, net of income taxes of
$4.6 million.
Employees
As of January 28, 1995, the Company had approximately 42,700
employees, of which 22,200 were full-time employees. The Company
believes that overall employee relations are good. None of the
Company's employees are represented by unions.
Patents, Trademarks and Tradenames
No patent, trademark, license, franchise or concession is
considered to be of material importance to the business of the
Company other than the trade names under which the Company operates
its retail businesses, including the Eckerd name. The Company also
holds servicemarks for its photofinishing products, private label
products and information systems.
Item 2. Properties
The Company conducts substantially all of its retail businesses
from stores located in leased premises. Substantially all of these
leases will expire within the next twenty-five years. In the normal
course of business, however, it is expected that leases will be
renewed or replaced by leases on other properties. Most of the
Company's store leases provide for a fixed minimum rental together
with a percentage rental based on sales.
The material office and distribution center properties owned or
leased by the Company at January 28, 1995 are as follows:
Owned or
Location Square Feet Leased
Largo, Florida 488,000 Owned(1)
Charlotte, North Carolina 587,000 Owned
Garland, Texas 270,000 Owned
Conroe, Texas 345,000 Owned
Orlando, Florida 321,000 Owned(2)
Orlando, Florida 587,000 Leased(2)
Newnan, Georgia 244,000 Owned(3)
Hammond, Louisiana 185,000 Owned(3)(4)
(1) Includes the Company headquarters.
(2) In January, 1993 the Company assumed a lease for an office and
distribution facility of approximately 587,000 square feet
(lease expires 2005). The Company's existing Orlando facilities
and the Largo distribution center facility were consolidated
into the new facility during 1993. One of the owned Orlando
facilities was sold in May 1994, and the other owned facility is
under contract to be sold.
(3) Construction was financed pursuant to revenue bond issues.
Because these properties are currently leased subject to nominal
purchase options with development authorities which the Company
anticipates it will exercise, they are listed as owned by the
Company.
(4) The Company closed the Hammond distribution center and subleased
the former Hammond, Louisiana office and distribution center.
The Company considers that all property owned or leased is well
maintained and in good condition.
Item 3. Legal Proceedings
In the ordinary course of its business, the Company and its
subsidiaries are parties to various legal actions which the Company
believes are routine in nature and incidental to the operation of the
business of the Company and its subsidiaries. The Company believes
that the outcome of the proceedings to which the Company and its
subsidiaries currently are parties will not have a material adverse
effect upon its operations or financial condition.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during
the last quarter of the fiscal year ended January 28, 1995.
Executive Officers of the Registrant
The name, age and office of the executive officers of the
Company as of year end January 28, 1995 and certain information
relating to their business experience are set forth below:
Name Age Position
Stewart Turley 60 Director, Chairman of the Board and
Chief Executive Officer
Francis A. Newman 46 Director, President and Chief Operating
Officer
Kenneth L. Flynn 50 Senior Vice President/Store Operations
Edward W. Kelly 49 Senior Vice President/Merchandising
Robert L. Myers 49 Senior Vice President/Pharmacy
James M. Santo 53 Senior Vice President/Administration and
Secretary
Samuel G. Wright 44 Senior Vice President and Chief
Financial Officer
Robert D. Boos 55 Vice President
Martin W. Gladysz 42 Vice President/Treasurer
Robert E. Lewis 34 Vice President/General Counsel and
Assistant Secretary
Mr. Turley is Chairman of the Board and Chief Executive Officer
of the Company, positions he has held since 1986. He served as
President of the Company from 1986 until July 1993. He joined Old
Eckerd in 1966 and has served as Senior Vice President (1971-1974)
and President and Chief Executive Officer (1984-1985) prior to being
elected to Chairman of the Board, President and Chief Executive
Officer. He is also a director of Barnett Banks, Inc., Sprint
Corporation and Springs Industries, Inc.
Mr. Newman is President, Chief Operating Officer and a director
of the Company, positions he has held since July 1993. Prior to
joining the Company, Mr. Newman served as President, Chief Executive
Officer and a director of F&M Distributors, Inc. ("F&M"), a drug
store chain, since 1986. F&M filed bankruptcy under Chapter 11 of
the United States Bankruptcy Code in December 1994. Prior to joining
F&M, he was the Executive Vice President of Household Merchandising,
a retail firm, from 1984 to 1985 and the Senior Vice President of
Merchandising for F.W. Woolworth, a retail firm, from 1980 to 1984.
Mr. Newman is also a director of FabriCenters of America, a retail
firm.
Mr. Flynn was appointed Senior Vice President/Store Operations
of the Company in December 1994. Prior to joining the Company, Mr.
Flynn was Executive Vice President with the Thrifty/Payless drug
chain in Portland, Oregon. Prior to joining Thrifty/Payless in
August 1993, Mr. Flynn was employed by Lucky Stores, Inc. for over 30
years most recently as Senior Vice President/Store Operations.
Mr. Kelly was appointed Senior Vice President/Merchandising of
the Company in February 1993. Prior thereto he served as Vice
President of Merchandising of Eckerd Drug Company, formerly Old
Eckerd's principal subsidiary ("Eckerd Drug Company") and now the
Company's principal division, for more than the past five years.
Mr. Myers was appointed Senior Vice President/Pharmacy of the
Company in February 1993. Prior thereto he was a Vice President of
the Company, a position he held for more than the past five years.
In addition, Mr. Myers has served as Vice President of Pharmacy
Services of Eckerd Drug Company for more than the past five years.
Mr. Santo was appointed Senior Vice President/Administration of
the Company in February 1993. Prior thereto he was Vice
President/Legal Affairs of the Company, a position he held for more
than the past five years. In addition, Mr. Santo was appointed
Secretary of the Company effective January 1, 1992.
Mr. Wright was appointed Senior Vice President and Chief
Financial Officer of the Company in February 1995. Prior thereto Mr.
Wright was appointed Senior Vice President/Finance in February 1993
and was also Vice President and Controller of the Company, from
September 1988 until February 1993. Mr. Wright became a Vice
President of the Company in June 1986. In addition, Mr. Wright has
served as Vice President of Finance of Eckerd Drug Company since May
1985.
Mr. Boos was appointed Vice President of the Company in April
1991. In addition, Mr. Boos has been Vice President of Real Estate
and Development of Eckerd Drug Company since August 1985. Mr. Boos
joined Eckerd Drug Company in 1982.
Mr. Gladysz was appointed Vice President/Treasurer of the
Company in May 1994. Prior to joining the Company, Mr. Gladysz was
Executive Vice President/Treasurer for Fortune Bancorp, a Florida
banking organization, a position he held for more than the past
five years.
Mr. Lewis was appointed Vice President/General Counsel and
Assistant Secretary of the Company in August 1994. Prior to joining
the Company, Mr. Lewis was a shareholder in the law firm of
Shackleford, Farrior, Stallings & Evans, P.A. in Tampa, Florida, from
January 1992 to August 1994 and was an associate at that firm for
more than five years prior thereto.
Officers are elected for a one-year term by the Board of
Directors at its annual meeting. There is no family relationship
between any of the aforementioned officers or directors of the
Company.
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters
The Company's common stock is listed on the New York Stock
Exchange (Symbol: ECK) and started trading on August 6, 1993. The
approximate number of shareholders of record on March 31, 1995 was
937.
Fiscal 1994
Quarter Ended
Market Price
Per Share Information 4/30/94 7/30/94 10/29/9 1/28/95
High 24.00 25.25 31.50 32.00
Low 18.50 18.125 23.25 25.375
Fiscal 1993
Market Price Quarter Ended
Per Share Information 10/30/93 1/29/94
High 18.00 20.75
Low 12.75 13.75
The Company is subject to restrictive covenants under its Credit
Agreement and the 9 1/4% Senior Subordinated Notes which restrict the
payment of dividends. The Company has not paid or declared any
dividends on its common stock.
Item 6. Selected Financial Data
The selected financial information required by this item is
included in the Company's 1994 annual report to stockholders on page
9 under the heading "Five Year Financial Operating Summary". Such
information is incorporated herein by reference. The ratio of
earnings to fixed charges was 1.7X and 1.0X in fiscal 1994 and 1991,
respectively. In fiscal 1993, 1992 and 1990 earnings were inadequate
to cover fixed charges, and the Company had a deficiency in earnings
to fixed charges of $2,941,000, $4,123,000 and $35,982,000 in fiscal
years 1993, 1992 and 1990, respectively.
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The information required by this item is included in the
Company's 1994 annual report to stockholders on pages 10 through 14
under the heading "Management's Discussion and Analysis of Results of
Operations and Financial Condition". Such information is
incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
The following consolidated financial statements as of January
28, 1995 and January 29, 1994 and for each of the years in the three
year period ended January 28, 1995 included in the Company's 1994
annual report to stockholders on pages 15 through 27 are incorporated
herein by reference:
Consolidated Statements of Operations
Consolidated Balance Sheets
Consolidated Statements of Stockholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Information on selected quarterly financial data also required
by this item is included in the Company's 1994 annual report to
stockholders on page 30 under the heading "Quarterly Information
(Unaudited)". Such information is incorporated herein by
reference.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant
Information required by this item regarding the directors of the
Company is included in the Company's definitive proxy statement dated
April 24, 1995 for the 1995 annual meeting of stockholders on pages
2 through 4 under the headings "Nominees For Election of Directors In
Class II With Terms Expiring in 1998"; "Directors in Class III With
Terms Expiring in 1996" and "Directors in Class I with Terms Expiring
in 1997". Such information is incorporated herein by reference.
Information required by this item regarding executive officers of the
Company is contained in Part I of this Form 10-K405 under the item
entitled "Executive Officers of the Registrant".
Item 11. Executive Compensation
Information regarding management remuneration is included in the
Company's definitive proxy statement dated April 24, 1995 for the
1995 annual meeting of stockholders on pages 1 and 2, and 8 through
14 under the headings "Nomination and Election of Directors" and
"Executive Compensation". Such information is incorporated herein by
reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
Information regarding security ownership of certain beneficial
owners and of management is included in the Company's definitive
proxy statement dated April 24, 1995 for the 1995 annual meeting of
stockholders on pages 5 through 7 under the heading "Security
Ownership Of Certain Persons". Such information is incorporated
herein by reference.
Item 13. Certain Relationships and Related Transactions
Information regarding certain relationships and related
transactions is included in the Company's definitive proxy statement
dated April 24, 1995 for the 1995 annual meeting of stockholders on
pages 13 and 17 under the headings "Executive Compensation -
Compensation Committee Interlocks and Insider Participation" and
"Certain Transactions". Such information is incorporated herein by
reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
Listed below are all financial statements, notes, schedules, and
exhibits filed as part of this Form 10-K405 annual report:
(a) Financial statements and Schedules
1. The following financial statements and schedules of the
Company together with the Report of Independent Certified Public
Accountants dated March 20, 1995 in this Form 10-K405 are filed
herewith:
Eckerd Corporation and Subsidiaries
Financial Statements:
Independent Auditors' Report
Consolidated Balance Sheets as of January 28, 1995 and
January 29, 1994
Consolidated Statements of Operations for the Years Ended
January 28, 1995, January 29, 1994 and January 30, 1993
Consolidated Statements of Stockholders' Equity for the Years
Ended January 28, 1995, January 29, 1994 and January 30,
1993
Consolidated Statements of Cash Flows for the Years Ended
January 28, 1995, January 29, 1994 and January 30, 1993
Notes to Consolidated Financial Statements
Schedules:
II - Reserves
Independent Auditor's Report
All other schedules for the Company are omitted as the
required information is inapplicable or the information is
presented in the respective consolidated financial statements or
related notes.
Also filed in this Form 10-K405 is the consent of KPMG Peat
Marwick LLP to the incorporation by reference of their auditors'
report dated March 20, 1995, relating to the consolidated
financial statements appearing in the Form 10-K405, into
Registration Statement Numbers 33-49977 and 33-50755 on Form S-8
and Registration Statement Numbers 33-10721, 33-50223, and
33-56261 on Form S-3.
2. Exhibits:
Exhibits previously filed or filed by incorporation by
reference:
3.1(i) Restated Certificate of Incorporation of Eckerd Corporation
(the "Company") (incorporated by reference to Exhibit
3.1(i) to the Registration Statement on Form S-3 of the
Company (No. 33-50223)).
3.2(ii) Amended and Restated By-laws of the Company (incorporated
by reference to Exhibit 3.2(ii) to the Registration
Statement on Form S-3 of the Company (No. 33-50223)).
4.1 Form of certificate for the Company's Common Stock, par
value $.01 per share (incorporated by reference to Exhibit
4.1 to the Registration Statement on Form S-2 of the
Company (No. 33-64906)).
4.2 Indenture dated as of May 1, 1986 by and between the
Company and Mellon Bank, N.A. as trustee, relating to the
11 1/8% Subordinated Debentures due 2001 (incorporated by
reference to the Registration Statement on Form S-1 of
Eckerd Holdings Inc. (No. 33-4576)). (On February 6, 1991,
Mellon Bank, N.A. was succeeded by Security Pacific
National Trust Company, as trustee.)
4.3 Indenture dated as of November 1, 1993 between the Company
and State Street Bank and Trust Company of Connecticut,
National Association, as Trustee relating to the Company's
91/4% Senior Subordinated Notes Due 2004 (incorporated by
reference to Exhibit 4.02 to the Current Report on Form 8-K
dated October 26, 1993 of the Company (File No. 1-4844)).
4.4 Form of 9 1/4% Senior Subordinated Notes Due 2004 of the
Company (incorporated by reference to Exhibit 4.01 to the
Current Report on Form 8-K dated October 26, 1993 of the
Company (File No. 1-4844)).
10.1 Merrill Lynch Common Stock Purchase Agreement dated as of
April 1, 1986 by and among the Company and the Merrill
Lynch Investors (incorporated by reference to the
Registration Statement on Form S-4 of Eckerd Holdings Inc.
(No. 33-4497)).
10.2 Commercial Paper Placement Agency Agreement dated July 17,
1989 between the Company and Merrill Lynch Money Markets,
Inc. (incorporated by reference to Exhibit 10.15 of Form
10-K of the Company for the period ended February 3, 1990).
10.3 Registration Rights Agreement dated as of April 30, 1986 by
and among the Company, the Merrill Lynch Investors, Morgan
Capital Corporation and the other bank affiliates listed
therein, the institutional and corporate investors listed
therein and certain members of management of the Company
(incorporated by reference to Exhibit 10.19 to the
Registration Statement on Form S-2 of the Company (No.
33-64906)).
10.4 First Amendment to Registration Rights Agreement among the
Company, EDS Holdings Inc., the Merrill Lynch Investors,
the Bank Affiliates, the Institutional Investors and the
Management Investors (incorporated by reference to Exhibit
10.20 to Amendment No. 1 to the Registration Statement on
Form S-2 of the Company (No. 33-64906)).
10.5 First Employees Management Stock Option Plan (incorporated
by reference to the Registration Statement on Form S-8 of
the Company (No. 33-30761)).
10.6 Employment Agreement dated as of April 30, 1986, between
the Company and Stewart Turley (incorporated by reference
to Exhibit 10.23 to the Registration Statement on FormS-2
of the Company (No. 33-64906)).
10.7 Employment Agreement dated as of April 30, 1986, between
the Company and John W. Boyle (incorporated by reference to
Exhibit 10.25 to the Registration Statement on Form S-2 of
the Company (No. 33-64906)).
10.8 Employment Agreement dated June 9, 1993, between the
Company and Francis A. Newman (incorporated by reference to
Exhibit 10.27 to the Registration Statement on Form S-2 of
the Company (No. 33-64906)).
10.9 Master Lease Agreement I dated as of May 18, 1993 between
the Company and Imaging Financial Services d/b/a EKCC
("IFS") (incorporated by reference to Exhibit 10.28 to
Amendment No. 1 to the Registration Statement on Form S-2
of the Company (No. 33-64906)).
10.10 Master Lease Agreement II dated as of June 15, 1993 between
the Company and IFS (incorporated by reference to Exhibit
10.29 to Amendment No. 1 to the Registration Statement on
Form S-2 of the Company (No. 33-64906)).
10.11 Systems Operations Service Agreement dated as of July 14,
1993 between the Company and Integrated Systems Solutions
Corporation (incorporated by reference to Exhibit 10.30 to
Amendment No. 1 to the Registration Statement on Form S-2
of the Company (No. 33-64906)).
10.12 Letter dated March 16, 1993 between IFS and the Company
relating to IFS Sale and Leaseback (incorporated by
reference to Exhibit 10.31 to Amendment No. 2 of the
Registration Statement on Form S-2 of the Company (No.
33-64906)).
10.13 1993 Stock Option and Incentive Plan of the Company
(incorporated by reference to Exhibit 99.1 to the
Registration Statement on Form S-8 of the Company (No.
33-49977)).
10.14 Employment Agreement dated October 1, 1988 between the
Company and James M. Santo (incorporated by reference to
Exhibit 10.38 to Form 10-K for the year ended January 29,
1994 of the Company (File No. 1-4844)).
10.15 Employment Agreement dated October 1, 1988 between the
Company and Robert L. Myers (incorporated by reference to
Exhibit 10.38 to Form 10K/A for the year ended January 29,
1994 of the Company (File No. 1-4844)).
10.16 Credit Agreement dated as of June 14, 1993, as amended and
restated as of August 3, 1994 (the "Credit Agreement"),
among the Company, the lenders named therein, Chemical Bank
and NationsBank of Florida, N.A. as managing agents and
swingline lenders, and Chemical Bank, as administrative
agent and NationsBank of Florida, N.A. as documentation
agent (incorporated by reference to Exhibit 10.1 to form
10-Q of the Company for twenty-six weeks ended July 30,
1994).
12.1 Statement regarding computation of ratio of earnings to
fixed charges of the Company (incorporated by reference to
Exhibit 12.1 to the Registration Statement on Form S-3 of
the Company (No. 33-50223)).
Exhibits filed herewith:
10.17 Employment Agreement dated October 1, 1988 between the
Company and Samuel G. Wright.
10.18 Receivables Purchase Agreement dated as of January 26, 1995
between the Company and Three Rivers Funding Corporation.
10.19 First Amendment to Receivables Purchase Agreement dated as
of March 31, 1995 between the Company and Three Rivers
Funding Corporation.
10.20 Registration Rights Agreement dated as of December 31, 1994
by and among the Company and the Eckerd Corporation Profit
Sharing Plan.
10.21 Guarantee Agreement dated as of June 14, 1993 as amended
and restated as of August 3, 1994 (the "Guarantee
Agreement") among the subsidiaries of the Company listed
therein and Chemical Bank, as collateral agent.
10.22 Indemnity, Subrogation and Contribution Agreement dated as
of June 14, 1993 as amended and restated as of August 3,
1994 (the "Indemnity, Subrogation and Contribution
Agreement"), among the Company, each subsidiary of the
Company listed therein and Chemical Bank, as collateral
agent.
10.23 Pledge Agreement dated as of June 14, 1993 as amended and
restated as of August 3, 1994 among the Company, each
subsidiary of the Registrant listed therein and Chemical
Bank, as collateral agent.
10.24 Security Agreement dated as of June 14, 1993 as amended and
restated as of August 3, 1994 among the Company, each
subsidiary of the Company listed therein and Chemical Bank,
as collateral agent.
10.25 Trademark Security Agreement dated as of June 14, 1993 as
amended and restated as of August 3, 1994 among the
Company, each subsidiary of the Company listed therein and
Chemical Bank, as collateral agent.
10.26 Revolving Note dated as of August 3, 1994 made by the
Company in favor of Chemical Bank issued pursuant to the
Credit Agreement.
10.27 Term Note dated as of August 3, 1994 made by the Company in
favor of Chemical Bank issued pursuant to the Credit
Agreement.
10.28 Swingline Note dated as of August 3, 1994 made by the
Company in favor of Chemical Bank issued pursuant to the
Credit Agreement.
10.29 Deed of Trust, Security Agreement and Assignment of Leases
and Rents dated as of June 14, 1993, as amended and
restated as of August 3, 1994, by the Company in favor of
Kenneth Plifka, as trustee, for the benefit of Chemical
Bank, as collateral agent, relating to certain real
property located in Dallas County, Texas.
10.30 Deed of Trust, Security Agreement and Assignment of Leases
and Rents dated as of June 14, 1993, as amended and
restated as of August 3, 1994, by the Company in favor of
Kenneth Plifka, as trustee, for the benefit of Chemical
Bank, as collateral agent, relating to certain real
property located in Montgomery County, Texas.
10.31 Amendment, Consent and Waiver dated as of October 31, 1994
to the Credit Agreement, the Guarantee Agreement, the
Indemnity, Subrogation and Contribution Agreement.
10.32 Amended and Restated Mortgage, Security Agreement and
Assignment of Leases and Rents dated as of August 3, 1994,
as mortgagor and Chemical Bank, as mortgagee.
12.2 Statement regarding computation of ratio of earnings to
fixed charges of the Company.
13 The following sections of the 1994 annual report to
stockholders of the Company incorporated by reference and
included in Parts II and IV of this Form 10-K405:
Five Year Financial Operating Summary.
Management's Discussion and Analysis of Results of
Operations and Financial Condition.
Consolidated Financial Statements and Independent Auditor's
Report.
Quarterly Information.
21.1 Subsidiaries of the Company.
23.1 Consent of Independent Certified Public Accountants.
27 Financial data schedules.
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the
thirteen weeks ended January 28, 1995.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this
Form 10-K405 report to be signed on its behalf by the undersigned,
thereunto duly authorized.
April 27, 1995 ECKERD CORPORATION
By:/s/ Samuel G. Wright
Samuel G. Wright
Senior Vice President
Chief Financial and
Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf
of the Registrant and in the capacities indicated on the date
indicated.
Signature Titles Date
/s/Stewart Turley
Stewart Turley Chairman of the Board April 27, 1995
and Chief Executive
Officer
/s/Francis A. Newman
Francis A. Newman President, Chief April 27, 1995
Operating Officer
and Director
/s/John W. Boyle
John W. Boyle Director April 27, 1995
/s/James T. Doluisio
James T. Doluisio Director April 27, 1995
/s/Donald F. Dunn
Donald F. Dunn Director April 27, 1995
/s/Albert J. Fitzgibbons, III
Albert J. Fitzgibbons, III Director April 27, 1995
/s/Lewis W. Lehr
Lewis W. Lehr Director April 27, 1995
/s.Alexis P. Michas
Alexis P. Michas Director April 27, 1995
/s/Rupinder S. Sidhu
Rupinder S. Sidhu Director April 27, 1995
Independent Auditor's Report
The Board of Directors
Eckerd Corporation and Subsidiaries:
Under date of March 20, 1995, we reported on the consolidated balance
sheets of Eckerd Corporation and subsidiaries as of January 28, 1995
and January 29, 1994, and the related consolidated statements of
operations, stockholders' equity, and cash flows for each of the
years in the three-year period ended January 28, 1995, which are
incorporated by reference in the Form 10-K405. In connection with our
audits of the aforementioned consolidated financial statements, we
also audited the related consolidated financial statement schedule in
the Form 10-K405. This financial statement schedule is the
responsibility of the Company's management. Our responsibility is to
express an opinion on this financial statement schedule based on our
audits.
In our opinion, such financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information set
forth therein.
As discussed in note 9 to the consolidated financial statements, the
Company changed its accounting policy in the current year related to
the timing of the recognition of closed store obligations.
KPMG PEAT MARWICK LLP
Tampa, Florida
March 20, 1995
Schedule II
<TABLE>
ECKERD CORPORATION AND SUBSIDIARIES
RESERVES
Years ended January 28, 1995, January 29, 1994 and January 30, 1993
(In Thousands)
Balance at Charged
Balance at
Beginning to
End
Description of Period earnings
Deductions Others of Period
<S> <C> <C>
<C> <C> <C>
Allowance for doubtful receivables (a)
Year ended January 28, 1995 $5,000 $7,148
$4,924 ($4,224) $3,000
Year ended January 29, 1994 $5,000 $7,000
$7,000 - $5,000
Year ended January 30, 1993 $4,600 $4,475
$4,075 - $5,000
</TABLE>
Notes:
(a) This reserve is deducted from receivables in the balance
sheets.
Exhibit Index
Eckerd Corporation Form 10-K405
for the Fiscal Year Ended January 28, 1995
Exhibit Page
Number Description of Exhibit Number
3.1(i) Restated Certificate of Incorporation of Eckerd *
Corporation (the "Company") (incorporated by
reference to Exhibit 3.1(i) to the Registration
Statement on Form S-3 of the Company (No.
33-50223)).
3.2(ii) Amended and Restated By-laws of the Company *
(incorporated by reference to Exhibit 3.2(ii)
to the Registration Statement on Form S-3 of
the Company (No. 33-50223)).
4.1 Form of certificate for the Company's Common *
Stock, par value $.01 per share (incorporated
by reference to Exhibit 4.1 to the Registration
Statement on Form S-2 of the Company (No. 33-
64906)).
4.2 Indenture dated as of May 1, 1986 by and between *
the Company and Mellon Bank, N.A. as trustee,
relating to the 11 1/8% Subordinated Debentures
due 2001 (incorporated by reference to the
Registration Statement on Form S-1 of Eckerd
Holdings Inc. (No. 33-4576)). (On February 6,
1991, Mellon Bank, N.A. was succeeded by Security
Pacific National Trust Company, as trustee.)
4.3 Indenture dated as of November 1, 1993 between *
the Company and State Street Bank and Trust
Company of Connecticut, National Association,
as Trustee relating to the Company's 9 1/4% Senior
Subordinated Notes Due 2004 (incorporated by
reference to Exhibit 4.02 to the Current Report
on Form 8-K dated October 26, 1993 of the
Company (File No. 1-4844)).
4.4 Form of 9 1/4% Senior Subordinated Notes Due *
2004 of the Company (incorporated by reference
to Exhibit 4.01 to the Current Report of Form
8-K dated October 26, 1993 of the Company (File
No. 1-4844)).
10.1 Merrill Lynch Common Stock Purchase Agreement *
dated as of April 1, 1986 by and among the
Company and the Merrill Lynch Investors
(incorporated by reference to the Registration
Statement on Form S-4 of Eckerd Holdings Inc.
(No. 33-4497)).
10.2 Commercial Paper Placement Agency Agreement dated *
July 17, 1989 between the Company and Merrill
Lynch Money Markets, Inc. (incorporated by
reference to Exhibit 10.15 of Form 10-K of the
Company for the period ended February 3, 1990).
10.3 Registration Rights Agreement dated as of *
April 30, 1986 by and among the Company, the
Merrill Lynch Investors, Morgan Capital
Corporation and the other bank affiliates listed
therein, the institutional and corporate investors
listed therein and certain members of management
of the Company (incorporated by reference to
Exhibit 10.19 to the Registration Statement on
Form S-2 of the Company (No. 33-64906)).
10.4 First Amendment to Registration Rights Agreement *
among the Company, EDS Holdings Inc., the Merrill
Lynch Investors, the Bank Affiliates, the
Institutional Investors and the Management
Investors (incorporated by reference to Exhibit
10.20 to Amendment No. 1 to the Registration
Statement on Form S-2 of the Company (No. 33-
64906)).
10.5 First Employees Management Stock Option Plan *
(incorporated by reference to the Registration
Statement on Form S-8 of the Company (No.
33-30761)).
10.6 Employment Agreement dated as of April 30, 1986, *
between the Company and Stewart Turley
(incorporated by reference to Exhibit 10.23 to
the Registration Statement on Form S-2 of the
Company (No. 33-64906)).
10.7 Employment Agreement dated as of April 30, 1986, *
between the Company and John W. Boyle
(incorporated by reference to Exhibit 10.25 to
the Registration Statement on Form S-2 of the
Company (No. 33-64906)).
10.8 Employment Agreement dated June 9, 1993, between *
the Company and Francis A. Newman (incorporated
by reference to Exhibit 10.27 to the Registration
Statement on Form S-2 of the Company (No. 33-
64906)).
10.9 Master Lease Agreement I dated as of May 18, 1993 *
between the Company and Imaging Financial Services
d/b/a EKCC ("IFS") (incorporated by reference to
Exhibit 10.28 to Amendment No. 1 to the
Registration Statement on Form S-2 of the Company
(No. 33-64906)).
10.10 Master Lease Agreement II dated as of June 15, *
1993 between the Company and IFS (incorporated
by reference to Exhibit 10.29 to Amendment No. 1
to the Registration Statement on Form S-2 of the
Company (No. 33-64906)).
10.11 Systems Operations Service Agreement dated as of *
July 14, 1993 between the Company and Integrated
Systems Solutions Corporation (incorporated by
reference to Exhibit 10.30 to Amendment No. 1 to
the Registration Statement on Form S-2 of the
Company (No. 33-64906)).
10.12 Letter dated March 16, 1993 between IFS and the *
Company relating to IFS Sale and Leaseback
(incorporated by reference to Exhibit 10.31 to
Amendment No. 2 of the Registration Statement on
Form S-2 of the Company (No. 33-64906)).
10.13 1993 Stock Option and Incentive Plan of the *
Company (incorporated by reference to Exhibit
99.1 to the Registration Statement on Form S-8
of the Company (No. 33-49977)).
10.14 Employment Agreement dated October 1, 1988 *
between the Company and James M. Santo
(incorporated by reference to Exhibit 10.38
to Form 10-K for the year ended January 29, 1994
of the Company (File No. 1-4844)).
10.15 Employment Agreement dated October 1, 1988 *
between the Company and Robert L. Myers
(incorporated by reference to Exhibit 10.38 to
Form 10K/A for the year ended January 29, 1994
of the Company (File No. 1-4844)).
10.16 Credit Agreement dated as of June 14, 1993, as *
amended, and restated as of August 3, 1994 (the
"Credit Agreement"), among the Company, the
lenders named therein, Chemical Bank and
NationsBank of Florida, N.A. as managing agents
and swingline lenders, and Chemical Bank, as
administrative agent and NationsBank of Florida,
N.A. as documentation agent (incorporated by
reference to Exhibit 10.1 to form 10-Q of the
Company for twenty-six weeks ended July 30, 1994).
10.17 Employment Agreement dated October 1, 1988 between
the Company and Samuel G. Wright.
10.18 Receivables Purchase Agreement dated as of January
26, 1995 between the Company and Three Rivers
Funding Corporation.
10.19 First Amendment to Receivables Purchase Agreement
dated as of March 31, 1995 between the Company
and Three Rivers Funding Corporation.
10.20 Registration Rights Agreement dated as of December
31, 1994 by and among the Company and the Eckerd
Corporation Profit Sharing Plan.
10.21 Guarantee Agreement dated as of June 14, 1993 as
amended and restated as of August 3, 1994 (the
"Guarantee Agreement") among the subsidiaries of
the Company listed therein and Chemical Bank, as
collateral agent.
10.22 Indemnity, Subrogation and Contribution Agreement
dated as of June 14, 1993 as amended and restated
as of August 3, 1994 (the "Indemnity, Subrogation
and Contribution Agreement"), among the Company,
each subsidiary of the Company listed therein and
Chemical Bank, as collateral agent.
10.23 Pledge Agreement dated as of June 14, 1993 as
amended and restated as of August 3, 1994 among
the Company, each subsidiary of the Company
listed therein and Chemical Bank, as collateral
agent.
10.24 Security Agreement dated as of June 14, 1993 as
amended and restated as of August 3, 1994 among
the Company, each subsidiary of the Company listed
therein and Chemical Bank, as collateral agent.
10.25 Trademark Security Agreement dated as of June 14,
1993 as amended and restated as of August 3, 1994
among the Company, each subsidiary of the Company
listed therein and Chemical Bank, as collateral
agent.
10.26 Revolving Note dated as of August 3, 1994 made by
the Company in favor of Chemical Bank issued
pursuant to the Credit Agreement.
10.27 Term Note dated as of August 3, 1994 made by the
Company in favor of Chemical Bank issued pursuant
to the Credit Agreement.
10.28 Swingline Note dated as of August 3, 1994 made by
the Company in favor of Chemical Bank issued
pursuant to the Credit Agreement.
10.29 Deed of Trust, Security Agreement and Assignment
of Leases and Rents dated as of June 14, 1993,
as amended and restated as of August 3, 1994, by
the Company in favor of Kenneth Plifka, as trustee,
for the benefit of Chemical Bank, as collateral
agent, relating to certain real property located
in Dallas County, Texas.
10.30 Deed of Trust, Security Agreement and Assignment of
Leases and Rents dated as of June 14, 1993, as
amended and restated as of August 3, 1994, by the
Company in favor of Kenneth Plifka, as trustee,
for the benefit of Chemical Bank, as collateral
agent, relating to certain real property located
in Montgomery County, Texas.
10.31 Amendment, Consent and Waiver dated as of October 31,
1994 to the Credit Agreement, the Guarantee Agreement,
the Indemnity, Subrogation and Contribution Agreement.
10.32 Amended and Restated Mortgage, Security Agreement and
Assignment of Leases and Rents dated as of August 3,
1994, as mortgagor and Chemical Bank, as mortgagee.
12.1 Statement regarding computation of ratio earnings to *
fixed charges of the Company (incorporated by
reference to Exhibit 12.1 to the Registration
Statement on Form S-3 of the Company (No. 33-50223)).
12.2 Statement regarding computation of ratio of earnings
to fixed charges of the Company.
13 The following sections of the 1994 annual report to
stockholders of the Company incorporated by reference
and included in Parts II and IV of this Form 10-K405:
Five Year Financial Operating Summary.
Management's Discussion and Analysis of Results of
Operations and Financial Condition.
Consolidated Financial Statements and Independent
Auditor's Report.
Quarterly Information.
21.1 Subsidiaries of the Company.
23.1 Consent of Independent Certified Public Accountants.
27 Financial data schedules.
* Filed by incorporation by reference.
EMPLOYMENT AGREEMENT
AGREEMENT made as of October 1, 1988, by and between JACK
ECKERD CORPORATION, a Delaware corporation (the "Company) and
SAMUEL G. WRIGHT, residing at 10 Ambleside Drive, Belleair, Florida
34616 (the "Employee").
WHEREAS, upon the terms and subject to the conditions of this
Agreement, the Company desires to employ the Employee and the
Employee is willing to accept employment by the Company.
NOW, THEREFORE, in consideration of the mutual covenants set
forth herein and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. Employment.
Upon the terms and subject to the conditions of this
Agreement, the Company hereby employs the Employee and the Employee
hereby accepts employment by the Company in the capacity
hereinafter set forth.
2. Term of Employment.
The term of the Employee's employment by the Company
under this Agreement shall commence on the date hereof and shall be
for a term of twelve (12) months, subject to extension and
termination as provided in Section 8 hereof (the "Contract
Period").
3. Duties; Extent of Services.
(a) During the Contract Period, the Employee shall serve
as Vice President, Controller of the Company or in such other
executive capacity as shall be determined from time to time by the
Board of Directors of the Company and shall perform the duties,
undertake the responsibilities and exercise the authority
customarily performed, undertaken and exercised by a person in such
position in the business in which the Company is engaged.
(b) Except as otherwise provided herein and except for
illness, permitted vacation periods and permitted leaves of absence
during the Contract Period, the Employee shall (i) devote his full
time and attention during normal business hours to the business of
the Company and its subsidiaries; (ii) use his best efforts to
promote the Company's and its subsidiaries' interest; and (iii)
discharge such other and further executive and administrative
duties as may be assigned to him by the Board of Directors of the
Company and its subsidiaries.
(c) Except for directorships held by the Employee on the
date of this Agreement, during the Contract Period the Employee
will not, without the prior written consent of the Company's Board
of Directors, serve as a director of any corporation, joint
venture, association or other commercial enterprise not controlled
by, controlling or under common control with, the Company and its
subsidiaries.
4. Compensation.
(a) In consideration of the services rendered by the
Employee under this Agreement, the Company shall pay the Employee
a base annual salary (the "Base Salary") in the amount of $134,000
(or such higher amount as the Board of Directors of the Company
shall determine) payable monthly on the fifteenth (15th) of each
month during the Contract Period.
(b) During the Contract Period, as additional
compensation for his services and as a further incentive and
inducement to the Employee to accept employment by the Company and
to devote his best efforts to the business and affairs of the
Company and its subsidiaries, the Company shall pay to the Employee
additional compensation (the "Bonus Compensation") in the following
amounts:
(i) The Company shall pay, or shall cause to be
paid, to the Employee the payments described in the letter
agreement dated April 30, 1986 between the Company and the
Employee, the form of which is attached hereto as Exhibit A; and
(ii) The Employee shall be entitled to participate
in the Company's Key Management Bonus Plan (KMBP), 3-Year Bonus
Plan (3-Year Bonus) and such other plans as may be in effect from
time to time as determined by the Board of Directors of the Company
from time to time.
(c) The Company agrees that the Employee shall be
entitled to defer some portion or all of his Base Salary for any
calendar year in accordance with the provisions of the Company's
Executive Deferred Compensation Plan as adopted by the Board of
Directors.
5. Fringe Benefits.
In addition to the compensation provided in Section 4
above, during the Contract Period the Employee shall be entitled to
the following benefits:
(a) The Employee shall be entitled to paid vacation time
annually in accordance with the Company policy as determined by the
Board of Directors.
(b) The Employee shall be entitled to participate in all
employee benefit programs now or hereafter maintained by the
Company for executive personnel for which he is eligible,
including, without limitation, group life insurance, short and
long-term disability, profit sharing, pension, automobile allowance
or
leasing, stock option (subject to approval by the Board of
Directors), supplemental retirement income (subject to approval by
the board of Directors), hospitalization and medical and dental
reimbursement plan or program, his participation in such programs
to be based upon the applicable provisions of such programs as they
may exist from time to time.
6. Expenses.
The Company shall pay or reimburse the Employee for all
reasonable expenses reasonably incurred or paid by him in
connection with the performance of his duties hereunder upon
presentation of expense statements or vouchers and such other
supporting documentation as the Company may from time to time
reasonably request.
7. Benefits Payable Upon Disability, Death, or Retirement.
(a) In the event of the disability (as hereinafter
defined) of the Employee during the Contract Period, the Company
shall continue to pay the Employee the compensation provided in
Section 4 hereof during the period of his disability or earlier
termination hereof; provided, however, that in the event the
Employee is disabled for a continuous period exceeding six (6)
consecutive calendar months, the Company may, at its election,
terminate this Agreement at the close of business on the date
thirty (30) days after the Company shall have delivered a written
notice of such election to the Employee, in which event the
Employee shall be entitled to receive benefits under the Company's
Long Term Disability Plan as such plan may exist as of the date of
termination of this Agreement.
As used in this Agreement, the term "disability"
shall mean the inability of the Employee due to illness or physical
or mental infirmity to perform his duties under this Agreement as
determined by a physician selected by the Employee and acceptable
to the Company.
(b) During the period the Employee shall be entitled to
receive payments under Section 7(a) above, to the extent that he is
physically and mentally able to do so, he shall, upon the request
of the Company, furnish information and assistance to the Company,
and, in addition, upon reasonable request of Senior Management or
the Board of Directors, he shall make himself available to the
Company to undertake reasonable assignments consistent with the
dignity, importance and scope of his position and his physical and
mental health.
(c) In the event of the death of the Employee during the
Contract Period, the Company shall pay, or cause to be paid, to the
Employee's designated beneficiary or beneficiaries or estate or
legal representatives, the payment due pursuant to the terms of the
group term insurance policies together with such other death
benefits as may be payable under the Company's benefit plans.
(d) In the event of the retirement of the Employee on
his Normal Retirement Date (as such term is defined in the
Company's Pension Plan) in addition to such retirement benefits
that are available to the Employee upon retirement pursuant to the
Company's retirement benefit plans, the Company shall reduce the
principle amount of the Employee's aggregate obligation under the
Employee's 10% Recourse Secured Promissory Note and 10%
Non-Recourse Secured Promissory Note dated as of April 30, 1986
(hereinafter collectively referred to as the "Notes") by an amount
equal to the amount such Notes would have been reduced had the
Employee remained in the employment of the Company for a period of
two (2) years from the date of retirement and shall pay the
Employee an additional amount equal to the federal, state or local
income taxes deemed to be payable by the Employee in respect of the
reduction in the principle amount of the Notes pursuant to this
clause.
8. Termination.
(a) Except as otherwise provided in subsection (c), (d)
and (e) hereof, this Agreement and the employment of the Employee
hereunder shall terminate upon the earliest to occur of the dates
specified below:
(i) The close of business on September 30, 1989
(the "Initial Period"), except that this Agreement and the
employment of the Employee hereunder shall be automatically
extended from year to year thereafter unless (x) terminated by the
Company by delivery of not less than 60 days written notice to the
Employee prior to the end of the Initial Period or any extension
thereof in which case the employment of the Employee shall
terminate on the date specified for termination in such notice, or
(y) terminated by the Employee by delivery of not less than 60 days
written notice to the Company prior to the end of the Initial
Period or any extension thereof in which case the employment of the
Employee shall terminate on the date specified for termination in
such notice;
(ii) the close of business on the date of death of
the Employee;
(iii) the close of business on the date the
Company delivers to the Employee a written notice of its election
to terminate his employment for "cause" (as defined in paragraph
(b) below);
(iv) the close of business on the date thirty (30)
days after the Company shall have delivered to the Employee a
written notice of its intention to terminate his employment because
the board of Directors has determined that such termination is in
the best interests of the Company and such termination is not for
cause, death, disability or failure to extend pursuant to Section
8(a)(i)(x) hereof;
(v) the close of business on the date of a
termination by the Company pursuant to Section 7(a) hereof; or
(vi) the close of business the date of the
retirement of the Employee pursuant to Section 7(d) hereof.
(b) For purposes of this Agreement, the term "cause"
shall be limited to (i) a felony conviction or (ii) the commission
of an act of fraud or embezzlement against the Company or any of
its subsidiaries.
(c) For purposes hereof, upon termination of this
Agreement and employment of Employee as provided in Section
8(a)(i)-(vi), all obligations and liabilities of the parties hereto
shall cease and be of no effect except for those liabilities and
obligations provided for in Section 7, 9, 10 and 11 hereof.
(d) For purposes of clauses (i) and (iv) of Section 8(a)
above, the Employee shall be relieved of his duties and shall
vacate his office and the Company's premises on the date of receipt
of the notice required by such clauses unless requested by the
Company to remain in the active employment of the Company during
such period between the receipt of notice and the effective date of
termination of employment.
(e) Notwithstanding the provisions of this Section 8,
the Company in its sole discretion may, in connection with the
termination of all of the employment agreements dated as of this
date between the Company and the Management Group (as such term is
defined in the Registration Rights Agreements), terminate this
Agreement upon 3 months written notice; provided, however, that if
termination of this Agreement under this provision results in the
termination of employment of Employee by the Company other than for
cause, death, disability or retirement within one (1) year from the
effective date of the termination of this Agreement under this
clause (e), Employee shall be entitled to the benefits and shall be
bound by the obligations provided in Sections 9, 10 and 11 hereof.
9. Payments to Employee Upon Termination of Employment.
(a) Upon the termination of the Employee's full-time
employment hereunder by the Company in accordance with clauses (i)
(x) or (iv) of Section 8(a) of this Agreement, the Company shall
pay to the Employee, or in the event of his subsequent death, to
his beneficiary or beneficiaries or his estate or legal
representative, as severance pay (i) an amount equal the Employee's
Base Salary on the date of termination for the Applicable Severance
Period payable in monthly installments on the fifteenth (15th) of
each month during the Applicable Severance Period plus (ii) a pro
rata portion of the lower of (x) the bonus compensation which would
have been paid to Employee pursuant to the KMBP in respect of the
year of termination if he had not been terminated and (y) the
amount of Bonus Compensation which would have been paid to Employee
under the KMBP in such year if the Company had met Target as such
term is defined in the KMBP plus (iii) a pro rata portion of any
Bonus compensation payable under the 3-Year Bonus Plan for any
3-year Performance Period in which Employee has been a participant
for a period of 12 months plus (iv) an amount equal to the value as
of the valuation date next preceding the date of termination of
this Agreement of the pro rata portion of any of the Employee's
shares of Class B Common Stock that would have become Vested
Shares in respect of the year of termination if he had not been
terminated. Any payments due Employee hereunder with respect to
the KMBP, 3-Year bonus Plan or Vested Class B Stock shall be paid
promptly after the determination of such amounts.
(b) Upon the termination of the Employee's full-time
employment hereunder pursuant to (i)(x) or (iv) of Section 8(a) of
this Agreement, the Company shall at its expense continue on behalf
of the Employee the following benefits: life insurance, short and
long-term disability insurance, hospitalization insurance and
medical and dental reimbursement plan insurance. The coverage of
any such insurance provided by the Company hereunder shall be no
less favorable to the Employee, in terms of amounts and
deductibles, than the coverage provided under the benefit programs
maintained by the Company from time to time for the Company's
executives. The Company's obligation hereunder with respect to
each of the foregoing benefit plans shall terminate upon the
earlier of the end of the applicable Severance Period or the date
the Employee obtains any such benefits pursuant to a subsequent
employer's benefit plans.
(c) Benefits pursuant to the Company's Profit Sharing
and Pension Plans (and such other plans in which Employee
participates) shall be payable to Employee in accordance with the
terms of such Plans.
(d) Upon the termination of the Employee's full-time
employment hereunder by the Company in accordance with clauses
(i)(x) or (iv) of Section 8(a) of this Agreement, the Company shall
reduce the principle amount of the Employee's aggregate obligation
under the Employee's 10% Recourse Secured Promissory Note and 10%
Non-Recourse Secured Promissory Note dated as of April 30, 1986 by
an amount equal to the amount such Notes would have been reduced
had the Employee remained in the employment of the Company through
the end of the Applicable Severance Period and shall pay the
Employee an additional amount equal to the federal, state or local
income taxes deemed to be payable by the Employee in respect of the
reduction in the principle amount of the Notes pursuant to this
clause.
(e) For purposes of this Agreement, Applicable Severance
Period shall mean (i) one year (12 months) for a termination which
occurs prior to the Employee's tenth (10th) anniversary of
employment with the Company or (ii) one and one-half years (18
months) for a termination which occurs after the Employee's tenth
(10th) anniversary of employment with the Company.
10. Covenants of the Employee.
(a) The Employee agrees that during the Contract Period
and for a period of time equal to (i) one year in the event of a
termination of employment in accordance with clauses (i) (y) or
(iii) of Section 8(a); (ii) two years in the event of a termination
of employment in accordance with Section 7(a) or retirement in
accordance with Section 7(d); or (iii) the Applicable Severance
Period in the event of a termination of employment in accordance
with clauses (i) (x) or (iv) of Section 8(a), he will not, directly
or indirectly, engage, assist or participate in, whether as a
director, officer, employee, agent, manager, consultant, partner,
owner or independent contractor or other participant, any business,
firm, corporation, partnership, enterprise or organization that
through the operation of retail stores in which prescription drugs
are sold competes with the business engaged or hereafter engaged in
by the Company or any of its subsidiaries in the Company's or such
subsidiaries' trade areas (for purposes hereof "trade areas" shall
mean any county in any state of the United States in which retail
drug stores operated by the Company and its subsidiaries are
located). Nothing contained herein shall prevent the Employee from
acquiring less than 2% of any class of outstanding securities of any
Company that has any of its securities listed on a national
securities exchange or traded in the over-the-counter market.
(b) The Employee agrees that during the Contract Period
and for a period of two years after the termination of this
Agreement for any reason, he will not directly induce or solicit
any person employed or hereafter employed by the Company or any of
its subsidiaries to leave the employ of the Company or any of its
subsidiaries.
(c) The Employee agrees and acknowledges that the
Confidential Information of the Company and its subsidiaries (as
hereinafter defined) is valuable, special and unique to their
business; that such business depends on such Confidential
Information; and that the Company wishes to protect such
Confidential Information by keeping it confidential for the use and
benefit of the Company. Based on the foregoing, the Employee
agrees to undertake the following obligations with respect to such
Confidential Information:
(i) The Employee agrees to keep any and all
Confidential Information in trust for the use and benefit of the
Company;
(ii) The Employee agrees that, except as required by
the Employee duties or authorized in writing by the Company and its
subsidiaries or required by applicable law, he will not at any time
during and for a period of five (5) years after the termination of
his employment with the Company and its subsidiaries, disclose,
directly or indirectly, any Confidential Information of the Company
or any of its subsidiaries.
(iii) The Employee agrees to take all
reasonable steps necessary, or reasonably requested by the Company
and its subsidiaries, to ensure that all Confidential Information
of the Company is kept confidential for the use and benefit of the
Company and its subsidiaries; and
(iv) The Employee agrees that, upon termination of
his employment by the Company or any of its subsidiaries or at any
other time the Company may in writing so request, he will promptly
deliver to the Company all materials constituting Confidential
Information (including all copies thereof) that are in the
possession of or under the control of the Employee. The Employee
further agrees that, if requested by the Company to return any
Confidential Information pursuant to this Subsection (iv), he will
not make or retain any copy or extract from such materials.
For purposes of this Section 10(c), Confidential
Information means any and all information developed by or for the
Company or any of its subsidiaries of which the Employee gained
knowledge by reason of his employment by the Company or any of its
subsidiaries prior to the date hereof or his employment under this
Agreement that is not generally known in any industry in which the
Company is or may become engaged. Confidential Information
includes, but is not limited to, any and all information developed
by or for the Company concerning plans, marketing and sales
methods, materials, processes, business forms, procedures, devices
used by the Company, its subsidiaries, suppliers and customers with
which the Company had dealt prior to the Employee's termination of
employment with the Company and its subsidiaries, plans for
development of new products, services and expansion into new areas
or markets, internal operations, and any trade secrets and
proprietary information of any type owned by the Company and its
subsidiaries, together with all written, graphic and other
materials relating to all or any part of the same.
11. Covenant Not to Sue.
Employee hereby covenants and agrees with the Company,
its successors and assigns forever to refrain from making,
instituting, pressing or in any way aiding any claim, demand,
action or cause of action against the Company and its officers and
agents arising in connection with his employment, modification of
employment or termination thereof, including claims, demands,
actions or causes of action arising under federal and state fair
employment practice or discrimination laws, laws pertaining to
breach of employment contract or wrongful discharge and any other
federal, state or local laws relating in any way to Employee's
employment with the Company or the termination thereof. Employee
further understands and agrees that this covenant not to sue
applies to any and all forms of relief, whether monetary or other,
which Employee might seek in connection with his employment,
modification of employment or termination thereof. Provided,
however, that this covenant not to sue shall not prohibit Employee
from making, instituting or pressing any claim, demand, action or
cause of action to enforce the benefits payable to Employee
pursuant to Sections 7 and 9 of the Agreement upon termination of
employment with the Company or arising under the Management
Subscription Agreement dated April 30, 1986 or any employee benefit
plan maintained by the Company or any claim under the workman's
compensation laws of any state.
Employee further acknowledges that as a condition
precedent to Employee receiving any benefits under this Agreement,
Employee shall complete, execute and deliver to the Company at the
time of his termination of employment a Release in the form of
Exhibit "B" hereto which releases any and all claims that the
Employee may have against the Company as of the date of termination
arising under federal, state, local or common law.
12. Successors and Assigns.
(a) This Agreement shall be binding upon and shall inure
to the benefit of the Company, its successors and assigns. The
term "Company" as used herein shall include such successors and
assigns. The term "successors and assigns" as used herein shall
mean a corporation or other entity acquiring all or substantially
all the assets and business of this Company (including this
Agreement) whether by operation of law or otherwise.
(b) Neither this Agreement nor any right or interest
hereunder shall be assignable by the Employee, his beneficiaries,
or legal representatives without the Company's prior written
consent; provided, however, that nothing in this Section 11 shall
preclude (i) the Employee from designating a beneficiary to receive
any benefit payable hereunder upon his death, or (ii) the
executors, administrators, or other legal representatives of the
Employee or his estate from assigning any rights hereunder to
distributees, legatees, beneficiaries, testamentary trustees or
other legal heirs of the Employee.
13. Notices.
Any notice required or permitted by this Agreement shall
be given by registered or certified mail, return receipt requested,
addressed to the Company at its then principal office, or to the
Employee at his address specified on page 1 of this Agreement, or
to either party hereto at such other address or addresses as he or
it may from time to time specify for such purposes in a notice
similarly given.
14. Governing Law; Litigation; Expenses.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida without giving
effect to the conflicts of law principles thereof.
(b) The Employee and the Company hereby agree that the
courts of the State of Florida shall have exclusive jurisdiction to
hear and determine any claims or disputes pertaining to this
Agreement or to any matter arising therefrom. Each of the Employee
and the Company expressly submits and consents in advance to such
jurisdiction in any action commenced in such courts hereby waiving
personal service of the summons and complaint or other process or
papers issued therein, and agreeing that service of such summons
and complaint, or other process or papers, may be made by
registered or certified mail addressed to the Company at its then
principal office or to the Employee at his address specified on
page 1 of this Agreement, or to either party hereto at such other
addresses as it or he from time to time specify to the other party
in writing for such purpose. The exclusive choice of forum set
forth in this Section 14 shall not be deemed to preclude the
enforcement of any judgment obtained in such forum or the taking of
any action under this Agreement to enforce such judgment in any
appropriate jurisdiction.
(c) All costs and expenses (including attorneys' fees)
incurred in connection with any litigation relating to a claim or
dispute pertaining to this Agreement shall be paid by the party
incurring such expenses.
(d) Nothing contained in this Section 14 shall be deemed
to limit the Company's obligation to indemnify the Employee to the
fullest extent permitted by applicable law in respect of any
actions, claims or proceedings which are based upon acts or
omissions of the Employee related to the performance of his duties
hereunder to the extent he would have otherwise been entitled to
indemnification under the by-laws or charter of the Company or any
of its subsidiaries or to the extent to which indemnification is to
be paid to officers and directors as a matter of law.
15. Entire Agreement.
This instrument contains the entire agreement of the
parties relating to the subject matter hereof, and there are no
restrictions, agreements, promises, covenants, undertakings,
representations or warranties with respect to the subject matter
hereof other than those expressly set forth herein and in the
following instruments and agreements to which the Company and the
Employee are parties: The Recourse Note, the Non-Recourse Note,
the Convertible Debentures, the Compensation Letter, the Management
Subscription Agreement, the Registration Rights agreement, the
Stockholders' Agreement and the Pledge Agreement (such instruments
and agreements to have the same defined meanings as such
instruments and agreements are defined in the Management
Subscription Agreement). No modification of this Agreement shall
be valid unless in writing and signed by the parties hereto. The
waiver of a breach of any term or condition of this Agreement shall
not be deemed to constitute a waiver of any subsequent breach of
the same or any other term or condition of this Agreement.
16. Severability.
If any term or provision of this Agreement or the
application thereof to any person, property or circumstance shall
to any extent be invalid or unenforceable, the remainder of this
Agreement, or the application of such term or provision to persons,
property or circumstances other than those as to which it is
invalid or unenforceable shall not be affected thereby, and each
term and provision of this Agreement shall be valid and enforceable
to the fullest extent permitted by law.
17. Injunctive Relief.
(a) The Employee acknowledges and agrees that the
covenants and obligations contained in Sections 10(a), 10(b) and
10(c) of this Agreement relate to special, unique and extraordinary
matters and that a violation of any of the terms of such Sections
will cause the Company irreparable injury for which adequate remedies
at law are not available. Therefore, the Employee agrees that the
Company shall be entitled to an injunction, restraining order, or
other equitable relief from any court of competent jurisdiction,
restraining the Employee from committing any violation of the
covenants and obligations set forth in Sections 10(a), 10(b) and
10(c) hereof.
(b) The Company's rights and remedies under this Section
17 are cumulative and are in addition to any other rights and
remedies the Company may have at law or in equity. In connection
with the foregoing provision of this Section 17, the Employee
represents that his economic means and circumstances are such that
such provisions will not prevent him from providing for himself and
his family on a basis satisfactory to him.
18. Withholding Taxes.
The Company may deduct from any payments to be made
hereunder any federal, state or local withholding or other taxes
which the Company determines it is required to deduct under
applicable law.
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement as of the day, month and year first
written above.
JACK ECKERD CORPORATION
By:/s/ Stewart Turley
Stewart Turley, President
EMPLOYEE
/s/ Samuel G. Wright
Samuel G. Wright
RECEIVABLES PURCHASE AGREEMENT
THIS AGREEMENT dated as of January 26, 1995 between
ECKERD CORPORATION, a Delaware corporation (the "Seller"), and
THREE RIVERS FUNDING CORPORATION, a Delaware corporation (the
"Buyer").
WITNESSETH THAT:
WHEREAS, the Seller and the Buyer wish to enter into
this Agreement pursuant to which the Buyer may from time to time
purchase from the Seller undivided percentage ownership interests
in receivables originated by the Seller pursuant to and in
accordance with the terms hereof;
NOW, THEREFORE, the parties hereto, in consideration of
their mutual covenants hereinafter set forth and intending to be
legally bound hereby, agree as follows:
ARTICLE I
DEFINITIONS; CONSTRUCTION
1.01. CERTAIN DEFINITIONS. In addition to other words
and terms defined in the recitals hereof and elsewhere in this
Agreement, as used herein, the following words and terms shall
have the following meanings respectively, unless otherwise
required by context:
"Account Balance" shall mean, in respect of any
Contract, all amounts shown on the most recent invoice or
statement sent to the related Obligor, and all other amounts
which are shown on the most recent Settlement Statement and in
respect of which the related Obligor is obligated.
"Accounting Period" shall mean each fiscal month of the
Seller.
"Affected Party" shall mean each of the Buyer, any
permitted assignee of the Buyer, the Banks, the Surety Bond
Provider, any assignee of any of the Buyer's obligations to the
Banks or the Surety Bond Provider under the Credit Agreement or
the Insurance Agreement, respectively, and the Agent.
"Affiliate" shall mean, with respect to a Person, any
other Person which directly or indirectly Controls, is Controlled
by or is under common Control with such Person.
"Agent" shall mean Mellon Bank, acting as agent for the
Banks.
"Agreement" shall mean this Receivables Purchase
Agreement, as the same may from time to time be amended,
supplemented or otherwise modified and in effect.
"Banks" shall mean the banks party to the Credit
Agreement from time to time.
"Business Day" shall mean any day other than a Saturday,
Sunday, public holiday under the Laws of the Commonwealth of
Pennsylvania or the State of New York or other day on which
banking institutions are authorized or obligated to close in the
Commonwealth of Pennsylvania or the State of New York.
"Buyer's Allocation" shall have the meaning ascribed to
such term in Section 3.01 hereof.
"Certificate of Participation" shall mean the written
evidence of the Buyer's interest in the Receivables Pool, in the
form attached as Exhibit A hereto.
"Change in Control" shall mean the occurrence of any one
of the following: (a) any Person or group (within the meaning of
Rule 13d-5 promulgated under the Securities Exchange Act of 1934
as in effect on the date hereof) other than Merrill Lynch Capital
Partners, Inc. and its Affiliates shall own directly or
indirectly, beneficially or of record, shares representing more
than 30% of the aggregate ordinary voting power represented by
the issued and outstanding capital stock of the Seller; (b) a
change in the membership of the board of directors of the Seller
shall occur at any time during any twelve-month period such that,
following such change, at least 30% of the members of the board
of directors are Persons who were not members of the board of
directors at the beginning of such twelve-month period (but only
if the election of such new members of the board of directors was
not approved by a majority of the directors who were either
sitting at the beginning of such twelve-month period or elected
to the board of directors during such twelve-month period with
the approval of a majority of the directors who were sitting at
the beginning of such twelve-month period); or (c) any Person or
group other than Merrill Lynch Capital Partners, Inc. and its
Affiliates shall otherwise directly or indirectly Control the
Seller.
"Chief Executive Office" shall mean, with respect to the
Seller, the place where the Seller is located, within the meaning
of Section 9-103(3)(b) of the Uniform Commercial Code, as the
same may from time to time be amended, supplemented or otherwise
modified, or any analogous provision of any successor statute or,
to the extent applicable, any analogous provision of the Uniform
Commercial Code in effect in the jurisdiction whose Law governs
the perfection of the Buyer's ownership interest in any Purchased
Receivable.
"Closing Date" shall mean the date on which the
Participation Interest is initially purchased by the Buyer in the
Receivables Pool pursuant to the terms of this Agreement.
"Collateral Agent" shall mean Bankers Trust Company, as
collateral agent for the Banks, the Depositary, the Surety Bond
Provider and the holders from time to time of the commercial
paper notes and short-term promissory notes of the Buyer.
"Collections" shall mean, for any Purchased Receivable
as of any date, (i) the sum of all amounts, whether in the form
of cash, checks, drafts, or other instruments, received by the
Seller or the Servicer or in a Permitted Lockbox, a Lockbox
Account or a Medicaid Collection Account in payment of, or
applied to, any amount owed by an Obligor on account of such
Purchased Receivable (including but not limited to all amounts
received on account of any Defaulted Receivable) on or before
such date, including, without limitation, all amounts received on
account of such Purchased Receivable and other fees and charges,
and (ii) all amounts deemed to have been received by the Seller
or the Servicer as a Collection pursuant to Sections 5.03(c) or
6.04 hereof.
"Complete Servicing Transfer" shall have the meaning
ascribed to such term in Section 6.07 hereof.
"Concentration Limit" shall mean, as of any date of
determination, with respect to all of the Receivables owing from
a single Obligor, together with Receivables owing from its
Affiliates or subsidiaries, an amount equal to six percent
(6.00%) of the aggregate Account Balance of the Eligible
Receivables in the Receivables Pool outstanding as of the last
day of the most recently completed Accounting Period; PROVIDED
(i) that the Concentration Limit with respect to Receivables
owing from Paid shall be an amount equal to eighteen percent
(18%) of the aggregate Account Balance of the Eligible
Receivables in the Receivables Pool outstanding as of the last
day of the most recently completed Accounting Period so long as
Paid has, or shall be a wholly-owned subsidiary of an entity
which has, short-term ratings of at least A-1 and P-1 from S&P
and Moody's, respectively, (ii) that the Concentration Limit in
respect of each Obligor whose Receivables are outstanding under a
Contract with PCS shall be six percent (6%) of the aggregate
Account Balance of the Eligible Receivables in the Receivables
Pool outstanding as of the last day of the most recently
completed Accounting Period prior to any adjustment for unapplied
cash received from all such Obligors and (iii) that the Buyer
may, at any time in its sole discretion, reduce or increase the
Concentration Limit for any Obligor through the delivery of a
notice to the Seller.
"Confirmation" shall mean each acknowledgment, notice of
receipt, or agreement in respect of a related Notice of
Assignment which is required to be delivered to the Seller by, or
received by the Seller from, the recipient of such Notice of
Assignment.
"Consent and Acknowledgment" shall mean an agreement, in
substantially the form of Exhibit N, by Holdings in favor of the
Buyer pursuant to which, among other things, Holdings consents
to, and acknowledges, the transactions contemplated hereby.
"Contract" shall mean a written contract, which shall be
legally binding on an Obligor, which gives rise to a short-term
receivable with a maturity of not greater than 45 days arising
from the sale by the Seller of goods or services in the ordinary
course of the Seller's pharmaceutical business.
"Control" shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ownership
of voting securities, by contract or otherwise, and the term
"Controlled" shall have the meaning correlative thereto.
"Cost of Funds" shall mean, with respect to any
Settlement Period, an amount, as notified in writing by the Buyer
to the Seller on or prior to the related Settlement Date, equal
to the interest or discount cost for funds borrowed or obtained
during such Settlement Period, either from the issuance of
commercial paper notes, the taking of loans or otherwise, by the
Buyer for the purpose of maintaining or acquiring the
Participation Interest, including in the computation of such cost
any dealer's commissions or fees and any and all other fees which
are attributable to such borrowing and are specified from time to
time in writing by the Buyer to the Seller.
"Credit Agreement" shall mean the Amended and Restated
Credit Agreement dated as of October 8, 1993 among the Buyer, the
Banks and the Agent, as the same has been amended and may from
time to time hereafter be amended, supplemented or otherwise
modified and in effect.
"Credit Loss Reserve" shall mean, with respect to any
Settlement Period, the product of (i) the Credit Loss Reserve
Percentage for such Settlement Period and (ii) the positive
result of (a) the aggregate Account Balances of all Eligible
Receivables in the Receivables Pool as of the last day of the
Accounting Period most recently completed, less (b) the
Settlement Period Reserve for such Settlement Period, less
(c) the Servicer's Compensation Reserve for such Settlement
Period, less (d) the sum, without duplication, of (1) the
aggregate (determined as of the last day of the Accounting Period
most recently completed) for all Obligors of the excess, if any,
of the aggregate Account Balances of all Eligible Receivables
owing by a single Obligor (calculated prior to any adjustment for
unapplied cash received from such Obligor in the case of an
Obligor whose Receivables are outstanding under a Contract with
PCS) over the Concentration Limit in effect with respect to such
Obligor and (2) the aggregate amount by which the Account Balance
of Eligible Receivables owing under all Contracts with PCS
exceeds (A) eighteen percent (18%) of the aggregate Account
Balance of the Eligible Receivables in the Receivables Pool
outstanding as of the last day of the most recently completed
Accounting Period so long as PCS has, or is a wholly-owned
subsidiary of an entity which has, short-term ratings of at least
A-1 and P-1 from S&P and Moody's respectively or (B) six
percent (6%) of the aggregate Account Balance of the Eligible
Receivables in the Receivables Pool outstanding as of the last
day of the most recently completed Accounting Period if
clause (A) is not applicable.
"Credit Loss Reserve Percentage" shall mean, with
respect to any Settlement Period, the greater of (i) 18% and
(ii) the product of (a) 1.5, and (b) the Loss Ratio with respect
to such Settlement Period, and (c) the Loss Horizon Ratio with
respect to such Settlement Period.
"Days Sales Outstanding" shall mean, (i) on the Closing
Date, the number of days in the period ending on the Closing Date
and commencing on such earlier date such that the aggregate
amount of net sales of the Seller during such period is equal to
the aggregate Account Balance of all Eligible Receivables
outstanding on the Closing Date and (ii) at any other time of
determination, the number of days in the period ending on the
last day of the most recently ended Accounting Period and
commencing on such earlier date such that the aggregate amount of
net sales of the Seller during such period is equal to the
aggregate Account Balance of all Eligible Receivables outstanding
on such last day.
"Default Ratio" shall mean, as of any date of
determination, a fraction, expressed as a percentage, the
numerator of which is the aggregate Account Balance of all
Receivables which became Defaulted Receivables during the full
Accounting Period most recently completed in conformity with the
Seller's Normal Credit Policies, and the denominator of which is
the aggregate amount of net sales of the Seller during the fourth
full Accounting Period preceding the full Accounting Period most
recently completed; PROVIDED that any such determination which
utilizes in the denominator information regarding the sales of
the Seller during any Accounting Period prior to November 1994
shall have both its numerator and its denominator calculated on
the basis of the gross amount charged by the Seller to the
Obligors, rather than the net amount due to the Seller from the
Obligors.
"Defaulted Receivable" shall mean a Purchased Receivable
(a) the Obligor in respect of which is not entitled to any
further extensions of credit, by reason of any default or
nonperformance by such Obligor, under the terms of the Seller's
Normal Credit Policies, (b) which has become uncollectible or has
been written off the books of the Seller by reason of such
Obligor's inability to pay, as determined by the Buyer or the
Servicer, in either case in accordance with the Seller's Normal
Credit Policies, or (c) in respect of which an Event of
Bankruptcy has occurred with respect to the related Obligor or
(d) which is unpaid for more than 90 days past the date on which
it was due.
"Deferred Purchase Price" shall mean the amount
calculated pursuant to Section 5.06 hereof.
"Depositary" shall mean Bankers Trust Company.
"Dilution Factors" shall mean credits, cancellations,
cash discounts, warranties, allowances, Disputes, rebates, charge
backs, pay-cuts, reject write-offs, returned or repossessed
goods, and other allowances, adjustments and deductions
(including, without limitation, any special or other discounts or
any reconciliations) that are given to an Obligor in accordance
with the Seller's Normal Credit Policies.
"Dispute" shall mean any dispute, deduction, claim,
offset, defense, counterclaim, set-off or obligation of any kind,
contingent or otherwise, relating to a Receivable, including,
without limitation, any dispute relating to goods or services
already paid for.
"Dollar", "Dollars" and the symbol "$" shall mean lawful
money of the United States of America.
"Duff" shall mean Duff & Phelps, Inc.
"Eckerd Credit Agreement" shall have the meaning
assigned to such term in Section 4.02(i) hereof.
"Eligible Receivable" shall mean any Receivable which:
(a) together with the related Contract, duly complies
with all applicable Laws and other legal
requirements, whether Federal, state or local,
including, without limitation, usury laws, the
Federal Consumer Credit Protection Act, the Fair
Credit Billing Act, the Federal Truth in Lending
Act, and Regulation Z of the Board of Governors of
the Federal Reserve System;
(b) constitutes an "account" or a "general intangible"
as defined in the UCC and the jurisdiction whose
Law governs the perfection of the Buyer's
Participation Interest in such Receivable;
(c) was originated in connection with an extension of
credit by the Seller in the ordinary course of the
Seller's business pursuant to the Seller's third
party prescription drug program to an Obligor whose
application for the extension of credit was
processed by the Seller in accordance with the
Seller's Normal Credit Policies, and which Obligor
is located in the United States and is not an
Affiliate of the Seller;
(d) arises from a Contract and has been billed, or will
be billed to the related Obligor, or in respect of
which the related Obligor is otherwise liable, in
accordance with the terms of such Contract;
(e) constitutes a legal, valid, binding and irrevocable
payment obligation of the related Obligor,
enforceable in accordance with its terms;
(f) provides for payment in Dollars by the related
Obligor no later than 45 days after the invoice
date of such Receivable;
(g) is payable into a Permitted Lockbox or Lockbox
Account or, with respect to Medicaid Receivables,
directly to the Seller or into a Medicaid
Collection Account;
(h) is not, at the time the Participation Interest is
first purchased therein or a Reinvestment therein
is made by the Buyer hereunder, a Defaulted
Receivable;
(i) was not originated in or subject to the Laws of a
jurisdiction whose Laws would make such Receivable,
the related Contract or the sale of the
Participation Interest in such Receivable to the
Buyer hereunder unlawful, invalid or unenforceable;
(j) immediately prior to it becoming a Purchased
Receivable, is owned solely by the Seller free and
clear of all Liens;
(k) no rejection or return of the goods or services
which give rise to such Receivable has occurred and
all goods and services in connection therewith have
been finally performed or delivered to and accepted
by the recipient thereof without Dispute;
(l) is not subject to any contractual right of set-off;
(m) is an obligation representing part or all of the
sales price of merchandise or services; and
(n) is not an obligation of an Obligor designated as
ineligible in the sole discretion of the Buyer.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time.
"Event of Bankruptcy" shall mean, for any Person:
(a) if such Person shall fail generally to, or admit in
writing its inability to, pay its debts as they
become due; or
(b) a proceeding shall have been instituted in a court
having jurisdiction in the premises seeking a
decree or order for relief in respect of such
Person in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or
hereafter in effect, or for the appointment of a
receiver, liquidator, assignee, custodian, trustee,
sequestrator, conservator (under the Bank
Conservation Act, as amended, or otherwise) or
other similar official of such Person or for any
substantial part of its property, or for the
winding-up or liquidation of its affairs; or
(c) the commencement by such Person of a voluntary case
under any applicable bankruptcy, insolvency or
other similar Law now or hereafter in effect, or
such Person's consent to the entry of an order for
relief in an involuntary case under any such Law,
or consent to the appointment of or taking
possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator, conservator
(under the Bank Conservation Act, as amended, or
otherwise) or other similar official of such Person
or for any substantial part of its property, or any
general assignment for the benefit of creditors,
or, if a corporation or similar entity, any
corporate action in furtherance of any of the
foregoing; or
(d) a decree or order of a court or agency or
supervisory authority having jurisdiction in the
premises for the appointment of a receiver,
liquidator, assignee, trustee, custodian,
sequestrator, or conservator in any insolvency,
readjustment of debt, marshalling of assets and
liabilities, or similar proceedings, shall have
been entered against such Person.
"Expiration Date" shall mean the earliest of (i)
January 20, 1996, which shall be extended thereafter on the last
Business Day of each March, June, September and December during
the term of this Agreement, beginning in June, 1995, to the 24th
day in the calendar month which is three months after the month
in which the then scheduled Expiration Date falls unless, prior
to the first Business Day of each March, June, September and
December, as the case may be, either the Buyer notifies the
Seller that it does not desire to offer to extend its Purchase
Obligation, or the Seller notifies the Buyer that it does not
desire to continue to sell interests in the Receivables to the
Buyer, PROVIDED that as of June 30, 1995, the Expiration Date
shall, unless the Buyer or the Seller notifies the other party to
the contrary, be extended to June 24, 1996; PROVIDED FURTHER,
that the new scheduled Expiration Date shall in no event result
in a remaining term of the Purchase Obligation that exceeds 360
days, (ii) the date of termination of the commitment of the
Surety Bond Provider under the Insurance Agreement, and (iii) the
date of termination of the commitment of the Banks under the
Credit Agreement.
"GAAP" shall mean generally accepted accounting
principles in the United States of America, applied on a
consistent basis and applied to both classification of items and
amounts, and shall include, without limitation, the official
interpretations thereof by the Financial Accounting Standards
Board, its predecessors and successors.
"Holdings" shall mean Eckerd Holdings II, Inc., a
Delaware corporation and a wholly-owned subsidiary of the Seller.
"Insurance Agreement" shall mean the Insurance and
Reimbursement Agreement dated as of October 8, 1993 between the
Surety Bond Provider and the Buyer, as the same may from time to
time be amended, supplemented or otherwise modified and in
effect.
"Insurer" shall have the meaning ascribed to such term
in Section 8.02(e) hereof.
"Investment" shall mean, on each date of determination,
the sum of (i) the Net Investment and (ii) the Deferred Purchase
Price, if any, as determined on the Closing Date or as set forth
on the most recently delivered Settlement Statement.
"Law" shall mean any law (including common law),
constitution, statute, treaty, regulation, rule, ordinance,
order, injunction, writ, decree or award of any Official Body.
"Lien", in respect of the property of any Person, shall
mean any ownership interest of any other Person, any mortgage,
deed of trust, hypothecation, pledge, lien, security interest,
grant of a power to confess judgment, preference, right to
priority payment, charge or other encumbrance or security
arrangement of any nature whatsoever, including, without
limitation, any conditional sale or title retention arrangement,
and any assignment, deposit arrangement, consignment or lease
intended as, or having the effect of, security, or the filing of
any financing statement in connection with any of the foregoing.
"Liquidation Day" shall mean each day which occurs on or
after (i) the date designated in a notice given by the Buyer to
the Seller stating that the conditions contained in Section 4.03
hereof are not satisfied, (ii) the Expiration Date, (iii) the
first date on which a Termination Event has occurred and the
Buyer has given notice to the Seller that it is terminating its
obligations pursuant to Section 10.02(a) hereof or (iv) the date
on which the Seller gives written notice to the Buyer that the
Seller no longer wishes to sell interests in the Receivables Pool
to the Buyer or permit Reinvestments to be made; PROVIDED,
HOWEVER, there shall be no Liquidation Day after the Net
Investment shall equal zero and the Seller shall have no
remaining payment obligations to the Buyer under this Agreement.
"Liquidation Period" shall mean one or more consecutive
Liquidation Days.
"Lockbox Account" shall mean an account established by
the Seller with a Permitted Lockbox Bank for the purpose of
depositing payments made by Obligors, other than payments made by
Obligors on account of Medicaid Receivables.
"Lockbox Servicing Agreement" shall mean an agreement
relating to lockbox services in connection with a Lockbox Account
which gives the Buyer the right under certain circumstances to
take control of the related Lockbox Account, which is in form and
substance satisfactory to the Buyer, and which has been executed
and delivered to the Buyer by a Permitted Lockbox Bank.
"Loss Ratio" shall mean, with respect to any Settlement
Period, the greatest average Default Ratio determined for any
three consecutive full Accounting Periods during the twelve full
Accounting Periods immediately preceding the first day of such
Settlement Period.
"Loss Horizon Ratio" shall mean, with respect to any
Settlement Period, a fraction the numerator of which is the
aggregate amount of net sales of the Seller resulting in the
creation of Receivables during the four full Accounting Periods
immediately preceding the first day of such Settlement Period,
and the denominator of which is the aggregate outstanding balance
of all Eligible Receivables as of the last day of the Accounting
Period most recently completed.
"Maximum Net Investment" shall mean $75,000,000 unless
otherwise increased with the consent of the Buyer or reduced as
provided in Section 2.03 hereof.
"Medicaid" shall mean, in any state, the hospital
insurance program created by that state's statutes in accordance
with Title XIX of the Social Security Act.
"Medicaid Collection Account" shall mean any
FDIC-insured account maintained by the Seller in the name of the
Seller with a Permitted Lockbox Bank in accordance with the
provisions hereof and under the ownership and control of the
Seller, exclusively for the deposit upon receipt by the Seller of
all payments made by Obligors on account of the Medicaid
Receivables.
"Medicaid Receivables" shall mean, with respect to any
state, a Receivable the Obligor of which is the state and, to the
extent provided by law, the United States, acting through the
state Medicaid agency, and which arises out of charges properly
reimbursable to the Seller under Medicaid.
"Mellon Bank" shall mean Mellon Bank, N.A., a national
banking association.
"Moody's" shall mean Moody's Investors Service, Inc.
"Net Investment" shall mean (a) on the Closing Date, an
amount equal to the Purchase Price (not including the Deferred
Purchase Price, if any) paid for the Participation Interest on
the Closing Date, and (b) on any other day, an amount equal to
the sum of (i) the amount calculated pursuant to (a) above, plus
(ii) amounts paid to the Seller pursuant to Section 5.01 hereof
since the Closing Date as an increase in the Net Investment, less
(iii) all Collections and other amounts paid to the Buyer and not
reinvested (which shall not include any amounts paid to the Buyer
as Settlement Period Amount or fees) pursuant to
Sections 2.03(b), 5.01, 5.03(d), 5.03(e) or 5.04 hereof since the
Closing Date. In the event that any amount received by the Buyer
constituting any portion of Collections is rescinded or must
otherwise be returned or restored for any reason to any Person,
the Net Investment shall be increased by the amount of
Collections so rescinded, returned or restored.
"Non-Medicaid Receivables" shall mean, Purchased
Receivables, other than Medicaid Receivables, together with any
and all rights to receive payments due thereon, and all proceeds
thereof in any way derived, whether directly or indirectly.
"Notice of Assignment" shall mean each notice of
assignment delivered by or on behalf of the Seller to any insurer
or third party intermediary that is an Obligor in respect of the
Receivables, which notice of assignment shall notify such Obligor
of the Buyer's Participation Interest in the Receivables and
request such Obligor's acknowledgment thereof and consent
thereto.
"Notification Obligor" shall have the meaning assigned
to such term in Section 8.02(e) hereof.
"Obligor" shall mean, for any Receivable, each and every
Person under a Contract who is obligated to make payments to the
Seller on such Contract as a result of a purchase of goods or
services, whether or not such goods or services were provided to
such Person.
"Office" shall mean, when used in connection with the
Buyer, its office located at 225 Liberty Street - 8th Floor, New
York, New York 10080, or when used in connection with the Seller,
its office located at 8333 Bryan Dairy Road, Largo, Florida
34647, or at such other office or offices of the Buyer or the
Seller or branch, subsidiary or Affiliate of either thereof as
may be designated in writing from time to time by the Buyer to
the Seller or the Seller to the Buyer, as appropriate.
"Official Body" shall mean any government or political
subdivision or any agency, authority, bureau, central bank,
commission, department or instrumentality of either, or any
court, tribunal, grand jury or arbitrator, in each case whether
foreign or domestic.
"Paid" shall mean Paid Prescription, a pharmacy benefit
company headquartered in Montvale, New Jersey.
"Participation Interest" shall mean, at any time, an
undivided percentage ownership interest equal to the Buyer's
Allocation at such time in all then outstanding Receivables
included in the Receivables Pool, including, without limitation,
all Collections, and all collateral security, insurance policies,
letters of credit and surety bonds given on behalf of Obligors to
secure or support payment of such Receivables, and any proceeds
of any of the foregoing.
"PCS" shall mean Pharmaceutical Card System (currently
known as PCS Health System), a pharmacy benefit company
headquartered in Scottsdale, Arizona.
"Permitted Lockbox" shall mean a post office box
maintained by the Permitted Lockbox Bank for the purpose of
receiving payments made by Obligors.
"Permitted Lockbox Bank" shall mean (i) NationsBank of
Florida, N.A. and (ii) any commercial bank at which a Lockbox
Account or a Medicaid Collection Account is maintained, the
short-term unsecured debt obligations of which are rated at least
A-1 by S&P, at least P-1 by Moody's and, if rated by Duff, at
least D-1 by Duff, appointed from time to time by the Seller and
approved by the Buyer.
"Person" shall mean an individual, corporation,
partnership (general or limited), trust, business trust,
unincorporated association, joint venture, joint-stock company,
Official Body, or any other entity of whatever nature.
"Potential Termination Event" shall mean any event or
condition which, with the giving of notice, the passage of time
or both, would constitute a Termination Event.
"Program Fee" shall mean the rate per annum set forth in
a separate letter agreement between the Seller and the Buyer.
"Purchase Availability Amount" shall mean, as of any
date, an amount equal to the excess, if any, of (i) the Maximum
Net Investment as of such date over (ii) the Net Investment as of
such date.
"Purchase Availability Fee" shall mean the fee set forth
in a separate letter agreement between the Seller and the Buyer.
"Purchase Documents" shall mean this Agreement, the
Certificate of Participation and such other agreements, documents
and instruments entered into and delivered by the Seller in
connection with the transactions contemplated by this Agreement.
"Purchase Notice" shall mean each notice delivered
pursuant to Section 4.03(c) hereof, in such form and with such
detail as the Buyer may require from time to time.
"Purchase Obligation" shall have the meaning ascribed to
such term in Section 2.01(a) hereof.
"Purchase Price" shall mean, with respect to the
purchase of the Participation Interest, the amount of cash
consideration set forth on the Purchase Notice or otherwise paid
by the Buyer for the Participation Interest on the Closing Date.
"Purchased Receivable" shall mean a Receivable included
in the Receivables Pool in which the Buyer has purchased and is
maintaining the Participation Interest pursuant to the terms of
this Agreement.
"Rate of Collections" shall mean, for any Accounting
Period, a fraction, expressed as a percentage, the numerator of
which is equal to the total Collections in respect of all
Receivables (including deemed Collections to the extent actually
received by the Servicer pursuant to Section 5.07 hereof) during
such Accounting Period, and the denominator of which is equal to
the aggregate Account Balances of all Receivables on the last day
of the immediately preceding Accounting Period.
"Receivable" shall mean, with respect to any Contract,
all receivables, contract rights, general intangibles, accounts,
chattel paper, amounts due and to become due to the Seller
arising under such Contract (including but not limited to finance
charges accrued with respect to such amounts and fees), and all
other rights, powers and privileges of the Seller arising
thereunder or related thereto and in the merchandise and
contracts relating thereto, assertable against any Person
whatsoever, all security interests, guaranties and property
securing or supporting payment thereof, all Records relating
thereto and all proceeds and products of any of the foregoing.
"Receivables Pool" shall mean, at any time, the group of
Purchased Receivables then outstanding which have, on the Closing
Date, been identified by the Seller as constituting a pool and
each additional Receivable thereafter added to such pool.
"Records" shall mean correspondence, memoranda, computer
programs, tapes, discs, papers, books or other documents or
transcribed information of any type whether expressed in ordinary
or machine readable language.
"Reference Rate" shall mean the rate of interest
established by Mellon Bank in Pittsburgh, Pennsylvania from time
to time as its reference rate; any change in the reference rate
shall become effective as of the opening of business when such
change occurs. The "Reference Rate" is not intended to be the
lowest rate of interest charged by Mellon Bank in connection with
extensions of credit to debtors.
"Referral Agent" shall mean Mellon Bank, together with
its successors or assigns.
"Reinvestment" shall mean the purchase by the Buyer and
the sale by the Seller of additional undivided percentage
ownership interests in each and every Purchased Receivable
utilizing the proceeds of Collections that were allocated to the
Buyer for such purpose pursuant to Section 5.03(a) hereof.
"Remainder" shall have the meaning assigned to such term
in Section 5.03(a) hereof.
"Responsible Officer" shall mean the chief executive
officer, chief financial officer, treasurer, controller or the
vice president/legal affairs of the Seller.
"S&P" shall mean Standard & Poor's Ratings Group.
"Security Agreement" shall mean the Security Agreement
dated as of June 14, 1993, as amended and restated as of August ,
3, 1994, among Eckerd Corporation, the "Guarantors" party thereto
and Chemical Bank, as "Collateral Agent", as the same may from
time to time be amended, supplemented or otherwise modified and
in effect.
"Seller Fiscal Year" shall mean the fiscal year, as used
for accounting purposes, of the Seller.
"Seller's Normal Credit Policies" shall mean the normal
credit review policies and procedures established by the Seller
(whether or not formally established by the Seller) in approving
Obligors for credit and relating to the collection of
Receivables, which policies and procedures have been approved by
the Buyer.
"Servicer" shall mean the Seller, or any Person other
than the Seller or its Affiliates which, upon the termination of
the Seller as Servicer, succeeds to the functions performed by
the Seller as the servicer of the Purchased Receivables (other
than with respect to the Medicaid Receivables) pursuant to a
Complete Servicing Transfer and a Servicing Agreement.
"Servicer's Compensation" shall have the meaning
ascribed to such term in Section 6.06(e) hereof.
"Servicer's Compensation Reserve" shall mean, with
respect to any Settlement Period, the product of (i) the
Servicer's Compensation with respect to the immediately preceding
Settlement Period and (ii) two.
"Servicing Agreement" shall mean any agreement between
the Buyer and any Person, other than the Seller or its
Affiliates, which contains provisions concerning the servicing of
the Purchased Receivables (other than the servicing of the
Medicaid Receivables) substantially similar to the provisions
contained herein, including Sections 5.03, 5.04, 5.06, 6.01,
6.02, 6.04, 6.06 and 6.07 hereof, pursuant to which such Person
performs servicing functions in respect of the Purchased
Receivables (other than with respect to the Medicaid
Receivables), and all agreements, instruments and documents
attached thereto or delivered in connection therewith, as any of
the same may from time to time be amended, supplemented or
otherwise modified and in effect.
"Settlement Date" shall mean the last day of each
Settlement Period, which shall be the 20th calendar day (or if
such 20th calendar day is not a Business Day, the next succeeding
Business Day) after the last day of the Accounting Period most
recently completed.
"Settlement Period" shall mean (a) the period from and
including the Closing Date to but excluding the first Settlement
Date, and (b) thereafter, the period from and including the
Settlement Date of the immediately preceding Settlement Period to
but excluding the next Settlement Date; PROVIDED, HOWEVER, that
any Settlement Period which would otherwise end on a day which is
after the Expiration Date shall end on such Expiration Date.
"Settlement Period Amount" shall mean, with respect to
any Settlement Period, an amount equal to the sum of (i) the Cost
of Funds for such Settlement Period and (ii) the product of
(a) the Program Fee, (b) the Net Investment at the close of
business on the first day of such Settlement Period, and (c) a
fraction the numerator of which is the actual number of days in
such Settlement Period and the denominator of which is 360.
"Settlement Period Reserve" shall mean, with respect to
any Settlement Period, the product of (i) the Settlement Period
Amount with respect to the immediately preceding Settlement
Period and (ii) two.
"Settlement Statement" shall mean a statement,
substantially in the form of Exhibit B hereto, which, among other
things, will identify any and all Receivables included in the
Receivables Pool as of the last day of the Accounting Period most
recently completed, duly completed and executed by a Responsible
Officer of the Seller and delivered to the Buyer pursuant to
Section 5.01 hereof.
"Social Security Act" shall mean the Social Security Act
of 1935, 42 U.S.C. Sections 401 et seq., as the same may from
time to time be amended, supplemented or otherwise modified and
in effect.
"Surety Bond" shall mean the surety bond issued by the
Surety Bond Provider under the Insurance Agreement.
"Surety Bond Provider" shall mean Capital Markets
Assurance Corporation, as the issuer of the Surety Bond under the
Insurance Agreement.
"Termination Event" shall have the meaning ascribed to
such term in Section 10.01 hereof.
"Transaction Costs" shall have the meaning ascribed to
such term in Section 11.01 hereof.
"TRIFCO Security Agreement" shall mean the Amended and
Restated Security Agreement dated as of October 8, 1993 among the
Buyer, the Surety Bond Provider and the Collateral Agent, and
consented and agreed to by the Agent and the Depositary, as the
same has been amended and may from time to time hereafter be
amended, supplemented or otherwise modified and in effect.
"UCC" shall have the meaning ascribed to such term in
Section 1.02 hereof.
1.02. INTERPRETATION AND CONSTRUCTION. Unless the
context of this Agreement otherwise clearly requires, references
to the plural include the singular, the singular the plural and
the part the whole. References in this Agreement to
"determination" by the Buyer shall be conclusive absent manifest
error and include good faith estimates by the Buyer (in the case
of quantitative determinations) and good faith beliefs by the
Buyer (in the case of qualitative determinations). The words
"hereof", "herein", "hereunder" and similar terms in this
Agreement refer to this Agreement as a whole and not to any
particular provision of this Agreement. The section and other
headings contained in this Agreement are for reference purposes
only and shall not control or affect the construction of this
Agreement or the interpretation hereof in any respect. Section,
subsection and appendix references are to this Agreement unless
otherwise specified. As used in this Agreement, the masculine,
feminine or neuter gender shall each be deemed to include the
others whenever the context so indicates. Terms not otherwise
defined herein which are defined in the Uniform Commercial Code
as in effect in the State of New York (the "UCC") on the date
hereof shall have the respective meanings ascribed to such terms
therein unless the context otherwise clearly requires. This
Agreement shall be construed as a whole and in accordance with
its fair meaning.
ARTICLE II
AGREEMENT TO PURCHASE AND SELL
2.01. PURCHASE LIMITS. Subject to the terms and
conditions hereof, the Seller may at its option sell to the
Buyer, and the Buyer agrees to purchase from the Seller (such
agreement being referred to herein as the "Purchase Obligation"),
at any time and from time to time on and after the date hereof
and to but excluding the Expiration Date, undivided percentage
ownership interests in the Receivables Pool by purchasing the
Participation Interest. Subject to the terms and conditions
hereof, the Buyer shall also (i) make Reinvestments by permitting
the Servicer to cause Collections allocated to the Buyer to be
applied to the purchase of additional undivided percentage
ownership interests in the Receivables Pool, and (ii) increase
its Net Investment in the Participation Interest on any
Settlement Date at the request of the Seller (without regard to a
minimum amount). The Buyer shall have no obligation to purchase
the Participation Interest on the Closing Date, or to increase
its Net Investment on any Settlement Date, or to permit a
Reinvestment to be made on any day, to the extent that the amount
of such purchase or increase or Reinvestment shall exceed the
Purchase Availability Amount, or shall cause the Buyer's
Allocation (after giving effect to such purchase or increase or
Reinvestment) to exceed 100%. The Buyer shall not be obligated
to increase the Maximum Net Investment. The Buyer shall not
purchase the Participation Interest or increase the Net
Investment on any Settlement Date if the Buyer cannot issue its
commercial paper notes or short-term promissory notes or
otherwise borrow in order to fund the Purchase Price of the
Participation Interest or such increase in the Net Investment.
The Buyer shall not make any such purchase or any Reinvestment or
increase its Net Investment on any Settlement Date on or after
the earlier to occur of (i) the Expiration Date, and (ii) the
reduction of the Maximum Net Investment to zero pursuant to
Section 2.03 hereof.
2.02. AMOUNT OF PURCHASES. The sale of the
Participation Interest by the Seller to the Buyer on the Closing
Date shall be for a minimum Purchase Price of $10,000,000.
2.03. REDUCTION OF THE MAXIMUM NET INVESTMENT AND
NET INVESTMENT; TERMINATION OF THE AGREEMENT.
(a) REDUCTION OF MAXIMUM NET INVESTMENT. The Maximum
Net Investment shall be reduced to zero (i) on the Expiration
Date, or (ii) in accordance with Section 10.02 hereof. In
addition, upon written notice from the Seller to the Buyer, the
Seller may reduce in whole or in part the Maximum Net Investment,
effective as of the next Settlement Date on or after the
thirtieth (30th) day following the date on which such notice is
given; PROVIDED, HOWEVER, that (i) any partial reduction must be
in an amount equal to $5,000,000 or any greater amount which is
an integral multiple of $1,000,000, and (ii) if the Maximum Net
Investment at the time of such notice is less than or equal to
$15,000,000, the Seller may only elect to reduce the amount of
the Maximum Net Investment to zero. Notwithstanding any other
provision of this Agreement, the Maximum Net Investment may not
at any time be reduced below the amount of the Net Investment at
such time.
(b) REDUCTION OF THE NET INVESTMENT. If at any time
the Seller shall wish to cause the reduction of the Net
Investment (but not to commence the permanent liquidation of the
Participation Interest), the Seller may do so upon ten (10) days'
prior written notice thereof to the Buyer (such notice to include
the amount of such proposed reduction and the proposed date on
which such reduction will commence, which shall not be earlier
than ten (10) days prior to the next Settlement Date). On the
proposed date of commencement of such reduction and on each day
thereafter, the Servicer shall refrain from making Reinvestments
of Collections until the amount of such Collections not so
reinvested shall equal the desired amount of reduction. The
Servicer shall hold such unreinvested Collections in trust for
the benefit of the Buyer, for payment to the Buyer on the
Settlement Date for the Settlement Period in which such
Collections are accumulated, and the Net Investment shall be
reduced by the amount actually paid to the Buyer. The Seller
shall use reasonable efforts to attempt to choose a reduction
amount, and the date of the commencement thereof, so that such
reduction shall commence and conclude in the same Settlement
Period. The Seller shall pay to the Buyer an amount equal to any
loss, cost or expense incurred by the Buyer as the result of the
repayment of the Net Investment prior to the maturity date of any
(x) loans made to the Buyer by third parties or (y) commercial
paper notes or short-term promissory notes issued by the Buyer,
in each case for the purpose of maintaining the Participation
Interest.
(c) TERMINATION OF THE AGREEMENT. This Agreement shall
terminate at the later to occur of (i) the Expiration Date or
(ii) when the Net Investment equals zero and no further purchases
are to be made by the Buyer hereunder; PROVIDED, HOWEVER, that
the covenants, representations, warranties and indemnities of the
Seller to the Buyer contained herein or made pursuant hereto
shall survive such termination. Upon such termination, the Buyer
shall convey to the Seller, without recourse, its Participation
Interest in all Purchased Receivables and shall deliver to the
Seller all instruments and documents relating thereto. Upon such
reconveyance the Deferred Purchase Price shall be deemed paid in
full.
2.04. FEES PAYABLE TO THE BUYER.
(a) PURCHASE AVAILABILITY FEE. The Seller agrees to
pay to the Buyer, in consideration for the Purchase Obligation
hereunder, from and including the date of execution of this
Agreement to but excluding the Expiration Date, the Purchase
Availability Fee in the amount set forth in a separate letter
agreement between the Seller and the Buyer. The accrued Purchase
Availability Fee shall be due and payable in accordance with
Sections 5.03 and 5.04 hereof until the earlier of the Expiration
Date and the date on which the Maximum Net Investment is reduced
to zero pursuant to Section 2.03(a) hereof. To the extent the
Purchase Availability Fee is not paid from Collections in
accordance with Section 5.03 or 5.04 hereof, the Purchase
Availability Fee shall be an absolute and unconditional
obligation of the Seller.
(b) FEES NON-REFUNDABLE. The fees to be paid to the
Buyer pursuant to this Section 2.04 are non-refundable and shall
not be refunded for any reason whatsoever, including, without
limitation, the later reduction or termination of the Maximum Net
Investment in whole or in part in accordance with the provisions
of this Agreement.
2.05. FEES PAYABLE TO THE REFERRAL AGENT. The Seller
shall on the date of execution of this Agreement pay to the
Referral Agent for its own account an arrangement fee in the
amount agreed to between the Seller and the Referral Agent.
ARTICLE III
BUYER'S ALLOCATION
3.01. BUYER'S ALLOCATION. The Buyer's Allocation on
any day of determination shall be a percentage, not in excess of
100%, equal to the quotient of (i) the Investment, divided by
(ii) the positive result of (a) the aggregate Account Balances of
all Eligible Receivables included in the Receivables Pool on the
date of determination before giving effect to Collections on such
date, less (b) the sum, without duplication, of (1) the aggregate
amount by which the Account Balance of Eligible Receivables of
each Obligor (calculated prior to any adjustment for unapplied
cash received from such Obligor in the case of an Obligor whose
Receivables are outstanding under a Contract with PCS) exceeds
the Concentration Limit for such Obligor and (2) the aggregate
amount by which the Account Balance of Eligible Receivables owing
under all Contracts with PCS exceeds (A) eighteen percent (18%)
of the aggregate Account Balance of the Eligible Receivables in
the Receivables Pool outstanding as of the last day of the most
recently completed Accounting Period so long as PCS has, or is a
wholly-owned subsidiary of an entity which has, short-term
ratings of at least A-1 and P-1 from S&P and Moody's respectively
or (B) six percent (6%) of the aggregate Account Balance of the
Eligible Receivables in the Receivables Pool outstanding as of
the last day of the most recently completed Accounting Period if
clause (A) is not applicable.
3.02. FREQUENCY OF COMPUTATION OF THE BUYER'S
ALLOCATION. The Buyer's Allocation shall be initially computed
as of the opening of business of the Servicer on the Closing
Date. Thereafter, until the Net Investment shall be reduced to
zero, the Buyer's Allocation shall be automatically recomputed as
of the close of business of the Servicer on each Business Day,
and the Buyer's Allocation shall constitute the percentage
ownership interest of the Buyer in the Receivables Pool on such
date; PROVIDED, HOWEVER, that on and after a Liquidation Day and
during the continuance of a Liquidation Period, the Buyer's
Allocation shall be equal to the greater of (i) the Buyer's
Allocation as computed on the first Business Day preceding the
occurrence of such Liquidation Day, and (ii) the Buyer's
Allocation computed on each Business Day after the occurrence of
such Liquidation Day. The Buyer's Allocation shall be reduced to
zero at such time as the Net Investment shall be reduced to zero,
the Buyer shall have received all amounts in respect of accrued
and unpaid Settlement Period Amounts and all other amounts
payable to it pursuant to this Agreement, and the Servicer,
provided the Seller is not the Servicer, shall have received the
accrued Servicer's Compensation.
ARTICLE IV
CLOSING PROCEDURES
4.01. PURCHASE AND SALE PROCEDURES.
(a) GENERAL. The sale of the Participation Interest
hereunder shall, with respect to the Receivables Pool, transfer
ownership to the Buyer of an undivided percentage ownership
interest in each Receivable in the Receivables Pool, effective
(i) as of the Closing Date, (ii) as of any Settlement Date on
which the Net Investment therein is increased or (iii) as of the
date of any Reinvestment thereafter, as the case may be.
(b) INDEMNITY FOR FAILURE TO CLOSE. If the sale of the
Participation Interest fails to occur on the Closing Date as
specified in a Purchase Notice delivered pursuant to
Section 4.03(c) hereof and agreed to by the Buyer pursuant to
Section 4.04 hereof for any reason, or if any increase in the Net
Investment reflected on any Settlement Statement delivered by the
Seller to the Buyer fails to occur on the Settlement Date related
to such Settlement Statement for any reason, the Seller shall
reimburse the Buyer on demand for any loss, cost or expense
(including loss of margin) incurred by the Buyer with respect to
this Agreement, its obligations hereunder or its funding of the
proposed Purchase Price or Net Investment increase (including,
without limitation, any loss, cost or expense in obtaining,
liquidating or employing deposits as loans from third parties or
the loss, cost or expense of issuing its commercial paper notes
or short-term promissory notes in order to fund such Purchase
Price or Net Investment increase) until the earlier of (A) the
Closing Date as specified in a subsequent Purchase Notice
delivered pursuant to Section 4.03(a) hereof and agreed to by the
Buyer pursuant to Section 4.04 hereof and (B) the date on which
(i) the Buyer redeploys any funds committed to fund such Purchase
Price or Net Investment increase at a rate of return greater than
or equal to the Cost of Funds, or (ii) such commercial paper
notes or short-term promissory notes become due and payable, as
the case may be. The Buyer shall notify the Seller of the amount
determined by the Buyer (which determination shall be conclusive
and binding absent manifest error) to be necessary to compensate
the Buyer for such loss, cost or expense. Such amount shall be
due and payable by the Seller to the Buyer ten (10) Business Days
after such notice is given.
(c) The Buyer's Participation Interest shall be
evidenced by a Certificate of Participation, and each increase or
decrease in the Net Investment shall be evidenced by an entry on
the grid annexed thereto.
4.02. CONDITIONS PRECEDENT TO THE FIRST PURCHASE. The
obligation of the Buyer to purchase the Participation Interest
from the Seller on the Closing Date shall be subject to the
satisfaction of the conditions set forth in Section 4.03 hereof
and the following further conditions, unless waived by the Buyer:
(a) CORPORATE STANDING. The Buyer shall have received
from the Seller (i) a certificate, dated a recent date relative
to the Closing Date as determined by the Buyer, of the Secretary
of State or other similar official as to its good standing under
the Laws of its jurisdiction of incorporation, and
(ii) certificates, dated a recent date relative to the Closing
Date as determined by the Buyer, of the Secretary of State or
other similar official of each jurisdiction in which it conducts
business or owns substantial properties and where the failure to
qualify as a foreign corporation would have a material adverse
effect on its business, operations, properties or financial
condition, as to its good standing under the the Laws of such
jurisdictions.
(b) OPINIONS OF COUNSEL; ACCOUNTANTS' LETTER. The
Buyer shall have received from the Seller:
(i) a favorable written opinion of Shackleford,
Farrior, Stallings & Evans, P.A., counsel for the
Seller, dated the Closing Date, in substantially
the form attached hereto as Exhibit D, and of
Vinson & Elkins L.L.P, special Texas counsel to the
Seller, in form and substance satisfactory to the
Buyer; and
(ii) a letter from KPMG Peat Marwick, independent
certified public accountants for the Seller, dated
the Closing Date, in substantially the form
attached hereto as Exhibit E.
(c) FINANCING STATEMENTS, ETC. The Buyer shall have
received executed copies, and (where applicable) evidence
satisfactory to it of the completion, of all recordings,
registrations, filings and notices as may be necessary or, in the
opinion of the Buyer, desirable to evidence or perfect the
ownership interests to be acquired by the Buyer hereunder,
including, without limitation:
(i) (x) proper financing statements on Form UCC-1 to
be filed within 5 Business Days after the Closing
Date, naming Mellon Bank as the assignor and the
Seller as the assignee with respect to Mellon
Bank's existing participation interest in the
Receivables, proper financing statement amendments
on Form UCC-3 to be filed within 5 Business Days
after the Closing Date, reflecting the termination
of Mellon Bank's existing participation interest in
the Receivables, proper Financing Statements on
Form UCC-1 to be filed within 5 Business Days after
the Closing Date, naming Holdings as the assignor
and the Seller as the assignee with respect to
Holdings' interest, if any, in the Receivables, and
proper financing statements on Form UCC-1 to be
filed within 5 Business Days after the Closing
Date, naming the Seller as the assignor and the
Buyer as the assignee, (y) copies certified by a
Responsible Officer of the Seller of the forms of
all Notices of Assignment to be sent to
Notification Obligors within 5 Business Days after
the Closing Date and a list of the names and
addresses of all Notification Obligors and (z) such
other similar instruments or documents as may be
necessary or, in the opinion of the Buyer,
advisable under the Uniform Commercial Code or any
comparable law of all appropriate jurisdictions to
evidence or perfect the Buyer's Participation
Interest;
(ii) evidence of searches satisfactory to the Buyer
listing all effective financing statements which
name the Seller as debtor and/or assignor in the
jurisdictions in which filings are made pursuant to
subsection (i) above, together with copies of such
financing statements, none of which shall cover any
Purchased Receivables or the related Contracts; and
(iii) any other document required by the terms of the
related Contracts.
(d) CERTIFICATE OF PARTICIPATION. The Buyer shall have
received on or prior to the Closing Date a Certificate of
Participation executed on behalf of the Seller by a Responsible
Officer.
(e) LOCKBOX AGREEMENTS. The Buyer shall have received
on or prior to the Closing Date duly executed copies of Lockbox
Servicing Agreements with each of one or more Permitted Lockbox
Banks.
(f) ARRANGEMENT FEE. The Seller shall have paid to the
Referral Agent the arrangement fee required to be paid pursuant
to Section 2.05 in the amount set forth in a separate letter
agreement among the Seller, the Buyer and the Referral Agent.
(g) PURCHASE NOTICE. The Buyer shall have received
from the Seller, no less than four (4) Business Days prior to the
Closing Date, a notice in substantially the form of Exhibit J
(the "Purchase Notice"), together with such written documentation
of the procedures utilized and calculations made in connection
with the preparation of such Purchase Notice as the Buyer may
request.
(h) RESPONSIBLE OFFICER CERTIFICATE. The Buyer shall
have received a certificate of a Responsible Officer of the
Seller dated the Closing Date in substantially the form attached
hereto as Exhibit C, and as to such other matters incident to the
transactions contemplated by the Purchase Documents as the Buyer
may reasonably request, in form and substance satisfactory to the
Buyer.
(i) CONSENT OF THE CREDIT BANKS. The Buyer shall have
received evidence satisfactory to the Buyer that the "Required
Lenders" as such term is defined in the Credit Agreement dated as
of June 14, 1993, as amended and restated as of August 3, 1994,
among the Seller, the lenders named therein, Chemical Bank and
NationsBank of Florida, N.A, (the "Eckerd Credit Agreement") have
consented to this Agreement and the transactions contemplated
hereby.
(j) HOLDINGS CONSENT. The Buyer shall have received on
or prior to the Closing Date the Consent and Acknowledgment duly
executed by Holdings.
4.03. CONDITIONS PRECEDENT TO EACH PURCHASE AND
REINVESTMENT. The obligation of the Buyer to purchase the
Participation Interest from the Seller on the Closing Date, to
make a Reinvestment on any date or to increase the Net Investment
in the Receivables Pool on any Settlement Date is subject to the
performance by the Seller of its obligations hereunder on or
before the Closing Date, such date on which a Reinvestment will
be made or Settlement Date and to the satisfaction of the
following further conditions:
(a) DETAILS, PROCEEDINGS AND DOCUMENTS. All legal
details and proceedings in connection with the transactions
contemplated by the Purchase Documents or the Receivables to be
included in the Receivables Pool on the Closing Date or date of
such Reinvestment or Settlement Date shall be in form and
substance satisfactory to the Buyer, and the Buyer shall have
received all such originals or certified copies or other copies
of such documents and proceedings in connection with such
transactions, in form and substance satisfactory to the Buyer.
(b) REPRESENTATIONS AND WARRANTIES. On and as of such
date (i) the representations and warranties of the Seller
contained in Article VIII hereof shall be true and correct with
the same force and effect as though made on and as of the Closing
Date or date of Reinvestment or Settlement Date (except to the
extent that such representations and warranties relate solely to
an earlier date), (ii) the Seller shall be in compliance with the
covenants contained in Article IX hereof, and (iii) no
Termination Event or Potential Termination Event shall occur as a
result of the purchase and sale of the Participation Interest in
the Receivables Pool on the Closing Date or as a result of such
Reinvestment or such increase in the Net Investment, or shall
have occurred and be continuing or shall exist on the Closing
Date or date of Reinvestment or Settlement Date.
(c) ACKNOWLEDGMENT OF SERVICER. If there is a Servicer
other than the Seller or the Buyer, the Buyer shall have received
a copy of the Servicing Agreement together with an acknowledgment
from the Servicer affirming that the Servicing Agreement is in
full force and effect.
4.04. PURCHASE PRICE. Subject to the terms and
conditions hereof, and relying upon the representations and
warranties set forth herein, on the Closing Date and on each
Settlement Date on which the Net Investment is increased, the
Buyer shall purchase the Participation Interest in the
Receivables Pool described in the Purchase Notice delivered by
the Seller to the Buyer and agreed upon by the Buyer or increase
the Net Investment as indicated in the related Settlement
Statement, as the case may be. On the Closing Date or such
Settlement Date, as the case may be, the Buyer shall make
available to the Seller at its Office, or such other place as the
Seller has notified the Buyer, the Purchase Price therefor or
such increase in the Net Investment, as the case may be.
4.05. SALE WITHOUT RECOURSE.
(a) The sale of the Participation Interest hereunder
shall, subject to Section 5.06 hereof, be made without recourse
to the Seller with respect to any loss arising from Defaulted
Receivables, PROVIDED that nothing contained herein shall limit
the rights of the Buyer provided in Articles V, VI, VII and XI
hereof.
(b) This Agreement also constitutes a security
agreement under the UCC. The Seller hereby grants to the Buyer
on the terms and conditions of this Agreement a first priority
security interest in and against all of the Seller's right, title
and interest in and to the entire amount of the Purchased
Receivables and the proceeds thereof for the purposes of securing
the rights of the Buyer under this Agreement.
4.06. NON-ASSUMPTION BY THE BUYER OF OBLIGATIONS. No
obligation or liability of the Seller to any Obligor under any
Purchased Receivable or Contract shall be assumed by the Buyer
hereunder or under the Certificate of Participation, and any such
assumption is hereby expressly disclaimed. The Buyer shall be
indemnified by the Seller in accordance with Section 11.04 hereof
in respect of any losses, claims, damages, liabilities, costs or
expenses arising out of or incurred in connection with any
Obligor's assertion of such obligation or liability against the
Buyer.
4.07. CHARACTER OF RECEIVABLES ADDED TO RECEIVABLES
POOLS. All Receivables of the Seller shall be included in the
Receivables Pool immediately upon creation thereof. All
Receivables shall comprise only one Receivables Pool.
ARTICLE V
SETTLEMENTS; ADJUSTMENTS
5.01. SETTLEMENT STATEMENTS. The Seller shall submit
to the Buyer not less than two (2) Business Days' prior to each
Settlement Date, a Settlement Statement signed by a Responsible
Officer of the Seller dated such Settlement Date and including
information in respect of the Receivables Pool as of the last day
of the immediately preceding Accounting Period. The execution
and delivery of any Settlement Statement shall constitute a
representation and warranty by the Seller that the information
contained therein is true and correct as of the date thereof.
Such Settlement Statement shall be accompanied by such other
information as the Buyer may reasonably request. The Net
Investment shall be recalculated on each such Settlement
Statement. If the Net Investment is to be increased on such
Settlement Date, as reflected on such Settlement Statement, the
Buyer shall make available to the Seller at its Office, or such
other place as the Seller has notified to the Buyer, on such
Settlement Date, the amount of such increase in the Net
Investment, PROVIDED that such increase in the Net Investment
shall not cause the Net Investment to exceed the Maximum Net
Investment then in effect. If the Net Investment is to be
decreased on such Settlement Date, as reflected on such
Settlement Statement, the Seller shall make available to the
Buyer at the Buyer's Office, or such other place as the Buyer has
notified the Seller, on such Settlement Date, the amount of such
decrease in the Net Investment, unless otherwise paid to the
Buyer pursuant to Section 5.03(d).
5.02. RECEIVABLES STATUS. Upon ten (10) Business Days'
notice from the Buyer, the Seller will furnish or cause to be
furnished to the Buyer a written report, signed by a Responsible
Officer of the Seller, containing such information as the Buyer
may reasonably request (in such form as the Buyer may reasonably
request), which shall include, without limitation, (a) the
Account Balances of the related Contracts for all Purchased
Receivables, together with all Collections, Dilution Factors, and
other adjustments to such Receivables since the date of the last
written report furnished to the Buyer, and an aging of all
Contracts as of a date no later than the date of such notice; and
(b) an analysis and explanation of significant variances, if any,
between actual Collections of Purchased Receivables during such
Settlement Period and historical collections experience.
5.03. NON-LIQUIDATION SETTLEMENTS.
(a) DAILY SETTLEMENTS. On each day (other than a
Liquidation Day) with regard to each Settlement Period, the Buyer
shall be allocated an amount of Collections equal to the product
of (i) the Buyer's Allocation, expressed as a decimal, and
(ii) Collections, if any, with respect to the Purchased
Receivables on such day. The Servicer shall hold in trust for
the benefit of the Buyer out of such amount in respect of such
Buyer's Allocation an amount equal to the Settlement Period
Amount accrued through such day and not previously so held
(whether or not accrued during the current Settlement Period),
and (following such allocation) shall hold for its own account an
amount, if available, equal to the Servicer's Compensation
accrued through such day for the Participation Interest and not
previously so held, and (following such allocation) shall hold
for the account of the Buyer an amount, if available, equal to
the Purchase Availability Fee accrued through such day and not
previously so held. The remainder of such amount (the
"Remainder") in respect of such Buyer's Allocation shall, subject
to the final sentence of Section 5.03(d), be applied to reduce
the Net Investment. After such reduction, and subject to the
terms and conditions of this Agreement, the Servicer shall make a
Reinvestment in the Receivables Pool in the amount of the
Remainder, subject to Sections 2.01 and 4.03 hereof, and after
giving effect to any allocation of new Receivables to the
Receivables Pool, thereby increasing the Net Investment to the
extent of such Reinvestment. Any portion of the Remainder not
applied to a Reinvestment shall be held by the Servicer in
accordance with subsection (d) below. The Remainder, or any
portion thereof, which is applied to a Reinvestment, and any
amount of Collections which were not allocated to the Buyer
pursuant to the first sentence of this Section 5.03(a), shall be
remitted by the Servicer to the Seller. Notwithstanding the
foregoing, in the event that at the end of any Settlement Period
the amounts held in trust for the benefit of the Buyer pursuant
to the second sentence of this Section 5.03(a) and not previously
paid to the Buyer are less than the accrued and unpaid Settlement
Period Amount for such Settlement Period, then any amount which
had been deemed to be a Remainder during such Settlement Period
up to the amount of such deficit in the amount available to pay
the Settlement Period Amount) shall be retroactively deemed to
have been held in trust for the benefit of the Buyer pursuant to
the second sentence of this Section 5.03(a) and such amount
shall, if applied to a Reinvestment, be returned by the Seller to
the Servicer.
(b) SETTLEMENT DATES. On each Settlement Date (other
than a Settlement Date with respect to a Settlement Period during
which a Liquidation Day occurs), the Servicer shall pay to the
Buyer and the Servicer the amounts held in trust for the benefit
of the Buyer and the Servicer, respectively, pursuant to
subsection (a) above and not previously paid to the Buyer and the
Servicer, respectively.
(c) DEEMED COLLECTIONS. If on any day the Account
Balance of a Purchased Receivable is reduced as a result of any
Dilution Factor with respect to such Purchased Receivable, the
Seller shall be deemed to have received on such day a Collection
of Purchased Receivables in the amount of such reduction. If on
any day any of the representations and warranties of the Seller
set forth in Section 8.02(b), (c) or (d) is no longer true or was
not true when made with respect to such Purchased Receivable, or
if any of the representations and warranties of the Seller set
forth in Section 8.02(a) or (e) was not true when made, the
Seller shall be deemed to have received on such day a Collection
of such Purchased Receivable in full.
(d) UNREINVESTED COLLECTIONS. Collections that are
allocated to the Buyer in accordance with the first sentence of
Section 5.03(a) and which constitute the Remainder, but which may
not be immediately applied to Reinvestments for any reason, shall
be so reinvested as soon as practicable without violating any
provisions of this Agreement. To the extent and so long as such
Collections may not be so reinvested, the Servicer shall hold
such Collections in accordance with Section 5.07 hereof and shall
pay such Collections to the Buyer on the Settlement Date for the
Settlement Period in which such Collections are accumulated in
accordance with Section 5.03(b), and the Net Investment shall be
reduced in the amount paid to the Buyer only when in fact so
paid.
(e) MANDATORY PAYMENT. Notwithstanding anything to the
contrary contained herein, if, on any Settlement Date prior to
the occurrence of a Liquidation Day (after giving effect to all
payments required to be made by the Seller or the Servicer to the
Buyer pursuant to this Section 5.03 and any increase in the Net
Investment effected on such day), the Buyer's Allocation shall
exceed one hundred percent (100%), the Seller shall make a
payment of an amount in immediately available funds to the Buyer
as a reduction of the Net Investment such that, after giving
effect to such payment, the Buyer's Allocation is equal to or
less than one hundred percent (100%).
5.04. LIQUIDATION SETTLEMENTS. Notwithstanding the
provisions of Sections 5.03(a) and (b) hereof, on each
Liquidation Day with regard to each Settlement Period, the
Servicer shall set aside and deposit within two (2) Business Days
of receipt thereof into a bank account under the control of the
Collateral Agent, an amount equal to the product of (i) the
Buyer's Allocation, and (ii) Collections in respect of the
Purchased Receivables for such Liquidation Day. The Collections
allocated to the Buyer pursuant to this section shall be
allocated on a daily basis (i) first, to the payment of any
Settlement Period Amount accrued and owing to the Buyer,
(ii) second, subject to Section 6.06(e), to the payment of any
Servicer's Compensation accrued and owing to the Servicer, (iii)
third, to make payment in respect of the Net Investment,
(iv) fourth, to make payment in respect of any Purchase
Availability Fee accrued and owing to the Buyer, and (v) fifth,
to the payment of any other amount accrued and owing to the Buyer
under this Agreement. Any amount of such Collections which were
not allocated to the Buyer pursuant to the preceding sentence of
this Section 5.04 on such Liquidation Day shall be remitted by
the Servicer to the Seller.
5.05. ALLOCATION OF COLLECTIONS.
(a) Except as required by Law or the underlying
Contract, if any Obligor is obligated under one or more Purchased
Receivables and also under one or more Contracts not constituting
Purchased Receivables, then any payment received from or on
behalf of such Obligor shall be applied (a) to a specific
Contract if the Obligor designates such payment to be so applied,
or (b) to the Purchased Receivables in the order in which
payments are due thereunder if the application of such payment is
not so designated.
(b) Notwithstanding any other provision of this
Agreement, the Buyer is not entitled to receive any portion of
Collections once the Net Investment is reduced to zero and the
Seller has no remaining payment obligations to the Buyer under
this Agreement.
5.06. DEFERRED PURCHASE PRICE.
(a) On the Closing Date, the Deferred Purchase Price
shall be an amount equal to the sum of (i) the Credit Loss
Reserve anticipated by the Buyer for the initial Settlement
Period, plus (ii) the Settlement Period Reserve anticipated by
the Buyer for the initial Settlement Period, plus (iii) the
Servicer's Compensation Reserve anticipated by the Buyer for the
initial Settlement Period.
(b) In each Settlement Statement, the Servicer shall
calculate the Deferred Purchase Price which shall be an amount
equal to the sum of (i) the Credit Loss Reserve for the related
Settlement Period, plus (ii) the Settlement Period Reserve for
such Settlement Period, plus (iii) the Servicer's Compensation
Reserve for such Settlement Period.
5.07. TREATMENT OF COLLECTIONS AND DEEMED COLLECTIONS.
Any Collections deemed to be received pursuant to this Agreement
shall be paid by the Seller to the Servicer in same day funds on
the date of such deemed receipt. The Servicer shall hold or
distribute all Collections deemed received pursuant to
Sections 5.03 and 6.04 hereof to the same extent as if such
Collections had actually been received. All Collections actually
received by the Seller on any Liquidation Day which are not
directly received in a Permitted Lockbox shall be transferred to
a Lockbox Account (in the case of Non-Medicaid Receivables) or a
Medicaid Collection Account (in the case of Medicaid Receivables)
not later than two Business Days after such receipt. So long as
the Servicer shall hold any Collections or deemed Collections
required to be paid to the Buyer, it shall hold such Collections
in trust and separate and apart from its own funds and shall
clearly mark its records to reflect such trust.
ARTICLE VI
PROTECTION OF THE BUYER;
ADMINISTRATION AND COLLECTIONS
6.01. MAINTENANCE OF INFORMATION AND COMPUTER RECORDS.
The Seller will, or will cause the Servicer to, hold in trust and
keep safely for the Buyer all evidence of the Buyer's right,
title and interest in the Receivables Pool. The Seller will, or
will cause the Servicer to, on or prior to the Closing Date, and
with respect to all Receivables that are added to the Receivables
Pool after the Closing Date, on each respective date such
Receivables are added, place an appropriate code or notation in
its Records in a manner mutually agreed upon by the Buyer and the
Seller to indicate those Receivables which are or which will be
included in the Receivables Pool.
6.02. PROTECTION OF THE INTERESTS OF THE BUYER.
(a) The Seller will, or will cause the Servicer to,
from time to time, do and perform any and all acts and execute
any and all documents (including, without limitation, the
execution, amendment or supplementation of any financing
statements, continuation statements, Certificates of
Participation and notices of Certificates of Participation
relating to the Participation Interest for filing under the
provisions of the Uniform Commercial Code of any applicable
jurisdiction, the execution, amendment or supplementation of any
instrument of transfer, and the making of notations on the
Records of the Seller) as may be requested by the Buyer in order
to effect the purposes of this Agreement and the sale of the
Participation Interest hereunder and to perfect the Buyer's
right, title and interest in the Receivables Pool and all
Collections with respect thereto against all Persons whomsoever.
(b) To the fullest extent permitted by applicable Law,
the Seller hereby irrevocably grants to the Buyer and the
Referral Agent an irrevocable power of attorney, with full power
of substitution, coupled with an interest, to sign and file in
the name of the Seller, or in its own name, financing statements
and continuation statements and amendments thereto with respect
to the Buyer's Participation Interest in the Purchased
Receivables.
(c) At any reasonable time and from time to time at the
Buyer's reasonable request upon notice to the Seller or the
Servicer, the Seller or the Servicer, as the case may be, shall
permit such Person as the Buyer may designate to conduct audits
or visit and inspect any of the properties of the Seller or the
Servicer, as the case may be, to examine the Records, internal
controls and procedures maintained by the Seller or Servicer, as
the case may be, and take copies and extracts therefrom, and to
discuss the Seller's or the Servicer's, as the case may be,
affairs with its officers, employees and independent accountants.
The Seller or the Servicer, as the case may be, hereby authorizes
such officers, employees and independent accountants to discuss
with the Buyer the affairs of the Seller or the Servicer, as the
case may be. The Seller shall reimburse the Buyer for all
reasonable fees, costs and expenses incurred by or on behalf of
the Buyer in connection with the foregoing actions promptly upon
receipt of a written invoice therefor.
(d) The Buyer shall have the right to do all such acts
and things as it may deem necessary to protect its interests,
including, without limitation, confirmation and verification of
Purchased Receivables.
6.03. MAINTENANCE OF THE LOCATION OF WRITINGS AND
RECORDS. The Seller will at all times until completion of a
Complete Servicing Transfer keep or cause to be kept at its Chief
Executive Office or at an office of the Servicer designated in
advance to the Buyer, separate and apart from all other Records,
each writing or Record which evidences, and which is necessary or
desirable to establish or protect, including such books of
account and other Records as will enable the Buyer or its
designee to determine at any time the status of, the
Participation Interest of the Buyer in each Purchased Receivable;
PROVIDED that any Records may be stored at other locations to the
extent temporary location elsewhere is necessary in connection
with litigation, repossession, other collection activities or
other usual business purposes. The Seller shall at its own
expense prepare and maintain its Records in a format which is
mutually agreed upon by the Buyer and the Seller, which format
cannot be changed by the Seller without the prior written consent
of the Buyer.
6.04. INFORMATION. The Seller will, or will cause the
Servicer to, furnish to the Buyer such additional information
with respect to the Purchased Receivables (including but not
limited to the Seller's Normal Credit Policies, and the Seller's
credit policy manual, if any) as the Buyer may reasonably
request. The Seller will also furnish to the Buyer all
modifications, adjustments or supplements to the Seller's credit
policy manual as in effect on the date hereof; PROVIDED, HOWEVER,
that the Seller shall not, without the Buyer's prior written
consent, alter its credit, enforcement and other policies as in
effect from time to time if the effect of any alteration thereof
would be to materially adversely affect the collectibility of the
Purchased Receivables. If any such alteration made without the
Buyer's consent is later determined by the Buyer to have had a
material adverse effect on the collectibility of Purchased
Receivables, then the Seller shall promptly revise such policies
in order to prevent any such material adverse effect from
occurring thereafter, and the Purchased Receivables that, in the
sole judgment of the Buyer, became uncollectible due to such
change shall be deemed collected and shall be treated as deemed
Collections pursuant to Section 5.07 hereof.
6.05. PERFORMANCE OF UNDERTAKINGS UNDER THE PURCHASED
RECEIVABLES; INDEMNIFICATION. The Seller will at all times
observe and perform, or cause to be observed and performed, all
obligations and undertakings to the Obligors arising in
connection with each Purchased Receivable or related Contract and
will not take any action or cause any action to be taken to
impair the rights of the Buyer to its Participation Interest in
the Purchased Receivables. The Buyer shall be indemnified by the
Seller in accordance with Section 11.04 hereof in respect of any
losses, claims, damages, liabilities, costs or expenses incurred
or arising out of any action taken or caused to be taken by the
Seller which impairs the Buyer's rights to its Participation
Interest in the Purchased Receivables.
6.06. ADMINISTRATION AND COLLECTIONS;
INDEMNIFICATION.
(a) GENERAL. Until a Complete Servicing Transfer shall
have occurred, the Seller will be the Servicer and will be
responsible for the administration, servicing and collection of
the Purchased Receivables; PROVIDED, HOWEVER, that upon written
approval by the Buyer such duties may be delegated by the Seller
to any of its Affiliates or a third party (without impairment of
the Seller's obligations as Servicer). If and to the extent that
the Seller or any of its Affiliates or any such third party is
performing such functions, the Seller agrees to exercise or cause
such Affiliate or third party to exercise the same degree of
skill and care and apply the same standards, policies, procedures
and diligence that it applies to the performance of the same
functions with respect to accounts owned by the Seller.
(b) ADMINISTRATION. The Servicer shall, to the maximum
extent permitted by Law, have the power and authority, on behalf
of the Buyer as part of the Servicer's administrative and
servicing obligations hereunder, to take such action in respect
of any such Purchased Receivable as the Servicer may deem
advisable, including the resale of any repossessed, returned or
rejected goods; PROVIDED, HOWEVER, that the Servicer may not
under any circumstances compromise, rescind, cancel, adjust or
modify (including by extension of time for payment or granting
any discounts, allowances or credits) the Account Balance of the
related Contract for any Purchased Receivable, except in
accordance with the Seller's Normal Credit Policies or otherwise
with the Buyer's prior written consent.
(c) ENFORCEMENT PROCEEDINGS. In the event of a default
under any Purchased Receivable before a Termination Event, the
Servicer shall, at the Seller's expense, to the maximum extent
permitted by Law, have the power and authority, on behalf of the
Buyer as part of the Servicer's administrative and servicing
obligations hereunder, to take any action in respect of any such
Purchased Receivable as the Servicer may deem advisable;
PROVIDED, HOWEVER, that the Servicer or the Seller, as the case
may be, shall take no enforcement action (judicial or otherwise)
with respect to such Purchased Receivable, except in accordance
with the Seller's Normal Credit Policies or otherwise with the
written consent of the Buyer. The Servicer or the Seller, as the
case may be, will apply or will cause to be applied at all times
before a Termination Event the same standards and follow the same
procedures with respect to deciding to commence, and in
prosecuting, litigation on such Purchased Receivables as is
applied and followed with respect to like accounts not owned by
the Buyer. In no event shall the Servicer or the Seller, as the
case may be, be entitled to make or authorize any Person to make
the Buyer a party to any litigation without the Buyer's express
prior written consent.
(D) OBLIGATIONS OF THE BUYER. The Buyer may, but shall
have no obligation to, take any action or commence any proceeding
to realize upon any Purchased Receivable, other than with respect
to a Medicaid Receivable. At such time as the Servicer or the
Seller, as the case may be, has any obligation to pursue the
collection of Purchased Receivables and the Buyer possesses any
documents necessary therefor, the Buyer agrees to furnish such
documents to the Servicer or the Seller, as the case may be, to
the extent and for the period necessary for the Servicer or the
Seller, as the case may be, to comply with its obligations
hereunder.
(e) SERVICER'S COMPENSATION. The Servicer's
Compensation for performing its responsibility as the servicer
with respect to any Purchased Receivables on any day shall be
equal to the quotient of (A) the product of (1) one-half of one
percent (.50%), and (2) the Account Balances of Purchased
Receivables on such day, divided by (B) 360. Subject to
Section 6.07(a), the Servicer's Compensation shall be retained by
the Servicer in accordance with Section 5.03 hereof or paid to
the Servicer by the Buyer in the event Collections are applied in
accordance with Section 5.04 hereof; PROVIDED, HOWEVER, that if
the Seller or an Affiliate of the Seller is the Servicer, the
Servicer's Compensation shall not be paid on or after any day on
which a Termination Event shall have occurred and be continuing.
(f) INDEMNITY. The Buyer shall be indemnified in
accordance with Section 11.04 hereof in respect of any losses,
claims, damages, liabilities, costs or expenses incurred or
arising out of any action taken or caused to be taken by the
Servicer under this Section 6.06.
(g) COLLECTIONS. If, at any time, the Servicer
receives any Collections in respect of Non-Medicaid Receivables,
the Servicer shall hold such Collections for the benefit of the
Buyer and shall not commingle any such amounts with any other
funds or property held by the Servicer other than Collections in
respect of Non-Medicaid Receivables, and the Servicer shall cause
such Collections to be promptly deposited into a Lockbox
Account. If, at any time, the Servicer receives any Collections
in respect of Medicaid Receivables, the Servicer shall promptly
cause such Collections to be deposited into a Medicaid Collection
Account, and shall cause such Collections to be swept on a daily
basis into a Lockbox Account. Nothing in this Section 6.06(g)
shall affect the obligations of the Seller or the Servicer to
apply all Collections received by the Seller or the Servicer
pursuant to Section 5.03 or 5.04 hereof.
6.07. COMPLETE SERVICING TRANSFER.
(a) GENERAL. If at any time a Termination Event shall
have occurred and be continuing, the Buyer may by notice in
writing to the Seller, terminate the Seller's capacity as
Servicer in respect of the Purchased Receivables (other than with
respect to the Medicaid Receivables) (such termination referred
to herein as a "Complete Servicing Transfer"), notify Obligors of
its interest in the Purchased Receivables (other than Obligors in
respect of the Medicaid Receivables), take control of each
Permitted Lockbox in respect of Non-Medicaid Receivables and each
Lockbox Account, and exercise all other incidences of ownership
in the Purchased Receivables (other than with respect to the
Medicaid Receivables). After a Complete Servicing Transfer, the
Buyer may administer, service and collect the Purchased
Receivables (other than with respect to the Medicaid Receivables)
itself, and in such event may retain the Servicer's Compensation
for its own account, in any manner it sees fit, including,
without limitation, by compromise, extension or settlement of
such Purchased Receivables (other than with respect to the
Medicaid Receivables). Alternatively, the Buyer may engage
Mellon Bank or unaffiliated contractors to perform all or any
part of the administration, servicing and collection of the
Purchased Receivables (other than with respect to the Medicaid
Receivables) and pay to Mellon Bank or such contractors all or a
portion of the Servicer's Compensation in consideration thereof.
(b) TRANSITION. The Seller, within ten (10) Business
Days after receiving a notice pursuant to Section 6.07(a) hereof,
shall, at the Seller's own cost and expense, deliver to the Buyer
or its designated agent (i) a schedule of the Purchased
Receivables indicating as to each such Purchased Receivable
information as to the related Obligor, the Account Balance as of
such date of the related Contract and the location of the
evidences of such Purchased Receivable and related Contract,
together with such other information as the Buyer may reasonably
request and (ii) all evidence of such Purchased Receivables and
related Contracts and such other Records related thereto
(including, without limitation, true copies of any computer tapes
and data in computer memories) as the Buyer may reasonably deem
necessary to enable it to protect and enforce its rights to, or
its position as owner of, the Participation Interest therein.
After any such delivery, the Seller will not hold or retain any
executed counterpart or any document evidencing such Purchased
Receivables or related Contracts without clearly marking the same
to indicate conspicuously that the same is not the original and
that transfer thereof does not transfer any rights against the
related Obligor or any other Person.
(c) COLLECTIONS. If at any time there shall be a
Complete Servicing Transfer, the Seller will cause to be
transmitted and delivered directly to the Buyer or its designated
agent, for the Buyer's own account, forthwith upon receipt and in
the exact form received, all Collections (properly endorsed,
where required, so that such items may be collected by the Buyer)
on account of the Participation Interest in the Purchased
Receivables. All such Collections consisting of cash shall not
be commingled with other items or monies of the Seller for a
period longer than the lesser of (i) two (2) Business Days or
(ii) the number of days specified in Section 9-306(4)(d) of the
Uniform Commercial Code as in effect in the jurisdiction whose
Laws govern the rights of the Buyer in and to any such
Collections. If the Buyer or its designated agent receives items
or monies that are not payments on account of the Participation
Interest, such items or monies shall be delivered promptly to the
Seller after being so identified by the Buyer or its designated
agent. The Seller hereby irrevocably grants the Buyer or its
designated agent, if any, an irrevocable power of attorney, with
full power of substitution, coupled with an interest, to take in
the name of the Seller all steps with respect to any Purchased
Receivable (other than with respect to the Medicaid Receivables)
which the Buyer, in its sole discretion, may deem necessary or
advisable to negotiate or otherwise realize on any right of any
kind held or owned by the Seller or transmitted to or received by
the Buyer or its designated agent (whether or not from the Seller
or any Obligor) in connection with the Participation Interest in
the Purchased Receivables (other than in connection with the
Participation Interest in the Medicaid Receivables). The Buyer
will provide such periodic accountings and other information
related to disposition of funds so collected as the Seller may
reasonably request.
(d) COLLECTION AND ADMINISTRATION AT EXPENSE OF SELLER.
The Seller agrees that, in the event of a Complete Servicing
Transfer, it will reimburse the Buyer or the Referral Agent for
all reasonable out-of-pocket expenses (including, without
limitation, attorneys' and accountants' and other third parties'
fees and expenses, expenses incurred by the Referral Agent's
credit recovery group (or any successor), expenses of litigation
or preparation therefor, and expenses of audits and visits to the
offices of either Seller) incurred by the Buyer or the Referral
Agent in connection with and following the transfer of functions
following a Complete Servicing Transfer.
(e) PAYMENTS BY OBLIGORS. At any time, and from time
to time following a Complete Servicing Transfer, or if a
Termination Event or Potential Termination Event shall have
occurred and be continuing, the Seller shall permit such Persons
as the Buyer may designate to open and inspect all mail received
by the Seller at any of its offices, and to remove therefrom any
and all Collections or other correspondence from Obligors or the
Servicer in respect of Purchased Receivables. All Collections
received by the Buyer shall be applied in accordance with
Section 5.05 hereof. The Buyer shall be entitled to notify the
Obligors of Purchased Receivables (other than Obligors in respect
of Medicaid Receivables) to make payments directly to the Buyer
of amounts due thereunder at any time and from time to time
following the occurrence of (i) a Termination Event, (ii) a
Complete Servicing Transfer, or (iii) a violation by the Seller
of the provisions of Section 6.08 hereof.
6.08. LOCKBOXES. The Seller hereby agrees (i) to cause
all Collections which may be sent by mail as payment on account
of Purchased Receivables to be mailed by Obligors to Permitted
Lockboxes and to be promptly deposited into a Lockbox Account (in
the case of Non-Medicaid Receivables) or into a Medicaid
Collection Account (in the case of Medicaid Receivables); (ii) to
cause all Collections which are deposited in a Medicaid
Collection Account to be swept on a daily basis into a Lockbox
Account; (iii) to make or cause the Servicer to make the
necessary bookkeeping entries to reflect such Collections on the
Records pertaining to such Purchased Receivables; (iv) to apply
or cause the Servicer to apply all such Collections as provided
in this Agreement; and (v) not to amend or modify any term, with
respect to the disposition of such Collections or any other
amounts received by the Seller or the Servicer or any Permitted
Lockbox Bank, of this Agreement, any Lockbox Servicing Agreement
or any other agreement (including instructions with respect
thereto) without the prior written consent of the Buyer to such
amendment or modification. Notwithstanding any other provision
hereof, Collections in respect of Medicaid Receivables and Non-
Medicaid Receivables shall be payable into separate Permitted
Lockboxes.
ARTICLE VII
REPURCHASES BY SELLER
7.01. REPURCHASES. If on the last day of a Settlement
Period the Net Investment shall be equal to or less than five
percent (5%) of the greatest amount of the Net Investment at any
time prior to such last day, the Seller shall be entitled on such
last day to repurchase the Participation Interest from the Buyer
upon at least ten Business Days' prior written notice to the
Buyer.
7.02. REPURCHASE PRICE. In the case of a repurchase
pursuant to Section 7.01 hereof, the Seller shall, on the date of
such repurchase, pay to the Buyer, as the repurchase price
thereof, an amount equal to the sum of (i) the Net Investment as
of such date, plus (ii) the Settlement Period Amount accrued and
owing as of such date, plus (iii) if the Servicer is not the
Seller, the Servicer's Compensation accrued and owing as of such
date, plus (iv) all other amounts due to the Buyer hereunder,
plus (v) any loss, cost or expense incurred by the Buyer as the
result of the repayment of the Net Investment prior to the
maturity date of any (a) loans made to the Buyer by third parties
or (b) commercial paper notes or short-term promissory notes
issued by the Buyer, in each case for the purpose of maintaining
the Participation Interest.
7.03. REASSIGNMENT OF REPURCHASED RECEIVABLES. Upon
receipt of the purchase price of the Participation Interest
pursuant to Section 7.02 hereof, the Buyer shall reassign to the
Seller the Buyer's Participation Interest in such Purchased
Receivables, without recourse, representation or warranty (except
for the warranty that upon the reassignment to the Seller of the
Buyer's Participation Interest in such Purchased Receivables, no
Lien created by the Buyer will affect the Purchased Receivables),
by an assignment acceptable to the Buyer and the Seller.
7.04. OBLIGATIONS NOT AFFECTED. The obligations of the
Seller to the Buyer under this Article VII shall not be affected
by any invalidity, illegality or irregularity of any Purchased
Receivable, the related Contract or the sale thereof, except and
to the extent that any such invalidity, illegality or
irregularity is caused solely by the gross negligence or willful
misconduct of the Buyer.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
8.01. GENERAL REPRESENTATIONS AND WARRANTIES OF THE
SELLER. The Seller, in addition to its other representations and
warranties contained herein or made pursuant hereto, hereby
represents and warrants to the Buyer with respect to itself, on
and as of the date hereof and on and as of the Closing Date, each
Settlement Date and each date on which a Reinvestment is made,
that:
(a) ORGANIZATION AND QUALIFICATION. The Seller is a
corporation duly organized, validly existing and in good standing
under the Laws of its jurisdiction of incorporation. The Seller
is duly qualified to do business as a foreign corporation in good
standing in each jurisdiction in which the ownership of its
properties or the nature of its activities (including
transactions giving rise to Receivables), or both, requires it to
be so qualified or, if not so qualified, the failure to so
qualify would not have a material adverse effect on its business,
operations, properties or financial condition.
(b) AUTHORIZATION. The Seller has the corporate power
and authority to execute and deliver the Purchase Documents, to
make the sales provided for herein, and to perform its
obligations hereunder and thereunder.
(c) EXECUTION AND BINDING EFFECT. Each of the Purchase
Documents (except the Certificate of Participation) has been duly
and validly executed and delivered by the Seller and (assuming
the due and valid execution and delivery thereof by the Buyer),
constitutes a legal, valid and binding obligation of the Seller
enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency
or other similar Laws of general application relating to or
affecting the enforcement of creditors' rights or by general
principles of equity. When duly executed and delivered by the
Seller under the provisions hereof, the Certificate of
Participation will constitute a legal, valid and binding
assignment by the Seller enforceable in accordance with the terms
thereof and hereof, which will vest absolutely and
unconditionally in the Buyer a valid Participation Interest in
the Purchased Receivables purported to be assigned thereby,
subject to no Liens whatsoever. Upon the filing of the financing
statements and the delivery of the Notices of Assignment required
under Section 4.02(c)(i)(x) hereof, the Buyer's Participation
Interest will be perfected under Article Nine of the Uniform
Commercial Code and other applicable laws in all appropriate
jurisdictions, prior to and enforceable against all creditors of
and purchasers from the Seller and all other Persons whatsoever.
(d) AUTHORIZATIONS AND FILINGS. No authorization,
consent, approval, license, exemption or other action by, and no
registration, qualification, designation, declaration or filing
with, any Official Body is or will be necessary or, in the
opinion of the Seller, advisable in connection with the execution
and delivery of the Purchase Documents, the consummation of the
transactions herein or therein contemplated or the performance of
or the compliance with the terms and conditions hereof or
thereof, to ensure the legality, validity or enforceability
hereof or thereof, or to ensure that the Buyer will have its
Participation Interest in and to the Purchased Receivables
perfected and prior to all other Liens (including competing
ownership interests), other than (i) the filing of financing
statements on Form UCC-1 and financing statement amendments on
Form UCC-3 under the Uniform Commercial Code in the jurisdiction
of the Seller's Chief Executive Office, Delaware and Texas, and
(ii) the delivery of the Notices of Assignment to the appropriate
Obligors.
(e) ABSENCE OF CONFLICTS. Neither the execution and
delivery of the Purchase Documents, nor the consummation of the
transactions herein or therein contemplated, nor the performance
of or the compliance with the terms and conditions hereof or
thereof, will (i) violate any Law or (ii) conflict with or result
in a breach of or a default under (A) the articles or certificate
of incorporation or by-laws of the Seller, or (B) any agreement
or instrument, including, without limitation, any and all
indentures, debentures, loans or other agreements to which the
Seller is a party or by which it or any of its properties (now
owned or hereafter acquired) may be subject or bound which would
have a material adverse effect on the financial position,
business or operations of the Seller or result in rendering any
indebtedness evidenced thereby due and payable prior to its
maturity or result in the creation or imposition of any Lien
pursuant to the terms of any such instrument or agreement upon
any property (now owned or hereafter acquired) of the Seller.
(f) LOCATION OF CHIEF EXECUTIVE OFFICE, ETC. As of the
date hereof the Seller's Chief Executive Office is located at
8333 Bryan Dairy Road, Largo, Florida 34647. The Seller has only
the Affiliates and operates only under the trade names identified
in Exhibit F hereto, and has not changed its name, merged or
consolidated with any other corporation or been the subject of
any proceeding under Title 11, United States Code (Bankruptcy)
within the past ten (10) years, except as disclosed in Exhibit F
hereto.
(g) NO TERMINATION EVENT. No event has occurred and is
continuing and no condition exists which constitutes a
Termination Event or a Potential Termination Event.
(h) ACCURATE AND COMPLETE DISCLOSURE. No information,
whether written or oral, furnished by the Seller to the Buyer
pursuant to or in connection with this Agreement or any
transaction contemplated hereby is false or misleading in any
material respect as of the date as of which such information was
furnished (including by omission of material information
necessary to make such information not misleading).
(i) NO PROCEEDINGS. There are no proceedings or
investigations pending, or threatened, before any court, official
body, regulatory body, administrative agency, or other tribunal
or governmental instrumentality (A) asserting the invalidity of
the Purchase Documents, (B) seeking to prevent the consummation
of any of the transactions contemplated by the Purchase
Documents, or (C) seeking any determination or ruling that might
materially and adversely affect (i) the performance by the Seller
or the Servicer of its obligations under this Agreement, or
(ii) the validity or enforceability of the Purchase Documents or
the Contracts, or Receivables representing in the aggregate one
percent or more of the aggregate Account Balances of all
Receivables.
(j) BULK SALES ACT. No transaction contemplated hereby
requires compliance with any bulk sales act or similar law.
(k) FINANCIAL CONDITIONS. (x) The consolidated balance
sheets of the Seller and its consolidated subsidiaries as at
January 29, 1994 and the related statements of income and
shareholders' equity of the Seller and its consolidated
subsidiaries for the fiscal year then ended, certified by KPMG
Peat Marwick, independent accountants, copies of which have been
furnished to the Buyer, fairly present the consolidated financial
position of the Seller and its consolidated subsidiaries as at
such date and the consolidated results of the operations of the
Seller and its consolidated subsidiaries for the period ended on
such date, all in accordance with GAAP consistently applied, and
(y) since January 29, 1994, there has been no material adverse
change in any such condition, business, business prospects or
operations or in the Seller's ability to perform its obligations
under this Agreement, except as described in Exhibit G.
(l) LITIGATION. No injunction, decree or other
decision has been issued or made by any court, government or
agency or instrumentality thereof that prevents, and no threat by
any Person has been made to attempt to obtain any such decision
that would prevent, the Seller from conducting a significant part
of its business operations, and there is no litigation,
investigation or proceeding of the type referred to in
Section 9.01(j), except as described in Exhibit H.
(m) MARGIN REGULATIONS. The use of all funds acquired
by the Seller under this Agreement will not conflict with or
contravene any of Regulations G, T, U and X of the Board of
Governors of the Federal Reserve System, as the same may from
time to time be amended, supplemented or otherwise modified.
8.02. REPRESENTATIONS AND WARRANTIES OF THE SELLER WITH
RESPECT TO RECEIVABLES. By selling the Participation Interest to
the Buyer (including by Reinvestment and by any increase in the
Net Investment), the Seller represents and warrants to the Buyer
as of the date of each such sale (in addition to its other
representations and warranties contained herein or made pursuant
hereto) that:
(a) ACCOUNT BALANCES; PURCHASE NOTICE. The Account
Balances of the related Contracts for the Purchased Receivables
are the respective amounts therefor which will be set forth in
the Purchase Notice or Settlement Statement, as the case may be,
and all information set forth on such Purchase Notice or
Settlement Statement, as the case may be, is true and correct as
of the Closing Date or Settlement Date, respectively.
(b) ASSIGNMENT. The Certificate of Participation vests
in the Buyer all the right, title and interest of the Seller in
and to the Purchased Receivables (to the extent of the
Participation Interest), and constitutes a valid sale thereof,
enforceable against all creditors of and purchasers from the
Seller.
(c) NO LIENS. This Agreement constitutes a "Permitted
Receivables Purchase Agreement" as defined in the Eckerd Credit
Agreement as the same may from time to time be further amended,
supplemented or otherwise modified and in effect. Any Lien on
any Receivable created pursuant to the terms of the Security
Agreement shall cease when the Buyer acquires an undivided
percentage ownership interest in such Receivable (which
Receivable shall thereupon constitute a Purchased Receivable) in
accordance with the terms of this Agreement. Each Purchased
Receivable, together with the related Contract and all purchase
orders and other agreements related to such Purchased Receivable,
is and will be owned by the Seller free and clear of any Lien,
except the Lien created hereby and by the TRIFCO Security
Agreement, and when the Buyer acquires an undivided percentage
ownership interest in such Purchased Receivable it shall have
acquired an undivided percentage ownership interest to the extent
of the Participation Interest in such Purchased Receivable and in
the Collections with respect thereto free and clear of any Lien,
except the Lien created hereby and by the TRIFCO Security
Agreement. The Seller has not sold, pledged, assigned,
transferred or subjected to a Lien any of the Purchased
Receivables, other than the assignment of the Participation
Interest therein to the Buyer in accordance with the terms of
this Agreement.
(d) ELIGIBLE RECEIVABLES. Each Receivable included in
the Receivables Pool the Account Balance of which is reflected in
the computation of the Buyer's Allocation is an Eligible
Receivable.
(e) NOTICE AND CONSENT PROCEDURES. The Seller will
send or cause to be sent, within 5 Business Days after the
Closing Date, a Notice of Assignment to each insurer, health
maintenance organization or other similar third-party
intermediary that is an Obligor on a Non-Medicaid Receivable (any
such person, a "Notification Obligor") and will request that a
Confirmation be delivered to the Seller by such Notification
Obligor. A list of the Notification Obligors to whom such
Notices of Assignment will be sent is attached hereto as Exhibit
L. The Seller agrees to use its best efforts to ensure that the
Buyer promptly receives Confirmations in respect of all such
Notices of Assignment. The Buyer shall have the right to elect,
by notice in writing to the Seller, to instruct the Seller to
compute the Buyer's Allocation by excluding from the amount of
Eligible Receivables an amount equal to the amount of Eligible
Receivables owed by any Notification Obligor that has a written
contract or other written arrangement with the Seller which
prohibits assignment of any rights of the Seller under such
contract or arrangement without the consent of such Notification
Obligor which has not returned a Confirmation relating to the
Notice of Assignment received by it on or prior to the one
hundred twentieth day after the Closing Date.
(f) CONCENTRATION LIMIT. The Account Balances which
are reflected in the computation of the Buyer's Allocation do not
exceed the applicable Concentration Limit or the limit applicable
in respect of PCS under Section 3.01(ii)(b)(2).
ARTICLE IX
COVENANTS
9.01. AFFIRMATIVE COVENANTS OF THE SELLER. In addition
to its other covenants contained herein or made pursuant hereto,
the Seller covenants to the Buyer as follows:
(a) NOTICE OF TERMINATION EVENT. Promptly upon
becoming aware of any Termination Event or Potential Termination
Event, the Seller shall give the Buyer notice thereof, together
with a written statement of a Responsible Officer setting forth
the details thereof and any action with respect thereto taken or
contemplated to be taken by the Seller.
(b) NOTICE OF MATERIAL ADVERSE CHANGE. Promptly upon
becoming aware thereof, the Seller shall give the Buyer notice of
any material adverse change in the business, operations or
financial condition of the Seller which reasonably could affect
adversely the collectibility of the Purchased Receivables or the
ability to service such Purchased Receivables. In order to
verify compliance with this Section 9.01(b), the Seller shall
furnish the following to the Buyer:
(i) as soon as practicable and in any event within 45
days following the close of each fiscal quarter,
excluding the last fiscal quarter, of each fiscal
year of the Seller during the term of this
Agreement, an unaudited consolidated balance sheet
of the Seller as at the end of such quarter and
unaudited consolidated statements of income and
changes in financial position of the Seller for
such quarter and for the fiscal year through such
quarter, setting forth in comparative form the
corresponding figures for the corresponding quarter
of the preceding fiscal year, together with notes
thereto as are required to be included therein in
accordance with GAAP, all in reasonable detail and
certified by the principal financial officer of the
Seller, subject to adjustments of the type which
would occur as a result of a year-end audit, as
having been prepared in accordance with GAAP; and
(ii) as soon as practicable and in any event within 90
days after the close of each fiscal year of the
Seller during the term of this Agreement, a
consolidated balance sheet of the Seller as at the
close of such fiscal year and consolidated
statements of income and changes in financial
position of the Seller for such fiscal year,
setting forth in comparative form the corresponding
figures for the preceding fiscal year, all in
reasonable detail and certified (with respect to
the consolidated financial statements) by
independent certified public accountants of
recognized standing selected by the the Seller and
satisfactory to the Buyer, whose certificate or
opinion accompanying such financial statements
shall not contain any qualification, exception or
scope limitation not satisfactory to the Buyer.
(c) PRESERVATION OF CORPORATE EXISTENCE. The Seller
shall preserve and maintain its corporate existence, rights,
franchises and privileges in the jurisdiction of its
incorporation, and qualify and remain qualified in good standing
as a foreign corporation in each jurisdiction where the failure
to preserve and maintain such existence, rights, franchises,
privileges and qualification would materially adversely affect
(i) the interests of the Buyer hereunder or (ii) the ability of
the Seller (in its capacity as Seller or Servicer) to perform its
obligations hereunder.
(d) COMPLIANCE WITH LAWS. The Seller shall comply in
all material respects with all Laws applicable to it, its
business and properties, and the Purchased Receivables.
(e) ENFORCEABILITY OF OBLIGATIONS. The Seller shall
ensure that, with respect to each Purchased Receivable, the
obligation of any related Obligor to pay the unpaid balance of
such Purchased Receivable in accordance with the terms of the
related Contract remains legal, valid, binding and enforceable
against such Obligor, except as otherwise permitted by
Section 6.06(b) hereof.
(f) BOOKS AND RECORDS. The Seller shall maintain and
implement administrative and operating procedures (including,
without limitation, the ability to recreate Records evidencing
the Purchased Receivables in the event of the destruction of the
originals thereof), and keep and maintain all documents, books,
Records and other information reasonably necessary or advisable
for the collection of all Purchased Receivables (including,
without limitation, Records adequate to permit the identification
of all Collections and adjustments to each existing Purchased
Receivable) at its Chief Executive Office, except as provided in
Section 6.03 hereof.
(g) FULFILLMENT OF OBLIGATIONS. The Seller will duly
observe and perform, or cause to be observed or performed, all
obligations and undertakings on its part to be observed and
performed under or in connection with the Purchased Receivables,
including its obligations as initial Servicer, and will do
nothing to impair the rights, title and interest of the Buyer in
and to its Participation Interest in the Purchased Receivables.
(h) CUSTOMER LIST. The Seller shall at all times
maintain (or cause the Servicer to maintain) current lists (which
may be stored on magnetic tapes or disks) of all Obligors under
Contracts related to Purchased Receivables, including the name,
address, telephone number of each such Obligor, and the terminal
plan numbers associated with such Obligor. The Seller shall
deliver or cause to be delivered a copy of such list to the Buyer
as soon as practicable following the Buyer's request.
(I) COPIES OF REPORTS, FILINGS, OPINIONS, ETC.
(1) The Seller will furnish to the Buyer, as soon as
practicable after the issuance, sending or filing
thereof, copies of all press releases, proxy
statements, financial statements, reports and other
communications which the Seller sends to its
security holders or any nationally recognized
statistical rating agency, and copies of all
regular, periodic and special reports which the
Seller files with the Securities and Exchange
Commission or with any securities exchange or
commission.
(2) Together with each Settlement Statement, the Seller
shall cause the Servicer to prepare and forward to
the Buyer (i) a Third Party Activity and Aging
Analysis Accounting Period report in substantially
the form of Exhibit I hereto, relating to the
Receivables Pool, as of the close of business on
the last day of the most recently completed
Accounting Period and (ii) a listing by Obligor of
all Purchased Receivables together with an aging of
such Purchased Receivables as of the last day of
the most recently completed Accounting Period.
(3) The Seller shall furnish to the Buyer promptly
after the filing or receiving thereof, copies of
all reports and notices with respect to any
Reportable Event defined in Article IV of ERISA
which the Seller files under ERISA with the
Internal Revenue Service or the Pension Benefit
Guaranty Corporation or the Department of Labor, or
which the Seller receives therefrom.
(4) The Seller agrees that, on or before January 31,
1996, the Buyer shall cause a firm of nationally
recognized independent certified public accountants
(who may render other services to the Servicer or
the Seller) to furnish a report to the Buyer and
the Referral Agent to the effect that they have
applied certain procedures agreed upon with the
Servicer and Buyer and examined certain documents
and records relating to the servicing of the
Receivables under this Agreement and that, based
upon such agreed-upon procedures, nothing has come
to the attention of such accountants that caused
them to believe that the servicing (including,
without limitation, the allocation of the
Collections) has not been conducted in compliance
with the terms and conditions of Article V and
Section 6.08 of this Agreement, except for such
exceptions as they believe to be immaterial and
such other exceptions as shall be set forth in such
statement; and in addition, each report shall set
forth the agreed upon procedures performed.
(j) LITIGATION. As soon as possible, and in any event
within three (3) Business Days of the Seller's knowledge thereof,
the Seller shall give the Buyer notice of (i) any litigation,
investigation or proceeding which may exist at any time which
could have a material adverse effect on the business, operations,
property or financial condition of the Seller or impair the
ability of the Seller to perform its obligations under this
Agreement and (ii) any material adverse development in previously
disclosed litigation.
(k) TOTAL SYSTEMS FAILURE. The Servicer shall promptly
notify the Buyer of any total systems failure and shall advise
the Buyer of the estimated time required to remedy such total
systems failure and of the estimated date on which a Purchase
Notice or Settlement Statement, as the case may be, can be
delivered. Until a total systems failure is remedied, the
Servicer (i) will furnish to the Buyer such periodic status
reports and other information relating to such total systems
failure as the Buyer may reasonably request and (ii) will
promptly notify the Buyer if the Servicer believes that such
total systems failure cannot be remedied by the estimated date,
which notice shall include a description of the circumstances
which gave rise to such delay, the action proposed to be taken in
response thereto, and a revised estimate of the date on which a
Purchase Notice or Settlement Statement, as the case may be, can
be delivered. The Servicer shall promptly notify the Buyer when
a total systems failure has been remedied.
(l) NOTICE OF RELOCATION. The Seller shall give the
Buyer sixty (60) days' prior written notice of any relocation of
its Chief Executive Office if, as a result of such relocation,
the applicable provisions of the Uniform Commercial Code of any
applicable jurisdiction or other applicable Laws would require
the filing of any amendment of any previously filed financing
statement or continuation statement or of any new financing
statement. The Seller will at all times maintain its Chief
Executive Office within a jurisdiction in the United States in
which Article Nine of the Uniform Commercial Code (1972 or later
revision) is in effect.
(m) FURTHER INFORMATION. The Seller will furnish or
cause to be furnished to the Buyer such other information as
promptly as practicable, and in such form and detail, as the
Buyer may reasonably request.
(n) TREATMENT OF PURCHASE. For accounting purposes,
the Seller shall treat each purchase, each increase in the Net
Investment and each Reinvestment made hereunder as a sale of an
undivided percentage ownership interest in the Receivables Pool.
The Seller shall also maintain its records and books of account
in a manner which clearly reflects the sale of the Participation
Interest to the Buyer and the Buyer's Investment therein.
(o) FEES AND EXPENSES. The Seller agrees to pay the
Buyer all filing fees, stamp taxes and expenses, including the
fees and expenses set forth in Section 11.01 hereof, if any,
which may be incurred on account of or arise out of this
Agreement and the documents and transactions entered into in
connection with this Agreement.
(p) ADMINISTRATIVE AND OPERATING PROCEDURES. The
Seller shall maintain and implement administrative and operating
procedures adequate to permit the identification of the
Receivables Pool and all Collections and adjustments attributable
to the Receivables Pool.
(q) NEW CONTRACTS. The Seller shall cause each
contract entered into after the Closing Date with any Insurer in
respect of Non-Medicaid Receivables to permit the assignment of
payments hereunder pursuant to the terms of this Agreement. In
the alternative, the Seller shall promptly (A) notify the Buyer
of any Notification Obligor which becomes an Obligor after the
Closing Date pursuant to a written contract or arrangement which
purports to prohibit the assignment of any rights of the Seller
under such contract or arrangement without the consent of such
Obligor, and (B) deliver, or cause to be delivered, to such
Notification Obligor a Notice of Assignment and use its best
efforts to obtain a Confirmation with respect thereto.
(r) COLLECTIONS. If, at any time, the Seller receives
any Collections in respect of Non-Medicaid Receivables, the
Seller shall hold such Collections for the benefit of the Buyer
and shall not commingle any such amounts with any other funds or
property held by the Seller other than Collections in respect of
Non-Medicaid Receivables, and the Seller shall cause such
Collections to be deposited within two Business Days into a
Lockbox Account. If, at any time, the Seller receives any
Collections in respect of Medicaid Receivables, the Seller shall
promptly deposit into a Medicaid Collection Account all such
Collections, and shall cause such Collections to be swept on a
daily basis into a Lockbox Account. Nothing in this Section
9.01(r) shall affect the obligations of the Seller or the
Servicer to apply all Collections received by the Seller or the
Servicer pursuant to Section 5.03 or 5.04 hereof.
The Seller shall, on each day on which Collections with
respect to Medicaid Receivables are deposited into the Medicaid
Collections Account, transfer, or cause to be transferred, all
such Collections so deposited to a Lockbox Account.
(s) FILINGS AND NOTICES. The Seller shall complete all
filings of UCC financing statements and financing statement
amendments and the sending of Notices of Assignment to all
Notification Obligors in accordance with Sections 4.02(c)(i)(x)
and 8.02(e) within 5 Business Days after the Closing Date.
9.02. NEGATIVE COVENANTS OF THE SELLER. The Seller
covenants that it will not, without the prior written consent of
the Buyer:
(a) ACCOUNTING FOR AND TREATMENT OF THE SALES. Prepare
any financial statements for financial accounting or reporting
purposes which shall account for the transactions contemplated
hereby in any manner other than as a sale of the Participation
Interest in the Purchased Receivables to the Buyer.
(b) NO RESCISSIONS OR MODIFICATIONS. Rescind or cancel
any Purchased Receivable or related Contract or modify any terms
or provisions thereof, except in accordance with the Seller's
Normal Credit Policies or otherwise with the prior written
consent of the Buyer.
(c) NO LIENS. Cause any of the Purchased Receivables
to be sold, pledged, assigned or transferred or to be subject to
a Lien (including the Lien created pursuant to the terms of the
Security Agreement), other than the sale and assignment of the
Participation Interest therein to the Buyer and the Liens created
in connection with the transactions contemplated by this
Agreement and the TRIFCO Security Agreement.
(d) MERGERS, ACQUISITIONS, SALES, ETC. Merge into or
consolidate with any other Person, or permit any other Person to
merge into or consolidate with it, or sell, transfer, assign,
lease, sublease or otherwise dispose of (in one transaction or in
a series of transactions) all or any substantial part of any
asset (whether now owned or hereafter acquired) or any capital
stock of any Subsidiary (this and other capitalized terms which
are used in this Section 9.02(d) but which are not defined in
Section 1.01 hereof are used as defined in the Eckerd Credit
Agreement as in effect on the date hereof, which defined terms
are set forth in Exhibit M hereto), or purchase, lease or
otherwise acquire (in one transaction or a series of
transactions) all or any substantial part of the assets of any
other Person (other than in connection with an acquisition of the
stock, or all or substantially all the assets, of any Person
whose assets consist solely of equipment or real estate that do
constitute an independent business organization); provided,
however, that the foregoing shall not prohibit:
(i) sales, transfers and other dispositions of
used or surplus equipment, vehicles and other assets in
the ordinary course of business;
(ii) sales of inventory in the ordinary course of
business;
(iii) if at the time thereof and immediately after
giving effect thereto no Event of Default or Default
shall have occurred and be continuing (A) any wholly-
owned Subsidiary or Acquired Entity may merge into the
Seller in a transaction in which the Seller is the
surviving corporation, and (B) any wholly-owned
Subsidiary or Acquired Entity may merge into or
consolidate with any other wholly-owned Subsidiary or
Acquired Entity in a transaction in which the surviving
entity is a wholly-owned Subsidiary and no person other
than the Seller or a wholly-owned Subsidiary receives
any consideration ;
(iv) sales of assets after the Closing Date so
long as (A) the aggregate Net Proceeds of all such sales
does not exceed $35,000,000 (of which sales with Net
Proceeds of no more than $10,000,000 may be made in any
twelve-month period) and (B) prior to the consummation
of each such sale, a Responsible Officer of the Seller
certifies to the Buyer that such sale is at a price
equal to or greater than the then fair market value of
such asset;
(v) the purchase or other acquisition of any
assets acquired in connection with any Permitted
Acquisitions;
(vi) the sale of the facility and real estate
described in item 6 of Schedule 4.22(a) of the Eckerd
Credit Agreement;
(vii) the lease or sublease of all or part of any
interest, including a leasehold interest, of the Seller
or any Subsidiary in real property or the assignment of
any lease of real property of the Seller or any
Subsidiary, provided that (A) such lease, sublease or
assignment is on commercially reasonable terms, (B) such
lease or sublease could not and will not be
characterized by the lessor or lessee thereunder as a
capital lease under GAAP, (C) the leasing or subleasing
of such real property or the assignment of such lease
shall not have an adverse material effect, individually
or in the aggregate, upon the conduct of the Seller's or
any Subsidiary's business or the value or use of the
real property encumbered by such lease or sublease,
(D) in the case of a lease in respect of any real
property owned by the Seller or any Subsidiary (other
than a retail store and the distribution center located
in Clearwater, Florida), the lease shall be of an
immaterial portion of such real property and (E) in the
case of a lease or sublease in respect of a retail
store, the decision to lease or sublease such retail
store is made on a basis that is consistent with the
practices of the Seller or such Subsidiary prior to the
date hereof with respect to the leasing or subleasing of
retail stores; and
(viii) sales of equipment of Equipment Lessors
pursuant to the Equipment Agency Arrangements.
(e) NO CHANGES. Change its name, identity or corporate
structure in any manner which would, could or might make any
financing statement or continuation statement filed in connection
with this Agreement or the transactions contemplated hereby
seriously misleading within the meaning of Section 9-402(7) of
the Uniform Commercial Code of any applicable jurisdiction or
other applicable Laws unless it shall have given the Buyer at
least sixty (60) days' prior written notice thereof.
(f) PAYMENT INSTRUCTIONS. Add any bank as a Permitted
Lockbox Bank, terminate any bank listed on Exhibit K hereto as a
Permitted Lockbox Bank, change any Lockbox Account listed on
Exhibit K hereto, or make any change in its instructions to
Obligors regarding payments to be made to the Seller or payments
to be made to any Permitted Lockbox, unless the Buyer shall have
received ten (10) Business Days' prior notice of such addition,
termination or change and, with respect to the addition of any
Permitted Lockbox Bank, a Lockbox Servicing Agreement executed by
such Permitted Lockbox Bank shall have been delivered to the
Buyer.
(g) NO MODIFICATION OF RECEIVABLES. Change the terms
of the payor contracts and agreements relating to the Purchased
Receivables or the Seller's Normal Credit Policies with respect
to the origination and servicing thereof (including, without
limitation, the amount and timing of finance charges, fees and
write-offs) in any respect which may have a material adverse
effect on the Buyer or the collectibility of Purchased
Receivables.
(h) MEDICAID COLLECTION ACCOUNTS. Terminate, or permit
any other Person to terminate, any Medicaid Collection Account,
modify the conditions upon which such Medicaid Collection Account
was established or establish any other Medicaid Collection
Account, without the consent of the Buyer.
(i) CHANGE OF CONTROL. Cause, or permit any Person to
cause, a Change of Control.
ARTICLE X
TERMINATION
10.01. TERMINATION EVENTS. A "Termination Event" shall
mean the occurrence and continuance of one or more of the
following events or conditions:
(a) either the Seller or the Servicer, as the case may
be, shall fail to remit or fail to cause to be
remitted to the Buyer on any Settlement Date any
Collections or other amounts required to be
remitted to the Buyer on such Settlement Date; or
(b) the Seller shall fail to deposit or pay or fail to
cause to be deposited or paid when due any other
amount due hereunder; or
(c) any representation, warranty, certification or
statement made by the Seller under this Agreement
or in any agreement, certificate, report, appendix,
schedule or document furnished by the Seller to the
Buyer pursuant to or in connection with this
Agreement shall prove to have been false or
misleading in any respect material to this
Agreement or the transactions contemplated hereby
as of the time made or deemed made (including by
omission of material information necessary to make
such representation, warranty, certification or
statement not misleading), and the Seller shall not
have taken corrective measures satisfactory to the
Buyer with respect thereto prior to the Settlement
Date immediately succeeding the date on which the
Buyer notifies the Seller thereof; or
(d) the Seller shall fail to obtain the prior consent
of the Buyer to any action or provision as to which
such consent is required by the terms of this
Agreement, or shall default or fail in the
performance of its covenant in Section 9.01(s); or
(e) the Seller shall default or fail in the performance
or observance of any other covenant, agreement or
duty applicable to it contained herein and such
default or failure shall continue for thirty (30)
days after either (i) any Responsible Officer of
the Seller becomes aware thereof or (ii) notice
thereof to the Seller by the Buyer; or
(f) a default shall have occurred and be continuing
under any instrument or agreement evidencing,
securing or providing for the issuance of
indebtedness for borrowed money in excess of
$5,000,000 of, or guaranteed by, the Seller or any
Affiliate thereof, which default if unremedied,
uncured, or unwaived (with or without the passage
of time or the giving of notice) would permit
acceleration of the maturity of such indebtedness
and such default shall have continued unremedied,
uncured or unwaived for a period long enough to
permit such acceleration and any notice of default
required to permit acceleration shall have been
given; or
(g) the average Default Ratio for any three consecutive
Accounting Periods during the period of twelve full
Accounting Periods immediately preceding the date
of determination shall exceed four percent (4%); or
(h) a Permitted Lockbox Bank shall default or fail in
the performance or observance of any agreement or
duty applicable to it under the Lockbox Servicing
Agreement executed by it and such default or
failure shall continue for two (2) Business Days
after notice thereof to such Permitted Lockbox Bank
and within such period another Permitted Lockbox
with another Permitted Lockbox Bank is not
established by the Seller, if so requested by the
Buyer; or
(i) (1) Litigation (including, without limitation,
derivative actions), arbitration or governmental
proceedings except as set forth on Exhibit H
attached hereto is pending against the Seller or
any Affiliate thereof, or (2) any material
development not so disclosed has occurred in any
litigation (including, without limitation,
derivative actions), arbitration or governmental
proceedings so disclosed, which (in the case of
either clause (1) or clause (2)) in the reasonable
opinion of the Buyer is likely to materially
adversely affect the financial position or business
of the Seller or any Affiliate thereof or impair
the ability of the Seller to perform its
obligations under this Agreement; or
(j) there shall have occurred any event which
materially adversely affects the collectibility of
a material amount of the Purchased Receivables, or
there shall have occurred any other event which
materially adversely affects the ability of the
Servicer to collect Purchased Receivables or the
ability of the Servicer to perform hereunder, or
the warranty in Section 8.01(k)(y) shall not be
true at any time; or
(k) an Event of Bankruptcy shall occur with respect to
(i) the Seller, or (ii) one or more Affiliates of
the Seller which, in the opinion of the Buyer,
would be reasonably likely to have a material
adverse effect on the business, financial condition
or operations of the Seller; or
(l) the Account Balances for Purchased Receivables that
are outstanding more than 120 days as reported on
the Third Party Activity and Aging Analysis in the
form of Exhibit I shall exceed 13% of the aggregate
Account Balance for all Purchased Receivables; or
(m) less than 95% of the Collections received during
any Accounting Period shall have been paid by the
related Obligors directly into a Permitted Lockbox,
a Lockbox Account or a Medicaid Collection Account;
provided that Collections in respect of Medicaid
Receivables shall be excluded from this calculation
until the fourth Accounting Period after the
Closing Date; or
(n) the Rate of Collections for any Accounting Period
shall be less than 75%; or
(o) the Buyer or the Receivables Pool shall be deemed
to have become an "investment company" within the
meaning of the Investment Company Act of 1940, as
amended; or
(p) there shall have occurred a Change in Control; or
(q) this Agreement and the Certificate of Participation
shall for any reason cease to either (1) evidence
the transfer to the Buyer (or its assignees or
transferees) of legal and equitable right, title
and interest to, and ownership of, an undivided
percentage ownership interest in the Purchased
Receivables and Collections with respect thereto to
the extent of the Participation Interest, or
(2) create a valid and perfected first priority
security interest (as defined in the UCC) in favor
of the Buyer in the Purchased Receivables and
Collections with respect thereto.
10.02. CONSEQUENCES OF A TERMINATION EVENT.
(a) If a Termination Event specified in Section 10.01
hereof shall occur and be continuing, the Buyer may, by notice to
the Seller, terminate its obligation to increase the Net
Investment and to make Reinvestments hereunder, and in the case
of a Termination Event under Section 10.01(k) the obligation of
the Buyer to purchase the Participation Interest (including by
Reinvestment) hereunder shall be automatically terminated without
any action on the part of the Buyer. Any such termination shall
reduce the Maximum Net Investment in effect from time to time
thereafter to the amount of the Net Investment at such time.
(b) Upon any termination of the Buyer's obligation to
purchase the Participation Interest and to make Reinvestments
pursuant to this Section 10.02, the Buyer shall have, in addition
to all rights and remedies under this Agreement or otherwise, all
other rights and remedies provided under the Uniform Commercial
Code of the applicable jurisdiction and under other applicable
Laws, which rights shall be cumulative.
(c) The parties hereto acknowledge that this Agreement
is, and is intended to be, a contract to extend financial
accommodations to the Seller within the meaning of
Section 365(e)(2)(B) of the Federal Bankruptcy Code (11 U.S.C.
365(e)(2)(B)) (or any amended or successor provision thereof or
any amended or successor code).
ARTICLE XI
MISCELLANEOUS
11.01. EXPENSES. The Seller agrees, promptly upon
receipt of a written invoice, to pay or cause to be paid, and to
save the Buyer and the Referral Agent harmless against liability
for the payment of, all reasonable out-of-pocket expenses
(including, without limitation, attorneys', accountant's and
other third parties' fees and expenses, any filing fees, expenses
of litigation or preparation therefor, audit expenses and
expenses incurred by officers or employees of the Buyer, but
excluding salaries and similar overhead costs of the Buyer and
the Referral Agent which are incurred notwithstanding the
execution and performance of this Agreement) incurred by or on
behalf of the Buyer and the Referral Agent from time to time
(a) arising in connection with the development, audit, delivery,
collection, preparation, printing, execution, amendment,
restatement, performance, administration and interpretation of
the Purchase Documents, or transactions undertaken pursuant to or
in connection herewith or therewith (including, without
limitation, the perfection or protection of the Buyer's
Participation Interest in the Purchased Receivables and the
Receivables Pool), (b) relating to any requested amendments,
waivers or consents to the Purchase Documents, (c) arising in
connection with the Buyer's or the Referral Agent's enforcement
or preservation of rights under the Purchase Documents, or
(d) arising in connection with any litigation or preparation for
litigation involving the Purchase Documents, which, including all
amounts payable under Section 11.03, shall be referred to in this
Agreement as "Transaction Costs".
11.02. PAYMENTS. All payments to be made to the Buyer
or the Seller hereunder shall be payable at 11:00 a.m., New York
time, on the day when due, at the payee's Office in Dollars in
immediately available funds. To the extent permitted by Law, any
amounts due from the Seller hereunder which are not paid when due
shall bear interest for each day from the day due until paid,
payable on demand, at a rate per annum equal to three percent
(3%) above the Reference Rate.
11.03. INDEMNITY FOR TAXES, RESERVES AND EXPENSES. If
after the date hereof the adoption of any Law or guideline or any
amendment or change in the administration, interpretation or
application of any existing or future Law or guideline by any
Official Body charged with the administration, interpretation or
application thereof, or the compliance with any request or
directive of any Official Body (whether or not having the force
of Law):
(a) subjects an Affected Party to any tax or changes
the basis of taxation with respect to the Purchase
Documents, the Participation Interest, the
Purchased Receivables or payments of amounts due
hereunder or under the Purchased Receivables
(including, without limitation, any sales, gross
receipts, general corporate, personal property,
privilege or license taxes, and including claims,
losses and liabilities arising from any failure to
pay or delay in paying any such tax (unless such
failure or delay results solely from such Affected
Party's gross negligence or willful misconduct),
but excluding taxes on the overall net income of
such Affected Party), or
(b) imposes, modifies or deems applicable any reserve
(including, without limitation, any reserve imposed
by the Board of Governors of the Federal Reserve
System), special deposit or similar requirement
against assets held by, credit extended by,
deposits with or for the account of, or other
acquisition of funds by, an Affected Party, or
(c) shall change the amount of capital maintained or
requested or directed to be maintained by an
Affected Party, or
(d) imposes upon an Affected Party any other condition
or expense (including, without limitation, (i) loss
of margin and (ii) reasonable attorneys' fees and
expenses, expenses incurred by officers or
employees of the Referral Agent's credit recovery
group (or any successor thereto) and expenses of
litigation or preparation therefor in contesting
any of the foregoing) with respect to the Purchase
Documents, the Participation Interest, the
Purchased Receivables or the purchase, maintenance
or funding of the purchase of the Participation
Interest in any Receivables by an Affected Party,
and the result of any of the foregoing is to increase the cost
to, reduce the income receivable by, reduce the rate of return on
capital, or impose any expense (including loss of margin) upon,
an Affected Party with respect to this Agreement, the obligations
hereunder or the funding of purchases hereunder, the Affected
Party may notify the Seller of the amount of such increase,
reduction, or imposition, and the Seller shall pay to such
Affected Party the amount so notified to the Seller by such
Affected Party (which determination shall be conclusive)
necessary to compensate such Affected Party for such increase,
reduction or imposition. Such amounts shall be due and payable
by the Seller to such Affected Party ten (10) Business Days after
such notice is given. Notwithstanding the foregoing, the Seller
shall not be obligated to pay any amount under this Section 11.03
in respect of any period prior to the 90th day before the date on
which such Affected Party notifies the Seller of such increase,
reduction or imposition; except to the extent that such increase,
reduction or imposition was imposed with retroactive effect for
any such earlier period.
11.04. INDEMNITY.
(a) The Seller agrees to indemnify, defend and save
harmless the Buyer, the Referral Agent, their respective
directors, officers, shareholders, employees, agents and each
legal entity, if any, who controls the Buyer or the Referral
Agent (each, an "Indemnified Party"), forthwith on demand, from
and against any and all losses, claims, damages, liabilities,
costs and expenses (including, without limitation, all attorneys'
fees and expenses, expenses incurred by their respective credit
recovery groups (or any successors thereto) and expenses of
settlement, litigation or preparation therefor) which an
Indemnified Party may incur or which may be asserted against such
Indemnified Party by any Person (including, without limitation,
any Obligor or any other Person whether on its own behalf or
derivatively on behalf of the Seller) (all of the foregoing being
collectively referred to as "Losses"), excluding, however,
(a) Losses to the extent resulting from the gross negligence or
willful misconduct on the part of such Indemnified Party,
(b) recourse (except as otherwise provided in this Agreement) for
Defaulted Receivables, (c) any Losses with respect to any tax,
reserve, capital charge or expense related thereto
(indemnification with respect to such Losses being provided as
and to the extent provided in Section 11.03), or (d) Losses to
the extent that such Losses resulted from an act or omission of
the Servicer, if the Servicer is not the Seller or an Affiliate
of the Seller, arising from or incurred in connection with (i)
any breach of a representation, warranty or covenant by the
Seller made or deemed made hereunder or in connection herewith or
the transactions contemplated herewith, or (ii) any suit, action,
claim, proceeding or governmental investigation, pending or
threatened, whether based on statute, regulation or order, on
tort, on contract or otherwise, before any local, state or
federal court, arbitrator or administrative, governmental or
regulatory body, which arises out of or relates to the Purchase
Documents, the Participation Interest in the Purchased
Receivables or related Contracts, or the use of the proceeds of
the sale of the Participation Interest in the Receivables
pursuant hereto or the transactions contemplated hereby (all
Losses, after giving effect to the limitations set forth in
clauses (a) through (d) above, being hereinafter referred to as
"Indemnified Amounts") .
(b) Without limitation of the generality of Section
11.04(a), the Seller shall pay on demand to each Indemnified
Party any and all amounts necessary to indemnify such Indemnified
Party from and against any and all Indemnified Amounts relating
to or resulting from any of the following:
(i) the creation of the Participation Interest in
any Purchased Receivable which is not at the date of the
creation of such Participation Interest an Eligible
Receivable;
(ii) reliance on any representation or warranty
made or deemed made by the Seller (or any of its
respective Responsible Officers) or any statement made
by any Responsible Officer of the Seller under or in
connection with this Agreement which shall have been
incorrect in any material respect when made;
(iii) the failure by the Seller to comply with any
applicable law, rule or regulation;
(iv) the failure to vest in the Buyer an undivided
percentage interest, to the extent of the Participation
Interest, in the Purchased Receivables and Collections
in respect thereof, free and clear of any Lien;
(v) the failure to have filed, or any delay in
filing, financing statements or other similar
instruments or documents under the UCC of any applicable
jurisdiction or under any other applicable law with
respect to the assignment of the Participation Interest;
(vi) any dispute, claim, offset or defense (other
than discharge in bankruptcy of the Obligor) of the
Obligor to the payment of any Purchased Receivable
(including, without limitation, a defense based on such
Purchased Receivable or the related Contract not being a
legal, valid and binding obligation of such Obligor
enforceable against it in accordance with its terms), or
any other claim resulting from the sale of the
merchandise or service related to such Purchased
Receivable or the furnishing or failure to furnish such
merchandise or services;
(vii) any failure of the Seller to perform its
duties or obligations in accordance with the provisions
of this Agreement;
(viii) any products liability claim arising out of or
in connection with merchandise, insurance or services
which are the subject of any Contract; or
(ix) the failure to have delivered, or any delay in
delivering, Notices of Assignment to the appropriate
Obligors under any applicable law with respect to the
assignment of the Participation Interest in the
Non-Medicaid Receivables.
(c) Promptly upon receipt by any Indemnified Party
hereunder of notice of the commencement of any suit, action,
claim, proceeding or governmental investigation, such Indemnified
Party shall, if a claim in respect thereof is to be made against
the Seller hereunder, notify the Seller in writing of the
commencement thereof. The Seller may participate in the defense
of any such suit, action, claim, proceeding or investigation at
its expense, and no settlement thereof shall be made without the
approval of the Seller and the Indemnified Party. The approval
of the Seller will not be unreasonably withheld or delayed.
(d) The indemnity contained in this Section 11.04 shall
survive the termination of this Agreement.
11.05. HOLIDAYS. Except as may be provided in this
Agreement to the contrary, if any payment due hereunder shall be
due on a day which is not a Business Day, such payment shall
instead be due the next following Business Day.
11.06. RECORDS. All amounts calculated or due
hereunder shall be determined from the records of the Buyer,
which determinations shall be conclusive absent manifest error.
11.07. AMENDMENTS AND WAIVERS. The Buyer and the
Seller may from time to time enter into agreements amending,
modifying or supplementing this Agreement, and the Buyer, in its
sole discretion, may from time to time grant waivers of the
provisions of this Agreement or consents to a departure from the
due performance of the obligations of the Seller under this
Agreement. Any such agreement, waiver or consent must be in
writing and shall be effective only to the extent specifically
set forth in such writing. Any waiver of any provision hereof,
and any consent to a departure by the Seller from any of the
terms of this Agreement, shall be effective only in the specific
instance and for the specific purpose for which given and if such
amendment, waiver or departure would have a material adverse
effect on the rights or obligations of the Agent, the Referral
Agent, the Collateral Agent or the Surety Bond Provider, such
amendment, departure or waiver shall not be effective until
consented to by the affected party. The Buyer will not execute
any such agreement, waiver or consent unless any necessary
consents by such third parties have been obtained.
11.08. NO IMPLIED WAIVER; CUMULATIVE REMEDIES. No
course of dealing and no delay or failure of the Buyer in
exercising any right, power or privilege under the Purchase
Documents shall affect any other or future exercise thereof or
the exercise of any other right, power or privilege; nor shall
any single or partial exercise of any such right, power or
privilege or any abandonment or discontinuance of steps to
enforce such a right, power or privilege preclude any further
exercise thereof or of any other right, power or privilege. The
rights and remedies of the Buyer under the Purchase Documents are
cumulative and not exclusive of any rights or remedies which the
Buyer would otherwise have.
11.09. NO DISCHARGE. The obligations of the Seller
under the Purchase Documents shall be absolute and unconditional
and shall remain in full force and effect without regard to, and
shall not be released, discharged or in any way affected by
(a) any exercise or nonexercise of any right, remedy, power or
privilege under or in respect of the Purchase Documents or
applicable Law, including, without limitation, any failure to
set-off or release in whole or in part by the Buyer of any
balance of any deposit account or credit on its books in favor of
the Seller or any waiver, consent, extension, indulgence or other
action or inaction in respect of any thereof, or (b) any other
act or thing or omission or delay to do any other act or thing
which would operate as a discharge of the Seller as a matter of
Law.
11.10. NOTICES. All notices under Section 10.02 hereof
shall be given to the Seller by telephone or facsimile, confirmed
by first-class mail (which shall be effective when telephoned or
sent by facsimile) or by first-class mail, express mail or
courier (which shall be effective when deposited in the mail or
delivered to the courier), in all cases with charges prepaid.
All other notices, requests, demands, directions and other
communications (collectively "notices") under the provisions of
this Agreement shall be in writing (including telexed or
facsimile communication) unless otherwise expressly permitted
hereunder and shall be sent by first-class mail, express mail, or
by telex or facsimile with confirmation in writing mailed first-
class mail, in all cases with charges prepaid, and any such
properly given notice shall be effective when received. All
notices shall be sent to the applicable party at the address
stated on the signature page hereof or in accordance with the
last unrevoked written direction from such party to the other
parties hereto.
11.11. SEVERABILITY. The provisions of this Agreement
are intended to be severable. If any provision of this Agreement
shall be held invalid or unenforceable in whole or in part in any
jurisdiction, such provision shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability
without in any manner affecting the validity or enforceability of
such provision in any other jurisdiction or the remaining
provisions hereof in any jurisdiction.
11.12. GOVERNING LAW. THIS AGREEMENT AND THE
CERTIFICATES OF PARTICIPATION SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
(NOTWITHSTANDING SECTION 9-103 OF THE UNIFORM COMMERCIAL CODE OF
THE STATE OF NEW YORK), EXCLUDING ITS CONFLICT OF LAWS RULES.
The Seller hereby consents to the jurisdiction of the courts of
the State of New York and the courts of the United States located
in the State of New York for the purpose of adjudicating any
claim or controversy arising in connection with this Agreement,
and for such purpose, to the extent it may lawfully do so, waives
any objection to such jurisdiction or to venue therein.
11.13. PRIOR UNDERSTANDINGS. This Agreement sets forth
the entire understanding of the parties relating to the subject
matter hereof, and supersedes all prior understandings and
agreements, whether written or oral.
11.14. SURVIVAL. All representations and warranties of
the Seller contained herein or made in connection herewith or in
connection with the Certificate of Participation shall survive
the making thereof, and shall not be waived by the execution and
delivery of this Agreement or the Certificate of Participation,
any investigation by the Buyer, the purchase, repurchase or
payment of the Participation Interest in any Purchased
Receivable, or any other event or condition whatsoever (other
than a written waiver complying with Section 11.07 hereof). All
obligations of the Seller to make payments to, or to indemnify,
the Buyer or to repurchase the Participation Interest in
Purchased Receivables from the Buyer shall survive the payment of
all Purchased Receivables, the termination of the Purchase
Obligation and the termination of all other obligations of the
Seller hereunder and shall not be affected by reason of an
invalidity, illegality or irregularity of any Purchased
Receivable. The covenants and agreements contained in or given
pursuant to this Agreement (including, without limitation, those
contained in Article IX) shall continue in full force and effect
until the termination of the Purchase Obligation, discharge of
the Participation Interest in the Purchased Receivables and
discharge of all other obligations of the Seller hereunder.
11.15. 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, shall be
deemed an original, but all such counterparts shall constitute
but one and the same instrument.
11.16. SET-OFF. In case a Termination Event shall
occur and be continuing, the Buyer and, to the fullest extent
permitted by Law, the holder of any assignment of the Buyer's
rights hereunder (including, without limitation, each Bank and
the Surety Bond Provider) shall each have the right, in addition
to all other rights and remedies available to it, without notice
to the Seller, to set-off against and to appropriate and apply to
any amount owing by the Seller hereunder which has become due and
payable, any debt owing to, and any other funds held in any
manner for the account of, the Seller by the Buyer or by any
holder of any assignment, including, without limitation, all
funds in all deposit accounts (whether time or demand, general or
special, provisionally credited or finally credited, or
otherwise) now or hereafter maintained by the Seller with the
Buyer or any holder of any assignment. Such right shall exist
whether or not such debt owing to, or funds held for the account
of, the Seller is or are matured other than by operation of this
Section 11.16 and regardless of the existence or adequacy of any
collateral, guaranty or any other security, right or remedy
available to the Buyer or any holder of any assignment. Nothing
in this Agreement shall be deemed a waiver or prohibition or
restriction of the Buyer's or any such holder's rights of set-off
or other rights under applicable Law.
11.17. TIME OF ESSENCE. Time is of the essence in this
Agreement.
11.18. PAYMENTS SET ASIDE. To the extent that the
Seller or any Obligor makes a payment to the Buyer or the Buyer
exercises its rights of set-off and such payment or set-off or
any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged
by, or is required to be refunded, rescinded, returned, repaid or
otherwise restored to the Seller, such Obligor, a trustee, a
receiver or any other Person under any Law, including, without
limitation, any bankruptcy law, any state or federal law, common
law or equitable cause, the obligation or part thereof originally
intended to be satisfied shall, to the extent of any such
restoration, be reinstated, revived and continued in full force
and effect as if such payment had not been made or such set-off
had not occurred. The provisions of this Section 11.18 shall
survive the termination of this Agreement.
11.19. NO PETITION. The Seller agrees that it will not
institute against, or join any other Person in instituting
against, the Buyer any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceeding or other similar proceeding
under the laws of the United States or any state or territory of
the United States. The provisions of this Section 11.19 shall
survive the termination of this Agreement.
11.20. NO RECOURSE. The obligations of the Buyer under
this Agreement are solely the corporate obligations of the Buyer.
No recourse shall be had for the payment of any amount owing in
respect to this Agreement or for the payment of any fee hereunder
or for any other obligation or claim arising out of or based upon
this Agreement against Merrill Lynch Money Markets Inc.
("Merrill"), against any stockholder, employee, officer, director
or incorporator of the Buyer or against the Referral Agent or any
stockholder, employee, officer, director, incorporator or
affiliate thereof. For purposes of this paragraph, the term
"Merrill" shall mean and include Merrill and all Affiliates
thereof and any employee, officer, director, incorporator,
shareholder or beneficial owner of any of them; PROVIDED,
HOWEVER, that the Buyer shall not be considered to be an
affiliate of Merrill or the Referral Agent.
IN WITNESS WHEREOF, the parties hereto, by their duly
authorized signatories, have executed and delivered this
Agreement as of the date first above written.
THREE RIVERS FUNDING CORPORATION
By____________________________
Title:________________________
Address:
c/o Merrill Lynch & Co.
Merrill Lynch World Headquarters
World Financial Center - South Tower
225 Liberty Street - 8th Floor
New York, New York 10080
Attention: Mr. Martin J.McInerney
Telephone: (212) 236-7200
Facsimile: (212) 236-7584
ECKERD CORPORATION
By____________________________
Title:________________________
Address:
8333 Bryan Dairy Road
Largo, Florida 34647
Attention: Martin W. Gladysz,
Vice President - Treasurer
Telephone: (813) 399-6315
Facsimile: (813) 399-6468
EXHIBIT A
to Receivables
Purchase Agreement
CERTIFICATE OF PARTICIPATION
ECKERD CORPORATION having offices located at 8333 Bryan
Dairy Road, Largo, Florida (the "Seller") hereby acknowledges
that THREE RIVERS FUNDING CORPORATION (the "Buyer"), having
offices located at 225 Liberty Street, New York, New York, is the
owner of a Participation Interest in the Receivables designated
and described on the attached Schedule I, which constitute a
Receivables Pool pursuant to and in accordance with the
Receivables Purchase Agreement dated as of January __, 1995, as
the same may from time to time be amended, supplemented or
otherwise modified and in effect (the "Receivables Purchase
Agreement"), entered into between the Buyer and the Seller. The
purchase of the Participation Interest by the Buyer and each
increase in the Net Investment shall be recorded on the grid
attached hereto or on a continuation thereof which shall be
attached hereto; PROVIDED that the failure of the Buyer to make
any recordation on the grid shall not adversely affect the rights
of the Buyer in the Participation Interest and the Buyer's rights
to receive the Cost of Funds in respect of the Net Investment.
The Buyer's undivided percentage ownership interest at
any time shall be calculated in accordance with Article III of
the Receivables Purchase Agreement.
Capitalized terms not otherwise defined herein shall
have the meanings assigned to such terms in the Receivables
Purchase Agreement.
IN WITNESS WHEREOF, the undersigned have executed this
Certificate on the _____ day of ____________, 199_.
ECKERD CORPORATION
By __________________________
Authorized Signatory
CERTIFICATE OF PARTICIPATION GRID
AMOUNT OF
INCREASE
PURCHASE IN NET AMOUNT OF NET NOTATION
DATE PRICE INVESTMENT REPAYMENT INVESTMENT MADE BY
________________________________________________________________
________________________________________________________________
________________________________________________________________
________________________________________________________________
________________________________________________________________
________________________________________________________________
________________________________________________________________
________________________________________________________________
________________________________________________________________
________________________________________________________________
________________________________________________________________
________________________________________________________________
EXHIBIT B
to Receivables
Purchase Agreement
FORM OF SETTLEMENT STATEMENT
EXHIBIT C
to Receivables
Purchase Agreement
RESPONSIBLE OFFICER'S
CERTIFICATE
I, Robert E. Lewis, the undersigned Assistant Secretary
of Eckerd Corporation (the "Company"), a Delaware corporation, DO
HEREBY CERTIFY that:
1. Attached hereto as Exhibit A is a true and complete
copy of the Certificate of Incorporation of the Company as in
effect on the date hereof.
2. Attached hereto as Exhibit B is a true and complete
copy of the By-laws of the Company as in effect on the date
hereof.
3. Attached hereto as Exhibit C is a true and complete
copy of the resolutions duly adopted by the Board of Directors of
the Company January 19, 1995, authorizing the execution, delivery
and performance of each of the documents mentioned therein, which
resolutions have not been revoked, modified, amended or rescinded
and are still in full force and effect.
4. The below-named persons have been duly qualified as
and at all times since January 1, 1995, to and including the date
hereof, have been officers or representatives of the Company
holding the respective offices or positions below set opposite
their names and the signatures below set opposite their names are
their genuine signatures:
NAME OFFICE SIGNATURES
Frank A. Newman President ________________
Samuel G. Wright Senior Vice
President/
Finance ________________
Martin A. Gladysz Vice President/
Treasurer ________________
Robert E. Lewis Vice President/
General Counsel/
Assistant
Secretary ________________
5. The representations and warranties of the Company
contained in Section 8.01 of the Receivables Purchase Agreement
dated as of January __, 1995 between the Company and Three Rivers
Funding Corporation are true and correct as if made on the date
hereof.
WITNESS my hand and seal of the Company as of this ____
day of January, 1995.
______________________________
Assistant Secretary
ECKERD CORPORATION
I, the undersigned, Vice President/Treasurer of the
Company, DO HEREBY CERTIFY that Robert E. Lewis is the duly
elected Assistant Secretary of the Company and the signature
above is his genuine signature.
WITNESS my hand as of this day of January, 1995.
_______________________________
Vice President
ECKERD CORPORATION
EXHIBIT D
to Receivables
Purchase Agreement
FORM OF OPINION OF SHACKLEFORD, FARRIOR,
STALLINGS & EVANS, P.A.
EXHIBIT E
to Receivables
Purchase Agreement
FORM OF LETTER FROM KPMG PEAT MARWICK
EXHIBIT F
to Receivables
Purchase Agreement
INFORMATION REGARDING AFFILIATES AND TRADE NAMES
AFFILIATES
Merrill Lynch Capital Partners, Inc. and its affiliates
Clorwood Distributors, Inc.
Eckerd Consumer Products, Inc.
Eckerd Fleet, Inc.
Eckerd Holdings II, Inc.
Eckerd's Westbank, Inc.
Eckerd Tobacco Company, Inc.
E.I.T., Inc.
P.C.V., Inc.
E.T.B., Inc.
Life Care Medical Products, Inc.
TRADE NAMES
ECKERD DRUGS
ECKERD
ECKERD EXPRESS PHOTO (OR) EXPRESS PHOTO
ECKERD EXPRESS PRINT 60 (OR) EXPRESS PRINT 60
ECKERD OPTICAL
FORMER NAMES
1. Eckerd Corporation was formerly known as Jack Eckerd
Corporation. Name change occurred in 1993. Jack Eckerd
Corporation was formerly known as Eckerd Holdings, Inc. Name
change occurred in 1986. Eckerd Holdings acquired the old
Jack Eckerd Corporation in a merger that occurred in 1986.
2. EDS Holdings, Inc. was merged into Eckerd Corporation in
1993.
EXHIBIT G
to Receivables
Purchase Agreement
MATERIAL ADVERSE CHANGES IN THE SELLER'S
FINANCIAL CONDITION
None.
EXHIBIT H
to Receivables
Purchase Agreement
LITIGATION AGAINST THE SELLER
None.
EXHIBIT I
to Receivables
Purchase Agreement
FORM OF THIRD PARTY ACTIVITY AND AGING ANALYSIS
EXHIBIT J
to Receivables
Purchase Agreement
ECKERD CORPORATION
PURCHASE NOTICE
Three Rivers Funding Corporation
World Financial Center - South Tower
225 Liberty Street - 8th Floor
New York, New York 10080
Mellon Bank, N.A.,
as Referral Agent
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
January __, 1995
Gentlemen:
Reference is hereby made to the Receivables Purchase
Agreement dated as of January __, 1995 (the "Agreement") between
Eckerd Corporation (the "Seller") and Three Rivers Funding
Corporation (the "Buyer"). This Notice is delivered to you
pursuant to Section 4.03(c) of the Agreement. Capitalized terms
used herein and not defined shall have the meanings assigned to
them in the Agreement.
The Seller hereby requests that the initial Purchase be
made by the Buyer on January __, 1995 at a Purchase Price equal
to $__________, such Purchase Price determined as set forth in
Schedule A attached hereto and made a part hereof.
The Seller hereby certifies and warrants that on the
date on which the Purchase requested hereby is made (and the
Seller, by accepting the payment of the Purchase Price relating
to such Purchase, will be deemed to have certified on such date
that) (i) the representations and warranties of the Seller
contained in Article VIII of the Agreement are true and correct
on and as of the date of such Purchase as though made on and as
of such date, (ii) the Seller is in compliance with the covenants
set forth in Article IX of the Agreement and (iii) no Termination
Event or Potential Termination Event shall occur as a result of,
or shall exist on the date of, such Purchase.
The Seller agrees that if, prior to the time that the
Purchase requested hereby is made, any matter certified to herein
will not be true and correct at such time as if then made, it
will immediately so notify the Buyer and the Referral Agent.
The Seller has caused this notice to be executed and
delivered, and the certifications and warranties contained herein
to be made, by its duly authorized officer this _____ day of
January __, 1995.
ECKERD CORPORATION
By:______________________
Authorized Signatory
EXHIBIT K
to Receivables
Purchase Agreement
LIST OF PERMITTED LOCKBOX BANKS
MEDICAID
COLLECTION LOCKBOX PERMITTED
NAME OF BANK ADDRESS ACCOUNT # ACCOUNT # LOCKBOX #
EXHIBIT L
to Receivables
Purchase Agreement
LIST OF NOTIFICATION OBLIGORS TO WHOM NOTICES OF ASSIGNMENT
ARE TO BE DELIVERED
EXHIBIT M
to Receivables
Purchase Agreement
ECKERD CREDIT AGREEMENT DEFINITIONS
RELATING TO SECTION 9.02(D)
EXHIBIT N
to Receivables
Purchase Agreement
FORM OF CONSENT AND ACKNOWLEDGMENT BY HOLDINGS
January 26, 1995
THREE RIVERS FUNDING CORPORATION
c/o Merrill Lynch & Co.
Merrill Lynch World Headquarters
World Financial Center - South Tower
225 Liberty Street - 8th Floor
New York, New York 10080
RE: RECEIVABLES PURCHASE AGREEMENT
DATED AS OF JANUARY 26, 1995
Ladies and Gentlemen:
Reference is made to the Receivables Purchase Agreement
dated as of January 26, 1995 (the "Purchase Agreement") between
Eckerd Corporation (the "Seller") and Three Rivers Funding
Corporation (the "Buyer"). Capitalized terms used herein and not
defined herein shall have the meanings assigned to them in the
Purchase Agreement.
Eckerd Holdings II, Inc. ("Holdings") and the Seller
hereby represent, acknowledge and agree, notwithstanding that
each of the Seller and Holdings may be named parties to certain
of the Contracts, that each of Seller and Holdings do now and
shall for all purposes and at all times consider all of the
Contracts, and the Receivables now or hereafter existing in
respect thereof, to be owned solely by the Seller, and do not now
and shall not at any time nor for any purpose consider Holdings
to have any right, title or interest in and to any of the
Contracts and Receivables. Notwithstanding the immediately
preceding sentence, if any Person shall at any time assert that
Holdings shall have any right, title or interest in and to any
Receivable(s) or Contract(s), Holdings shall be deemed to have
transferred, and does hereby transfer, to the Seller all of
Holdings' right, title and interest in and to the Receivables and
the Contracts.
Holdings hereby acknowledges receipt of an executed copy
of the Purchase Agreement and agrees that such copy constitutes
adequate notice of all matters contained therein and consents to
the execution and delivery of the same and the performance of all
of the transactions provided for therein, including, without
limitation, the sale, assignment and transfer, from time to time,
by the Seller to the Buyer pursuant to the Purchase Agreement of
Participation Interests with respect to the Receivables.
Holdings hereby expressly understands that the Seller will sell
to the Buyer undivided percentage ownership interests in the
Receivables. Each of the Seller and Holdings hereby expressly
agrees to take such actions and execute such documents and
instruments in furtherance of the matters described herein as may
be requested by the Buyer.
Holdings does not currently have, and will not establish
hereafter, any lockbox or bank account to which Collections in
respect of Receivables are sent or deposited. If any such
Collections are received by Holdings, Holdings will transfer such
Collections to the Seller immediately upon receipt for
application in accordance with the Purchase Agreement.
This Consent shall be binding upon Holdings, the Seller
and their respective successors and assigns and shall inure to
the benefit of and be enforceable by the Buyer and its respective
successors and assigns. No term or provision of this Consent may
be amended, changed, waived, discharged or terminated orally, but
only by an instrument signed by Holdings, the Seller and the
Buyer. No failure, delay or forbearance on the part of the Buyer
in exercising any right, power and privilege hereunder shall
operate as a waiver thereof, nor as an acquiescence in any
breach, nor shall any single or partial exercise of any right,
power or remedy hereunder preclude any other or further exercise
or any other right, power or privilege. All rights, powers and
remedies of the Buyer hereunder are cumulative and may be
enforced concurrently and from time to time and are not exclusive
of any other rights, powers or remedies provided by law or
otherwise. Any provision of this Consent which 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. This Consent and the rights
and obligations in respect hereof shall be governed by and
construed and interpreted in accordance with, the laws of the
State of New York.
Without limiting any other rights that the Buyer or any
Affiliate thereof and each of their respective officers,
directors, employees and agents (each, an "Indemnified Party")
may have under the the Purchase Agreement or under applicable
law, Holdings hereby agrees to indemnify each Indemnified Party
from and against any and all claims, losses, liabilities,
expenses, damages and costs (including reasonable attorneys' fees
and expenses) (all of the foregoing being collectively referred
to as "Indemnified Amounts") arising out of or resulting from
this Consent, including any misrepresentation herein or any
breach or violation hereof, except for Indemnified Amounts
resulting from the gross negligence or willful misconduct of any
Indemnified Party. The obligations and liabilities of Holdings
contained in this paragraph shall remain in full force and effect
until all amounts due to the Buyer and the Servicer (if the
Servicer is not the Seller or an affiliate thereof) under the
Purchase Agreement are satisfied and paid in full.
IN WITNESS WHEREOF, Holdings has caused this Consent to
be duly executed and delivered by a proper and duly authorized
officer as of the date and year first above written.
ECKERD HOLDINGS II, INC.
By________________________
Authorized Signature
Consented and Agreed:
ECKERD CORPORATION
By_____________________________
Authorized Signature
THREE RIVERS FUNDING CORPORATION
By_____________________________
Authorized Signature
RECEIVABLES PURCHASE AGREEMENT
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS; CONSTRUCTION
1.01 Certain Definitions
1.02 Interpretation and Construction
ARTICLE II AGREEMENT TO PURCHASE AND SELL
2.01 Purchase Limits
2.02 Amount of Purchases
2.03 Reduction of the Maximum Net
Investment and Net Investment;
Termination of the Agreement
2.04 Fees Payable to the Buyer
2.05 Fees Payable to the Referral Agent
ARTICLE III BUYER'S ALLOCATION
3.01 Buyer's Allocation
3.02 Frequency of Computation of
the Buyer's Allocation
ARTICLE IV CLOSING PROCEDURES
4.01 Purchase and Sale Procedures
4.02 Conditions Precedent to the
First Purchase
4.03 Conditions Precedent to Each
Purchase and Reinvestment
4.04 Purchase Price
4.05 Sale Without Recourse
4.06 Non-Assumption by the Buyer
of Obligations
4.07 Character of Receivables Added
to Receivables Pools
ARTICLE V SETTLEMENTS; ADJUSTMENTS
5.01 Settlement Statements
5.02 Receivables Status
5.03 Non-Liquidation Settlements
5.04 Liquidation Settlements
5.05 Allocation of Collections
PAGE
5.06 Deferred Purchase Price
5.07 Treatment of Collections and
Deemed Collections
ARTICLE VI PROTECTION OF THE BUYER; ADMINISTRATION
AND COLLECTIONS
6.01 Maintenance of Information and
Computer Records
6.02 Protection of the Interests
of the Buyer
6.03 Maintenance of the Location of
Writings and Records
6.04 Information
6.05 Performance of Undertakings Under
the Purchased Receivables;
Indemnification
6.06 Administration and Collections;
Indemnification
6.07 Complete Servicing Transfer
6.08 Lockboxes
ARTICLE VII REPURCHASES BY SELLER
7.01 Repurchases
7.02 Repurchase Price
7.03 Reassignment of Repurchased Receivables
7.04 Obligations Not Affected
ARTICLE VIII REPRESENTATIONS AND WARRANTIES
8.01 General Representations and
Warranties of the Seller
8.02 Representations and Warranties of the
Seller With Respect to Each Sale
of Receivables
ARTICLE IX COVENANTS
9.01 Affirmative Covenants of the Seller
9.02 Negative Covenants of the Seller
ARTICLE X TERMINATION
10.01 Termination Events
10.02 Consequences of a Termination Event
PAGE
ARTICLE XI MISCELLANEOUS
11.01 Expenses
11.02 Payments
11.03 Indemnity for Taxes, Reserves
and Expenses
11.04 Indemnity
11.05 Holidays
11.06 Records
11.07 Amendments and Waivers
11.08 No Implied Waiver; Cumulative Remedies
11.09 No Discharge
11.10 Notices
11.11 Severability
11.12 Governing Law
11.13 Prior Understandings
11.14 Survival
11.15 Counterparts
11.16 Set-Off
11.17 Time of Essence
11.18 Payments Set Aside
11.19 No Petition
11.20 No Recourse
EXHIBITS
A Form of Certificate of Participation
B Form of Settlement Statement
C Form of Certificate of a Responsible Officer, required
pursuant to Section 4.02(h)
D Form of Opinion of Shackleford, Farrior, Stallings &
Evans, P.A., counsel for the Seller
E Form of Letter from KPMG Peat Marwick, certified public
accountants
F Information required pursuant to Section 8.01(f)
G Material Adverse Changes, required pursuant to Section
8.01(k)
H Litigation, required pursuant to Section 8.01(l)
I Form of Third Party Activity and Aging Analysis to be
prepared pursuant to Section 9.01(i)(2)
J Form of Purchase Notice
K List of Permitted Lockbox Banks
L List of Addressees to whom Notices of Assignment will be
delivered
M Eckerd Credit Agreement definitions relating to
Section 9.02(d)
N Form of Consent and Acknowledgment by Holdings
RECEIVABLES PURCHASE AGREEMENT
dated as of January 26, 1995
Between
ECKERD CORPORATION
as Seller
and
THREE RIVERS FUNDING CORPORATION
as Buyer
EXHIBIT M
to Receivables
Purchase Agreement
ECKERD CREDIT AGREEMENT DEFINITIONS
RELATING TO SECTION 9.02(D)
ABR Borrowing shall mean a Borrowing comprised of ABR Loans.
ABR Loan shall mean any ABR Term Loan or ABR Revolving
Loan.
ABR Revolving Loan shall mean any Revolving Loan bearing interest
at a rate determined by reference to the Alternate Base Rate in
accordance with the provisions of Article II.
ABR Spread shall have the meaning specified in the definition of
the term Applicable Rate Percentage .
ABR Term Loan shall mean any Term Loan bearing interest at a rate
determined by reference to the Alternate Base Rate in accordance with
the provisions of Article II.
Acquired EBITDA with respect to any Acquired Entity for any period
shall mean (a) the sum of (i) Acquired Net Income of such Acquired
Entity for such period, (ii) all Federal, state, local and
foreign taxes deducted in determining such Acquired Net Income,
(iii) interest expense deducted in determining such Acquired Net
Income and (iv) depreciation, amortization and other noncash
charges deducted in determining such Acquired Net Income, less (b)
any noncash income included in determining such Acquired Net
Income.
Acquired Entity shall mean, with respect to any Acquisition,
(a) the Person to be purchased or otherwise acquired in such
Acquisition or (b) the assets to be purchased, leased or otherwise
acquired in such Acquisition.
Acquired Interest Expense shall mean, with respect to any
Acquired Entity for any period, the gross interest expense of such
Acquired Entity for such period determined in accordance with GAAP.
For purposes of the foregoing, gross interest expense shall be
determined after giving effect to any net payments made or received
by such Acquired Entity with respect to Rate Protection Agreements.
Acquired Lease Expense shall mean, with respect to any
Acquired Entity for any period, with respect to any operating
leases of such Acquired Entity, all amounts paid or accrued during
such period under such operating leases (whether or not
constituting rental expense) by such Acquired Entity.
Acquired Net Income with respect to any Acquired Entity for
any period shall mean the
aggregate net income (or net deficit) of such Acquired Entity for
such period, which shall be equal to the gross revenues for such
Acquired Entity during such period less the aggregate for such
Acquired Entity
of, without duplication, (a) cost of goods sold, (b) interest
expense, (c) operating expenses, (d) selling, general and
administrative expenses, (e) taxes, (f) depreciation, depletion and
amortization of properties and (g) any other items that are treated
as expense under GAAP, all computed in accordance with GAAP;
provided, however, that the term "Acquired Net Income" shall
exclude (i) gains and losses from the sale of assets other than in
the ordinary course of business and (ii) any write-up in the value
of any asset.
Acquisition shall mean (a) any purchase or other acquisition,
in one transaction or a series of
related transactions, of all the common stock of any Person or (b)
any purchase, lease or other acquisition, in one transaction or a
series of related transactions, of all or part of the assets of any
Person ; provided, however, that the term "Acquisition" shall not
include the purchase or acquisition of, or any expenditure towards
the purchase or acquisition of, (i) inventory acquired in the
ordinary course of business for resale to customers or (ii) (A)
prescription files so long as the aggregate amount expended in any
fiscal year to acquire prescription files does not exceed
$2,000,000, (B) inventory acquired for resale to customers or
(C) Capital Expenditures unless, in the case of clause (ii), such
purchase, acquisition or expenditure is made in connection with the
acquisition of (x) all the common stock of any on-going business,
(y) all or substantially all the assets of any on-going business or
(z) one or more drugstores.
Acquisition Fixed Charge Coverage Ratio shall mean, for any
period in connection with the Acquisition of any Acquired Entity,
the ratio of (a) the sum of (i) EBITDA of the Borrower and the
Subsidiaries, determined on a consolidated basis in accordance with
GAAP, for such period plus Lease Expense (but only to the extent of
the amount of such Lease Expense that was deducted in calculating
such EBITDA) for such period less Capital Expenditures for such
period, (ii) Acquired EBITDA of such Acquired Entity for such
period plus Acquired Lease Expense of such Acquired Entity (but
only to the extent of the amount of such Acquired Lease Expense
that was deducted in calculating such Acquired EBITDA) for such
period and (iii) Acquired EBITDA of any previously acquired Entity
(but only to the extent that such Acquired EBITDA is allocable to
such period) plus Acquired Lease Expense of any
previously acquired Entity (but only to the extent of the amount of
such Acquired Lease Expense that was deducted in calculating such
Acquired EBITDA) to (b) the sum of (i) Interest Expense for such
period,
(ii) Acquired Interest Expense of such Acquired Entity for such
Period, (iii) Acquired Interest Expense of any previously acquired
Entity (but only to the extent that such Acquired Interest Expense
is allocable to such period), (iv) cash income taxes paid by the
Borrower and the Subsidiaries on a consolidated basis during such
period, (v) Lease Expense for such period, (vi) Acquired Lease
Expense of such Acquired Entity for such Period, (vii) Acquired
Lease Expense of any previously acquired Entity (but only to the
extent that such Acquired Lease Expense is allocable to such
period), (viii) the Term Loan Repayment Amounts scheduled to be
paid during such period and (ix) scheduled payments during such
period of the principal of permitted Indebtedness of the Borrower
and the Subsidiaries other than the Loans.
Adjusted LIBO Rate shall mean, with respect to any Eurodollar
Borrowing for any Interest
Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to the product of (a) the LIBO Rate
in effect for such Interest Period and (b) Statutory Reserves. For
purposes hereof, the term LIBO Rate shall mean the average of the
respective rates per annum at which dollar deposits approximately
equal in principal amount to each Reference Lender's portion of
such Eurodollar Borrowing and for a maturity comparable to such
Interest Period are offered to the principal London office of such
Reference Lender in immediately available funds in the London
interbank market at approximately 11:00 a.m., London time, two
Business Days prior to the commencement of such Interest Period.
Administrative Fees shall have the meaning assigned to
such term in Section 2.05(b).
Administrative Questionnaire shall mean an
Administrative Questionnaire in the form of Exhibit C.
Affiliate shall mean, when used with respect to a
specified Person, another Person that directly, or indirectly
through one or more intermediaries, Controls or is Controlled by or
is under common Control with the person specified.
Alternate Base Rate shall mean, for any day, a rate per annum
(rounded upwards, if necessary,
to the next 1/16 of 1%) equal to the greatest of (a) the Prime Rate
in effect on such day, (b) the Base CD Rate in effect on such day
plus 1% and (c) the Federal Funds Effective Rate in effect on such
day plus 1/2 of 1%. For purposes hereof, the term Prime Rate
shall mean the rate of interest per annum publicly
announced from time to time by the Administrative Agent as its
prime rate in effect at its principal office in New York City; each
change in the Prime Rate shall be effective on the date such change
is publicly announced as being effective. The term Base CD Rate
shall mean the sum of (a) the product of (i) the Three-Month
Secondary CD Rate and (ii) Statutory Reserves and (b) the
Assessment Rate. The term
Three-Month Secondary CD Rate shall mean, for any day, the
secondary market rate for three-month
certificates of deposit reported as being in effect on such day
(or, if such day shall not be a Business Day, the next preceding
Business Day) by the Board through the public information telephone
line of the Federal Reserve Bank of New York (which rate will,
under the current practices of the Board, be published in Federal
Reserve Statistical Release H.15(519) during the week following
such day) or, if such rate shall not be so reported on such day or
such next preceding Business Day, the average of the secondary
market quotations for three-month certificates of deposit of major
money center banks in New York City received
at approximately 10:00 a.m., New York City time, on such day (or,
if such day shall not be a Business Day, on the next preceding
Business Day) by the Administrative Agent from three New York City
negotia
ble certificate of deposit dealers of recognized standing selected
by it. If for any reason the Administrative Agent shall have
determined (which determination shall be conclusive absent manifest
error) that it is unable to ascertain the Base CD Rate or the
Federal Funds Effective Rate
or both for any reason, including the inability or failure of the
Administrative Agent to obtain sufficient quotations in accordance
with the terms thereof, the Alternate Base Rate shall be determined
without regard to clause (b) or (c), or both, of
the first sentence of this definition, as appropriate, until the
circumstances giving rise to such inability no longer exist. Any
change in the Alternate Base Rate due to a change in the Prime
Rate, the Three-Month Secondary CD Rate or the Federal Funds
Effective Rate shall be effective on the effective date of such
change in the Prime Rate, the Three-Month Secondary CD Rate or the
Federal Funds Effective Rate, respectively.
Applicable Percentage of any Participating Lender shall
mean the percentage of the aggregate Revolving Credit Commitments
represented by such Participating Lender's Revolving Credit
Commitment.
Applicable Rate Percentage shall mean on any date, with
respect to the Commitment Fee,
Eurodollar Loans or ABR Loans, as the case may be, the lowest
applicable percentage set forth in the table below based upon the
Funded Debt to EBITDA Ratio for the four-fiscal-quarter period
ending on the last
day of the immediately preceding fiscal quarter for which the
certificate referred to in the next succeeding paragraph has been
received by the Administrative Agent, as set forth in the following
table; provided, however, that the Applicable Rate Percentages in
respect of the Commitment Fee, the LIBOR Spread and
the ABR Spread for the period from and including the Restatement
Date to but excluding the date of receipt by the Lenders of the
Borrower's financial statements for the fiscal quarter ending
October 29, 1994, shall be the Applicable Rate Percentages
specified for Level IV in the table below:
COMMITMENT FEE/LIBOR SPREAD/ABR SPREAD
(Basis Points Per Annum)
Funded Debt to
EBITDA Ratio
Commitment Fee
LIBOR Spread
ABR Spread
Level I
Less than or equal to
2.50
25.00
75.00
0.00
Level II
Less than or equal to
3.00 but greater than
2.50
37.50
100.00
0.00
Level III
Less than or equal to
3.50 but greater than
3.00
37.50
125.00
25.00
Level IV
Greater than
3.50
50.00
150.00
50.00
For purposes of the foregoing, (a) any change in the
Applicable Rate Percentages based on the Funded Debt to EBITDA
Ratio shall be effective for all purposes on and after the date of
receipt by the Administrative Agent of the certificate described in
Section 6.04(d) for the most recently ended fiscal
quarter and (b) notwithstanding the foregoing provision of clause
(a), no reduction in the above Applicable Rate Percentages shall be
effective if any Event of Default or Default shall exist and be
continuing. Any change in the LIBOR Spread or the ABR Spread due
to a change in the applicable Level shall apply to all Eurodollar
Rate Loans made on or after the commencement of the period (and to
ABR Loans that are outstanding at any time during the period)
commencing on the effective date of such change in applicable Level
and ending on the date immediately preceding the effective date of
the next such change in applicable Level.
Notwithstanding the foregoing, at any time during which the
Borrower has failed to deliver the certificate described in Section
6.04(d) in accordance with the provisions thereof, (a)
the LIBOR Spread shall be deemed to be that of Level IV with
respect to Eurodollar Loans made on and after the date on which the
failure to deliver such certificate occurred until such date as the
Administrative Agent shall receive such certificate in accordance
with the provisions of Section 6.04(d), which change in the LIBOR
Spread shall become effective with respect to Eurodollar Loans made
on and after the date on which such certificate was received, (b)
the ABR Spread shall be deemed to be that of Level IV until such
time as the
Administrative Agent shall receive such certificate in accordance
with the provisions of Section 6.04(d) and (c) the Commitment Fee
shall be deemed to be that of Level IV until such time as the
Administrative Agent shall receive such certificate in accordance
with the provisions of Section 6.04(d).
Assessment Rate shall mean for any date the annual rate
(rounded upwards, if necessary, to the
next 1/100 of 1%) most recently estimated by the Administrative
Agent as the then-current net annual assessment rate that will be
employed in determining amounts payable by the Administrative Agent
to the Federal Deposit Insurance Corporation (or any successor) for
insurance by such Corporation (or such successor) of time deposits
made in dollars at the Administrative Agent's domestic offices.
Assignment and Acceptance shall mean an assignment and
acceptance entered into by a Lender and an assignee, and accepted by
the Administrative Agent, in the form of Exhibit B or such other form
as shall be approved by the Administrative Agent.
BA Disbursement shall mean, with respect to any Bankers'
Acceptance, any payment of the face amount of such Bankers'
Acceptance made by the Primary Fronting Bank to the holder thereof
upon the maturity thereof.
BA Discount Rate shall mean, with respect to any Bankers'
Acceptance, the current quoted discount rate for bankers' acceptances
of the Primary Fronting Bank on the date of the origination of such
Bankers' Acceptance for bankers' acceptances in an amount
substantially equal to the face amount of such Bankers' Acceptance
and having the same maturity as such Bankers' Acceptance.
BA Documents shall mean, with respect to any Bankers'
Acceptance, such documents and
agreements as the Primary Fronting Bank may reasonably require in
connection with the creation of such Bankers' Acceptance.
BA Exposure shall mean, at any time, the sum of (a) the
maximum aggregate amount that is, or at any time thereafter may
become, payable by the Primary Fronting Bank under all Bankers'
Acceptances then outstanding and (b) the aggregate amount of BA
Disbursements for which the Primary Fronting Bank or the Lenders, as
the case may be, have not been reimbursed by the Borrower at such
time.
Bankers' Acceptance shall mean a bill of exchange or
draft denominated in dollars (a) drawn
(i) in the case of a Clean Bankers' Acceptance, by the Borrower,
(ii) in the case of a Trade Banker's Acceptance, in the name of the
beneficiary of the related Trade Letter of Credit and (iii) in each
case, in the ordinary course of the Borrower's business and
accepted by the Primary Fronting Bank on the Primary Fronting
Bank's form of draft in effect from time to time, (b) in the case
of a Clean Bankers' Acceptance, for a face amount of $1,000,000 or
any integral multiple of $250,000 in excess thereof and (c) for a
term (i) in the case of a Clean Bankers' Acceptance, of not less
than 30 days or more than
120 days and (ii) in the case of a Trade Bankers' Acceptance, of
not less than 20 or more than 120 days.
Bankers' Acceptance Request shall mean a request made pursuant to
Section 3.02 in the form
of Exhibit K.
Board shall mean the Board of Governors of the Federal Reserve
System of the United States.
Borrowing shall mean a group of Loans of a single Type made by the
Lenders on a single date
and as to which a single Interest Period is in effect.
Business Day shall mean any day (other than a Saturday,
Sunday or legal holiday in the State
of New York) on which banks are open for business in New York City;
provided, however, that, when used in connection with a Eurodollar
Loan, the term Business Day shall also exclude any day on which
banks are not open for dealings in dollar deposits in the London
interbank market.
Capital Expenditures shall mean, for any period, the sum
of all amounts that would, in accordance with GAAP, be included as
additions to property, plant and equipment and other capital
expenditures on a consolidated statement of cash flows for the
Borrower and the Subsidiaries during such period (including the
amount of assets leased under any Capital Lease Obligation).
Notwithstanding the foregoing, the term Capital Expenditures
shall not include capital expenditures in respect of the
reinvestment of insurance proceeds and condemnation proceeds
received by the Borrower or any Subsidiary
in connection with the disposition of the Borrower's or such
Subsidiary's assets or properties in the nature of a casualty or
condemnation, if (as contemplated in the definition of the term
Prepayment Event ) such reinvestment (including, in the case of
insurance proceeds, reinvestment in the form of restoration or
replacement of damaged property) shall have resulted in the event
giving rise to the receipt of such amounts not being considered a
Prepayment Event as contemplated in the definition of such term.
Capital Lease Obligations of any person shall mean the
obligations of such person to pay rent
or other amounts under any lease of (or other arrangement conveying
the right to use) real or personal property, or a combination
thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such person
under GAAP and, for the purposes of this Agreement, the amount of
such obligations at any time shall be the capitalized amount
thereof at such time determined in accordance with GAAP.
A Change in Control shall be deemed to have occurred if (a)
any Person or group (within the meaning of Rule 13d-5 of the
Securities and Exchange Commission as in effect on the date hereof)
other
than ML Capital Partners, Inc. and its Affiliates shall own
directly or indirectly, beneficially or of record, shares
representing more than 30% of the aggregate ordinary voting power
represented by the issued and
outstanding capital stock of the Borrower; (b) a change in the
membership of the board of directors of the Borrower shall occur at
any time during any twelve-month period such that, following such
change, at least 30% of the members of the board of directors were
not members of the board of directors at the beginning of such
twelve-month period (but only if the election of such new members
of the board of directors was not approved by a majority of the
directors who were either sitting at the beginning of such
twelve-month
period or elected to the board of directors during such
twelve-month period with the approval of a majority of the
directors who were sitting at the beginning of such twelve-month
period); or (c) any Person or group other than ML Capital Partners,
Inc. and its Affiliates shall otherwise directly or indirectly
Control the Borrower.
Change in Liquidity From Receivables Programs shall mean, for
any period, the net change
from the first day of such period to the last day of such period in
accounts receivable of the Borrower resulting from the sale of such
accounts receivable by the Borrower and receipt by the Borrower of
the cash proceeds of such sale pursuant to Permitted Receivables
Purchase Agreements, calculated in accordance with GAAP applied on
a basis consistent with the Borrower's audited consolidated
financial statements for the fiscal year ended January 30, 1993.
Clean Bankers' Acceptance shall mean (a) each Bankers'
Acceptance that is not a Trade
Bankers' Acceptance and (b) each Existing Clean Bankers'
Acceptance; each Clean Bankers' Acceptance (other than an Existing
Clean Bankers' Acceptance) shall be originated by the Primary
Fronting Bank in accordance with Section 3.02(c).
Code shall mean the Internal Revenue Code of 1986, or any
successor statute thereto, as the
same may be amended from time to time.
Collateral shall mean all the Collateral as defined in any
Security Document and shall also
include the Lockbox Collateral and the Mortgaged Properties.
Collateral Agent shall mean Chemical Bank, as Collateral Agent
under the Security Documents,
the Guarantee Agreement and the Indemnity, Subrogation and
Contribution Agreement.
Commitment shall mean, with respect to each Lender, such
Lender's Term Loan Commitment
and Revolving Credit Commitment.
Commitment Fee shall have the meaning assigned to such term
in Section 2.05(a).
Common Stock shall mean the Voting Common Stock and the
Non-Voting Common Stock.
Confidential Information Memorandum shall mean the
Confidential Information Memorandum
of the Borrower dated June 1994.
Consideration shall mean, with respect to any Acquisition, the
aggregate consideration to be
paid by the Borrower or any Subsidiary in connection with such
Acquisition, including (a) any Indebtedness assumed or incurred by
the Borrower or any Subsidiary in connection with such Acquisition
and (b) any shares of the Borrower's capital stock or other equity
securities, or any obligations convertible into or exchangeable for
(or giving any Person a right, option or warrant to acquire) such
securities or such convertible or exchangeable obligations, in each
case issued by the Borrower in connection with such Acquisition.
Control shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management or
policies of a person, whether through the ownership of voting
securities, by contract or otherwise, and the terms Controlling
and Controlled shall have meanings correlative thereto.
Credit Event shall have the meaning assigned to such term in
Article V.
Default shall mean any event or condition that upon notice,
lapse of time or both would constitute an Event of Default.
Default Rate shall have the meaning assigned to such term in
Section 2.07.
dollars or $ shall mean lawful money of the United States.
EBITDA with respect to any Person for any period shall mean (a)
the sum of (i) Net Income
of such Person for such period, (ii) all Federal, state, local and
foreign taxes deducted in determining such Net Income, (iii)
interest expense deducted in determining such Net Income and (iv)
depreciation,
amortization and other noncash charges deducted in determining such
Net Income, less (b) any noncash income included in determining
such Net Income.
11-1/8% Subordinated Debenture Indenture shall mean the
Subordinated Debenture Indenture dated as of May 1, 1986, between
the Borrower and Bank of America, N.A., as trustee, as successor to
Mellon Bank, N.A., relating to the 11-1/8% Subordinated Debentures,
as such Subordinated Debenture Indenture may from time to time be
amended or modified in accordance with Section 7.10.
11-1/8% Subordinated Debentures shall mean the 11-1/8%
Subordinated Debentures due 2001
of the Borrower, as such 11-1/8% Subordinated Debentures may from
time to time be amended or modified in accordance with Section
7.10.
Equipment Agency Arrangements shall mean arrangements between
the Borrower and one or
more equipment lessors (the "Equipment Lessors") pursuant to which
(a) the Borrower, acting as the Equipment Lessor's agent or
otherwise, orders and/or pays for equipment to be used in the
Borrower's business, (b) the Equipment Lessor reimburses the
Borrower for any such payment and (c) the Equipment Lessor leases
such equipment to the Borrower.
Equipment Lessor shall have the meaning assigned to such term in
the definition of the term
"Equipment Agency Arrangements".
Equity Issuance shall mean any issuance or sale by the
Borrower of any shares of its capital stock or other equity
securities, or any obligations convertible into or exchangeable for
(or giving any Person a right, option or warrant to acquire) such
securities or such convertible or exchangeable obligations, other
than (a) sales or issuances of Common Stock to management or key
employees of the Borrower or any of its Subsidiaries under any
employee stock option or stock purchase plan in existence
from time to time, not to exceed in the aggregate $6,000,000 in any
fiscal year or (b) issuances or sales of any securities by any
Subsidiary to a Subsidiary that is a Guarantor or to the Borrower
or by the Borrower to any Subsidiary that is a Guarantor; provided,
however, that the term Equity Issuance shall not include any
issuance or sale of Common Stock to any Person that is not an
Affiliate of the Borrower
to the extent that the consideration for such issuance or sale is
a drugstore or any assets thereof or all or substantially all the
capital stock of any corporation that engages exclusively in a
business or businesses substantially similar to one or more lines
of business in which the Borrower or any Subsidiary is principally
engaged on the date hereof.
Equity Issuance Balance shall mean (a) 100% of the Net
Proceeds from any Equity Issuance
minus (b) the aggregate amount of such Net Proceeds that has been
applied by the Borrower (or placed in
the Repurchase Account pursuant to Section 2.13(d) to be applied by
the Borrower) to redeem or
repurchase 11-1/8% Subordinated Debentures pursuant to Section
7.09(a)(iii)(B).
ERISA shall mean the Employee Retirement Income Security Act
of 1974, or any successor
statute, as the same may be amended from time to time.
ERISA Affiliate shall mean any trade or business (whether or
not incorporated) that is a member
of a group of which the Borrower is a member and which is treated
as a single employer under Section 414 of the Code.
Eurodollar Borrowing shall mean a Borrowing comprised of
Eurodollar Loans.
Eurodollar Loan shall mean any Eurodollar Term Loan or
Eurodollar Revolving Loan.
Eurodollar Revolving Loan shall mean any Revolving Loan bearing
interest at a rate determined
by reference to the Adjusted LIBO Rate in accordance with the
provisions of Article II.
Eurodollar Term Loan shall mean any Term Loan bearing
interest at a rate determined by reference to the Adjusted LIBO
Rate in accordance with the provisions of Article II.
Event of Default shall have the meaning assigned to such term
in Article VIII.
Existing Clean Bankers' Acceptance shall mean each bill of
exchange or draft denominated in dollars that (a) was drawn by the
Borrower in the ordinary course of the Borrower's business, (b) was
accepted by NationsBank, (c) is outstanding on the Restatement Date
and (d) is listed in part I of Schedule 1.01(a).
Existing Standby Letter of Credit shall mean each standby
letter of credit that (a) was issued by NationsBank for the account
of the Borrower, (b) is outstanding on the Restatement Date and (c)
is listed
in part II of Schedule 1.01(a).
Existing Trade Bankers' Acceptance shall mean each bill
of exchange or draft denominated in dollars that (a) was drawn by
the beneficiary of a related commercial documentary letter of
credit in the ordinary course of the Borrower's business, (b) was
accepted by NationsBank, (c) is outstanding on the Restatement Date
and (d) is listed in part III of Schedule 1.01(a).
Existing Trade Letter of Credit shall mean each commercial
documentary letter of credit that
(a) was issued by NationsBank for the account of the Borrower, (b)
is outstanding on the Restatement Date and (c) is listed in part IV
of Schedule 1.01(a).
Facilities shall mean, collectively, the Term Facility
and the Revolving Facility.
Federal Funds Effective Rate shall mean, for any day,
the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by
Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York or,
if such rate is not so published for any day that is a Business
Day, the average of the quotations for the day of such transactions
received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
Fees shall mean the Administrative Fees, the Commitment
Fees, the LC/BA Fees, the fees
specified in Section 2.05(c) and the fees specified in Section
3.09.
Financial Officer of any corporation shall mean the
chief financial officer, principal accounting officer, Treasurer or
Controller of such corporation.
Fixed Charge Coverage Ratio shall mean, for any period,
the ratio of (a) EBITDA of the
Borrower and the Subsidiaries, determined on a consolidated basis
in accordance with GAAP, for such period plus Lease Expense (but
only to the extent of the amount of such Lease Expense that was
deducted in calculating such EBITDA) for such period less Capital
Expenditures for such period to (b) the sum of (i) Interest Expense
for such period, (ii) cash income taxes paid by the Borrower and
the Subsidiaries on a consolidated basis during such period, (iii)
Lease Expense for such period, (iv) the Term Loan Repayment Amounts
scheduled to be paid during such period and (v) scheduled payments
during such
period of the principal of permitted Indebtedness of the Borrower
and the Subsidiaries other than the Loans.
Fronting Banks shall mean (a) with respect to Letters of
Credit (other than IRB Letters of
Credit) and Bankers' Acceptances, the Primary Fronting Bank, and
(b) with respect to IRB Letters of Credit, the IRB Fronting Bank.
Funded Debt shall mean all Indebtedness of the Borrower
and the Subsidiaries, determined on a consolidated basis in
accordance with GAAP, excluding Indebtedness described in clause
(i) of the definition of such term.
Funded Debt to EBITDA Ratio shall mean, with respect to any fiscal
period, the ratio of
(a) Funded Debt on the last day of such period to (b) EBITDA of the
Borrower and the Subsidiaries, determined on a consolidated basis
in accordance with GAAP, for such period.
Funding I Lease shall mean (a) the sale and master
operating leaseback of 72 store premises
pursuant to the Lease Agreement dated as of January 15, 1987, as
amended to the date hereof, among JEC Funding, Inc., as lessor, and
the Borrower as lessee, and (b) the documents related thereto.
Funding II Lease shall mean (a) the capital lease of
store premises pursuant to the Lease Agreement dated as of March
31, 1989, among JEC Facilities Funding II, Inc., as lessor, and the
Borrower, as lessee, and (b) the documents related thereto.
GAAP shall mean generally accepted accounting principles
in the United States.
Governmental Authority shall mean any Federal, state, local or
foreign court or governmental
agency, authority, instrumentality or regulatory body.
Guarantee of or by any Person shall mean any obligation,
contingent or otherwise (whether or not denominated as a
guarantee), of such person guaranteeing any Indebtedness of any
other person (the
primary obligor ) in any manner, whether directly or indirectly,
and including any obligation of such
person, direct or indirect, (a) to purchase or pay (or advance or
supply funds for the purchase or payment of) such Indebtedness or
to purchase (or to advance or supply funds for the purchase of)
any security for the payment of such Indebtedness, (b) to purchase
property, securities or services for the purpose of
assuring the owner of such Indebtedness of the payment of such
Indebtedness or (c) to maintain working capital, equity capital or
other financial statement condition or liquidity of the primary
obligor so as to enable the primary obligor to pay such
Indebtedness; provided, however, that the term Guarantee shall
not include endorsements for collection or deposit, in either case
in the ordinary course of business.
Guarantee Agreement shall mean the Guarantee Agreement dated
as of June 14, 1993, as
amended and restated as of August 3, 1994, among the Guarantors and
the Collateral Agent.
Guarantor shall mean each Subsidiary that shall be one of the
initial parties to the Guarantee Agreement and any other Person
that shall become a Guarantor pursuant to Section 6.10 or clause
(q) of Article VIII.
IC Florida shall mean Pharmacy Dynamics Group, Inc., a
Florida corporation.
IC Holdings shall mean Insta-Care Holdings, Inc., a Florida
corporation.
IC Holdings Convertible Debentures shall mean the Convertible
Debentures issued pursuant to the IC Holdings Management
Subscription Agreement, as such Convertible Debentures may from
time to time be amended or modified in accordance with Section
7.10.
IC Holdings Employees shall mean (a) employees of IC Holdings or
any of its subsidiaries and
their estates, (b) the spouses, parents and issue of employees of
IC Holdings or any of its subsidiaries and their estates and (c)
trusts, corporations and partnerships, the beneficiaries,
stockholders or partners of which include only the persons listed
in clauses (a) and (b) above.
IC Holdings Management Subscription Agreement shall mean the
Subscription Agreement dated
as of May 1, 1990, among IC Holdings and certain IC Holdings
Employees pursuant to which such IC Holdings Employees have agreed
to purchase IC Holdings Convertible Debentures, as such
Subscription Agreement may from time to time be amended or modified
in accordance with Section 7.10.
IC Holdings Sale shall mean the sale, transfer or other
disposition by the Borrower of the business and assets of IC
Holdings or the capital stock of IC Holdings, whether by means of
an initial public offering or otherwise.
IC Holdings Sale Balance shall mean (a) 100% of the Net Proceeds
from the IC Holdings Sale
minus (b) the aggregate amount of such Net Proceeds that has been
applied by the Borrower (or placed in the Repurchase Account
pursuant to Section 2.13(c) to be applied by the Borrower) to
redeem or repurchase 11-1/8% Subordinated Debentures pursuant to
Section 7.09(a)(iii)(A).
IC Texas shall mean Insta-Care Pharmacy Services Corp., a
Texas corporation.
IFS Sale and Leaseback shall mean the sale and leaseback
transaction consummated by the Borrower on June 15, 1993, whereby
the Borrower sold certain photographic processing equipment to
Imaging Financial Services, Inc., a Delaware corporation, and
entered into a lease in respect of such equipment.
Inactive Subsidiary shall mean any subsidiary of the Borrower
that (a) has assets with a total market value not in excess of
$1,000 and (b) has not conducted any business or other operations
during the prior 12-month period.
Indebtedness of any Person shall mean, without duplication,
(a) all obligations of such Person for borrowed money or with
respect to deposits or advances of any kind other than deposits or
advances
in the ordinary course of business, (b) all obligations of such
person evidenced by bonds, debentures, notes or similar
instruments, (c) all obligations of such Person upon which interest
charges are customarily paid,
(d) all obligations of such Person under conditional sale or other
title retention agreements relating to assets purchased by such
Person, (e) all obligations of such Person issued or assumed as the
deferred purchase
price of property or services (excluding trade accounts payable and
accrued expenses arising in the ordinary course of business), (f)
all Indebtedness of others secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise,
to be secured by) any Lien on property owned or acquired by such
Person, whether or not the obligations secured thereby have been
assumed by such Person, (g) all Guarantees by such Person of
Indebtedness of others, (h) all Capital Lease Obligations of such
Person, (i)
all obligations of such Person in respect of interest rate
protection agreements, foreign currency exchange agreements or
other interest or exchange rate hedging arrangements and (j) all
obligations of such Person as an account party to reimburse any
bank or any other Person in respect of letters of credit or
bankers' acceptances. The Indebtedness of any Person shall include
the Indebtedness of any partnership in which such Person is a
general partner.
Indemnity, Subrogation and Contribution Agreement shall mean
the Indemnity, Subrogation and Contribution Agreement dated as of
June 14, 1993, as amended and restated as of August 3, 1994, among
the Guarantors and the Collateral Agent.
Institutional Investors shall mean the Institutional
Investors that purchased class A stock and cumulative redeemable
preferred stock pursuant to the Investor Stock Subscription
Agreements.
Interest Coverage Ratio shall mean, for any period, the ratio of
(a) EBITDA of the Borrower
and the Subsidiaries, determined on a consolidated basis in
accordance with GAAP, for such period less Capital Expenditures
during such period to (b) Interest Expense for such period.
Interest Expense shall mean, for any period, the gross
interest expense of the Borrower and the Subsidiaries for such
period determined on a consolidated basis in accordance with GAAP,
excluding any fees and expenses payable or amortized during such
period by the Borrower in connection with the
Transactions. For purposes of the foregoing, gross interest expense
shall be determined after giving effect to any net payments made or
received by the Borrower with respect to Rate Protection
Agreements.
Interest Payment Date shall mean (a) with respect to any
Loan, the last day of the Interest
Period applicable to the Borrowing of which such Loan is a part,
(b) with respect to any Swingline Loan, the last day of the
Interest Period applicable to such Swingline Loan and (c) with
respect to any Eurodollar Borrowing with an Interest Period of more
than three months' duration, each day that would have been an
Interest Payment Date had successive Interest Periods of three
months' duration been applicable to such Borrowing and, in
addition, the date of any refinancing or conversion of such
Borrowing with or to a Borrowing of a different Type, provided that
upon any conversion of an ABR Borrowing to a Eurodollar Borrowing
on a day other than the last day of the Interest Period with
respect to such ABR Borrowing, the Interest Payment Date for such
ABR Borrowing shall be the last day of such Interest Period.
Interest Period shall mean (a) as to any Eurodollar Borrowing, the
period commencing on the
date of such Borrowing or on the last day of the immediately
preceding Interest Period applicable to such Borrowing, as the case
may be, and ending on the numerically corresponding day (or, if
there is no numerically corresponding day, on the last day) in the
calendar month that is 1, 2, 3 or 6 months thereafter, as the
Borrower may elect, (b) as to any ABR Borrowing, the period
commencing on the date of
such Borrowing or on the last day of the immediately preceding
Interest Period applicable to such Borrowing, as the case may be,
and ending on the earliest of (i) the next succeeding March 31,
June 30, September 30 or December 31, (ii) the Revolving Credit
Maturity Date or the Term Loan Maturity Date, as applicable, and
(iii) the date such Borrowing is converted to a Borrowing of a
different Type in accordance with Section 2.10 or repaid or prepaid
in accordance with Section 2.11, 2.12 or 2.13, and (c) as to any
Swingline Loan, the period commencing on the date such Swingline
Loan is made or on the
last day of the immediately preceding Interest Period applicable to
such Swingline Loan, as the case may be, and ending on the earliest
of (i) the next succeeding March 31, June 30, September 30 or
December 31, (ii) the Revolving Credit Maturity Date and (iii) any
date on which the Swingline Lenders require the Lenders to purchase
all or any portion of such Swingline Loan pursuant to Section
2.22(c); provided, however, that, if any Interest Period would end
on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless, in the case of
a Eurodollar Borrowing only, such next succeeding Business Day
would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day. Interest shall
accrue from and including the first day of an Interest Period to
but excluding the last day of such Interest Period.
Investor Stock Subscription Agreements shall mean (a) the
Subscription Agreement dated as of
April 30, 1986, among the Borrower, the financial institutions
identified therein, the Merrill Lynch Affiliate Investors and the
Institutional Investors and (b) the Subscription Agreement dated as
of April 30, 1986, between the Borrower and Morgan Capital
Corporation, as such Subscription Agreements may from time
to time be amended or modified in accordance with Section 7.10.
IRB Fronting Bank shall mean any Lender designated as such by
written notice to the Administrative Agent from the Borrower, which
designation shall be effective upon receipt by the Managing Agents
of an instrument, in form and substance satisfactory to the
Managing Agents, whereby such Lender assumes the obligations of the
IRB Fronting Bank hereunder.
IRB Letter of Credit shall mean any Standby Letter of Credit
issued by the IRB Fronting Bank in accordance with (a) Section 5.4
of the Lease Agreement dated as of November 1, 1986, between The
Industrial Development Board of the City of Hammond, Inc. and the
Borrower or (b) Section 5.4 of the Lease Agreement dated as of
December 1, 1986, between Development Authority of Coweta County
and the Borrower, and any extensions and replacements thereof, as
such Standby Letter of Credit may from time to time be amended,
supplemented or modified.
LC/BA Commitment shall mean at any time an amount equal to
the lesser of (a) $155,000,000, as the same may be reduced from
time to time pursuant to Section 3.08, and (b) the Revolving Credit
Commitment at such time. The LC/BA Commitment shall automatically
and permanently terminate on the LC/BA Maturity Date.
LC/BA Exposure shall mean, at any time of determination, the sum
of (a) the Trade LC
Exposure, (b) the Standby LC Exposure and (c) the BA Exposure at
such time.
LC/BA Fee shall have the meaning given such term in Section
3.04.
LC/BA Maturity Date shall mean the fifth Business Day prior
to the Revolving Credit Maturity Date.
LC Disbursement shall mean any payment or disbursement made by a
Fronting Bank under or
pursuant to a Letter of Credit.
Lease Expense shall mean, for any period, with respect to any
operating leases of the Borrower
and the Subsidiaries, all amounts paid or accrued during such
period under such operating leases (whether or not constituting
rental expense) by the Borrower and the Subsidiaries on a
consolidated basis.
Leasehold Mortgage shall mean any Mortgage that is a
leasehold mortgage.
Letter of Credit Application shall mean a commercial or
standby letter of credit application, as applicable, in the
relevant Fronting Bank's customary form, as such form may be
modified from time to time by such Fronting Bank.
Letters of Credit shall mean Trade Letters of Credit and
Standby Letters of Credit.
LIBOR Spread shall have the meaning specified in the definition of
the term Applicable Rate
Percentage .
Lien shall mean, with respect to any asset, (a) any mortgage,
deed of trust, lien, pledge, assignments for security (whether
collateral or otherwise), hypothecation, encumbrance, lease,
sublease,
charge or security interest in or on such asset, (b) the interest
of a vendor or a lessor under any conditional sale agreement,
capital lease or title retention agreement relating to such asset
and (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.
Loan Documents shall mean this Agreement, the Notes, the
Letters of Credit, the Bankers'
Acceptances, the BA Documents, the Security Documents, the
Guarantee Agreement and the Indemnity, Subrogation and Contribution
Agreement.
Loans shall mean the Revolving Loans and the Term Loans.
Lockbox Agreements shall mean any lockbox agreements among the
Borrower, the Collateral
Agent and a Sub-Agent (as defined in each Lockbox Agreement),
substantially in the form of Annex 1 to the Security Agreement.
Lockbox Collateral shall have the meaning assigned to such term in
each of the Lockbox
Agreements.
Management Investors shall mean the officers of the Borrower who
purchased Class A Stock
and Class B Stock pursuant to the Management Subscription
Agreement.
Management Subscription Agreement shall mean, collectively,
(a) the Management Subscription Agreement dated as of April 30,
1986, (b) the Management Subscription Agreement dated as of June
30, 1987, and (c) the Management Subscription Agreement dated as of
November 1, 1987, in each case, among the Borrower and the
Management Investors and pursuant to which the Management Investors
purchased Class A Stock and Class B Stock, as such agreements may
from time to time be amended or modified in accordance with Section
7.10.
Margin Stock shall have the meaning given such term under
Regulation U.
Material Adverse Effect shall mean (a) a materially adverse
effect on the business, assets,
operations, prospects or condition, financial or otherwise, or the
material agreements of the Borrower and the Subsidiaries, taken as
a whole, (b) material impairment of the ability of the Borrower or
any Subsidiary
to perform any of its obligations under any Loan Document to which
it is or will be a party or (c) material impairment of the rights
of or benefits available to the Administrative Agent, the Fronting
Banks, the Collateral Agent or the Lenders under any Loan Document.
Merrill Lynch Affiliate Investors shall mean the Affiliates
of Merrill Lynch & Co., Inc. on
April 30, 1986, who purchased class A stock and cumulative
redeemable preferred stock pursuant to the Investor Stock
Subscription Agreements.
Mortgaged Properties shall mean the owned real properties of the
Borrower specified on
Schedule 1.01(b).
Mortgages shall mean the mortgages, deeds of trust, leasehold
mortgages, assignments of leases and rents (including the
Assignments of Leases and Rents), modifications and other security
documents
delivered pursuant to Section 5.02(k) or Section 6.10, each (except
in the case of any Leasehold Mortgage) substantially in the form of
Exhibit I.
Multiemployer Plan shall mean a multiemployer plan as defined in
Section 4001(a)(3) of ERISA
to which the Borrower or any ERISA Affiliate (other than one
considered an ERISA Affiliate only pursuant to subsection (m) or
(o) of Section 414 of the Code) is making or accruing an obligation
to make contributions, or has within any of the preceding five plan
years made or accrued an obligation to make contributions.
Net Income with respect to any Person for any period shall mean
the aggregate net income (or
net deficit) of such Person and its subsidiaries determined on a
consolidated basis for such period, which shall be equal to gross
revenues for such Person and its subsidiaries determined on a
consolidated basis during such period less the aggregate for such
Person and its subsidiaries determined on a consolidated
basis during such period of, without duplication, (a) cost of goods
sold, (b) interest expense, (c) operating expenses, (d) selling,
general and administrative expenses, (e) taxes, (f) depreciation,
depletion and amortization of properties and (g) any other items
that are treated as expense under GAAP, all computed
in accordance with GAAP; provided, however, that the term Net
Income shall exclude (i) gains and
losses from the sale of assets other than in the ordinary course of
business and (ii) any write-up in the value of any asset.
Net Proceeds shall mean, with respect to any Prepayment
Event, the IC Holdings Sale or any
Equity Issuance, (a) the gross proceeds (including, if applicable,
insurance proceeds, condemnation awards and payments from time to
time in respect of installment obligations) received by or on
behalf of the Borrower or any of its Subsidiaries in respect of
such Prepayment Event, the IC Holdings Sale or such
Equity Issuance, less (b) the sum of (i) in the case of a
Prepayment Event under clause (a) or (b) of the definition thereof
or the IC Holdings Sale, the amount, if any, of all taxes (other
than income taxes) payable by the Borrower or any of its
Subsidiaries in connection with such Prepayment Event or the IC
Holdings Sale and the Borrower's good-faith best estimate of the
amount of all income taxes payable in connection with such
Prepayment Event or the IC Holdings Sale (to the extent that such
amount shall have been set aside for the purpose of paying such
income taxes), (ii) in the case of a Prepayment Event under clause
(a) of the definition thereof or the IC Holdings Sale, (A) the
amount of any reasonable reserve established
in accordance with GAAP against any liabilities associated with the
assets sold or disposed of and retained by the Borrower or any of
its Subsidiaries, provided that the amount of any subsequent
reduction of such reserve (other than in connection with a payment
in respect of any such liability) shall be deemed to be Net
Proceeds of a Prepayment Event or the IC Holdings Sale occurring on
the date of
such reduction, and (B) the amount applied to repay any
Indebtedness (other than the Loans and the Swingline Loans) to the
extent such Indebtedness is required by its terms to be repaid as
a result of such Prepayment Event or the IC Holdings Sale and (iii)
reasonable and customary fees, commissions and expenses and other
costs paid by the Borrower or any of its Subsidiaries in connection
with such Prepayment Event, the IC Holdings Sale or Equity Issuance
(other than those payable to the Borrower or any subsidiary of the
Borrower), in each case only to the extent not already deducted in
arriving at the amount referred to in clause (a) above.
Net Working Capital shall mean, with respect to any Person
and its subsidiaries on a
consolidated basis at any date, (a) the sum of inventory
(calculated using a first-in-first-out accounting
method), current receivables (including trade receivables and
current rent receivables) and prepaid expenses minus (b) the sum of
accrued expenses currently payable and trade payables, as each of
such items would appear on a consolidated balance sheet of such
Person and its subsidiaries as of the date of determination in
accordance with GAAP.
9-1/4% Senior Subordinated Note Indenture shall mean the
Senior Subordinated Note Indenture
dated as of November 1, 1993, between the Borrower and State Street
Bank and Trust Company of Connecticut, National Association , as
trustee, as such Senior Subordinated Note Indenture may from time
to time be amended or modified in accordance with Section 7.10.
9-1/4% Senior Subordinated Notes shall mean the 9-1/4% Senior
Subordinated Notes due 2004 of the Borrower, as such 9-1/4% Senior
Subordinated Notes may from time to time be amended or modified in
accordance with Section 7.10.
1993 Credit Agreement shall mean the Credit Agreement dated
as of June 14, 1993, among the
Borrower, the Lenders listed therein, Chemical Bank and
NationsBank, as Managing Agents and Swingline Lenders, and Chemical
Bank, as Administrative Agent.
Non-Voting Common Stock shall mean the Borrower's Non-Voting
Common Stock (Series I),
par value $.01 per share.
Notes shall mean the Term Notes, the Revolving Credit Notes
and the Swingline Notes.
Obligations shall mean all obligations defined as Obligations in
the Guarantee Agreement and
the Security Documents.
Outstanding Bankers' Acceptances shall mean at any time the
Bankers' Acceptances outstanding
at such time.
Outstanding Clean Bankers' Acceptances shall mean at any time the
Clean Bankers' Acceptances
outstanding at such time.
Outstanding Letters of Credit shall mean at any time the Letters
of Credit outstanding at such
time.
Outstanding Standby Letters of Credit shall mean at any time the
Standby Letters of Credit
outstanding at such time.
Outstanding Trade Bankers' Acceptances shall mean at any time the
Trade Bankers' Acceptances
outstanding at such time.
Outstanding Trade Letters of Credit shall mean at any time
the Trade Letters of Credit outstanding at such time.
Participating Lender shall mean at any time any Lender with a
Revolving Credit Commitment
at such time.
PBGC shall mean the Pension Benefit Guaranty Corporation referred
to and defined in ERISA
or any successor thereto.
Perfection Certificate shall mean the Perfection Certificate,
substantially in the form of Annex 2 to the Security Agreement,
prepared by the Borrower.
Permitted Acquisition shall mean any Acquisition by the
Borrower or any of its Subsidiaries of any Acquired Entity engaged
in one or more lines of business substantially similar to those in
which the Borrower or any Subsidiary is principally engaged as of
the Restatement Date, so long as (a) the Consideration to be paid
by the Borrower or any Subsidiary in connection with such
Acquisition does not exceed $50,000,000 and (b) the sum of (i) the
Consideration to be paid by the Borrower or any Subsidiary in
connection with such Acquisition and (ii) the aggregate
Consideration paid by the Borrower or any
Subsidiary in connection with all prior Permitted Acquisitions that
were consummated in the fiscal year in which such Acquisition will
occur does not exceed $100,000,000. Notwithstanding the
immediately preceding sentence, no Acquisition for which the
Consideration to be paid by the Borrower or any Subsidiary exceeds
$15,000,000 shall be deemed to be a Permitted Acquisition unless
the Borrower shall, not less than ten days prior to the
consummation of such Acquisition, (a) furnish to the Lenders
written notice of such Acquisition and the Consideration to be paid
in connection therewith, (b) furnish to the Lenders a certificate,
certified by one of the Borrower's Financial Officers, setting
forth in reasonable detail (i) the calculation of Acquired EBITDA,
Acquired Interest Expense, Acquired Lease Expense and Acquired Net
Income with respect to such Acquired Entity and (ii) the
calculation of the ratios specified
in clause (c) below and (c) furnish to the Lenders a certificate,
certified by one of the Borrower's Financial Officers, stating
that, after giving pro forma effect to such Acquisition as if it
had been consummated on the last day of the Borrower's most
recently completed period of four
consecutive fiscal quarters for which a certificate has been
delivered pursuant to Section 6.04(d), (i) the ratio of (A) Funded
Debt on the last day of such period to (B) the sum of (x) EBITDA of
the Borrower and the Subsidiaries, determined on a consolidated
basis in accordance with GAAP, for such period, (y) Acquired EBITDA
of such Acquired
Entity for such period and (z) Acquired EBITDA of any previously
acquired Acquired Entity (but only to the extent that such Acquired
EBITDA is allocable to such period) would be less than or equal to
the ratio set forth in Section 7.11 as being applicable to such
period, (ii) the ratio of (A) the sum of (x) EBITDA of the Borrower
and the Subsidiaries, determined on a consolidated basis in
accordance with GAAP, for such period less Capital Expenditures
during such period, (y) Acquired EBITDA of such Acquired Entity for
such period and (z) Acquired EBITDA of any previously acquired
Acquired Entity (but only to the extent that such Acquired EBITDA
is allocable to such period) to (B) the sum of (x) Interest Expense
for such period, (y) Acquired Interest Expense of such Acquired
Entity for such period and (z) Acquired Interest Expense of any
previously acquired Acquired Entity (but only to the extent that
such Acquired Interest Expense is allocable to such period) would
be greater than or equal to the ratio set forth in
Section 7.12 as being applicable to such period and (iii) the
Acquisition Fixed Charge Coverage Ratio for such period shall be
greater than or equal to 1.10 to 1.00.
Permitted Investments shall mean:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United
States of America (or by any agency thereof to the extent such
obligations are backed by the full faith and credit of the United
States of America), in each case maturing within six months from
the date of acquisition thereof by the Borrower or any Subsidiary;
(b) without limiting the provisions of paragraph (d) below,
investments in commercial
paper maturing within six months from the date of acquisition
thereof by the Borrower or any Subsidiary and having, at such date
of acquisition, a credit rating of A1 from Standard & Poor's
Corporation or P1 from Moody's Investors Service, Inc.;
(c) investments in certificates of deposit, bankers' acceptances
and time deposits maturing within six months from the date of
acquisition thereof by the Borrower or any Subsidiary issued or
guaranteed by or placed with, and money market deposit accounts
issued or offered by, (i) any domestic office of either Managing
Agent or (ii) any domestic office of any other commercial bank of
recognized standing organized under the laws of the United States
of America or any state thereof which is rated (or the senior debt
securities of the holding company of such commercial bank are
rated) in one of the three highest grades by Standard & Poor's
Corporation or Moody's Investors Service, Inc., or another
nationally recognized rating agency if neither of such two named
rating agencies shall rate such bank;
(d) investments in commercial paper maturing within six months from
the date of acquisi-
tion thereof by the Borrower or any Subsidiary and issued by (i)
the holding company of either Managing Agent or (ii) the holding
company of any other commercial bank of recognized standing
organized under the laws of the United States of America or any
state thereof that has commercial paper rated in one of the three
highest grades by Standard & Poor's Corporation or Moody's
Investors Service, Inc., or another nationally recognized rating
agency if neither of such two named rating agencies shall rate such
bank;
(e) repurchase agreements maturing within six months from the date
of acquisition thereof
by the Borrower or a Subsidiary with (i) any Lender (of Affiliate
thereof), (ii) any bank or trust company referred to in paragraph
(c) or (d) above or (iii) Broadway National Bank, in each case,
for, and fully collateralized by a perfected security interest in,
underlying securities of the type referred to in paragraph (a)
above, provided that, in the case of any such repurchase agreements
with Broadway National Bank, the aggregate amount of the repurchase
obligations thereunder shall not at any time exceed $2,000,000.
(f) investments in Merrill Lynch Institutional Fund,
Merrill Lynch Government Fund,
Merrill Lynch Treasury Fund, Merrill Lynch Institutional Tax-Exempt
Fund, American Express
Daily Dividends Fund and American Express Government and
Agencies Fund.
(g) other investment instruments approved in writing by the
Required Lenders and offered
by financial institutions that have a combined capital and surplus
and undivided profits of not less than $250,000,000.
Permitted Receivables Purchase Agreements shall mean,
collectively, (a) the Receivables
Purchase Agreement dated as of March 29, 1990, as amended and
restated as of May 16, 1991, and as further amended as of June 14,
1993, and as the expiration date thereof may be extended from time
to time, between the Borrower and Mellon Bank, N.A., providing for
the transfer to Mellon Bank, N.A. of
an undivided interest in a pool of Third Party Receivables, (b) any
agreement providing for the transfer by the Borrower of Third Party
Receivables that is entered into with the prior written consent of
the
Required Lenders and (c) any other agreements providing for the
transfer by the Borrower of Third Party Receivables in a true sale
transaction, on terms no less favorable to the Borrower and the
Lenders than the receivables purchase agreement described in clause
(a) above, in each case if and to the extent permitted by Section
7.05(e).
Person shall mean any natural person, corporation, business trust,
joint venture, association,
company, partnership or government, or any agency or political
subdivision thereof.
Plan shall mean any pension plan (other than a Multiemployer Plan)
subject to the provisions
of Title IV of ERISA or Section 412 of the Code that is maintained
for employees of the Borrower or any ERISA Affiliate.
Pledge Agreement shall mean the Pledge Agreement dated as of
June 14, 1993, as amended and restated as of August 3, 1994, among
the Borrower, the Guarantors and the Collateral Agent.
Prepayment Account shall have the meaning assigned to such
term in Section 2.13(h).
Prepayment Event shall mean (a) any sale, transfer or other
disposition of any business units,
assets or other properties of the Borrower or any of its
Subsidiaries (including dispositions in the nature of casualties
(to the extent covered by insurance) or condemnations), (b) any
sale and leaseback of any asset or the mortgaging of any real
property other than pursuant to a Mortgage (or a modification
thereof) by
the Borrower or any of its Subsidiaries or (c) the issuance or
incurrence by the Borrower or any of its Subsidiaries of any
Indebtedness (other than any indebtedness that the Borrower or any
Subsidiary is permitted to incur pursuant to Section 7.01), or the
issuance or sale by the Borrower or any of its Subsidiaries of any
debt securities or any obligations convertible into or exchangeable
for, or giving any person or entity any right, option or warrant to
acquire from the Borrower or any of its Subsidiaries any
Indebtedness (other than any indebtedness that the Borrower or any
Subsidiary is permitted to incur pursuant to Section 7.01), or any
such debt securities or any such convertible or exchangeable
obligations. Notwithstanding the foregoing, the term Prepayment
Event shall not include:
(i) sales, transfers and other dispositions of business units,
assets and other properties on commercially reasonable terms
permitted pursuant to Section 7.05(a) with Net Proceeds not
exceeding in the aggregate $6,000,000 in any fiscal year, provided
that at any time when the Net
Proceeds of any such sale, transfer and other disposition, together
with the aggregate Net Proceeds of all other such sales, transfers
and other dispositions during the same fiscal year, shall exceed
$6,000,000 in any fiscal year, a Prepayment Event shall be deemed
to have occurred, and the resultant prepayment in connection with
such Prepayment Event shall equal the amount by which
the aggregate Net Proceeds of such sales, transfers and
dispositions exceeds $6,000,000;
(ii) sales of inventory, used or surplus equipment, vehicles and
other assets in the ordinary course of business;
(iii) the receipt of insurance or condemnation proceeds in respect
of the loss, damage, destruction or taking of any asset of the
Borrower or any such Subsidiary, provided that (A) the aggregate
amount of insurance or condemnation proceeds received by the
Borrower and the Subsidiaries in connection with the event that
resulted in the loss, damage, destruction or taking of such asset
are less than $5,000,000, (B) such proceeds are reinvested in
equipment, vehicles or other
assets (other than inventory that does not replace lost, damaged,
destroyed or taken inventory) used in the Borrower's principal
lines of business within 180 days after the receipt thereof, (C) if
such proceeds are equal to or exceed $1,000,000, the Borrower,
pending such reinvestment, promptly applies such proceeds towards
the payment of Swingline Loans or
Revolving Loans or deposits such proceeds so received and
unreinvested in a cash collateral
account established with the Collateral Agent for the benefit of
the Secured Parties and (D) at the time such proceeds are received
by the Borrower or any of its Subsidiaries, no Default or Event of
Default shall have occurred and be continuing;
(iv) the IC Holdings Sale; or
(v) sales, transfers or other dispositions to Equipment Lessors of
equipment purchased
by the Borrower, as agent for such Equipment Lessor,
pursuant to Equipment Agency
Arrangements.
Primary Fronting Bank shall mean NationsBank.
Rate Protection Agreements shall mean interest rate cap
agreements, interest rate swap
agreements and other agreements or arrangements entered into by the
Borrower to provide protection to
the Borrower against fluctuations in interest rates.
Receivables Subsidiary means any bankruptcy-remote subsidiary
of the Borrower created for the purpose of purchasing accounts
receivable from the Borrower and the Subsidiaries pursuant to a
Permitted Receivables Purchase Agreement.
Reference Lenders shall mean the principal London offices of the
Managing Agents and, as
long as it is a Lender, Union Bank of Switzerland.
Register shall have the meaning given such term in Section
10.04(d).
Regulation G shall mean Regulation G of the Board as from time to
time in effect and all
official rulings and interpretations thereunder or thereof.
Regulation U shall mean Regulation U of the Board as from time to
time in effect and all
official rulings and interpretations thereunder or thereof.
Regulation X shall mean Regulation X of the Board as from time to
time in effect and all
official rulings and interpretations thereunder or thereof.
Repurchase Account shall have the meaning assigned to such term in
Section 2.13(c).
Reportable Event shall mean any reportable event as defined
in Section 4043(b) of ERISA or the regulations issued thereunder
with respect to a Plan (other than a Plan maintained by an ERISA
Affiliate that is considered an ERISA Affiliate only pursuant to
subsection (m) or (o) of Section 414 of the Code).
Required Lenders shall mean, at any time, Lenders holding
Loans, a share of the used
LC/BA Commitments and unused Commitments representing greater than
50% of the sum of (a) the
aggregate principal amount of the Loans at such time, (b) the LC/BA
Exposure at such time and (c) the aggregate unused Commitments at
such time.
Responsible Officer of any corporation shall mean any executive
officer or Financial Officer
of such corporation and any other officer or similar official
thereof responsible for the administration of the obligations of
such corporation in respect of this Agreement.
Restatement Date shall mean the date of the execution of this
Agreement.
Revolving Credit Borrowing shall mean a Borrowing comprised
of Revolving Loans.
Revolving Credit Commitment shall mean, with respect to each
Lender, the commitment of
such Lender to make Revolving Loans hereunder as set forth in
clause (b) of Section 2.01, as the same
may be reduced from time to time pursuant to Section 2.09.
Revolving Credit Maturity Date shall mean July 29, 2000.
Revolving Credit Note shall mean a promissory note of the
Borrower, substantially in the
form of Exhibit A-1, evidencing Revolving Loans.
Revolving Credit Utilization shall mean, at any time of
determination, the sum of (a) the aggregate principal amount of
Revolving Loans outstanding at such time, (b) the aggregate
principal amount of Swingline Loans outstanding at such time and
(c) the LC/BA Exposure at such time.
Revolving Facility shall mean the aggregate of the Lenders'
Revolving Credit Commitments.
Revolving Loans shall mean the revolving loans made by the
Lenders to the Borrower
pursuant to clause (b) of Section 2.01. Each Revolving Loan shall
be a Eurodollar Revolving Loan or
an ABR Revolving Loan.
Secured Parties shall have the meaning assigned to such term
in the Security Agreement.
Security Agreement shall mean the Security Agreement dated as
of June 14, 1993, as
amended and restated as of August 3, 1994, among the Borrower, the
Guarantors and the Collateral Agent.
Security Documents shall mean the Mortgages (including the
Assignment of Leases and
Rents and any leasehold mortgage), the Security Agreement, the
Pledge Agreement, the Lockbox Agreements, the Trademark Security
Agreement and each of the security agreements, mortgages and
other instruments and documents executed and delivered pursuant to
any of the foregoing or pursuant to Section 6.10.
Standby LC Exposure shall mean, at any time of determination,
the sum of (a) the aggregate undrawn amount of all Standby Letters
of Credit outstanding at such time and (b) the aggregate amount
that has been drawn under any Standby Letters of Credit but for
which the Fronting Banks or the Lenders, as the case may be, have
not been reimbursed by the Borrower at such time.
Standby Letter of Credit shall mean (a) each irrevocable letter of
credit issued pursuant to
Section 3.01(a) under which a Fronting Bank agrees to make payments
for the account of the
Borrower, on behalf of the Borrower, in respect of obligations of
the Borrower incurred pursuant to contracts made or performances
undertaken or to be undertaken or like matters relating to
contracts to which the Borrower is or proposes to become a party in
the ordinary course of the Borrower's business and (b) each
Existing Standby Letter of Credit.
Statutory Reserves shall mean a fraction (expressed as a
decimal), the numerator of which is the number one and the
denominator of which is the number one minus the aggregate of the
maximum applicable reserve percentages, including any marginal,
special, emergency or supplemental reserves (expressed as a
decimal) established by the Board and any other banking authority
to which the Administrative Agent is subject (a) with respect to
the Base CD Rate (as such term is used in the
definition of the term Alternate Base Rate ) for new negotiable
nonpersonal time deposits in dollars of over $100,000 with
maturities approximately equal to three months and (b) with respect
to the Adjusted LIBO Rate, for Eurocurrency Liabilities (as defined
in Regulation D of the Board). Such reserve percentages shall
include those imposed pursuant to Regulation D of the Board.
Eurodollar Loans shall be deemed to constitute Eurocurrency
Liabilities and to be subject to such reserve requirements without
benefit of or credit for proration, exemptions or offsets that may
be available from time to time to any Lender under such Regulation
D. Statutory Reserves shall be adjusted automatically on and as of
the effective date of any change in any reserve percentage.
Stockholders' Agreement shall mean the Stockholders'
Agreement dated as of April 30,
1986, among the Borrower, the Management Investors, the
Institutional Investors and the Merrill Lynch Affiliate Investors,
as such Stockholders' Agreement may be amended or modified from
time to time in accordance with Section 7.10.
Subordinated Debt Refinancing Indebtedness shall mean any
Indebtedness incurred by the Borrower as contemplated in Section
7.01(j) in connection with the refinancing of the 11-1/8%
Subordinated Debentures or the 9-1/4% Senior Subordinated Notes.
subsidiary shall mean, with respect to any Person (herein
referred to as the parent ), any
corporation, partnership, association or other business entity (a)
of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting
power or more than 50% of the general partnership interests are, at
the time any determination is being made,
owned, controlled or held or (b) that is, at the time any
determination is made, otherwise Controlled by the parent or one or
more subsidiaries of the parent or by the parent and one or more
subsidiaries of the parent.
Subsidiary shall mean any subsidiary of the Borrower other than an
Inactive Subsidiary.
Swingline Commitment Percentage shall mean (a) in the case of
Chemical Bank in its
capacity as a Swingline Lender, 50% and (b) in the case of
NationsBank in its capacity as a Swingline Lender, 50%.
Swingline Loans shall mean the swingline loans made by the
Swingline Lenders pursuant to
Section 2.22.
Swingline Note shall mean a promissory note of the Borrower,
substantially in the form of
Exhibit A-3, evidencing the Swingline Loans.
Term Borrowing shall mean a Borrowing comprised of Term
Loans.
Term Facility shall mean the aggregate amount of the Lenders'
Term Loan Commitments.
Term Loan Commitment shall mean, with respect to each Lender,
the commitment of such
Lender to make Term Loans hereunder as set forth in clause (a) of
Section 2.01, as the same may be
reduced from time to time pursuant to Section 2.09.
Term Loan Maturity Date shall mean July 29, 2000.
Term Loan Repayment Amounts shall have the meaning set forth in
Section 2.11(a)(i). Term Loan Repayment Date shall have the
meaning set forth in Section 2.11(a)(i). Term Loans shall mean the
term loans made by the Lenders to the Borrower pursuant to
clause (a) of Section 2.01. Each Term Loan shall be either a
Eurodollar Term Loan or an ABR Term Loan.
Term Note shall mean a promissory note of the Borrower
substantially in the form of
Exhibit A-2, evidencing Term Loans.
Third Party Receivables shall mean the Accounts (as
defined in the Security Agreement) owing to the Borrower arising
from the sale by the Borrower of goods or services in the ordinary
course of the pharmaceutical business of the Borrower and with
respect to which the obligor is a Person other than the Person to
whom such goods or services were sold.
Trade BA Exposure shall mean, at any time, the sum of (a) the
maximum aggregate amount
that is, or at any time thereafter may become, payable by the
Fronting Bank under all Trade Bankers' Acceptances then outstanding
and (b) the aggregate amount of BA Disbursements in respect of
Trade Bankers' Acceptances for which the Primary Fronting Bank or
the Lenders, as the case may be, have
not been reimbursed by the Borrower at such time.
Trade Bankers' Acceptance shall mean (a) a Bankers'
Acceptance originated by the Primary Fronting Bank upon the
presentation to the Primary Fronting Bank of a time draft for
payment under a Trade Letter of Credit by a beneficiary thereof and
(b) each Existing Trade Bankers' Acceptance; each origination of a
Trade Bankers' Acceptance (other than an Existing Trade Bankers'
Acceptance) shall be in accordance with Section 3.02(e).
Trade LC Exposure shall mean, at any time of
determination, the sum of (a) the aggregate undrawn amount of all
Trade Letters of Credit outstanding at such time and (b) the
aggregate amount that has been drawn under any Trade Letters of
Credit but for which the Primary Fronting Bank or the Lenders, as
the case may be, have not been reimbursed by the Borrower at such
time.
Trade Letter of Credit shall mean (a) each commercial
documentary letter of credit issued by
the Primary Fronting Bank for the account of the Borrower pursuant
to Section 3.01(a) for the purchase of goods in the ordinary course
of business and (b) each Existing Trade Letter of Credit.
Trademark Security Agreement shall mean the Trademark
Security Agreement dated as of
June 14, 1993, as amended and restated as of August 3, 1994, among
the Borrower, the Guarantors and the Collateral Agent.
Transactions shall have the meaning assigned to such
term in Section 4.02.
Type , when used in respect of any Loan or Borrowing,
shall refer to the Rate by reference to which interest on such Loan
or on the Loans comprising such Borrowing is determined. For
purposes hereof, the term Rate shall include the Adjusted LIBO
Rate and the Alternate Base Rate.
Voting Common Stock shall mean the Borrowers' Common Stock, par
value $.01 per share.
Withdrawal Liability shall mean liability to a
Multiemployer Plan as a result of a complete
or partial withdrawal from such Multiemployer Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.
<PAGE>
FIRST AMENDMENT TO RECEIVABLES
PURCHASE AGREEMENT
FIRST AMENDMENT TO RECEIVABLES PURCHASE AGREEMENT dated
as of March 31, 1995 (the "Amendment") between ECKERD CORPORATION
(the "Seller") and THREE RIVERS FUNDING CORPORATION (the
"Buyer").
WITNESSETH:
WHEREAS, the Seller and the Buyer entered into that
certain Receivables Purchase Agreement dated as of January 26,
1995 (the "Agreement"), pursuant to which the Seller has sold
undivided ownership interests in Receivables, and may from time
to time hereafter sell undivided ownership interests in
Receivables, to the Buyer; and
WHEREAS, the parties hereto desire to amend the
Agreement in the manner and on the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration of the premises and of
the mutual covenants herein contained, the parties hereto agree
as follows:
<PAGE>
I. DEFINITIONS
1. DEFINED TERMS.
"Amendment Effective Date" means the first date on which
this Amendment shall have been executed and delivered by all of
the parties hereto and the conditions precedent set forth in
Section IV hereof shall have been fulfilled.
Unless otherwise defined herein, capitalized terms used
herein shall have the meanings assigned to them in the Agreement.
II. AMENDMENTS TO AGREEMENT.
As of the Amendment Effective Date, the Agreement shall
be amended as follows:
1. AMENDMENTS TO ARTICLE I.
(a) The definition of "Concentration Limit" in
Section 1.01 of the Agreement is hereby amended to read in its
entirety as follows:
"Concentration Limit" shall mean, as of any
date of determination, with respect to all of the
Receivables owing from a single Obligor, together with
Receivables owing from its Affiliates or subsidiaries,
an amount equal to six percent (6.00%) of the aggregate
Account Balance of the Eligible Receivables in the
Receivables Pool outstanding as of the last day of the
most recently completed Accounting Period; PROVIDED,
(i) that the Concentration Limit with respect to
Receivables owing from Paid shall be an amount equal to
eighteen percent (18%) of the aggregate Account Balance
of the Eligible Receivables in the Receivables Pool
outstanding as of the last day of the most recently
completed Accounting Period so long as (A) Paid shall be
a wholly-owned subsidiary of Merck & Co., Inc. and (B)
Merck & Co., Inc. shall have short-term ratings of at
least A-1 and P-1 from S&P and Moody's, respectively,
and, if rated by Duff, at least D-1 from Duff, (ii) that
the Concentration Limit in respect of each Obligor whose
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Receivables are outstanding under a Contract with PCS
shall be six percent (6%) of the aggregate Account
Balance of the Eligible Receivables in the Receivables
Pool outstanding as of the last day of the most recently
completed Accounting Period prior to any adjustment for
unapplied cash received from all such Obligors, and
(iii) that the Buyer may, at any time in its sole
discretion, reduce or increase the Concentration Limit
for any Obligor through the delivery of a notice to the
Seller.
(b) The definition of "Credit Loss Reserve" in
Section 1.01 of the Agreement is hereby amended to read in its
entirety as follows:
"Credit Loss Reserve" shall mean, with respect
to any Settlement Period, the product of (i) the Credit
Loss Reserve Percentage for such Settlement Period and
(ii) the positive result of (a) the aggregate Account
Balances of all Eligible Receivables in the Receivables
Pool as of the last day of the Accounting Period most
recently completed, less (b) the Settlement Period
Reserve for such Settlement Period, less (c) the
Servicer's Compensation Reserve for such Settlement
Period, less (d) the sum, without duplication, of
(1) the aggregate (determined as of the last day of the
Accounting Period most recently completed) for all
Obligors of the excess, if any, of the aggregate Account
Balances of all Eligible Receivables owing by a single
Obligor (calculated prior to any adjustment for
unapplied cash received from such Obligor in the case of
an Obligor whose Receivables are outstanding under a
Contract with PCS) over the Concentration Limit in
effect with respect to such Obligor, (2) the aggregate
amount by which the Account Balance of Eligible
Receivables that are Medicaid Receivables exceeds the
Medicaid Receivables Limit and (3) the aggregate amount
by which the Account Balance of Eligible Receivables
owing under all Contracts with PCS exceeds (A) eighteen
percent (18%) of the aggregate Account Balance of the
Eligible Receivables in the Receivables Pool outstanding
as of the last day of the most recently completed
Accounting Period so long as (I) PCS is a wholly-owned
subsidiary of Eli Lilly and Company and (II) Eli Lilly
and Company has short-term ratings of at least A-1 and
P-1 from S&P and Moody's, respectively, and, if rated by
Duff, at least D-1 from Duff, or (B) six percent (6%) of
the aggregate Account Balance of the Eligible
Receivables in the Receivables Pool outstanding as of
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<PAGE>
the last day of the most recently completed Accounting
Period if either of the conditions specified in
clauses (A)(I) and (A)(II) is not satisfied.
(c) The definition of "Duff" in Section 1.01 of
the Agreement is hereby amended to read in its entirety as
follows:
"Duff" shall mean Duff & Phelps Credit Rating
Co.
(d) The definition of "Eligible Receivable" in
Section 1.01 of the Agreement is hereby amended by deleting the
word "and" from the end of clause (m) thereof, by redesignating
clause (n) thereof as clause (o) thereof, and by adding a new
clause (n) thereof as follows:
(n) is not a receivable with respect to which the
Obligor is an Official Body, unless such
receivable is a Medicaid Receivable; and
(e) The definition of "Insurer" in Section 1.01 of
the Agreement is hereby deleted in its entirety.
(f) The definition of "Purchase Notice" in
Section 1.01 of the Agreement is hereby amended by deleting the
reference to "4.03(c)" and substituting in its place "4.04".
(g) The definition of "Purchase Obligation" in
Section 1.01 of the Agreement is hereby amended by deleting "(a)"
in the reference to "2.01(a)".
(h) The definition of "Servicer" in Section 1.01
of the Agreement is hereby amended to read in its entirety as
follows:
"Servicer" shall mean the Seller, or any
Person other than the Seller or its Affiliates which,
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<PAGE>
upon the termination of the Seller as Servicer, succeeds
to the functions performed by the Seller as the servicer
of the Purchased Receivables, including the Medicaid
Receivables (to the extent permitted by applicable Law),
pursuant to a Complete Servicing Transfer and a
Servicing Agreement.
(i) The definition of "Servicing Agreement" in
Section 1.01 of the Agreement is hereby amended to read in its
entirety as follows:
"Servicing Agreement" shall mean any agreement
between the Buyer and any Person, other than the Seller
or its Affiliates, which contains provisions concerning
the servicing of the Purchased Receivables, including
the Medicaid Receivables (to the extent permitted by
applicable Law), substantially similar to the provisions
contained herein, including Sections 5.03, 5.04, 5.06,
6.01, 6.02, 6.04, 6.06 and 6.07 hereof, pursuant to
which such Person performs servicing functions in
respect of the Purchased Receivables, including the
Medicaid Receivables (to the extent permitted by
applicable Law), and all agreements, instruments and
documents attached thereto or delivered in connection
therewith, as any of the same may from time to time be
amended, supplemented or otherwise modified and in
effect.
(j) Section 1.01 of the Agreement is hereby
amended by adding each of the following definitions in its proper
alphabetical position:
"Code" shall mean the Internal Revenue Code of
1986, or any successor statute thereto, as the same may
be amended from time to time.
"ERISA Affiliate" shall mean any trade or
business (whether or not incorporated) that is a member
of a group of which the Seller is a member and which is
treated as a single employer under Section 414 of the
Code.
"Medicaid Receivables Limit" shall mean, as of
any date of determination, with respect to the
Receivables, an amount equal to twenty percent (20%) of
the aggregate Account Balance of the Eligible
Receivables in the Receivables Pool outstanding as of
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<PAGE>
the last day of the most recently completed Accounting
Period.
"Multiemployer Plan" shall mean a
multiemployer plan as defined in Section 4001(a)(3) of
ERISA to which the Seller or any ERISA Affiliate (other
than one considered an ERISA Affiliate only pursuant to
subsection (m) or (o) of Section 414 of the Code) is
making or accruing an obligation to make contributions,
or has within any of the preceding five plan years made
or accrued an obligation to make contributions.
"PBGC" shall mean the Pension Benefit Guaranty
Corporation referred to and defined in ERISA or any
successor thereto.
"Plan" shall mean any pension plan (other than
a Multiemployer Plan) subject to the provisions of Title
IV of ERISA or Section 412 of the Code that is
maintained for employees of the Seller or any ERISA
Affiliate.
"Reportable Event" shall mean any reportable
event as defined in Section 4043(b) of ERISA or the
regulations issued thereunder with respect to a Plan
(other than a Plan maintained by an ERISA Affiliate that
is considered an ERISA Affiliate only pursuant to
subsection (m) or (o) of Section 414 of the Code).
"Withdrawal Liability" shall mean liability to
a Multiemployer Plan as a result of a complete or
partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I Subtitle E of Title IV of
ERISA.
2. AMENDMENT TO SECTION 3.01. Section 3.01 of the
Agreement is hereby amended to read in its entirety as follows:
3.01. BUYER'S ALLOCATION. The Buyer's
Allocation on any day of determination shall be a
percentage, not in excess of 100%, equal to the quotient
of (i) the Investment, divided by (ii) the positive
result of (a) the aggregate Account Balances of all
Eligible Receivables included in the Receivables Pool on
the date of determination before giving effect to
Collections on such date, less (b) the sum, without
duplication, of (1) the aggregate amount by which the
Account Balance of Eligible Receivables of each Obligor
(calculated prior to any adjustment for unapplied cash
received from such Obligor in the case of an Obligor
6
<PAGE>
whose Receivables are outstanding under a Contract with
PCS) exceeds the Concentration Limit for such Obligor,
(2) the aggregate amount by which the Account Balance of
Eligible Receivables that are Medicaid Receivables
exceeds the Medicaid Receivables Limit and (3) the
aggregate amount by which the Account Balance of
Eligible Receivables owing under all Contracts with PCS
exceeds (A) eighteen percent (18%) of the aggregate
Account Balance of the Eligible Receivables in the
Receivables Pool outstanding as of the last day of the
most recently completed Accounting Period so long as (I)
PCS is a wholly-owned subsidiary of Eli Lilly and
Company and (II) Eli Lilly and Company has short-term
ratings of at least A-1 and P-1 from S&P and Moody's,
respectively, and, if rated by Duff, at least D-1 from
Duff, or (B) six percent (6%) of the aggregate Account
Balance of the Eligible Receivables in the Receivables
Pool outstanding as of the last day of the most recently
completed Accounting Period if either of the conditions
specified in clauses (A)(I) and (A)(II) is not
satisfied.
3. AMENDMENT TO SECTION 6.06. The first sentence of
Section 6.06(d) of the Agreement is hereby amended to read in its
entirety as follows:
The Buyer may, but shall have no obligation to, take any
action or commence any proceeding to realize upon any
Purchased Receivable, including any of the Medicaid
Receivables (to the extent permitted by applicable Law).
4. AMENDMENTS TO SECTION 6.07. Section 6.07 of the
Agreement is hereby amended as follows:
(a) Clause (a) of Section 6.07 of the Agreement is
hereby amended to read in its entirety as follows:
(a) GENERAL. If at any time a Termination
Event shall have occurred and be continuing, the Buyer
may by notice in writing to the Seller, terminate the
Seller's capacity as Servicer in respect of the
Purchased Receivables, including the Medicaid
Receivables (to the extent permitted by applicable
Law)(such termination referred to herein as a "Complete
Servicing Transfer"), notify Obligors of its interest in
the Purchased Receivables, including the Medicaid
Receivables (to the extent permitted by applicable Law),
7
<PAGE>
take control of each Permitted Lockbox in respect of
Non-Medicaid Receivables and each Lockbox Account, and
each Medicaid Collection Account (to the extent
permitted by applicable Law), and exercise all other
incidences of ownership in the Purchased Receivables,
including the Medicaid Receivables (to the extent
permitted by applicable Law). After a Complete
Servicing Transfer, the Buyer may itself administer,
service and collect the Purchased Receivables, including
the Medicaid Receivables (to the extent permitted by
applicable Law), and in such event may retain the
Servicer's Compensation for its own account, in any
manner it sees fit, including, without limitation, by
compromise, extension or settlement of such Purchased
Receivables, including such Medicaid Receivables (to the
extent permitted by applicable Law). Alternatively, the
Buyer may engage Mellon Bank or unaffiliated contractors
to perform all or any part of the administration,
servicing and collection of the Purchased Receivables,
including the Medicaid Receivables (to the extent
permitted by applicable Law), and pay to Mellon Bank or
such contractors all or a portion of the Servicer's
Compensation in consideration thereof.
(b) The fourth sentence of clause (c) of
Section 6.07 of the Agreement is hereby amended to read in its
entirety as follows:
The Seller hereby irrevocably grants the Buyer or its
designated agent, if any, an irrevocable power of
attorney, with full power of substitution, coupled with
an interest, to take in the name of the Seller all steps
with respect to any Purchased Receivable, including any
of the Medicaid Receivables (to the extent permitted by
applicable Law), which the Buyer, in its sole
discretion, may deem necessary or advisable to negotiate
or otherwise realize on any right of any kind held or
owned by the Seller or transmitted to or received by the
Buyer or its designated agent (whether or not from the
Seller or any Obligor) in connection with the
Participation Interest in the Purchased Receivables,
including the Medicaid Receivables (to the extent
permitted by applicable Law).
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(c) The third sentence of clause (e) of
Section 6.07 of the Agreement is hereby amended to read in its
entirety as follows:
The Buyer shall be entitled to notify the Obligors of
Purchased Receivables, including Medicaid Receivables
(to the extent permitted by applicable Law), to make
payments directly to the Buyer of amounts due thereunder
at any time and from time to time following the
occurrence of (i) a Termination Event, (ii) a Complete
Servicing Transfer, or (iii) a violation by the Seller
of the provisions of Section 6.08 hereof.
5. AMENDMENT TO SECTION 8.02. Section 8.02 of the
Agreement is hereby amended by amending clause (f) thereof to
read in its entirety as follows:
(f) CONCENTRATION LIMIT. The Account
Balances which are reflected in the computation of the
Buyer's Allocation do not exceed (i) the applicable
Concentration Limit, (ii) the Medicaid Receivables
Limit, or (iii) the limit applicable in respect of PCS
under Section 3.01(ii)(b)(3).
6. AMENDMENTS TO SECTION 9.01. Section 9.01 of the
Agreement is hereby amended as follows:
(a) Subclause (3) of clause (i) of Section 9.01 of
the Agreement is hereby deleted in its entirety and subclause (4)
of clause (i) thereof is hereby redesignated as subclause (3).
(b) Clause (q) of Section 9.01 of the Agreement is
hereby amended to read in its entirety as follows:
The Seller shall use its best efforts to cause each
Contract entered into after the Closing Date with any
Notification Obligor in respect of Purchased Receivables
to contain provisions permitting the assignment of
payments thereunder pursuant to the terms of this
Agreement. The Seller shall promptly (A) notify the
Buyer of any Notification Obligor which becomes an
Obligor after the Closing Date pursuant to a written
contract or arrangement which purports to prohibit the
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assignment of any rights of the Seller under such
contract or arrangement without the consent of such
Obligor, and (B) deliver, or cause to be delivered, to
each Notification Obligor which becomes an Obligor after
the Closing Date a Notice of Assignment and use its best
efforts to obtain a Confirmation with respect thereto;
PROVIDED that a Notice of Assignment need not be
delivered to a Notification Obligor if consent to the
assignment of the Participation Interest in the
Receivables to the Buyer is included in the related
Contract.
(c) A new clause (t) of Section 9.01 of the
Agreement is hereby added as follows:
(t) COMPLIANCE WITH ERISA. (1) The Seller
shall comply in all material respects with the
applicable provisions of ERISA and (2) furnish to the
Buyer (i) as soon as possible after, and in any event
within thirty (30) days after any Responsible Officer of
the Seller or any ERISA Affiliate either knows or has
reason to know that, any Reportable Event has occurred
that alone or together with any other Reportable Event
could reasonably be expected to result in liability of
the Seller to the PBGC in an aggregate amount exceeding
$1,000,000, (A) a copy of the notice of such event
required to be given to the PBGC or, if notice is not so
required, a statement of an officer of the Seller having
responsibility over its employee benefits (a "Benefits
Officer") setting forth in reasonable detail the nature
of such event and the action proposed to be taken with
respect thereto and (B) in the event that a notice is
required to be given to the PBGC, as soon as practicable
after the reasonable request of the Buyer following
receipt a copy of such notice, a statement of a Benefits
Officer of the type described in (A) above,
(ii) promptly after receipt thereof, a copy of any
notice the Seller or any ERISA Affiliate may receive
from the PBGC relating to the intention of the PBGC to
terminate any Plan or Plans (other than a Plan
maintained by an ERISA Affiliate that is considered an
ERISA Affiliate only pursuant to subsection (m) or (o)
of Section 414 of the Code) or to appoint a trustee to
administer any Plan or Plans, (iii) within ten (10) days
after the due date for filing with the PBGC pursuant to
Section 412(n) of the Code of a notice of failure to
make a required installment or other payment with
respect to a Plan, a copy of such notice, and, as soon
as practicable after the reasonable request of the
Buyer, a statement of a Benefits Officer setting forth
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in reasonable detail the nature of such failure and the
action proposed to be taken with respect thereto and
(iv) promptly and in any event within thirty (30) days
after receipt thereof by the Seller or any ERISA
Affiliate from the sponsor of a Multiemployer Plan, a
copy of each notice received by the Seller or any ERISA
Affiliate concerning (A) the imposition of Withdrawal
Liability or (B) a determination that a Multiemployer
Plan is, or is expected to be, terminated or in
reorganization, in each case within the meaning of Title
IV of ERISA.
7. AMENDMENT TO SECTION 11.07. Section 11.07 of the
Agreement is hereby amended by adding a new sentence immediately
preceding the last sentence reading as follows:
In the case of each change of Law affecting any right
of, or remedy available to, the Buyer with respect to
the Medicaid Receivables, or affecting the sale,
assignment, payment or collection of, or the granting of
a security interest in, the Medicaid Receivables, the
Seller shall, upon the Buyer's request, enter into an
amendment to this Agreement to reflect such change of
Law upon such terms and conditions as are reasonably
requested by the Buyer.
III. REPRESENTATIONS AND WARRANTIES
The Seller hereby repeats and reaffirms at the Amendment
Effective Date the representations and warranties of the Seller
contained in the Agreement with the same force and effect as
though such representations and warranties had been made as of
the Amendment Effective Date; PROVIDED, that all references in
such representations and warranties to the Agreement shall, at
the Amendment Effective Date, refer to the Agreement as amended
by this Amendment.
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IV. CONDITIONS PRECEDENT
The occurrence of the Amendment Effective Date shall be
subject to the fulfillment of each of the following conditions:
(a) Except as otherwise consented to by the
Buyer in writing, the Seller shall be in compliance with
all the terms and provisions set forth in the Agreement
on its part to be observed or performed and no
Termination Event shall have occurred and be continuing
under the Agreement.
(b) The representations and warranties of the
Seller contained in Section III of this Amendment shall
be true and correct as if made on and as of the
Amendment Effective Date.
(c) The Buyer shall have received from the
Seller favorable written opinions of counsel to the
Seller as to such matters as the Buyer shall reasonably
request.
V. MISCELLANEOUS.
1. AGREEMENTS TO REMAIN IN FULL FORCE AND EFFECT. The
Seller and the Buyer hereby agree that, except as amended hereby,
the Agreement shall remain in full force and effect and is hereby
ratified, adopted and confirmed in all respects. All references
to the Agreement in any other agreement or document shall
hereafter be deemed to refer to the Agreement as amended hereby.
2. EXECUTION IN COUNTERPARTS. This Amendment may be
executed in any number of counterparts and by different parties
hereto on separate counterparts, each of which counterparts, when
so executed and delivered, shall be deemed to be an original, and
all of which counterparts, when taken together, shall constitute
but one and the same Amendment.
12
<PAGE>
3. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.
4. SEVERABILITY OF PROVISIONS. Any provision of this
Amendment which 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 or affecting the
ability or enforceability of such provision in any other
jurisdiction.
5. CAPTIONS. The captions in this Amendment are for
convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their representative officers
thereunder duly authorized as of the date first above written.
ECKERD CORPORATION
By:_____________________________
Authorized Signatory
THREE RIVERS FUNDING CORPORATION
By:_____________________________
Authorized Signatory
13
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this
"Agreement"), dated as of December 31, 1994 between
ECKERD CORPORATION, a Delaware corporation (the
"Company"), and the Eckerd Corporation Profit Sharing
Plan, a trust organized under the laws of the state of
Florida, for which NationsBank of Georgia, N.A. acts as
trustee (the "Holder").
WHEREAS, the Holder is, at the date hereof, the
owner of shares the Company's issued and outstanding
shares of common stock, par value $.01 per share (the
"Common Stock"), and the Company has irrevocably
committed to deposit to the Holder an additional 128,000
shares of Common Stock (the "Committed Shares") during
the period beginning January 28, 1995 and ending on
January 31, 1997; and
WHEREAS, the parties hereto desire to enter
into this Agreement which sets forth the terms of certain
registration rights applicable to the Registrable
Securities (as defined below);
NOW, THEREFORE, upon the premises and the
mutual promises herein contained, and for good and
valuable consideration, the receipt and adequacy of which
are acknowledged, the parties agree as follows:
1. Certain Definitions. As used in this
Agreement, the following initially capitalized terms
shall have the following meanings:
(a) "Affiliate" means, with respect to
any person, any other person who, directly or indirectly,
is in control of, is controlled by or is under common
control with the former person.
(b) "Holder" means the Eckerd Corporation
Profit Sharing Plan, which is the record holder of
Registrable Securities. The term "Holder" does not
include any Affiliate, transferee or assignee of the
Eckerd Corporation Profit Sharing Plan, but does include
a successor by operation of law to the Eckerd Corporation
Profit Sharing Plan.
(c) "Registration Expenses" means any and
all expenses incident to the Company's performance or
compliance with its obligations under this Agreement in
connection with any registration of Registrable
Securities pursuant to this Agreement including, without
limitation, the following: (i) SEC filing fees; (ii) the
fees, disbursements and expenses of the Company's
counsel(s) and accountants in connection with the
registration of the Registrable Securities to be disposed
of under the Securities Act; (iii) the reasonable fees
and disbursements of one counsel retained by the Holder
in connection with a registration under Section 2 hereof;
(iv) all expenses in connection with the preparation,
printing and filing of the registration statement, any
preliminary prospectus or final prospectus and amendments
and supplements thereto and the mailing and delivering of
copies thereof to the Holder, underwriters and dealers
and all expenses incidental to delivery of the
Registrable Securities; (v) the cost of producing blue
sky or legal investment memoranda; (vi) all expenses in
connection with the qualification of the Registrable
Securities to be disposed of for offering and sale under
state securities laws, including the fees and
disbursements of counsel for the underwriters or the
Holder in connection with such qualification and in
connection with any blue sky and legal investments
surveys; (vii) the filing fees incident to securing any
required review by the National Association of Securities
Dealers, Inc. of the terms of the sale of the Registrable
Securities to be disposed of; (viii) all security
engraving and security printing expenses, (ix) all fees
and expenses payable in connection with the listing of
the Registrable Securities on each securities exchange or
inter-dealer quotation system on which a class of common
equity securities of the Company is then listed and (x)
any fees and disbursements of underwriters customarily
paid by issuers or sellers of securities and the
reasonable fees and expenses of any special experts
retained in connection with the requested registration,
but excluding underwriting discounts and commissions and
transfer taxes, if any.
(d) "Registrable Securities" means the
shares of Common Stock (as presently constituted)
identified in Schedule A attached hereto and the
Committed Shares (as and when deposited with the Plan),
any stock or other securities into which or for which
such Common Stock may hereafter be changed, converted or
exchanged, and any other securities issued to holders of
such Common Stock (or such shares into which or for which
such shares are so changed, converted or exchanged) upon
any reclassification, share combination, share
subdivision, stock dividend, merger, consolidation or
similar transactions or events, provided that once
issued, any such securities shall cease to be Registrable
Securities when (i) a registration statement with respect
to the sale of such securities shall have become
effective under the Securities Act and such securities
shall have been disposed of in accordance with the plan
of distribution set forth in such registration statement,
(ii) such securities shall have been distributed to the
public pursuant to Rule 144, (iii) such securities are
held by a person or entity other than the Holder, (iv)
new certificates for such securities not bearing a legend
restricting further transfer shall have been delivered by
the Company to the Holder and the subsequent disposition
of them shall not require registration or qualification
of them under the Securities Act or any similar state law
then in force, (v) such securities shall have ceased to
be outstanding or (vi) the Termination Date shall occur.
(e) "Rule 144" means Rule 144 promulgated
under the Securities Act, or any successor rule of
similar effect.
(f) "SEC" means the United States
Securities and Exchange Commission or any other federal
agency at the time administering the Securities Act.
(g) "Securities Act" means the Securities
Act of 1933, as amended, or any successor federal
statute.
(h) "Termination Date" means December 31,
1998 or such later date as mutually agreed in writing by
the parties to this Agreement.
2. Demand Registration.
(a) At any time prior to the Termination
Date, upon written notice from the Holder in the manner
set forth in Section 9(g) hereof requesting that the
Company effect the registration under the Securities Act
of any or all of the Registrable Securities held by the
Holder, which notice shall specify the intended method or
methods of disposition of such Registrable Securities,
the Company shall use its best efforts to effect, in the
manner set forth in Section 4, the registration under the
Securities Act of such Registrable Securities for
disposition in accordance with the intended method or
methods of disposition stated in such request, provided
that:
(i) if, within 5 business days
of receipt of a registration request pursuant
to this Section 2(a), the Company is advised in
writing (with a copy to the Holder requesting
registration) by the managing underwriter of
the proposed offering described below that, in
such firm's good faith opinion, a registration
at the time and on the terms requested would
materially and adversely affect any immediately
planned offering of securities by the Company
that had been contemplated by the Company prior
to receipt of notice requesting registration
pursuant to this Section 2(a) (a "Transaction
Blackout"), the Company shall not be required
to effect a registration pursuant to this
Section 2(a) until the earliest of (A) the
abandonment of such offering, (B) 90 days after
the completion of such offering, (C) the
termination of any "hold back" period obtained
by the underwriter(s) of such offering from any
person in connection therewith or (D) 210 days
after receipt by the Holder requesting
registration of the managing underwriter's
written opinion referred to above in this
subsection (i);
(ii) if, while a registration
request is pending pursuant to this Section
2(a), the Company has determined in good faith
that (A) the filing of a registration statement
would require the disclosure of material
information that the Company has a bona fide
business purpose for preserving as confidential
or (B) the Company then is unable to comply
with SEC requirements applicable to the
requested registration, the Company shall not
be required to effect a registration pursuant
to this Section 2(a) until the earlier of
(1) the date upon which such material
information is otherwise disclosed to the
public or ceases to be material or the Company
is able to so comply with applicable SEC
requirements, as the case may be, and (2) 90
days after the Company makes such good-faith
determination;
(iii) the Company shall not be
obligated to file a registration statement
relating to a registration request pursuant to
this Section 2(a) within a period of six months
after the effective date of any other
registration statement of the Company, whether
such registration statement was effected
pursuant to this Section 2(a) or otherwise
(other than registration statements on Form S-4
or Form S-8 or any succesor or similar forms);
and
(iv) the Company shall not be
obligated to effect more than two registration
statements in any calendar year pursuant to
requests made under this Section 2(a).
(b) Notwithstanding any other provision
of this Agreement to the contrary,
(i) a registration requested by
a Holder pursuant to this Section 2 shall not
be deemed to have been effected (and,
therefore, not requested for purposes of
subsection 2(a)), (A) unless the registration
statement filed in connection therewith has
become effective, (B) if after it has become
effective such registration is interfered with
by any stop order, injunction or other order or
requirement of the SEC or other governmental
agency or court for any reason other than a
misrepresentation or an omission by the Holder
or (C) if the conditions to closing specified
in the purchase agreement or underwriting
agreement entered into in connection with such
registration are not satisfied (other than by
reason of some act or omission by such Holder)
or waived by the underwriters; and
(ii) a registration requested
by a Holder pursuant to Section 2(a) and later
withdrawn at the request of such Holder shall
be deemed to have been effected for purposes of
Section 2(a), whether withdrawn by the Holder
prior to or after the effectiveness of such
requested registration, unless (x) such request
is withdrawn by the Holder prior to the filing
of a registration statement with the SEC and
(y) the Holder had not made and withdrawn a
registration request in the prior twelve-month
period.
(c) In the event that any registration
pursuant to this Section 2 shall involve, in whole or in
part, an underwritten offering, the Holder shall have the
right to designate an underwriter reasonably satisfactory
to the Company as the lead managing underwriter of such
underwritten offering and the Company shall have the
right to designate one underwriter reasonably
satisfactory to the Holder as a co-manager of such
underwritten offering.
(d) The Company shall have the right to
cause the registration of additional securities for sale
for the account of any person (including without
limitation the Company and the parties to the
Registration Rights Agreement dated as of April 30, 1986,
as amended (the "1986 Registration Rights Agreement"),
among the Company, the Merrill Lynch Investors, the Bank
Affiliates, the Institutional Investors and the
Management Group (as such terms are defined therein)) in
any registration of Registrable Securities requested by
a Holder pursuant to Section 2(a); provided that the
Company shall not have the right to cause the
registration of such additional securities which are not
Registrable Securities in a registration involving an
underwritten offering if the Company and the Holder is
advised in writing by the managing underwriter that, in
such firm's opinion, the number of securities requested
to be registered exceeds the number of securities which
can be sold in an orderly manner in such underwritten
offering within a price range acceptable to the Holder
and the Company. To the extent so advised by such
managing underwriter of the number of securities which
can be sold in such underwritten offering, the Company
will include in such registration (i) first, all
Registrable Securities requested to be included in such
registration by the Holder and (ii) second, the
additional securities that the Company proposes to
include in such registration.
3. Expenses. The Company agrees to pay all
Registration Expenses in connection with any registration
requested pursuant to Section 2(a) hereof, provided that
the Holder will pay all underwriting discounts and
commissions and transfer taxes, if any.
4. Registration and Qualification. If and
whenever the Company is required to use its best efforts
to effect the registration of any Registrable Securities
under the Securities Act as provided in Section 2 hereof,
the Company shall:
(a) prepare and file a registration
statement under the Securities Act relating to the
Registrable Securities to be offered as soon as
practicable, but in no event later than 60 days after the
date notice is given, and use its best efforts to cause
the same to become effective within 120 days after the
date notice is given;
(b) prepare and file with the SEC such
amendments and supplements to such registration statement
and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective
for such period as the Holder shall request (which in no
event shall exceed 120 days) and to comply with the
provisions of the Securities Act with respect to the
disposition of all Registrable Securities covered by such
registration statement during such period;
(c) furnish to the Holder and to any
underwriter of such Registrable Securities such number of
conformed copies of such registration statement and of
each such amendment and supplement thereto (in each case
including all exhibits), such number of copies of the
prospectus included in such registration statement
(including each preliminary prospectus and any summary
prospectus), in conformity with the requirements of the
Securities Act, and such other documents, as the Holder
or such underwriter may reasonably request in order to
facilitate the public sale of the Registrable Securities;
(d) use its best efforts to register or
qualify all Registrable Securities covered by such
registration statement under the securities or blue sky
laws of such jurisdictions as the Holder or any
underwriter of such Registrable Securities shall request,
and use its best efforts to obtain all appropriate
registrations, permits and consents required in
connection therewith, and do any and all other acts and
things which may be necessary or advisable to enable the
Holder or any such underwriter to consummate the
disposition in such jurisdictions of its Registrable
Securities covered by such registration statement;
provided that the Company shall not for any such purpose
be required to register or qualify generally to do
business as a foreign corporation in any jurisdiction
wherein it is not so qualified, or to subject itself to
taxation in any such jurisdiction, or to consent to
general service of process in any such jurisdiction;
(e) (i) use its best efforts to furnish
an opinion of counsel for the Company addressed to the
underwriters and the Holder and dated the date of the
closing under the underwriting agreement (if any) (or if
such offering is not underwritten, dated the effective
date of the registration statement), and (ii) use its
best efforts to furnish a "cold comfort" letter addressed
to the underwriters and to the Holder, if permissible
under applicable accounting practices, and signed by the
independent public accountants who have audited the
Company's financial statements included in such
registration statement, in each such case covering
substantially the same matters with respect to such
registration statement (and the prospectus included
therein) as are customarily covered in opinions of
issuer's counsel and in accountants' letters delivered to
underwriters in underwritten public offerings of
securities and such other matters as the Holder may
reasonably request;
(f) immediately notify the Holder in
writing (i) at any time when a prospectus relating to a
registration pursuant to Section 2 hereof is required to
be delivered under the Securities Act of the happening of
any event as a result of which the prospectus included in
such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state
any 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,
and (ii) of any request by the SEC or any other
regulatory body or other body having jurisdiction for any
amendment of or supplement to any registration statement
or other document relating to such offering, and in
either such case (i) or (ii) at the request of the
Holder, prepare and furnish to the Holder a reasonable
number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such
Registrable Securities, such prospectus shall not include
an 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 are made, not misleading;
(g) otherwise use its best efforts to
comply with all applicable rules and regulations of the
SEC, and make available to its security holders, as soon
as reasonably practicable, an earnings statement covering
the period of at least twelve months, but not more than
eighteen months, beginning with the first day of the
Company's first quarter after the effective date of such
registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities
Act and Rule 158 thereunder;
(h) use its best efforts to list all such
Registrable Securities covered by such registration on
each securities exchange and inter-dealer quotation
system on which a class of common equity securities of
the Company is then listed; and
(i) furnish unlegended certificates
representing ownership of the Registrable Securities
being sold in such denominations as shall be requested by
the Holder or the underwriters.
In connection with any registration of
Registrable Securities being effected pursuant to Section
2 hereof, the Company may require the Holder to furnish
the Company with such information regarding the Holder
and the distribution of the securities covered by such
registration as the Company may from time to time
reasonably request in writing.
The Holder of Registrable Securities agrees
that, upon receipt of any notice from the Company of the
occurrence of any event of the kind described in clause
(f) of this Section 4, the Holder will forthwith
discontinue disposition of Registrable Securities
pursuant to the registration statement relating to such
Registrable Securities until the Holder's receipt of the
copies of the supplemented or amended prospectus
contemplated by clause (f) of this Section 4 and, if so
directed by the Company, will deliver to the Company (at
the Company's expense) all copies, other than permanent
file copies, then in the Holder's possession of the
prospectus relating to such Registrable Securities which
was in effect prior to such amendment or supplement. In
the event the Company shall give any such notice, the
period mentioned in clause (b) of this Section 4 shall be
extended by the number of days during the period from and
including the date of the giving of such notice pursuant
to clause (f) of this Section 4 to and including the date
on which the Holder has received the copies of the
supplemented or amended prospectus contemplated by clause
(f) of this Section 4.
5. Underwriting; Due Diligence.
(a) If requested by the underwriters for
any underwritten offering of Registrable Securities
pursuant to a registration requested under Section 2 of
this Agreement, the Company shall enter into an
underwriting agreement with such underwriters for such
offering, such agreement to contain such representations
and warranties by the Company and such other terms and
provisions as are customarily contained in underwriting
agreements with respect to secondary distributions,
including, without limitation, indemnities and
contribution substantially to the effect and to the
extent provided in Section 6 hereof and the provision of
opinions of counsel and accountants' letters to the
effect and to the extent provided in Section 4(e) hereof.
The Holder shall be a party to any such underwriting
agreement. Such underwriting agreement may contain such
representations and warranties by the Holder as are
customarily contained in underwriting agreements with
respect to secondary distributions. The Holder agrees
that it may not participate in any underwritten offering
hereunder unless the Holder (i) agrees to sell the
Registrable Securities on the basis provided in any
underwriting arrangements approved by the Company and the
Holder and (ii) completes and executes all
questionnaires, indemnities, underwriting agreements and
other documents (other than powers of attorney) required
under the terms of such underwriting arrangements.
(b) In connection with the preparation
and filing of each registration statement registering
Registrable Securities under the Securities Act, the
Company shall give the Holder and the underwriters, if
any, and their respective counsel and accountants, such
reasonable and customary access to its books and records
and such opportunities to discuss the business of the
Company with its officers and the independent public
accountants who have certified the Company's financial
statements as shall be necessary, in the opinion of the
Holder and such underwriters or their respective counsel,
to conduct a reasonable investigation within the meaning
of the Securities Act.
6. Indemnification and Contribution.
(a) In the event of any registration of
Registrable Securities under the Securities Act pursuant
to Section 2 of this Agreement, the Company agrees to
indemnify and hold harmless, to the extent permitted by
law, the Holder, its officers and directors, each
underwriter of Registrable Securities so offered and each
person, if any, who controls the Holder or any such
underwriters within the meaning of the Securities Act,
from and against any and all losses, claims, damages or
liabilities, joint or several, and expenses (including
any amounts paid in any settlement effected with the
Company's consent) to which they or any of them may
become subject under the Securities Act, common law or
otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect
thereof) shall arise out of, or shall be based upon (a)
any untrue statement or alleged untrue statement of a
material fact contained in the registration statement
under which such Registrable Securities were registered
under the Securities Act or any omission or alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements
therein not misleading, (b) any untrue statement or
alleged untrue statement of a material fact contained in
any preliminary prospectus, together with the documents
incorporated by reference therein (as amended or
supplemented if the Company shall have filed with the SEC
any amendment thereof or supplement thereto), if used
prior to the effective date of such registration
statement, or contained in the prospectus, together with
the documents incorporated by reference therein (as
amended or supplemented if the Company shall have filed
with the SEC any amendment thereof or supplement
thereto), or the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary in order to make the statements therein in the
light of the circumstances under which they were made,
not misleading or (c) any violation by the Company of any
federal, state or common law rule or regulation
applicable to the Company and relating to action required
of or inaction by the Company in connection with any such
registration, and the Company will reimburse the Holder
and each such director, officer, underwriter and
controlling person for any legal or any other expenses
reasonably incurred by any of them in connection with
investigating or defending any such loss, claim,
liability, action or proceeding; provided, that the
Company shall not be liable to the Holder or any such
director, officer, underwriter or controlling person in
any such case to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect
thereof) or expense arises out of or is based upon any
untrue statement or alleged untrue statement or omission
or alleged omission made in such registration statement
or amendment thereof or supplement thereto or in any such
preliminary, final or summary prospectus in reliance upon
and in conformity with written information furnished to
the Company by or on behalf of the Holder or any such
director, officer, underwriter or controlling person,
specifically stating that it is for use in the
preparation thereof; and provided further, that the
Company will not be liable to any person who participates
as an underwriter in the offering or sale of Registrable
Securities, if any, or any other person, if any, who
controls such underwriter within the meaning of the
Securities Act, under the indemnity agreement in this
Section 6(a) with respect to any preliminary prospectus
or the final prospectus or the final prospectus as
amended or supplemented as the case may be, to the extent
that any such loss, claim, damage or liability of such
underwriter or controlling person results from the fact
that such underwriter sold Registrable Securities to a
person to whom there was not sent or given, at or prior
to the written confirmation of such sale, a copy of the
final prospectus or of the final prospectus as then
amended or supplemented, whichever is most recent, if the
Company has previously furnished copies thereof to such
underwriter and such final prospectus, as then amended or
supplemented, has corrected any such misstatement or
omission. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on
behalf of the Holder or any director, officer,
underwriter or controlling person and shall survive the
transfer of such Registrable Securities by the Holder.
(b) As a condition to including any
Registrable Securities in any registration statement
filed in accordance with Section 2 hereof and by
exercising its registration rights under this Agreement,
the Holder agrees to indemnify and hold harmless (in the
same manner and to the same extent as set forth in clause
(a) of this Section 6) the Company and its directors and
officers and each person controlling the Company within
the meaning of the Securities Act (and if requested by
the underwriters, each underwriter who participates in
the offering or sale of such Registrable Securities
covered by the registration statement and each person, if
any, who controls such underwriter within the meaning of
the Securities Act but subject to the same provided
further clause set forth in clause (a) of this Section 6
with respect to the underwriter's failure to deliver a
final prospectus) with respect to any statement or
alleged statement in or omission or alleged omission from
such registration statement, any preliminary, final or
summary prospectus contained therein, or any amendment or
supplement, if such statement or alleged statement or
omission or alleged omission was made in reliance upon
and in conformity with written information furnished to
the Company or its representatives by or on behalf of the
Holder specifically stating that it is for use in the
preparation of such registration statement, preliminary,
final or summary prospectus or amendment or supplement,
or a document incorporated by reference into any of the
foregoing. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on
behalf of the Company (or any underwriter, if requested)
or any of its directors, officers, or controlling persons
(or controlling persons of the underwriters, if
requested) and shall survive the transfer of such
Registrable Securities by the Holder.
(c) As soon as possible after receipt by
an indemnified party hereunder of written notice of the
commencement of any action or proceeding with respect to
which a claim for indemnification may be made pursuant to
this Section 6, such indemnified party will, if a claim
in respect thereof is to be made against an indemnifying
party, give written notice to the latter of the
commencement of such action; provided, that the failure
of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its
obligations under the preceding clauses of this Section
6, except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. If
any such claim or action shall be brought against an
indemnified party, and it shall notify the indemnifying
party thereof, the indemnifying party shall be entitled
to participate therein, and, to the extent that it
wishes, jointly with any other similarly notified
indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party;
provided that the indemnifying party shall not be
entitled to so participate or so assume the defense if,
in the indemnified party's reasonable judgment, a
conflict of interest between the indemnified party and
the indemnifying party exists in respect of such claim.
After notice from the indemnifying party to such
indemnified party of its election to assume the defense
of such claim or action, the indemnifying party shall not
be liable to the indemnified party under this Section 6
for any legal or other expenses subsequently incurred by
the indemnified party in connection with the defense
thereof; and provided further that the Holder and its
officers, directors, and controlling persons or the
Company and its officers, directors and controlling
persons, as the case may be, shall have the right to
employ one counsel to represent such indemnified parties
if, in such indemnified parties' reasonable judgment, a
conflict of interest between the indemnified parties and
the indemnifying parties exists in respect of such claim,
and in that event the fees and expenses of such separate
counsel shall be paid by the indemnifying party; and
provided further that if, in the reasonable judgment of
any of the indemnified parties, a conflict of interest
between such indemnified parties and any other
indemnified parties exists in respect of such claim, such
indemnified parties shall be entitled to additional
counsel or counsels and the indemnifying party shall be
obligated to pay the fees and expenses of such additional
counsel or counsels. No indemnifying party will consent
to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof
the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in
respect to such claim or litigation.
(d) Indemnification similar to that
specified in the preceding clauses of this Section 6
(with appropriate modifications) shall be given by the
Company and the Holder of Registrable Securities with
respect to any required registration or other
qualification of securities under any state securities
and blue sky laws.
(e) If the indemnification provided for
in this Section 6 is unavailable or insufficient to hold
harmless an indemnified party under Section 6(a) or (b)
of this Agreement, then each indemnifying party shall
contribute to the amount paid or payable by such
indemnified party as a result of the losses, claims,
damages or liabilities referred to in Section 6(a) or
(b), in such proportion as shall be appropriate to
reflect the relative fault of the indemnifying party on
the one hand and the indemnified party on the other with
respect to the statements or omissions which resulted in
such loss, claim, damage or liability, as well as any
other relevant equitable considerations. The relative
fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of
a material fact or omission or alleged omission to state
a material fact relates to information supplied by the
indemnifying party on the one hand or the indemnified
party on the other, and the parties' relative intent,
knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission.
The parties hereto agree that it would not be just and
equitable if contributions pursuant to this Section 6(e)
were to be determined by pro rata allocation or by any
other method of allocation which does not take account of
the equitable considerations referred to in the first
sentence of this Section 6(e). The amount paid by an
indemnified party as a result of the losses, claims,
damages or liabilities referred to in the first sentence
of this Section 6(e) shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any
action or claim (which shall be limited as provided in
Section 6(c) if the indemnifying party has assumed the
defense of any such action in accordance with the
provisions thereof) which is the subject of this Section
6(e). No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
Promptly after receipt by an indemnified party under this
Section 6(e) of notice of the commencement of any action
against such party in respect of which a claim for
contribution may be made against an indemnifying party
under this Section 6(e), such indemnified party shall
notify the indemnifying party in writing of the
commencement thereof if the notice specified in Section
6(c) has not been given with respect to such action;
provided that the omission so to notify the indemnifying
party shall not relieve the indemnifying party from any
liability which it may have to any indemnified party
otherwise under this Section 6(e), except to the extent
that the indemnifying party is actually prejudiced by
such failure to give notice. Notwithstanding anything in
this Section 6(e) to the contrary, no indemnifying party
(other than the Company) shall be required pursuant to
this Section 6(e) to contribute any amount in excess of
the proceeds received by such indemnifying party from the
sale of Registrable Securities in the offering to which
the losses, claims, damages or liabilities of the
indemnified parties relate.
7. Holdback.
(a) The Holder agrees, if so required by
the managing underwriter, not to sell, make any short
sale of, loan, grant any option for the purchase of,
effect any public sale or distribution of (including any
sale pursuant to Rule 144) or otherwise dispose of any
Registrable Securities or any other equity securities of
the Company or any securities convertible into or
exchangeable or exercisable for any equity security of
the Company , during the 7 days prior to and the 120 days
after any underwritten registration pursuant to Section
2 has become effective (or such shorter period as may be
required by the underwriter, subject to Section 7(b)
hereof), except as part of such underwritten
registration. Notwithstanding the foregoing sentence,
the Holder shall be entitled to sell during the foregoing
period securities in a private sale. The Company may
legend and may impose stop transfer instructions on any
certificate evidencing Registrable Securities relating to
the restrictions provided for in this Section 7.
(b) The Holder agrees that, if so
required by the Company or any managing underwriter of an
offering of Common Stock which is being effected pursuant
to the exercise of the demand or incidental registration
rights contained in the 1986 Registration Rights
Agreement, that the Holder will not effect any public
sale or distribution (including any sale pursuant to Rule
144) of any Registrable Securities or any other equity
securities of the Company or any securities convertible
into or exchangeable or exercisable for any equity
security of the Company during the 7 days prior to and
120 days after the effective date of such registration
statement filed pursuant to the 1986 Registration Right
Agreement; provided that the Holder will not be required
to comply with this Section 7(b) with respect to any
registration statement effected at a time when the Holder
owns 1% or less of the shares of Common Stock then
outstanding.
8. No Transfer of Registration Rights or
Assignments.
(a) The Holder may not transfer all or
any portion of its rights under this Agreement to any
Affiliate, transferee or assignee, provided that the
Holder may transfer all of its rights under this
Agreement to its successor by operation of law.
(b) Neither the Company nor the Holder
may assign their rights under this Agreement. The
Company may not delegate its obligations under this
Agreement.
9. Miscellaneous.
(a) Amendment. This Agreement may be
amended only by a written instrument duly executed by an
authorized officer of each of the parties.
(b) Waivers, etc. No failure or delay on
the part of either party (or the intended third-party
beneficiaries referred to herein) in exercising any power
or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other
right or power. No modification or waiver of any
provision of this Agreement nor consent to any departure
therefrom shall in any event be effective unless the same
shall be in writing and signed by an authorized officer
of each of the parties, and then such waiver or consent
shall be effective only in the specific instance and for
the purpose for which given.
(c) Severability. If any term or
provision of this Agreement held by a court of competent
jurisdiction to be invalid, void or unenforceable, the
remainder of the terms and provisions set forth herein
shall remain in full force and effect and shall in no way
be affected, impaired or invalidated, and each of the
parties shall use its best efforts to find and employ an
alternative means to achieve the same or substantially
the same result as that contemplated by such term or
provision.
(d) Further Assurances. Subject to the
specific terms of this Agreement, each of the parties
hereto shall make, execute, acknowledge and deliver such
other instruments and documents, and take all such other
actions, as may be reasonably required in order to
effectuate the purposes of this Agreement and to
consummate the transactions contemplated hereby.
(e) Entire Agreement. This Agreement
contains the final and complete understanding of the
parties with respect to its subject matter. This
Agreement supersedes all prior agreements and
understandings between the parties, whether written or
oral, with respect to the subject matter hereof. The
paragraph headings contained in this Agreement are for
reference purposes only, and shall not affect in any
manner the meaning or interpretation of this Agreement.
(f) Counterparts. For the convenience of
the parties, this Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an
original but all of which together shall be one and the
same instrument.
(g) Notices. Unless expressly provided
herein, all notices, claims, certificates, requests,
demands and other communications hereunder shall be in
writing and shall be deemed to be duly given (i) when
personally delivered or (ii) if mailed registered or
certified mail, postage prepaid, return receipt
requested, on the date the return receipt is executed or
the letter refused by the addressee or its agent or (iii)
if mailed by first class mail, on the fifth business day
after being deposited in the mail, postage prepaid or
(iv) if sent by overnight courier which delivers only
upon the signed receipt of the addressee, on the date the
receipt acknowledgment is executed or refused by the
addressee or its agent or (v) if telecopied, when receipt
acknowledged:
(i) if to the Company, to
Eckerd Corporation
8333 Bryan Dairy Road
Largo, Florida 34647
Attention: General Counsel
(ii) if to the Holder, to
Eckerd Corporation Profit Sharing Plan
c/o NationsBank of Georgia, N.A.
Institutional Administrative Services
600 Peachtree Street
7 Plaza South
Atlanta, Georgia 30308
(h) GOVERNING LAW. THIS AGREEMENT AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL
BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO
THE CONFLICTS OF LAW RULES THEREOF.
(i) Termination. This Agreement shall
terminate, and thereby become null and void, on the
Termination Date; provided that the provisions of Section
6 shall survive the termination of this Agreement.
IN WITNESS WHEREOF, the Company and the Holder
have caused this Agreement to be duly executed by their
authorized representative as of the date first above
written.
ECKERD CORPORATION
By /s/ Francis A. Newman
Name: Francis A. Newman
Title: President
ECKERD CORPORATION PROFIT
SHARING PLAN
By NationsBank of Georgia, N.A.,
in its capacity as trustee
By /s/ M. Carole Trizzino
Name: M. Carole Trizzino
Title: Vice President
SCHEDULE A
REGISTRABLE SECURITIES
Number of Shares
Certificate Numbers of Common Stock
970 161,522
1621 1,248,000
3176 64,000
GUARANTEE AGREEMENT dated as of June 14,
1993, as amended and restated as of August 3,
1994, among each subsidiary party hereto
(individually, a Guarantor and collectively,
the
Guarantors ) of Eckerd Corporation, a Delaware
corporation (the Borrower ), and CHEMICAL BANK,
a
New York banking corporation ( Chemical Bank ),
as
collateral agent (the Collateral Agent ) for the
Secured Parties (as defined in the Credit
Agreement referred to below).
Reference is made to the Credit Agreement dated as of
June 14, 1993, as amended and restated as of August 3, 1994
(as amended or modified from time to time, the Credit
Agreement ), among the Borrower, the financial institutions
party thereto, as lenders (the Lenders ), Chemical Bank
and
NationsBank of Florida, N.A., a national banking
association
( NationsBank ), as managing agents and as swingline
lenders
(in such latter capacity, each a Swingline Lender ), and
Chemical Bank, as administrative agent (in such capacity,
the Administrative Agent ) for the Lenders, the Swingline
Lenders and the Fronting Banks.
The Lenders and the Swingline Lenders have agreed to
make Loans and Swingline Loans, respectively, to the
Borrower, and the Fronting Banks have agreed to issue
Letters of Credit and to originate Bankers' Acceptances for
the account of the Borrower, pursuant to, and upon the
terms
and subject to the conditions specified in, the Credit
Agreement. The obligations of the Lenders to make Loans, of
the Swingline Lenders to make Swingline Loans and of the
Fronting Banks to issue Letters of Credit and to originate
Bankers' Acceptances are conditioned on, among other
things,
the execution and delivery by the Guarantors of a guarantee
agreement in the form hereof. Capitalized terms used herein
and not defined herein shall have the meanings assigned to
such terms in the Credit Agreement.
Accordingly, the parties hereto agree as follows:
SECTION 1. Guarantee. Each Guarantor unconditionally
guarantees, jointly with the other Guarantors and
severally,
as a primary obligor and not merely as a surety, (a) the
due
and punctual payment of (i) the principal of and premium,
if
any, and interest (including interest accruing during the
pendency of any bankruptcy, insolvency, receivership or
other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the Loans and the
Swingline
Loans, when and as due, whether at maturity, by
acceleration, upon one or more dates set for prepayment or
otherwise, (ii) each payment required to be made by the
Borrower under the Credit Agreement in respect of any
Letter
of Credit and any Bankers' Acceptance, when and as due,
including payments in respect of reimbursement of
disbursements, interest thereon and obligations to provide
cash collateral and (iii) all other monetary obligations,
including fees, costs, expenses and indemnities, whether
primary, secondary, direct, contingent, fixed or otherwise
(including monetary obligations incurred during the
pendency
of any bankruptcy, insolvency, receivership or other
similar
proceeding, regardless of whether allowed or allowable in
such proceeding), of the Borrower to the Secured Parties
under the Credit Agreement and the other Loan Documents to
which it is or is to be a party, (b) the due and punctual
performance of all covenants, agreements, obligations and
liabilities of the Borrower under or pursuant to the Credit
Agreement and the other Loan Documents and (c) unless
otherwise agreed upon in writing by the applicable Lender,
all obligations of the Borrower, monetary or otherwise,
under each Rate Protection Agreement entered into with any
Lender, whether pursuant to Section 6.11 of the Credit
Agreement or otherwise (all the obligations referred to in
this clause (c) and in the preceding clauses (a) and (b)
being collectively called the Obligations ). Each
Guarantor
further agrees that the Obligations may be extended or
renewed, in whole or in part, without notice to or further
assent from it, and that it will remain bound upon its
guarantee notwithstanding any extension or renewal of any
Obligation.
SECTION 2. Obligations Not Waived. To the fullest
extent permitted by applicable law, each Guarantor waives
presentment to, demand of payment from and protest to the
Borrower of any of the Obligations, and also waives notice
of acceptance of its guarantee and notice of protest for
nonpayment. To the fullest extent permitted by applicable
law, the obligations of each Guarantor hereunder shall not
be affected by (a) the failure of the Collateral Agent or
any other Secured Party to assert any claim or demand or to
enforce any right or remedy against the Borrower or any
other Guarantor under the provisions of this Agreement, any
Loan Document or otherwise; (b) any rescission, waiver,
amendment or modification of, or any release from any of
the
terms or provisions of this Agreement, any other Loan
Document, any guarantee or any other agreement, including
with respect to any other Guarantor under this Agreement;
(c) the release of any security held by the Collateral
Agent
or any other Secured Party for the Obligations or any of
them; or (d) the failure of the Collateral Agent or any
other Secured Party to exercise any right or remedy against
any other Guarantor or guarantor of the Obligations.
SECTION 3. Security. Each of the Guarantors
authorizes
the Collateral Agent and each of the other Secured Parties,
in accordance with the terms and subject to the conditions
set forth in the Security Documents to which such Guarantor
is a party, to (a) take and hold security for the payment
of
this guarantee or the Obligations and exchange, enforce,
waive and release any such security, (b) apply such
security
and direct the order or manner of sale thereof as they in
their sole discretion may determine and (c) release or
substitute any one or more endorsees, other guarantors or
other obligors.
SECTION 4. Guarantee of Payment. Each Guarantor
further
agrees that its guarantee constitutes a guarantee of
payment
when due and not of collection, and waives any right to
require that any resort be had by the Collateral Agent or
any other Secured Party to any of the security held for
payment of the Obligations or to any balance of any deposit
account or credit on the books of the Collateral Agent or
any other Secured Party in favor of the Borrower or any
other Person.
SECTION 5. No Discharge or Diminishment of Guarantee.
The obligations of each Guarantor hereunder shall not be
subject to any reduction, limitation, impairment or
termination for any reason (other than the indefeasible
payment in full in cash of the Obligations), including any
claim of waiver, release, surrender, alteration or
compromise of any of the Obligations, and shall not be
subject to any defense or setoff, counterclaim, recoupment
or termination whatsoever by reason of the invalidity,
illegality or unenforceability of the Obligations or
otherwise. Without limiting the generality of the
foregoing,
the obligations of each Guarantor hereunder shall not be
discharged or impaired or otherwise affected by the failure
of the Collateral Agent or any other Secured Party to
assert
any claim or demand or to enforce any remedy under the
Credit Agreement, any other Loan Document, any other
guarantee or any other agreement, by any waiver or
modification of any provision of any thereof, by any
default, failure or delay, willful or otherwise, in the
performance of the Obligations, or by any other act or
omission that may or might in any manner or to any extent
vary the risk of any Guarantor or that would otherwise
operate as a discharge of any Guarantor as a matter of law
or equity (other than the indefeasible payment in full in
cash of all the Obligations).
SECTION 6. Defenses of Borrower Waived. To the extent
permitted by applicable law, each of the Guarantors waives
any defense based on or arising out of any defense of the
Borrower or the unenforceability of the Obligations or any
part thereof from any cause, or the cessation from any
cause
of the liability of the Borrower, other than final and
indefeasible payment in full in cash of the Obligations.
The
Collateral Agent and the other Secured Parties may, at
their
election, in accordance with the terms and subject to the
conditions set forth in the Security Documents to which
such
Guarantor is a party, foreclose on any security held by one
or more of them by one or more judicial or non-judicial
sales, or exercise any other right or remedy available to
them against the Borrower or any other Guarantor, or any
security, without affecting or impairing in any way the
liability of such Guarantor hereunder except to the extent
the Obligations have been fully, finally and indefeasibly
paid. Each of the Guarantors waives any defense arising out
of any such election even though such election operates to
impair or to extinguish any right of reimbursement or
subrogation or other right or remedy of such Guarantor
against the Borrower or any other Guarantor, as the case
may
be, or any security.
SECTION 7. Continued Effectiveness. Each Guarantor
further agrees that its guarantee hereunder shall continue
to be effective or be reinstated, as the case may be, if at
any time payment, or any part thereof, of principal of or
interest on any Obligation is rescinded or must otherwise
be
restored by the Collateral Agent or any other Secured Party
upon the bankruptcy or reorganization of the Borrower, any
other Guarantor or otherwise.
SECTION 8. Subrogation. In furtherance of the
foregoing
and not in limitation of any other right that the
Collateral
Agent or any other Secured Party has at law or in equity
against any Guarantor by virtue hereof, upon the failure of
the Borrower to pay any Obligation when and as the same
shall become due, whether at maturity, by acceleration,
after notice of prepayment or otherwise, each Guarantor
hereby promises to and will, upon receipt of written demand
by the Collateral Agent, forthwith pay, or cause to be
paid,
to the Collateral Agent or such other Secured Party as is
designated thereby in cash the amount of such unpaid
Obligations, and thereupon the Collateral Agent or the
other
Secured Party that shall have received any part of such
payment shall, assign (except to the extent that such
assignment would render such Guarantor a creditor of the
Borrower within the meaning of Section 547 of Title 11 of
the United States Code as now in effect or hereafter
amended
or any comparable provision of any successor statute) the
amount of the Obligations owed to it and paid by such
Guarantor pursuant to this guarantee to such Guarantor,
such
assignment to be pro tanto to the extent to which the
Obligations in question were discharged by such Guarantor,
or make such other disposition thereof as such Guarantor
shall direct (all without recourse to the Collateral Agent
or such other Secured Party, and without any representation
or warranty by the Collateral Agent or such other Secured
Party); provided, however, that until the indefeasible
payment in full of all the Obligations to the Collateral
Agent and the other Secured Party, none of the Guarantors
shall have any right by way of subrogation or otherwise as
a
result of the payment of any sums hereunder. If (a) any
Guarantor shall make payment to the Collateral Agent or any
Secured Party of all or any part of the Obligations, (b)
all
the Obligations and all other amounts payable under this
Agreement shall be indefeasibly paid in full and (c) the
Commitments and the LC/BA Commitment shall have expired or
terminated, the Collateral Agent will, at such Guarantor's
request, execute and deliver to such Guarantor appropriate
documents, without recourse and without representation or
warranty, necessary to evidence the transfer by subrogation
to such Guarantor of an interest in the Obligations
resulting from such payment by the Guarantor.
SECTION 9. Information. Each of the Guarantors assumes
all responsibility for being and keeping itself informed of
the Borrower's financial condition and assets, and of all
other circumstances bearing upon the risk of nonpayment of
the Obligations and the nature, scope and extent of the
risks that such Guarantor assumes and incurs hereunder, and
agrees that none of the Collateral Agent and the other
Secured Parties will have any duty to advise any of the
Guarantors of information known to it or any of them
regarding such circumstances or risks.
SECTION 10. Subordination. Upon payment by any
Guarantor of any sums to the Collateral Agent or any other
Secured Party, as provided above, all rights of such
Guarantor against the Borrower, arising as a result thereof
by way of right of subrogation or otherwise shall in all
respects be subordinated and junior in right of payment to
the prior indefeasible payment in full in cash of all the
Obligations to the Collateral Agent and the other Secured
Parties; provided, however, that to the extent any right of
subrogation that such Guarantor may have pursuant to the
Credit Agreement or otherwise would render such Guarantor
a
creditor of the Borrower within the meaning of Section
547
of Title 11 of the United States Code as now in effect or
hereafter amended, or any comparable provision of any
successor statute, such Guarantor hereby irrevocably waives
such right of subrogation.
SECTION 11. Representations and Warranties. Each of
the
Guarantors represents and warrants as to itself that all
representations and warranties relating to it contained in
the Credit Agreement are true and correct.
SECTION 12. Termination or Release. (a) The
guarantees
made hereunder shall terminate when all the Obligations
have
been indefeasibly paid in full and the Lenders and the
Swingline Lenders have no further commitment to lend under
the Credit Agreement, the LC/BA Exposure has been reduced
to
zero and the Fronting Banks have no further obligation to
issue Letters of Credit or to originate Bankers'
Acceptances
under the Credit Agreement.
(b) Upon the sale of all or substantially all of the
assets or all of the capital stock of any Guarantor in a
manner that is permitted by the Credit Agreement, the
guarantees of such Guarantor made hereunder shall
automatically terminate.
SECTION 13. Binding Agreement; Assignments. Whenever
in
this Agreement any of the parties hereto is referred to,
such reference shall be deemed to include the successors
and
assigns of such party; and all covenants, promises and
agreements by or on behalf of the Guarantors that are
contained in this Agreement shall bind and inure to the
benefit of each party hereto and their respective
successors
and assigns. This Agreement shall become effective as to
any
Guarantor when a counterpart hereof executed on behalf of
such Guarantor shall have been delivered to the Collateral
Agent and a counterpart hereof shall have been executed on
behalf of the Collateral Agent, and thereafter shall be
binding upon such Guarantor and the Collateral Agent and
their respective successors and assigns, and shall inure to
the benefit of such Guarantor, the Collateral Agent and the
other Secured Parties, and their respective successors and
assigns, except that no Guarantor shall have the right to
assign its rights hereunder or any interest herein or in
the
Collateral (and any such attempted assignment shall be
void), except as expressly contemplated by this Agreement
or
the other Loan Documents.
SECTION 14. Waivers; Amendment. (a) No failure or
delay
of the Collateral Agent in exercising any power or right
hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such
a
right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The
rights and remedies of the Collateral Agent hereunder and
of
the other Secured Parties under the other Loan Documents
are
cumulative and are not exclusive of any rights or remedies
that they would otherwise have. No waiver of any provisions
of this Agreement or consent to any departure by any
Guarantor therefrom shall in any event be effective unless
the same shall be permitted by paragraph (b) below, and
then
such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. No
notice or demand on any Guarantor in any case shall entitle
such Guarantor to any other or further notice or demand in
similar or other circumstances.
(b) Neither this Agreement nor any provision hereof
may
be waived, amended or modified except pursuant to a written
agreement entered into between the Guarantors and the
Collateral Agent, with the prior written consent of the
Required Lenders.
SECTION 15. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK.
SECTION 16. Notices. All communications and notices
hereunder shall be in writing and given as provided in
Section 10.01 of the Credit Agreement. All communications
and notices hereunder to each Guarantor shall be given to
it
at its address set forth on Schedule I hereto with a copy
to
the Borrower.
SECTION 17. Survival of Agreement; Severability. (a)
All covenants, agreements, representations and warranties
made by the Guarantors herein and in the certificates or
other instruments prepared or delivered in connection with
or pursuant to this Agreement or any other Loan Document
shall be considered to have been relied upon by the
Collateral Agent and the other Secured Parties and shall
survive the making by the Lenders of the Loans, the making
by the Swingline Lenders of the Swingline Loans and the
issuance of the Letters of Credit and the origination of
the
Bankers' Acceptances by the Fronting Bank, and the
execution
and delivery to the Lenders and the Swingline Lenders of
the
Notes evidencing such loans, regardless of any
investigation
made by the Secured Parties or on their behalf, and shall
continue in full force and effect as long as the principal
of or any accrued interest on any Loan or Swingline Loan or
any other fee or amount payable under any this Agreement or
any other Loan Document is outstanding and unpaid or the
LC/BA Exposure does not equal zero and as long as the
Commitments and the LC/BA Commitment have not been
terminated.
(b) In the event any one or more of the provisions
contained in this Agreement or in any other Loan Document
should be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not
in any way be affected or impaired thereby (it being
understood that the invalidity of a particular provision in
a particular jurisdiction shall not in and of itself affect
the validity of such provision in any other jurisdiction).
The parties shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions
with valid provisions the economic effect of which comes as
close as possible to that of the invalid, illegal or
unenforceable provisions.
SECTION 18. Counterparts. This Agreement may be
executed in two or more counterparts, each of which shall
constitute an original, but all of which, when taken
together, shall constitute but one instrument, and shall
become effective as provided in Section 13.
SECTION 19. Rules of Interpretation. The rules of
interpretation specified in Section 1.02 of the Credit
Agreement shall be applicable to this Agreement.
SECTION 20. Jurisdiction; Consent to Service of
Process. (a) Each Guarantor hereby irrevocably and
unconditionally submits, for itself and its property, to
the
nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in
New York City, and any appellate court from any thereof, in
any action or proceeding arising out of or relating to this
Agreement or the other Loan Documents, or for recognition
or
enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all
claims in respect of any such action or proceeding may be
heard and determined in such New York State or, to the
extent permitted by law, in such Federal court. Each of the
parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be
enforced
in other jurisdictions by suit on the judgment or in any
other manner provided by law. Nothing in this Agreement
shall affect any right that the Collateral Agent or any
other Secured Party may otherwise have to bring any action
or proceeding relating to this Agreement or the other Loan
Documents against any Guarantor or its properties in the
courts of any jurisdiction.
(b) Each Guarantor hereby irrevocably and
unconditionally waives, to the fullest extent it may
legally
and effectively do so, any objection that it may now or
hereafter have to the laying of venue of any suit, action
or
proceeding arising out of or relating to this Agreement or
the other Loan Documents in any New York State or Federal
court. Each of the parties hereto hereby irrevocably
waives,
to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or
proceeding in any such court.
(c) Each party to this Agreement irrevocably
consents
to service of process in the manner provided for notices in
Section 16. Nothing in this Agreement will affect the right
of any party to this Agreement to serve process in any
other
manner permitted by law.
SECTION 21. Waiver of Jury Trial. Each party hereto
hereby waives, to the fullest extent permitted by
applicable
law, any right it may have to a trial by jury in respect of
any litigation directly or indirectly arising out of, under
or in connection with this Agreement. Each party hereto
(a) certifies that no representative, agent or attorney of
any other party has represented, expressly or otherwise,
that such other party would not, in the event of
litigation,
seek to enforce the foregoing waiver and (b) acknowledges
that it and the other parties hereto have been induced to
enter into this Agreement by, among other things, the
mutual
waivers and certifications in this Section.
SECTION 22. Additional Guarantors. Pursuant to
Section 6.10(b) of the Credit Agreement, each Subsidiary
that was not in existence or not a Subsidiary on the date
hereof or that was previously an Inactive Subsidiary is
required to enter into this Agreement as a Guarantor upon
or, in the case of an Inactive Subsidiary, prior to
becoming
a Subsidiary. Upon execution and delivery, after the date
hereof, by the Collateral Agent and a subsidiary of an
instrument in the form of Annex 1, such subsidiary shall
become a Guarantor hereunder with the same force and effect
as if originally named as a Guarantor herein. Pursuant to
paragraph (q) of Article VIII of the Credit Agreement, an
Event of Default will occur if any Person (referred to
herein as a Parent Guarantor ) becomes the owner or holder
of record of all the common equity securities of the
Borrower and, prior to or simultaneously with obtaining
such
shares, fails, among other things, to enter into this
Agreement (or a similar agreement) as a Guarantor. Upon
execution and delivery, after the date hereof, by the
Collateral Agent and a Parent Guarantor of an instrument in
the form of Annex 2, such Parent Guarantor shall become a
Guarantor hereunder with the same force and effect as if
originally named as a Guarantor herein. The execution and
delivery of any instrument adding an additional Guarantor
as
a party to this Agreement shall not require the consent of
any Guarantor hereunder. The rights and obligations of each
Guarantor hereunder shall remain in full force and effect
notwithstanding the addition of any new Guarantor as a
party
to this Agreement.
SECTION 23. Right of Setoff. If an Event of Default
shall have occurred and be continuing and the
Administrative
Agent shall have declared, or the Required Lenders shall
have requested the Administrative Agent to declare, the
Loans and the Swingline Loans immediately due and payable
pursuant to Article VIII of the Credit Agreement, each
Lender (including the Fronting Banks in their capacity as
such) is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off
and
apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other
Indebtedness at any time owing by such Lender to or for the
credit or the account of any Guarantor against any of and
all the obligations of such Guarantor now or hereafter
existing under the Credit Agreement and the other Loan
Documents held by such Lender, irrespective of whether or
not such Lender shall have made any demand under the Credit
Agreement or any such other Loan Document and although such
obligations may be unmatured. The rights of each Lender
under this Section are in addition to other rights and
remedies (including other rights of setoff) that such
Lender
may have.
SECTION 24. Impairment of Subrogation Rights. Upon the
occurrence and during the continuance of an Event of
Default
the Collateral Agent may elect to nonjudicially or
judicially foreclose against any real or personal property
security it holds for the Obligations or any part thereof,
or accept an assignment of any such security in lieu of
foreclosure or compromise or adjust any part of the
Obligations, or make any other accommodation with the
Borrower or any Guarantor, or exercise any other remedy
against the Borrower or any Guarantor or any security, in
accordance with and subject to the provisions of the
Security Documents. No such action by the Collateral Agent
will release or limit the liability of any Guarantor to the
Collateral Agent, even if the effect of that action is to
deprive a Guarantor of the right to collect reimbursement
from the Borrower for any sums paid to the Collateral
Agent.
IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement as of the day and year first above
written.
CLORWOOD DISTRIBUTORS,
INC.,
by
/s/ Martin W. Gladysz
Name: Martin W.
Gladysz
Title: Vice President
ECKERD CONSUMER PRODUCTS,
INC.,
by
/s/ Martin W. Gladysz
Name: Martin W.
Gladysz
Title: Vice President
ECKERD FLEET, INC.,
by
/s/ Martin W. Gladysz
Name: Martin W.
Gladysz
Title: Vice President
ECKERD HOLDINGS II, INC.,
by
/s/ Martin W. Gladysz
Name: Martin W.
Gladysz
Title: Vice President
ECKERD'S WESTBANK, INC.,
by
/s/ Martin W. Gladysz
Name: Martin W.
Gladysz
Title: Vice President
ECKERD TOBACCO COMPANY,
INC.,
by
/s/ Martin W. Gladysz
Name: Martin W.
Gladysz
Title: Vice President
E.I.T., INC.,
by
/s/ Martin W. Gladysz
Name: Martin W.
Gladysz
Title: Vice President
INSTA-CARE HOLDINGS, INC.,
by
/s/ Martin W. Gladysz
Name: Martin W.
Gladysz
Title: Vice President
INSTA-CARE PHARMACY
SERVICES
CORPORATION,
by
/s/ Martin W. Gladysz
Name: Martin W.
Gladysz
Title: Vice President
P.C.V., INC.,
by
/s/ Martin W. Gladysz
Name: Martin W.
Gladysz
Title: Vice President
PHARMACY DYNAMICS GROUP,
INC.,
by
/s/ Martin W. Gladysz
Name: Martin W.
Gladysz
Title: Vice President
CHEMICAL BANK, as
Collateral Agent,
by
/s/ Meredith Vanden
Handel
Name: Meredith Vanden
Handel
Title: Vice President
Annex 1 to
the Guarantee
Agreement
SUPPLEMENT NO. dated as of
, to the Guarantee Agreement dated as
of
June 14, 1993, as amended and restated
as of August 3, 1994 (the "Guarantee
Agreement"), among each subsidiary
party
thereto of Eckerd Corporation, a
Delaware corporation (the "Borrower"),
and CHEMICAL BANK, a New York banking
corporation ("Chemical Bank"), as
collateral agent (the "Collateral
Agent") for the Secured Parties (as
defined in the Credit Agreement
referred
to below).
A. Reference is made to the Credit Agreement dated
as
of June 14, 1993, as amended and restated as of August 3,
1994 (as amended or modified from time to time, the "Credit
Agreement"), among the Borrower, the financial institutions
party thereto, as lenders (the "Lenders"), Chemical Bank
and
NationsBank of Florida, N.A., a national banking
association
("NationsBank"), as managing agents and as swingline
lenders
(in such latter capacity, each a "Swingline Lender"), and
Chemical Bank, as administrative agent (in such capacity,
the "Administrative Agent") for the Lenders, the Swingline
Lenders and the Fronting Banks.
B. Capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to such
terms in the Guarantee Agreement and the Credit Agreement.
C. Certain Subsidiaries of the Borrower have entered
into the Guarantee Agreement in order to induce the Lenders
to make Loans, the Swingline Lenders to make Swingline
Loans
and the Fronting Banks to issue Letters of Credit and
originate Bankers' Acceptances. Pursuant to Section
6.10(b)
of the Credit Agreement, each Subsidiary of the Borrower
that was not in existence or not a Subsidiary of the
Borrower on the date thereof or that was previously an
Inactive Subsidiary is required to enter into the Guarantee
Agreement as a Guarantor upon or, in the case of an
Inactive
Subsidiary, prior to becoming a Subsidiary. Section 22 of
the Guarantee Agreement provides that additional
subsidiaries of the Borrower may become Guarantors under
the
Guarantee Agreement by execution and delivery of an
instrument in the form of this Supplement. The undersigned
(the "New Guarantor") is a subsidiary of the Borrower and
is
executing this Supplement in accordance with the
requirements of the Credit Agreement to become a Guarantor
under the Guarantee Agreement in order to induce the
Lenders
to make additional Loans, the Swingline Lenders to make
additional Swingline Loans and the Fronting Banks to issue
additional Letters of Credit and originate additional
Bankers' Acceptances and as consideration for Loans and
Swingline Loans previously made, Letters of Credit
previously issued and Bankers' Acceptances previously
originated.
Accordingly, the Collateral Agent and the New
Guarantor
agree as follows:
SECTION 1. In accordance with Section 22 of the
Guarantee Agreement, the New Guarantor by its signature
below becomes a Guarantor under the Guarantee Agreement
with
the same force and effect as if originally named therein as
a Guarantor and the New Guarantor hereby (a) agrees to all
the terms and provisions of the Guarantee Agreement
applicable to it as a Guarantor thereunder and (b)
represents and warrants that the representations and
warranties made by it as a Guarantor thereunder are true
and
correct on and as of the date hereof. Each reference to a
"Guarantor" in the Guarantee Agreement shall be deemed to
include the New Guarantor. The Guarantee Agreement is
hereby incorporated herein by reference.
SECTION 2. The New Guarantor represents and
warrants to the Collateral Agent and the other Secured
Parties that this Supplement has been duly authorized,
executed and delivered by it and constitutes its legal,
valid and binding obligation, enforceable against it in
accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium or other
similar laws affecting creditors' rights generally and by
general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in
equity).
SECTION 3. This Supplement may be executed in two
or more counterparts, each of which shall constitute an
original, but all of which, when taken together, shall
constitute but one instrument. This Supplement shall
become
effective when the Collateral Agent shall have received
counterparts of this Supplement that, when taken together,
bear the signatures of the New Guarantor and the Collateral
Agent.
SECTION 4. Except as expressly supplemented
hereby,
the Guarantee Agreement shall remain in full force and
effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
SECTION 6. In case any one or more of the
provisions contained in this Supplement should be held
invalid, illegal or unenforceable in any respect, neither
party hereto shall be required to comply with such
provision
for so long as such provision is held to be invalid,
illegal
or unenforceable, but the validity, legality and
enforceability of the remaining provisions contained herein
and in the Guarantee Agreement shall not in any way be
affected or impaired. The parties hereto shall endeavor in
good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the
invalid, illegal or unenforceable provisions.
SECTION 7. All communications and notices
hereunder
shall be in writing and given as provided in Section 16 of
the Guarantee Agreement. All communications and notices
hereunder to the New Guarantor shall be given to it at the
address set forth under its signature below, which
supplements Schedule I to the Guarantee Agreement, with a
copy to the Borrower.
SECTION 8. The New Guarantor agrees to reimburse
the Collateral Agent for its reasonable out-of-pocket
expenses in connection with this Supplement, including the
reasonable fees, other charges and disbursements of counsel
for the Collateral Agent.
IN WITNESS WHEREOF, the New Guarantor and the
Collateral Agent have duly executed this Supplement to the
Guarantee Agreement as of the day and year first above
written.
[NAME OF NEW GUARANTOR],
by
Name:
Title:
Address:
CHEMICAL BANK, as Collateral
Agent,
by
Name:
Title:
Annex 2 to
the Guarantee
Agreement
SUPPLEMENT NO. dated as of ,
to the Guarantee Agreement dated as of
June 14, 1993, as amended and restated
as of August 3, 1994 (the "Guarantee
Agreement"), among each subsidiary
party
thereto of Eckerd Corporation, a
Delaware corporation (the "Borrower"),
and CHEMICAL BANK, a New York banking
corporation ("Chemical Bank"), as
collateral agent (the "Collateral
Agent") for the Secured Parties (as
defined in the Credit Agreement
referred
to below).
A. Reference is made to the Credit Agreement dated
as
of June 14, 1993, as amended and restated as of August 3,
1994 (as amended or modified from time to time, the "Credit
Agreement"), among the Borrower, the financial institutions
party thereto, as lenders (the "Lenders"), Chemical Bank
and
NationsBank of Florida, N.A., a national banking
association
("NationsBank"), as managing agents and as swingline
lenders
(in such latter capacity, each a "Swingline Lender"), and
Chemical Bank, as administrative agent (in such capacity,
the "Administrative Agent") for the Lenders, the Swingline
Lenders and the Fronting Banks.
B. Capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to such
terms in the Guarantee Agreement and the Credit Agreement.
C. Certain Subsidiaries of the Borrower have entered
into the Guarantee Agreement in order to induce the Lenders
to make Loans, the Swingline Lenders to make Swingline
Loans
and the Fronting Banks to issue Letters of Credit and
originate Bankers' Acceptances. Pursuant to paragraph (q)
of Article VIII of the Credit Agreement, an Event of
Default
will occur if any Person (referred to herein as a "Parent
Guarantor") becomes the owner or holder of record of all
the
common equity securities of the Borrower and, prior to or
simultaneously with obtaining such shares, fails, among
other things, to enter into the Guarantee Agreement (or a
similar agreement) as a Guarantor. Section 22 of the
Guarantee Agreement provides that any Parent Guarantor may
become a Guarantor under the Guarantee Agreement by
execution and delivery of an instrument in the form of this
Supplement. The undersigned (the "New Guarantor") is a
Parent Guarantor of the Borrower and is executing this
Supplement in accordance with the provisions of the Credit
Agreement to become a Guarantor under the Guarantee
Agreement in order to induce the Lenders to make additional
Loans, the Swingline Lenders to make additional Swingline
Loans and the Fronting Banks to issue additional Letters of
Credit and originate additional Bankers' Acceptances and as
consideration for Loans and Swingline Loans previously
made,
Letters of Credit previously issued and Bankers'
Acceptances
previously originated.
Accordingly, the Collateral Agent and the New
Guarantor
agree as follows:
SECTION 1. In accordance with Section 22 of the
Guarantee Agreement, the New Guarantor by its signature
below becomes a Guarantor under the Guarantee Agreement
with
the same force and effect as if originally named therein as
a Guarantor and the New Guarantor hereby (a) agrees to all
the terms and provisions of the Guarantee Agreement
applicable to it as a Guarantor thereunder and (b)
represents and warrants that the representations and
warranties made by it as a Guarantor thereunder are true
and
correct on and as of the date hereof. Each reference to a
"Guarantor" in the Guarantee Agreement shall be deemed to
include the New Guarantor. The Guarantee Agreement is
hereby incorporated herein by reference.
SECTION 2. The New Guarantor represents and
warrants to the Collateral Agent and the other Secured
Parties that this Supplement has been duly authorized,
executed and delivered by it and constitutes its legal,
valid and binding obligation, enforceable against it in
accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium or other
similar laws affecting creditors' rights generally and by
general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in
equity).
SECTION 3. This Supplement may be executed in two
or more counterparts, each of which shall constitute an
original, but all of which, when taken together, shall
constitute but one instrument. This Supplement shall
become
effective when the Collateral Agent shall have received
counterparts of this Supplement that, when taken together,
bear the signatures of the New Guarantor and the Collateral
Agent.
SECTION 4. Except as expressly supplemented
hereby,
the Guarantee Agreement shall remain in full force and
effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED
BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
SECTION 6. In case any one or more of the
provisions contained in this Supplement should be held
invalid, illegal or unenforceable in any respect, neither
party hereto shall be required to comply with such
provision
for so long as such provision is held to be invalid,
illegal
or unenforceable, but the validity, legality and
enforceability of the remaining provisions contained herein
and in the Guarantee Agreement shall not in any way be
affected or impaired. The parties hereto shall endeavor in
good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the
invalid, illegal or unenforceable provisions.
SECTION 7. All communications and notices
hereunder
shall be in writing and given as provided in Section 16 of
the Guarantee Agreement. All communications and notices
hereunder to the New Guarantor shall be given to it at the
address set forth under its signature below, which
supplements Schedule I to the Guarantee Agreement, with a
copy to the Borrower.
SECTION 8. The New Guarantor agrees to reimburse
the Collateral Agent for its reasonable out-of-pocket
expenses in connection with this Supplement, including the
reasonable fees, other charges and disbursements of counsel
for the Collateral Agent.
IN WITNESS WHEREOF, the New Guarantor and the
Collateral Agent have duly executed this Supplement to the
Guarantee Agreement as of the day and year first above
written.
[NAME OF NEW GUARANTOR],
by
Name:
Title:
Address:
CHEMICAL BANK, as Collateral
Agent,
by
Name:
Title:
INDEMNITY, SUBROGATION and CONTRIBUTION
AGREEMENT dated as of June 14, 1993, as amended
and restated as of August 3, 1994, among ECKERD
CORPORATION, a Delaware corporation (the
"Borrower"), each subsidiary of the Borrower
party
hereto (collectively, the "Guarantors"), and
CHEMICAL BANK, a New York banking corporation
("Chemical Bank"), as collateral agent (the
"Collateral Agent") for the Secured Parties (as
defined in the Credit Agreement referred to
below).
Reference is made to the Credit Agreement dated as of
June 14, 1993, as amended and restated as of August 3, 1994
(as amended or modified from time to time, the Credit
Agreement ), among the Borrower, the financial institutions
party thereto, as lenders (the Lenders ), Chemical Bank
and
NationsBank of Florida, N.A., a national banking
association
("NationsBank"), as managing agents and as swingline
lenders
(in such latter capacity, each a Swingline Lender ), and
Chemical Bank, as administrative agent (in such capacity,
the Administrative Agent ) for the Lenders, the Swingline
Lenders and Fronting Banks.
The Lenders and the Swingline Lenders have agreed to
make Loans and Swingline Loans, respectively, to the
Borrower, and the Fronting Banks have agreed to issue
Letters of Credit and originate Bankers' Acceptances for
the
account of the Borrower, pursuant to, and upon the terms
and
subject to the conditions specified in, the Credit
Agreement. The Guarantors have guaranteed such Loans and
such Swingline Loans and the other Obligations (as defined
in the Guarantee Agreement) of the Borrower under the
Credit
Agreement pursuant to the Guarantee Agreement (for purposes
of this Agreement, the Guarantees ) and, in certain cases,
have granted Liens on and security interests in certain of
their assets to secure such Loans, such Swingline Loans and
such Guarantees. The obligations of the Lenders to make
Loans, of the Swingline Lenders to make Swingline Loans and
of the Fronting Banks to issue Letters of Credit and to
originate Bankers' Acceptances are conditioned on, among
other things, the execution and delivery by the Borrower
and
the Guarantors of an agreement in the form hereof.
Capitalized terms used herein and not defined herein shall
have the meanings assigned to such terms in the Credit
Agreement.
Accordingly, the Borrower, each Guarantor and the
Collateral Agent agree as follows:
SECTION 1. Indemnity and Subrogation. In addition to
all such rights of indemnity and subrogation as the
Guarantors may have under applicable law (but subject to
Section 3), the Borrower agrees that (a) in the event a
payment shall be made by any Guarantor under the Guarantee
Agreement, the Borrower shall indemnify such Guarantor for
the full amount of such payment and such Guarantor shall be
subrogated to the rights of the person to whom such payment
shall have been made to the extent of such payment and
(b) in the event any assets of any Guarantor shall be sold
pursuant to any mortgage, security agreement or similar
instrument or agreement to satisfy a claim of any Lender,
any Swingline Lender or either Fronting Bank, the Borrower
shall indemnify such Guarantor in an amount equal to the
greater of the book value or the fair market value of the
assets so sold.
SECTION 2. Contribution and Subrogation. Each
Guarantor
agrees (subject to Section 3) that in the event a payment
shall be made by any Guarantor under the Guarantee
Agreement
or assets of any Guarantor shall be sold pursuant to any
mortgage, security agreement or similar instrument or
agreement to satisfy a claim of any Lender, any Swingline
Lender or either Fronting Bank and such Guarantor (the
Claiming Guarantor ) shall not have been indemnified by
the
Borrower as provided in Section 1, each other Guarantor (a
Contributing Guarantor ) shall indemnify the Claiming
Guarantor in an amount equal to the amount of such payment
or the greater of the book value or the fair market value
of
such assets, as the case may be, multiplied by a fraction
of
which the numerator shall be the net worth of the
Contributing Guarantor on the date hereof and the
denominator shall be the aggregate net worth of all the
Guarantors on the date hereof. Any Contributing Guarantor
making any payment to a Claiming Guarantor pursuant to this
Section 2 shall be subrogated to the rights of such
Claiming
Guarantor under Section 1 to the extent of such payment.
SECTION 3. Subordination. Notwithstanding any
provision
of this Agreement to the contrary, all rights of the
Guarantors under Sections 1 and 2 and all other rights of
indemnity, contribution or subrogation under applicable law
or otherwise shall be fully subordinated to the
indefeasible
payment in full of the Obligations; provided, however, that
to the extent any right of indemnity, contribution or
subrogation that a Guarantor might have pursuant to this
Agreement or otherwise would render such Guarantor a
creditor of the Borrower within the meaning of Section 547
of Title 11 of the United State Code as now in effect or
hereafter amended or any comparable provision of any
successor statute, such Guarantor hereby irrevocably waives
such right of indemnity, contribution or subrogation. No
failure on the part of the Borrower or any Guarantor to
make
the payments required by Sections 1 and 2 (or any other
payments required under applicable law or otherwise) shall
in any respect limit the obligations and liabilities of any
Guarantor with respect to any Guarantee, and each Guarantor
shall remain liable for the full amount of the obligations
of such Guarantor under each such Guarantee.
SECTION 4. Termination. This Agreement shall survive
and be in full force and effect so long as any Obligation
is
outstanding and has not been indefeasibly paid in full in
cash, and so long as the LC/BA Exposure has not been
reduced
to zero or any of the Commitments or the LC/BA Commitment
under the Credit Agreement have not been terminated, and
shall continue to be effective or be reinstated, as the
case
may be, if at any time payment, or any part thereof, of
principal of or interest on any Obligation is rescinded or
must otherwise be restored by any Secured Party or any
Guarantor upon the bankruptcy or reorganization of the
Borrower, any Guarantor or otherwise.
SECTION 5. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK.
SECTION 6. No Waiver. No failure on the part of the
Collateral Agent or any Guarantor to exercise, and no delay
in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or
partial
exercise of any such right, power or remedy by the
Collateral Agent or any Guarantor preclude any other or
further exercise thereof or the exercise of any other
right,
power or remedy. All remedies hereunder are cumulative and
are not exclusive of any other remedies provided by law.
None of the Collateral Agent and the Guarantors shall be
deemed to have waived any rights hereunder unless such
waiver shall be in writing and signed by such parties.
SECTION 7. Notices. All communications and notices
hereunder shall be in writing and given as provided in
Section 16 of the Guarantee Agreement and addressed as
specified in such Section 16.
SECTION 8. Binding Agreement; Assignments. Whenever in
this Agreement any of the parties hereto is referred to,
such reference shall be deemed to include the successors
and
assigns of such party; and all covenants, promises and
agreements by or on behalf of the parties that are
contained
in this Agreement shall bind and inure to the benefit of
their respective successors and assigns. None of the
Borrower and the Guarantors may assign or transfer any of
its rights or obligations hereunder (and any such attempted
assignment or transfer shall be void) without the prior
written consent of the Required Lenders.
SECTION 9. Survival of Agreement; Severability. (a)
All
covenants and agreements made by each of the Borrower and
each Guarantor herein and in the certificates or other
instruments prepared or delivered in connection with this
Agreement shall be considered to have been relied upon by
the Collateral Agent, the other Secured Parties and each
Guarantor and shall survive the making by the Lenders of
the
Loans, the making by the Swingline Lenders of the Swingline
Loans, the issuance of the Letters of Credit and the
origination of the Bankers' Acceptances by the Fronting
Banks, and the execution and delivery to the Lenders of the
Notes and to the Swingline Lenders of the Swingline Notes
evidencing such loans and shall continue in full force and
effect as long as the principal of or any accrued interest
on any Notes or any Swingline Notes or any other fee or
amount payable under any Note, Swingline Note, Letter of
Credit or Bankers' Acceptance or this Agreement or, without
duplication of the foregoing, under any of the other Loan
Documents or under the Credit Agreement is outstanding and
unpaid or the LC/BA Exposure does not equal zero and as
long
as the Commitments and the LC/BA Commitment have not been
terminated.
(b) In case any one or more of the provisions
contained
in this Agreement should be held invalid, illegal or
unenforceable in any respect, no party hereto shall be
required to comply with such provision for so long as such
provision is held to be invalid, illegal or unenforceable,
but the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way
be affected or impaired thereby. The parties shall endeavor
in good-faith negotiations to replace the invalid, illegal
or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.
SECTION 10. Counterparts. This Agreement may be
executed in two or more counterparts, each of which shall
constitute an original, but all of which, when taken
together, shall constitute but one instrument. This
Agreement shall be effective with respect to any Guarantor
when a counterpart bearing the signature of such Guarantor
shall have been delivered to the Collateral Agent.
SECTION 11. Rules of Interpretation. The rules of
interpretation specified in Section 1.02 of the Credit
Agreement shall be applicable to this Agreement.
SECTION 12. Jurisdiction; Consent to Service of
Process. (a) Each of the Borrower and each Guarantor hereby
irrevocably and unconditionally submits, for itself and its
property, to the jurisdiction of any New York State court
or
Federal court of the United States of America sitting in
New
York City, and any appellate court from any thereof, in any
action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of
any
such action or proceeding may be heard and determined in
such New York State or, to the extent permitted by law, in
such Federal court. Each of the parties hereto agrees that
a
final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by
law.
Each of the parties hereto agrees that it will not
institute
or seek to institute any action or proceeding arising out
of
or relating to this Agreement (other than an action or
proceeding seeking enforcement of a judgment) in any forum
other than a New York State court or Federal court of the
United States of America sitting in New York City.
(b) Each of the Borrower and each Guarantor hereby
irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection
it may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to
this Agreement in any New York State or Federal court of
the
United States of America sitting in New York. Each of the
parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in
any
such court.
(c) Each party to this Agreement irrevocably consents
to service of process in the manner provided for notices in
Section 7. Nothing in this Agreement will affect the right
of any party to this Agreement to serve process in any
other
manner permitted by law.
SECTION 13. Waiver of Jury Trial. Each party hereto
hereby waives, to the fullest extent permitted by
applicable
law, any right it may have to a trial by jury in respect of
any litigation directly or indirectly arising out of, under
or in connection with this Agreement. Each party hereto
(a) certifies that no representative, agent or attorney of
any other party has represented, expressly or otherwise,
that such other party would not, in the event of
litigation,
seek to enforce the foregoing waiver and (b) acknowledges
that it and the other parties hereto have been induced to
enter into this Agreement by, among other things, the
mutual
waivers and certifications in this Section.
SECTION 14. Additional Guarantors. Pursuant to Section
6.10(b) of the Credit Agreement, each Subsidiary that was
not in existance or not a Subsidiary on the date hereof or
that was previously on Inactive Subsidiary is required to
enter into this Agreement as a Guarantor upon or, in the
case of an Inactive Subsidiary, prior to becoming a
Subsidiary. Upon execution and delivery, after the date
hereof, by the Collateral Agent and a subsidiary of the
Borrower of an instrument in the form of Annex 1, such
subsidiary of the Borrower shall become a Guarantor
hereunder with the same force and effect as if originally
named as a Guarantor hereunder. Pursuant to paragraph (q)
of
Article VIII of the Credit Agreement, an Event of Default
will occur if any Person (referred to herein as a Parent
Guarantor ) becomes the owner or holder of record of all
the
common equity securities of the Borrower and, prior to or
simultaneously with obtaining such shares, fails, among
other things, to enter into this Agreement (or a similar
agreement) as a Guarantor. Upon execution and delivery,
after the date hereof, by the Collateral Agent and a Parent
Guarantor of an instrument in the form of Annex 2, such
Parent Guarantor shall become a Guarantor hereunder with
the
same force and effect as if originally named as a Guarantor
herein. The execution and delivery of any instrument adding
an additional Guarantor as a party to this Agreement shall
not require the consent of any Guarantor hereunder. The
rights and obligations of each Guarantor hereunder shall
remain in full force and effect notwithstanding the
addition
of any new Guarantor as a party to this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused
this
Agreement to be executed by their duly authorized officers
as of the date first appearing above.
ECKERD CORPORATION,
by
/s/ Martin W. Gladysz
Name: Martin W. Gladysz
Title: Vice President
CLORWOOD DISTRIBUTORS,
INC.,
by
/s/ Martin W. Gladysz
Name: Martin W. Gladysz
Title: Vice President
ECKERD CONSUMER PRODUCTS,
INC.,
by
/s/ Martin W. Gladysz
Name: Martin W. Gladysz
Title: Vice President
ECKERD FLEET, INC.,
by
/s/ Martin W. Gladysz
Name: Martin W. Gladysz
Title: Vice President
ECKERD HOLDINGS II, INC.,
by
/s/ Martin W. Gladysz
Name: Martin W. Gladysz
Title: Vice President
ECKERD'S WESTBANK, INC.,
by
/s/ Martin W. Gladysz
Name: Martin W. Gladysz
Title: Vice President
ECKERD TOBACCO COMPANY,
INC.,
by
/s/ Martin W. Gladysz
Name: Martin W. Gladysz
Title: Vice President
E.I.T., INC.,
by
/s/ Martin W. Gladysz
Name: Martin W. Gladysz
Title: Vice President
INSTA-CARE HOLDINGS, INC.,
by
/s/ Martin W. Gladysz
Name: Martin W. Gladysz
Title: Vice President
INSTA-CARE PHARMACY
SERVICES CORPORATION,
by
/s/ Martin W. Gladysz
Name: Martin W. Gladysz
Title: Vice President
P.C.V., INC.,
by
/s/ Martin W. Gladysz
Name: Martin W. Gladysz
Title: Vice President
PHARMACY DYNAMICS GROUP,
INC.,
by
/s/ Martin W. Gladysz
Name: Martin W. Gladysz
Title: Vice President
CHEMICAL BANK, as
Collateral Agent,
by
Meredith Vanden Handel
Name: Meredith Vanden
Handel
Title: Vice President
Annex 1 to
the Indemnity, Subrogation
and
Contribution Agreement
SUPPLEMENT NO. dated as of , to the
Indemnity, Subrogation and Contribution Agreement
dated as of June 14, 1993, as amended and
restated
as of August 3, 1994 (the "Indemnity, Subrogation
and Contribution Agreement"), among ECKERD
CORPORATION, a Delaware corporation (the
"Borrower"), each subsidiary of the Borrower
party
thereto (collectively, the "Guarantors") and
CHEMICAL BANK, a New York banking corporation
("Chemical Bank"), as collateral agent (the
"Collateral Agent") for the Secured Parties (as
defined in the Credit Agreement referred to
below).
A. Reference is made to the Credit Agreement
dated as of June 14, 1993, as amended and restated as of
August 3, 1994 (as amended or modified from time to time,
the "Credit Agreement"), among the Borrower, the financial
institutions party thereto, as lenders (the "Lenders"),
Chemical Bank and NationsBank of Florida, N.A., a national
banking association ("NationsBank"), as managing agents and
as swingline lenders (in such latter capacity, each a
"Swingline Lender"), and Chemical Bank, as administrative
agent (in such capacity, the "Administrative Agent") for
the
Lenders, the Swingline Lenders and the Fronting Banks.
B. Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned
to
such terms in the Indemnity, Subrogation and Contribution
Agreement and the Credit Agreement.
C. Certain Subsidiaries of the Borrower have
entered into the Indemnity, Subrogation and Contribution
Agreement in order to induce the Lenders to make Loans, the
Swingline Lenders to make Swingline Loans and the Fronting
Bank to issue Letters of Credit and originate Bankers'
Acceptances. Pursuant to Section 6.10(b) of the Credit
Agreement, each Subsidiary of the Borrower that was not in
existence or not a Subsidiary of the Borrower on the date
thereof or that was previously an Inactive Subsidiary is
required to enter into the Indemnity, Subrogation and
Contribution Agreement as a Guarantor upon or, in the case
of an Inactive Subsidiary, prior to becoming a Subsidiary.
Section 14 of the Indemnity, Subrogation and Contribution
Agreement provides that additional subsidiaries of the
Borrower may become Guarantors under the Indemnity,
Subrogation and Contribution Agreement by execution and
delivery of an instrument in the form of this Supplement.
The undersigned (the "New Guarantor") is a subsidiary of
the
Borrower and is executing this Supplement in accordance
with
the requirements of the Credit Agreement to become a
Guarantor under the Indemnity, Subrogation and Contribution
Agreement in order to induce the Lenders to make additional
Loans, the Swingline Lenders to make additional Swingline
Loans and the Fronting Banks to issue additional Letters of
Credit and originate additional Bankers' Acceptances and as
consideration for Loans and Swingline Loans previously
made,
Letters of Credit previously issued and Bankers'
Acceptances
previously originated.
Accordingly, the Collateral Agent and the New
Guarantor agree as follows:
SECTION 1. In accordance with Section 14 of the
Indemnity, Subrogation and Contribution Agreement, the New
Guarantor by its signature below becomes a Guarantor under
the Indemnity, Subrogation and Contribution Agreement with
the same force and effect as if originally named therein as
a Guarantor and the New Guarantor hereby agrees to all the
terms and provisions of the Indemnity, Subrogation and
Contribution Agreement applicable to it as a Guarantor
thereunder. Each reference to a "Guarantor" in the
Indemnity, Subrogation and Contribution Agreement shall be
deemed to include the New Guarantor. The Indemnity,
Subrogation and Contribution Agreement is hereby
incorporated herein by reference.
SECTION 2. The New Guarantor represents and
warrants to the Collateral Agent and the other Secured
Parties that this Supplement has been duly authorized,
executed and delivered by it and constitutes its legal,
valid and binding obligation, enforceable against it in
accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium or other
similar laws affecting creditors' rights generally and by
general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in
equity).
SECTION 3. This Supplement may be executed in
two
or more counterparts, each of which shall constitute an
original, but all of which, when taken together, shall
constitute but one instrument. This Supplement shall
become
effective when the Collateral Agent shall have received
counterparts of this Supplement that, when taken together,
bear the signatures of the New Guarantor and the Collateral
Agent.
SECTION 4. Except as expressly supplemented
hereby, the Indemnity, Subrogation and Contribution
Agreement shall remain in full force and effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
SECTION 6. In case any one or more of the
provisions contained in this Supplement should be held
invalid, illegal or unenforceable in any respect, neither
party hereto shall be required to comply with such
provision
for so long as such provision is held to be invalid,
illegal
or unenforceable, but the validity, legality and
enforceability of the remaining provisions contained herein
and in the Indemnity, Subrogation and Contribution
Agreement
shall not in any way be affected or impaired. The parties
hereto shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid
provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 7. All communications and notices
hereunder shall be in writing and given as provided in
Section 7 of the Indemnity, Subrogation and Contribution
Agreement. All communications and notices hereunder to the
New Guarantor shall be given to it at the address set forth
under its signature, which supplements Schedule I to the
Guarantee Agreement, with a copy to the Borrower.
SECTION 8. The New Guarantor agrees to
reimburse
the Collateral Agent for its reasonable out-of-pocket
expenses in connection with this Supplement, including the
reasonable fees, other charges and disbursements of counsel
for the Collateral Agent.
IN WITNESS WHEREOF, the New Guarantor and the
Collateral Agent have duly executed this Supplement to the
Indemnity, Subrogation and Contribution Agreement as of the
day and year first above written.
[NAME OF NEW GUARANTOR],
by
Name:
Title:
Address:
CHEMICAL BANK, as Collateral
Agent,
by
Name:
Title:
Annex 2 to
the Indemnity, Subrogation
and
Contribution
Agreement
SUPPLEMENT NO. dated as of , to
the
Indemnity, Subrogation and Contribution
Agreement dated as of June 14, 1993, as
amended
and restated as of August 3, 1994 (the
"Indemnity, Subrogation and Contribution
Agreement"), among ECKERD CORPORATION, a
Delaware corporation (the "Borrower"), each
subsidiary of the Borrower party thereto
(collectively, the "Guarantors") and CHEMICAL
BANK, a New York banking corporation
("Chemical
Bank"), as collateral agent (the "Collateral
Agent") for the Secured Parties (as defined in
the Credit Agreement referred to below).
A. Reference is made to the Credit Agreement dated
as of June 14, 1993, as amended and restated as of August 3,
1994 (as amended or modified from time to time, the "Credit
Agreement"), among the Borrower, the financial institutions
party thereto, as lenders (the "Lenders"), Chemical Bank and
NationsBank of Florida, N.A., a national banking association
("NationsBank"), as managing agents and as swingline lenders
(in such latter capacity, each a "Swingline Lender"), and
Chemical Bank, as administrative agent (in such capacity, the
"Administrative Agent") for the Lenders, the Swingline
Lenders
and the Fronting Banks.
B. Capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to such terms
in the Indemnity, Subrogation and Contribution Agreement and
the Credit Agreement.
C. Certain Subsidiaries of the Borrower have
entered
into the Indemnity, Subrogation and Contribution Agreement in
order to induce the Lenders to make Loans, the Swingline
Lenders to make Swingline Loans and the Fronting Banks to
issue
Letters of Credit and originate Bankers' Acceptances.
Pursuant
to paragraph (q) of Article VIII of the Credit agreement, an
Event of Default will occur if any Person (referred to herein
as a "Parent Guarantor") becomes the owner or holder of
record
of all the common equity securities of the Borrower and,
prior
to or simultaneously with obtaining such shares, fails, among
other things, to enter into the Guarantee Agreement (or a
similar agreement) as a Guarantor. Section 14 of the
Indemnity, Subrogation and Contribution Agreement provides
that
any Parent Guarantor may become a Guarantor under the
Indemnity, Subrogation and Contribution Agreement by
execution
and delivery of an instrument in the form of this Supplement.
The undersigned (the "New Guarantor") is a Parent Guarantor
of
the Borrower and is executing this Supplement in accordance
with the provisions of the Credit Agreement to become a
Guarantor under the Indemnity, Subrogation and Contribution
Agreement in order to induce the Lenders to make additional
Loans, the Swingline Lenders to make additional Swingline
Loans
and the Fronting Banks to issue additional Letters of Credit
and originate additional Bankers' Acceptances and as
consideration for Loans and Swingline Loans previously made,
Letters of Credit previously issued and Bankers' Acceptances
previously originated.
Accordingly, the Collateral Agent and the New
Guarantor agree as follows:
SECTION 1. In accordance with Section 14 of the
Indemnity, Subrogation and Contribution Agreement, the New
Guarantor by its signature below becomes a Guarantor under
the
Indemnity, Subrogation and Contribution Agreement with the
same
force and effect as if originally named therein as a
Guarantor
and the New Guarantor hereby (a) agrees to all the terms and
provisions of the Indemnity, Subrogation and Contribution
Agreement applicable to it as a Guarantor thereunder and (b)
represents and warrants that the representations and
warranties
made by it as a Guarantor thereunder are true and correct on
and as of the date hereof. Each reference to a "Guarantor"
in
the Indemnity, Subrogation and Contribution Agreement shall
be
deemed to include the New Guarantor. The Indemnity,
Subrogation and Contribution Agreement is hereby incorporated
herein by reference.
SECTION 2. The New Guarantor represents and
warrants
to the Collateral Agent and the other Secured Parties that
this
Supplement has been duly authorized, executed and delivered
by
it and constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms, except
as
the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, fraudulent transfer, moratorium
or
other similar laws affecting creditors' rights generally and
by
general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in
equity).
SECTION 3. This Supplement may be executed in two
or
more counterparts, each of which shall constitute an
original,
but all of which, when taken together, shall constitute but
one
instrument. This Supplement shall become effective when the
Collateral Agent shall have received counterparts of this
Supplement that, when taken together, bear the signatures of
the New Guarantor and the Collateral Agent.
SECTION 4. Except as expressly supplemented
hereby,
the Indemnity, Subrogation and Contribution Agreement shall
remain in full force and effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY,
AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
SECTION 6. In case any one or more of the
provisions
contained in this Supplement should be held invalid, illegal
or
unenforceable in any respect, neither party hereto shall be
required to comply with such provision for so long as such
provision is held to be invalid, illegal or unenforceable,
but
the validity, legality and enforceability of the remaining
provisions contained herein and in the Indemnity, Subrogation
and Contribution Agreement shall not in any way be affected
or
impaired. The parties hereto shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
SECTION 7. All communications and notices
hereunder
shall be in writing and given as provided in Section 7 of the
Indemnity, Subrogation and Contribution Agreement. All
communications and notices hereunder to the New Guarantor
shall
be given to it at the address set forth under its signature
below, which supplements Schedule I to the Guarantee
Agreement,
with a copy to the Borrower.
SECTION 8. The New Guarantor agrees to reimburse
the
Collateral Agent for its reasonable out-of-pocket expenses in
connection with this Supplement, including the reasonable
fees,
other charges and disbursements of counsel for the Collateral
Agent.
IN WITNESS WHEREOF, the New Guarantor and the
Collateral Agent have duly executed this Supplement to the
Guarantee Agreement as of the day and year first above
written.
[NAME OF NEW GUARANTOR],
by
______________________________
Name:
Title
Address:
____________________
____________________
____________________
CHEMICAL BANK, as Collateral
Agent
by
______________________________
Name:
Title
PLEDGE AGREEMENT dated as of June 14, 1993,
as amended and restated as of August 3, 1994,
among ECKERD CORPORATION, a Delaware corporation
(the Borrower ), each of the subsidiaries of the
Borrower listed on the signature pages hereof
(individually, a Subsidiary Pledgor and,
collectively, the Subsidiary Pledgors ; the
Subsidiary Pledgors, together with the Borrower,
are referred to individually as a Pledgor and
collectively as the Pledgors ) and CHEMICAL
BANK,
a New York banking corporation ( Chemical Bank ),
as collateral agent (the Collateral Agent ) for
the Secured Parties (as defined in the Credit
Agreement referred to below).
Reference is made to the Credit Agreement dated as of
June 14, 1993, as amended and restated as of August 3, 1994
(as amended or modified from time to time, the Credit
Agreement ), among the Borrower, the financial institutions
party thereto, as lenders (the Lenders ), Chemical Bank
and
NationsBank of Florida, N.A., a national banking
association
( NationsBank ), as managing agents and as swingline
lenders
(in such latter capacity, each a Swingline Lender ), and
Chemical Bank, as administrative agent (in such capacity,
the Administrative Agent ) for the Lenders, the Swingline
Lenders and the Fronting Banks.
The Lenders and the Swingline Lenders have agreed to
make Loans and Swingline Loans, respectively, to the
Borrower, and the Fronting Banks have agreed to issue
Letters of Credit and to originate Bankers' Acceptances for
the account of the Borrower pursuant to, and upon the terms
and subject to the conditions specified in, the Credit
Agreement. Each of the Subsidiary Pledgors has agreed to
guarantee, among other things, all the obligations of the
Borrower under the Credit Agreement. The obligations of the
Lenders to make Loans, of the Swingline Lenders to make
Swingline Loans and of the Fronting Banks to issue Letters
of Credit and to originate Bankers' Acceptances are
conditioned upon, among other things, the execution and
delivery by the Pledgors of a pledge agreement in the form
hereof to secure (a) the due and punctual payment of (i)
the
principal of and premium, if any, and interest (including
interest accruing during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding,
regardless of whether allowed or allowable in such
proceeding) on the Loans and the Swingline Loans, when and
as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise, (ii) each
payment required to be made by the Borrower under the
Credit
Agreement in respect of any Letter of Credit and any
Bankers' Acceptance, when and as due, including payments in
respect of reimbursement of disbursements, interest thereon
and obligations to provide cash collateral and (iii) all
other monetary obligations, including fees, costs, expenses
and indemnities, whether primary, secondary, direct,
contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding,
regardless of whether allowed or allowable in such
proceeding), of the Borrower to the Secured Parties under
the Credit Agreement and the other Loan Documents to which
it is or is to be a party, (b) the due and punctual
performance of all covenants, agreements, obligations and
liabilities of the Borrower under or pursuant to the Credit
Agreement and the other Loan Documents and (c) unless
otherwise agreed upon in writing by the applicable Lender,
all obligations of the Borrower, monetary or otherwise,
under each Rate Protection Agreement entered into with any
Lender, whether pursuant to Section 6.11 of the Credit
Agreement or otherwise (all the obligations referred to in
this clause (c) and in the preceding clauses (a) and (b)
being collectively called the Obligations ). Capitalized
terms used herein and not defined herein shall have
meanings
assigned to such terms in the Credit Agreement.
Accordingly, each Pledgor and the Collateral Agent, on
behalf of itself and each Secured Party (and each of their
respective successors or assigns), hereby agree as follows:
SECTION 1. Pledge. As security for the payment and
performance in full of the Obligations, each Pledgor hereby
transfers, grants, bargains, sells, conveys, hypothecates,
pledges, sets over and delivers unto the Collateral Agent,
and grants to the Collateral Agent for the benefit of the
Secured Parties a security interest in (a) the shares of
capital stock listed below the name of such Pledgor on
Schedule I and any shares of stock of any Subsidiary
obtained in the future by such Pledgor and the certificates
representing all such shares (the Pledged Stock ),
provided
that the Pledged Stock shall not include (i) more than 66%
of the issued and outstanding shares of stock of any
Subsidiary now or hereafter organized under the laws of a
country other than the United States or any State or
Commonwealth thereof (a Foreign Subsidiary ), (ii) any of
the issued and outstanding shares of stock of any Foreign
Subsidiary of a Foreign Subsidiary and (iii) to the extent
that applicable law requires that a Subsidiary of the
Borrower issue directors' qualifying shares, such
qualifying
shares, (b) the promissory notes listed on Schedule I
hereto
and any promissory notes issued in the future to such
Pledgor (other than those evidencing Accounts Receivables
(as defined in the Security Agreement) of Insta-Care
Pharmacy Services Corporation, in an aggregate amount at
any
time outstanding not to exceed $1,000,000), (c) all other
property that may be delivered to and held by the
Collateral
Agent pursuant to the terms hereof, (d) subject to
Section 5, all payments of principal or interest,
dividends,
cash, instruments and other property from time to time
received, receivable or otherwise distributed, in respect
of, in exchange for or upon the conversion of the
securities
referred to in clauses (a), (b) and (c) above, (e) subject
to Section 5, all rights and privileges of such Pledgor
with
respect to the securities and other property referred to in
clauses (a), (b), (c) and (d) above, and (f) all proceeds
of
any of the foregoing (the items referred to in clauses (a)
through (f) above being collectively referred to as the
Collateral ). Upon delivery to the Collateral Agent,
(a) any stock certificates, notes or other securities now
or
hereafter included in the Collateral (the Pledged
Securities ) shall be accompanied by stock powers duly
executed in blank or other instruments of transfer
satisfactory to the Collateral Agent and by such other
instruments and documents as the Collateral Agent may
reasonably request and (b) all other property comprising
part of the Collateral shall be accompanied by proper
instruments of assignment duly executed by the applicable
Pledgor and such other instruments or documents as the
Collateral Agent may reasonably request. Each delivery of
Pledged Securities shall be accompanied by a schedule
describing the securities theretofore and then being
pledged
hereunder, which schedule shall be attached hereto as
Schedule I and made a part hereof. Each schedule so
delivered shall supersede any prior schedules so delivered.
TO HAVE AND TO HOLD the Collateral, together with all
right, title, interest, powers, privileges and preferences
pertaining or incidental thereto, unto the Collateral
Agent,
its successors and assigns, for the ratable benefit of the
Secured Parties, forever; subject, however, to the terms,
covenants and conditions hereinafter set forth.
SECTION 2. Delivery of the Collateral; Intercompany
Obligations. (a) Each Pledgor agrees promptly to deliver or
cause to be delivered to the Collateral Agent any and all
Pledged Securities, and any and all certificates or other
instruments or documents representing the Collateral.
(b)(i) Each Pledgor will cause any Indebtedness for
borrowed money owed to such Pledgor by any person to be
evidenced by a duly executed promissory note that is
pledged
and delivered to the Collateral Agent pursuant to the terms
hereof.
SECTION 3. Representations, Warranties and
Covenants.
Each Pledgor hereby represents, warrants and covenants, as
to itself and the Collateral pledged by it hereunder, to
and
with the Collateral Agent that:
(a) the Pledged Stock represents that percentage
as set forth on Schedule I of the issued and
outstanding shares of each class of the capital stock
of the issuer with respect thereto;
(b) except as set forth in Schedule 3(b) and
except for the security interest granted hereunder,
each Pledgor (i) is and will at all times continue to
be the direct owner, beneficially and of record, of
the
Pledged Securities indicated on Schedule I to be owned
by such Pledgor, (ii) holds the same free and clear of
all Liens, (iii) will make no assignment, pledge,
hypothecation or transfer of, or create or permit to
exist any security interest in or other Lien on, the
Collateral, other than pursuant hereto, and
(iv) subject to Section 5, will cause any and all
Collateral, whether for value paid by any Pledgor or
otherwise, to be forthwith deposited with the
Collateral Agent and pledged or assigned hereunder;
(c) each Pledgor (i) has the power and authority
to pledge the Collateral in the manner hereby done or
contemplated and (ii) will defend its title or
interest
thereto or therein against any and all Liens (other
than the Lien created by this Agreement and the Lien
described in Schedule 3(b)), however arising, of all
persons whomsoever;
(d) no consent or approval of any Governmental
Authority or any securities exchange was or is
necessary to the validity of the pledge effected
hereby;
(e) by virtue of the execution and delivery by
the
Pledgors of this Agreement, when the Pledged
Securities, certificates, instruments or other
documents representing or evidencing the Collateral
are
delivered to the Collateral Agent in accordance with
this Agreement, the Collateral Agent will obtain a
valid and perfected first lien upon and security
interest in such Pledged Securities as security for
the
payment and performance of the Obligations); and
(f) the pledge effected hereby is effective to
vest in the Collateral Agent, on behalf of the Secured
Parties, the rights of the Collateral Agent in the
Collateral as set forth herein.
SECTION 4. Registration in Nominee Name;
Denominations.
The Collateral Agent, on behalf of the Secured Parties,
shall have the right (in its sole and absolute discretion)
to hold the Pledged Securities in its own name as pledgee,
the name of its nominee (as pledgee or as sub-agent) or the
name of the applicable Pledgor, endorsed or assigned in
blank or in favor of the Collateral Agent. The applicable
Pledgor will promptly give to the Collateral Agent copies
of
any notices or other communications received by it with
respect to Pledged Securities registered in the name of
such
Pledgor. The Collateral Agent shall at all times have the
right to exchange the certificates representing Pledged
Securities for certificates of smaller or larger
denominations for any purpose consistent with this
Agreement.
SECTION 5. Voting Rights; Dividends and Interest; etc.
(a) Unless and until an Event of Default shall have
occurred
and be continuing:
(i) The Pledgors shall be entitled to exercise
any
and all voting and/or other consensual rights and
powers accruing to an owner of Pledged Securities or
any part thereof for any purpose consistent with the
terms of this Agreement, the Credit Agreement and the
other Loan Documents; provided, however, that such
action would not materially and adversely affect the
rights inuring to a holder of the Pledged Securities
or
the rights and remedies of any of the Secured Parties
under this Agreement or the Credit Agreement or any
other Loan Document or the ability of the Secured
Parties to exercise the same.
(ii) The Collateral Agent shall execute and
deliver to each Pledgor, or cause to be executed and
delivered to such Pledgor, all such proxies, powers of
attorney and other instruments as such Pledgor may
reasonably request for the purpose of enabling such
Pledgor to exercise the voting and/or consensual
rights
and powers it is entitled to exercise pursuant to
subparagraph (i) above and to receive the cash
dividends, interest and principal it is entitled to
receive pursuant to subparagraph (iii) below.
(iii) Each Pledgor shall be entitled to receive
and retain any and all cash dividends, interest and
principal paid on the Pledged Securities to the extent
and only to the extent that such cash dividends,
interest and principal are permitted by, and otherwise
paid in accordance with, the terms and conditions of
the Credit Agreement, the other Loan Documents and
applicable laws. Other than pursuant to the first
sentence of this subparagraph, all noncash dividends,
interest and principal, and all dividends, interest
and
principal paid or payable in cash or otherwise in
connection with a partial or total liquidation or
dissolution, return of capital, capital surplus or
paid-in surplus, and all other distributions made on
or
in respect of the Pledged Securities, whether paid or
payable in cash or otherwise, whether resulting from
a
subdivision, combination or reclassification of the
outstanding capital stock of the issuer of any Pledged
Securities or received in exchange for Pledged
Securities or any part thereof, or in redemption
thereof, or as a result of any merger, consolidation,
acquisition or other exchange of assets to which such
issuer may be a party or otherwise, shall be and
become
part of the Collateral, and, if received by a Pledgor,
shall not be commingled by such Pledgor with any of
its
other funds or property but shall be held separate and
apart therefrom, shall be held in trust for the
benefit
of the Collateral Agent and shall be forthwith
delivered to the Collateral Agent in the same form as
so received (with any necessary endorsement).
(b) Upon the occurrence and during the continuance of
an Event of Default, all rights of each Pledgor to
dividends, interest and principal that such Pledgor is
authorized to receive pursuant to paragraph (a)(iii) above
shall cease, and all such rights shall thereupon become
vested in the Collateral Agent, which shall have the sole
and exclusive right and authority to receive and retain
such
dividend, interest and principal payments. All dividends,
interest and principal received by any Pledgor contrary to
the provisions of this Section 5 shall be held in trust for
the benefit of the Collateral Agent, shall be segregated
from other property or funds of such Pledgor and shall be
forthwith delivered to the Collateral Agent upon demand in
the same form as so received (with any necessary
endorsement). Any and all money and other property paid
over
to or received by the Collateral Agent pursuant to the
provisions of this paragraph (b) shall be retained by the
Collateral Agent in an interest-bearing account to be
established by the Collateral Agent upon receipt of such
money or other property and shall be applied in accordance
with the provisions of Section 7. After all Events of
Default have been cured or waived, the Collateral Agent
shall, within five Business Days after all such Events of
Default have been cured or waived, repay to the Pledgors
all
cash dividends, interest or principal, with accrued
interest
thereon, that such Pledgors would otherwise be permitted to
retain pursuant to the terms of paragraph (a)(iii) above
and
which remain in such account.
(c) Upon the occurrence and during the continuance
of
an Event of Default, all rights of the Pledgors to exercise
the voting and consensual rights and powers they are
entitled to exercise pursuant to paragraph (a)(i) of this
Section 5, and the obligations of the Collateral Agent
under
paragraph (a)(ii) of this Section 5, shall cease, and all
such rights shall thereupon become vested in the Collateral
Agent, which shall have the sole and exclusive right and
authority to exercise such voting and consensual rights and
powers.
SECTION 6. Remedies upon Default. Upon the occurrence
and during the continuance of an Event of Default, subject
to applicable regulatory and legal requirements, the
Collateral Agent may sell the Collateral, or any part
thereof, at public or private sale or at any broker's board
or on any securities exchange, for cash, upon credit or for
future delivery as the Collateral Agent shall deem
appropriate. The Collateral Agent shall be authorized at
any
such sale (if it deems it advisable to do so) to restrict
the prospective bidders or purchasers to persons who will
represent and agree that they are purchasing the Collateral
for their own account for investment and not with a view to
the distribution or sale thereof, and upon consummation of
any such sale the Collateral Agent shall have the right to
assign, transfer and deliver to the purchaser or purchasers
thereof the Collateral so sold. Each such purchaser at any
such sale shall hold the property sold absolutely free from
any claim or right on the part of any Pledgor, and each
Pledgor hereby waives all rights of redemption, stay,
valuation and appraisal such Pledgor now has or may at any
time in the future have under any rule of law or statute
now
existing or hereafter enacted. Upon taking of possession of
any Collateral hereunder, the Collateral Agent shall deal
with such Collateral in the same manner as it deals with
similar property for its own account.
The Collateral Agent shall give the applicable Pledgor
10 days' prior written notice (which such Pledgor agrees is
reasonable notice within the meaning of Section 9-504(3) of
the Uniform Commercial Code as in effect in the State of
New
York) of the Collateral Agent's intention to make any sale
of Collateral. Such notice, in the case of a public sale,
shall state the time and place for such sale and, in the
case of a sale at a broker's board or on a securities
exchange, shall state the board or exchange at which such
sale is to be made and the day on which the Collateral, or
portion thereof, will first be offered for sale at such
board or exchange. Any such public sale shall be held at
such time or times within ordinary business hours and at
such place or places as the Collateral Agent may fix and
state in the notice of such sale. At any such sale, the
Collateral, or portion thereof, to be sold may be sold in
one lot as an entirety or in separate parcels, as the
Collateral Agent may (in its sole and absolute discretion)
determine. The Collateral Agent shall not be obligated to
make any sale of any Collateral if it shall determine not
to
do so, regardless of the fact that notice of sale of such
Collateral shall have been given. The Collateral Agent may,
without notice or publication, adjourn any public or
private
sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for sale, and such
sale may, without further notice, be made at the time and
place to which the same was so adjourned. In case any sale
of all or any part of the Collateral is made on credit or
for future delivery, the Collateral so sold may be retained
by the Collateral Agent until the sale price is paid in
full
by the purchaser or purchasers thereof, but the Collateral
Agent shall not incur any liability in case any such
purchaser or purchasers shall fail to take up and pay for
the Collateral so sold and, in case of any such failure,
such Collateral may be sold again upon like notice. At any
public sale made pursuant to this Section 6, any Secured
Party may bid for or purchase, free from any right of
redemption, stay or appraisal on the part of any Pledgor
(all said rights being also hereby waived and released),
the
Collateral or any part thereof offered for sale and may
make
payment on account thereof by using any claim then due and
payable to it from any Pledgor as a credit against the
purchase price, and it may, upon compliance with the terms
of sale, hold, retain and dispose of such property without
further accountability to any Pledgor therefor. For
purposes
hereof, (a) a written agreement to purchase the Collateral
or any portion thereof shall be treated as a sale thereof,
(b) the Collateral Agent shall be free to carry out such
sale pursuant to such agreement and (c) no Pledgor shall be
entitled to the return of the Collateral or any portion
thereof subject thereto, notwithstanding the fact that
after
the Collateral Agent shall have entered into such an
agreement all Events of Default shall have been remedied
and
the Obligations paid in full. As an alternative to
exercising the power of sale herein conferred upon it, the
Collateral Agent may proceed by a suit or suits at law or
in
equity to foreclose upon the Collateral and to sell the
Collateral or any portion thereof pursuant to a judgment or
decree of a court or courts having competent jurisdiction
or
pursuant to a proceeding by a court-appointed receiver. Any
sale pursuant to the provisions of this Section 6 shall be
deemed to conform to the commercially reasonable standards
as provided in Section 9-504(3) of the Uniform Commercial
Code as in effect in the State of New York or its
equivalent
in other jurisdictions.
SECTION 7. Application of Proceeds of Sale. The
proceeds of any sale of Collateral pursuant to Section 6,
as
well as any Collateral consisting of cash, shall be applied
by the Collateral Agent as follows:
FIRST, to the payment of all costs and expenses
incurred by the Collateral Agent in connection with
such sale or otherwise in connection with this
Agreement, any other Loan Document or any of the
Obligations, including all court costs and the
reasonable fees, other charges and disbursements of
its
agents and legal counsel, the repayment of all
advances
made by the Collateral Agent hereunder or under any
other Loan Document on behalf of any of the Pledgors
and any other costs or expenses incurred in connection
with the exercise of any right or remedy hereunder or
thereunder;
SECOND, to the payment in full of the Obligations
owed to the Lenders, the Swingline Lenders and the
Fronting Banks in respect of the Loans and the
Swingline Loans made by them and outstanding and the
amounts owing in respect of any LC Disbursement or BA
Disbursement or under any Rate Protection Agreement
entered into with any Lender pursuant to Section 6.11
of the Credit Agreement, pro rata as among the
Lenders,
the Swingline Lenders and the Fronting Banks in
accordance with the amount of such Obligations owed to
them;
THIRD, to the payment and discharge in full of
the
Obligations (other than those referred to above) pro
rata as among the Secured Parties in accordance with
the amount of such Obligations owed to them; and
FOURTH, to the Pledgors, their successors or
assigns, or as a court of competent jurisdiction may
otherwise direct.
The Collateral Agent shall have absolute discretion as
to the time of application of any such proceeds, moneys or
balances in accordance with this Agreement. Upon any sale
of
the Collateral by the Collateral Agent (including pursuant
to a power of sale granted by statute or under a judicial
proceeding), the receipt by the Collateral Agent or of the
officer making the sale shall be a sufficient discharge to
the purchaser or purchasers of the Collateral so sold and
such purchaser or purchasers shall not be obligated to see
to the application of any part of the purchase money paid
over to the Collateral Agent or such officer or be
answerable in any way for the misapplication thereof.
SECTION 8. Reimbursement of Collateral Agent. (a) The
Pledgors jointly and severally agree to pay upon demand to
the Collateral Agent the amount of any and all reasonable
and documented expenses, including the reasonable fees,
other charges and disbursements of its counsel and of any
experts or agents, that the Collateral Agent may incur in
connection with (i) the administration of this Agreement,
(ii) the custody or preservation of, or the sale of,
collection from, or other realization upon, any of the
Pledged Securities, (iii) the exercise or enforcement of
any
of the rights of the Collateral Agent hereunder or (iv) the
failure by any Pledgor to perform or observe any of the
provisions hereof.
(b) Without limitation of their indemnification
obligations under the other Documents, the Pledgors jointly
and severally agree to indemnify the Collateral Agent and
the Indemnitees against, and hold each of them harmless
from, any and all losses, claims, damages, liabilities and
related expenses, including reasonable and documented
counsel fees and expenses, incurred by or asserted against
any of them arising out of, in any way connected with, or
as
a result of, the execution, delivery or performance of this
Agreement or any claim, litigation, investigation or
proceeding relating hereto or to the Collateral, whether or
not any Indemnitee is a party thereto, provided that such
indemnity shall not, as to any Indemnitee, be available to
the extent that such losses, claims, damages, liabilities
or
related expenses have resulted from the gross negligence or
wilful misconduct of such Indemnitee.
(c) Any amounts payable as provided hereunder shall be
additional Obligations secured hereby and by the other
Security Documents. The provisions of this Section 8 shall
remain operative and in full force and effect regardless of
the termination of this Agreement, the consummation of the
transactions contemplated hereby, the repayment of any of
the Obligations, the invalidity or unenforceability of any
term or provision of this Agreement or any other Loan
Document or any investigation made by or on behalf of the
Collateral Agent or any other Secured Party. All amounts
due
under this Section 8 shall be payable on written demand
therefor and shall bear interest at the Default Rate (as
defined in the Credit Agreement).
SECTION 9. Collateral Agent Appointed
Attorney-in-Fact.
Each Pledgor hereby appoints the Collateral Agent the
attorney-in-fact of such Pledgor for the purpose of
carrying
out the provisions of this Agreement and taking any action
and executing any instrument that the Collateral Agent may
deem necessary or advisable to accomplish the purposes
hereof, which appointment is irrevocable and coupled with
an
interest. Without limiting the generality of the foregoing,
the Collateral Agent shall have the right, upon the
occurrence and during the continuance of an Event of
Default, with full power of substitution either in the
Collateral Agent's name or in the name of any Pledgor, to
ask for, demand, sue for, collect, receive and give
acquittance for any and all moneys due or to become due and
under and by virtue of any Collateral, to endorse checks,
drafts, orders and other instruments for the payment of
money payable to such Pledgor representing any interest or
dividend or other distribution payable in respect of the
Collateral or any part thereof or on account thereof and to
give full discharge for the same, to settle, compromise,
prosecute or defend any action, claim or proceeding with
respect thereto, and to sell, assign, endorse, pledge,
transfer and to make any agreement respecting, or otherwise
deal with, the same; provided, however, that nothing herein
contained shall be construed as requiring or obligating the
Collateral Agent to make any commitment or to make any
inquiry as to the nature or sufficiency of any payment
received by the Collateral Agent, or to present or file any
claim or notice, or to take any action with respect to the
Collateral or any part thereof or the moneys due or to
become due in respect thereof or any property covered
thereby. The Collateral Agent and the other Secured Parties
shall be accountable only for amounts actually received as
a
result of the exercise of the powers granted to them
herein,
and neither they nor their officers, directors, employees
or
agents shall be responsible to any Pledgor for any act or
failure to act hereunder, except for their own gross
negligence or willful misconduct.
SECTION 10. Waivers; Amendment. (a) No failure or
delay
of the Collateral Agent in exercising any power or right
hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such
a
right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The
rights and remedies of the Collateral Agent hereunder and
of
the other Secured Parties under the other Loan Documents
are
cumulative and are not exclusive of any rights or remedies
that they would otherwise have. No waiver of any provisions
of this Agreement or consent to any departure by any
Pledgor
therefrom shall in any event be effective unless the same
shall be permitted by paragraph (b) below, and then such
waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice or
demand on any Pledgor in any case shall entitle such
Pledgor
to any other or further notice or demand in similar or
other
circumstances.
(b) Neither this Agreement nor any provision hereof
may
be waived, amended or modified except pursuant to a written
agreement entered into between the Pledgors and the
Collateral Agent, with the prior written consent of the
Required Lenders.
SECTION 11. Securities Act, etc. In view of the
position of the Pledgors in relation to the Pledged
Securities, or because of other current or future
circumstances, a question may arise under the Securities
Act
of 1933, as now or hereafter in effect, or any similar
statute hereafter enacted analogous in purpose or effect
(such Act and any such similar statute as from time to time
in effect being called the Federal Securities Laws ) with
respect to any disposition of the Pledged Securities
permitted hereunder. The Pledgors understand that
compliance
with the Federal Securities Laws might very strictly limit
the course of conduct of the Collateral Agent if the
Collateral Agent were to attempt to dispose of all or any
part of the Pledged Securities, and might also limit the
extent to which or the manner in which any subsequent
transferee of any Pledged Securities could dispose of the
same. Similarly, there may be other legal restrictions or
limitations affecting the Collateral Agent in any attempt
to
dispose of all or part of the Pledged Securities under
applicable Blue Sky or other state securities laws or
similar laws analogous in purpose or effect. The Pledgors
recognize that in light of the foregoing restrictions and
limitations the Collateral Agent may, with respect to any
sale of the Pledged Securities, limit the purchasers to
those who will agree, among others things, to acquire such
Pledged Securities for their own account, for investment,
and not with a view to the distribution or resale thereof.
The Pledgors acknowledge and agree that in light of the
foregoing restrictions and limitations, the Collateral
Agent, in its sole and absolute discretion, (a) may proceed
to make such a sale whether or not a registration statement
for the purpose of registering such Pledged Securities or
part thereof shall have been filed under the Federal
Securities Laws and (b) may approach and negotiate with a
single potential purchaser to effect such sale. The
Pledgors
acknowledge and agree that any such sale might result in
prices and other terms less favorable to the seller than if
such sale were a public sale without such restrictions. In
the event of any such sale, the Collateral Agent shall
incur
no responsibility or liability for selling all or any part
of the Pledged Securities at a price that the Collateral
Agent, in its sole and absolute discretion, may in good
faith deem reasonable under the circumstances,
notwithstanding the possibility that a substantially higher
price might have been realized if the sale were deferred
until after registration as aforesaid or if more than a
single purchaser were approached. The provisions of this
Section 11 will apply notwithstanding the existence of a
public or private market upon which the quotations or sales
prices may exceed substantially the price at which the
Collateral Agent sells.
SECTION 12. Registration, etc. Each Pledgor agrees
that, upon the occurrence and during the continuance of an
Event of Default hereunder, if for any reason the
Collateral
Agent desires to sell any of the Pledged Securities at a
public sale, it will, at any time and from time to time,
upon the written request of the Collateral Agent, use its
best efforts to take or to cause the issuer of such Pledged
Securities to take such action and prepare, distribute
and/or file such documents, as are required or advisable in
the reasonable opinion of counsel for the Collateral Agent
to permit the public sale of such Pledged Securities. Each
Pledgor further agrees to indemnify, defend and hold
harmless the Collateral Agent, each other Secured Party,
any
underwriter and their respective officers, directors,
affiliates and controlling persons from and against all
loss, liability, expenses, costs of counsel (including,
without limitation, reasonable and documented fees and
expenses to the Collateral Agent of legal counsel), and
claims (including the costs of investigation) that they may
incur insofar as such loss, liability, expense or claim
arises out of or is based upon any alleged untrue statement
of a material fact contained in any prospectus (or any
amendment or supplement thereto) or in any notification or
offering circular, or arises out of or is based upon any
alleged omission to state a material fact required to be
stated therein or necessary to make the statements in any
thereof not misleading, except insofar as the same may have
been caused by any untrue statement or omission based upon
information furnished in writing to any Pledgor or the
issuer of such Pledged Securities by the Collateral Agent
or
any other Secured Party expressly for use therein. Each
Pledgor further agrees, upon such written request referred
to above, to use its best efforts to qualify, file or
register, or cause the issuer of such Pledged Securities to
qualify, file or register, any of the Pledged Securities
under the Blue Sky or other securities laws of such states
as may be requested by the Collateral Agent and keep
effective, or cause to be kept effective, all such
qualifications, filings or registrations. The Pledgors will
bear all costs and expenses of carrying out their
obligations under this Section 12. The Pledgors acknowledge
that there is no adequate remedy at law for failure by them
to comply with the provisions of this Section 12 and that
such failure would not be adequately compensable in
damages,
and therefore agree that their agreements contained in this
Section 12 may be specifically enforced.
SECTION 13. Security Interest Absolute. All rights of
the Collateral Agent hereunder, the grant of a security
interest in the Collateral and all obligations of the
Pledgors hereunder, shall be absolute and unconditional
irrespective of (a) any lack of validity or enforceability
of the Credit Agreement, any other Loan Document, any
agreement with respect to any of the Obligations or any
other agreement or instrument relating to any of the
foregoing, (b) any change in the time, manner or place of
payment of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or any
consent to any departure from the Credit Agreement, any
other Loan Document, any other agreement or instrument
relating to any of the foregoing, (c) any exchange, release
or nonperfection of any other collateral, or any release or
amendment or waiver of or consent to or departure from any
guaranty, for all or any of the Obligations or (d) any
other
circumstance that might otherwise constitute a defense
available to, or a discharge of, any Pledgor in respect of
the Obligations or in respect of this Agreement (other than
the indefeasible payment in full of all the Obligations).
SECTION 14. Termination or Release. (a) This Agreement
and the security interests granted hereby shall terminate
when all the Obligations have been indefeasibly paid in
full
and the Lenders and the Swingline Lenders have no further
commitment to lend under the Credit Agreement, the LC/BA
Exposure has been reduced to zero and the Fronting Banks
have no further obligation to issue Letters of Credit or to
originate Bankers' Acceptances under the Credit Agreement.
(b) Upon any sale or other transfer by any Pledgor of
any Collateral that is permitted under the Credit
Agreement,
or, upon the effectiveness of any written consent to the
release of the security interest granted hereby in any
Collateral pursuant to Section 10.08 of the Credit
Agreement, the security interest in such Collateral shall
be
automatically released.
(c) Upon the sale of all or substantially all of the
assets or all of the capital stock of any Pledgor in a
manner that is permitted by the Credit Agreement the
security interest in the Collateral relating to such
Pledgor
shall be automatically released.
(d) In connection with any termination or release
pursuant to paragraphs (a), (b) and (c), the Collateral
Agent shall execute and deliver to such Pledgor, at such
Pledgor's expense, all documents that such Pledgor shall
reasonably request to evidence such termination or release.
Any execution and delivery of documents pursuant to this
Section 14 shall be without recourse to or warranty by the
Collateral Agent.
SECTION 15. Notices. All communications and notices
hereunder shall be in writing and given as provided in
Section 10.01 of the Credit Agreement. All communications
and notices hereunder to any Subsidiary Pledgor shall be
given to it at its address set forth on Schedule II hereto
with a copy to the Borrower.
SECTION 16. Further Assurances. Each Pledgor agrees to
do such further acts and things, and to execute and deliver
such additional conveyances, assignments, agreements and
instruments, as the Collateral Agent may at any time
reasonably request in connection with the administration
and
enforcement of this Agreement or with respect to the
Collateral or any part thereof or in order better to assure
and confirm unto the Collateral Agent its rights and
remedies hereunder.
SECTION 17. Binding Agreement; Assignments. Whenever
in
this Agreement any of the parties hereto is referred to,
such reference shall be deemed to include the successors
and
assigns of such party; and all covenants, promises and
agreements by or on behalf of the Pledgors that are
contained in this Agreement shall bind and inure to the
benefit of their respective successors and assigns. This
Agreement shall become effective as to any Pledgor when a
counterpart hereof executed on behalf of such Pledgor shall
have been delivered to the Collateral Agent and a
counterpart hereof shall have been executed on behalf of
the
Collateral Agent, and thereafter shall be binding upon such
Pledgor and the Collateral Agent and their respective
successors and assigns, and shall inure to the benefit of
such Pledgors, the Collateral Agent and the other Secured
Parties, and their respective successors and assigns,
except
that no Pledgor shall have the right to assign its rights
hereunder or any interest herein or in the Collateral (and
any such attempted assignment shall be void), except as
expressly contemplated by this Agreement or the other Loan
Documents.
SECTION 18. Survival of Agreement; Severability. (a)
All covenants, agreements, representations and warranties
made by the Pledgors herein and in the certificates or
other
instruments prepared, delivered in connection with or
pursuant to this Agreement or any other Loan Document shall
be considered to have been relied upon by the Collateral
Agent and the other Secured Parties and shall survive the
making by the Lenders of the Loans, the making by the
Swingline Lenders of the Swingline Loans and the issuance
of
the Letters of Credit and the origination of the Bankers'
Acceptances by the Fronting Banks, and the execution and
delivery to the Lenders and the Swingline Lenders of the
Notes evidencing such loans, regardless of any
investigation
made by the Secured Parties or on their behalf, and shall
continue in full force and effect as long as the principal
of or any accrued interest on any Loan or Swingline Loan or
any other fee or amount payable under any this Agreement or
any other Loan Document is outstanding and unpaid or the
LC/BA Exposure does not equal zero and as long as the
Commitments and the LC/BA Commitment have not been
terminated.
(b) In the event any one or more of the provisions
contained in this Agreement or in any other Loan Document
should be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not
in any way be affected or impaired thereby (it being
understood that the invalidity of a particular provision in
a particular jurisdiction shall not in and of itself affect
the validity of such provision in any other jurisdiction).
The parties shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions
with valid provisions the economic effect of which comes as
close as possible to that of the invalid, illegal or
unenforceable provisions.
SECTION 19. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK.
SECTION 20. Counterparts. This Agreement may be
executed in two or more counterparts, each of which shall
constitute an original, but all of which, when taken
together, shall constitute but one instrument, and shall
become effective as provided in Section 17.
SECTION 21. Rules of Interpretation. The rules of
interpretation specified in Section 1.02 of the Credit
Agreement shall be applicable to this Agreement.
SECTION 22. Jurisdiction; Consent to Service of
Process. (a) Each Pledgor hereby irrevocably and
unconditionally submits, for itself and its property, to
the
nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in
New
York City, and any appellate court from any thereof, in any
action or proceeding arising out of or relating to this
Agreement or the other Loan Documents, or for recognition
or
enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all
claims in respect of any such action or proceeding may be
heard and determined in such New York State or, to the
extent permitted by law, in such Federal court. Each of the
parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be
enforced
in other jurisdictions by suit on the judgment or in any
other manner provided by law. Nothing in this Agreement
shall affect any right that the Collateral Agent or any
other Secured Party may otherwise have to bring any action
or proceeding relating to this Agreement or the other Loan
Documents against any Pledgor or its properties in the
courts of any jurisdiction.
(b) Each Pledgor hereby irrevocably and
unconditionally
waives, to the fullest extent it may legally and
effectively
do so, any objection that it may now or hereafter have to
the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other
Loan Documents in any New York State or Federal court. Each
of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or
proceeding in any such court.
(c) Each party to this Agreement irrevocably consents
to service of process in the manner provided for notices in
Section 15. Nothing in this Agreement will affect the right
of any party to this Agreement to serve process in any
other
manner permitted by law.
SECTION 23. Waiver of Jury Trial. Each party hereto
hereby waives, to the fullest extent permitted by
applicable
law, any right it may have to a trial by jury in respect of
any litigation directly or indirectly arising out of, under
or in connection with this Agreement. Each party hereto
(a) certifies that no representative, agent or attorney of
any other party has represented, expressly or otherwise,
that such other party would not, in the event of
litigation,
seek to enforce the foregoing waiver and (b) acknowledges
that it and the other parties hereto have been induced to
enter into this Agreement by, among other things, the
mutual
waivers and certifications in this Section.
SECTION 24. Additional Pledgors. Pursuant to
Section 6.10(b) of the Credit Agreement, each Subsidiary
that was not in existence or not a Subsidiary on the date
thereof or that was previously an Inactive Subsidiary is
required to enter into this Agreement as a Pledgor upon or,
in the case of an Inactive Subsidiary, prior to becoming a
Subsidiary. Upon execution and delivery, after the date
hereof, by the Collateral Agent and a subsidiary of an
instrument in the form of Annex 1, such subsidiary shall
become a Subsidiary Pledgor hereunder with the same force
and effect as if originally named as a Subsidiary Pledgor
herein. Pursuant to paragraph (q) of Article VIII of the
Credit Agreement, an Event of Default will occur if any
Person (referred to herein as Parent Pledgor ) becomes the
owner or holder of record of all the common equity
securities of the Borrower and, prior to or simultaneously
with obtaining such shares, fails to enter into this
Agreement (or a similar agreement) as a Pledgor. Upon
execution and delivery, after the date hereof, by the
Collateral Agent and a Parent Pledgor of an instrument in
the form of Annex 2, such Parent Pledgor shall become a
Pledgor hereunder with the same force and effect as if
originally named as a Pledgor herein. The execution and
delivery of any instrument adding an additional Pledgor as
a
party to this Agreement shall not require the consent of
any
Pledgor hereunder. The rights and obligations of each
Pledgor hereunder shall remain in full force and effect
notwithstanding the addition of any new Pledgor as a party
to this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement as of the day and year first above
written.
ECKERD CORPORATION,
by
/s/ Martin W. Gladysz
Name: Martin W. Gladysz
Title: Vice President
CLORWOOD DISTRIBUTORS, INC.,
by
/s/ Martin W. Gladysz
Name: Martin W. Gladysz
Title: Vice President
ECKERD CONSUMER PRODUCTS,
INC.,
by
/s/ Martin W. Gladysz
Name: Martin W. Gladysz
Title: Vice President
ECKERD FLEET, INC.,
by
/s/ Martin W. Gladysz
Name: Martin W. Gladysz
Title: Vice President
ECKERD HOLDINGS II, INC.,
by
/s/ Martin W. Gladysz
Name: Martin W. Gladysz
Title: Vice President
ECKERD'S WESTBANK, INC.,
by
/s/ Martin W. Gladysz
Name: Martin W. Gladysz
Title: Vice President
ECKERD TOBACCO COMPANY,
INC.,
by
/s/ Martin W. Gladysz
Name: Martin W. Gladysz
Title: Vice President
E.I.T., INC.,
by
/s/ Martin W. Gladysz
Name: Martin W. Gladysz
Title: Vice President
INSTA-CARE HOLDINGS, INC.,
by
/s/ Martin W. Gladysz
Name: Martin W. Gladysz
Title: Vice President
INSTA-CARE PHARMACY
SERVICES CORPORATION,
by
/s/ Martin W. Gladysz
Name: Martin W. Gladysz
Title: Vice President
P.C.V., INC.,
by
/s/ Martin W. Gladysz
Name: Martin W. Gladysz
Title: Vice President
PHARMACY DYNAMICS GROUP,
INC.,
by
/s/ Martin W. Gladysz
Name: Martin W. Gladysz
Title: Vice President
CHEMICAL BANK, as
Collateral Agent,
by
/s/ Meredith Vanden Handel
Name: Meredith Vanden Handel
Title: Vice President
Annex 1 to
the Pledge
Agreement
SUPPLEMENT NO. dated as of
, to the Pledge Agreement dated as of
June 14, 1993, as amended and restated as of
August 3, 1994 (the "Pledge Agreement"), among
ECKERD CORPORATION, a Delaware corporation (the
"Borrower"), each of the subsidiaries of the
Borrower listed on the signature pages thereof
(individually a "Subsidiary Pledgor" and
collectively, the "Subsidiary Pledgors"; the
Subsidiary Pledgors together with the Borrower
are
referred to individually as a "Pledgor" and
collectively as the "Pledgors") and CHEMICAL
BANK,
a New York banking corporation ("Chemical Bank"),
as collateral agent (the "Collateral Agent") for
the Secured Parties (as defined in the Credit
Agreement referred to below).
A. Reference is made to the Credit Agreement dated
as
of June 14, 1993, as amended and restated as of August 3,
1994 (as amended or modified from time to time, the "Credit
Agreement"), among the Borrower, the financial institutions
party thereto, as lenders (the "Lenders"), Chemical Bank
and
NationsBank of Florida, N.A., a national banking
association
("NationsBank"), as managing agents and as swingline
lenders
(in such latter capacity, each a "Swingline Lender"), and
Chemical Bank, as administrative agent (in such capacity,
the "Administrative Agent") for the Lenders, the Swingline
Lenders and the Fronting Banks.
B. Capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to such
terms in the Pledge Agreement and the Credit Agreement.
C. The Borrower and certain Subsidiaries of the
Borrower have entered into the Pledge Agreement in order to
induce the Lenders to make Loans, the Swingline Leaders to
make Swingline Loans and the Fronting Banks to issue
Letters
of Credit and originate Bankers' Acceptances. Pursuant to
Section 6.10(b) of the Credit Agreement, each Subsidiary of
the Borrower that was not in existence or not a Subsidiary
of the Borrower on the date thereof or that was previously
an Inactive Subsidiary is required to enter into the Pledge
Agreement as a Pledgor upon or, in the case of an Inactive
Subsidiary, prior to becoming a Subsidiary. Section 24 of
the Pledge Agreement provides that additional subsidiaries
of the Borrower may become Subsidiary Pledgors under the
Pledge Agreement by execution and delivery of an instrument
in the form of this Supplement. The undersigned (the 'New
Subsidiary Pledgor") is a subsidiary of the Borrower and is
executing this Supplement in accordance with the
requirements of the Credit Agreement to become a Subsidiary
Pledgor under the Pledge Agreement in order to induce the
Lenders to make additional Loan, the Swingline Lenders to
make additional Swingline Loans and the Fronting Banks to
issue additional Letters of Credit and originate additional
Bankers' Acceptances and as consideration for Loans and
Swingline Loans previously made, Letters of Credit
previously issued and Bankers' Acceptances previously
originated.
Accordingly, the Collateral Agent and the New
Subsidiary Pledgor agree as follows:
SECTION 1. In accordance with Section 24 of the
Pledge
Agreement, the New Subsidiary Pledgor by its signature
below
becomes a Subsidiary Pledgor under the Pledge Agreement
with
the same force and effect as if originally named therein as
a Subsidiary Pledgor and the New Subsidiary Pledgor hereby
(a) agrees to all the terms and provisions of the Pledge
Agreement applicable to it as a Subsidiary Pledgor
thereunder and (b) represents and warrants that the
representations and warranties made by it as a Subsidiary
Pledgor thereunder are true and correct on and as of the
date hereof. In furtherance of the foregoing, the New
Subsidiary Pledgor, as security for the payment and
performance in full of the Obligations, does hereby
transfer, grant, bargain, sell, convey, hypothecate,
pledge,
set over and deliver unto the Collateral Agent, and grant
to
the Collateral Agent for the benefit of the Secured Parties
a security interest in (a) the shares of capital stock
listed below the name of the New Subsidiary Pledgor on
Schedule I hereto and any shares of stock of any Subsidiary
obtained in the future by the New Subsidiary Pledgor and
the
certificates representing all such shares (subject to the
proviso in clause (a) of Section I of the Pledge
Agreement),
(b) the promissory notes listed on Schedule I hereto and
any
promissory notes issued in the future to such New
Subsidiary
Pledgor and (c) all other Collateral referred to in the
Pledge Agreement. Schedule I attached hereto supplements
Schedule I to the Pledge Agreement and shall be deemed a
part thereof for all purposes of the Pledge Agreement.
Each
reference to a "Subsidiary Pledgor" or a "Pledgor" in the
Pledge Agreement shall be deemed to include the New
Subsidiary Pledgor. The Pledge Agreement is hereby
incorporated herein by reference.
SECTION 2. The New Subsidiary Pledgor represents and
warrants to the Collateral Agent and to the other Secured
Parties that this Supplement has been duly authorized,
executed and delivered by it Pledgor and constitutes its
legal, valid and binding obligation, enforceable against it
in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium or other
similar laws affecting creditors' rights generally and by
general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in
equity).
SECTION 3. This Supplement may be executed in two or
more counterparts, each of which shall constitute an
original, but all of which, when taken together, shall
constitute but one instrument. This Supplement shall
become
effective when the Collateral Agent shall have received
counterparts of this Supplement that, when taken together,
bear the signatures of the New Subsidiary Pledgor and the
Collateral Agent.
SECTION 4. Except as expressly supplemented hereby,
the Pledge Agreement shall remain in full force and effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
SECTION 6. In case any one or more of the provisions
contained in this Supplement should be held invalid,
illegal
or unenforceable in any respect, neither party hereto shall
be required to comply with such provision for so long as
such provision is held to be invalid, illegal or
unenforceable, but the validity, legality and
enforceability
of the remaining provisions contained herein and in the
Pledge Agreement shall not in any way be affected or
impaired. The parties hereto shall endeavor in good-faith
negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the
invalid, illegal or unenforceable provisions.
SECTION 7. All communications and notices hereunder
shall be in writing and given as provided in Section 15 of
the Pledge Agreement. All communications and notices
hereunder to the New Subsidiary Pledgor shall be given to
it
at the address set forth under its signature hereto, which
supplements Schedule 11 to the Pledge Agreement, with a
copy
to the Borrower.
SECTION 8. The New Subsidiary Pledgor agrees to
reimburse the Collateral Agent for its reasonable out-of-
pocket expenses in connection with this Supplement,
including the reasonable fees, other charges and
disbursements of counsel for the Collateral Agent.
IN WITNESS WHEREOF, the New Subsidiary Pledgor and the
Collateral Agent have duly executed this Supplement to the
Pledge Agreement as of the day and year first above written
[NAME OF NEW SUBSIDIARY PLEDGOR],
by
Name:
Title:
Address:
CHEMICAL BANK, as Collateral Agent,
by
Name:
Title:
Annex 2
to
the Pledge
Agreement
SUPPLEMENT NO. dated as of
, to the Pledge Agreement dated as of
June 14, 1993, as amended and restated as of
August 3, 1994 (the "Pledge Agreement"), among
ECKERD CORPORATION, a Delaware corporation (the
"Borrower"), each of the subsidiaries of the
Borrower listed on the signature pages thereof
(individually a "Subsidiary Pledgor" and
collectively, the "Subsidiary Pledgors"; the
Subsidiary Pledgors together with the Borrower
are
referred to individually as a "Pledgor" and
collectively as the "Pledgors") and CHEMICAL
BANK,
a New York banking corporation ("Chemical Bank"),
as collateral agent (the "Collateral Agent") for
the Secured Parties (as defined in the Credit
Agreement referred to below).
A. Reference is made to the Credit Agreement dated
as
of June 14, 1993, as amended and restated as of August 3,
1994 (as amended or modified from time to time, the "Credit
Agreement"), among the Borrower, the financial institutions
party thereto, as lenders (the "Lenders"), Chemical Bank
and
NationsBank of Florida, N.A., a national banking
association
("NationsBank"), as managing agents and as swingline
lenders
(in such latter capacity, each a "Swingline Lender"), and
Chemical Bank, as administrative agent (in such capacity,
the "Administrative Agent") for the Lenders, the Swingline
Lenders and the Fronting Banks.
B. Capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to such
terms in the Pledge Agreement and the Credit Agreement.
C. The Borrower and certain Subsidiaries of the
Borrower have entered into the Pledge Agreement in order to
induce the Lenders to make Loans, the Swingline Lenders to
make Swingline Loans and the Fronting Banks to issue
Letters
of Credit and originate Bankers' Acceptances. Pursuant to
paragraph (q) of Article VIII of the Credit Agreement, an
Event of Default will occur if any Person (referred to
herein as a 'Parent Pledgor") becomes the owner or holder
of
record of all the common equity securities of the Borrower
and, prior to or simultaneously with obtaining such shares,
fails to enter into the Pledge Agreement (or a similar
agreement) as a Pledgor. Section 24 of the Pledge
Agreement
provides that any Parent Pledgor may become a Pledgor under
the Pledge Agreement by execution and delivery of an
instrument in the form of this Supplement. The undersigned
(the "New Pledgor") is a Parent Pledgor of the Borrower and
is executing this Supplement in accordance with the
provisions of the Credit Agreement to become a Pledgor
under
the Pledge Agreement in order to induce the Lenders to make
additional Loans, the Swingline Lenders to make additional
Swingline Loans and the Fronting Banks to issue additional
Letters of Credit and originate additional Bankers'
Acceptances and as consideration for Loans and Swingline
Loans previously made, Letters of Credit previously issued
and Bankers' Acceptances previously originated.
Accordingly, the Collateral Agent and the New Pledgor
agree as follows:
SECTION 1. In accordance with Section 24 of the
Pledge
Agreement, the New Pledgor by its signature below becomes
a
Pledgor under the Pledge Agreement with the same force and
effect as if originally named therein as a Pledgor and the
New Pledgor hereby (a) agrees to all the terms and
provisions of the Pledge Agreement applicable to it as a
Pledgor thereunder and (b) represents and warrants that the
representations and warranties made by it as a Pledgor
thereunder are true and correct on and as of the date
hereof. In furtherance of the foregoing, the New Pledgor,
as security for the payment and performance in full of the
Obligations, does hereby transfer, grant, bargain, sell,
convey, hypothecate, pledge, set over and deliver unto the
Collateral Agent, and grant to the Collateral Agent for the
benefit of the Secured Parties a security interest in (a)
the shares of capital stock listed below the name of the
New
Pledgor on Schedule I hereto and any shares of stock of the
Borrower obtained in the future by the New Pledgor and the
certificates representing all such shares, (b) subject to
Section 5 of the Pledge Agreement, all payments of
dividends, cash, instruments and other property from time
to
time received, receivable or otherwise distributed, in
respect of, in exchange for or upon the conversion of the
securities referred to in clause (a) above, (c) subject to
Section 5 of the Pledge Agreement, all rights and
privileges
of such New Pledgor with respect to the securities and
other
property referred to in clause (a) above, and (d) all
proceeds of any of the foregoing. Schedule I attached
hereto supplements Schedule I to the Pledge Agreement and
shall be deemed a part thereof for all of the Pledgor
Agreement. Each reference to a "Pledgor" in the Pledge
Agreement shall be deemed to include the New Pledgor. The
Pledgor Agreement is hereby incorporated herein by
reference.
SECTION 2. The New Pledgor represents and warrants to
the Collateral Agent and to the other Secured Parties that
this Supplement has been duly authorized, executed and
delivered by it Pledgor and constitutes its legal, valid
and
binding obligation, enforceable against it in accordance
with its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization,
fraudulent transfer, moratorium or other similar laws
affecting creditors' rights generally and by general
principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in
equity).
SECTION 3. This Supplement may be executed in two or
mom counterparts, each of which shall constitute an
original, but all of which, when taken together, shall
constitute but one instrument. This Supplement shall
become
effective when the Collateral Agent shall have received
counterparts of this Supplement that, when taken together,
bear the signatures of the New Pledgor and the Collateral
Agent.
SECTION 4. Except as expressly supplemented hereby,
the Pledge Agreement shall remain in full force and effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
SECTION 6. In case any one or more of the provisions
contained in this Supplement should be held invalid,
illegal
or unenforceable in any respect, neither party hereto shall
be required to comply with such provision for so long as
such provision is held to be invalid, illegal or
unenforceable, but the validity, legality and
enforceability
of the remaining provisions contained herein and in the
Pledge Agreement shall not in any way be affected or
impaired. The parties hereto shall endeavor in good-faith
negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the
invalid, illegal or unenforceable provisions.
SECTION 7. All communications and notices hereunder
shall be in writing and given as provided in Section 15 of
the Pledge Agreement. All communications and notices
hereunder to the New Pledgor shall be given to it at the
address set forth under its signature hereto, which
supplements Schedule II to the Pledge Agreement, with a
copy
to the Borrower.
SECTION 8. The New Pledgor agrees to reimburse the
Collateral Agent for its reasonable out-of-pocket expenses
in connection with this Supplement, including the
reasonable
fees, other charges and disbursements of counsel for the
Collateral Agent.
IN WITNESS WHEREOF, the New Pledgor and the Collateral
Agent have duly executed this Supplement to the Pledge
Agreement as of the day and year first above written.
[NAME OF NEW PLEDGOR],
by
Name:
Title:
Address:
CHEMICAL BANK, as Collateral Agent,
by
Name:
Title:
SECURITY AGREEMENT dated as of June 14,
1993,
as amended and restated as of August 3, 1994,
among ECKERD CORPORATION, a Delaware corporation
(the Borrower ), each of the subsidiaries of the
Borrower listed on the signature pages hereof
(individually, a Guarantor and, collectively,
the Guarantors ; the Guarantors, together with
the Borrower, are referred to individually as a
Grantor and collectively as the Grantors ) and
CHEMICAL BANK, a New York banking corporation
( Chemical Bank ), as collateral agent (in such
capacity, the Collateral Agent ) for the Secured
Parties (as defined herein).
Reference is made to the Credit Agreement dated as of
June 14, 1993, as amended and restated as of August 3, 1994
(as amended or modified from time to time, the Credit
Agreement ), among the Borrower, the financial institutions
party thereto, as lenders (the Lenders ), Chemical Bank
and
NationsBank of Florida, N.A., a national banking
association
( NationsBank ), as managing agents and as swingline
lenders
(in such latter capacity, each a Swingline Lender ), and
Chemical Bank, as administrative agent (in such capacity,
the Administrative Agent ) for the Lenders, the Swingline
Lenders and the Fronting Banks.
The Lenders and the Swingline Lenders have agreed to
make Loans and Swingline Loans, respectively, to the
Borrower, and the Fronting Banks have agreed to issue
Letters of Credit and to originate Bankers' Acceptances for
the account of the Borrower, pursuant to, and upon the
terms
and subject to the conditions specified in, the Credit
Agreement. Each of the Guarantors has agreed to guarantee,
among other things, all the obligations of the Borrower
under the Credit Agreement. The obligations of the Lenders
to make Loans, of the Swingline Lenders to make Swingline
Loans and of the Fronting Banks to issue Letters of Credit
and to originate Bankers' Acceptances are conditioned upon,
among other things, the execution and delivery by the
Grantors of a security agreement in the form hereof to
secure (a) the due and punctual payment of (i) the
principal
of and premium, if any, and interest (including interest
accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding) on the
Loans and the Swingline Loans, when and as due, whether at
maturity, by acceleration, upon one or more dates set for
prepayment or otherwise, (ii) each payment required to be
made by the Borrower under the Credit Agreement in respect
of any Letter of Credit or Bankers' Acceptance, when and as
due, including payments in respect of reimbursement of
disbursements, interest thereon and obligations to provide
cash collateral and (iii) all other monetary obligations,
including fees, costs, expenses and indemnities, whether
primary, secondary, direct, contingent, fixed or otherwise
(including monetary obligations incurred during the
pendency
of any bankruptcy, insolvency, receivership or other
similar
proceeding, regardless of whether allowed or allowable in
such proceeding), of the Borrower to the Secured Parties
under the Credit Agreement and the other Loan Documents to
which the Borrower is or is to be a party, (b) the due and
punctual performance of all covenants, agreements,
obligations and liabilities of the Borrower under or
pursuant to the Credit Agreement and the other Loan
Documents and (c) unless otherwise agreed upon in writing
by
the applicable Lender, all obligations of the Borrower,
monetary or otherwise, under each Rate Protection Agreement
entered into with any Lender, whether pursuant to
Section 6.11 of the Credit Agreement or otherwise (all the
obligations referred to in this clause (c) and in the
preceding clauses (a) and (b) being referred to
collectively
as the Obligations ).
Accordingly, the Grantors and the Collateral Agent, on
behalf of itself and each Secured Party (and each of their
respective successors or assigns), hereby agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Definition of Terms Used Herein. All
capitalized terms used but not defined herein shall have
the
meanings set forth in the other Loan Documents.
SECTION 1.02. Definition of Certain Terms Used Herein.
As used herein, the following terms shall have the
following
meanings:
Account Debtor shall mean any person who is or who
may become obligated to the Grantors under, with respect to
or on account of an Account.
Accounts shall mean, with respect to the Grantors,
any and all right, title and interest of any Grantor to
payment for goods and services sold or leased, including
any
such right evidenced by chattel paper, whether due or to
become due, whether or not it has been earned by
performance, and whether now or hereafter acquired or
arising in the future, including accounts receivable from
Affiliates of the Grantors.
Accounts Receivable shall mean, with respect to
the
Grantors, all Accounts and all right, title and interest of
any Grantor to Accounts and all right, title and interest
of
any Grantor in any returned goods, together with all
rights,
titles, securities and guarantees with respect thereto,
including any rights to stoppage in transit, replevin,
reclamation and resales, and all related security
interests,
liens and pledges, whether voluntary or involuntary, in
each
case whether now existing or owned or hereafter arising or
acquired.
Collateral shall mean all (a) Accounts, (b) Accounts
Receivable, (c) Documents, (d) Equipment (including
Fixtures), (e) General Intangibles, (f) Inventory,
(g) Proceeds, (h) amounts due or to become due from the
transfer of Third Party Receivables pursuant to Permitted
Receivables Purchase Agreements and (i) Collection Deposit
Accounts and all other cash and cash accounts, provided
that
Collateral shall not include any of the foregoing in
clause (a), (b), (c), (e) or (g) solely to the extent
transferred by the Borrower (either in its entirety or an
undivided interest therein) under any Permitted Receivables
Purchase Agreement from time to time.
Collection Deposit Account shall mean a lockbox
account of any Grantor maintained for the benefit of the
Secured Parties with the Collateral Agent pursuant to
Article V or with a Sub-Agent pursuant to a Lockbox
Agreement.
Credit Agreement shall have the meaning assigned to
such term in the preliminary statement of this Agreement.
Documents shall mean all instruments, files,
records,
ledger sheets and documents, whether now owned or hereafter
acquired, covering or relating to any of the Collateral
(other than any such instruments pledged and delivered
pursuant to the Pledge Agreement), including customer
lists,
credit files, computer programs, printouts and other
computer materials and records, but excluding prescription
records and files.
Equipment shall mean all equipment in all its forms,
wherever located, now or hereafter existing, and all parts
thereof and accessions thereto, that are now or hereafter
owned by any Grantor, provided that Equipment shall not
include any equipment subject to Liens permitted under
Section 7.02(h) or (i) of the Credit Agreement or any
equipment that has been or will be the subject of Equipment
Agency Arrangements. The term Equipment shall include
Fixtures.
Fixtures shall mean all items of Equipment,
whether
now owned or hereafter acquired, of any Grantor that become
so related to particular real estate that an interest in
such items of Equipment arises under any real estate law
applicable thereto.
General Intangibles shall mean all choses in action
and causes of action and all other intangible personal
property of any Grantor of every kind and nature (other
than
Accounts Receivable) now owned or hereafter acquired by any
Grantor (other than any such intangible personal property
if
applicable law or any agreement in respect of such property
by its terms prohibits the assignment or grant of a
security
interest in such property), including corporate or other
business records, indemnification claims, contract rights
(including rights under leases, whether entered into as
lessor or lessee, Rate Protection Agreements and other
agreements), Intellectual Property, goodwill,
registrations,
franchises, tax refund claims and any letter of credit,
guarantee, claim, security interest or other security held
by or granted to any Grantor to secure payment by an
Account
Debtor of any of the Accounts Receivable.
Intellectual Property shall mean all intellectual
and
similar property of any Grantor of every kind and nature
now
owned or hereafter acquired by any Grantor, including
inventions, designs, patents, patent applications,
copyrights, copyright registrations, applications to
register copyrights, Licenses, trademarks (including
service
marks), trademark or service mark applications, trade
names,
trade secrets, confidential or proprietary technical and
business information, know-how, show-how or other data or
information, software and databases and all embodiments or
fixations thereof and related documentation, registrations
and franchises, and all additions, improvements and
accessions to, and books and records describing or used in
connection with, any of the foregoing.
Inventory shall mean all goods of any Grantor,
whether now owned or hereafter acquired, held for sale or
lease, or furnished or to be furnished by any Grantor under
contracts of service, or consumed in any Grantor's
business,
including raw materials, intermediates, work in process,
packaging materials, finished goods, semi-finished
inventory, scrap inventory, manufacturing supplies and
spare
parts, and all such goods that have been returned to or
repossessed by or on behalf of any Grantor.
License shall mean any patent license, copyright
license or other license or sublicense (other than any
Trademark License) to which any Grantor is or becomes a
party (other than those license agreements that by their
terms prohibit assignment or a grant of a security interest
by such Grantor as licensee thereunder).
Lockbox Agreements shall mean the lockbox agreements
among any Grantor, the Collateral Agent and a Sub-Agent (as
defined in each Lockbox Agreement), substantially in the
form of Annex 1 hereto, with any changes, additions or
modifications as reasonably requested by such Sub-Agent.
Loan Documents shall have the meaning assigned to
such term in the Credit Agreement.
Medicaid Accounts shall mean Third Party Receivables
owed pursuant to State plans approved under Title XIX of
the
Social Security Act of 1935, as amended.
Medicare Accounts shall mean Third Party Receivables
owed pursuant to the health insurance program for the aged
and disabled under Title XVIII of the Social Security Act
of
1935, as amended.
Obligations shall have the meaning assigned to such
term in the preliminary statement of this Agreement.
Perfection Certificate shall mean the Perfection
Certificate substantially in the form of Annex 2 hereto,
prepared by the Borrower.
Permitted Receivables Purchase Agreements shall have
the meaning assigned to such term in the Credit Agreement.
Proceeds shall mean any consideration received from
the sale, exchange or other disposition of any asset or
property that constitutes Collateral, any value received as
a consequence of the possession of any Collateral and any
payment received from any insurer or other person or entity
as a result of the destruction, loss, theft, damage or
other
involuntary conversion of whatever nature of any asset or
property that constitutes Collateral, and shall include (a)
all cash and negotiable instruments received or held on
behalf of the Collateral Agent pursuant to the Lockbox
Agreements or any other lockbox or similar arrangement
relating to the payment of Accounts Receivable, Inventory
and Third Party Receivables (other than those transferred
pursuant to Permitted Receivables Purchase Agreements) and
(b) any claim of any Grantor against any third party for
(and the right to sue and recover for and the rights to
damages or profits due or accrued arising out of or in
connection with) (i) past, current or future infringement
of
any patent now or hereafter owned by any Grantor or
licensed
under a patent license, (ii) past, current or future breach
of any License, (iii) past, current or future infringement
of any copyright now or hereafter owned by any Grantor or
licensed under a copyright license and (iv) any and all
other amounts from time to time paid or payable under or in
connection with any of the Collateral.
Secured Parties shall mean (a) the Lenders, (b) the
Fronting Banks, (c) the Administrative Agent, (d) the
Collateral Agent, (e) the Swingline Lenders and (f) the
successors and assigns of each of the foregoing.
Security Interest shall have the meaning assigned to
such term in Section 2.01.
Sub-Agent shall mean a financial institution that
shall have delivered to the Collateral Agent an executed
Lockbox Agreement.
Third Party Receivables shall have the meaning
assigned to such term in the Credit Agreement.
SECTION 1.03. Rules of Interpretation. The rules of
interpretation specified in Section 1.02 of the Credit
Agreement shall be applicable to this Agreement.
ARTICLE II
Security Interest
SECTION 2.01. Security Interest. As security for the
payment or performance, as the case may be, of the
Obligations, each Grantor hereby bargains, sells, conveys,
assigns, sets over, mortgages, pledges, hypothecates and
transfers to the Collateral Agent, its successors and its
assigns, for the ratable benefit of the Secured Parties,
and
hereby grants to the Collateral Agent, its successors and
assigns, for the ratable benefit of the Secured Parties, a
security interest in, all of such Grantor's right, title
and
interest in, to and under the Collateral (the Security
Interest ). Without limiting the foregoing, the Collateral
Agent is hereby authorized to file one or more financing
statements (other than fixture filings, except with respect
to Fixtures appurtenant to the Mortgaged Properties),
continuation statements or other documents for the purpose
of perfecting, confirming, continuing, enforcing or
protecting the Security Interest granted by each Grantor,
without the signature of any Grantor, naming any Grantor or
the Grantors as debtors and the Collateral Agent as secured
party.
Each Grantor agrees at all times to keep such accurate
and complete accounting records with respect to the
Collateral as is consistent with its current practices and
in accordance with such prudent and standard practices used
in industries that are the same as or similar to those in
which such Grantor is engaged.
SECTION 2.02. No Assumption of Liability. The Security
Interest is granted as security only and shall not subject
the Collateral Agent or any other Secured Party to, or in
any way alter or modify, any obligation or liability of any
Grantor with respect to or arising out of any of the
Collateral.
ARTICLE III
Representations And Warranties
The Grantors jointly and severally represent and
warrant to and with the Collateral Agent and each other
Secured Party that:
SECTION 3.01. Title and Authority. Each Grantor has
good and valid rights in and title to the Collateral with
respect to which it has purported to grant a Security
Interest hereunder and has full power and authority to
grant
to the Collateral Agent the Security Interest in such
Collateral pursuant hereto and to execute, deliver and
perform its obligations in accordance with the terms of
this
Agreement, without the consent or approval of any other
person other than any consent or approval that has been
obtained.
SECTION 3.02. Filings. The Perfection Certificate has
been duly prepared, completed and executed and the
information set forth therein is correct and complete in
all
material respects. Fully executed Uniform Commercial Code
financing statements (other than fixture filings, except
with respect to Fixtures appurtenant to the Mortgaged
Properties) or other appropriate filings, recordings or
registrations (other than such as would be made in the
United States Copyright Office) containing a description of
the Collateral have been delivered to the Collateral Agent
for filing in each governmental, municipal or other office
specified in Schedule 6 to the Perfection Certificate,
which
are all the filings, recordings and registrations that are
necessary to publish notice of and protect the validity of
and to establish a valid and perfected security interest in
favor of the Collateral Agent (for the ratable benefit of
the Secured Parties) in respect of all Collateral (other
than Fixtures, except Fixtures appurtenant to the Mortgaged
Properties, and copyrights, to the extent that recordings
and registration in the United States Copyright Office may
be necessary) in which the Security Interest may be
perfected by filing, recording or registration in the
United
States (or any political subdivision thereof) and its
territories and possessions, and no further or subsequent
filing, refiling, recording, rerecording, registration or
reregistration is necessary in any such jurisdiction,
except
as provided under applicable law with respect to the filing
of continuation statements and except that recordation of
the Security Interest in the United States Patent and
Trademark Office may be necessary with respect to
Collateral
consisting of patents and Trademarks acquired after the
date
hereof and recordation of the Security Interest, in
addition
to registration of any unregistered copyrights, in the
United States Copyright Office may be necessary with
respect
to Collateral consisting of copyrights.
SECTION 3.03. Validity of Security Interest. The
Security Interest constitutes (a) a valid security interest
in all the Collateral securing the payment and performance
of the Obligations and (b) subject to the filings described
in Section 3.02 above, a perfected security interest in all
Collateral (other than Fixtures, except Fixtures
appurtenant
to the Mortgaged Properties, and copyrights, to the extent
that recordings and registration in the United States
Copyright Office may be necessary) in which a security
interest may be perfected by filing, recording or
registering a financing statement or analogous document in
the United States (or any political subdivision thereof)
and
its territories and possessions pursuant to the Uniform
Commercial Code or other applicable law in such
jurisdictions, except that recordation of the Security
Interest in the United States Patent and Trademark Office
may be necessary with respect to Collateral consisting of
patents and Trademarks acquired after the date hereof and
recordation of the Security Interest, in addition to
registration of any unregistered copyrights, in the United
States Copyright Office may be necessary with respect to
Collateral consisting of copyrights. The Security Interest
is and shall be prior to any other Lien on any of the
Collateral, other than Liens expressly permitted to be
prior
to the Security Interest pursuant to Section 7.02 of the
Credit Agreement.
SECTION 3.04. Absence of Other Liens. The Collateral
is
owned by the Grantors free and clear of any Lien, except
for
Liens expressly permitted pursuant to Section 7.02 of the
Credit Agreement. Other than as contemplated hereby or by
the Trademark Security Agreement, none of the Grantors has
filed or consented to the filing of (a) any financing
statement or analogous document under the Uniform
Commercial
Code or any other applicable laws covering any Collateral,
(b) any assignment in which any Grantor assigns any
Collateral or any security agreement or similar instrument
covering any Collateral with the United States Patent and
Trademark Office or the United States Copyright Office or
(c) any assignment in which any Grantor assigns any
Collateral or any security agreement or similar instrument
covering any Collateral with any foreign governmental,
municipal or other office, which financing statement or
analogous document, assignment, security agreement or
similar instrument is still in effect.
ARTICLE IV
Covenants
SECTION 4.01. Change of Name; Location of Collateral;
Records; Place of Business. (a) Each Grantor agrees
promptly
to notify the Collateral Agent of any change (i) in its
corporate name or in any trade name used to identify it in
the conduct of its business or in the ownership of its
properties, (ii) in the location of its chief executive
office, its principal place of business, any office in
which
it maintains books or records relating to Collateral owned
by it or any office or facility at which Collateral owned
by
it is located (including the establishment of any such new
office or facility), (iii) in its identity or corporate
structure or (iv) in its Federal Taxpayer Identification
Number. Each Grantor agrees not to effect or permit any
change referred to in the preceding sentence unless all
filings have been made under the Uniform Commercial Code or
otherwise that are required in order for the Collateral
Agent to continue at all times following such change to
have
a valid and perfected security interest in all the
Collateral. Each Grantor agrees promptly to notify the
Collateral Agent if any material portion of the Collateral
is damaged or destroyed.
(b) Each Grantor agrees to maintain, at its own cost
and expense, such complete and accurate records with
respect
to the Collateral owned by it as is consistent with its
current practices and in accordance with such prudent and
standard practices used in industries that are the same as
or similar to those in which such Grantor is engaged and,
at
such time or times as the Collateral Agent may reasonably
request, promptly to prepare and deliver to the Collateral
Agent a duly certified schedule or schedules in form and
detail reasonably satisfactory to the Collateral Agent
showing the identity, amount and location of any and all
Collateral.
SECTION 4.02. Periodic Certification. Each year, at
the
time of delivery of annual financial statements with
respect
to the preceding fiscal year pursuant to Section 6.04 of
the
Credit Agreement, each Grantor shall deliver to the
Collateral Agent a certificate executed by a Financial
Officer and the chief legal officer of such Grantor (a)
setting forth the information required pursuant to Section
2
of the Perfection Certificate, (b) certifying that all
Uniform Commercial Code financing statements (other than
fixture filings, except with respect to Fixtures
appurtenant
to the Mortgaged Properties) or other appropriate filings,
recordings or registrations, including all refilings,
rerecordings and reregistrations, containing a description
of the Collateral have been filed of record in each
governmental, municipal or other appropriate office in each
jurisdiction identified pursuant to clause (a) above to the
extent necessary to protect and perfect the Security
Interest for a period of not less than 18 months after the
date of such certificate (except as noted therein with
respect to any continuation statements to be filed within
such period), (c) setting forth, with respect to each
filing, recording or registration (including each refiling,
rerecording or reregistration) made since the date of the
Perfection Certificate or the most recent certificate
delivered pursuant to this Section 4.02, the filing office,
date and file number thereof and (d) attaching true,
correct
and complete acknowledgement copies of each such filing,
recording or registration not theretofore delivered to the
Collateral Agent.
SECTION 4.03. Protection of Security. Each Grantor
shall, at its own cost and expense, take any and all
actions
necessary to defend title to the Collateral against all
persons and to defend the Security Interest of the
Collateral Agent in the Collateral and the priority thereof
against any Lien not expressly permitted under the Credit
Agreement.
SECTION 4.04. Further Assurances. Each Grantor agrees,
at its expense, to execute, acknowledge, deliver and cause
to be duly filed all such further instruments and documents
and take all such actions as the Collateral Agent may from
time to time reasonably request to better assure, preserve,
protect and perfect the Security Interest and the rights
and
remedies created hereby, including the payment of any fees
and taxes required in connection with the execution and
delivery of this Agreement, the granting of the Security
Interest and the filing of any financing statements (other
than fixture filings, except with respect to Fixtures
appurtenant to the Mortgaged Properties) or other documents
in connection herewith. If any amount payable under or in
connection with any of the Collateral shall be or become
evidenced by any promissory note or other instrument, such
note or instrument shall (to the extent not previously
pledged and delivered pursuant to the Pledge Agreement) be
immediately pledged and delivered to the Collateral Agent,
duly endorsed in a manner satisfactory to the Collateral
Agent.
SECTION 4.05. Inspection and Verification. The
Collateral Agent and such persons as the Collateral Agent
may reasonably designate shall have the right, at any
reasonable time or times upon reasonable notice and at the
Grantor's own cost and expense, to inspect the Collateral,
all records related thereto (and to make extracts and
copies
from such records) and the premises upon which any of the
Collateral is located, to discuss any Grantor's affairs
with
the officers of such Grantor and its independent
accountants
and to verify under reasonable procedures the validity,
amount, quality, quantity, value, condition and status of
or
any other matter relating to, the Collateral, including, in
the case of Accounts or Collateral in the possession of any
third party, by contacting Account Debtors or the third
party possessing such Collateral for the purpose of making
such a verification. The Collateral Agent shall have the
absolute right to share any information it gains from such
inspection or verification with any other Secured Party (it
being understood that any such information shall be deemed
to be Information subject to the provisions of
Section 10.15 of the Credit Agreement).
SECTION 4.06. Taxes; Encumbrances. At its option, the
Collateral Agent may discharge past due taxes, assessments,
charges, fees, liens, security interests or other
encumbrances at any time levied or placed on the Collateral
other than as the same may be permitted under the Loan
Documents, and may pay for the maintenance and preservation
of the Collateral to the extent any Grantor fails to do so
as required by this Agreement or the other Loan Documents,
and such Grantor agrees to reimburse the Collateral Agent
on
demand for any payment made or any reasonable and
documented
expense incurred by the Collateral Agent pursuant to the
foregoing authorization; provided, however, that nothing in
this Section 4.06 shall be interpreted as excusing any
Grantor from the performance of, or imposing any obligation
on the Collateral Agent or any other Secured Party to cure
or perform, any covenants or other promises of the Grantors
with respect to taxes, assessments, charges, fees, liens,
security interests or other encumbrances and maintenance as
set forth herein or in the other Loan Documents.
SECTION 4.07. Assignment of Security Interest. If at
any time any Grantor shall take and perfect a security
interest in any property of an Account Debtor or any other
person to secure payment and performance of an Account,
such
Grantor shall promptly assign such security interest to the
Collateral Agent. Such assignment need not be filed of
public record unless necessary to continue the perfected
status of the security interest against creditors of and
transferees from the Account Debtor or other person
granting
the security interest.
SECTION 4.08. Continuing Obligations of the Grantors.
The Grantors shall remain liable to, at their own cost and
expense, duly and punctually observe and perform all the
conditions and obligations to be observed and performed by
them under each contract, agreement or instrument relating
to the Collateral, all in accordance with the terms and
conditions thereof, and each Grantor agrees to indemnify
and
hold harmless the Collateral Agent and the other Secured
Parties from and against any and all liability for such
performance.
SECTION 4.09. Use and Disposition of Collateral. The
Grantors may use but not dispose of the Collateral in any
lawful manner not inconsistent with the provisions of this
Agreement, the Credit Agreement or any other Loan Document,
except that the Grantors may dispose of Collateral to the
extent expressly permitted by provisions of the Loan
Documents. Without limiting the generality of the
foregoing,
(a) each Grantor agrees that it shall not permit any
Inventory to be in the possession or control of any
warehouseman, bailee, agent or processor at any time unless
such warehouseman, bailee, agent or processor shall have
been notified of the Security Interest and shall have
agreed
in a writing in form and substance reasonably satisfactory
to the Collateral Agent to hold the Inventory subject to
the
Security Interest and the instructions of the Collateral
Agent and to waive and release any Lien held by it with
respect to such Inventory, whether arising by operation of
law or otherwise, and (b) each Grantor may sell or purport
to sell Accounts Receivable or an undivided interest in
Accounts Receivable in accordance with the provisions of
any
Permitted Receivables Purchase Agreement and transfer any
Document representing only Accounts Receivable so sold or
in
which an undivided interest is so sold or purported to be
sold whereupon, in the case of such a sale or purported
sale, the Security Interest created hereby in the Accounts
Receivable so sold or purported to be sold and Document so
transferred (but not in any Proceeds arising from such sale
or purported sale) shall cease immediately without any
further action on the part of the Collateral Agent,
provided
that, with respect to each Account Receivable in which an
undivided interest is sold pursuant to a Permitted
Receivables Purchase Agreement, such Security Interest in
that portion of such Account Receivable that remains the
property of any Grantor shall so cease only if required by
the terms of such Permitted Receivables Purchase Agreement
in order for such Account Receivable to be eligible for
sale
thereunder. The Collateral Agent will deliver to each
Grantor, upon its written request, any Document to be so
transferred pursuant to clause (b) of the foregoing
sentence, if such Document is in the Collateral Agent's
possession.
SECTION 4.10. Limitation on Modification of Accounts.
None of the Grantors will, without the Collateral Agent's
prior written consent, grant any extension of the time of
payment of any of the Accounts Receivable, compromise,
compound or settle the same for less than the full amount
thereof, release, wholly or partly, any person liable for
the payment thereof or allow any credit or discount
whatsoever thereon, other than extensions, credits,
discounts, compromises or settlements granted or made in
the
ordinary course of business. After a Default or an Event of
Default shall have occurred and during the continuance
thereof, the Collateral Agent may notify the Grantors not
to
grant or make any such extension, credit, discount,
compromise, or settlement under any circumstances without
its prior written consent.
ARTICLE V
Collections
SECTION 5.01. Collection Deposit Accounts. (a) Each
Grantor agrees (i) at the request of the Collateral Agent,
after the occurrence and during the continuation of any
Default or Event of Default, to establish one or more
Collection Deposit Accounts with the Collateral Agent or
with any financial institution that (A) is satisfactory to
the Collateral Agent and (B) enters into a Lockbox
Agreement
and (ii) once established, to maintain such Collection
Deposit Accounts regardless of whether such Default or
Event
of Default shall no longer be continuing.
(b) Unless and until the Collection Deposit Accounts
are converted to closed lockbox accounts pursuant to
paragraph (c) below, each Grantor may at any time withdraw
any of the funds contained in a Collection Deposit Account
of such Grantor for use, subject to the provisions of the
Loan Documents, for general corporate purposes.
(c) Effective upon notice to the Grantors from the
Collateral Agent after the occurrence and during the
continuance of an Event of Default (which notice may be
given by telephone if promptly confirmed in writing), each
Collection Deposit Account will, without any further action
on the part of any Grantor, the Collateral Agent or any
Sub-
Agent, convert into a closed lockbox account under the
exclusive dominion and control of the Collateral Agent in
which funds are held subject to the rights of the
Collateral
Agent hereunder. No Grantor shall thereafter have any right
or power to withdraw any funds from any Collection Deposit
Account without the prior written consent of the Collateral
Agent until all Events of Default are cured or waived. The
Grantors irrevocably authorize the Collateral Agent to
notify each Sub-Agent (i) of the occurrence of an Event of
Default and (ii) of the matters referred to in this
paragraph (c). Following the occurrence of an Event of
Default, the Collateral Agent may instruct each Sub-Agent
to
transfer immediately all funds held in each Collection
Deposit Account to an account maintained with the
Collateral
Agent.
SECTION 5.02. Collections. (a) From and after the date
on which the Collateral Agent requests that the Grantors
establish and maintain one or more Collection Deposit
Accounts, each Grantor agrees to notify and direct promptly
each Account Debtor and every other person obligated to
make
payments with respect to the Accounts Receivable, Inventory
and Third Party Receivables (other than those transferred
pursuant to Permitted Receivables Purchase Agreements) to
make all such payments to a Collection Deposit Account
established by it, provided that such payment arrangements
shall apply to Medicaid Accounts and Medicare Accounts only
to the extent permitted under applicable law, it being the
express intention of the Grantors and the Secured Parties
that the Security Interests hereunder in the Medicaid
Accounts and Medicare Accounts be perfected and that the
Proceeds thereof be fully available to the Collateral Agent
for the benefit of the Secured Parties to the maximum
extent
permitted by law. Each Grantor shall use all reasonable
efforts to cause each Account Debtor and every other person
identified in the preceding sentence (subject to the
proviso
in the preceding sentence) to make all of the foregoing
payments directly to such Collection Deposit Account.
(b) In the event that any Grantor directly receives
any
remittances on Accounts Receivable (including to the extent
permitted by applicable law, payments made in respect of
Medicaid Accounts and Medicare Accounts), Inventory or
Third
Party Receivables (other than those transferred pursuant to
Permitted Receivables Purchase Agreements), notwithstanding
the arrangements for payment directly into the Collection
Deposit Accounts, such remittances shall be held in trust
for the benefit of the Collateral Agent and the other
Secured Parties and shall be segregated from other funds of
such Grantor, subject to the Security Interest granted
hereby, and such Grantor shall cause such remittances and
payments to be deposited into the applicable Collection
Deposit Account as soon as practicable after such Grantor's
receipt thereof.
SECTION 5.03. Collateral Agent Appointed Attorney-in-
Fact. The Collateral Agent is hereby appointed by the
Grantors as the true and lawful agent and attorney-in-fact
of each Grantor, and in such capacity the Collateral Agent
shall have the right, with power of substitution for the
Grantors and in each Grantor's name or otherwise, for the
use and benefit of the Collateral Agent and the other
Secured Parties, upon the occurrence and during the
continuance of an Event of Default, (a) to receive,
endorse,
assign and/or deliver any and all notes, acceptances,
checks, drafts, money orders or other evidences of payment
relating to the Collateral or any part thereof; (b) to
demand, collect, receive payment of, give receipt for and
give discharges and releases of all or any of the
Collateral; (c) to sign the name of any Grantor on any
invoice or bill of lading relating to any of the
Collateral;
(d) to send verifications of Accounts Receivable to any
Account Debtor; (e) to commence and prosecute any and all
suits, actions or proceedings at law or in equity in any
court of competent jurisdiction to collect or otherwise
realize on all or any of the Collateral or to enforce any
rights in respect of any Collateral; (f) to settle,
compromise, compound, adjust or defend any actions, suits
or
proceedings relating to all or any of the Collateral; (g)
to
notify, or to require the Grantors to notify, Account
Debtors to make payment directly to the Collateral Agent;
and (h) to use, sell, assign, transfer, pledge, make any
agreement with respect to or otherwise deal with all or any
of the Collateral, and to do all other acts and things
necessary to carry out the purposes of this Agreement, as
fully and completely as though the Collateral Agent were
the
absolute owner of the Collateral for all purposes;
provided,
however, that nothing herein contained shall be construed
as
requiring or obligating the Collateral Agent or any other
Secured Party to make any commitment or to make any inquiry
as to the nature or sufficiency of any payment received by
the Collateral Agent or any other Secured Party, or to
present or file any claim or notice, or to take any action
with respect to the Collateral or any part thereof or the
moneys due or to become due in respect thereof or any
property covered thereby. The Collateral Agent and the
Secured Parties shall be accountable only for amounts
actually received as a result of the exercise of the powers
granted to them herein, and neither they nor their
officers,
directors, employees or agents shall be responsible to any
Grantor for any act or failure to act hereunder, except for
their own gross negligence or willful misconduct. It is
understood and agreed that the appointment of the
Collateral
Agent as the agent and attorney-in-fact of the Grantors for
the purposes set forth above is coupled with an interest
and
is irrevocable. The provisions of this Section 5.03 shall
in
no event relieve any Grantor of any of its obligations
hereunder or under the other Loan Documents with respect to
the Collateral or any part thereof or impose any obligation
on the Collateral Agent or any other Secured Party to
proceed in any particular manner with respect to the
Collateral or any part thereof, or in any way limit the
exercise by the Collateral Agent or any other Secured Party
of any other or further right that it may have on the date
of this Agreement or hereafter, whether hereunder, under
any
other Loan Document, by law or otherwise. Any sale pursuant
to the provisions of this Section 5.03 shall be deemed to
conform to the commercially reasonable standards as
provided
in Section 9-504(3) of the Uniform Commercial Code as in
effect in the State of New York or its equivalent in other
jurisdictions.
ARTICLE VI
Remedies
SECTION 6.01. Remedies upon Default. Upon the
occurrence and during the continuance of an Event of
Default, each Grantor agrees to deliver each item of
Collateral to the Collateral Agent on demand, and it is
agreed that the Collateral Agent shall have the right
(subject to applicable law) to take any of or all the
following actions at the same or different times: (a) with
respect to any Collateral consisting of Intellectual
Property, on demand, to cause the Security Interest to
become an assignment, transfer and conveyance of any of or
all such Collateral by such Grantor to the Collateral
Agent,
or to license or, to the extent permitted by applicable
law,
sublicense, whether general, special or otherwise, and
whether on an exclusive or non-exclusive basis, any such
Collateral throughout the world on such terms and
conditions
and in such manner as the Collateral Agent shall determine
(other than in violation of any then-existing licensing
arrangements to the extent that waivers cannot be
obtained),
and (b) with or without legal process and with or without
previous notice or demand for performance, to take
possession of the Collateral (and temporary possession of
any non-Collateral in connection with any such
repossession,
with the right to store, at the Grantors' expense and risk,
such non-Collateral) and without liability for trespass to
enter any premises where the Collateral may be located for
the purpose of taking possession of or removing the
Collateral and, generally, to exercise any and all rights
afforded to a secured party under the Uniform Commercial
Code or other applicable law (subject to any applicable
alcohol and liquor control laws, rules and regulations and
pharmaceutical laws, rules and regulations and except as
may
be limited in the case of Medicaid Accounts and Medicare
Accounts by the Social Security Act and regulations
thereunder and any applicable state law, including as set
forth in Appendix A attached hereto and incorporated by
reference herein). Without limiting the generality of the
foregoing, each Grantor agrees that the Collateral Agent
shall have the right, subject to the mandatory requirements
of applicable law, to sell or otherwise dispose of all or
any part of the Collateral (subject to any applicable
alcohol and liquor control laws, rules and regulations and
pharmaceutical laws, rules and regulations and except as
may
be limited in the case of Medicaid Accounts and Medicare
Accounts by the Social Security Act and regulations
thereunder and any applicable state law, including as set
forth in Appendix A attached hereto and incorporated by
reference herein), at public or private sale or at any
broker's board or on any securities exchange, for cash,
upon
credit or for future delivery as the Collateral Agent shall
deem appropriate. The Collateral Agent shall be authorized
at any such sale (if it deems it advisable to do so) to
restrict the prospective bidders or purchasers to persons
who will represent and agree that they are purchasing the
Collateral for their own account for investment and not
with
a view to the distribution or sale thereof, and upon
consummation of any such sale the Collateral Agent shall
have the right to assign, transfer and deliver to the
purchaser or purchasers thereof the Collateral so sold.
Each
such purchaser at any such sale shall (subject to any
applicable alcohol and liquor control laws, rules and
regulations and pharmaceutical laws, rules and regulations
and except as may be limited in the case of Medicaid
Accounts and Medicare Accounts by the Social Security Act
and regulations thereunder and any applicable state law,
including as set forth in Appendix A attached hereto and
incorporated by reference herein) hold the property sold
absolutely free from any claim or right on the part of such
Grantors, and each Grantor hereby waives (to the fullest
extent permitted by applicable law) all rights of
redemption, stay and appraisal that such Grantor now has or
may at any time in the future have under any rule of law or
statute now existing or hereafter enacted.
The Collateral Agent shall give the Grantors 10 days'
prior written notice (which each Grantor agrees is
reasonable notice within the meaning of Section 9-504(3) of
the Uniform Commercial Code as in effect in the State of
New
York or its equivalent in other jurisdictions) of the
Collateral Agent's intention to make any sale of
Collateral.
Such notice, in the case of a public sale, shall state the
time and place for such sale and, in the case of a sale at
a
broker's board or on a securities exchange, shall state the
board or exchange at which such sale is to be made and the
day on which the Collateral, or portion thereof, will first
be offered for sale at such board or exchange. Any such
public sale shall be held at such time or times within
ordinary business hours and at such place or places as the
Collateral Agent may fix and state in the notice (if any)
of
such sale. At any such sale, the Collateral, or portion
thereof, to be sold may be sold in one lot as an entirety
or
in separate parcels, as the Collateral Agent may (in its
sole and absolute discretion) determine. The Collateral
Agent shall not be obligated to make any sale of any
Collateral if it shall determine not to do so, regardless
of
the fact that notice of sale of such Collateral shall have
been given. The Collateral Agent may, without notice or
publication, adjourn any public or private sale or cause
the
same to be adjourned from time to time by announcement at
the time and place fixed for sale, and such sale may,
without further notice, be made at the time and place to
which the same was so adjourned. In case any sale of all or
any part of the Collateral is made on credit or for future
delivery, the Collateral so sold may be retained by the
Collateral Agent until the sale price is paid by the
purchaser or purchasers thereof, but the Collateral Agent
shall not incur any liability in case any such purchaser or
purchasers shall fail to take up and pay for the Collateral
so sold and, in case of any such failure, such Collateral
may be sold again upon like notice. At any public sale made
pursuant to this Section 6.01, any Secured Party may bid
for
or purchase (subject to any applicable alcohol and liquor
control laws, rules and regulations and pharmaceutical
laws,
rules and regulations and except as may be limited in the
case of Medicaid Accounts and Medicare Accounts by the
Social Security Act and regulations thereunder and any
applicable state law, including as set forth in Appendix A
attached hereto and incorporated by reference herein), free
(to the fullest extent permitted by applicable law) from
any
right of redemption, stay, valuation or appraisal on the
part of any Grantor (all said rights being also hereby
waived and released to the extent permitted by law), the
Collateral or any part thereof offered for sale and may
make
payment on account thereof by using any claim then due and
payable to such Secured Party from any Grantor as a credit
against the purchase price, and it may, upon compliance
with
the terms of sale, hold, retain and dispose of such
property
(subject to any applicable alcohol and liquor control laws,
rules and regulations and pharmaceutical laws, rules and
regulations and except as may be limited in the case of
Medicaid Accounts and Medicare Accounts by the Social
Security Act and regulations thereunder and any applicable
state law, including as set forth in Appendix A attached
hereto and incorporated by reference herein) without
further
accountability to such Grantor therefor. For purposes
hereof, (a) a written agreement to purchase the Collateral
or any portion thereof shall be treated as a sale thereof,
(b) the Collateral Agent shall be free to carry out such
sale pursuant to such agreement and (c) no Grantor shall be
entitled to the return of the Collateral or any portion
thereof subject thereto, notwithstanding the fact that
after
the Collateral Agent shall have entered into such an
agreement all Events of Default shall have been remedied
and
the Obligations paid in full. As an alternative to
exercising the power of sale herein conferred upon it, the
Collateral Agent may (subject to any applicable alcohol and
liquor control laws, rules and regulations and
pharmaceutical laws, rules and regulations and except as
may
be limited in the case of Medicaid Accounts and Medicare
Accounts by the Social Security Act and regulations
thereunder and any applicable state law, including as set
forth in Appendix A attached hereto and incorporated by
reference herein) proceed by a suit or suits at law or in
equity to foreclose upon the Collateral and to sell the
Collateral or any portion thereof pursuant to a judgment or
decree of a court or courts having competent jurisdiction
or
pursuant to a proceeding by a court-appointed receiver. The
Collateral Agent may also seek a court order directing
payment of Medicare Accounts and Medicaid Accounts to
itself
or any purchaser thereof from it and, to the extent
permitted by law, each Grantor hereby reasonably consents
to
the entry of such an order. Any sale pursuant to the
provisions of this Section 6.01 shall be deemed to conform
to the commercially reasonable standards as provided in
Section 9-504(3) of the Uniform Commercial Code as in
effect
in the State of New York or its equivalent in other
jurisdictions.
SECTION 6.02. Application of Proceeds. The Collateral
Agent shall apply the proceeds of any collection or sale of
the Collateral, as well as any Collateral consisting of
cash, as follows:
FIRST, to the payment of all costs and expenses
incurred by the Collateral Agent in connection with
such collection or sale or otherwise in connection
with
this Agreement, any other Loan Document or any of the
Obligations, including all court costs and the
reasonable and documented fees, other charges and
disbursements of its agents and legal counsel, the
repayment of all advances made by the Collateral Agent
hereunder or under any other Loan Document on behalf
of
any of the Grantors and any other costs or expenses
incurred in connection with the exercise of any right
or remedy hereunder or thereunder;
SECOND, to the payment in full of the
Obligations
owed to the Lenders, the Swingline Lenders and the
Fronting Banks in respect of the Loans and the
Swingline Loans made by them and outstanding and the
amounts owing in respect of any LC Disbursement or BA
Disbursement or under any Rate Protection Agreement
entered into with any Lender pursuant to Section 6.11
of the Credit Agreement, pro rata as among the
Lenders,
the Swingline Lenders and the Fronting Banks in
accordance with the amount of such Obligations owed to
them;
THIRD, to the payment and discharge in full of
the
Obligations (other than those referred to above) pro
rata as among the Secured Parties in accordance with
the amount of such Obligations owed to them; and
FOURTH, to the Grantors, their successors or
assigns, or as a court of competent jurisdiction may
otherwise direct.
The Collateral Agent shall have absolute discretion as
to the time of application of any such proceeds, moneys or
balances in accordance with this Agreement. Upon any sale
of
the Collateral by the Collateral Agent (including pursuant
to a power of sale granted by statute or under a judicial
proceeding), the receipt by the Collateral Agent or of the
officer making the sale shall be a sufficient discharge to
the purchaser or purchasers of the Collateral so sold and
such purchaser or purchasers shall not be obligated to see
to the application of any part of the purchase money paid
over to the Collateral Agent or such officer or be
answerable in any way for the misapplication thereof.
SECTION 6.03. Grant of License to Use Intellectual
Property. For the purpose of enabling the Collateral Agent
to exercise rights and remedies under Sections 6.01 and
6.02
at such time as the Collateral Agent shall be lawfully
entitled to exercise such rights and remedies, each Grantor
hereby grants to the Collateral Agent an irrevocable, non-
exclusive license (exercisable without payment of royalty
or
other compensation to such Grantor) to use, license or sub-
license any of the Collateral consisting of Intellectual
Property now owned or hereafter acquired by such Grantor to
the extent of the interest of such Grantor therein at such
time, and wherever the same may be located, and including
in
such license reasonable access to all media in which any of
the licensed items may be recorded or stored and to all
computer software and programs used for the compilation or
printout thereof. The use of such license by the Collateral
Agent shall be exercised, at the option of the Collateral
Agent, upon the occurrence and during the continuation of
an
Event of Default, provided that any license, sub-license or
other transaction entered into by the Collateral Agent in
accordance herewith shall be binding upon the Grantors
notwithstanding any subsequent cure of an Event of Default.
In operating under the license granted by each Grantor
pursuant to this Section 6.03, the Collateral Agent agrees
that the goods sold and services rendered under the
Trademarks shall be of a nature and quality substantially
consistent with those theretofore offered under such
Trademarks by such Grantor and such Grantor shall have the
right to inspect during the term of such license, at any
reasonable time or times upon reasonable notice to the
Collateral Agent, and at such Grantor's own cost and
expense, representative samples of goods sold and services
rendered under the Trademarks.
ARTICLE VII
Miscellaneous
SECTION 7.01. Notices. All communications and notices
hereunder shall (except as otherwise expressly permitted
herein) be in writing and given as provided in Section
10.01
of the Credit Agreement. All communications and notices
hereunder to any Grantor shall be given to it at its
address
set forth in Schedule I hereto.
SECTION 7.02. Security Interest Absolute. All rights
of
the Collateral Agent hereunder, the Security Interest and
all obligations of the Grantors hereunder shall be absolute
and unconditional irrespective of (a) any lack of validity
or enforceability of the Credit Agreement, any other Loan
Document, any agreement with respect to any of the
Obligations or any other agreement or instrument relating
to
any of the foregoing, (b) any change in the time, manner or
place of payment of, or in any other term of, all or any of
the Obligations or any other amendment or waiver of or any
consent to any departure from the Credit Agreement, any
other Loan Document or any other agreement or instrument
relating to the foregoing, (c) any exchange, release or
nonperfection of any other collateral, or any release or
amendment or waiver of or consent to or departure from any
guaranty, for all or any of the Obligations or (d) any
other
circumstance that might otherwise constitute a defense
available to, or a discharge of, any Grantor in respect of
the Obligations or in respect of this Agreement (other than
the indefeasible payment in full of all the Obligations).
SECTION 7.03. Survival of Agreement. All covenants,
agreements, representations and warranties made by the
Grantors herein and in the certificates or other
instruments
prepared or delivered in connection with or pursuant to
this
Agreement or any other Loan Document shall be considered to
have been relied upon by the Collateral Agent and the other
Secured Parties and shall survive the making by the Lenders
of the Loans, the making by the Swingline Lenders of the
Swingline Loans and the issuance of the Letters of Credit
and the origination of the Bankers' Acceptances by the
Fronting Banks, and the execution and delivery to the
Lenders and the Swingline Lenders of the Notes evidencing
such loans, regardless of any investigation made by the
Secured Parties or on their behalf, and shall continue in
full force and effect as long as the principal of or any
accrued interest on any Loan or Swingline Loan or any other
fee or amount payable under this Agreement or any other
Loan
Document is outstanding and unpaid or the LC/BA Exposure
does not equal zero and as long as the Commitments and the
LC/BA Commitment have not been terminated.
SECTION 7.04. Binding Agreement; Assignments. This
Agreement shall become effective as to any Grantor when a
counterpart hereof executed on behalf of such Grantor shall
have been delivered to the Collateral Agent and a
counterpart hereof shall have been executed on behalf of
the
Collateral Agent, and thereafter shall be binding upon such
Grantor and the Collateral Agent and their respective
successors and assigns, and shall inure to the benefit of
such Grantors, the Collateral Agent and the other Secured
Parties, and their respective successors and assigns,
except
that no Grantor shall have the right to assign its rights
hereunder or any interest herein or in the Collateral (and
any such attempted assignment shall be void), except as
expressly contemplated by this Agreement or the other Loan
Documents.
SECTION 7.05. Successors and Assigns. Whenever in this
Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the successors and
assigns of such party; and all covenants, promises and
agreements by or on behalf of the Grantors that are
contained in this Agreement shall bind and inure to the
benefit of their respective successors and assigns.
SECTION 7.06. Reimbursement of Collateral Agent. (a)
The Grantors jointly and severally agree to pay upon demand
to the Collateral Agent the amount of any and all
reasonable
and documentd expenses, including the reasonable and
documented fees and expenses of its counsel and of any
experts or agents, that the Collateral Agent may incur in
connection with (i) the administration of this Agreement
(including the customary fees and expenses of the
Collateral
Agent for any audits conducted by it with respect to the
Accounts Receivable, Inventory or Third Party Receivables
(other than those transferred pursuant to Permitted
Receivables Purchase Agreements)), (ii) the custody or
preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise
or enforcement of any of the rights of the Collateral Agent
hereunder, or (iv) the failure by any Grantor to perform or
observe any of the provisions hereof. If the Grantors
shall
fail to do any act or thing that they have covenanted to do
hereunder or any representation or warranty of the Grantors
hereunder shall be breached, the Collateral Agent may (but
shall not be obligated to) do the same or cause it to be
done or remedy any such breach and there shall be added to
the Obligations the cost or expense incurred by the
Collateral Agent in so doing.
(b) Without limitation of their indemnification
obligations under the other Loan Documents, the Grantors
jointly and severally agree to indemnify the Collateral
Agent and the Indemnitees against, and hold each of them
harmless from, any and all losses, claims, damages,
liabilities and related expenses, including reasonable
counsel fees and expenses, incurred by or asserted against
any of them arising out of, in any way connected with, or
as
a result of, the execution, delivery or performance of this
Agreement or any claim, litigation, investigation or
proceeding relating hereto or to the Collateral, whether or
not any Indemnitee is a party thereto, provided that such
indemnity shall not, as to any Indemnitee, be available to
the extent that such losses, claims, damages, liabilities
or
related expenses have resulted from the gross negligence or
wilful misconduct of such Indemnitee.
(c) Any amounts payable as provided hereunder shall
be
additional Obligations secured hereby and by the other
Security Documents. The provisions of this Section
7.06
shall remain operative and in full force and effect
regardless of the termination of this Agreement, the
consummation of the transactions contemplated hereby,
the
repayment of any of the Obligations, the invalidity or
unenforceability of any term or provision of this
Agreement or any other Loan Document or any
investigation
made by or on behalf of the Collateral Agent or any
other
Secured Party. All amounts due under this Section
7.06
shall be payable on written demand therefor and shall
bear
interest at the Default Rate (as defined in the Credit
Agreement).
SECTION 7.07. GOVERNING LAW. THIS AGREEMENT SHALL
BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF
THE STATE OF NEW YORK.
SECTION 7.08. Waivers; Amendment. (a) No failure
or
delay of the Collateral Agent in exercising any power
or
right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right
or
power, or any abandonment or discontinuance of steps
to
enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other
right or power. The rights and remedies of the
Collateral
Agent hereunder and of the other Secured Parties under
the
other Loan Documents are cumulative and are not
exclusive
of any rights or remedies that they would otherwise
have.
No waiver of any provisions of this Agreement or
consent
to any departure by any Grantor therefrom shall in any
event be effective unless the same shall be permitted
by
paragraph (b) below, and then such waiver or consent
shall
be effective only in the specific instance and for the
purpose for which given. No notice or demand on any
Grantor in any case shall entitle such Grantor to any
other or further notice or demand in similar or other
circumstances.
(b) Neither this Agreement nor any provision
hereof
may be waived, amended or modified except pursuant to
a
written agreement entered into between the Grantors
and
the Collateral Agent, with the prior written consent
of
the Required Lenders.
SECTION 7.09. Waiver of Jury Trial. Each party
hereto
hereby waives, to the fullest extent permitted by
applicable law, any right it may have to a trial by
jury
in respect of any litigation directly or indirectly
arising out of, under or in connection with this
Agreement. Each party hereto (a) certifies that no
representative, agent or attorney of any other party
has
represented, expressly or otherwise, that such other
party
would not, in the event of litigation, seek to enforce
the
foregoing waiver and (b) acknowledges that it and the
other parties hereto have been induced to enter into
this
Agreement by, among other things, the mutual
waivers and certifications in this Section 7.09.
SECTION 7.10. Severability. In the event any one
or
more of the provisions contained in this Agreement or
in
any other Loan Document should be held invalid,
illegal or
unenforceable in any respect, the validity, legality
and
enforceability of the remaining provisions contained
herein and therein shall not in any way be affected or
impaired thereby (it being understood that the
invalidity
of a particular provision in a particular jurisdiction
shall not in and of itself affect the validity of such
provision in any other jurisdiction). The parties
shall
endeavor in good-faith negotiations to replace the
invalid, illegal or unenforceable provisions with
valid
provisions the economic effect of which comes as close
as
possible to that of the invalid, illegal or
unenforceable
provisions.
SECTION 7.11. Jurisdiction; Consent to Service
of
Process. (a) Each Grantor hereby irrevocably and
unconditionally submits, for itself and its property,
to
the nonexclusive jurisdiction of any New York State
court
or Federal court of the United States of America
sitting
in New York City, and any appellate court from any
thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan
Documents, or
for recognition or enforcement of any judgment, and
each
of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of
any
such action or proceeding may be heard and determined
in
such New York State or, to the extent permitted by
law, in
such Federal court. Each of the parties hereto agrees
that
a final judgment in any such action or proceeding
shall be
conclusive and may be enforced in other jurisdictions
by
suit on the judgment or in any other manner provided
by
law. Nothing in this Agreement shall affect any right
that
the Collateral Agent or any other Secured Party may
otherwise have to bring any action or proceeding
relating
to this Agreement or the other Loan Documents against
any
Grantor or its properties in the courts of any
jurisdiction.
(b) Each Grantor hereby irrevocably and
unconditionally waives, to the fullest extent it may
legally and effectively do so, any objection that it
may
now or hereafter have to the laying of venue of any
suit,
action or proceeding arising out of or relating to
this
Agreement or the other Loan Documents in any New York
State or Federal court. Each of the parties hereto
hereby
irrevocably waives, to the fullest extent permitted
by
law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such
court.
(c) Each party to this Agreement irrevocably
consents
to service of process in the manner provided for
notices in
Section 7.01. Nothing in this Agreement will affect
the
right of any party to this Agreement to serve process
in any
other manner permitted by law.
SECTION 7.12. Termination or Release. (a) This
Agreement and the Security Interest shall terminate
when all
the Obligations have been indefeasibly paid in full
and the
Lenders and the Swingline Lenders have no further
commitment
to lend under the Credit Agreement, the LC/BA Exposure
has
been reduced to zero and the Fronting Banks have no
further
obligation to issue Letters of Credit or to originate
Bankers' Acceptances under the Credit Agreement.
(b) Upon any sale or other transfer by any
Grantor of
any Collateral that is permitted under the Credit
Agreement,
or, upon the effectiveness of any written consent to
the
release of the Security Interest in any Collateral
pursuant
to Section 10.08 of the Credit Agreement, the Security
Interest in such Collateral shall be automatically
released.
(c) In connection with any termination or release
pursuant to paragraphs (a) and (b), the Collateral
Agent
shall execute and deliver to such Grantor, at such
Grantor's
expense, all Uniform Commercial Code termination
statements
and similar documents that such Grantor shall
reasonably
request to evidence such termination or release. Any
execution and delivery of termination statements or
documents pursuant to this Section 7.12 shall be
without
recourse to or warranty by the Collateral Agent.
SECTION 7.13. Counterparts. This Agreement may be
executed in two or more counterparts, each of which
shall
constitute an original, but all of which, when taken
together, shall constitute but one instrument, and
shall
become effective as provided in Section 7.04.
SECTION 7.14. Additional Grantors. Upon execution
and
delivery by the Collateral Agent and a subsidiary of
the
Borrower of an instrument in the form of Annex 3, such
subsidiary of the Borrower shall become a Grantor
hereunder
with the same force and effect as if originally named
as a
Grantor herein. The execution and delivery of such
instrument shall not require the consent of any
Grantor
hereunder. The rights and obligations of each Grantor
hereunder shall remain in full force and effect
notwithstanding the addition of any new Grantor as a
party
to this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement as of the day and year first
above
written.
ECKERD CORPORATION,
by
/s/ Martin W.
Gladysz
Name: Martin W.
Gladysz
Title: Vice
President
CLORWOOD
DISTRIBUTORS,
INC.,
by
/s/ Martin W.
Gladysz
Name: Martin W.
Gladysz
Title: Vice
President
ECKERD CONSUMER
PRODUCTS,
INC.,
by
/s/ Martin W.
Gladysz
Name: Martin W.
Gladysz
Title: Vice
President
ECKERD FLEET, INC.,
by
/s/ Martin W.
Gladysz
Name: Martin W.
Gladysz
Title: Vice
President
ECKERD HOLDINGS II,
INC.,
by
/s/ Martin W.
Gladysz
Name: Martin W.
Gladysz
Title: Vice
President
ECKERD'S WESTBANK,
INC.,
by
/s/ Martin W.
Gladysz
Name: Martin W.
Gladysz
Title: Vice
President
ECKERD TOBACCO
COMPANY,
INC.,
by
/s/ Martin W.
Gladysz
Name: Martin W.
Gladysz
Title: Vice
President
E.I.T., INC.,
by
/s/ Martin W.
Gladysz
Name: Martin W.
Gladysz
Title: Vice
President
INSTA-CARE HOLDINGS,
INC.,
by
/s/ Martin W.
Gladysz
Name: Martin W.
Gladysz
Title: Vice
President
INSTA-CARE PHARMACY
SERVICES CORPORATION,
by
/s/ Martin W.
Gladysz
Name: Martin W.
Gladysz
Title: Vice
President
P.C.V., INC.,
by
/s/ Martin W.
Gladysz
Name: Martin W.
Gladysz
Title: Vice
President
PHARMACY DYNAMICS
GROUP,
INC.,
by
/s/ Martin W.
Gladysz
Name: Martin W.
Gladysz
Title: Vice
President
CHEMICAL BANK, as
Collateral Agent,
by
/s/ Meredith
Vanden
Handel
Name: Meredith
Vanden
Handel
Title: Vice
President
Annex 1 to
the Security
Agreement
LOCKBOX AGREEMENT dated as of ________,
among
ECKERD CORPORATION, a Delaware corporation
(the
"Borrower"), each of the subsidiaries of the
Borrower party to the Security Agreement
referred
to below and listed on the signature pages
hereof
(together with the Borrower, individually a
"Grantor" and collectively the "Grantors"),
CHEMICAL BANK, a New York banking
corporation
("Chemical Bank"), as collateral agent (in
such
capacity, the "Collateral Agent") for the
Secured
Parties (such term, and each other
capitalized
term used but not defined herein, having the
meaning given it in the Security Agreement
referred to below) and [ ], a [
]
banking corporation (the "Sub-Agent").
A. The Grantors and the Collateral Agent
are
parties to a Security Agreement dated as of June 14,
1993,
as amended and restated as of August 3, 1994 (the
"Security
Agreement"). Pursuant to the terms of the Security
Agreement, each Grantor has granted to the Collateral
Agent,
for the benefit of the Secured Parties, a perfected
security
interest in such Grantor's Accounts Receivable (as
defined
in the Security Agreement) and other Collateral to
secure
the payment and performance of the Obligations and has
irrevocably appointed the Collateral Agent as its
agent to
collect amounts due in respect of Accounts Receivable
(as
defined in the Security Agreement), Inventory (as
defined in
the Security Agreement) and Third Party Receivables
(as
defined in the Security Agreement) (other than those
transferred pursuant to Permitted Receivables Purchase
Agreements) (as defined in the Security Agreement).
B. The Sub-Agent has agreed to act as
collection
sub-agent of the Collateral Agent to receive payments
on the
terms set forth herein.
NOW, THEREFORE, the parties hereto agree as
follows:
1. The Collateral Agent hereby appoints the
Sub-
Agent as its collection sub-agent under the Security
Agreement and authorizes the Sub-Agent, on the terms
and
subject to the conditions set forth herein, to receive
payments in respect of the Accounts Receivable,
Inventory
and Third Party Receivables (other than those
transferred
pursuant to Permitted Receivables Purchase
Agreements). The
Sub-Agent shall have no duty to obtain or read the
Security
Agreement, to know the definitions of terms defined
therein
or to comply with any provisions thereof (except to
the
extent expressly provided in this Agreement).
2. Contemporaneously with the execution and
delivery by the Sub-Agent of this Agreement, and for
the
purposes of this Agreement, the Sub-Agent shall
establish
and maintain deposit account number [ ]
(including
all subaccounts thereof) for the benefit of the
Collateral
Agent (such account being called the "Collection
Deposit
Account"). The Collection Deposit Account shall be
designated with the title "Chemical Bank, as
Collateral
Agent under the ECKERD Security Agreement dated as of
June
14, 1993, as amended and restated as of August 3,
1994" (or
a similar title). Subject to the Sub-Agent's Terms
for
Remittance Banking (Lockbox) Services attached hereto
as
Exhibit A, to the extent that the terms thereof relate
to
procedures or fees and to the extent not inconsistent
with
the terms hereof, all payments received by the
Sub-Agent in
Lockboxes Number [ ] and [ ] or
any
replacements in respect thereof (the "Lockboxes")
shall be
deposited in the Collection Deposit Account. All
funds at
any time on deposit in the Collection Deposit Account
shall
be held by the Sub-Agent for application in accordance
with
the terms of this Agreement. The Sub-Agent agrees to
give
the Collateral Agent prompt notice if the Collection
Deposit
Account shall become subject to any writ, judgment,
warrant
of attachment, execution or similar process, except as
may
be required by law. As security for the payment and
performance of the Obligations, each Grantor hereby
pledges,
assigns and transfers to the Collateral Agent, and
hereby
creates and grants to the Collateral Agent, a security
interest in the Collection Deposit Account and all
property
and assets held therein.
3. The Collateral Agent shall have the sole
right
of withdrawal over the Collection Deposit Account and
the
sole power to agree with the Sub-Agent as to
specifications
for Lockbox services; provided, however, that the
Collateral
Agent hereby authorizes the Sub-Agent to permit the
Grantors
to make withdrawals from the Collection Deposit
Account and
to agree with the Sub-Agent as to specifications for
Lockbox
services as they relate to procedures or fees, so long
as
the Sub-Agent has not received notice from the
Collateral
Agent pursuant to the next succeeding sentence or
paragraph
8 below. Upon receipt of written, telex or telephonic
notice (which, in the case of telephonic notice, shall
be
promptly confirmed in writing) from the Collateral
Agent so
directing the Sub-Agent at any time, which the
Collateral
Agent agrees will be given only during the existence
of a
Default or Event of Default, the Sub-Agent shall no
longer
permit withdrawals from the Collection Deposit Account
to be
made or new specifications for Lockbox services to be
implemented by the Grantors and, if so directed in
such
notice, shall (subject to the Sub-Agent's right to
request
that the Collateral Agent furnish, in form
satisfactory to
the Sub-Agent, signature cards and/or other
appropriate
documentation and/or that the Collateral Agent comply
with
other security procedures satisfactory to the
Sub-Agent)
promptly transmit to the Collateral Agent, at the
office
specified in such notice, all funds, if any, then on
deposit
in, or otherwise to the credit of, the Collection
Deposit
Account (provided that funds on deposit that are
subject to
collection may be transmitted promptly upon
availability for
withdrawal and that the Sub-Agent may retain a
reasonable
reserve in a separate deposit account with the
Sub-Agent for
unpaid and future fees and amounts which may be
subject to
collection). If so directed in such notice, the
Sub-Agent
shall deliver directly to the Collateral Agent at the
office
specified in such notice all checks, drafts and other
instruments for the payment of money received in the
Lockboxes and at the time in the possession of or
thereafter
received by the Sub-Agent without depositing such
checks,
drafts or other instruments in the Collection Deposit
Account or any other account, provided that the
Sub-Agent
may retain a reasonable reserve in a separate deposit
account with the SubAgent in respect of unpaid and
future
fees and amounts which may be subject to collection.
4. The Sub-Agent shall furnish the
Collateral
Agent with monthly statements setting forth the
amounts
deposited in and withdrawn from the Collection Deposit
Account and shall furnish such other information
relating to
the Collection Deposit Account at such times as shall
be
reasonably requested by the Collateral Agent.
5. The fees for the services of the
Sub-Agent
shall be mutually agreed upon between the Grantors and
the
Sub-Agent and shall be the joint and several
obligation of
the Grantors; provided, however, that, notwithstanding
the
terms of any agreement under which the Collection
Deposit
Account shall have been established with the
Sub-Agent, the
Grantor and the Sub-Agent agree not to terminate such
Collection Deposit Account for any reason (including,
without limitation, the failure of the Grantors to pay
such
fees) for so long as this Agreement shall remain in
effect
(it being understood that the foregoing shall not be
construed to prohibit the resignation of the Sub-Agent
in
accordance with paragraph 8 below). Neither the
Collateral
Agent nor the Secured Parties shall have any liability
for
the payment of any such fees.
6. The Sub-Agent may perform any of its
duties
hereunder by or through its agents, officers or
employees
and shall be entitled to rely upon the advice of
counsel as
to its duties. The Sub-Agent shall not be liable to
the
Collateral Agent or the Grantors for any action taken
or
omitted to be taken by it in good faith, nor shall the
Sub-
Agent be responsible to the Collateral Agent or the
Grantors
for the consequences of any oversight or error of
judgment
or be answerable to the Collateral Agent for the same
unless
such consequences shall occur through the Sub-Agent's
gross
negligence or wilful misconduct.
7. The Sub-Agent hereby represents and
warrants
that (a) it is a banking corporation duly organized,
validly
existing and in good standing under the laws of [
] and has full corporate power and authority under
such laws
to execute, deliver and perform its obligations under
this
Agreement and (b) the execution, delivery and
performance of
this Agreement by the Sub-Agent have been duly and
effectively authorized by all necessary corporate
action and
this Agreement has been duly executed and delivered by
the
Sub-Agent and constitutes a valid and binding
obligation of
the Sub-Agent enforceable in accordance with its
terms.
8. The Sub-Agent may resign at any time as
Sub-
Agent hereunder by delivery to the Collateral Agent of
written notice of resignation not less than thirty
days
prior to the effective date of such resignation. The
Sub-
Agent may be removed by the Collateral Agent at any
time,
with or without cause, by written, telex or telephonic
notice (which, in the case of telephonic notice, shall
be
promptly confirmed in writing) of removal delivered to
the
Sub-Agent. Upon receipt of such notice of removal, or
delivery of such notice of resignation, the Sub-Agent
(subject to the Sub-Agent's right to request that the
Collateral Agent furnish, in form satisfactory to the
Sub-
Agent, signature cards and/or other appropriate
documentation and/or that the Collateral Agent comply
with
other security procedures satisfactory to the
Sub-Agent)
will (a) promptly transmit to the Collateral Agent at
the
office specified in paragraph 11 (or such other office
as
the Collateral Agent shall specify) all funds, if any,
then
on deposit in, or otherwise to the credit of, the
Collection
Deposit Account (provided that funds on deposit that
are
subject to collection may be transmitted promptly upon
availability for withdrawal), (b) deliver directly to
the
Collateral Agent at the office specified in paragraph
11 (or
such other office as the Collateral Agent shall
specify) all
checks, drafts and other instruments for the payment
of
money received in the Lockboxes and in the possession
of the
Sub-Agent, without depositing such checks, drafts or
other
instruments in the Collection Deposit Account or any
other
account and (c) deliver any checks, drafts and other
instruments for the payment of money received in the
Lockboxes by the Sub-Agent after such notice, in
whatever
form received, directly to the Collateral Agent at the
office specified in paragraph 11 (or such other office
as
the Collateral Agent shall specify).
9. Each Grantor consents to the appointment
of
the Sub-Agent and agrees that it will not withdraw, or
request to withdraw, funds from the Lockboxes or the
Collection Deposit Account other than in accordance
with the
provisions of this Agreement, the Security Agreement
and the
other Loan Documents (as defined in the Security
Agreement).
Each Grantor agrees that the Sub-Agent shall incur no
liability to such Grantor as a result of any action
taken
pursuant to an instruction given by the Collateral
Agent in
accordance with the provisions of this Agreement.
Each
Grantor agrees to indemnify and defend the Sub-Agent
against
any loss, liability, claim or expense (including
reasonable
attorneys' fees) arising from the Sub-Agent's entry
into
this Agreement and actions taken hereunder, except to
the
extent resulting from the Sub-Agent's gross negligence
or
willful misconduct.
10. The term of this Agreement shall extend
from
the date hereof until the earlier of (a) the date on
which
the Sub-Agent has been notified in writing by the
Collateral
Agent that the Sub-Agent has no further duties under
this
Agreement and (b) the date of termination specified in
the
notice of removal given by the Collateral Agent, or
notice
of resignation given by the Sub-Agent, as the case may
be,
pursuant to paragraph 8. The obligations of the
Sub-Agent
contained in the last sentence of paragraph 8 and the
obligations of the Grantors contained in paragraphs 5,
9 and
14 shall survive the termination of this Agreement.
11. All notices and communications
hereunder
shall be in writing or by telex (except where
telephonic
instructions or notices are authorized herein) and
shall be
deemed to have been received and shall be effective on
the
day on which delivered (a) in the case of the
Collateral
Agent, to Chemical Bank, 270 Park Avenue, New York,
New York
10017, Attention of [ ], and (b) in the
case
of the Sub-Agent, addressed to [ ], Attention
of [
]. For purposes of this Agreement, any officer
of
the Collateral Agent shall be authorized to act, and
to give
instructions and notices, on behalf of the Collateral
Agent
hereunder.
12. The Sub-Agent will not assign or
transfer any
of its rights or obligations hereunder (other than to
the
Collateral Agent) without the prior written consent of
the
other parties hereto.
13. This Agreement may be amended only
by a
written instrument executed by the Collateral Agent,
the
Sub-Agent and the Grantors, acting by their
representative
officers thereunto duly authorized.
14. Except as otherwise provided in the
Credit
Agreement with respect to rights of setoff available
to the
Sub-Agent in its capacity as a Lender (if and so long
as the
Sub-Agent is a Lender thereunder), the Sub-Agent
hereby
irrevocably waives any right to set off against, or
otherwise deduct from, any funds held in the
Collection
Deposit Account any indebtedness or other claim owed
by the
Grantor to the Sub-Agent; provided, however, that this
paragraph shall not limit the ability of the SubAgent
to,
and the Sub-Agent may, (a) exercise any right to
setoff
against, or otherwise deduct from, any such funds to
the
extent necessary for the Sub-Agent to collect any fees
owed
to it by the Grantors in connection with the
Collection
Deposit Account, (b) charge back and net against the
Collection Deposit Account any returned or dishonored
items
or other adjustments in accordance with the
Sub-Agent's
usual practices and (c)(i) establish the reserves
contemplated in paragraph 3 in respect of unpaid and
future
fees and amounts which may be subject to collection
and (ii)
to transfer funds in respect of such reserves from the
Collection Deposit Account to the separate deposit
account
with the Sub-Agent as contemplated in paragraph 3.
15. This Agreement shall inure to the
benefit of
and be binding upon the Collateral Agent, the
Sub-Agent, the
Grantors and their respective permitted successors and
assigns.
16. This Agreement may be executed
simultaneously
in two or more counterparts, each of which shall be
deemed
an original but all of which together shall constitute
one
and the same instrument.
17. THIS AGREEMENT SHALL BE GOVERNED BY,
AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW
YORK.
18. The Sub-Agent shall be an independent
contractor. This Agreement does not give rise to any
partnership, joint venture or fiduciary relationship.
IN WITNESS WHEREOF, the parties hereto have
caused
this Agreement to be executed by their duly authorized
officers as of the day and year first above written.
ECKERD CORPORATION,
by
Name:
Title:
CLORWOOD DISTRIBUTORS, INC.,
by
Name:
Title:
ECKERD CONSUMER PRODUCTS, INC.,
by
Name:
Title:
ECKERD FLEET, INC.,
by
Name:
Title:
ECKERD HOLDINGS II, INC.,
by
Name:
Title:
ECKERD'S WESTBANK, INC.,
by
Name:
Title:
ECKERD TOBACCO COMPANY, INC.,
by
Name:
Title:
E.I.T., INC.,
by
Name:
Title
INSTA-CARE HOLDINGS, INC.,
by
Name:
Title:
INSTA-CARE PHARMACY SERVICES
CORPORATION,
by
Name:
Title:
P.C.V., INC.,
by
Name:
Title:
PHARMACY DYNAMICS GROUP, INC.,
by
Name:
Title:
CHEMICAL BANK, as Collateral
Agent,
by
Name:
Title:
[SUB-AGENT],
by
Name:
Title:
Annex 3 to
the Security
Agreement
SUPPLEMENT NO. dated as of
, to
the Security Agreement dated as of June 14,
1993,
as amended and restated as of August 3, 1994
(the
"Security Agreement"), among ECKERD
CORPORATION, a
Delaware corporation (the "Borrower"), each
of the
subsidiaries of the Borrower listed on the
signature pages thereof (individually, a
"Guarantor" and, collectively, the
"Guarantors";
the Guarantors, together with the Borrower,
are
referred to individually as a "Grantor" and
collectively as the "Grantors") and CHEMICAL
BANK,
a New York banking corporation ("Chemical
Bank"),
as collateral agent (the "Collateral Agent")
for
the Secured Parties (as defined in the
Security
Agreement).
A. Reference is made to the Credit
Agreement
dated as of June 14, 1993, as amended and restated as
of
August 3, 1994 (as amended or modified from time to
time,
the "Credit Agreement"), among the Borrower, the
financial
institutions party thereto, as lenders (the
"Lenders"),
Chemical Bank and NationsBank of Florida, N.A., a
national
banking association ("NationsBank"), as managing
agents and
as swingline lenders (in such latter capacity, each a
"Swingline Lender"), and Chemical Bank, as
administrative
agent (in such capacity, the "Administrative Agent")
for the
Lenders, the Swingline Lenders and the Fronting Banks.
B. Capitalized terms used herein and not
otherwise defined herein shall have the meanings
assigned to
such terms in the Security Agreement and the Credit
Agreement.
C. The Borrower and certain Subsidiaries of
the
Borrower have entered into the Security Agreement in
order
to induce the Lenders to make Loans, the Swingline
Lenders
to make Swingline Loans and the Fronting Banks to
issue
Letters of Credit and originate Bankers' Acceptances.
Pursuant to Section 6.10(b) of the Credit Agreement,
each
Subsidiary of the Borrower that was not in existence
or not
a Subsidiary of the Borrower on the date thereof or
that was
previously an Inactive Subsidiary is required to enter
into
the Security Agreement as a Grantor upon or, in the
case of
an Inactive Subsidiary, prior to becoming a
Subsidiary.
Section 7.14 of the Security Agreement provides that
additional subsidiaries of the Borrower may become
Grantors
under the Security Agreement by execution and delivery
of an
instrument in the form of this Supplement. The
undersigned
(the "New Grantor") is a subsidiary of the Borrower
and is
executing this Supplement in accordance with the
requirements of the Credit Agreement to become a
Grantor
under the Security Agreement in order to induce the
Lenders
to make additional Loans, the Swingline Lenders to
make
additional Swingline Loans and the Fronting Banks to
issue
additional Letters of Credit and originate additional
Bankers' Acceptances and as consideration for Loans
and
Swingline Loans previously made, Letters of Credit
previously issued and Bankers' Acceptances previously
originated.
Accordingly, the Collateral Agent and the
New
Grantor agree as follows:
SECTION 1. In accordance with Section 7.14
of the
Security Agreement, the New Grantor by its signature
below
becomes a Grantor under the Security Agreement with
the same
force and effect as if originally named therein as a
Grantor
and the New Grantor hereby agrees (a) to all the terms
and
provisions of the Security Agreement applicable to it
as a
Grantor thereunder and (b) represents and warrants
that the
representations and warranties made by it as a Grantor
thereunder are true and correct on and as of the date
hereof. In furtherance of the foregoing, the New
Grantor,
as security for the payment and performance in full of
the
Obligations, does hereby create and grant to the
Collateral
Agent, its successors and permitted assigns, for the
benefit
of the Secured Parties, their successors and permitted
assigns, a security interest in the Collateral (as
defined
in the Security Agreement) of the New Grantor. Each
reference to a "Grantor" in the Security Agreement
shall be
deemed to include the New Grantor. The Security
Agreement
is hereby incorporated herein by reference.
SECTION 2. The New Grantor represents and
warrants to the Collateral Agent and the other Secured
Parties that this Supplement has been duly authorized,
executed and delivered by it and constitutes its
legal,
valid and binding obligation, enforceable against it
in
accordance with its terms, except as the
enforceability
thereof may be limited by bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium or
other
similar laws affecting creditors' rights generally and
by
general principles of equity (regardless of whether
such
enforceability is considered in a proceeding at law or
in
equity).
SECTION 3. This Supplement may be executed
in two
or more counterparts, each of which shall constitute
an
original, but all of which, when taken together, shall
constitute but one instrument. This Supplement shall
become
effective when the Collateral Agent shall have
received
counterparts of this Supplement that, when taken
together,
bear the signatures of the New Grantor and the
Collateral
Agent.
SECTION 4. The New Grantor hereby
represents and
warrants that (a) set forth on Schedule I attached
hereto is
a true and correct schedule of the location of any and
all
Collateral of the New Grantor and (b) set forth under
its
signature hereto, is the true and correct location of
the
chief executive office of the New Grantor.
SECTION 5. Except as expressly supplemented
hereby, the Security Agreement shall remain in full
force
and effect.
SECTION 6. THIS SUPPLEMENT SHALL BE
GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF
NEW YORK.
SECTION 7. In case any one or more of the
provisions contained in this Supplement should be held
invalid, illegal or unenforceable in any respect,
neither
party hereto shall be required to comply with such
provision
for so long as such provision is held to be invalid,
illegal
or unenforceable, but the validity, legality and
enforceability of the remaining provisions contained
herein
and in the Security Agreement shall not in any way be
affected or impaired. The parties hereto shall
endeavor in
good-faith negotiations to replace the invalid,
illegal or
unenforceable provisions with valid provisions the
economic
effect of which comes as close as possible to that of
the
invalid, illegal or unenforceable provisions.
SECTION 8. All communications and notices
hereunder shall be in writing and given as provided in
Section 7.01 of the Security Agreement. All
communications
and notices hereunder to the New Grantor shall be
given to
it at the address set forth under its signature
hereto, with
a copy to the Borrower.
SECTION 9. The New Grantor agrees to
reimburse
the Collateral Agent for its reasonable out-of-pocket
expenses in connection with this Supplement, including
the
reasonable fees, other charges and disbursements of
counsel
for the Collateral Agent.
IN WITNESS WHEREOF, the New Grantor and the
Collateral Agent have duly executed this Supplement to
the
Security Agreement as of the day and year first above
written.
[NAME OF NEW GRANTOR],
by
Name:
Title:
Address:
CHEMICAL BANK, as Collateral
Agent,
by
Name:
Title:
TRADEMARK SECURITY AGREEMENT dated as of June 14,
1993, as amended and restated as of Augut 3, 1994,
among ECKERD CORPORATION, a Delaware corporation (the
Borrower ), each of the subsidiaries of the Borrower
listed on the signature pages hereof (individually, a
Guarantor and, collectively, the Guarantors ; the
Guarantors, together with the Borrower, are referred
to
individually as a Grantor and collectively as the
Grantors ) and CHEMICAL BANK, a New York banking
corporation ( Chemical Bank ), as collateral agent (in
such capacity, the Collateral Agent ) for the Secured
Parties (as defined herein).
Reference is made to the Credit Agreement dated as of
June 14, 1993, as amended and restated as of August 3, 1994
(as amended or modified from time to time, the Credit
Agreement ), among the Borrower, the financial institutions
party thereto, as lenders (the Lenders ), Chemical Bank
and
NationsBank of Florida, N.A., a national banking
association
( NationsBank ), as managing agents and as swingline
lenders
(in such latter capacity, each a Swingline Lender ), and
Chemical Bank, as administrative agent (in such capacity,
the Administrative Agent ) for the Lenders, the Swingline
Lenders and the Fronting Banks.
The Lenders and the Swingline Lenders have agreed to
make Loans and Swingline Loans, respectively, to the
Borrower, and the Fronting Banks have agreed to issue
Letters of Credit and to originate Bankers' Acceptances for
the account of the Borrower, pursuant to, and upon the
terms
and subject to the conditions specified in, the Credit
Agreement. Each of the Guarantors has agreed to guarantee,
among other things, all the obligations of the Borrower
under the Credit Agreement. The obligations of the Lenders
to make Loans, of the Swingline Lenders to make Swingline
Loans and of the Fronting Banks to issue Letters of Credit
and to originate Bankers' Acceptances are conditioned upon,
among other things, the execution and delivery by the
Grantors of a trademark security agreement in the form
hereof to secure (a) the due and punctual payment of (i)
the
principal of and premium, if any, and interest (including
interest accruing during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding,
regardless of whether allowed or allowable in such
proceeding) on the Loans and the Swingline Loans, when and
as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise, (ii) each
payment required to be made by the Borrower under the
Credit
Agreement in respect of any Letter of Credit or Bankers'
Acceptance, when and as due, including payments in respect
of reimbursement of disbursements, interest thereon and
obligations to provide cash collateral and (iii) all other
monetary obligations, including fees, costs, expenses and
indemnities, whether primary, secondary, direct,
contingent,
fixed or otherwise (including monetary obligations incurred
during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding), of the
Borrower to the Secured Parties under the Credit Agreement
and the other Loan Documents to which the Borrower is or is
to be a party, (b) the due and punctual performance of all
covenants, agreements, obligations and liabilities of the
Borrower under or pursuant to the Credit Agreement and the
other Loan Documents and (c) unless otherwise agreed upon
in
writing by the applicable Lender, all obligations of the
Borrower, monetary or otherwise, under each Rate Protection
Agreement entered into with any Lender, whether pursuant to
Section 6.11 of the Credit Agreement or otherwise (all the
obligations referred to in this clause (c) and in the
preceding clauses (a) and (b) being referred to
collectively
as the Obligations ).
Accordingly, the Grantors and the Collateral Agent, on
behalf of itself and each other Secured Party (and each of
their successors or assigns), hereby agree as follows:
SECTION 1. Definition of Terms Used Herein. All
capitalized terms used but not defined herein shall have
the
meanings set forth in the Credit Agreement.
SECTION 2. Definition of Certain Terms Used Herein. As
used herein, the following terms shall have the following
meanings:
Collateral shall mean all the following, whether now
owned or hereafter acquired by any Grantor: (a) Trademark
Licenses, (b) Trademarks, including registrations,
recordings and applications listed on Schedule I attached
hereto and (c) all products and Proceeds (including
insurance proceeds) of, and additions, improvements and
accessions to, and books and records describing or used in
connection with, any and all the property described above.
Proceeds shall mean any consideration received from
the sale, exchange or other disposition of any asset or
property that constitutes Collateral, any value received as
a consequence of the possession of any Collateral and any
payment received from any insurer or other person or entity
as a result of the destruction, loss, theft, damage or
other
involuntary conversion of whatever nature of any asset or
property that constitutes Collateral, any claims of either
Grantor against third parties for past, current or future
infringement or dilution of any Trademark or Trademark
License or for injury to the goodwill associated with any
Trademark or Trademark licensed under any Trademark License
and any and all other amounts from time to time paid or
payable under or in connection with any of the Collateral.
Secured Parties shall mean (a) the Lenders, (b) the
Fronting Banks, (c) the Administrative Agent, (d) the
Collateral Agent, (e) the Swingline Lenders and (f) the
successors and assigns of each of the foregoing.
Trademark Licenses shall mean any written agreement
granting to any third party any right to use any Trademark
now or hereafter owned by any Grantor, or granting to any
Grantor any right to use any Trademark now or hereafter
owned by any third party, except for any agreement that by
its terms prohibits the assignment or grant of security
interests therein.
Trademarks shall mean all of the following now or
hereafter owned: (a) all trademarks, service marks, trade
names, corporate names, company names, business names,
fictitious business names, trade styles, logos, other
source
or business identifiers, designs and general intangibles of
like nature, now existing or hereafter adopted or acquired,
all registrations and recordings thereof, and all
applications in connection therewith, including
registrations, recordings and applications in the United
States Patent and Trademark Office, any State of the United
States or any other country or any political subdivision
thereof, (b) all goodwill of the business symbolized by
and/or associated therewith and (c) all extensions or
renewals thereof.
SECTION 3. Rule of Interpretation. The rules of
interpretation specified in Section 1.02 of the Credit
Agreement shall be applicable to this Agreement.
SECTION 4. Security Interest. As security for the
payment or performance, as the case may be, of the
Obligations, each Grantor hereby bargains, sells, conveys,
assigns, sets over, mortgages, pledges, hypothecates and
transfers to the Collateral Agent, its successors and its
assigns, for the ratable benefit of the Secured Parties,
and
hereby grants to the Collateral Agent, its successors and
assigns, for the benefit of the Secured Parties, a security
interest in, all of such Grantor's right, title and
interest
in, to and under the Collateral (the Security Interest ).
Without limiting the foregoing, the Collateral Agent is
hereby authorized to file one or more financing statements,
continuation statements, filings with the United States
Patent and Trademark Office, or other documents for the
purpose of perfecting, confirming, continuing, enforcing or
protecting the Security Interest without the signature of
each Grantor, naming any Grantor or the Grantors as debtors
and the Collateral Agent as secured party.
Each Grantor agrees at all times to keep such accurate
and complete accounting records with respect to the
Collateral as are consistent with its current practices and
in accordance with such prudent and standard practices used
in industries that are the same as or similar to those in
which such Grantor is engaged.
SECTION 5. Further Assurances. Each Grantor agrees, at
its expense, to execute, acknowledge, deliver and cause to
be duly filed all such further instruments and documents
and
take all such actions as the Collateral Agent may from time
to time reasonably request for the better assuring and
preserving of the Security Interest and the rights and
remedies created hereby, including the payment of any fees
and taxes required in connection with the execution and
delivery of this Agreement, the granting of the Security
Interest created hereby and the filing of any financing
statements or other documents (including filings with the
United States Patent and Trademark Office) in connection
herewith, and the execution and delivery of any document
required to supplement this Agreement with respect to any
Trademarks acquired, registered or issued after the date
hereof. If any amount payable under or in connection with
any of the Collateral shall be or become evidenced by any
promissory note or other instrument, such note or
instrument
shall (to the extent not previously pledged and delivered
pursuant to the Pledge Agreement) be immediately pledged
and
delivered to the Collateral Agent, duly endorsed in a
manner
reasonably satisfactory to the Collateral Agent.
SECTION 6. Inspection and Verification. The Collateral
Agent and such persons as the Collateral Agent may
reasonably designate shall have the right, at any
reasonable
time or times, upon reasonable notice and at such Grantor's
own cost and expense, to inspect the Collateral, all
records
related thereto (and to make extracts and copies from such
records) and the premises upon which any of the Collateral
is located, to discuss any Grantor's affairs with the
officers of such Grantor and its independent accountants
and
to verify under reasonable procedures the validity, amount,
quality, quantity, value, conditions and status of, or any
other matter relating to, the Collateral, including, in the
case of Collateral in the possession of any third party, by
contacting such person possessing such Collateral for the
purpose of making such a verification. The Collateral Agent
shall have the absolute right to share any information it
gains from such inspection or verification with any other
Secured Party (it being understood that any such
information
shall be deemed to be Information subject to the
provisions of Section 10.15 of the Credit Agreement).
SECTION 7. Taxes; Encumbrances. At its option, the
Collateral Agent may discharge past due taxes, assessments,
charges, fees, liens, security interests or other
encumbrances at any time levied or placed on the Collateral
other than as the same may be permitted under the Loan
Documents, and may pay for the maintenance and preservation
of the Collateral to the extent any Grantor fails to do so
as required by this Agreement or the other Loan Documents,
and such Grantor agrees to reimburse the Collateral Agent
on
demand for any payment made or any reasonable and
documented
expense incurred by it pursuant to the foregoing
authorization; provided, however, that nothing in this
Section 7 shall be interpreted as excusing any Grantor from
the performance of, or imposing any obligation on the
Collateral Agent or any other Secured Party to cure or
perform, any covenants or other promises of the Grantors
with respect to taxes, assessments, charges, fees, liens,
security interests or other encumbrances and maintenance as
set forth herein or in the other Loan Documents.
SECTION 8. Representations and Warranties. The
Grantors
jointly and severally represent, warrant and covenant to
and
with the Collateral Agent and each other Secured Party
that:
(a) Title and Authority. Each Grantor has rights
in such Collateral and good title to the United States
registrations of the Trademarks shown on Schedule I
with respect to which it has purported to grant the
Security Interest hereunder and has full corporate
power and authority to grant to the Collateral Agent
the Security Interest in such Collateral pursuant
hereto and to execute, deliver and perform its
obligations in accordance with the terms of this
Agreement, without the consent or approval of any
other
person other than any consent or approval that has
been
obtained.
(b) Filings. Fully executed Uniform Commercial
Code financing statements containing a description of
the Collateral have been delivered to the Collateral
Agent for filing in every governmental, municipal or
other office in every jurisdiction in which any
portion
of the Collateral is located necessary to establish a
valid and perfected security interest in favor of the
Collateral Agent in respect of the Collateral in which
a security interest may be perfected by filing in the
United States and its territories and possessions, and
no further or subsequent filing, refiling, recording,
rerecording, registration or reregistration is
necessary in any such jurisdiction, except as provided
under applicable law with respect to the filing of
continuation statements and except to record notice of
the Security Interest with the United States Patent
and
Trademark Office with respect to applications for
registration and registrations of such Trademarks that
are filed or acquired after the date hereof.
(c) Validity of Security Interest. The Security
Interest constitutes a valid and, upon the filing of
the Uniform Commercial Code financing statements
referred to in paragraph (b) above and upon filing
financing statements and filings with the United
States
Patent and Trademark Office and appropriate state
offices with respect to state registered trademarks,
perfected first priority security interest in all such
Collateral in which a security interest may be
perfected by filing in the United States and its
territories and possessions, provided that recordation
of the Security Interest in the United States Patent
and Trademark Office may be required with respect to
Trademarks acquired by the Debtor after the date
hereof.
(d) Information Regarding Names and Locations.
Each Grantor has disclosed in writing to the
Collateral
Agent on Schedule II the material trade names used to
identify it in its business or in the ownership of its
properties.
(e) Absence of Other Liens. Such Collateral is
owned by the Grantors free and clear of any Lien of
any
nature whatsoever (except for Liens expressly
permitted
by Section 7.02 of the Credit Agreement or hereby and
any liens or licenses listed on Schedule III). None of
the Grantors has filed a financing statement under the
Uniform Commercial Code covering any such Collateral
used in the United States, nor has any Grantor filed
any assignment in which it assigns such Collateral,
any
security agreement or any similar instrument covering
such Collateral with the United States Patent and
Trademark Office, other than as contemplated hereby,
which financing statement, assignment, security
agreement or similar instrument is still in effect.
(f) Licenses. On the date hereof, there is no
default by any Licensee under the Trademark Licenses
listed on Schedule III hereto.
SECTION 9. Covenants Regarding Trademark
Collateral.
(a) Each Grantor (either itself or through licensees) will,
for each Trademark material to the conduct of such
Grantor's
business, (i) to the extent consistent with past practice,
continue to use such Trademark currently in use on each and
every trademark class of goods applicable to its current
line of products and/or services as currently reflected in
order to maintain such Trademark in full force free from
any
claim of abandonment for nonuse, provided that such Grantor
may modify or abandon its logos, change advertising
campaign
slogans and discontinue or abandon the use of any
Trademark,
in each case consistent with its ordinary business
practice,
(ii) maintain as in the past (or as future business
requirements may dictate) the quality of products and
services offered under such Trademark, (iii) with respect
to
Trademarks used in the United States or as otherwise
required by law, employ such Trademark with the notice of
Federal registration as the case may be, except where the
failure to do so would not materially impair such Grantor's
rights to or in such Trademark, (iv) not knowingly use such
Trademark in violation of any third party rights (which
shall not be construed to include any of the liens listed
on
Schedule III) and (v) not (and not knowingly permit any
licensee or sub-licensee thereof to) do any act or omit to
do any act whereby such Trademark may become or be deemed
to
have been abandoned or invalidated except as provided in
the
proviso to clause (i) above.
(b) Each Grantor shall notify the Collateral Agent
immediately if it knows or has reason to know that any
Trademark material to the conduct of its business may
become
abandoned or dedicated to the public, or of any adverse
determination or development (including the institution of,
or any such determination or development in, any proceeding
in the United States Patent and Trademark Office or any
court) regarding the Grantor's ownership of any such
material Trademark, its right to register the same, or to
keep and maintain the same.
(c) In no event shall any Grantor, either itself or
through any agent, employee, licensee or designee, file an
application for any Trademark material to the conduct of
its
business with the United States Patent and Trademark Office
or any similar office or agency in any other country or any
political subdivision thereof, unless it promptly informs
the Collateral Agent and, upon request of the Collateral
Agent, executes and delivers to the Collateral Agent any
and
all agreements, instruments, documents and papers as the
Collateral Agent may reasonably request to evidence and, in
the case of applications for Trademarks with the United
States Patent and Trademark Office, perfect the Collateral
Agent's security interest in such Trademark and the
goodwill
and general intangibles of such Grantor relating thereto or
represented thereby.
(d) Each Grantor will take all necessary steps (except
as provided in Section 9(a)(i)) that are consistent with
the
practice in any proceeding before the United States Patent
and Trademark Office or any similar office or agency in any
other country or any political subdivision thereof, to
maintain and pursue each material application relating to
the Trademarks material to the conduct of its business (and
to obtain the relevant grant or registration) and to
maintain each material registration of the Trademarks that
is material to the conduct of such Grantor's business,
including, filing of applications for renewal, affidavits
of
use, affidavits of incontestability and maintenance fees,
and, if consistent with good business judgment of such
Grantor, to initiate opposition, interference and
cancellation proceedings against third parties.
(e) In the event that any Collateral consisting of a
Trademark material to the conduct of such Grantor's
business
is believed by such Grantor to have been infringed,
misappropriated or diluted by a third party in a manner
that
materially impairs such Grantor's rights in and to the
Trademarks, such Grantor shall notify the Collateral Agent
within 15 days after it learns thereof and shall, if
consistent with good business judgment or, if reasonably
requested by the Collateral Agent, promptly sue for
infringement, misappropriation or dilution and to recover
any and all damages for such infringement, misappropriation
or dilution, or take such other actions as are appropriate
under the circumstances to protect such Collateral.
SECTION 10. Protection of Security. Each Grantor
shall,
at its own cost and expense, take any and all actions
necessary to defend title to the Collateral that is
material
to the conduct of its business against all persons and to
defend the Security Interest of the Collateral Agent in the
Collateral and the priority thereof, against any adverse
Lien not permitted under the Credit Agreement.
SECTION 11. Continuing Obligations of the Grantors.
Each Grantor shall remain liable to observe and perform all
the conditions and obligations to be observed and performed
by it under each contract, agreement, interest or
obligation
relating to the Collateral, all in accordance with the
terms
and conditions thereof, and shall indemnify and hold
harmless the Collateral Agent and the other Secured Parties
and each of them severally, from any and all such
liabilities.
SECTION 12. Grant of License To Use Trademark
Collateral. For the purpose of enabling the Collateral
Agent
to exercise rights and remedies under Sections 14 and 15
hereof at such time as the Collateral Agent shall be
lawfully entitled to exercise such rights and remedies,
each
Grantor hereby grants to the Collateral Agent an
irrevocable, non-exclusive license (exercisable without
payment of royalty or other compensation to such Grantor)
to
use, license or sub-license any Trademark now owned or
hereafter acquired by such Grantor to the extent of the
interest of such Grantor therein at such time, and wherever
the same may be located, and including in such license
reasonable access to all media in which any of the licensed
items may be recorded or stored and to all computer
software
and programs used for the compilation or printout thereof.
The use of such license by the Collateral Agent shall be
exercised, at the option of the Collateral Agent, upon the
occurrence and during the continuation of an Event of
Default, provided that any license, sub-license or other
transaction entered into by the Collateral Agent in
accordance herewith shall be binding upon the Grantors
notwithstanding any subsequent cure of an Event of Default.
The Collateral Agent agrees to apply the net proceeds
received from any license towards payment of the
Obligations
as set forth in Section 15. In operating under the license
granted by each Grantor pursuant to this Section 12, the
Collateral Agent agrees that the goods sold and services
rendered under the Trademarks shall be of a nature and
quality substantially consistent with those theretofore
offered under such Trademarks by such Grantor and such
Grantor shall have the right to inspect during the term of
such license, at any reasonable time or times upon
reasonable notice to the Collateral Agent and at such
Grantor's own cost and expense, representative samples of
goods sold and services rendered under the Trademarks.
SECTION 13. Power of Attorney. The Collateral Agent is
hereby appointed by the Grantors, as the true and lawful
agent and attorney in fact of each Grantor, and in such
capacity the Collateral Agent shall have the right, with
power of substitution for each Grantor and in each
Grantor's
name or otherwise, for the use and benefit of the
Collateral
Agent and the other Secured Parties, upon the occurrence
and
during the continuance of an Event of Default, (a) to
receive, endorse, assign and/or deliver any and all notes,
acceptances, checks, drafts, money orders or other
evidences
of payment relating to the Collateral or any part thereof;
(b) to demand, collect, receive payment of, give receipt
for
and give discharges and releases of all or any of the
Collateral; (c) to sign the name of any Grantor on any
invoice or bill of lading relating to any of the
Collateral;
(d) to commence and prosecute any and all suits, actions or
proceedings at law or in equity in any court of competent
jurisdiction to collect or otherwise realize on all or any
of the Collateral or to enforce any rights in respect of
any
Collateral; (e) to settle, compromise, compound, adjust or
defend any actions, suits or proceedings relating to or
pertaining to all or any of the Collateral; and (f) to use,
sell, assign, transfer, pledge, make any agreement with
respect to or otherwise deal with all or any of the
Collateral and to do all other acts and things necessary to
carry out the purposes of this Agreement, as fully and
completely as though the Collateral Agent were the absolute
owner of the Collateral for all purposes; provided,
however,
that nothing herein contained shall be construed as
requiring or obligating the Collateral Agent or any other
Secured Party to make any commitment or to make any inquiry
as to the nature or sufficiency of any payment received by
the Collateral Agent or any other Secured Party, or to
present or file any claim or notice, or to take any action
with respect to the Collateral or any part thereof or the
moneys due or to become due in respect thereof or any
property covered thereby. The Collateral Agent and the
other
Secured Parties shall be accountable only for amounts
actually received as a result of the exercise of the powers
granted to them herein, and neither they nor their
officers,
directors, employees or agents shall be responsible to any
Grantor for any act or failure to act hereunder, except for
their own gross negligence or willful misconduct. It is
understood and agreed that the appointment of the
Collateral
Agent as the agent of each Grantor for the purposes set
forth above in this Section 13 is coupled with an interest
and is irrevocable. The provisions of this Section 13 shall
in no event relieve any Grantor of any of its obligations
hereunder or under any other Loan Document with respect to
the Collateral or any part thereof or impose any obligation
on the Collateral Agent or any other Secured Party to
proceed in any particular manner with respect to the
Collateral or any part thereof, or in any way limit the
exercise by the Collateral Agent or any other Secured Party
of any other or further right that it may have on the date
of this Agreement or hereafter, whether hereunder, under
any
other Loan Document, by law or otherwise. Any sale pursuant
to the provisions of this Section 13 shall be deemed to
conform to the commercially reasonable standards as
provided
in Section 9-504(3) of the Uniform Commercial Code as in
effect in the State of New York as its equivalent in other
jurisdictions.
SECTION 14. Remedies upon Default. Upon the occurrence
and during the continuance of an Event of Default, each
Grantor agrees to deliver each item of Collateral to the
Collateral Agent on demand, and it is agreed that the
Collateral Agent shall have the right to take any or all of
the following actions at the same or different times: with
or without legal process and with or without previous
notice
or demand for performance, to take possession of the
Collateral and without liability for trespass to enter any
premises where the Collateral may be located for the
purpose
of taking possession of or removing the Collateral and,
generally, to exercise any and all rights afforded to a
secured party under the Uniform Commercial Code or other
applicable law. Without limiting the generality of the
foregoing, each Grantor agrees that the Collateral Agent
shall have the right, subject to the mandatory requirements
of applicable law, to sell or otherwise dispose of all or
any part of the Collateral, at public or private sale or at
any broker's board or on any securities exchange, for cash,
upon credit or for future delivery as the Collateral Agent
shall deem appropriate. The Collateral Agent shall be
authorized at any such sale (if it deems it advisable to do
so) to restrict the prospective bidders or purchasers to
persons who will represent and agree that they are
purchasing the Collateral for their own account for
investment and not with a view to the distribution or sale
thereof, and upon consummation of any such sale the
Collateral Agent shall have the right to assign, transfer
and deliver to the purchaser or purchasers thereof the
Collateral so sold. Each such purchaser at any such sale
shall hold the property sold absolutely, free from any
claim
or right on the part of any Grantor, and such Grantor
hereby
waives (to the fullest extent permitted by applicable law)
all rights of redemption, stay and appraisal which such
Grantor now has or may at any time in the future have under
any rule of law or statute now existing or hereafter
enacted.
The Collateral Agent shall give the Grantors 10 days'
prior written notice (which each Grantor agrees is
reasonable notice within the meaning of Section 9-504(3) of
the Uniform Commercial Code as in effect in the State of
New
York or its equivalent in other jurisdictions) of the
Collateral Agent's intention to make any sale of
Collateral.
Such notice, in the case of a public sale, shall state the
time and place for such sale and, in the case of a sale at
a
broker's board or on a securities exchange, shall state the
board or exchange at which such sale is to be made and the
day on which the Collateral, or portion thereof, will first
be offered for sale at such board or exchange. Any such
public sale shall be held at such time or times within
ordinary business hours and at such place or places as the
Collateral Agent may fix and state in the notice (if any)
of
such sale. At any such sale, the Collateral, or portion
thereof, to be sold may be sold in one lot as an entirety
or
in separate parcels, as the Collateral Agent may (in its
sole and absolute discretion) determine. The Collateral
Agent shall not be obligated to make any sale of any
Collateral if it shall determine not to do so, regardless
of
the fact that notice of sale of such Collateral shall have
been given. The Collateral Agent may, without notice or
publication, adjourn any public or private sale or cause
the
same to be adjourned from time to time by announcement at
the time and place fixed for sale, and such sale may,
without further notice, be made at the time and place to
which the same was so adjourned. In case any sale of all or
any part of the Collateral is made on credit or for future
delivery, the Collateral so sold may be retained by the
Collateral Agent until the sale price is paid by the
purchaser or purchasers thereof, but the Collateral Agent
shall not incur any liability in case any such purchaser or
purchasers shall fail to take up and pay for the Collateral
so sold and, in case of any such failure, such Collateral
may be sold again upon like notice. At any public sale made
pursuant to this Section 14, any Secured Party may bid for
or purchase, free from any right of redemption, stay,
valuation or appraisal on the part of any Grantor (all said
rights being also hereby waived and released to the fullest
extent permitted by applicable law), the Collateral or any
part thereof offered for sale and may make payment on
account thereof by using any claim then due and payable to
such Secured Party from any Grantor as a credit against the
purchase price, and it may, upon compliance with the terms
of sale, hold, retain and dispose of such property without
further accountability to such Grantor therefor. For
purposes hereof, (a) a written agreement to purchase the
Collateral or any portion thereof shall be treated as a
sale
thereof, (b) the Collateral Agent shall be free to carry
out
such sale pursuant to such agreement and (c) no Grantor
shall be entitled to the return of the Collateral or any
portion thereof subject thereto, notwithstanding the fact
that after the Collateral Agent shall have entered into
such
an agreement all Events of Default shall have been remedied
and the Obligations paid in full. As an alternative to
exercising the power of sale herein conferred upon it, the
Collateral Agent may proceed by a suit or suits at law or
in
equity to foreclose this Agreement and to sell the
Collateral or any portion thereof pursuant to a judgment or
decree of a court or courts having competent jurisdiction
or
pursuant to a proceeding by a court-appointed receiver. Any
sale pursuant to the provisions of this Section 14 shall be
deemed to conform to the commercially reasonable standards
as provided in Section 9-504(3) of the Uniform Commercial
Code as in effect in the State of New York or its
equivalent
in other jurisdictions.
SECTION 15. Application of Proceeds of Sale. The
proceeds of any sale of Collateral pursuant to Section 15,
as well as any Collateral consisting of cash, shall be
applied by the Collateral Agent as follows:
FIRST, to the payment of all costs and expenses
incurred by or the Collateral Agent in connection with
such sale or otherwise in connection with this
Agreement, any other Loan Document or any of the
Obligations, including all court costs and the
reasonable and documented fees, other charges and
disbursements of its agents and legal counsel, the
repayment of all advances made by the Collateral Agent
hereunder or under any other Loan Document on behalf
of
any of the Grantors and any other costs or expenses
incurred in connection with the exercise of any right
or remedy hereunder or thereunder;
SECOND, to the payment in full of the Obligations
owed to the Lenders, the Swingline Lenders and the
Fronting Banks in respect of the Loans and the
Swingline Loans made by them and outstanding and the
amounts owing in respect of any LC Disbursement or BA
Disbursement or under any Rate Protection Agreement
entered into with any Lender pursuant to Section 6.11
of the Credit Agreement, pro rata as among the
Lenders,
the Swingline Lenders and the Fronting Banks in
accordance with the amount of such Obligations owed to
them;
THIRD, to the payment and discharge in full of
the
Obligations (other than those referred to above) pro
rata as among the Secured Parties in accordance with
the amount of such Obligations owed to them; and
FOURTH, to the Grantors, their successors or
assigns, or as a court of competent jurisdiction may
otherwise direct.
The Collateral Agent shall have absolute discretion as to
the time of application of any such proceeds, moneys or
balances in accordance with this Agreement. Upon any sale
of
the Collateral by the Collateral Agent (including pursuant
to a power of sale granted by statute or under a judicial
proceeding), the receipt of the Collateral Agent or of the
officer making the sale shall be a sufficient discharge to
the purchaser or purchasers of the Collateral so sold and
such purchaser or purchasers shall not be obligated to see
to the application of any part of the purchase money paid
over to the Collateral Agent or such officer or be
answerable in any way for the misapplication thereof.
SECTION 16. Locations of Collateral; Place of
Business.
(a) Each Grantor agrees, at such time or times as the
Collateral Agent may reasonably request, promptly to
prepare
and deliver to the Collateral Agent a duly certified
schedule or schedules in form reasonably satisfactory to
the
Collateral Agent, showing the identity, amount and location
of any and all material Collateral.
(b) Each Grantor agrees not to change, or permit to be
changed, the location of its chief executive office or the
name or names used to identify it in its business or in the
ownership of its properties unless all filings under the
Uniform Commercial Code or otherwise that are required by
the Credit Agreement to be made have been made and the
Collateral Agent has a valid, legal and perfected security
interest in the Collateral subject to no liens, other than
liens permitted by Section 7.02 of the Credit Agreement and
any liens or licenses listed on Schedule III.
SECTION 17. Notices. All communications and notices
hereunder shall be in writing and given as provided in
Section 10.01 of the Credit Agreement. All communications
and notices hereunder to any Grantor shall be given to it
at
the address set forth on Schedule IV hereto.
SECTION 18. Security Interest Absolute. All rights of
the Collateral Agent hereunder, the security interests
granted hereunder and all obligations of the Grantors
hereunder shall be absolute and unconditional irrespective
of (a) any lack of validity or enforceability of the Credit
Agreement, any other Loan Document, any agreement with
respect to any of the Obligations or any other agreement or
instrument relating to any of the foregoing, (b) any change
in the time, manner or place of payment of, or in any other
term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to any departure from
the Credit Agreement, any other Loan Document or any other
agreement or instrument, (c) any exchange, release or non
perfection of any Lien on other Collateral, or any release
or amendment or waiver of or consent under or departure
from
any guarantee, securing or guaranteeing all or any of the
Obligations or (d) any other circumstance that might
otherwise constitute a defense available to, or a discharge
of, any Grantor in respect of the Obligations or this
Agreement (other than the indefeasible payment in full of
all the Obligations).
SECTION 19. Survival of Agreement. All covenants,
agreements, representations and warranties made by the
Grantors herein and in the certificates or other
instruments
prepared or delivered in connection with or pursuant to
this
Agreement or any other Loan Document shall be considered to
have been relied upon by the Collateral Agent and the other
Secured Parties and shall survive the making by the Lenders
of the Loans, the making by the Swingline Lenders of the
Swingline Loans and the issuance of the Letters of Credit
and the origination of Bankers' Acceptances by the Fronting
Banks, and the execution and delivery to the Lenders and
the
Swingline Lenders of the Notes evidencing such loans,
regardless of any investigation made by the Secured Parties
or on their behalf, and shall continue in full force and
effect as long as the principal of or any accrued interest
on any Loan or Swingline Loan or any other fee or amount
payable under any this Agreement or any other Loan Document
is outstanding and unpaid or the LC/BA Exposure does not
equal zero and as long as the Commitments and the LC/BA
Commitment have not been terminated.
SECTION 20. Binding Agreement; Assignments. This
Agreement shall become effective as to any Grantor when a
counterpart hereof executed on behalf of such Grantor shall
have been delivered to the Collateral Agent and a
counterpart hereof shall have been executed on behalf of
the
Collateral Agent, and thereafter shall be binding upon such
Grantor and the Collateral Agent and their respective
successors and assigns, and shall inure to the benefit of
such Grantors, the Collateral Agent and the other Secured
Parties, and their respective successors and assigns,
except
that no Grantor shall have the right to assign its rights
hereunder or any interest herein or in the Collateral (and
any such attempted assignment shall be void), except as
expressly contemplated by this Agreement or the other Loan
Documents.
SECTION 21. Successors and Assigns. Whenever in this
Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the successors and
assigns of such party; and all covenants, promises and
agreements by or on behalf of any Grantor or the Collateral
Agent that are contained in this Agreement shall bind and
inure to the benefit of their respective successors and
assigns.
SECTION 22. Reimbursement of Collateral Agent. (a) The
Grantors jointly and severally agree to pay upon demand to
the Collateral Agent the amount of any and all reasonable
and documented expenses and its fully allocated internal
costs, including the reasonable and documented fees and
expenses of its counsel and of any experts or agents, that
the Collateral Agent may incur in connection with (i) the
administration of this Agreement, (ii) the custody or
preservation of, or the sale of, collection from or other
realization upon any of the Collateral, (iii) the exercise,
enforcement or protection of any of the rights of the
Collateral Agent hereunder or (iv) the failure of any
Grantor to perform or observe any of the provisions hereof.
If the Grantors shall fail to do any act or thing that they
have covenanted to do hereunder or any representation or
warranty of the Grantors hereunder shall be breached, the
Collateral Agent may (but shall not be obligated to) do the
same or cause it to be done or remedy any such breach and
there shall be added to the Obligations the cost or expense
incurred by the Collateral Agent in so doing.
(b) Without limitation of their indemnification
obligations under the other Documents, the Grantors jointly
and severally agree to indemnify the Collateral Agent and
the Indemnitees against, and hold each of them harmless
from, any and all losses, claims, damages, liabilities and
related expenses, including reasonable counsel fees and
expenses, incurred by or asserted against any of them
arising out of, in any way connected with, or as a result
of, the execution, delivery or performance of this
Agreement
or any claim, litigation, investigation or proceeding
relating hereto or to the Collateral, whether or not any
Indemnitee is a party thereto, provided that such indemnity
shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related
expenses have resulted from the gross negligence or wilful
misconduct of such Indemnitee.
(c) Any amounts payable as provided hereunder shall be
additional Obligations secured hereby and by the other
Security Documents. The provisions of this Section 22 shall
remain operative and in full force and effect regardless of
the termination of this Agreement, the consummation of the
transactions contemplated hereby, the repayment of any of
the Obligations, the invalidity or unenforceability of any
term or provision of this Agreement or any other Loan
Document or any investigation made by or on behalf of the
Collateral Agent or any other Secured Party. All amounts
due
under this Section 22 shall be payable on written demand
therefor and shall bear interest at the Default Rate (as
defined in the Credit Agreement).
SECTION 23. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT FEDERAL
LAW
OR LAWS OF ANOTHER STATE MAY APPLY TO THE TRADEMARKS.
SECTION 24. Waivers; Amendment. (a) No failure or
delay
of the Collateral Agent in exercising any power or right
hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such
a
right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The
rights and remedies of the Collateral Agent hereunder and
of
the other Secured Parties under the other Loan Documents
are
cumulative and are not exclusive of any rights or remedies
that they would otherwise have. No waiver of any provisions
of this Agreement or consent to any departure by any
Grantor
therefrom shall in any event be effective unless the same
shall be permitted by paragraph (b) below, and then such
waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice or
demand on any Grantor in any case shall entitle such
Grantor
to any other or further notice or demand in similar or
other
circumstances.
(b) Neither this Agreement nor any provision hereof
may
be waived, amended or modified except pursuant to a written
agreement entered into between the Grantors and the
Collateral Agent, with the prior written consent of the
Required Lenders.
SECTION 25. Waiver of Jury Trial. Each party hereto
hereby waives, to the fullest extent permitted by
applicable
law, any right it may have to a trial by jury in respect of
any litigation directly or indirectly arising out of, under
or in connection with this Agreement. Each party hereto (a)
certifies that no representative, agent or attorney of any
other party has represented, expressly or otherwise, that
such other party would not, in the event of litigation,
seek
to enforce the foregoing waiver and (b) acknowledges that
it
and the other parties hereto have been induced to enter
into
this Agreement by, among other things, the mutual waivers
and certifications in this section 25.
SECTION 26. Severability. In the event any one or more
of the provisions contained in this Agreement or in any
other Loan Document should be held invalid, illegal or
unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein
and therein shall not in any way be affected or impaired
thereby (it being understood that the invalidity of a
particular provision in a particular jurisdiction shall not
in and of itself affect the validity of such provision in
any other jurisdiction). The parties shall endeavor in
good-
faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the
invalid, illegal or unenforceable provisions.
SECTION 27. Jurisdiction; Consent to Service of
Process. (a) Each Grantor hereby irrevocably and
unconditionally submits, for itself and its property, to
the
nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in
New
York City, and any appellate court from any thereof, in any
action or proceeding arising out of or relating to this
Agreement or the other Loan Documents, or for recognition
or
enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all
claims in respect of any such action or proceeding may be
heard and determined in such New York State or, to the
extent permitted by law, in such Federal court. Each of the
parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be
enforced
in other jurisdictions by suit on the judgment or in any
other manner provided by law. Nothing in this Agreement
shall affect any right that the Collateral Agent or any
other Secured Party may otherwise have to bring any action
or proceeding relating to this Agreement or the other Loan
Documents against any Grantor or its properties in the
courts of any jurisdiction.
(b) Each Grantor hereby irrevocably and
unconditionally
waives, to the fullest extent it may legally and
effectively
do so, any objection that it may now or hereafter have to
the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other
Loan Documents in any New York State or Federal court. Each
of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or
proceeding in any such court.
(c) Each party to this Agreement irrevocably consents
to service of process in the manner provided for notices in
Section 17. Nothing in this Agreement will affect the right
of any party to this Agreement to serve process in any
other
manner permitted by law.
SECTION 28. Termination; Release. (a) This Agreement
and the security interests granted hereby shall terminate
when all the Obligations have been indefeasibly paid in
full
and the Lenders and the Swingline Lenders have no further
commitment to lend under the Credit Agreement, the LC/BA
Exposure has been reduced to zero and the Fronting Banks
have no further obligation to issue Letters of Credit or to
originate Bankers' Acceptances under the Credit Agreement.
(b) Upon any sale or other transfer by any Grantor of
any Collateral that is permitted under the Credit
Agreement,
or upon the effectiveness of any written consent to the
release of the Security Interest in any Collateral pursuant
to Section 10.08 of the Credit Agreement, the Security
Interest in such Collateral shall be automatically
released.
(c) In connection with any termination or release
pursuant to paragraphs (a) and (b), the Collateral Agent
shall execute and deliver to such Grantor, at such
Grantor's
expense, all Uniform Commercial Code termination
statements,
documents in order to terminate any United States Patent
and
Trademark Office filings and similar documents that such
Grantor shall reasonably request to evidence such
termination or release. Any execution and delivery of
termination statements or documents pursuant to this
Section 28 shall be without recourse to or warranty by the
Collateral Agent.
SECTION 29. Headings. Article and Section headings
used
herein are for convenience of reference only, are not part
of this Agreement and are not to affect the construction
of,
or to be taken into consideration in interpreting, this
Agreement.
SECTION 30. Counterparts. This Agreement may be
executed in two or more counterparts, each of which shall
constitute an original, but all of which, when taken
together, shall constitute but one instrument, and shall
become effective as provided in Section 20.
SECTION 31. Additional Grantors. Upon execution and
delivery, after the date hereof, by the Collateral Agent
and
a subsidiary of the Borrower of an instrument in the form
of
Annex 1, such subsidiary of the Borrower shall become a
Grantor hereunder with the same force and effect as if
originally named as a Grantor herein. The execution and
delivery of any such instrument shall not require the
consent of any Grantor hereunder. The rights and
obligations
of each Grantor hereunder shall remain in full force and
effect notwithstanding the addition of any new Grantor as
a
party to this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly
executed this Trademark Security Agreement as of the day
and
year first above written.
ECKERD CORPORATION,
by
/s/ Martin W. Gladysz
Name:Martin W. Gladysz
Title:Vice President
CLORWOOD DISTRIBUTORS,
INC.,
by
/s/ Martin W. Gladysz
Name:Martin W. Gladysz
Title:Vice President
ECKERD CONSUMER PRODUCTS,
INC.,
by
/s/ Martin W. Gladysz
Name:Martin W. Gladysz
Title:Vice President
ECKERD FLEET, INC.,
by
/s/ Martin W. Gladysz
Name:Martin W. Gladysz
Title:Vice President
ECKERD HOLDINGS II, INC.,
by
/s/ Martin W. Gladysz
Name:Martin W. Gladysz
Title:Vice President
ECKERD'S WESTBANK, INC.,
by
/s/ Martin W. Gladysz
Name:Martin W. Gladysz
Title:Vice President
ECKERD TOBACCO COMPANY,
INC.,
by
/s/ Martin W. Gladysz
Name:Martin W. Gladysz
Title:Vice President
E.I.T., INC.,
by
/s/ Martin W. Gladysz
Name:Martin W. Gladysz
Title:Vice President
INSTA-CARE HOLDINGS, INC.,
by
/s/ Martin W. Gladysz
Name:Martin W. Gladysz
Title:Vice President
INSTA-CARE PHARMACY
SERVICES CORPORATION,
by
/s/ Martin W. Gladysz
Name:Martin W. Gladysz
Title:Vice President
P.C.V., INC.,
by
/s/ Martin W. Gladysz
Name:Martin W. Gladysz
Title:Vice President
PHARMACY DYNAMICS GROUP,
INC.,
by
/s/ Martin W. Gladysz
Name:Martin W. Gladysz
Title:Vice President
CHEMICAL BANK, as
Collateral Agent,
by
/s/ Meredith Vanden
Handel
Name: Meredith Vanden
Handel
Title: Vice President
REVOLVING CREDIT NOTE
$350,000,000 New York, New
York
August 3,
1994
FOR VALUE RECEIVED, the undersigned, ECKERD CORPORATION, a
Delaware corporation (the Borrower ), hereby promises to pay
____________________________ or registered assigns (the
Lender ), at the office of Chemical Bank (the Administrative
Agent ) at 270 Park Avenue, New York, New York 10017, (a) on
the
last day of each Interest Period (as defined in the Credit
Agreement dated as of June 14, 1993, as amended and restated
as
of August 3, 1994 (the Credit Agreement ), among the
Borrower,
the Lenders named therein, Chemical Bank and NationsBank of
Florida, N.A., as Managing Agents and as Swingline Lenders,
and
the Administrative Agent), the aggregate unpaid principal
amount
of all Revolving Loans (as defined in the Credit Agreement)
made
by the Lender to the Borrower pursuant to the Credit Agreement
to
which the Interest Period applies and (b) on the Revolving
Credit
Maturity Date (as defined in the Credit Agreement), the lesser
of
the principal sum of THREE HUNDRED FIFTY MILLION Dollars
$350,000,000) and the aggregate unpaid principal amount of all
Revolving Loans made to the Borrower by the Lender pursuant to
the
Credit Agreement, in lawful money of the United States of
America
in immediately available funds, and to pay interest from the
date
hereof on the principal amount hereof from time to time
outstanding, in like funds, at said office, at the rate or
rates
per annum and payable on the dates provided in the Credit
Agreement.
The Borrower promises to pay interest, on demand, on any
overdue principal and, to the extent permitted by law, overdue
interest from their due dates at the rate or rates provided in
the Credit Agreement.
The Borrower hereby waives diligence, presentment, demand,
protest and notice of any kind whatsoever. The nonexercise by
the
holder of any of its rights hereunder in any particular
instance
shall not constitute a waiver thereof in that or any
subsequent
instance.
This Note is issuable only in registered form. The holder
hereof, by its acceptance of this Note, shall be deemed to
have
agreed to transfer this Note only on the terms provided in the
Credit Agreement.
All borrowings evidenced by this Note and all payments and
prepayments of the principal hereof and interest hereon and
the
respective dates and maturity dates thereof shall be endorsed
by
the holder hereof on the schedule attached hereto and made a
part
hereof or on a continuation thereof that shall be attached
hereto
and made a part hereof, or otherwise recorded by such holder
in
its internal records; provided, however, that the failure of
the
holder hereof to make such a notation or any error in such a
notation shall not affect the obligations of the Borrower
under
this Note.
This Note is one of the Revolving Credit Notes referred to
in
the Credit Agreement, which, among other things, contains
provisions for the acceleration of the maturity hereof upon
the
happening of certain events, for optional and mandatory
prepayment of the principal hereof prior to the maturity
hereof
and for the amendment or waiver of certain provisions of the
Credit Agreement, all upon the terms and conditions therein
specified. This Note is secured as provided in the Credit
Agreement. This Note shall be governed by, and construed in
accordance with, the laws of the State of New York.
ECKERD CORPORATION,
By: /s/ MARTIN W. GLADYSZ
Name: MARTIN W. GLADYSZ
Title: Vice President
LOANS AND PAYMENTS
Payments Unpaid Name of
Amount Principal Person
and Type Maturity Balance Making
Date of Loan Date Principal Interest of Note Notation
TERM NOTE
$500,000,000 New York, New
York
August 3,
1994
FOR VALUE RECEIVED, the undersigned, ECKERD CORPORATION, a
Delaware corporation (the Borrower ), hereby promises to pay
____________________________ or registered assigns (the
Lender ), at the office of Chemical Bank (the Administrative
Agent ) at 270 Park Avenue, New York, New York 10017, (a) on
the
Term Loan Maturity Date (as defined in the Credit Agreement
dated
as of June 14, 1993, as amended and restated as of August 3,
1994 (the Credit Agreement ), among the Borrower, the Lenders
named therein, Chemical Bank and NationsBank of Florida, N.A.,
as
Managing Agents and as Swingline Lenders, and the
Administrative
Agent), the aggregate unpaid principal amount of all Term
Loans
(as defined in the Credit Agreement) made to the Borrower by
the
Lender pursuant to the Credit Agreement and (b) on each Term
Loan
Repayment Date (as defined in the Credit Agreement) prior to
the
Term Loan Maturity Date, the principal amount of Term Loans
made
to the Borrower by the Lender pursuant to the Credit Agreement
and payable to the Lender on such Term Loan Repayment Date as
provided therein, in each case in lawful money of the United
States of America in immediately available funds, and to pay
interest from the date hereof on the principal amount hereof
from
time to time outstanding, in like funds, at said office, at
the
rate or rates per annum and payable on the dates provided in
the
Credit Agreement.
The Borrower promises to pay interest, on demand, on any
overdue principal and, to the extent permitted by law, overdue
interest from their due dates at the rate or rates provided in
the Credit Agreement.
The Borrower hereby waives diligence, presentment, demand,
protest and notice of any kind whatsoever. The nonexercise by
the
holder of any of its rights hereunder in any particular
instance
shall not constitute a waiver thereof in that or any
subsequent
instance.
This Note is issuable only in registered form. The holder
hereof, by its acceptance of this Note, shall be deemed to
have
agreed to transfer this Note only on the terms provided in the
Credit Agreement.
All borrowings evidenced by this Note and all payments and
prepayments of the principal hereof and interest hereon and
the
respective dates thereof shall be endorsed by the holder
hereof
on the schedule attached hereto and made a part hereof or on
a
continuation thereof that shall be attached hereto and made a
part hereof, or otherwise recorded by such holder in its
internal
records; provided, however, that the failure of the holder
hereof
to make such a notation or any error in such a notation shall
not
affect the obligations of the Borrower under this Note.
This Note is one of the Term Notes referred to in the
Credit
Agreement, which, among other things, contains provisions for
the
acceleration of the maturity hereof upon the happening of
certain
events, for optional and mandatory prepayment of the principal
hereof prior to the maturity hereof and for the amendment or
waiver of certain provisions of the Credit Agreement, all upon
the terms and conditions therein specified. This Note is
secured
as provided in the Credit Agreement. This Note shall be
governed
by, and construed in accordance with, the laws of the State of
New York.
ECKERD CORPORATION,
By: /s/ MARTIN W. GLADYSZ
Name: MARTIN W. GLADYSZ
Title: Vice President
LOANS AND PAYMENTS
Payments Unpaid Name of
Amount Principal Person
and Type Maturity Balance Making
Date of Loan Date Principal Interest of Note Notation
SWINGLINE NOTE
$15,000,000 New York, New York
August 3,
1993
FOR VALUE RECEIVED, the undersigned, ECKERD CORPORATION, a
Delaware corporation (the Borrower ), hereby promises to pay
_________________________ or registered assigns (the
Swingline
Lender ), at its office at _________________________ or to
such
account of the Swingline Lender as specified by notice from
the
Swingline Lender to the Borrower, (a) on the last day of each
Interest Period (as defined in the Credit Agreement dated as
of
June 14, 1993, as amended and restated as of August 3, 1994
(the
Credit Agreement ), among the Borrower, the Lenders named
therein (the Lenders ), Chemical Bank and NationsBank of
Florida, N.A., as Managing Agents and as Swingline Lenders,
and
Chemical Bank, as Administrative Agent), the aggregate unpaid
principal amount of all Swingline Loans (as defined in the
Credit
Agreement) made by the Swingline Lender to the Borrower
pursuant
to the Credit Agreement to which the Interest Period applies
and
(b) on the Revolving Credit Maturity Date (as defined in the
Credit Agreement), the lesser of the principal sum of FIFTEEN
MILLION Dollars ($15,000,000) and the aggregate unpaid
principal
amount of all Swingline Loans made to the Borrower by the
Swingline Lender pursuant to the Credit Agreement, in lawful
money of the United States of America in immediately available
funds, and to pay interest from the date hereof on the
principal
amount hereof from time to time outstanding, in like funds, at
said office, at the rate or rates per annum and payable on the
dates provided in the Credit Agreement.
The Borrower promises to pay interest, on demand, on any
overdue principal and, to the extent permitted by law, overdue
interest from their due dates at the rate or rates provided in
the Credit Agreement.
The Borrower hereby waives diligence, presentment, demand,
protest and notice of any kind whatsoever. The nonexercise by
the
holder of any of its rights hereunder in any particular
instance
shall not constitute a waiver thereof in that or any
subsequent
instance.
This Note is issuable only in registered form. The holder
hereof, by its acceptance of this Note, shall be deemed to
have
agreed to transfer this Note only on the terms provided in the
Credit Agreement.
All borrowings evidenced by this Note and all payments and
prepayments of the principal hereof and interest hereon and
the
respective dates and maturity dates thereof and all purchases
by
the Lenders of any Swingline Loans evidenced hereby shall be
endorsed by the holder hereof on the schedule attached hereto
and
made a part hereof or on a continuation thereof that shall be
attached hereto and made a part hereof, or otherwise recorded
by
such holder in its internal records; provided, however, that
the
failure of the holder hereof to make such a notation or any
error
in such a notation shall not affect the obligations of the
Borrower under this Note.
This Note is one of the Swingline Notes referred to in the
Credit Agreement, which, among other things, contains
provisions
for the acceleration of the maturity hereof upon the happening
of
certain events, for optional and mandatory prepayment of the
principal hereof prior to the maturity hereof and for the
amendment or waiver of certain provisions of the Credit
Agreement, all upon the terms and conditions therein
specified.
This Note is secured as provided in the Credit Agreement. This
Note shall be governed by, and construed in accordance with,
the
laws of the State of New York.
ECKERD CORPORATION,
By: /s/ MARTIN W. GLADYSZ
Name: MARTIN W. GLADYSZ
Title: Vice President
LOANS, PAYMENTS AND LENDER PURCHASES
Payments or
Purchases Unpaid Name
of
by Lenders Principal Person
Amount Maturity Balance Making
Date of Loan Date Principal Interest of Note
Notation
DEED OF TRUST, SECURITY AGREEMENT
AND ASSIGNMENT OF LEASES AND RENTS
THIS DEED OF TRUST, SECURITY AGREEMENT
AND ASSIGNMENT OF LEASES AND RENTS dated as
of June 14, 1994 as amended and restated as
of August 3, 1994, (this "Deed of Trust"),
by
ECKERD CORPORATION, formerly known as Jack
Eckerd Corporation, a Delaware corporation,
having an office at 8333 Bryan Dairy Road,
Largo, Florida 34647 (the "Grantor"), to
Kenneth F. Plifka (the "Trustee") for the
benefit of CHEMICAL BANK, a New York banking
corporation ("Chemical"), having an office
at
270 Park Avenue, New York, New York 10017,
as
Collateral Agent for the Secured Parties (as
defined herein) (in such capacity, together
with its successors" substitutes and
assigns,
the "Beneficiary").
WITNESSETH THAT:
A. The Grantor as the Borrower (such term and
each other capitalized term used herein but not defined
herein shall have the meaning given to such term in the
Credit Agreement (as defined herein)), has entered into an
amended and restated credit agreement dated as of the date
hereof of the credit agreement dated as of June 14, 1993
(the "1993 Agreement"), (such amended and restated credit
agreement, as amended or modified from time to time, the
"Credit Agreement"), with the financial institutions party
thereto, as lenders (the "Lenders"), Chemical and
NationsBank of Florida, N.A., a national banking
association
("NationsBank"), as managing agents and swingline lenders
(in such latter capacity, each a "Swingline Lender") and
Chemical, as administrative agent (in such capacity, the
"Administrative Agent") and NationsBank as documentation
Agent (in such capacity, the "Documentation Agent").
B. Pursuant to the Credit Agreement (a) the
Lenders and the Swingline Lenders, respectively, have
agreed
to extend credit in order to enable the Mortgagor to borrow
(i) on a term basis, Term Loans in an aggregate principal
amount not to exceed $500,000,000 and having a scheduled
maturity date of July 29, 2000, (ii) on a revolving basis,
Revolving Loans, at any time and from time to time prior to
July 29, 2000, in an aggregate principal amount at any time
outstanding not in excess of the difference between
$350,000,000 and the sum of (A) the aggregate principal
amount of the Swingline Loans outstanding at such time and
(B) the LC/BA Exposure at such time and (iii) on a
revolving
basis, at any time and from time to time prior to July 29,
2000, Swingline Loans in an aggregate principal amount at
any time outstanding not to exceed $30,000,000 and (b) the
Fronting Banks to issue Letters of Credit and originate
Bankers' Acceptance in an aggregate face amount at any time
outstanding not in excess of $155,000,000 and having a
scheduled maturity date of July 29, 2000.
C. On the Restatement Date, the Mortgagor will
(a) use the proceeds of (i) all Term Borrowings and
(ii) Revolving Credit Borrowings not in excess of
$50,000,000 solely to continue or convert all term loans
outstanding under the 1993 Credit Agreement and (b) use the
proceeds of any additional Revolving Credit Borrowings
solely to continue or convert all revolving loans
outstanding under the 1993 Credit Agreement.
The proceeds of Revolving Credit Borrowings
following the Restatement Date will be used for the general
corporate purposes of the Mortgagor and the Subsidiaries.
The proceeds of the Swingline Loans will also be used for
the general corporate purposes of the Mortgagor and the
Subsidiaries, Letters of Credit and Bankers' Acceptances
will be used to support obligations of the Mortgagor and
the
Subsidiaries incurred in the ordinary course of business of
the Mortgagor and the Subsidiaries.
D. The obligations of the Lenders to make Loans,
of the Swingline Lenders to make Swingline Loans and of the
Fronting Banks to issue Letters of Credit and to originate
Bankers' Acceptances, are conditioned upon, among other
things, the execution and delivery by the Grantor of this
Deed of Trust, in the form hereof, to secure (a) the due
and
punctual payment of (i) the principal of and premium, if
any, and interest (including interest accruing during the
pendency of any bankruptcy, insolvency, receivership or
other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the Loans and the
Swingline
Loans, when and as due, whether at maturity, by
acceleration, upon one or more dates set for prepayment or
otherwise, (ii) each payment required to be made by the
Borrower under the Credit Agreement in respect of any
Letter
of Credit or Bankers' Acceptance, when and as due,
including
payments in respect of reimbursement of disbursements,
interest thereon and obligations to provide cash collateral
and (iii) all other monetary obligations, including fees,
costs, expenses and indemnities, whether primary,
secondary,
direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding,
regardless of whether allowed or allowable in such
proceeding) of the Borrower to the Secured Parties under
the
Credit Agreement, this Deed of Trust and the other Loan
Documents, to which the Borrower is or is to be a party,
(b) the due and punctual performance of all covenants,
agreements, obligations and liabilities of the Borrower
under or pursuant to the Credit Agreement, this Deed of
Trust and the other Loan Documents and (c) unless otherwise
agreed upon in writing by the applicable Lender, all
obligations of the Borrower, monetary or otherwise, under
each Rate Protection Agreement entered into with any
Lender,
whether pursuant to Section 6.11 of the Credit Agreement or
otherwise (all the obligations referred to in this
clause (c) and in the preceding clauses (a) and (b) being
referred to, collectively, as the "Obligations").
E. Pursuant to the requirements of the Credit
Agreement, the Grantor is entering into this Deed of Trust
to grant to the Beneficiary a lien against and create a
security interest in the Trust Property (as defined herein)
to secure the performance and payment by the Grantor of the
Obligations. The Credit Agreement also requires the
granting by Grantor of mortgages (the "Other Mortgages")
that create security interests in certain Mortgaged
Properties other than the Trust Property to secure the
performance by the Grantor of the Obligations.
Granting Clauses
NOW THEREFORE, IN CONSIDERATION OF the foregoing
and in order to secure the (a) due and punctual payment and
performance of the Obligations by the Grantor, (b) the due
and punctual payment by the Grantor of all taxes and
insurance premiums relating to the Trust Property and
(c) all disbursements made by Beneficiary for the payment
of
taxes, or insurance premiums, all fees, expenses or
advances
in connection with or relating to the Trust Property, and
interest on such disbursements and other amounts not timely
paid in accordance with the terms of the Credit Agreement,
this Deed of Trust and the Loan Documents, Grantor hereby
grants, bargains, sells, transfers, sets over, assigns and
conveys as security, grants a security interest in,
hypothecates, mortgages, pledges and sets over unto
Trustee,
IN TRUST FOREVER, with power of sale, with mortgage
covenants, all the following described property (the "Trust
Property") whether now owned or held or hereafter acquired;
provided, however, that the maximum amount secured by this
Deed of Trust in the State of Texas upon recordation or
upon
any contingency which may be secured hereby at any time
hereafter is $850,000,000;
(1) the fee estate in the land more particularly
described on Exhibit A hereto (the "Land"), together
with all rights appurtenant thereto, including the
easements over certain other adjoining land granted by
any easement agreements, covenant or restrictive
agreements and all air rights, mineral rights, water
rights, oil and gas rights and development rights, if
any, relating thereto, and also together with all of
the other easements, rights, privileges, interests,
permits, hereditaments and appurtenances thereunto
belonging or in anywise appertaining and all of the
estate, right, title, interest, claim or demand
whatsoever of Grantor therein and in the streets and
ways adjacent thereto, either in law or in equity, in
possession or expectancy, now or hereafter acquired
(the "Premises");
(2) all buildings, improvements, structures,
paving, parking areas, walkways and landscaping now or
hereafter erected or located upon the Land, and all
legal fixtures of every kind and type affixed to all
or
any portion of the Premises or attached to or forming
part of all or any portion of any structures,
buildings
or improvements and replacements thereof now or
hereafter erected or located upon the Land (the
"Improvements");
(3) all apparatus, movable appliances, building
materials, equipment, fittings, furnishings,
furniture,
machinery and other articles of tangible personal
property of every kind and nature, and replacements
thereof, now or at any time hereafter owned by the
Grantor and placed upon or used in any way in
connection with the use, enjoyment, occupancy or
operation of the Improvements or the Premises,
including all of Grantor's books and records relating
thereto and including all pumps, tanks, goods,
machinery, tools, equipment, lifts (including fire
sprinklers and alarm systems, fire prevention or
control systems, cleaning rigs, air conditioning,
heating, boilers, refrigerating, electronic
monitoring,
water, loading, unloading, lighting, power,
sanitation,
waste removal, entertainment, communications,
computers, recreational, window or structural,
maintenance, truck or car repair and all other
equipment of every kind), restaurant, bar and all
other
indoor or outdoor furniture (including tables, chairs,
booths, serving stands, planters, desks, sofas, racks,
shelves, lockers and cabinets), bar equipment,
glasses,
cutlery, uniforms, linens, memorabilia and other
decorative items, furnishings, appliances, supplies,
inventory, rugs, carpets and other floor coverings,
draperies, drapery rods and brackets, awnings,
venetian
blinds, partitions, chandeliers and other lighting
fixtures, freezers, refrigerators, walk-in coolers,
signs (indoor and outdoor), computer systems, cash
registers and inventory control systems, and all other
apparatus, equipment, furniture, furnishings, and
articles used in connection with the use or operation
of the Improvements or the Premises, it being
understood that the enumeration of any specific
articles of property shall in no way result in or be
held to exclude any items of property not specifically
mentioned (the property referred to in this
paragraph (3), including Grantor's interest as lessee
under any lease of personal property to the extent
such
lease does not prohibit such grant, being hereinafter
called the "Personal Property");
(4) all general intangibles now owned or
hereafter
acquired by the Grantor and relating to design,
development, operation, management and use of the
Premises or the Improvements, all certificates of
occupancy, zoning variances, building, use or other
permits, approvals, authorizations and consents
obtained from and all materials prepared for filing or
filed with any governmental agency in connection with
the development, use, operation or management of the
Premises and Improvements, all construction, service,
engineering, consulting, leasing, architectural and
other similar contracts concerning the design,
construction, management, operation, occupancy and/or
use of the Premises and Improvements, all
architectural
drawings, plans, specifications, soil tests,
feasibility studies, appraisals, environmental
studies,
engineering reports and similar materials relating to
any portion of or all of the Premises and
Improvements,
and all payment and performance bonds or warranties or
guarantees relating to the Premises or the
Improvements, all to the extent assignable (the
"Permits, Plans and Warranties");
(5) Grantor's interest in and rights under all
leases or licenses (under which Grantor is landlord or
licensor) and subleases (under which Grantor is
sublandlord), concession, management, mineral or other
agreements of a similar kind that permit the use or
occupancy of the Premises or the Improvements for any
purpose in return for any payment, or the extraction
or
taking of any gas, oil, water or other minerals from
the Premises in return for payment of any fee, rent or
royalty (collectively, "Leases"), and all agreements
or
contracts for the sale or other disposition of all or
any part of the Premises or the Improvements, now or
hereafter entered into by Grantor, together with all
charges, fees, income, issues, profits, receipts,
rents, revenues or royalties payable thereunder
("Rents");
(6) all of Grantor's right, title and interest in
and to all real estate tax refunds and all proceeds of
the conversion, voluntary or involuntary, of any of
the
Trust Property into cash or liquidated claims,
including Proceeds of insurance maintained by the
Grantor and condemnation awards, any awards which may
become due by reason of the taking by eminent domain
or
any transfer in lieu thereof of the whole or any part
of the Premises or Improvements or any rights
appurtenant thereto, and any awards for change of
grade
of streets ("Proceeds"), together with any and all
moneys now or hereafter on deposit for the payment of
real estate taxes or assessments levied against the
Trust Property, unearned premiums on policies of fire
and other insurance maintained by the Grantor covering
any interest in the Trust Property or required by the
Credit Agreement; and
(7) all extensions, improvements, betterments,
renewals, substitutes and replacements of and all
additions and appurtenances to, the Land, the
Premises,
the Improvements, the Personal Property, the Permits,
Plans and Warranties and the Leases, hereinafter
acquired by or released to the Grantor or constructed,
assembled or placed by the Grantor on the Land, the
Premises or the Improvements, and all conversions of
the security constituted thereby, immediately upon
such
acquisition, release, construction, assembling,
placement or conversion, as the case may be, and in
each such case, without any further mortgage, deed of
trust, conveyance, assignment or other act by the
Grantor, all of which shall become subject to the lien
of this Deed of Trust as fully and completely, and
with
the same effect, as though now owned by the Grantor
and
specifically described herein.
TO HAVE AND TO HOLD the Trust Property and the
rights and privileges hereby mortgaged or intended to be,
unto Trustee, its successors and assigns for the uses and
purposes herein set forth, for the benefit of the
Beneficiary, subject only to the Permitted Encumbrances (as
hereinafter defined) and to satisfaction and cancellation
as
provided in Section 3.05. IN TRUST NEVERTHELESS, upon the
terms and trust herein set forth for the benefit and
security of the Beneficiary.
ARTICLE I
Representations, Warranties and Covenants of Grantor
Grantor agrees, covenants, represents and/or
warrants as follows:
SECTION 1.01. Title. (a) Grantor has good and
marketable title to a fee estate in the Land and
Improvements subject to no lien, charge or encumbrance
except for, and this Deed of Trust is and will remain a
valid and enforceable first and prior lien on the Premises,
Improvements and the Rents subject only to, in each case,
Liens permitted by Section 7.02 of the Credit Agreement and
the exceptions and encumbrances referred to in Schedule A
annexed hereto.
(b) Grantor has good and marketable title to all
the Personal Property subject to no lien, charge or
encumbrance other than this Deed of Trust and those allowed
under Section 7.02 of the Credit Agreement. The Personal
Property is not and will not become the subject matter of
any lease or other arrangement that is not allowed under
Section 7.02 of the Credit Agreement, whereby the ownership
of any Personal Property will be held by any person or
entity other than Grantor; except as expressly permitted by
Section 7.05 of the Credit Agreement, none of the Personal
Property will be removed from the Premises or the
Improvements unless the same is no longer needed for the
continued operation of the Premises and the Improvements as
currently operated (or as then operated, to the extent that
any change from the current manner of operation was
permitted by the Credit Agreement) or is replaced by other
Personal Property of substantially equal or greater utility
and value; and, except as expressly permitted by
Section 7.05 of the Credit Agreement, Grantor will not
create or cause to be created (other than those allowed
under Section 7.02 of the Credit Agreement) any security
interest covering any of the Personal Property that Grantor
owns other than the security interest in the Personal
Property created in favor of Beneficiary by this Deed of
Trust or any other agreement collateral hereto.
(c) All easement agreements, covenant or
restrictive agreements, supplemental agreements and any
other instruments hereinabove referred to and mortgaged
hereby are and will remain valid, subsisting and in full
force and effect, unless the failure to remain valid,
subsisting and in full force and effect, individually or in
the aggregate, would not have a material adverse effect on
the Trust Property, and Grantor is not in default
thereunder
and has fully performed the material terms thereof required
to be performed through the date hereof, and has no
knowledge of any default thereunder or failure to fully
perform the terms thereof by any other party, nor of the
occurrence of any event which after notice or the passage
of
time or both will constitute a default thereunder, unless
the default thereunder by Grantor or by any other party,
individually or in the aggregate, would not have a material
adverse effect on the Trust Property.
(d) Grantor has good and lawful right and full
power and authority to mortgage or grant a security
interest
in the Trust Property. Grantor will forever warrant and
defend its title to the Trust Property, the rights of
Beneficiary therein under this Deed of Trust and the
validity and priority of the lien of this Deed of Trust
thereon against the claims of all persons and parties
except
those having rights under Permitted Encumbrances to the
extent of those rights and those having rights under any
exception or matter permitted by Section 7.02 of the Credit
Agreement.
(e) This Deed of Trust, when duly recorded in
the
appropriate public records and when financing statements
are
duly filed in the appropriate public records, will create
a
valid, perfected and enforceable lien upon and security
interest in all the Trust Property and there will be no
defenses or offsets to this Deed of Trust or to any of the
Obligations secured hereby, (i) except as the enforcement
thereof may be limited by bankruptcy, insolvency or similar
laws affecting creditors' rights generally and (ii) subject
to general principles of equity.
SECTION 1.02. Credit Agreement; Certain Amounts.
(a) This Deed of Trust is given pursuant to the Credit
Agreement. Each and every term and provision of the Credit
Agreement, including the rights, remedies, obligations,
covenants, conditions, agreements, indemnities,
representations and warranties of the parties thereto shall
be considered as if a part of this Deed of Trust.
(b) If any remedy or right of Trustee or
Beneficiary pursuant hereto is acted upon by Trustee or
Beneficiary or if any actions or proceedings (including any
bankruptcy, insolvency or reorganization proceedings) are
commenced in which Trustee or Beneficiary is made a party
and is obliged to defend or uphold or enforce this Deed of
Trust or the rights of Trustee or Beneficiary hereunder or
the terms of any Lease, or if a condemnation proceeding is
instituted affecting the Trust Property, Grantor will pay
all sums, including reasonable attorneys' fees and
disbursements, incurred by Trustee or Beneficiary related
to
the exercise of any remedy or right of Trustee or
Beneficiary pursuant hereto or for the expense of any such
action or proceeding together with all statutory or other
costs, disbursements and allowances, interest thereon from
the date of demand for payment thereof at the Default Rate,
and such sums and the interest thereon shall, to the extent
permissible by law, be a lien on the Trust Property prior
to
any right, title to, interest in or claim upon the Trust
Property attaching or accruing subsequent to the recording
of this Deed of Trust and shall be secured by this Deed of
Trust to the extent permitted by law.
(c) Any payment of amounts due under this Deed
of
Trust not made on or before the due date for such payments
shall accrue interest daily without notice from the due
date
until paid at the Default Rate, and such interest at the
Default Rate shall be immediately due upon demand by
Trustee
or Beneficiary.
SECTION 1.03. Payment of Taxes, Liens and
Charges. (a) Except as may be permitted by Section 6.03
of
the Credit Agreement, Grantor will pay and discharge from
time to time when the same shall become due and payable,
and
before any interest or penalty accrues thereon or attaches
thereto, all taxes of every kind and nature, all general
and
special assessments, levies, permits, inspection and
license
fees, all water and sewer rents, all vault charges, and all
other public charges, and all service charges, common area
charges, private maintenance charges, utility charges and
all other private charges, whether of a like or different
nature, imposed upon or assessed against the Trust Property
or any part thereof or upon the Rents from the Trust
Property or arising in respect of the occupancy, use or
possession thereof. At Beneficiary's option, Beneficiary
may require Grantor to contract with a tax service firm to
provide to Beneficiary on or about the same times each
year,
receipts evidencing the payment of all such taxes,
assessments, levies, fees and other public charges imposed
upon or assessed against the Trust Property or may provide
such information to Beneficiary from internal sources.
(b) In the event of the passage of any state,
Federal, municipal or other governmental law, order, rule
or
regulation subsequent to the date hereof (i) deducting from
the value of real property for the purpose of taxation any
lien or encumbrance thereon or in any manner changing or
modifying the laws now in force governing the taxation of
this Deed of Trust or debts secured by mortgages (other
than
laws governing income, franchise and similar taxes
generally) or the manner of collecting taxes thereon and
(ii) imposing a tax to be paid by Beneficiary, either
directly or indirectly, on this Deed of Trust, the Notes or
any of the Loan Documents or to require an amount of taxes
to be withheld or deducted therefrom, Grantor will promptly
notify Beneficiary of such event. In such event Grantor
shall (i) agree to enter into such further instruments,
including but not limited to new notes to be issued in
exchange for the Notes theretofore issued, as may be
reasonably necessary or desirable to obligate Grantor to
make any applicable additional payments, and (ii) Grantor
shall make such additional payments under the Notes. If
Grantor is not permitted by law to do that which is
required
by the preceding sentence, Grantor shall be required to do
so to the extent there are unencumbered assets of Grantor
to
substitute collateral for the Trust Property which is of
equivalent value upon notice from Beneficiary promptly
after
such determination is reached.
(c) At any time that an Event of Default shall
occur hereunder, or if required by any law applicable to
Grantor or to Beneficiary, Beneficiary shall have the right
to direct Grantor to make an initial deposit on account of
real estate taxes and assessments, insurance premiums and
common area charges, levied against or payable in respect
of
the Trust Property in advance and thereafter semi-annually,
each such deposit to be equal to one-half of any such
annual
charges reasonably estimated by Beneficiary in order to
accumulate with Beneficiary sufficient funds to pay such
taxes, assessments, insurance premiums and charges.
SECTION 1.04. Payment of Closing Costs. Grantor
shall pay all reasonable costs in connection with, relating
to or arising out of the preparation, execution and
recording of this Deed of Trust, including title company
premiums and charges for a customary loan policy with such
endorsements as may be reasonably requested by Beneficiary,
inspection costs, survey costs, recording fees and taxes,
attorneys', engineers', appraisers' and consultants' fees
and disbursements and all other similar expenses of every
kind.
SECTION 1.05. Alterations and Waste; Plans.
(a) No Improvements will be materially altered or
demolished or removed in whole or in part by Grantor except
as provided by Section 1.05(c) hereof. Grantor will not
commit any waste on the Trust Property or make any
alteration to, or change in the use of, the Trust Property
which will diminish the fair market value thereof or
materially increase any ordinary fire or other hazard
arising out of construction or operation, but in no event
shall any such alteration or change be contrary to the
terms
of any insurance policy required to be kept pursuant to
Section 1.06. Grantor will maintain and operate, the
Improvements and Personal Property in good repair, working
order and condition, reasonable wear and tear excepted.
(b) Grantor shall maintain a complete set of
final plans, specifications, blueprints and drawings for
the
Trust Property currently in possession of Grantor either at
the Trust Property or in a particular office at the
headquarters of Grantor to which Beneficiary shall have
access upon reasonable advance notice.
(c) Grantor shall in connection with any lease
or
sublease permitted by Section 7.05(j) of the Credit
Agreement have the right to alter the Trust Property for
purposes of performing reasonable improvements in
connection
with such lease or sublease.
SECTION 1.06. Insurance. Grantor will (a) Keep
the Trust Property (including Improvements and Personal
Property (each as defined in the Deed of Trust)) insured at
all times by financially sound and reputable insurers
against loss by fire, casualty and such other hazards as
may
be afforded by an "all risk" policy or a fire policy
covering "special" causes of loss, including building
ordinance law endorsements; cause all such policies to be
endorsed or otherwise amended to include a "standard" or
"New York" lender's loss payable endorsement, in form and
substance reasonably satisfactory to the Collateral Agent,
which endorsement shall provide that, from and after the
Restatement Date, the insurance carrier subject to the
provisions of Sections 1.07 and 1.08 hereof, shall pay all
proceeds otherwise payable to the Grantor under such
policies directly to the Collateral Agent; cause all such
policies to provide that neither the Grantor, the
Collateral
Agent nor any other party shall be a coinsurer thereunder
and to contain a "Replacement Cost Endorsement", without
any
deduction for depreciation, and such other provisions as
the
Collateral Agent may reasonably require from time to time
to
protect its interest; provided, however, that if additional
coverage is required, Grantor will obtain such coverage
only
if such coverage is (i) customarily maintained by others in
the same or similar business in the geographic region of
the
Trust Property, and (ii) available at commercially
reasonable rates (if available to Grantor); deliver,
original or certified copies of all such policies to the
Collateral Agent confirming that the terms of such policy
are in compliance with the provisions of this Section 1.06
hereof; cause each such policy to provide that it shall not
be canceled, modified or not renewed for any reason upon
not
less than 30 days' prior written notice thereof by insurer
to the Collateral Agent; deliver to the Collateral Agent,
prior to the cancellation, modification or nonrenewal of
any
such policy of insurance, a copy of a renewal or
replacement
policy (or other evidence of renewal of a policy previously
delivered to the Collateral Agent), together with evidence
reasonably satisfactory to the Collateral Agent of timely
payment of the premium therefor promptly after making such
payment;
(b) If at any time the area in which the
Premises
(as defined in the Deed of Trust) are located is designated
a "flood hazard area" in any Flood Insurance Rate Map
published by the Federal Emergency Management Agency,
obtain
flood insurance in such total amount as the Collateral
Agent
may from time to time reasonably require, and otherwise
comply with the National Flood Insurance Program as set
forth in said Flood Disaster Protection Act of 1973, as it
may be amended from time to time.
(c) With respect to any Trust Property, carry
and
maintain comprehensive general liability insurance
including
the "broad form endorsement" and coverage on an occurrence
basis against claims made for personal injury (including
bodily injury, death and property damage) and umbrella
liability insurance against any and all claims, in no event
for a combined single limit of less than $5,000,000, naming
the Collateral Agent as an additional insured, on forms
reasonably satisfactory to the Collateral Agent.
(d) Notify the Collateral Agent immediately
whenever any separate insurance concurrent in form or
contributing in the event of loss with that required to be
maintained under this Section 1.06 is taken out by the
Grantor; and promptly deliver to the Collateral Agent a
duplicate original copy of such policy or policies.
SECTION 1.07. Casualty; Restoration of Casualty
Damage. Notwithstanding any other provisions of this Deed
of Trust or the other Loan Documents, the Collateral Agent
is authorized, at its option, to collect and receive, all
insurance Proceeds, damages, claims and rights of action
and
the right thereto under any insurance policies with respect
to a casualty relating to any portion of the Trust
Property;
provided, however, that if the Collateral Agent shall
determine, in its sole and reasonable discretion, that
(a) no Prepayment Event has occurred and (b) if no Event of
Default has occurred, then in such event, the Collateral
Agent shall direct the insurance carrier to pay such
proceeds directly to the Grantor. Grantor agrees to notify
the Collateral Agent, in writing, in reasonable detail of
any casualty to the Trust Property, promptly after the
Grantor obtains notice of any casualty to all or any
portion
of the Trust Property.
SECTION 1.08. Condemnation/Eminent Domain.
Grantor will notify the Collateral Agent immediately upon
obtaining notice of the institution, or the proposed,
contemplated or threatened institution, of any action or
proceeding for the taking of the Trust Property, for public
or quasi-public use under the power of eminent domain, by
reason of any public improvement or condemnation
proceeding,
or in any other manner (a "Condemnation"). The Collateral
Agent is authorized, at its option, to collect and receive,
all Proceeds of any such Condemnation; provided, however,
that if the Collateral Agent shall determine, in its sole
and reasonable discretion, that (a) no Prepayment Event has
occurred and (b) if no Event of Default has occurred, then
in such event, the Collateral Agent shall direct the
governmental authority to pay such proceeds directly to the
Grantor.
SECTION 1.09. Assignment of Leases and Rents.
(a) Grantor hereby irrevocably and absolutely grants,
transfers and assigns all of its right title and interest
in
all Leases, together with any and all extensions and
renewals thereof for purposes of securing and discharging
the performance by Grantor of the Obligations. Grantor has
not assigned or executed any assignment of, and will not
assign or execute any assignment of, any other Lease or
their respective Rents to anyone other than Beneficiary.
(b) (i) Without Beneficiary's prior written
consent, Grantor will not (A) modify, amend, terminate or
consent to the cancellation or surrender of any lease if
such modification, amendment, termination or consent would,
in the reasonable judgment of the Beneficiary, be adverse
in
any material respect to the Lenders, the value of the Trust
Property or the lien created by this Deed of Trust or
(B) consent to an assignment of a tenant's interest in any
Lease or to a subletting thereof covering a material
portion
of the Trust Property unless such assignment or sublease
conforms with Section 7.05 of the Credit Agreement.
(ii) If requested by
Grantor,
Beneficiary shall
execute and deliver to Grantor's tenant a non-disturbance
attornment and recognition agreement in form and substance
satisfactory to Beneficiary.
(c) Subject to paragraph 1.09(d) below, Grantor
has assigned and transferred to Beneficiary all of
Grantor's
right, title and interest in and to the Rents now or
hereafter arising from Leases heretofore or hereafter made
or agreed to by Grantor, it being intended that this
assignment establish, subject to paragraph 1.09(d) below,
an
absolute transfer and assignment of all Rents and all
Leases
to Beneficiary and not merely to grant a security interest
therein. Subject to paragraph 1.09(d) below, Beneficiary
may in Grantor's name and stead (with or without first
taking possession of any of the Trust Property personally
or
by receiver as provided herein) operate the Trust Property
and rent, lease or let all or any portion of any of the
Trust Property to any party or parties at such rental and
upon such terms as Beneficiary shall, in its sole
discretion, determine, and may collect and have the benefit
of all of said Rents arising from or accruing at any time
thereafter or that may thereafter become due under any
Lease.
(d) Until an Event of Default occurs or after an
Event of Default has occurred but is no longer continuing,
Beneficiary will not exercise any of its rights under
paragraph 1.09(c) above, and Grantor shall receive and
collect the Rents accruing under any Lease; but after the
happening of any Event of Default (but only while such
Event
of Default continues), Beneficiary may, at its option,
receive and collect all Rents and enter upon the Premises
and Improvements through its officers, agents, employees or
attorneys for such purpose and for the operation and
maintenance thereof. Upon the happening of an Event of
Default, Grantor hereby irrevocably authorizes and directs
each tenant, if any, and each successor, if any, to the
interest of any tenant under any Lease, respectively, to
rely upon any notice of a claimed Event of Default sent by
Beneficiary to any such tenant or any of such tenant's
successors in interest, and thereafter to pay Rents to
Beneficiary without any obligation or right to inquire as
to
whether an Event of Default actually exists and even if
some
notice to the contrary is received from the Grantor, who
shall have no right or claim against any such tenant or
successor in interest for any such Rents so paid to
Beneficiary. Each tenant or any of such tenant's
successors
in interest from whom Beneficiary or any officer, agent,
attorney or employee of Beneficiary shall have collected
any
Rents, shall be authorized to pay Rents to Grantor only
after such tenant or any of such tenant's successors in
interest shall have received written notice from
Beneficiary
that the Event of Default is no longer continuing, which
notice Beneficiary shall be obligated to give if
Beneficiary
determines in its reasonable discretion that such Event of
Default is no longer continuing, unless and until a further
notice of an Event of Default is given by Beneficiary to
such tenant or any of such tenant's successors in interest.
(e) Beneficiary will not become a mortgagee in
possession so long as it does not enter or take actual
possession of the Trust Property. In addition, Beneficiary
shall not be responsible or liable for performing any of
the
obligations of the landlord under any Lease, for any waste
by any tenants, or others, for any dangerous or defective
conditions of any of the Trust Property, for negligence in
the management, upkeep, repair or control of any of the
Trust Property or any other act or omission by any other
person.
(f) Grantor shall furnish to Beneficiary, within
30 days after a request by Beneficiary to do so, a written
statement containing the names of all tenants, subtenants
and concessionaires of the Premises or Improvements, the
terms of any Lease, the space occupied and the rentals or
license fees payable thereunder.
SECTION 1.10. Restrictions on Transfers and
Encumbrances. Except as permitted hereby or by the Credit
Agreement, Grantor shall not directly or indirectly sell,
convey, alienate, assign, lease, sublease, license,
mortgage, pledge, encumber or otherwise transfer, create,
consent to or suffer the creation of any lien, charges or
any form of encumbrance upon any interest in or any part of
the Trust Property, or be divested of its title to the
Trust
Property or any interest therein in any manner or way,,
whether voluntarily or involuntarily (other than resulting
from a taking), or engage in any common, cooperative,
joint,
time-sharing or other congregate ownership of all or part
thereof; provided, however, that Grantor may in the
ordinary
course of business within reasonable commercial standards,
enter into easement or covenant agreements which relate to
and/or benefit the operation of the Trust Property or which
do not materially or adversely affect the use and operation
of the same (except for customary utility easements which
service the Trust Property).
SECTION 1.11. Security Agreement. This Deed of
Trust is both a mortgage of real property and a grant of a
security interest in personal property, and shall
constitute
and serve as a "Security Agreement" within the meaning of
the uniform commercial code as adopted in the state wherein
the Premises are located. Grantor has hereby granted unto
Beneficiary a security interest in and to all the Trust
Property described in this Deed of Trust that is not real
property, and simultaneously with the recording of this
Deed
of Trust, Grantor has filed or will file UCC financing
statements, and will file continuation statements prior to
the lapse thereof, at the appropriate offices in the state
in which the Premises are located to perfect the security
interest granted by this Deed of Trust in all the Trust
Property that is not real property. Grantor hereby
appoints
Beneficiary as its true and lawful attorney-in-fact and
agent, for Grantor and in its name, place and stead, in any
and all capacities, to execute any document and to file the
same in the appropriate offices (to the extent it may
lawfully do so), and to perform each and every act and
thing
requisite and necessary to be done to perfect the security
interest contemplated by the preceding sentence.
Beneficiary shall have all rights with respect to the part
of the Trust Property that is the subject of a security
interest afforded by the uniform commercial code as adopted
in the state wherein the Premises are located in addition
to, but not in limitation of, the other rights afforded
Trustee and Beneficiary hereunder.
SECTION 1.12. Filing and Recording. Grantor
will
cause this Deed of Trust, any other security instrument
creating a security interest in or evidencing the lien
hereof upon the Trust Property and each instrument of
further assurance to be filed, registered or recorded in
such manner and in such places as may be required by any
present or future law in order to publish notice of and
fully to protect the lien hereof upon, and the security
interest of Trustee and Beneficiary in, the Trust Property.
Grantor will pay all filing, registration or recording
fees,
and all expenses incidental to the execution and
acknowledgment of this Deed of Trust, any mortgage
supplemental hereto, any security instrument with respect
to
the Personal Property, and any instrument of further
assurance and all Federal, state, county and municipal
recording, documentary or intangible taxes and other taxes,
duties, imposts, assessments and charges arising out of or
in connection with the execution, delivery and recording of
this Deed of Trust, any mortgage supplemental hereto, any
security instrument with respect to the Personal Property
or
any instrument of further assurance.
SECTION 1.13. Further Assurances. Upon demand
by
Beneficiary, Grantor will, at the cost of Grantor and
without expense to Beneficiary, do, execute, acknowledge
and
deliver all such further acts, deeds, conveyances,
mortgages, assignments, notices of assignment, transfers
and
assurances as Beneficiary shall from time to time
reasonably
require for the better assuring, conveying, assigning,
transferring and confirming unto Beneficiary the property
and rights hereby conveyed or assigned or intended now or
hereafter so to be, or which Grantor may be or may
hereafter
become bound to convey or assign to Beneficiary, or for
carrying out the intention or facilitating the performance
of the terms of this Deed of Trust, or for filing,
registering or recording this Deed of Trust, and on demand,
Grantor will also execute and deliver and hereby appoints
Beneficiary as its true and lawful attorney-in-fact and
agent for Grantor and in its name, place and stead, in any
and all capacities, to execute and file to the extent it
may
lawfully do so, one or more financing statements, chattel
mortgages or comparable security instruments reasonably
requested by Beneficiary to evidence more effectively the
lien hereof upon the Personal Property and to perform each
and every act and thing requisite and necessary to be done
to accomplish the same.
SECTION 1.14. Additions to Trust Property. All
right, title and interest of Grantor in and to all
extensions, improvements, betterments, renewals,
substitutes
and replacements of, and all additions and appurtenances
to,
the Trust Property hereafter acquired by or released to
Grantor or constructed, assembled or placed by Grantor upon
the Premises or the Improvements, and all conversions of
the
security constituted thereby, immediately upon such
acquisition, release, construction, assembling, placement
or
conversion, as the case may be, and in each such case
without any further mortgage, conveyance, assignment or
other act by Grantor, shall become subject to the lien and
security interest of this Deed of Trust as fully and
completely and with the same effect as though now owned by
Grantor and specifically described in the grant of the
Trust
Property above, but at any and all times Grantor will
execute and deliver to Beneficiary any and all such further
assurances, mortgages, conveyances or assignments thereof
as
Beneficiary may reasonably require for the purpose of
expressly and specifically subjecting the same to the lien
and security interest of this Deed of Trust.
SECTION 1.15. No Claims Against Trustee or
Beneficiary. Nothing contained in this Deed of Trust shall
constitute any consent or request by Trustee or
Beneficiary,
express or implied, for the performance of any labor or
services or the furnishing of any materials or other
property in respect of the Trust Property or any part
thereof, nor as giving Grantor any right, power or
authority
to contract for or permit the performance of any labor or
services or the furnishing of any materials or other
property in such fashion as would permit the making of any
claim against Trustee or Beneficiary in respect thereof.
ARTICLE II
Defaults and Remedies
SECTION 2.01. Events of Default. It shall be an
Event of Default under this Deed of Trust if any Event of
Default (as therein defined) shall exist pursuant to (a)
the
Credit Agreement or (b) any other Mortgage.
Notwithstanding
the provisions of Article VIII, Section (e) of the Credit
Agreement, if Grantor shall default in the observance or
performance of any covenant, condition or agreement
expressly set forth in this Deed of Trust and the subject
matter of any such covenant, condition or agreement is not
otherwise set forth in the Credit Agreement or any other
Loan Document, and Grantor's default in its observance or
performance of such covenant, condition or agreement (a) is
not susceptible of cure by the payment of money or (b)
could
not, if left uncured, have a material adverse effect on the
Trust Property, then in such case an Event of Default shall
not occur until such default shall continue unremedied for
a
period of 30 days after written notice thereof from
Beneficiary; provided, however, that in the case of any
such
default described in clauses (a) or (b) above, which cannot
with the exercise by the Grantor of due diligence be cured
within such 30-day period, the period within which such
default may be cured may be extended for up to an
additional
90 days, so long as Grantor shall have promptly commenced
to
cure the same during its initial 30-day cure period and
thereafter continuously prosecutes the curing thereof with
diligence.
SECTION 2.02. Demand for Payment. If an Event
of
Default as set forth herein shall occur and be continuing,
then, upon written demand of Beneficiary, Grantor will pay
to Beneficiary upon demand all amounts due hereunder and
such further amounts as shall be incurred to cover the
costs
and expenses of collection, including attorneys' fees,
disbursements and expenses incurred by Trustee or
Beneficiary. In case Grantor shall fail forthwith to pay
such amounts or any amounts due under any other Section of
this Deed of Trust upon Beneficiary's demand, Trustee or
Beneficiary shall be entitled and empowered to institute an
action or proceedings at law or in equity as advised by
counsel for the collection of the sums so due and unpaid,
to
prosecute any such action or proceedings to judgment or
final decree, to enforce any such judgment or final decree
against Grantor and to collect, in any manner provided by
law, all moneys adjudged or decreed to be payable.
SECTION 2.03. Rights to Take Possession, Operate
and Apply Revenues. (a) If an Event of Default shall
occur
and be continuing, Grantor shall, upon demand of
Beneficiary, forthwith surrender to Beneficiary actual
possession of the Trust Property and, if and to the extent
permitted by law, Beneficiary itself, or by such officers
or
agents as it may appoint, may then enter and take
possession
of all the Trust Property without the appointment of a
receiver or an application therefor, exclude Grantor and
its
agents and employees wholly therefrom, and have access
(with
Grantor) to the books, papers and accounts of Grantor.
(b) If Grantor shall for any reason fail to
surrender or deliver the Trust Property or any part thereof
after such demand by Beneficiary, Beneficiary may obtain a
judgment or decree conferring upon Beneficiary the right to
immediate possession or requiring Grantor to deliver
immediate possession of the Trust Property to Beneficiary,
to the entry of which judgment or decree Grantor hereby
specifically consents. Grantor will pay to Beneficiary,
upon demand, all expenses of obtaining such judgment or
decree, including compensation to Beneficiary's attorneys
and agents with interest thereon at the Default Rate; and
all such expenses and compensation shall, until paid, be
secured by this Deed of Trust.
(c) Upon every such entry or taking of
possession, Beneficiary may hold, store, use, operate,
manage and control the Trust Property, conduct the business
thereof and, from time to time, (i) make all necessary,
proper and reasonable maintenance, repairs, renewals,
replacements, additions, betterments and improvements
thereto and thereon, (ii) purchase or otherwise acquire
additional fixtures, personalty and other property,
(iii) insure or keep the Trust Property insured, (iv)
manage
and operate the Trust Property and exercise all the rights
and powers of Grantor to the same extent as Grantor could
in
its own name or otherwise with respect to the same, or
(v) enter into any and all agreements with respect to the
exercise by others of any of the powers herein granted
Beneficiary, all as may from time to time be directed or
determined by Beneficiary to be in its best interest and
Grantor hereby appoints Beneficiary as its true and lawful
attorney-in-fact and agent, for Grantor and in its name,
place and stead, in any and all capacities, to perform any
of the foregoing acts. Beneficiary may collect and receive
all the Rents, issues, profits and revenues from the Trust
Property, including those past due as well as those
accruing
thereafter, and, after deducting (i) all expenses of
taking,
holding, managing and operating the Trust Property
(including compensation for the services of all persons
employed for such purposes), (ii) the costs of all such
maintenance, repairs, renewals, replacements, additions,
betterments, improvements, purchases and acquisitions,
(iii) the costs of insurance, (iv) such taxes, assessments
and other similar charges as Beneficiary may at its option
pay, (v) other proper charges upon the Trust Property or
any
part thereof and (vi) the reasonable compensation, expenses
and disbursements of the attorneys and agents of
Beneficiary, Beneficiary shall apply the remainder of the
moneys and proceeds so received first to the payment of the
Beneficiary for the payment in full of Indebtedness and
satisfaction of the Obligations, and second, if there is
any
surplus, to Grantor, subject to the entitlement of others
thereto under applicable law.
(d) Whenever, before any sale of the Trust
Property under Section 2.06 hereof, all Obligations which
are then due shall have been paid and all Events of Default
fully cured, Beneficiary will surrender possession of the
Trust Property back to Grantor, its successors or assigns.
The same right of taking possession shall, however, arise
again if any subsequent Event of Default shall occur and be
continuing.
SECTION 2.04. Right to Cure Grantor's Failure to
Perform. Prior to the occurrence of an Event of Default
upon five business days' written notice to Grantor (except
in the case of an emergency), or after the occurrence of an
Event of Default at any time and without notice, should
Grantor fail in the payment, performance or observance of
any term, covenant or condition required by this Deed of
Trust or the Credit Agreement (with respect to the Trust
Property), Beneficiary may pay, perform or observe the
same,
and all payments made or costs or expenses incurred by
Beneficiary in connection therewith shall be secured hereby
and shall be, without demand, immediately repaid by Grantor
to Beneficiary with interest thereon at the Default Rate.
Beneficiary shall make reasonable judgment as to the
necessity for any such actions and of the amounts to be
paid. Subject to the notice provisions of the first
sentence of this paragraph 2.04, Beneficiary is hereby
empowered to enter and to authorize others to enter upon
the
Premises or the Improvements or any part thereof for the
purpose of performing or observing any such defaulted term,
covenant or condition without having any obligation to so
perform or observe and without thereby becoming liable to
Grantor, to any person in possession holding under Grantor
or to any other person.
SECTION 2.05. Right to a Receiver. If an Event
of Default shall occur and be continuing, Beneficiary, upon
application to a court of competent jurisdiction, shall be
entitled as a matter of right to the appointment of a
receiver to take possession of and to operate the Trust
Property and to collect and apply the Rents. The receiver
shall have all of the rights and powers permitted under the
laws of the state wherein the Trust Property is located.
Grantor will pay to Beneficiary upon demand all reasonable
amounts of expenses, including receiver's fees, attorney's
fees and disbursements, costs and agent's compensation
incurred pursuant to the provisions of this Section 2.05;
and all such expenses shall be secured by this Deed of
Trust
and shall be, without demand, immediately repaid by Grantor
to Beneficiary with interest thereon at the Default Rate.
SECTION 2.06. Foreclosure and Sale. (a) If an
Event of Default shall occur and be continuing, Beneficiary
may elect to sell the Trust Property or any part of the
Trust Property by exercise of the power of foreclosure or
of
sale granted to Beneficiary by applicable law or this Deed
of Trust. In such case, Trustee or Beneficiary may
commence
a civil action to foreclose this Deed of Trust, or it may
proceed and sell the Trust Property to satisfy any
Obligation. Trustee or Beneficiary or an officer appointed
by a judgment of foreclosure to sell the Trust Property,
may
sell all or such parts of the Trust Property as may be
chosen by Beneficiary at the time and place of sale fixed
by
it in a notice of sale, either as a whole or in separate
lots, parcels or items as Beneficiary shall deem expedient,
and in such order as it may determine, at public auction to
the highest bidder. Trustee or Beneficiary or an officer
appointed by a judgment of foreclosure to sell the Trust
Property may postpone any foreclosure or other sale of all
or any portion of the Trust Property by public announcement
at such time and place of sale, and from time to time
thereafter may postpone such sale by public announcement or
subsequently noticed sale. Without further notice, Trustee
or Beneficiary or an officer appointed to sell the Trust
Property may make such sale at the time fixed by the last
postponement, or may, in its discretion, give a new notice
of sale. Any person, including Grantor or Beneficiary or
any designee or affiliate thereof, may purchase at such
sale.
(b) The Trust Property may be sold subject to
unpaid taxes and Permitted Encumbrances, and after
deducting
all costs, fees and expenses of Beneficiary, including
costs
of evidence of title in connection with the sale, Trustee
or
Beneficiary or an officer that makes any sale shall apply
the proceeds of sale in the manner set forth in Section
2.08
hereof.
(c) Any foreclosure or other sale of less than
the whole of the Trust Property or any defective or
irregular sale made hereunder shall not exhaust the power
of
foreclosure provided for herein; and subsequent sales may
be
made hereunder until the obligations have been satisfied,
or
the entirety of the Trust Property has been sold.
(d) Grantor waives, to the extent not prohibited
by law, (i) the benefit of all laws now existing or that
hereafter may be enacted providing for any appraisement
before sale of any portion of the Trust Property, (ii) the
benefit of all laws now existing or that may be hereafter
enacted in any way extending the time for the enforcement
or
the collection of amounts due under any of the Obligations
or creating or extending a period of redemption from any
sale made in collecting said debt or any other amounts due
Beneficiary, (iii) any right to at any time insist upon,
plead, claim or take the benefit or advantage of any law
now
or hereafter in force providing for any appraisement,
valuation, stay, extension or redemption, or sale of the
Trust Property as separate tracts, units or estates or as
a
single parcel in the event of foreclosure, and (iv) all
rights of redemption, valuation, appraisement, stay of
execution, notice of election to mature or declare due the
whole of or each of the Obligations and marshalling in the
event of foreclosure of this Deed of Trust.
(e) If an Event of Default shall occur and be
continuing, Beneficiary may instead of, or in addition to,
exercising the rights described in paragraph 2.06(a) above
and either with or without entry or taking possession as
herein permitted, proceed by a suit or suits in law or in
equity or by any other appropriate proceeding or remedy
(i) to specifically enforce payment of some or all of the
terms of the Loan Documents or the performance of any term,
covenant, condition or agreement of this Deed of Trust or
any other right, or (ii) to pursue any other remedy
available to it, all as Beneficiary shall determine most
effectual for such purposes.
SECTION 2.07. Other Remedies. (a) In case an
Event of Default shall occur and be continuing, Beneficiary
may also exercise, to the extent not prohibited by law, any
or all of the remedies available to a secured party under
the uniform commercial code of the State wherein the
Premises are located, including, to the extent not
prohibited by applicable law, the following:
(i) Either personally or by means of a court-
appointed receiver, to take possession of all or any
of
the Personal Property and exclude therefrom Grantor
and
all others claiming under Grantor, and thereafter to
hold, store, use, operate, manage, maintain and
control, make repairs, replacements, alterations,
additions and improvements to and exercise all rights
and powers of Grantor with respect to the Personal
Property or any part thereof.
(ii) To make such
payments and do
such acts as
Beneficiary may deem necessary to protect its security
interest in the Personal Property, including paying,
purchasing, contesting or compromising any
encumbrance,
charge or lien which is prior or superior to the
security interest granted hereunder, and, in
exercising
any such powers or authority, paying all expenses
incurred in connection therewith.
(iii) To assemble the
Personal
Property or any
portion thereof at a place designated by Beneficiary
and reasonably convenient to both parties, to demand
prompt delivery of the Personal Property to
Beneficiary
or an agent or representative designated by it, and to
enter upon any or all of the Premises or Improvements
to exercise Beneficiary's rights hereunder.
(iv) To sell or
otherwise dispose
of or purchase
the Personal Property at public sale, with or without
having the Personal Property at the place of sale,
upon
such terms and in such manner as Beneficiary may
determine, after Beneficiary shall have given Grantor
at least ten days' prior written notice of the time
and
place of any public sale or other intended disposition
of the Personal Property by mailing a copy to Grantor
at the address set forth in Section 3.02.
(b) In connection with a sale of the Trust
Property or any Personal Property and the application of
the
proceeds of sale as provided in Section 2.08 of this Deed
of
Trust, Beneficiary shall be entitled to enforce payment of
and to receive up to the principal amount of the
Obligations, plus all other charges, payments and costs due
under this Deed of Trust, and to recover a deficiency
judgment for any portion of the aggregate principal amount
of the Obligations remaining unpaid, with interest.
SECTION 2.08. Application of Sale Proceeds and
Rents. After any foreclosure sale of all or any of the
Trust Property, Beneficiary shall receive the proceeds of
sale, no purchaser shall be required to see to the
application of the proceeds and Beneficiary shall apply the
proceeds of the sale together with any Rents that may have
been collected and any other sums which then may be held by
Beneficiary under this Deed of Trust as follows:
First: to the payment of the costs and expenses
of such sale, including compensation to Beneficiary's
attorneys and agents, and of any judicial proceedings
wherein the same may be made, and of all expenses,
liabilities and advances made or incurred by
Beneficiary under this Deed of Trust, together with
interest at the Default Rate on all advances made by
Beneficiary, including all taxes or assessments
(except
any taxes, assessments or other charges subject to
which the Trust Property shall have been sold) and the
cost of removing any Permitted Encumbrance (except any
Permitted Encumbrance subject to which the Trust
Property was sold);
Second: to the payment in full of the
Obligations
owed to the Lenders, the Swingline Lenders and the
Fronting Banks in respect of the Loans and the
Swingline Loans made by them and outstanding and the
amounts owing in respect of any LC Disbursement or BA
Disbursement or under any Rate Protection Agreement
entered into with any Lender pursuant to Section 6.11
of the Credit Agreement, pro rata as among the
Lenders,
the Swingline Lenders and the Fronting Banks in
accordance with the amount of such Obligations owed to
them;
Third: to the payment and discharge in full of
the Obligations (other than those referred to above)
pro rata as among the Secured Parties in accordance
with the amount of such Obligations owed to them; and
Fourth: to the Grantor, its successors or
assigns, or as a court of competent jurisdiction may
otherwise direct.
The Beneficiary shall promptly make application of any such
proceeds, moneys or balances in accordance with this Deed
of
Trust. Upon any sale of the Trust Property by Trustee or
Beneficiary (including pursuant to a power of sale granted
by statute or under a judicial proceeding), the receipt of
Trustee or Beneficiary or of the officer making the sale
shall be a sufficient discharge to the purchaser or
purchasers of the Trust Property so sold and such purchaser
or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to
Trustee or Beneficiary or such officer or be answerable in
any way for the misapplication thereof.
SECTION 2.09. Grantor as Tenant Holding Over.
If
Grantor remains in possession of any of the Trust Property
after any foreclosure sale by Beneficiary, at Beneficiary's
election Grantor shall be deemed a tenant holding over and
shall forthwith surrender possession to the purchaser or
purchasers at such sale or be summarily dispossessed or
evicted according to provisions of law applicable to
tenants
holding over.
SECTION 2.10. Waiver of Appraisement, Valuation,
Stay, Extension and Redemption Laws. (a) Grantor will not
object to any sale of the Trust Property in its entirety
pursuant to Section 2.06, and for itself and all who may
claim under it, Grantor waives, to the extent that it
lawfully may, all right to have the Trust Property
marshalled or to have the Trust Property sold as separate
estates, parcels, tracts or units in the event of any
foreclosure of this Deed of Trust.
(b) To the full extent permitted by the law of
the state wherein the Trust Property is located or other
applicable law, neither Grantor nor anyone claiming through
or under it shall or will set up, claim or seek to take
advantage of any appraisement, valuation, stay, extension,
homestead-exemption or redemption laws now or hereafter in
force in order to prevent or hinder the enforcement or
foreclosure of this Deed of Trust, the absolute sale of the
Trust Property or the final and absolute putting of the
purchasers into possession thereof immediately after any
sale; and Grantor, for itself and all who may at any time
claim through or under it, hereby waives, to the full
extent
that it may lawfully do so, the benefit of all such laws
and
any and all right to have the assets covered by the
security
interest created hereby marshalled upon any foreclosure of
this Deed of Trust.
SECTION 2.11. Discontinuance of Proceedings. In
case Trustee or Beneficiary shall proceed to enforce any
right, power or remedy under this Deed of Trust by
foreclosure, entry or otherwise, and such proceedings shall
be discontinued or abandoned for any reason, or shall be
determined adversely to Trustee or Beneficiary, then and in
every such case Grantor, Trustee and Beneficiary shall be
restored to their former positions and rights hereunder,
and
all rights, powers and remedies of Trustee and Beneficiary
shall continue as if no such proceeding had been taken.
SECTION 2.12. Suits to Protect the Trust
Property. Trustee and/or Beneficiary shall have power
(a) to institute and maintain suits and proceedings to
prevent any impairment of the Trust Property by any acts
which may be unlawful or in violation of this Deed of
Trust,
(b) to preserve or protect its interest in the Trust
Property and in the Rents arising therefrom and (c) at its
sole cost and expense, to restrain the enforcement of or
compliance with any legislation or other governmental
enactment, rule or order that may be unconstitutional or
otherwise invalid if the enforcement of or compliance with
such enactment, rule or order would impair the security or
be prejudicial to the interest of Trustee or Beneficiary
hereunder provided there is no adverse impact on Grantor
and
its interest in the Trust Property.
SECTION 2.13. Filing Proofs of Claim. In case
of
any receivership, insolvency, bankruptcy, reorganization,
arrangement, adjustment, composition or other proceedings
affecting Grantor, Beneficiary shall, to the extent
permitted by law, be entitled to file such proofs of claim
and other documents as may be necessary or advisable in
order to have the claims of Beneficiary allowed in such
proceedings for the obligations secured by this Deed of
Trust at the date of the institution of such proceedings
and
for any interest accrued, late charges and additional
interest or other amounts due or which may become due and
payable hereunder after such date.
SECTION 2.14. Possession by Beneficiary.
Notwithstanding the appointment of any receiver, liquidator
or trustee of Grantor, any of its property or the Trust
Property, Beneficiary shall be entitled, to the extent not
prohibited by law, to remain in possession and control of
all parts of the Trust Property now or hereafter granted
under this Deed of Trust to Beneficiary in accordance with
the terms hereof and applicable law.
SECTION 2.15. Waiver. (a) No delay or failure
by Trustee or Beneficiary to exercise any right, power or
remedy accruing upon any breach or Event of Default shall
exhaust or impair any such right, power or remedy or be
construed to be a waiver of any such breach or Event of
Default or acquiescence therein; and every right, power and
remedy given by this Deed of Trust to Trustee or
Beneficiary
may be exercised from time to time and as often as may be
deemed expedient by Trustee or Beneficiary. No consent or
waiver by Beneficiary to or of any breach or default by
Grantor in the performance of the Obligations shall be
deemed or construed to be a consent or waiver to or of any
other breach or Event of Default in the performance of the
same or any other obligations by Grantor hereunder. No
failure on the part of Beneficiary to complain of any act
or
failure to act or to declare an Event of Default,
irrespective of how long such failure continues, shall
constitute a waiver by Beneficiary of its rights hereunder
or impair any rights, powers or remedies consequent on any
future Event of Default by Grantor.
(b) Even if Beneficiary (i) grants some
forbearance or an extension of time for the payment of any
sums secured hereby, (ii) takes other or additional
security
for the payment of any sums secured hereby, (iii) waives or
does not exercise some right granted herein or under the
Loan Documents, (iv) releases a part of the Trust Property
from this Deed of Trust, (v) agrees to change some of the
terms, covenants, conditions or agreements of any of the
Loan Documents, (vi) consents to the filing of a map, plat
or replat affecting the Premises, (vii) consents to the
granting of an easement or other right affecting the
Premises or (viii) makes or consents to an agreement
subordinating Beneficiary's lien on the Trust Property
hereunder; no such act or omission shall preclude
Beneficiary from exercising any other right, power or
privilege herein granted or intended to be granted in the
event of any breach or Event of Default then made or of any
subsequent default; nor, except as otherwise provided in an
instrument executed by Trustee and Beneficiary, shall this
Deed of Trust be altered thereby. In the event of the sale
or transfer by operation of law or otherwise of all or part
of the Trust Property, Beneficiary is hereby authorized and
empowered to deal with any vendee or transferee with
reference to the Trust Property secured hereby, or with
reference to any of the terms, covenants, conditions or
agreements hereof, as fully and to the same extent as it
might deal with the original parties hereto and without in
any way releasing or discharging any liabilities,
obligations or undertakings.
SECTION 2.16. Remedies Cumulative. No right,
power or remedy conferred upon or reserved to Trustee or
Beneficiary by this Deed of Trust is intended to be
exclusive of any other right, power or remedy, and each and
every such right, power and remedy shall be cumulative and
concurrent and in addition to any other right, power and
remedy given hereunder or now or hereafter existing at law
or in equity or by statute.
ARTICLE III
Miscellaneous
SECTION 3.01. Partial Invalidity. In the event
any one or more of the provisions contained in this Deed of
Trust shall for any reason be held to be invalid, illegal
or
unenforceable in any respect, such validity, illegality or
unenforceability shall, at the option of Beneficiary, not
affect any other provision of this Deed of Trust, and this
Deed of Trust shall be construed as if such invalid,
illegal
or unenforceable provision had never been contained herein
or therein.
SECTION 3.02. Notices. All notices to be sent
and all documents to be delivered hereunder shall be in
writing, shall be delivered by hand or overnight courier
service, mailed or sent by telex, graphic scanning or other
telegraphic communications equipment of the sending party
and shall be deemed to have been given on the date of
receipt if delivered by hand or overnight courier service
or
sent by telex, telecopy or other telegraphic communications
equipment of the sender, or on the date five Business Days
after dispatch by certified or registered mail if mailed,
in
each case delivered, sent or mailed (properly addressed) to
such party as provided in Section 10.01 of the Credit
Agreement or in accordance with the latest unrevoked
direction from such party given in accordance with said
Section 10.01, except that all notices to the Trustee shall
be delivered, sent or mailed (properly addressed) to the
Trustee at Stutzman & Bromberg, 2323 Bryan, Dallas, Texas
75201.
SECTION 3.03. Successors and Assigns. All of
the
grants, covenants, terms, provisions and conditions herein
shall run with the Premises and the Improvements and shall
apply to, bind and inure to, the benefit of the permitted
successors and assigns of Grantor and the successors and
assigns of Beneficiary.
SECTION 3.04. Counterparts. This Deed of Trust
may be executed in any number of counterparts and all such
counterparts shall together constitute but one and the same
mortgage.
SECTION 3.05. Satisfaction and Cancellation.
(a) The conveyance to Beneficiary of the Trust Property as
security, created and consummated by this Deed of Trust,
shall be null and void when all the Obligations have been
indefeasibly paid in full in accordance with the terms of
the Loan Documents and the Lenders and the Swingline
Lenders
have no further commitment to lend under the Credit
Agreement, no Letters of Credit or Bankers' Acceptances are
outstanding and the Fronting Banks have no further
obligation to issue Letters of Credit or to originate
Bankers' Acceptances under the Credit Agreement.
(b) The lien of this conveyance shall be
released
from the Trust Property pursuant to and in accordance with
the operative provisions of Section 7.05 of the Credit
Agreement.
(c) In connection with any termination or
release
pursuant to paragraph (a) or (b), to the extent applicable,
the Mortgage shall be marked "satisfied" by the Beneficiary
and/or Trustee, and this Deed of Trust may be canceled of
record at the request and at the expense of the Grantor.
Beneficiary and Trustee shall execute any documents
reasonably requested by Grantor to accomplish the foregoing
or to accomplish any release contemplated by paragraph (a)
or (b) and Grantor will pay all costs and expenses,
including attorneys' fees and disbursements, incurred by
Beneficiary in connection with the preparation and
execution
of such documents.
SECTION 3.06. Definitions. As used in this Deed
of Trust, the singular shall include the plural as the
context requires and the following words and phrases shall
have the following meanings: (a) "including" shall mean
"including but not limited to"; (b) "provisions" shall mean
"provisions, terms, covenants and/or conditions"; (c)
"lien"
shall mean "lien, charge, encumbrance, security interest,
mortgage or deed of trust"; (d) "obligation" shall mean
"obligation, duty, covenant and/or condition"; and (e) "any
of the Trust Property" shall mean "the Trust Property or
any
part thereof or interest therein". Any act which Trustee
or
Beneficiary is permitted to perform hereunder may be
performed at any time and from time to time by Trustee or
Beneficiary or any person or entity designated by Trustee
or
Beneficiary. Any act which is prohibited to Grantor
hereunder is also prohibited to all lessees of any of the
Trust Property. Each appointment of Trustee or Beneficiary
as attorney-in-fact for Grantor under the Deed of Trust is
irrevocable, with power of substitution and coupled with an
interest. Subject to the applicable provisions hereof,
Beneficiary has the right to refuse to grant its consent,
approval or acceptance or to indicate its satisfaction, in
its sole discretion, whenever such consent, approval,
acceptance or satisfaction is required hereunder.
SECTION 3.07. Multisite Real Estate Transaction.
Grantor acknowledges that this Deed of Trust is one of a
number of Other Mortgages and Security Documents which
secure the Obligations. Grantor agrees that the lien of
this Deed of Trust shall be absolute and unconditional and
shall not in any manner be affected or impaired by any acts
or omissions whatsoever of Trustee or Beneficiary and,
without limiting the generality of the foregoing, the lien
hereof shall not be impaired by any acceptance by Trustee
or
Beneficiary of any security for or guarantees of any of the
Obligations hereby secured, or by any failure, neglect or
omission on the part of Trustee or Beneficiary to realize
upon or protect any Obligation or indebtedness hereby
secured or any collateral security therefor including the
Other Mortgages and other Security Documents. The lien
hereof shall not in any manner be impaired or affected by
any release (except as to the property released), sale,
pledge, surrender, compromise, settlement, renewal,
extension, indulgence, alteration, changing, modification
or
disposition of any of the Obligations secured or of any of
the collateral security therefor, including the Other
Mortgages and other Security Documents or of any guarantee
thereof, and Trustee or Beneficiary may at its discretion
foreclose, exercise any power of sale, or exercise any
other
remedy available to it under any or all of the Other
Mortgages and other Security Documents without first
exercising or enforcing any of its rights and remedies
hereunder. Such exercise of Trustee's or Beneficiary's
rights and remedies under any or all of the Other Mortgages
and other Security Documents shall not in any manner impair
the indebtedness hereby secured or the lien of this Deed of
Trust and any exercise of the rights or remedies of Trustee
or Beneficiary hereunder shall not impair the lien of any
of
the Other Mortgages and other Security Documents or any of
Trustee's or Beneficiary's rights and remedies thereunder.
The undersigned specifically consents and agrees that
Trustee or Beneficiary may exercise its rights and remedies
hereunder and under the Other Mortgages and other Security
Documents separately or concurrently and in any order that
it may deem appropriate and the undersigned waives any
rights of subrogation.
ARTICLE IV
Particular Provisions
This Deed of Trust is subject to the following
provisions relating to the particular laws of the state
wherein the Premises are located:
SECTION 4.01. Applicable Law; Certain Particular
Provisions. This Deed of Trust shall be governed by and
construed in accordance with the internal law of the State
of New York; provided, however, that the provisions of this
Deed of Trust relating to the creation, perfection and
enforcement of the lien and security interest created by
this Deed of Trust in respect of the Trust Property and the
exercise of each remedy provided hereby, including the
power
of foreclosure or power of sale procedures set forth in
this
Deed of Trust, shall be governed by and construed in
accordance with the internal law of the state where the
Trust Property is located, and Grantor and Beneficiary will
submit to jurisdiction and the laying of venue for any suit
on this Deed of Trust in such state. The terms and
provisions set forth in Appendix A attached hereto are
hereby incorporated by reference as though fully set forth
herein. In the event of any conflict between the terms and
provisions contained in the body of this Deed of Trust and
the terms and provisions set forth in Appendix A, the terms
and provisions set forth in Appendix A shall govern and
control.
SECTION 4.02. Trustee's Powers and Liabilities.
(a) Trustee, by acceptance hereof, covenants faithfully
to
perform and fulfill the trusts herein created, being
liable,
however, only for gross negligence or wilful misconduct,
and
hereby waives any statutory fee and agrees to accept
reasonable compensation, in lieu thereof, for any services
rendered by it in accordance with the terms hereof. All
authorities, powers and discretions given in this Deed of
Trust to Trustee and/or Beneficiary may be exercised by
either, without the other, with the same effect as if
exercised jointly.
(b) Trustee may resign at any time upon giving
30
days' notice in writing to Grantor and to Beneficiary.
(c) Beneficiary may remove Trustee at any time
or
from time to time and select a successor trustee. In the
event of the death, removal, resignation, refusal to act,
inability to act or absence of Trustee from the state in
which the premises are located, or in its sole discretion
for any reason whatsoever, Beneficiary may, upon notice to
the Grantor and without specifying the reason therefor and
without applying to any court, select and appoint a
successor trustee, and all powers, rights, duties and
authority of the former Trustee, as aforesaid, shall
thereupon become vested in such successor. Such substitute
trustee shall not be required to give bond for the faithful
performance of his duties unless required by Beneficiary.
Such substitute trustee shall be appointed by written
instrument duly recorded in the county where the Land is
located. Grantor hereby ratifies and confirms any and all
acts which the herein named Trustee, or his successor or
successors in this trust, shall do lawfully by virtue
hereof. Grantor hereby agrees, on behalf of itself and its
heirs, executors, administrators and assigns, that the
recitals contained in any deed or deeds executed in due
form
by any Trustee or substitute trustee, acting under the
provisions of this instrument, shall be prima facie
evidence
of the facts recited, and that it shall not be necessary to
prove in any court, otherwise than by such recitals, the
existence of the facts essential to authorize the execution
and delivery of such deed or deeds and the passing of title
thereby.
(d) Trustee shall not be required to see that
this Deed of Trust is recorded, nor be liable for its
validity or its priority as a first deed of trust, or
otherwise, nor shall Trustee be answerable or responsible
for performance or observance of the covenants and
agreements imposed upon Grantor or Beneficiary by this Deed
of Trust or any other agreement. Trustee, as well as
Beneficiary, shall have authority in their respective
discretion to employ agents and attorneys in the execution
of this trust and to protect the interest of the
Beneficiary
hereunder, and to the extent permitted by law they shall be
compensated and all expenses relating to the employment of
such agents and/or attorneys, including expenses of
litigations, shall be paid out of the proceeds of the sale
of the Trust Property conveyed hereby should a sale be had,
but if no such sale be had, all sums so paid out shall be
recoverable to the extent permitted by law by all remedies
at law or in equity.
(e) At any time, or from time to time, without
liability therefor and with 10 days' prior written notice
to
Grantor, upon written request of Beneficiary and without
affecting the effect of this Deed of Trust upon the
remainder of the Trust Property, Trustee may (i) reconvey
any part of the Trust Property, (ii) consent in writing to
the making of any map or plat thereof, so long as Grantor
has consented thereto, (iii) join in granting any easement
thereon, so long as Grantor has consented thereto, or
(iv) join in any extension agreement or any agreement
subordinating the lien or charge hereof.
IN WITNESS WHEREOF, this Deed of Trust has been
duly authorized and has been executed and delivered to
Trustee and Beneficiary by Grantor on the date first
written
above.
ECKERD CORPORATION, a
Delaware
corporation,
by
/s/ Martin W. Gladysz
Name: Martin W.
Gladysz
Title: Vice President
[ACKNOWLEDGMENT FORM]
THE STATE OF NEW YORK )
COUNTY OF NEW YORK )
This instrument has been acknowledged before me
on
this 3rd day of August, 1994, by Martin W. Gladysz, a vice
president of Eckerd Corporation, a Delaware corporation, on
behalf of such corporation.
My Commission expires: /s/ Deborah M. Voytovich
May 1, 1995 Notary Public in and for
the State of New York
Deborah M. Voytovich
Printed Name of Notary
APPENDIX A to Deed of Trust,
Security Agreement and
Assignment of Leases and
Rents
TEXAS OVERRIDE PROVISIONS
This Appendix A (this "Appendix A") has been
attached to and shall be deemed incorporated into that
certain Deed of Trust, Security Agreement and Assignment of
Leases and Rents (the "Deed of Trust") dated as of June 14,
1993, as amended and restated as of August 3, 1994, by
Eckerd Corporation, formerly known as Jack Eckerd
Corporation, a Delaware corporation, (the "Grantor") to the
trustee named therein (the "Trustee") for the benefit of
Chemical Bank, as Collateral Agent for the Secured Parties
(in such capacity the "Beneficiary"). As set forth in
Section 4.01 of the Deed of Trust, in the event of any
conflict between the terms and provisions contained in the
body of the Deed of Trust and the terms and provisions set
forth in this Appendix A, the terms and provisions set
forth
in this Appendix A shall govern and control. All
references
in this Appendix A to Articles and Section shall, unless
otherwise provided, refer to Articles and Sections of this
Appendix A and all references to "this Deed of Trust" or
similar language shall refer to the Deed of Trust, as
supplemented and, if applicable, overridden by this
Appendix
A.
ARTICLE I
Future Advances and Interest Limitation
SECTION 1.01. Future Advances. In addition to
securing the full, prompt and complete payment when due of
the Obligations, this Deed of Trust shall also secure any
and all other, further or future loans, advances,
readvances, reborrowings and borrowings made to or at the
request of the Grantor from or by any one on all of the
Beneficiary, the Lenders, the Swingline Lenders, the
Fronting Banks, the Managing Agents, the Administrative
Agent, the Documentation Agent and/or the Collateral Agent
and all other debts, obligations and liabilities of every
kind and character of the Grantor now or hereafter existing
in favor of any one or all of the Beneficiary, the Lenders,
the Swingline Lenders, the Fronting Banks, the Managing
Agents, the Administrative Agent, the Documentation Agent
and/or the Collateral Agent (including, without limitation,
all indebtedness incurred or arising pursuant to the Credit
Agreement and/or any Loan Document) whether such debts,
obligations or liabilities be direct or indirect, primary
or
secondary, joint or several, fixed or contingent, and
whether originally payable to any of such parties or to a
third party, and subsequently acquired by any of such
parties, and whether such debts, obligations and
liabilities
are evidenced by note, open account, overdraft,
endorsement,
surety agreement or otherwise, it being presently
contemplated by the Grantor and such other parties that the
Grantor may and will hereafter become indebted to the
Beneficiary, the Lenders, the Swingline Lenders, the
Fronting Banks, the Managing Agents, the Administrative
Agent, the Documentation Agent and the Collateral Agent in
other, further and future sum or sums.
SECTION 1.02. Limitation on Interest. All
agreements between the Grantor and the Beneficiary, whether
now existing or hereafter arising and whether written or
oral, are expressly limited so that in no contingency or
event whatsoever, whether by reason of acceleration of the
maturity of the indebtedness secured hereby, or otherwise,
shall the amount paid or agreed to be paid to the
Beneficiary for the use, forbearance or detention of the
indebtedness secured hereby or for the performance or
payment of any covenant or obligation contained herein or
in
any other instrument evidencing, securing or pertaining to
the indebtedness secured hereby, exceed the maximum rate
permitted by applicable law. If from any circumstances
whatsoever fulfillment of any provision hereof or of any
such other document, at the time performance of such
provision shall be due, shall involve transcending the
limit
of validity prescribed by law, then, ipso facto, the
obligation to be fulfilled shall be reduced to the limit of
such validity, and if from any such circumstance the
Beneficiary hereof shall ever receive anything of value
deemed interest by applicable law which would exceed the
maximum rate, an amount equal to any excessive interest
shall be applied to the reduction of the principal amount
owing under the Obligations or on account of any other
principal indebtedness of the Grantor to the Beneficiary,
in
the inverse order of maturity, and not to the payment of
interest, or if such excessive interest exceeds the unpaid
balance of principal of the Obligations and such other
indebtedness, such excess shall be refunded by the
Beneficiary to the Grantor. In determining if from any
such
specific circumstance the Beneficiary shall have received
anything of value deemed interest by applicable law which
would exceed the maximum rate, the Grantor and the
Beneficiary shall, to the maximum extent permissible under
applicable law, (a) characterize any non-principal payment
as an expense, fee or premium rather than as interest;
(b) exclude voluntary prepayments and the effects thereof;
and (c) amortize, prorate, allocate and spread all sums
paid
or agreed to be paid throughout the full term of such
indebtedness until payment in full so that the rate of
interest on account of such indebtedness is uniform
throughout the term thereof; provided, however, that if
such
indebtedness is paid and performed in full prior to the end
of the full contemplated term thereof, and the Beneficiary
shall have received anything of value deemed interest by
applicable law which would exceed the maximum rate for the
actual period of such indebtedness, the Beneficiary shall
apply such amounts as hereinabove provided, and, in such
event, the Beneficiary shall not be subject to any penalty
for contracting for, charging or receiving interest in
excess of the maximum rate. The terms and provisions of
this Section 1.02 shall control and supersede every other
provision of all agreements between the Grantor and the
Beneficiary.
ARTICLE II
Non-Judicial Foreclosure and Certain Waivers
SECTION 2.01. Foreclosure and Sale.
(a) If an Event of Default shall occur, each of
Trustee and his successor or substitute is authorized
and empowered and it shall be his special duty at the
request of the Beneficiary to sell or offer for sale
the Trust Property in such portions, order and parcels
as the Beneficiary may determine, with or without
having first taken possession of same, to the highest
bidder for cash at public auction or upon such other
terms and conditions as the Beneficiary, in its sole
and absolute discretion, may hereafter elect. Such
sale shall be made at the courthouse door of the
county
in which the Trust Property (or that portion thereof
to
be sold) is situated (whether the parts or parcels
thereof, if any, located in different counties are
contiguous or not, and without the necessity of having
any personal property hereby mortgaged present at such
sale) on the first Tuesday of any month between the
hours of 10:00 a.m. and 4:00 p.m. after advertising
the
time, place and terms of sale and that portion of the
Trust Property to be sold by posting or causing to be
posted written or printed notice thereof at least 21
days preceding the date of said sale at the courthouse
door of the county in which the sale is to be made and
at the courthouse door of any other county in which a
portion of the Trust Property may be situated, which
notice may be posted by the Trustee acting, or by any
person acting for him, and filing a copy of such
notice
with the clerk of the county in which the sale is to
be
made, and the holder of the indebtedness has, at least
21 days preceding the date of sale, served written or
printed notice of the proposed sale by certified mail
on each debtor obligated to pay the indebtedness
secured by this Deed of Trust according to the records
of the Beneficiary by the deposit of such notice,
enclosed in a postpaid wrapper, properly addressed to
such debtor at debtor's most recent address as shown
by
the records of the holder of the indebtedness, in a
post office or official depository under the care and
custody of the United States Postal Service. In the
event any of the foregoing are not sufficient to
satisfy or are in excess of the requirements of the
applicable laws of the State of Texas or of the United
States whenever such is to be commenced or conducted,
this Article shall be deemed to incorporate any
additional laws of the State of Texas or of the United
States, and to be amended by deletion of any
requirements in excess thereof.
(b) Notwithstanding anything herein to the
contrary, the Beneficiary may, at its option,
accomplish all or any of the aforesaid in such manner
as may from time to time be permitted or required by
the provisions of the Property Code of the State of
Texas (the "Property Code") relating to the sale of
real estate or by Chapter 9 of the Texas Business and
Commerce Code relating to the sale of collateral after
default by a debtor (as said article and chapter now
exist or may be hereinafter amended or succeeded), or
by any other present or subsequent articles or
enactments relating to same. Nothing contained in
this
Section 2.01 shall be construed to limit in any way
the
Trustee's right to sell the Trust Property by private
sale under the laws of the State of Texas or by public
or private sale after entry of a judgment by any court
of competent jurisdiction ordering same. At any such
sale: (i) whether made under the power herein
contained, the Property Code, the Texas Business and
Commerce Code or by virtue of any judicial proceedings
or any other legal right, remedy or recourse, it shall
not be necessary for the Trustee to have physically
present, or to have constructive possession of, the
Trust Property (the Grantor shall deliver to the
Trustee any portion of the Trust Property not actually
or constructively possessed by the Trustee immediately
upon demand by the Trustee) and the title to and right
of possession of any such property shall pass to the
purchaser thereof as completely as if the same had
been
actually present and delivered to purchaser at such
sale; (ii) each instrument of conveyance executed by
the Trustee shall contain a general warranty of title,
binding upon the Grantor and its successors; (iii)
each
and every recital contained in any instrument of
conveyance made by the Trustee shall be conclusive
evidence of the truth and accuracy of the matters
recited therein, including, without limitation, non-
payment of the indebtedness, advertisement and conduct
of such sale in the manner provided herein and
otherwise by law and appointment of any successor to
the Trustee hereunder; (iv) any and all prerequisites
to the validity thereof shall be presumed to have been
performed; (v) the receipt of the Trustee or of such
other party or officer making the sale shall be
sufficient to discharge to the purchaser or purchasers
for his or their purchase money, and no such purchaser
or purchasers, or his or their assigns or personal
representatives, shall thereafter be obligated to see
to the application of such purchase money or be in any
way answerable for any loss, misapplication or non-
application thereof; (vi) to the fullest extent
permitted by law, the Grantor shall be completely and
irrevocably divested of all of its right, title,
interest, claim and demand whatsoever, either at law
or
in equity, in and to the property sold, and such sale
shall be a perpetual bar, both at law and in equity,
against the Grantor and against all other persons
claiming or to claim the property sold or to any part
thereof by, through or under the Grantor; and (vii) to
the extent and under such circumstances as are
permitted by law, the Beneficiary may be a purchaser
at
any such sale.
SECTION 2.02. Separate Sales. The Trustee may
sell all or any portion of the Trust Property together or
in
lots or parcels and in such manner and order as the
Trustee,
in its sole discretion, may elect. The sale or sales by
the
Trustee of less than the whole of the Trust Property shall
not exhaust the power of sale herein granted, and the
Trustee is specifically empowered to make successive sale
or
sales under such power until the whole of the Trust
Property
shall be sold; and if the proceeds of such sale or sales of
less than the whole of the Trust Property shall be less
than
the aggregate of the indebtedness and the expense of
executing this trust, this Deed of Trust and the lien,
security interest and assignment hereof shall remain in
full
force and effect as to the unsold portion of the Trust
Property just as though no sale or sales had been made;
provided, however, that the Grantor shall never have any
right to require the sale or sales of less than the whole
of
the Trust Property, but the Beneficiary shall have the
right, at its sole election, to request the Trustee to sell
less than the whole of the Trust Property. As among the
various counties in which items of the Trust Property may
be
situated, sales in such counties may be conducted in any
order that the Trustee may deem expedient; and any one or
more of such sales may be conducted in the same month, or
in
successive or different months, as the Trustee may deem
expedient. If default is made hereunder, the holder of the
indebtedness or any part thereof on which the payment is
delinquent shall have the option to proceed as if under a
full foreclosure, conducting the sale as herein provided
without declaring the entire indebtedness due, and if sale
is made because of default of an installment, or a part of
an installment, such sale may be made subject to the
unmatured part of the indebtedness; and such sale, if so
made, shall not in any manner affect the unmatured part of
the indebtedness but as to such unmatured part, this Deed
of
Trust shall remain in full force and effect as though no
sale had been made under the provision of this paragraph.
Any number of sales may be made hereunder without
exhausting
the right of sale for any unmatured part of the
indebtedness
secured hereby.
SECTION 2.03. Release of and Resort to
Collateral. Any part of the Trust Property may be released
by the Beneficiary without affecting, subordinating or
releasing the lien, security interest and assignment hereof
against the remainder. The lien, security interest and
other rights granted hereby shall not affect or be affected
by any other security taken for the same indebtedness or
any
part thereof. The taking of additional security, or the
rearrangement, extension, modification, reinstatement or
renewal of the indebtedness, or any part thereof, shall not
release or impair the lien, security interest and other
rights granted hereby or affect the liability of any
endorser, guarantor or surety, or improve the right of any
permitted junior lienholder; and this Deed of Trust, as
well
as any instrument given to secure any rearrangement,
modification, renewal or extension of the indebtedness
secured hereby, or any part thereof, shall be and remain a
first and prior lien on all of the Trust Property not
expressly released until the indebtedness is completely
paid.
SECTION 2.04. Waiver of Redemption, Notice and
Marshalling of Assets. To the fullest extent permitted by
law, the Grantor hereby irrevocably and unconditionally
waives and releases:
(a) all benefits that might accrue to the
Grantor, by any present or future laws exempting the
Trust Property from attachment, levy or sale on
execution or providing for any appraisement,
valuation,
stay of execution, exemption from civil process,
redemption or extension of time for payment;
(b) all notices of acceleration, notices of
intent
to accelerate, notices of demand, notices of intent to
demand, notices of any Event of Default and notices of
the Beneficiary's or the Trustee's election to
exercise
or the actual exercise of any right, remedy or
recourse
provided for under the Loan Documents, except to the
extent, if at all, expressly otherwise provided in the
Credit Agreement;
(c) any right to appraisal or marshalling of
assets or a sale in inverse order of alienation;
(d) the exemption of homestead;
(e) the administration of estates of decedents,
or
other matter whatever to defeat, reduce or affect the
right of the Beneficiary under the terms of this Deed
of Trust, to sell the Trust Property for the
collection
of the indebtedness secured hereby (without any prior
or different resort for collection) or the right of
the
Beneficiary, under the terms of this Deed of Trust, to
the payment of the indebtedness out of the proceeds of
sale of the Trust Property in preference of every
other
person and claimant whatever (only reasonable expenses
of such sale being first deducted); and
(f) any right or remedy which it may have or be
able to assert by reason of the provisions of
Chapter 34 of the Business and Commerce Code of the
State of Texas, as currently in effect or hereafter
amended, and any other, further or future laws, rules
and/or judicial doctrines pertaining to the rights and
remedies of sureties.
ARTICLE III
The Trustee's Duties and Liability
SECTION 3.01. No Liability. The Trustee shall
not be liable for any error of judgment or act done by the
Trustee, or be otherwise responsible or accountable under
any circumstances whatsoever, except if the result of the
Trustee's gross negligence or willful misconduct. The
Trustee shall not be personally liable in case of entry by
him or anyone acting by virtue of the powers herein granted
him upon the Trust Property for debts contracted or
liability or damages or damages incurred in the management
or operation of the Trust Property. The Trustee shall have
the right to rely on any instrument, document or signature
authorizing or supporting any action taken or proposed to
be
taken by him hereunder or believed by him to be genuine.
The Trustee shall be entitled to reimbursement for actual
expenses incurred by him in the performance of his duties
hereunder and to reasonable compensation for such of his
services hereunder as shall be rendered. The Grantor will,
from time to time, reimburse the Trustee for and save and
hold him harmless from and against any and all loss, cost,
liability, damage and expense whatsoever incurred by him in
the performance of his duties.
SECTION 3.02. Retention of Monies. All monies
received by the Trustee shall, until used or applied as
herein provided, be held in trust for the purposes for
which
they were received, but need not be segregated in any
manner
from any other monies (except to the extent required by
law)
and the Trustee shall be under no liability for interest on
any monies received by him hereunder.
SECTION 3.03. Successor Trustees. The Trustee
may resign by giving of notice of such resignation in
writing to the Beneficiary. If the Trustee shall die,
resign or become disqualified from acting in the execution
of this trust or shall fail or refuse to exercise the same
when requested by the Beneficiary or if for any or no
reason
and without cause the Beneficiary shall prefer to appoint
a
substitute trustee to act instead of the original Trustee
named herein, or any prior successor or substitute trustee,
the Beneficiary shall, without any formality or notice to
the Grantor or any other person, have full power to appoint
a substitute trustee and, if the Beneficiary so elects,
several substitute trustees in succession who shall succeed
to all the estate, rights, powers and duties of the
aforenamed Trustee.
SECTION 3.04. Succession Instruments. Any new
Trustee appointed pursuant to any of the provisions hereof
shall, without any further act, deed or conveyance, become
vested with all the estates, properties, rights, powers and
trusts of its or his predecessor in the rights hereunder
with like effect as if originally named as the Trustee
herein; but, nevertheless, upon the written request of the
Beneficiary or his successor trustee, the Trustee ceasing
to
act shall execute and deliver an instrument transferring to
such successor trustee, upon the trust herein expressed,
all
the estates, properties, rights, powers and trusts of the
Trustee so ceasing to act, and shall duly assign, transfer
and deliver any of the property and monies held by the
Trustee to the successor trustee so appointed in its or his
place.
SECTION 3.05. Performance of Duties by Agents.
The Trustee may authorize one or more parties to act on his
behalf to perform the ministerial functions required of him
hereunder, including, without limitation, the transmittal
and posting of any notices.
ARTICLE IV
Fixture Filing and Assignment of Rents
SECTION 4.01. Fixture Filing. Pursuant to the
Texas Business and Commerce Code, this Deed of Trust shall
be effective as a Financing Statement filed as a fixture
filing from the date of its filing for record covering and
including any and all fixtures of every kind and type
affixed to all or any portion of the Premises or forming
part of all or any portion of the Improvements. The name
and address of the Grantor, as Debtor, and the Beneficiary
(where information concerning the security interest granted
hereby may be obtained), as Secured Party, are as set forth
on page 1 of this Deed of Trust. The above described goods
are or are to become fixtures related to the Premises and
the Improvements of which the Grantor is the record title
owner. This Deed of Trust shall also be effective as a
financing statement covering minerals or the like
(including
oil and gas) and accounts subject to Section 9.103(e) of
the
Texas Business and Commerce Code, as amended. A carbon,
photographic or other reproduction of this Deed of Trust or
any financing statement relating to this Deed of Trust
shall
be sufficient as a financing statement.
SECTION 4.02. Assignment of Rents. The Grantor
acknowledges and agrees that the assignment set forth in
Section 1.09(c) of the body of this Deed of Trust shall be
upon the following additional terms:
(a) until receipt from the Beneficiary of written
notice each tenant may pay any and all Rents and other
sums set forth above directly to the Grantor, but
after
written notice, the Grantor covenants to hold any and
all such sums in trust for the use and benefit of the
Beneficiary;
(b) upon receipt from the Beneficiary of a
written
notice, each tenant is hereby authorized and directed,
without the need for the prior consent, approval or
joinder by the Grantor or any other person, to pay
directly to the Beneficiary any and all of such Rents
and other sums thereafter accruing;
(c) the Beneficiary shall not be liable for its
failure to exercise diligence in the collection of any
and all of such Rents and other sums;
(d) the assignment set forth herein shall
terminate upon the release of this instrument, but no
tenant shall be required to accept notice of any such
termination until a copy of any such release, as
executed by the Beneficiary, has been delivered to
such
tenant;
(e) in no event shall the rights set forth in
this
assignment effect or be construed so as to effect a
pro
tanto reduction of the indebtedness secured hereby
except to the extent, if at all, that the Beneficiary
actually receives, after the occurrence of a default
and the Beneficiary's election to pursue its rights
under this Section, Rents and other sums directly from
any tenant of all or any portion of the Trust Property
and applies same, in the Beneficiary's discretion, to
such indebtedness; and
(f) the Beneficiary need not institute, prosecute
or resort to any legal, equitable or other action, nor
deliver any notice or demand, nor take any affirmative
action whatsoever after the occurrence of a default in
order to enforce and obtain the benefits of the
provisions set forth herein.
Notwithstanding anything to the contrary contained herein
or
otherwise, the Grantor and the Beneficiary intend, clearly
and without ambiguity, that the assignment set forth herein
shall be deemed and otherwise construed for all purposes to
be an absolute, unconditional and presently effective
assignment of the Rents and the provisions of clause (a)
and
clause (b) above are intended solely for the benefit of
each
tenant and shall never inure to the benefit of the Grantor
or any person claiming by, through or under the Grantor.
ARTICLE V
Miscellaneous
SECTION 5.01. Releases. Upon payment in full of
the Obligations and all other indebtedness secured hereby,
the Beneficiary shall, at the Grantor's expense, cause the
lien created by this Deed of Trust to be released by an
instrument in form and substance reasonably satisfactory to
the Grantor and the Beneficiary.
SECTION 5.02. Subrogation. If any or all of the
proceeds of the indebtedness secured hereby have been used
to extinguish, extend or renew any indebtedness heretofore
existing against all or any portion of the Trust Property
or
to satisfy any indebtedness or obligation secured by a lien
or encumbrance of any kind (including liens securing the
payment of any taxes), such proceeds have been advanced by
the Beneficiary at the Grantor's request and, to the extent
of such funds so used, the indebtedness and obligations in
this Deed of Trust shall be subrogated to and extend to all
of the rights, claims, liens, titles and interests
heretofore existing against the Trust Property (or such
portion thereof) to secure the indebtedness or obligation
so
extinguished, paid, extended or renewed, and the former
rights, claims, liens, titles and interests, if any, shall
not be waived but rather shall be continued in full force
and effect and in favor of the Beneficiary and shall be
merged with the lien and security interest created herein
as
cumulative security for the repayment of the indebtedness
and satisfaction of the Obligations.
SECTION 5.03. No Partnership. That
notwithstanding anything to the contrary contained herein
or
otherwise (a) the relationship between the Grantor and the
Beneficiary hereunder and otherwise shall be deemed,
construed and treated by the Grantor and the Beneficiary
for
all purposes to be solely that of debtor/creditor; (b) the
various consent, approval and other rights afforded to the
Beneficiary under this Deed of Trust have been granted and
designed solely to protect the value of the Trust Property
and to assure the Grantor's payment of the indebtedness and
all of such rights are customarily granted lenders in
secured lending transactions; (c) the Grantor and the
Beneficiary hereby expressly disclaim any sharing of
liabilities, losses, costs or expenses with respect to the
ownership or operation of all or any portion of the Trust
Property, or otherwise; and (d) the terms contained herein
are not intended by the Grantor and the Beneficiary and
shall not for any purpose be deemed, construed or treated
by
the Grantor and the Beneficiary so as (i) to create a
partnership or joint venture between the Beneficiary and
the
Grantor or between the Beneficiary and any other party, or
(ii) to cause the Beneficiary to be or become liable in any
way for the debts and obligations of the Grantor
(including,
without limitation, any losses attributable to the
Grantor's
operation of the Trust Property) or any other party.
SECTION 5.04. Incorporation by Reference. The
terms, covenants and provisions of the Credit Agreement and
the other Loan Documents have been incorporated into this
Deed of Trust by this reference. All references to the
"Beneficiary" shall be deemed to include Chemical Bank and
any successor, further or substitute entity appointed now
or
at any time hereafter as the collateral agent hereunder.
All references to the "Lenders", the "Swingline Lenders"
the
"Fronting Banks", the "Managing Agents", the
"Administrative
Agent" and the "Documentation Agent" shall include all
persons and entities currently acting as such and their
respective successors and assigns. All persons from time
to
time having an interest in all or any portion of the Trust
Property are hereby placed on notice of all of the terms,
covenants and provisions of the instruments incorporated
herein and that copies of same may be obtained, subject to
such confidentiality restrictions as may be reasonably
acceptable to both the Beneficiary and the Grantor, by
those
having an appropriate interest in the Trust Property or any
portion thereof upon written request to the Beneficiary at
the address set forth on page 1 of this Deed of Trust. Any
such request shall include the name and address of the
requesting party and also contain a brief explanation of
the
nature and reason for such request.
SECTION 5.05. Section 26.02 Notice. IN
ACCORDANCE WITH SECTION 26.02 OF THE TEXAS BUSINESS AND
COMMERCE CODE, THIS DEED OF TRUST AND THE OTHER DOCUMENTS
EVIDENCING, SECURING OR PERTAINING TO ALL OR ANY PORTION OF
THE OBLIGATIONS REPRESENT THE FINAL AGREEMENT BETWEEN THE
GRANTOR AND THE BENEFICIARY AS TO THE SUBJECT MATTER
THEREOF
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF SUCH
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
SUCH PARTIES.
Dallas County,
Texas
EXHIBIT A
All that certain plot, piece or parcel of land located in
the City of Garland, County of Dallas, and State of Texas,
bounded and described as follows:
BEING A TRACT OF LAND IN THE CITY
OF GARLAND, DALLAS COUNTY, TEXAS, BEING DESCRIBED AS THE
EAST 370 FEET OF LOTS 7 AND 8, ALL OF LOT 9 OF SHEPERD
INDUSTRIAL PARK NO. 3, AN ADDITION TO THE CITY OF GARLAND,
TEXAS, ACCORDING TO THE PLAT RECORDED IN VOLUME 823, PAGE
2073, MAP RECORDS OF DALLAS COUNTY, TEXAS, AND ALL OF LOT
32
OF SHEPERD INDUSTRIAL PARK NO. 4, AN ADDITION TO THE CITY
OF
GARLAND, TEXAS, ACCORDING TO THE PLAT RECORDED IN VOLUME
71194, PAGE 009, MAP AND PLAT RECORDS, DALLAS COUNTY,
TEXAS,
AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE NORTHEAST CORNER OF LOT 7 OF SAID SHEPERD
INDUSTRIAL PARK NO. 3;
THENCE SOUTH 0 DEG. 14' 38" WEST WITH THE EAST LINE OF SAID
LOTS 7, 8, 9 AND 32, 673.21 FEET TO AN IRON STAKE FOR
CORNER
LOCATED IN THE NORTH RIGHT OF WAY OF ACTION STREET AND
BEING
THE SOUTHEAST CORNER OF SAID LOT 32;
THENCE SOUTH 70 DEG. 12' 24" WEST WITH THE NORTH RIGHT OF
WAY OF ACTION STREET AND THE SOUTH LINE OF LOT 32, 517.04
FEET TO POINT OF CURVATURE OF CURVE FOR CORNER;
THENCE NORTHEASTERLY WITH A CURVE TO THE RIGHT AND SOUTH
AND
WEST LINES OF SAID LOT 32, 192.05 FEET TO POINT OF SAID
CURVE IN THE EAST RIGHT OF WAY OF SHEPERD DRIVE, SAID CURVE
HAVING A CENTRAL ANGLE OF 110 DEG. 02' 14" AND A RADIUS OF
100.00 FEET;
THENCE NORTH 0 DEG. 14' 38" EAST WITH THE EAST RIGHT OF WAY
OF SHEPERD DRIVE AND THE WEST LINE OF LOT 32 AND LOT 9,
523.78 FEET TO AN IRON STAKE FOR CORNER, SAID CORNER BEING
THE NORTHWEST CORNER OF SAID LOT 9;
THENCE EAST WITH THE NORTH LINE OF LOT 9 AND THE SOUTH LINE
OF LOT 8, 250 FEET TO IRON STAKE FOR CORNER;
THENCE NORTH 0 DEG. 14' 38" EAST PARALLEL TO SHEPERD DRIVE
ACROSS LOTS 8 AND 7, 230 FEET TO AN IRON STAKE FOR CORNER
SET IN THE NORTH LINE OF LOT 7, SAID POINT BEING THE
SOUTHEAST CORNER OF LOT 6 OF SHEPERD INDUSTRIAL PARK NO. 2
AS FILED IN VOLUME 52, PAGE 113, MAP AND PLAT RECORDS,
DALLAS COUNTY, TEXAS;
THENCE EAST WITH THE NORTH LINE OF LOT 7 AND THE SOUTH LINE
OF AMERICAN METER PROPERTY 370 FEET TO THE PLACE OF
BEGINNING, AND CONTAINING 424,466.90 SQUARE FEET OF LAND.
DEED OF TRUST, SECURITY AGREEMENT
AND ASSIGNMENT OF LEASES AND RENTS
THIS DEED OF TRUST, SECURITY AGREEMENT
AND ASSIGNMENT OF LEASES AND RENTS dated as
of June 14, 1994 as amended and restated as
of August 3, 1994, (this "Deed of Trust"),
by
ECKERD CORPORATION, formerly known as Jack
Eckerd Corporation, a Delaware corporation,
having an office at 8333 Bryan Dairy Road,
Largo, Florida 34647 (the "Grantor"), to
Kenneth F. Plifka (the "Trustee") for the
benefit of CHEMICAL BANK, a New York banking
corporation ("Chemical"), having an office
at
270 Park Avenue, New York, New York 10017,
as
Collateral Agent for the Secured Parties (as
defined herein) (in such capacity, together
with its successors" substitutes and
assigns,
the "Beneficiary").
WITNESSETH THAT:
A. The Grantor as the Borrower (such term and
each other capitalized term used herein but not defined
herein shall have the meaning given to such term in the
Credit Agreement (as defined herein)), has entered into an
amended and restated credit agreement dated as of the date
hereof of the credit agreement dated as of June 14, 1993
(the "1993 Agreement"), (such amended and restated credit
agreement, as amended or modified from time to time, the
"Credit Agreement"), with the financial institutions party
thereto, as lenders (the "Lenders"), Chemical and
NationsBank of Florida, N.A., a national banking
association
("NationsBank"), as managing agents and swingline lenders
(in such latter capacity, each a "Swingline Lender") and
Chemical, as administrative agent (in such capacity, the
"Administrative Agent") and NationsBank as documentation
Agent (in such capacity, the "Documentation Agent").
B. Pursuant to the Credit Agreement (a) the
Lenders and the Swingline Lenders, respectively, have
agreed
to extend credit in order to enable the Mortgagor to borrow
(i) on a term basis, Term Loans in an aggregate principal
amount not to exceed $500,000,000 and having a scheduled
maturity date of July 29, 2000, (ii) on a revolving basis,
Revolving Loans, at any time and from time to time prior to
July 29, 2000, in an aggregate principal amount at any time
outstanding not in excess of the difference between
$350,000,000 and the sum of (A) the aggregate principal
amount of the Swingline Loans outstanding at such time and
(B) the LC/BA Exposure at such time and (iii) on a
revolving
basis, at any time and from time to time prior to July 29,
2000, Swingline Loans in an aggregate principal amount at
any time outstanding not to exceed $30,000,000 and (b) the
Fronting Banks to issue Letters of Credit and originate
Bankers' Acceptance in an aggregate face amount at any time
outstanding not in excess of $155,000,000 and having a
scheduled maturity date of July 29, 2000.
C. On the Restatement Date, the Mortgagor will
(a) use the proceeds of (i) all Term Borrowings and
(ii) Revolving Credit Borrowings not in excess of
$50,000,000 solely to continue or convert all term loans
outstanding under the 1993 Credit Agreement and (b) use the
proceeds of any additional Revolving Credit Borrowings
solely to continue or convert all revolving loans
outstanding under the 1993 Credit Agreement.
The proceeds of Revolving Credit Borrowings
following the Restatement Date will be used for the general
corporate purposes of the Mortgagor and the Subsidiaries.
The proceeds of the Swingline Loans will also be used for
the general corporate purposes of the Mortgagor and the
Subsidiaries, Letters of Credit and Bankers' Acceptances
will be used to support obligations of the Mortgagor and
the
Subsidiaries incurred in the ordinary course of business of
the Mortgagor and the Subsidiaries.
D. The obligations of the Lenders to make Loans,
of the Swingline Lenders to make Swingline Loans and of the
Fronting Banks to issue Letters of Credit and to originate
Bankers' Acceptances, are conditioned upon, among other
things, the execution and delivery by the Grantor of this
Deed of Trust, in the form hereof, to secure (a) the due
and
punctual payment of (i) the principal of and premium, if
any, and interest (including interest accruing during the
pendency of any bankruptcy, insolvency, receivership or
other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the Loans and the
Swingline
Loans, when and as due, whether at maturity, by
acceleration, upon one or more dates set for prepayment or
otherwise, (ii) each payment required to be made by the
Borrower under the Credit Agreement in respect of any
Letter
of Credit or Bankers' Acceptance, when and as due,
including
payments in respect of reimbursement of disbursements,
interest thereon and obligations to provide cash collateral
and (iii) all other monetary obligations, including fees,
costs, expenses and indemnities, whether primary,
secondary,
direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding,
regardless of whether allowed or allowable in such
proceeding) of the Borrower to the Secured Parties under
the
Credit Agreement, this Deed of Trust and the other Loan
Documents, to which the Borrower is or is to be a party,
(b) the due and punctual performance of all covenants,
agreements, obligations and liabilities of the Borrower
under or pursuant to the Credit Agreement, this Deed of
Trust and the other Loan Documents and (c) unless otherwise
agreed upon in writing by the applicable Lender, all
obligations of the Borrower, monetary or otherwise, under
each Rate Protection Agreement entered into with any
Lender,
whether pursuant to Section 6.11 of the Credit Agreement or
otherwise (all the obligations referred to in this
clause (c) and in the preceding clauses (a) and (b) being
referred to, collectively, as the "Obligations").
E. Pursuant to the requirements of the Credit
Agreement, the Grantor is entering into this Deed of Trust
to grant to the Beneficiary a lien against and create a
security interest in the Trust Property (as defined herein)
to secure the performance and payment by the Grantor of the
Obligations. The Credit Agreement also requires the
granting by Grantor of mortgages (the "Other Mortgages")
that create security interests in certain Mortgaged
Properties other than the Trust Property to secure the
performance by the Grantor of the Obligations.
Granting Clauses
NOW THEREFORE, IN CONSIDERATION OF the foregoing
and in order to secure the (a) due and punctual payment and
performance of the Obligations by the Grantor, (b) the due
and punctual payment by the Grantor of all taxes and
insurance premiums relating to the Trust Property and
(c) all disbursements made by Beneficiary for the payment
of
taxes, or insurance premiums, all fees, expenses or
advances
in connection with or relating to the Trust Property, and
interest on such disbursements and other amounts not timely
paid in accordance with the terms of the Credit Agreement,
this Deed of Trust and the Loan Documents, Grantor hereby
grants, bargains, sells, transfers, sets over, assigns and
conveys as security, grants a security interest in,
hypothecates, mortgages, pledges and sets over unto
Trustee,
IN TRUST FOREVER, with power of sale, with mortgage
covenants, all the following described property (the "Trust
Property") whether now owned or held or hereafter acquired;
provided, however, that the maximum amount secured by this
Deed of Trust in the State of Texas upon recordation or
upon
any contingency which may be secured hereby at any time
hereafter is $850,000,000;
(1) the fee estate in the land more particularly
described on Exhibit A hereto (the "Land"), together
with all rights appurtenant thereto, including the
easements over certain other adjoining land granted by
any easement agreements, covenant or restrictive
agreements and all air rights, mineral rights, water
rights, oil and gas rights and development rights, if
any, relating thereto, and also together with all of
the other easements, rights, privileges, interests,
permits, hereditaments and appurtenances thereunto
belonging or in anywise appertaining and all of the
estate, right, title, interest, claim or demand
whatsoever of Grantor therein and in the streets and
ways adjacent thereto, either in law or in equity, in
possession or expectancy, now or hereafter acquired
(the "Premises");
(2) all buildings, improvements, structures,
paving, parking areas, walkways and landscaping now or
hereafter erected or located upon the Land, and all
legal fixtures of every kind and type affixed to all
or
any portion of the Premises or attached to or forming
part of all or any portion of any structures,
buildings
or improvements and replacements thereof now or
hereafter erected or located upon the Land (the
"Improvements");
(3) all apparatus, movable appliances, building
materials, equipment, fittings, furnishings,
furniture,
machinery and other articles of tangible personal
property of every kind and nature, and replacements
thereof, now or at any time hereafter owned by the
Grantor and placed upon or used in any way in
connection with the use, enjoyment, occupancy or
operation of the Improvements or the Premises,
including all of Grantor's books and records relating
thereto and including all pumps, tanks, goods,
machinery, tools, equipment, lifts (including fire
sprinklers and alarm systems, fire prevention or
control systems, cleaning rigs, air conditioning,
heating, boilers, refrigerating, electronic
monitoring,
water, loading, unloading, lighting, power,
sanitation,
waste removal, entertainment, communications,
computers, recreational, window or structural,
maintenance, truck or car repair and all other
equipment of every kind), restaurant, bar and all
other
indoor or outdoor furniture (including tables, chairs,
booths, serving stands, planters, desks, sofas, racks,
shelves, lockers and cabinets), bar equipment,
glasses,
cutlery, uniforms, linens, memorabilia and other
decorative items, furnishings, appliances, supplies,
inventory, rugs, carpets and other floor coverings,
draperies, drapery rods and brackets, awnings,
venetian
blinds, partitions, chandeliers and other lighting
fixtures, freezers, refrigerators, walk-in coolers,
signs (indoor and outdoor), computer systems, cash
registers and inventory control systems, and all other
apparatus, equipment, furniture, furnishings, and
articles used in connection with the use or operation
of the Improvements or the Premises, it being
understood that the enumeration of any specific
articles of property shall in no way result in or be
held to exclude any items of property not specifically
mentioned (the property referred to in this
paragraph (3), including Grantor's interest as lessee
under any lease of personal property to the extent
such
lease does not prohibit such grant, being hereinafter
called the "Personal Property");
(4) all general intangibles now owned or
hereafter
acquired by the Grantor and relating to design,
development, operation, management and use of the
Premises or the Improvements, all certificates of
occupancy, zoning variances, building, use or other
permits, approvals, authorizations and consents
obtained from and all materials prepared for filing or
filed with any governmental agency in connection with
the development, use, operation or management of the
Premises and Improvements, all construction, service,
engineering, consulting, leasing, architectural and
other similar contracts concerning the design,
construction, management, operation, occupancy and/or
use of the Premises and Improvements, all
architectural
drawings, plans, specifications, soil tests,
feasibility studies, appraisals, environmental
studies,
engineering reports and similar materials relating to
any portion of or all of the Premises and
Improvements,
and all payment and performance bonds or warranties or
guarantees relating to the Premises or the
Improvements, all to the extent assignable (the
"Permits, Plans and Warranties");
(5) Grantor's interest in and rights under all
leases or licenses (under which Grantor is landlord or
licensor) and subleases (under which Grantor is
sublandlord), concession, management, mineral or other
agreements of a similar kind that permit the use or
occupancy of the Premises or the Improvements for any
purpose in return for any payment, or the extraction
or
taking of any gas, oil, water or other minerals from
the Premises in return for payment of any fee, rent or
royalty (collectively, "Leases"), and all agreements
or
contracts for the sale or other disposition of all or
any part of the Premises or the Improvements, now or
hereafter entered into by Grantor, together with all
charges, fees, income, issues, profits, receipts,
rents, revenues or royalties payable thereunder
("Rents");
(6) all of Grantor's right, title and interest in
and to all real estate tax refunds and all proceeds of
the conversion, voluntary or involuntary, of any of
the
Trust Property into cash or liquidated claims,
including Proceeds of insurance maintained by the
Grantor and condemnation awards, any awards which may
become due by reason of the taking by eminent domain
or
any transfer in lieu thereof of the whole or any part
of the Premises or Improvements or any rights
appurtenant thereto, and any awards for change of
grade
of streets ("Proceeds"), together with any and all
moneys now or hereafter on deposit for the payment of
real estate taxes or assessments levied against the
Trust Property, unearned premiums on policies of fire
and other insurance maintained by the Grantor covering
any interest in the Trust Property or required by the
Credit Agreement; and
(7) all extensions, improvements, betterments,
renewals, substitutes and replacements of and all
additions and appurtenances to, the Land, the
Premises,
the Improvements, the Personal Property, the Permits,
Plans and Warranties and the Leases, hereinafter
acquired by or released to the Grantor or constructed,
assembled or placed by the Grantor on the Land, the
Premises or the Improvements, and all conversions of
the security constituted thereby, immediately upon
such
acquisition, release, construction, assembling,
placement or conversion, as the case may be, and in
each such case, without any further mortgage, deed of
trust, conveyance, assignment or other act by the
Grantor, all of which shall become subject to the lien
of this Deed of Trust as fully and completely, and
with
the same effect, as though now owned by the Grantor
and
specifically described herein.
TO HAVE AND TO HOLD the Trust Property and the
rights and privileges hereby mortgaged or intended to be,
unto Trustee, its successors and assigns for the uses and
purposes herein set forth, for the benefit of the
Beneficiary, subject only to the Permitted Encumbrances (as
hereinafter defined) and to satisfaction and cancellation
as
provided in Section 3.05. IN TRUST NEVERTHELESS, upon the
terms and trust herein set forth for the benefit and
security of the Beneficiary.
ARTICLE I
Representations, Warranties and Covenants of Grantor
Grantor agrees, covenants, represents and/or
warrants as follows:
SECTION 1.01. Title. (a) Grantor has good and
marketable title to a fee estate in the Land and
Improvements subject to no lien, charge or encumbrance
except for, and this Deed of Trust is and will remain a
valid and enforceable first and prior lien on the Premises,
Improvements and the Rents subject only to, in each case,
Liens permitted by Section 7.02 of the Credit Agreement and
the exceptions and encumbrances referred to in Schedule A
annexed hereto.
(b) Grantor has good and marketable title to all
the Personal Property subject to no lien, charge or
encumbrance other than this Deed of Trust and those allowed
under Section 7.02 of the Credit Agreement. The Personal
Property is not and will not become the subject matter of
any lease or other arrangement that is not allowed under
Section 7.02 of the Credit Agreement, whereby the ownership
of any Personal Property will be held by any person or
entity other than Grantor; except as expressly permitted by
Section 7.05 of the Credit Agreement, none of the Personal
Property will be removed from the Premises or the
Improvements unless the same is no longer needed for the
continued operation of the Premises and the Improvements as
currently operated (or as then operated, to the extent that
any change from the current manner of operation was
permitted by the Credit Agreement) or is replaced by other
Personal Property of substantially equal or greater utility
and value; and, except as expressly permitted by
Section 7.05 of the Credit Agreement, Grantor will not
create or cause to be created (other than those allowed
under Section 7.02 of the Credit Agreement) any security
interest covering any of the Personal Property that Grantor
owns other than the security interest in the Personal
Property created in favor of Beneficiary by this Deed of
Trust or any other agreement collateral hereto.
(c) All easement agreements, covenant or
restrictive agreements, supplemental agreements and any
other instruments hereinabove referred to and mortgaged
hereby are and will remain valid, subsisting and in full
force and effect, unless the failure to remain valid,
subsisting and in full force and effect, individually or in
the aggregate, would not have a material adverse effect on
the Trust Property, and Grantor is not in default
thereunder
and has fully performed the material terms thereof required
to be performed through the date hereof, and has no
knowledge of any default thereunder or failure to fully
perform the terms thereof by any other party, nor of the
occurrence of any event which after notice or the passage
of
time or both will constitute a default thereunder, unless
the default thereunder by Grantor or by any other party,
individually or in the aggregate, would not have a material
adverse effect on the Trust Property.
(d) Grantor has good and lawful right and full
power and authority to mortgage or grant a security
interest
in the Trust Property. Grantor will forever warrant and
defend its title to the Trust Property, the rights of
Beneficiary therein under this Deed of Trust and the
validity and priority of the lien of this Deed of Trust
thereon against the claims of all persons and parties
except
those having rights under Permitted Encumbrances to the
extent of those rights and those having rights under any
exception or matter permitted by Section 7.02 of the Credit
Agreement.
(e) This Deed of Trust, when duly recorded in
the
appropriate public records and when financing statements
are
duly filed in the appropriate public records, will create
a
valid, perfected and enforceable lien upon and security
interest in all the Trust Property and there will be no
defenses or offsets to this Deed of Trust or to any of the
Obligations secured hereby, (i) except as the enforcement
thereof may be limited by bankruptcy, insolvency or similar
laws affecting creditors' rights generally and (ii) subject
to general principles of equity.
SECTION 1.02. Credit Agreement; Certain Amounts.
(a) This Deed of Trust is given pursuant to the Credit
Agreement. Each and every term and provision of the Credit
Agreement, including the rights, remedies, obligations,
covenants, conditions, agreements, indemnities,
representations and warranties of the parties thereto shall
be considered as if a part of this Deed of Trust.
(b) If any remedy or right of Trustee or
Beneficiary pursuant hereto is acted upon by Trustee or
Beneficiary or if any actions or proceedings (including any
bankruptcy, insolvency or reorganization proceedings) are
commenced in which Trustee or Beneficiary is made a party
and is obliged to defend or uphold or enforce this Deed of
Trust or the rights of Trustee or Beneficiary hereunder or
the terms of any Lease, or if a condemnation proceeding is
instituted affecting the Trust Property, Grantor will pay
all sums, including reasonable attorneys' fees and
disbursements, incurred by Trustee or Beneficiary related
to
the exercise of any remedy or right of Trustee or
Beneficiary pursuant hereto or for the expense of any such
action or proceeding together with all statutory or other
costs, disbursements and allowances, interest thereon from
the date of demand for payment thereof at the Default Rate,
and such sums and the interest thereon shall, to the extent
permissible by law, be a lien on the Trust Property prior
to
any right, title to, interest in or claim upon the Trust
Property attaching or accruing subsequent to the recording
of this Deed of Trust and shall be secured by this Deed of
Trust to the extent permitted by law.
(c) Any payment of amounts due under this Deed
of
Trust not made on or before the due date for such payments
shall accrue interest daily without notice from the due
date
until paid at the Default Rate, and such interest at the
Default Rate shall be immediately due upon demand by
Trustee
or Beneficiary.
SECTION 1.03. Payment of Taxes, Liens and
Charges. (a) Except as may be permitted by Section 6.03
of
the Credit Agreement, Grantor will pay and discharge from
time to time when the same shall become due and payable,
and
before any interest or penalty accrues thereon or attaches
thereto, all taxes of every kind and nature, all general
and
special assessments, levies, permits, inspection and
license
fees, all water and sewer rents, all vault charges, and all
other public charges, and all service charges, common area
charges, private maintenance charges, utility charges and
all other private charges, whether of a like or different
nature, imposed upon or assessed against the Trust Property
or any part thereof or upon the Rents from the Trust
Property or arising in respect of the occupancy, use or
possession thereof. At Beneficiary's option, Beneficiary
may require Grantor to contract with a tax service firm to
provide to Beneficiary on or about the same times each
year,
receipts evidencing the payment of all such taxes,
assessments, levies, fees and other public charges imposed
upon or assessed against the Trust Property or may provide
such information to Beneficiary from internal sources.
(b) In the event of the passage of any state,
Federal, municipal or other governmental law, order, rule
or
regulation subsequent to the date hereof (i) deducting from
the value of real property for the purpose of taxation any
lien or encumbrance thereon or in any manner changing or
modifying the laws now in force governing the taxation of
this Deed of Trust or debts secured by mortgages (other
than
laws governing income, franchise and similar taxes
generally) or the manner of collecting taxes thereon and
(ii) imposing a tax to be paid by Beneficiary, either
directly or indirectly, on this Deed of Trust, the Notes or
any of the Loan Documents or to require an amount of taxes
to be withheld or deducted therefrom, Grantor will promptly
notify Beneficiary of such event. In such event Grantor
shall (i) agree to enter into such further instruments,
including but not limited to new notes to be issued in
exchange for the Notes theretofore issued, as may be
reasonably necessary or desirable to obligate Grantor to
make any applicable additional payments, and (ii) Grantor
shall make such additional payments under the Notes. If
Grantor is not permitted by law to do that which is
required
by the preceding sentence, Grantor shall be required to do
so to the extent there are unencumbered assets of Grantor
to
substitute collateral for the Trust Property which is of
equivalent value upon notice from Beneficiary promptly
after
such determination is reached.
(c) At any time that an Event of Default shall
occur hereunder, or if required by any law applicable to
Grantor or to Beneficiary, Beneficiary shall have the right
to direct Grantor to make an initial deposit on account of
real estate taxes and assessments, insurance premiums and
common area charges, levied against or payable in respect
of
the Trust Property in advance and thereafter semi-annually,
each such deposit to be equal to one-half of any such
annual
charges reasonably estimated by Beneficiary in order to
accumulate with Beneficiary sufficient funds to pay such
taxes, assessments, insurance premiums and charges.
SECTION 1.04. Payment of Closing Costs. Grantor
shall pay all reasonable costs in connection with, relating
to or arising out of the preparation, execution and
recording of this Deed of Trust, including title company
premiums and charges for a customary loan policy with such
endorsements as may be reasonably requested by Beneficiary,
inspection costs, survey costs, recording fees and taxes,
attorneys', engineers', appraisers' and consultants' fees
and disbursements and all other similar expenses of every
kind.
SECTION 1.05. Alterations and Waste; Plans.
(a) No Improvements will be materially altered or
demolished or removed in whole or in part by Grantor except
as provided by Section 1.05(c) hereof. Grantor will not
commit any waste on the Trust Property or make any
alteration to, or change in the use of, the Trust Property
which will diminish the fair market value thereof or
materially increase any ordinary fire or other hazard
arising out of construction or operation, but in no event
shall any such alteration or change be contrary to the
terms
of any insurance policy required to be kept pursuant to
Section 1.06. Grantor will maintain and operate, the
Improvements and Personal Property in good repair, working
order and condition, reasonable wear and tear excepted.
(b) Grantor shall maintain a complete set of
final plans, specifications, blueprints and drawings for
the
Trust Property currently in possession of Grantor either at
the Trust Property or in a particular office at the
headquarters of Grantor to which Beneficiary shall have
access upon reasonable advance notice.
(c) Grantor shall in connection with any lease
or
sublease permitted by Section 7.05(j) of the Credit
Agreement have the right to alter the Trust Property for
purposes of performing reasonable improvements in
connection
with such lease or sublease.
SECTION 1.06. Insurance. Grantor will (a) Keep
the Trust Property (including Improvements and Personal
Property (each as defined in the Deed of Trust)) insured at
all times by financially sound and reputable insurers
against loss by fire, casualty and such other hazards as
may
be afforded by an "all risk" policy or a fire policy
covering "special" causes of loss, including building
ordinance law endorsements; cause all such policies to be
endorsed or otherwise amended to include a "standard" or
"New York" lender's loss payable endorsement, in form and
substance reasonably satisfactory to the Collateral Agent,
which endorsement shall provide that, from and after the
Restatement Date, the insurance carrier subject to the
provisions of Sections 1.07 and 1.08 hereof, shall pay all
proceeds otherwise payable to the Grantor under such
policies directly to the Collateral Agent; cause all such
policies to provide that neither the Grantor, the
Collateral
Agent nor any other party shall be a coinsurer thereunder
and to contain a "Replacement Cost Endorsement", without
any
deduction for depreciation, and such other provisions as
the
Collateral Agent may reasonably require from time to time
to
protect its interest; provided, however, that if additional
coverage is required, Grantor will obtain such coverage
only
if such coverage is (i) customarily maintained by others in
the same or similar business in the geographic region of
the
Trust Property, and (ii) available at commercially
reasonable rates (if available to Grantor); deliver,
original or certified copies of all such policies to the
Collateral Agent confirming that the terms of such policy
are in compliance with the provisions of this Section 1.06
hereof; cause each such policy to provide that it shall not
be canceled, modified or not renewed for any reason upon
not
less than 30 days' prior written notice thereof by insurer
to the Collateral Agent; deliver to the Collateral Agent,
prior to the cancellation, modification or nonrenewal of
any
such policy of insurance, a copy of a renewal or
replacement
policy (or other evidence of renewal of a policy previously
delivered to the Collateral Agent), together with evidence
reasonably satisfactory to the Collateral Agent of timely
payment of the premium therefor promptly after making such
payment;
(b) If at any time the area in which the
Premises
(as defined in the Deed of Trust) are located is designated
a "flood hazard area" in any Flood Insurance Rate Map
published by the Federal Emergency Management Agency,
obtain
flood insurance in such total amount as the Collateral
Agent
may from time to time reasonably require, and otherwise
comply with the National Flood Insurance Program as set
forth in said Flood Disaster Protection Act of 1973, as it
may be amended from time to time.
(c) With respect to any Trust Property, carry
and
maintain comprehensive general liability insurance
including
the "broad form endorsement" and coverage on an occurrence
basis against claims made for personal injury (including
bodily injury, death and property damage) and umbrella
liability insurance against any and all claims, in no event
for a combined single limit of less than $5,000,000, naming
the Collateral Agent as an additional insured, on forms
reasonably satisfactory to the Collateral Agent.
(d) Notify the Collateral Agent immediately
whenever any separate insurance concurrent in form or
contributing in the event of loss with that required to be
maintained under this Section 1.06 is taken out by the
Grantor; and promptly deliver to the Collateral Agent a
duplicate original copy of such policy or policies.
SECTION 1.07. Casualty; Restoration of Casualty
Damage. Notwithstanding any other provisions of this Deed
of Trust or the other Loan Documents, the Collateral Agent
is authorized, at its option, to collect and receive, all
insurance Proceeds, damages, claims and rights of action
and
the right thereto under any insurance policies with respect
to a casualty relating to any portion of the Trust
Property;
provided, however, that if the Collateral Agent shall
determine, in its sole and reasonable discretion, that
(a) no Prepayment Event has occurred and (b) if no Event of
Default has occurred, then in such event, the Collateral
Agent shall direct the insurance carrier to pay such
proceeds directly to the Grantor. Grantor agrees to notify
the Collateral Agent, in writing, in reasonable detail of
any casualty to the Trust Property, promptly after the
Grantor obtains notice of any casualty to all or any
portion
of the Trust Property.
SECTION 1.08. Condemnation/Eminent Domain.
Grantor will notify the Collateral Agent immediately upon
obtaining notice of the institution, or the proposed,
contemplated or threatened institution, of any action or
proceeding for the taking of the Trust Property, for public
or quasi-public use under the power of eminent domain, by
reason of any public improvement or condemnation
proceeding,
or in any other manner (a "Condemnation"). The Collateral
Agent is authorized, at its option, to collect and receive,
all Proceeds of any such Condemnation; provided, however,
that if the Collateral Agent shall determine, in its sole
and reasonable discretion, that (a) no Prepayment Event has
occurred and (b) if no Event of Default has occurred, then
in such event, the Collateral Agent shall direct the
governmental authority to pay such proceeds directly to the
Grantor.
SECTION 1.09. Assignment of Leases and Rents.
(a) Grantor hereby irrevocably and absolutely grants,
transfers and assigns all of its right title and interest
in
all Leases, together with any and all extensions and
renewals thereof for purposes of securing and discharging
the performance by Grantor of the Obligations. Grantor has
not assigned or executed any assignment of, and will not
assign or execute any assignment of, any other Lease or
their respective Rents to anyone other than Beneficiary.
(b) (i) Without Beneficiary's prior written
consent, Grantor will not (A) modify, amend, terminate or
consent to the cancellation or surrender of any lease if
such modification, amendment, termination or consent would,
in the reasonable judgment of the Beneficiary, be adverse
in
any material respect to the Lenders, the value of the Trust
Property or the lien created by this Deed of Trust or
(B) consent to an assignment of a tenant's interest in any
Lease or to a subletting thereof covering a material
portion
of the Trust Property unless such assignment or sublease
conforms with Section 7.05 of the Credit Agreement.
(ii) If requested by Grantor,
Beneficiary shall
execute and deliver to Grantor's tenant a non-disturbance
attornment and recognition agreement in form and substance
satisfactory to Beneficiary.
(c) Subject to paragraph 1.09(d) below, Grantor
has assigned and transferred to Beneficiary all of
Grantor's
right, title and interest in and to the Rents now or
hereafter arising from Leases heretofore or hereafter made
or agreed to by Grantor, it being intended that this
assignment establish, subject to paragraph 1.09(d) below,
an
absolute transfer and assignment of all Rents and all
Leases
to Beneficiary and not merely to grant a security interest
therein. Subject to paragraph 1.09(d) below, Beneficiary
may in Grantor's name and stead (with or without first
taking possession of any of the Trust Property personally
or
by receiver as provided herein) operate the Trust Property
and rent, lease or let all or any portion of any of the
Trust Property to any party or parties at such rental and
upon such terms as Beneficiary shall, in its sole
discretion, determine, and may collect and have the benefit
of all of said Rents arising from or accruing at any time
thereafter or that may thereafter become due under any
Lease.
(d) Until an Event of Default occurs or after an
Event of Default has occurred but is no longer continuing,
Beneficiary will not exercise any of its rights under
paragraph 1.09(c) above, and Grantor shall receive and
collect the Rents accruing under any Lease; but after the
happening of any Event of Default (but only while such
Event
of Default continues), Beneficiary may, at its option,
receive and collect all Rents and enter upon the Premises
and Improvements through its officers, agents, employees or
attorneys for such purpose and for the operation and
maintenance thereof. Upon the happening of an Event of
Default, Grantor hereby irrevocably authorizes and directs
each tenant, if any, and each successor, if any, to the
interest of any tenant under any Lease, respectively, to
rely upon any notice of a claimed Event of Default sent by
Beneficiary to any such tenant or any of such tenant's
successors in interest, and thereafter to pay Rents to
Beneficiary without any obligation or right to inquire as
to
whether an Event of Default actually exists and even if
some
notice to the contrary is received from the Grantor, who
shall have no right or claim against any such tenant or
successor in interest for any such Rents so paid to
Beneficiary. Each tenant or any of such tenant's
successors
in interest from whom Beneficiary or any officer, agent,
attorney or employee of Beneficiary shall have collected
any
Rents, shall be authorized to pay Rents to Grantor only
after such tenant or any of such tenant's successors in
interest shall have received written notice from
Beneficiary
that the Event of Default is no longer continuing, which
notice Beneficiary shall be obligated to give if
Beneficiary
determines in its reasonable discretion that such Event of
Default is no longer continuing, unless and until a further
notice of an Event of Default is given by Beneficiary to
such tenant or any of such tenant's successors in interest.
(e) Beneficiary will not become a mortgagee in
possession so long as it does not enter or take actual
possession of the Trust Property. In addition, Beneficiary
shall not be responsible or liable for performing any of
the
obligations of the landlord under any Lease, for any waste
by any tenants, or others, for any dangerous or defective
conditions of any of the Trust Property, for negligence in
the management, upkeep, repair or control of any of the
Trust Property or any other act or omission by any other
person.
(f) Grantor shall furnish to Beneficiary, within
30 days after a request by Beneficiary to do so, a written
statement containing the names of all tenants, subtenants
and concessionaires of the Premises or Improvements, the
terms of any Lease, the space occupied and the rentals or
license fees payable thereunder.
SECTION 1.10. Restrictions on Transfers and
Encumbrances. Except as permitted hereby or by the Credit
Agreement, Grantor shall not directly or indirectly sell,
convey, alienate, assign, lease, sublease, license,
mortgage, pledge, encumber or otherwise transfer, create,
consent to or suffer the creation of any lien, charges or
any form of encumbrance upon any interest in or any part of
the Trust Property, or be divested of its title to the
Trust
Property or any interest therein in any manner or way,,
whether voluntarily or involuntarily (other than resulting
from a taking), or engage in any common, cooperative,
joint,
time-sharing or other congregate ownership of all or part
thereof; provided, however, that Grantor may in the
ordinary
course of business within reasonable commercial standards,
enter into easement or covenant agreements which relate to
and/or benefit the operation of the Trust Property or which
do not materially or adversely affect the use and operation
of the same (except for customary utility easements which
service the Trust Property).
SECTION 1.11. Security Agreement. This Deed of
Trust is both a mortgage of real property and a grant of a
security interest in personal property, and shall
constitute
and serve as a "Security Agreement" within the meaning of
the uniform commercial code as adopted in the state wherein
the Premises are located. Grantor has hereby granted unto
Beneficiary a security interest in and to all the Trust
Property described in this Deed of Trust that is not real
property, and simultaneously with the recording of this
Deed
of Trust, Grantor has filed or will file UCC financing
statements, and will file continuation statements prior to
the lapse thereof, at the appropriate offices in the state
in which the Premises are located to perfect the security
interest granted by this Deed of Trust in all the Trust
Property that is not real property. Grantor hereby
appoints
Beneficiary as its true and lawful attorney-in-fact and
agent, for Grantor and in its name, place and stead, in any
and all capacities, to execute any document and to file the
same in the appropriate offices (to the extent it may
lawfully do so), and to perform each and every act and
thing
requisite and necessary to be done to perfect the security
interest contemplated by the preceding sentence.
Beneficiary shall have all rights with respect to the part
of the Trust Property that is the subject of a security
interest afforded by the uniform commercial code as adopted
in the state wherein the Premises are located in addition
to, but not in limitation of, the other rights afforded
Trustee and Beneficiary hereunder.
SECTION 1.12. Filing and Recording. Grantor
will
cause this Deed of Trust, any other security instrument
creating a security interest in or evidencing the lien
hereof upon the Trust Property and each instrument of
further assurance to be filed, registered or recorded in
such manner and in such places as may be required by any
present or future law in order to publish notice of and
fully to protect the lien hereof upon, and the security
interest of Trustee and Beneficiary in, the Trust Property.
Grantor will pay all filing, registration or recording
fees,
and all expenses incidental to the execution and
acknowledgment of this Deed of Trust, any mortgage
supplemental hereto, any security instrument with respect
to
the Personal Property, and any instrument of further
assurance and all Federal, state, county and municipal
recording, documentary or intangible taxes and other taxes,
duties, imposts, assessments and charges arising out of or
in connection with the execution, delivery and recording of
this Deed of Trust, any mortgage supplemental hereto, any
security instrument with respect to the Personal Property
or
any instrument of further assurance.
SECTION 1.13. Further Assurances. Upon demand
by
Beneficiary, Grantor will, at the cost of Grantor and
without expense to Beneficiary, do, execute, acknowledge
and
deliver all such further acts, deeds, conveyances,
mortgages, assignments, notices of assignment, transfers
and
assurances as Beneficiary shall from time to time
reasonably
require for the better assuring, conveying, assigning,
transferring and confirming unto Beneficiary the property
and rights hereby conveyed or assigned or intended now or
hereafter so to be, or which Grantor may be or may
hereafter
become bound to convey or assign to Beneficiary, or for
carrying out the intention or facilitating the performance
of the terms of this Deed of Trust, or for filing,
registering or recording this Deed of Trust, and on demand,
Grantor will also execute and deliver and hereby appoints
Beneficiary as its true and lawful attorney-in-fact and
agent for Grantor and in its name, place and stead, in any
and all capacities, to execute and file to the extent it
may
lawfully do so, one or more financing statements, chattel
mortgages or comparable security instruments reasonably
requested by Beneficiary to evidence more effectively the
lien hereof upon the Personal Property and to perform each
and every act and thing requisite and necessary to be done
to accomplish the same.
SECTION 1.14. Additions to Trust Property. All
right, title and interest of Grantor in and to all
extensions, improvements, betterments, renewals,
substitutes
and replacements of, and all additions and appurtenances
to,
the Trust Property hereafter acquired by or released to
Grantor or constructed, assembled or placed by Grantor upon
the Premises or the Improvements, and all conversions of
the
security constituted thereby, immediately upon such
acquisition, release, construction, assembling, placement
or
conversion, as the case may be, and in each such case
without any further mortgage, conveyance, assignment or
other act by Grantor, shall become subject to the lien and
security interest of this Deed of Trust as fully and
completely and with the same effect as though now owned by
Grantor and specifically described in the grant of the
Trust
Property above, but at any and all times Grantor will
execute and deliver to Beneficiary any and all such further
assurances, mortgages, conveyances or assignments thereof
as
Beneficiary may reasonably require for the purpose of
expressly and specifically subjecting the same to the lien
and security interest of this Deed of Trust.
SECTION 1.15. No Claims Against Trustee or
Beneficiary. Nothing contained in this Deed of Trust shall
constitute any consent or request by Trustee or
Beneficiary,
express or implied, for the performance of any labor or
services or the furnishing of any materials or other
property in respect of the Trust Property or any part
thereof, nor as giving Grantor any right, power or
authority
to contract for or permit the performance of any labor or
services or the furnishing of any materials or other
property in such fashion as would permit the making of any
claim against Trustee or Beneficiary in respect thereof.
ARTICLE II
Defaults and Remedies
SECTION 2.01. Events of Default. It shall be an
Event of Default under this Deed of Trust if any Event of
Default (as therein defined) shall exist pursuant to (a)
the
Credit Agreement or (b) any other Mortgage.
Notwithstanding
the provisions of Article VIII, Section (e) of the Credit
Agreement, if Grantor shall default in the observance or
performance of any covenant, condition or agreement
expressly set forth in this Deed of Trust and the subject
matter of any such covenant, condition or agreement is not
otherwise set forth in the Credit Agreement or any other
Loan Document, and Grantor's default in its observance or
performance of such covenant, condition or agreement (a) is
not susceptible of cure by the payment of money or (b)
could
not, if left uncured, have a material adverse effect on the
Trust Property, then in such case an Event of Default shall
not occur until such default shall continue unremedied for
a
period of 30 days after written notice thereof from
Beneficiary; provided, however, that in the case of any
such
default described in clauses (a) or (b) above, which cannot
with the exercise by the Grantor of due diligence be cured
within such 30-day period, the period within which such
default may be cured may be extended for up to an
additional
90 days, so long as Grantor shall have promptly commenced
to
cure the same during its initial 30-day cure period and
thereafter continuously prosecutes the curing thereof with
diligence.
SECTION 2.02. Demand for Payment. If an Event
of
Default as set forth herein shall occur and be continuing,
then, upon written demand of Beneficiary, Grantor will pay
to Beneficiary upon demand all amounts due hereunder and
such further amounts as shall be incurred to cover the
costs
and expenses of collection, including attorneys' fees,
disbursements and expenses incurred by Trustee or
Beneficiary. In case Grantor shall fail forthwith to pay
such amounts or any amounts due under any other Section of
this Deed of Trust upon Beneficiary's demand, Trustee or
Beneficiary shall be entitled and empowered to institute an
action or proceedings at law or in equity as advised by
counsel for the collection of the sums so due and unpaid,
to
prosecute any such action or proceedings to judgment or
final decree, to enforce any such judgment or final decree
against Grantor and to collect, in any manner provided by
law, all moneys adjudged or decreed to be payable.
SECTION 2.03. Rights to Take Possession, Operate
and Apply Revenues. (a) If an Event of Default shall
occur
and be continuing, Grantor shall, upon demand of
Beneficiary, forthwith surrender to Beneficiary actual
possession of the Trust Property and, if and to the extent
permitted by law, Beneficiary itself, or by such officers
or
agents as it may appoint, may then enter and take
possession
of all the Trust Property without the appointment of a
receiver or an application therefor, exclude Grantor and
its
agents and employees wholly therefrom, and have access
(with
Grantor) to the books, papers and accounts of Grantor.
(b) If Grantor shall for any reason fail to
surrender or deliver the Trust Property or any part thereof
after such demand by Beneficiary, Beneficiary may obtain a
judgment or decree conferring upon Beneficiary the right to
immediate possession or requiring Grantor to deliver
immediate possession of the Trust Property to Beneficiary,
to the entry of which judgment or decree Grantor hereby
specifically consents. Grantor will pay to Beneficiary,
upon demand, all expenses of obtaining such judgment or
decree, including compensation to Beneficiary's attorneys
and agents with interest thereon at the Default Rate; and
all such expenses and compensation shall, until paid, be
secured by this Deed of Trust.
(c) Upon every such entry or taking of
possession, Beneficiary may hold, store, use, operate,
manage and control the Trust Property, conduct the business
thereof and, from time to time, (i) make all necessary,
proper and reasonable maintenance, repairs, renewals,
replacements, additions, betterments and improvements
thereto and thereon, (ii) purchase or otherwise acquire
additional fixtures, personalty and other property,
(iii) insure or keep the Trust Property insured, (iv)
manage
and operate the Trust Property and exercise all the rights
and powers of Grantor to the same extent as Grantor could
in
its own name or otherwise with respect to the same, or
(v) enter into any and all agreements with respect to the
exercise by others of any of the powers herein granted
Beneficiary, all as may from time to time be directed or
determined by Beneficiary to be in its best interest and
Grantor hereby appoints Beneficiary as its true and lawful
attorney-in-fact and agent, for Grantor and in its name,
place and stead, in any and all capacities, to perform any
of the foregoing acts. Beneficiary may collect and receive
all the Rents, issues, profits and revenues from the Trust
Property, including those past due as well as those
accruing
thereafter, and, after deducting (i) all expenses of
taking,
holding, managing and operating the Trust Property
(including compensation for the services of all persons
employed for such purposes), (ii) the costs of all such
maintenance, repairs, renewals, replacements, additions,
betterments, improvements, purchases and acquisitions,
(iii) the costs of insurance, (iv) such taxes, assessments
and other similar charges as Beneficiary may at its option
pay, (v) other proper charges upon the Trust Property or
any
part thereof and (vi) the reasonable compensation, expenses
and disbursements of the attorneys and agents of
Beneficiary, Beneficiary shall apply the remainder of the
moneys and proceeds so received first to the payment of the
Beneficiary for the payment in full of Indebtedness and
satisfaction of the Obligations, and second, if there is
any
surplus, to Grantor, subject to the entitlement of others
thereto under applicable law.
(d) Whenever, before any sale of the Trust
Property under Section 2.06 hereof, all Obligations which
are then due shall have been paid and all Events of Default
fully cured, Beneficiary will surrender possession of the
Trust Property back to Grantor, its successors or assigns.
The same right of taking possession shall, however, arise
again if any subsequent Event of Default shall occur and be
continuing.
SECTION 2.04. Right to Cure Grantor's Failure to
Perform. Prior to the occurrence of an Event of Default
upon five business days' written notice to Grantor (except
in the case of an emergency), or after the occurrence of an
Event of Default at any time and without notice, should
Grantor fail in the payment, performance or observance of
any term, covenant or condition required by this Deed of
Trust or the Credit Agreement (with respect to the Trust
Property), Beneficiary may pay, perform or observe the
same,
and all payments made or costs or expenses incurred by
Beneficiary in connection therewith shall be secured hereby
and shall be, without demand, immediately repaid by Grantor
to Beneficiary with interest thereon at the Default Rate.
Beneficiary shall make reasonable judgment as to the
necessity for any such actions and of the amounts to be
paid. Subject to the notice provisions of the first
sentence of this paragraph 2.04, Beneficiary is hereby
empowered to enter and to authorize others to enter upon
the
Premises or the Improvements or any part thereof for the
purpose of performing or observing any such defaulted term,
covenant or condition without having any obligation to so
perform or observe and without thereby becoming liable to
Grantor, to any person in possession holding under Grantor
or to any other person.
SECTION 2.05. Right to a Receiver. If an Event
of Default shall occur and be continuing, Beneficiary, upon
application to a court of competent jurisdiction, shall be
entitled as a matter of right to the appointment of a
receiver to take possession of and to operate the Trust
Property and to collect and apply the Rents. The receiver
shall have all of the rights and powers permitted under the
laws of the state wherein the Trust Property is located.
Grantor will pay to Beneficiary upon demand all reasonable
amounts of expenses, including receiver's fees, attorney's
fees and disbursements, costs and agent's compensation
incurred pursuant to the provisions of this Section 2.05;
and all such expenses shall be secured by this Deed of
Trust
and shall be, without demand, immediately repaid by Grantor
to Beneficiary with interest thereon at the Default Rate.
SECTION 2.06. Foreclosure and Sale. (a) If an
Event of Default shall occur and be continuing, Beneficiary
may elect to sell the Trust Property or any part of the
Trust Property by exercise of the power of foreclosure or
of
sale granted to Beneficiary by applicable law or this Deed
of Trust. In such case, Trustee or Beneficiary may
commence
a civil action to foreclose this Deed of Trust, or it may
proceed and sell the Trust Property to satisfy any
Obligation. Trustee or Beneficiary or an officer appointed
by a judgment of foreclosure to sell the Trust Property,
may
sell all or such parts of the Trust Property as may be
chosen by Beneficiary at the time and place of sale fixed
by
it in a notice of sale, either as a whole or in separate
lots, parcels or items as Beneficiary shall deem expedient,
and in such order as it may determine, at public auction to
the highest bidder. Trustee or Beneficiary or an officer
appointed by a judgment of foreclosure to sell the Trust
Property may postpone any foreclosure or other sale of all
or any portion of the Trust Property by public announcement
at such time and place of sale, and from time to time
thereafter may postpone such sale by public announcement or
subsequently noticed sale. Without further notice, Trustee
or Beneficiary or an officer appointed to sell the Trust
Property may make such sale at the time fixed by the last
postponement, or may, in its discretion, give a new notice
of sale. Any person, including Grantor or Beneficiary or
any designee or affiliate thereof, may purchase at such
sale.
(b) The Trust Property may be sold subject to
unpaid taxes and Permitted Encumbrances, and after
deducting
all costs, fees and expenses of Beneficiary, including
costs
of evidence of title in connection with the sale, Trustee
or
Beneficiary or an officer that makes any sale shall apply
the proceeds of sale in the manner set forth in Section
2.08
hereof.
(c) Any foreclosure or other sale of less than
the whole of the Trust Property or any defective or
irregular sale made hereunder shall not exhaust the power
of
foreclosure provided for herein; and subsequent sales may
be
made hereunder until the obligations have been satisfied,
or
the entirety of the Trust Property has been sold.
(d) Grantor waives, to the extent not prohibited
by law, (i) the benefit of all laws now existing or that
hereafter may be enacted providing for any appraisement
before sale of any portion of the Trust Property, (ii) the
benefit of all laws now existing or that may be hereafter
enacted in any way extending the time for the enforcement
or
the collection of amounts due under any of the Obligations
or creating or extending a period of redemption from any
sale made in collecting said debt or any other amounts due
Beneficiary, (iii) any right to at any time insist upon,
plead, claim or take the benefit or advantage of any law
now
or hereafter in force providing for any appraisement,
valuation, stay, extension or redemption, or sale of the
Trust Property as separate tracts, units or estates or as
a
single parcel in the event of foreclosure, and (iv) all
rights of redemption, valuation, appraisement, stay of
execution, notice of election to mature or declare due the
whole of or each of the Obligations and marshalling in the
event of foreclosure of this Deed of Trust.
(e) If an Event of Default shall occur and be
continuing, Beneficiary may instead of, or in addition to,
exercising the rights described in paragraph 2.06(a) above
and either with or without entry or taking possession as
herein permitted, proceed by a suit or suits in law or in
equity or by any other appropriate proceeding or remedy
(i) to specifically enforce payment of some or all of the
terms of the Loan Documents or the performance of any term,
covenant, condition or agreement of this Deed of Trust or
any other right, or (ii) to pursue any other remedy
available to it, all as Beneficiary shall determine most
effectual for such purposes.
SECTION 2.07. Other Remedies. (a) In case an
Event of Default shall occur and be continuing, Beneficiary
may also exercise, to the extent not prohibited by law, any
or all of the remedies available to a secured party under
the uniform commercial code of the State wherein the
Premises are located, including, to the extent not
prohibited by applicable law, the following:
(i) Either personally or by means of a court-
appointed receiver, to take possession of all or any
of
the Personal Property and exclude therefrom Grantor
and
all others claiming under Grantor, and thereafter to
hold, store, use, operate, manage, maintain and
control, make repairs, replacements, alterations,
additions and improvements to and exercise all rights
and powers of Grantor with respect to the Personal
Property or any part thereof.
(ii) To make such
payments and do
such acts as
Beneficiary may deem necessary to protect its security
interest in the Personal Property, including paying,
purchasing, contesting or compromising any
encumbrance,
charge or lien which is prior or superior to the
security interest granted hereunder, and, in
exercising
any such powers or authority, paying all expenses
incurred in connection therewith.
(iii) To assemble the
Personal
Property or any
portion thereof at a place designated by Beneficiary
and reasonably convenient to both parties, to demand
prompt delivery of the Personal Property to
Beneficiary
or an agent or representative designated by it, and to
enter upon any or all of the Premises or Improvements
to exercise Beneficiary's rights hereunder.
(iv) To sell or otherwise dispose of or
purchase
the Personal Property at public sale, with or without
having the Personal Property at the place of sale,
upon
such terms and in such manner as Beneficiary may
determine, after Beneficiary shall have given Grantor
at least ten days' prior written notice of the time
and
place of any public sale or other intended disposition
of the Personal Property by mailing a copy to Grantor
at the address set forth in Section 3.02.
(b) In connection with a sale of the Trust
Property or any Personal Property and the application of
the
proceeds of sale as provided in Section 2.08 of this Deed
of
Trust, Beneficiary shall be entitled to enforce payment of
and to receive up to the principal amount of the
Obligations, plus all other charges, payments and costs due
under this Deed of Trust, and to recover a deficiency
judgment for any portion of the aggregate principal amount
of the Obligations remaining unpaid, with interest.
SECTION 2.08. Application of Sale Proceeds and
Rents. After any foreclosure sale of all or any of the
Trust Property, Beneficiary shall receive the proceeds of
sale, no purchaser shall be required to see to the
application of the proceeds and Beneficiary shall apply the
proceeds of the sale together with any Rents that may have
been collected and any other sums which then may be held by
Beneficiary under this Deed of Trust as follows:
First: to the payment of the costs and expenses
of such sale, including compensation to Beneficiary's
attorneys and agents, and of any judicial proceedings
wherein the same may be made, and of all expenses,
liabilities and advances made or incurred by
Beneficiary under this Deed of Trust, together with
interest at the Default Rate on all advances made by
Beneficiary, including all taxes or assessments
(except
any taxes, assessments or other charges subject to
which the Trust Property shall have been sold) and the
cost of removing any Permitted Encumbrance (except any
Permitted Encumbrance subject to which the Trust
Property was sold);
Second: to the payment in full of the
Obligations
owed to the Lenders, the Swingline Lenders and the
Fronting Banks in respect of the Loans and the
Swingline Loans made by them and outstanding and the
amounts owing in respect of any LC Disbursement or BA
Disbursement or under any Rate Protection Agreement
entered into with any Lender pursuant to Section 6.11
of the Credit Agreement, pro rata as among the
Lenders,
the Swingline Lenders and the Fronting Banks in
accordance with the amount of such Obligations owed to
them;
Third: to the payment and discharge in full of
the Obligations (other than those referred to above)
pro rata as among the Secured Parties in accordance
with the amount of such Obligations owed to them; and
Fourth: to the Grantor, its successors or
assigns, or as a court of competent jurisdiction may
otherwise direct.
The Beneficiary shall promptly make application of any such
proceeds, moneys or balances in accordance with this Deed
of
Trust. Upon any sale of the Trust Property by Trustee or
Beneficiary (including pursuant to a power of sale granted
by statute or under a judicial proceeding), the receipt of
Trustee or Beneficiary or of the officer making the sale
shall be a sufficient discharge to the purchaser or
purchasers of the Trust Property so sold and such purchaser
or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to
Trustee or Beneficiary or such officer or be answerable in
any way for the misapplication thereof.
SECTION 2.09. Grantor as Tenant Holding Over.
If
Grantor remains in possession of any of the Trust Property
after any foreclosure sale by Beneficiary, at Beneficiary's
election Grantor shall be deemed a tenant holding over and
shall forthwith surrender possession to the purchaser or
purchasers at such sale or be summarily dispossessed or
evicted according to provisions of law applicable to
tenants
holding over.
SECTION 2.10. Waiver of Appraisement, Valuation,
Stay, Extension and Redemption Laws. (a) Grantor will not
object to any sale of the Trust Property in its entirety
pursuant to Section 2.06, and for itself and all who may
claim under it, Grantor waives, to the extent that it
lawfully may, all right to have the Trust Property
marshalled or to have the Trust Property sold as separate
estates, parcels, tracts or units in the event of any
foreclosure of this Deed of Trust.
(b) To the full extent permitted by the law of
the state wherein the Trust Property is located or other
applicable law, neither Grantor nor anyone claiming through
or under it shall or will set up, claim or seek to take
advantage of any appraisement, valuation, stay, extension,
homestead-exemption or redemption laws now or hereafter in
force in order to prevent or hinder the enforcement or
foreclosure of this Deed of Trust, the absolute sale of the
Trust Property or the final and absolute putting of the
purchasers into possession thereof immediately after any
sale; and Grantor, for itself and all who may at any time
claim through or under it, hereby waives, to the full
extent
that it may lawfully do so, the benefit of all such laws
and
any and all right to have the assets covered by the
security
interest created hereby marshalled upon any foreclosure of
this Deed of Trust.
SECTION 2.11. Discontinuance of Proceedings. In
case Trustee or Beneficiary shall proceed to enforce any
right, power or remedy under this Deed of Trust by
foreclosure, entry or otherwise, and such proceedings shall
be discontinued or abandoned for any reason, or shall be
determined adversely to Trustee or Beneficiary, then and in
every such case Grantor, Trustee and Beneficiary shall be
restored to their former positions and rights hereunder,
and
all rights, powers and remedies of Trustee and Beneficiary
shall continue as if no such proceeding had been taken.
SECTION 2.12. Suits to Protect the Trust
Property. Trustee and/or Beneficiary shall have power
(a) to institute and maintain suits and proceedings to
prevent any impairment of the Trust Property by any acts
which may be unlawful or in violation of this Deed of
Trust,
(b) to preserve or protect its interest in the Trust
Property and in the Rents arising therefrom and (c) at its
sole cost and expense, to restrain the enforcement of or
compliance with any legislation or other governmental
enactment, rule or order that may be unconstitutional or
otherwise invalid if the enforcement of or compliance with
such enactment, rule or order would impair the security or
be prejudicial to the interest of Trustee or Beneficiary
hereunder provided there is no adverse impact on Grantor
and
its interest in the Trust Property.
SECTION 2.13. Filing Proofs of Claim. In case
of
any receivership, insolvency, bankruptcy, reorganization,
arrangement, adjustment, composition or other proceedings
affecting Grantor, Beneficiary shall, to the extent
permitted by law, be entitled to file such proofs of claim
and other documents as may be necessary or advisable in
order to have the claims of Beneficiary allowed in such
proceedings for the obligations secured by this Deed of
Trust at the date of the institution of such proceedings
and
for any interest accrued, late charges and additional
interest or other amounts due or which may become due and
payable hereunder after such date.
SECTION 2.14. Possession by Beneficiary.
Notwithstanding the appointment of any receiver, liquidator
or trustee of Grantor, any of its property or the Trust
Property, Beneficiary shall be entitled, to the extent not
prohibited by law, to remain in possession and control of
all parts of the Trust Property now or hereafter granted
under this Deed of Trust to Beneficiary in accordance with
the terms hereof and applicable law.
SECTION 2.15. Waiver. (a) No delay or failure
by Trustee or Beneficiary to exercise any right, power or
remedy accruing upon any breach or Event of Default shall
exhaust or impair any such right, power or remedy or be
construed to be a waiver of any such breach or Event of
Default or acquiescence therein; and every right, power and
remedy given by this Deed of Trust to Trustee or
Beneficiary
may be exercised from time to time and as often as may be
deemed expedient by Trustee or Beneficiary. No consent or
waiver by Beneficiary to or of any breach or default by
Grantor in the performance of the Obligations shall be
deemed or construed to be a consent or waiver to or of any
other breach or Event of Default in the performance of the
same or any other obligations by Grantor hereunder. No
failure on the part of Beneficiary to complain of any act
or
failure to act or to declare an Event of Default,
irrespective of how long such failure continues, shall
constitute a waiver by Beneficiary of its rights hereunder
or impair any rights, powers or remedies consequent on any
future Event of Default by Grantor.
(b) Even if Beneficiary (i) grants some
forbearance or an extension of time for the payment of any
sums secured hereby, (ii) takes other or additional
security
for the payment of any sums secured hereby, (iii) waives or
does not exercise some right granted herein or under the
Loan Documents, (iv) releases a part of the Trust Property
from this Deed of Trust, (v) agrees to change some of the
terms, covenants, conditions or agreements of any of the
Loan Documents, (vi) consents to the filing of a map, plat
or replat affecting the Premises, (vii) consents to the
granting of an easement or other right affecting the
Premises or (viii) makes or consents to an agreement
subordinating Beneficiary's lien on the Trust Property
hereunder; no such act or omission shall preclude
Beneficiary from exercising any other right, power or
privilege herein granted or intended to be granted in the
event of any breach or Event of Default then made or of any
subsequent default; nor, except as otherwise provided in an
instrument executed by Trustee and Beneficiary, shall this
Deed of Trust be altered thereby. In the event of the sale
or transfer by operation of law or otherwise of all or part
of the Trust Property, Beneficiary is hereby authorized and
empowered to deal with any vendee or transferee with
reference to the Trust Property secured hereby, or with
reference to any of the terms, covenants, conditions or
agreements hereof, as fully and to the same extent as it
might deal with the original parties hereto and without in
any way releasing or discharging any liabilities,
obligations or undertakings.
SECTION 2.16. Remedies Cumulative. No right,
power or remedy conferred upon or reserved to Trustee or
Beneficiary by this Deed of Trust is intended to be
exclusive of any other right, power or remedy, and each and
every such right, power and remedy shall be cumulative and
concurrent and in addition to any other right, power and
remedy given hereunder or now or hereafter existing at law
or in equity or by statute.
ARTICLE III
Miscellaneous
SECTION 3.01. Partial Invalidity. In the event
any one or more of the provisions contained in this Deed of
Trust shall for any reason be held to be invalid, illegal
or
unenforceable in any respect, such validity, illegality or
unenforceability shall, at the option of Beneficiary, not
affect any other provision of this Deed of Trust, and this
Deed of Trust shall be construed as if such invalid,
illegal
or unenforceable provision had never been contained herein
or therein.
SECTION 3.02. Notices. All notices to be sent
and all documents to be delivered hereunder shall be in
writing, shall be delivered by hand or overnight courier
service, mailed or sent by telex, graphic scanning or other
telegraphic communications equipment of the sending party
and shall be deemed to have been given on the date of
receipt if delivered by hand or overnight courier service
or
sent by telex, telecopy or other telegraphic communications
equipment of the sender, or on the date five Business Days
after dispatch by certified or registered mail if mailed,
in
each case delivered, sent or mailed (properly addressed) to
such party as provided in Section 10.01 of the Credit
Agreement or in accordance with the latest unrevoked
direction from such party given in accordance with said
Section 10.01, except that all notices to the Trustee shall
be delivered, sent or mailed (properly addressed) to the
Trustee at Stutzman & Bromberg, 2323 Bryan, Dallas, Texas
75201.
SECTION 3.03. Successors and Assigns. All of
the
grants, covenants, terms, provisions and conditions herein
shall run with the Premises and the Improvements and shall
apply to, bind and inure to, the benefit of the permitted
successors and assigns of Grantor and the successors and
assigns of Beneficiary.
SECTION 3.04. Counterparts. This Deed of Trust
may be executed in any number of counterparts and all such
counterparts shall together constitute but one and the same
mortgage.
SECTION 3.05. Satisfaction and Cancellation.
(a) The conveyance to Beneficiary of the Trust Property as
security, created and consummated by this Deed of Trust,
shall be null and void when all the Obligations have been
indefeasibly paid in full in accordance with the terms of
the Loan Documents and the Lenders and the Swingline
Lenders
have no further commitment to lend under the Credit
Agreement, no Letters of Credit or Bankers' Acceptances are
outstanding and the Fronting Banks have no further
obligation to issue Letters of Credit or to originate
Bankers' Acceptances under the Credit Agreement.
(b) The lien of this conveyance shall be
released
from the Trust Property pursuant to and in accordance with
the operative provisions of Section 7.05 of the Credit
Agreement.
(c) In connection with any termination or
release
pursuant to paragraph (a) or (b), to the extent applicable,
the Mortgage shall be marked "satisfied" by the Beneficiary
and/or Trustee, and this Deed of Trust may be canceled of
record at the request and at the expense of the Grantor.
Beneficiary and Trustee shall execute any documents
reasonably requested by Grantor to accomplish the foregoing
or to accomplish any release contemplated by paragraph (a)
or (b) and Grantor will pay all costs and expenses,
including attorneys' fees and disbursements, incurred by
Beneficiary in connection with the preparation and
execution
of such documents.
SECTION 3.06. Definitions. As used in this Deed
of Trust, the singular shall include the plural as the
context requires and the following words and phrases shall
have the following meanings: (a) "including" shall mean
"including but not limited to"; (b) "provisions" shall mean
"provisions, terms, covenants and/or conditions"; (c)
"lien"
shall mean "lien, charge, encumbrance, security interest,
mortgage or deed of trust"; (d) "obligation" shall mean
"obligation, duty, covenant and/or condition"; and (e) "any
of the Trust Property" shall mean "the Trust Property or
any
part thereof or interest therein". Any act which Trustee
or
Beneficiary is permitted to perform hereunder may be
performed at any time and from time to time by Trustee or
Beneficiary or any person or entity designated by Trustee
or
Beneficiary. Any act which is prohibited to Grantor
hereunder is also prohibited to all lessees of any of the
Trust Property. Each appointment of Trustee or Beneficiary
as attorney-in-fact for Grantor under the Deed of Trust is
irrevocable, with power of substitution and coupled with an
interest. Subject to the applicable provisions hereof,
Beneficiary has the right to refuse to grant its consent,
approval or acceptance or to indicate its satisfaction, in
its sole discretion, whenever such consent, approval,
acceptance or satisfaction is required hereunder.
SECTION 3.07. Multisite Real Estate Transaction.
Grantor acknowledges that this Deed of Trust is one of a
number of Other Mortgages and Security Documents which
secure the Obligations. Grantor agrees that the lien of
this Deed of Trust shall be absolute and unconditional and
shall not in any manner be affected or impaired by any acts
or omissions whatsoever of Trustee or Beneficiary and,
without limiting the generality of the foregoing, the lien
hereof shall not be impaired by any acceptance by Trustee
or
Beneficiary of any security for or guarantees of any of the
Obligations hereby secured, or by any failure, neglect or
omission on the part of Trustee or Beneficiary to realize
upon or protect any Obligation or indebtedness hereby
secured or any collateral security therefor including the
Other Mortgages and other Security Documents. The lien
hereof shall not in any manner be impaired or affected by
any release (except as to the property released), sale,
pledge, surrender, compromise, settlement, renewal,
extension, indulgence, alteration, changing, modification
or
disposition of any of the Obligations secured or of any of
the collateral security therefor, including the Other
Mortgages and other Security Documents or of any guarantee
thereof, and Trustee or Beneficiary may at its discretion
foreclose, exercise any power of sale, or exercise any
other
remedy available to it under any or all of the Other
Mortgages and other Security Documents without first
exercising or enforcing any of its rights and remedies
hereunder. Such exercise of Trustee's or Beneficiary's
rights and remedies under any or all of the Other Mortgages
and other Security Documents shall not in any manner impair
the indebtedness hereby secured or the lien of this Deed of
Trust and any exercise of the rights or remedies of Trustee
or Beneficiary hereunder shall not impair the lien of any
of
the Other Mortgages and other Security Documents or any of
Trustee's or Beneficiary's rights and remedies thereunder.
The undersigned specifically consents and agrees that
Trustee or Beneficiary may exercise its rights and remedies
hereunder and under the Other Mortgages and other Security
Documents separately or concurrently and in any order that
it may deem appropriate and the undersigned waives any
rights of subrogation.
ARTICLE IV
Particular Provisions
This Deed of Trust is subject to the following
provisions relating to the particular laws of the state
wherein the Premises are located:
SECTION 4.01. Applicable Law; Certain Particular
Provisions. This Deed of Trust shall be governed by and
construed in accordance with the internal law of the State
of New York; provided, however, that the provisions of this
Deed of Trust relating to the creation, perfection and
enforcement of the lien and security interest created by
this Deed of Trust in respect of the Trust Property and the
exercise of each remedy provided hereby, including the
power
of foreclosure or power of sale procedures set forth in
this
Deed of Trust, shall be governed by and construed in
accordance with the internal law of the state where the
Trust Property is located, and Grantor and Beneficiary will
submit to jurisdiction and the laying of venue for any suit
on this Deed of Trust in such state. The terms and
provisions set forth in Appendix A attached hereto are
hereby incorporated by reference as though fully set forth
herein. In the event of any conflict between the terms and
provisions contained in the body of this Deed of Trust and
the terms and provisions set forth in Appendix A, the terms
and provisions set forth in Appendix A shall govern and
control.
SECTION 4.02. Trustee's Powers and Liabilities.
(a) Trustee, by acceptance hereof, covenants faithfully
to
perform and fulfill the trusts herein created, being
liable,
however, only for gross negligence or wilful misconduct,
and
hereby waives any statutory fee and agrees to accept
reasonable compensation, in lieu thereof, for any services
rendered by it in accordance with the terms hereof. All
authorities, powers and discretions given in this Deed of
Trust to Trustee and/or Beneficiary may be exercised by
either, without the other, with the same effect as if
exercised jointly.
(b) Trustee may resign at any time upon giving
30
days' notice in writing to Grantor and to Beneficiary.
(c) Beneficiary may remove Trustee at any time
or
from time to time and select a successor trustee. In the
event of the death, removal, resignation, refusal to act,
inability to act or absence of Trustee from the state in
which the premises are located, or in its sole discretion
for any reason whatsoever, Beneficiary may, upon notice to
the Grantor and without specifying the reason therefor and
without applying to any court, select and appoint a
successor trustee, and all powers, rights, duties and
authority of the former Trustee, as aforesaid, shall
thereupon become vested in such successor. Such substitute
trustee shall not be required to give bond for the faithful
performance of his duties unless required by Beneficiary.
Such substitute trustee shall be appointed by written
instrument duly recorded in the county where the Land is
located. Grantor hereby ratifies and confirms any and all
acts which the herein named Trustee, or his successor or
successors in this trust, shall do lawfully by virtue
hereof. Grantor hereby agrees, on behalf of itself and its
heirs, executors, administrators and assigns, that the
recitals contained in any deed or deeds executed in due
form
by any Trustee or substitute trustee, acting under the
provisions of this instrument, shall be prima facie
evidence
of the facts recited, and that it shall not be necessary to
prove in any court, otherwise than by such recitals, the
existence of the facts essential to authorize the execution
and delivery of such deed or deeds and the passing of title
thereby.
(d) Trustee shall not be required to see that
this Deed of Trust is recorded, nor be liable for its
validity or its priority as a first deed of trust, or
otherwise, nor shall Trustee be answerable or responsible
for performance or observance of the covenants and
agreements imposed upon Grantor or Beneficiary by this Deed
of Trust or any other agreement. Trustee, as well as
Beneficiary, shall have authority in their respective
discretion to employ agents and attorneys in the execution
of this trust and to protect the interest of the
Beneficiary
hereunder, and to the extent permitted by law they shall be
compensated and all expenses relating to the employment of
such agents and/or attorneys, including expenses of
litigations, shall be paid out of the proceeds of the sale
of the Trust Property conveyed hereby should a sale be had,
but if no such sale be had, all sums so paid out shall be
recoverable to the extent permitted by law by all remedies
at law or in equity.
(e) At any time, or from time to time, without
liability therefor and with 10 days' prior written notice
to
Grantor, upon written request of Beneficiary and without
affecting the effect of this Deed of Trust upon the
remainder of the Trust Property, Trustee may (i) reconvey
any part of the Trust Property, (ii) consent in writing to
the making of any map or plat thereof, so long as Grantor
has consented thereto, (iii) join in granting any easement
thereon, so long as Grantor has consented thereto, or
(iv) join in any extension agreement or any agreement
subordinating the lien or charge hereof.
IN WITNESS WHEREOF, this Deed of Trust has been
duly authorized and has been executed and delivered to
Trustee and Beneficiary by Grantor on the date first
written
above.
ECKERD CORPORATION, a
Delaware
corporation,
by
/s/ Martin W. Gladysz
Name: Martin W.
Gladysz
Title: Vice President
[ACKNOWLEDGMENT FORM]
THE STATE OF NEW YORK SECTION
COUNTY OF NEW YORK SECTION
This instrument has been acknowledged before me
on
this 3rd day of August, 1994, by Martin W. Gladysz, a vice
president of Eckerd Corporation, a Delaware corporation, on
behalf of such corporation.
My Commission expires: /s/ Deborah M. Voytovich
May 1, 1995 Notary Public in and for
the State of New York
Deborah M. Voytovich
Printed Name of Notary
APPENDIX A to Deed of Trust,
Security Agreement and
Assignment of Leases and
Rents
TEXAS OVERRIDE PROVISIONS
This Appendix A (this "Appendix A") has been
attached to and shall be deemed incorporated into that
certain Deed of Trust, Security Agreement and Assignment of
Leases and Rents (the "Deed of Trust") dated as of June 14,
1993, as amended and restated as of August 3, 1994, by
Eckerd Corporation, formerly known as Jack Eckerd
Corporation, a Delaware corporation, (the "Grantor") to the
trustee named therein (the "Trustee") for the benefit of
Chemical Bank, as Collateral Agent for the Secured Parties
(in such capacity the "Beneficiary"). As set forth in
Section 4.01 of the Deed of Trust, in the event of any
conflict between the terms and provisions contained in the
body of the Deed of Trust and the terms and provisions set
forth in this Appendix A, the terms and provisions set
forth
in this Appendix A shall govern and control. All
references
in this Appendix A to Articles and Section shall, unless
otherwise provided, refer to Articles and Sections of this
Appendix A and all references to "this Deed of Trust" or
similar language shall refer to the Deed of Trust, as
supplemented and, if applicable, overridden by this
Appendix
A.
ARTICLE I
Future Advances and Interest Limitation
SECTION 1.01. Future Advances. In addition to
securing the full, prompt and complete payment when due of
the Obligations, this Deed of Trust shall also secure any
and all other, further or future loans, advances,
readvances, reborrowings and borrowings made to or at the
request of the Grantor from or by any one on all of the
Beneficiary, the Lenders, the Swingline Lenders, the
Fronting Banks, the Managing Agents, the Administrative
Agent, the Documentation Agent and/or the Collateral Agent
and all other debts, obligations and liabilities of every
kind and character of the Grantor now or hereafter existing
in favor of any one or all of the Beneficiary, the Lenders,
the Swingline Lenders, the Fronting Banks, the Managing
Agents, the Administrative Agent, the Documentation Agent
and/or the Collateral Agent (including, without limitation,
all indebtedness incurred or arising pursuant to the Credit
Agreement and/or any Loan Document) whether such debts,
obligations or liabilities be direct or indirect, primary
or
secondary, joint or several, fixed or contingent, and
whether originally payable to any of such parties or to a
third party, and subsequently acquired by any of such
parties, and whether such debts, obligations and
liabilities
are evidenced by note, open account, overdraft,
endorsement,
surety agreement or otherwise, it being presently
contemplated by the Grantor and such other parties that the
Grantor may and will hereafter become indebted to the
Beneficiary, the Lenders, the Swingline Lenders, the
Fronting Banks, the Managing Agents, the Administrative
Agent, the Documentation Agent and the Collateral Agent in
other, further and future sum or sums.
SECTION 1.02. Limitation on Interest. All
agreements between the Grantor and the Beneficiary, whether
now existing or hereafter arising and whether written or
oral, are expressly limited so that in no contingency or
event whatsoever, whether by reason of acceleration of the
maturity of the indebtedness secured hereby, or otherwise,
shall the amount paid or agreed to be paid to the
Beneficiary for the use, forbearance or detention of the
indebtedness secured hereby or for the performance or
payment of any covenant or obligation contained herein or
in
any other instrument evidencing, securing or pertaining to
the indebtedness secured hereby, exceed the maximum rate
permitted by applicable law. If from any circumstances
whatsoever fulfillment of any provision hereof or of any
such other document, at the time performance of such
provision shall be due, shall involve transcending the
limit
of validity prescribed by law, then, ipso facto, the
obligation to be fulfilled shall be reduced to the limit of
such validity, and if from any such circumstance the
Beneficiary hereof shall ever receive anything of value
deemed interest by applicable law which would exceed the
maximum rate, an amount equal to any excessive interest
shall be applied to the reduction of the principal amount
owing under the Obligations or on account of any other
principal indebtedness of the Grantor to the Beneficiary,
in
the inverse order of maturity, and not to the payment of
interest, or if such excessive interest exceeds the unpaid
balance of principal of the Obligations and such other
indebtedness, such excess shall be refunded by the
Beneficiary to the Grantor. In determining if from any
such
specific circumstance the Beneficiary shall have received
anything of value deemed interest by applicable law which
would exceed the maximum rate, the Grantor and the
Beneficiary shall, to the maximum extent permissible under
applicable law, (a) characterize any non-principal payment
as an expense, fee or premium rather than as interest;
(b) exclude voluntary prepayments and the effects thereof;
and (c) amortize, prorate, allocate and spread all sums
paid
or agreed to be paid throughout the full term of such
indebtedness until payment in full so that the rate of
interest on account of such indebtedness is uniform
throughout the term thereof; provided, however, that if
such
indebtedness is paid and performed in full prior to the end
of the full contemplated term thereof, and the Beneficiary
shall have received anything of value deemed interest by
applicable law which would exceed the maximum rate for the
actual period of such indebtedness, the Beneficiary shall
apply such amounts as hereinabove provided, and, in such
event, the Beneficiary shall not be subject to any penalty
for contracting for, charging or receiving interest in
excess of the maximum rate. The terms and provisions of
this Section 1.02 shall control and supersede every other
provision of all agreements between the Grantor and the
Beneficiary.
ARTICLE II
Non-Judicial Foreclosure and Certain Waivers
SECTION 2.01. Foreclosure and Sale.
(a) If an Event of Default shall occur, each of
Trustee and his successor or substitute is authorized
and empowered and it shall be his special duty at the
request of the Beneficiary to sell or offer for sale
the Trust Property in such portions, order and parcels
as the Beneficiary may determine, with or without
having first taken possession of same, to the highest
bidder for cash at public auction or upon such other
terms and conditions as the Beneficiary, in its sole
and absolute discretion, may hereafter elect. Such
sale shall be made at the courthouse door of the
county
in which the Trust Property (or that portion thereof
to
be sold) is situated (whether the parts or parcels
thereof, if any, located in different counties are
contiguous or not, and without the necessity of having
any personal property hereby mortgaged present at such
sale) on the first Tuesday of any month between the
hours of 10:00 a.m. and 4:00 p.m. after advertising
the
time, place and terms of sale and that portion of the
Trust Property to be sold by posting or causing to be
posted written or printed notice thereof at least 21
days preceding the date of said sale at the courthouse
door of the county in which the sale is to be made and
at the courthouse door of any other county in which a
portion of the Trust Property may be situated, which
notice may be posted by the Trustee acting, or by any
person acting for him, and filing a copy of such
notice
with the clerk of the county in which the sale is to
be
made, and the holder of the indebtedness has, at least
21 days preceding the date of sale, served written or
printed notice of the proposed sale by certified mail
on each debtor obligated to pay the indebtedness
secured by this Deed of Trust according to the records
of the Beneficiary by the deposit of such notice,
enclosed in a postpaid wrapper, properly addressed to
such debtor at debtor's most recent address as shown
by
the records of the holder of the indebtedness, in a
post office or official depository under the care and
custody of the United States Postal Service. In the
event any of the foregoing are not sufficient to
satisfy or are in excess of the requirements of the
applicable laws of the State of Texas or of the United
States whenever such is to be commenced or conducted,
this Article shall be deemed to incorporate any
additional laws of the State of Texas or of the United
States, and to be amended by deletion of any
requirements in excess thereof.
(b) Notwithstanding anything herein to the
contrary, the Beneficiary may, at its option,
accomplish all or any of the aforesaid in such manner
as may from time to time be permitted or required by
the provisions of the Property Code of the State of
Texas (the "Property Code") relating to the sale of
real estate or by Chapter 9 of the Texas Business and
Commerce Code relating to the sale of collateral after
default by a debtor (as said article and chapter now
exist or may be hereinafter amended or succeeded), or
by any other present or subsequent articles or
enactments relating to same. Nothing contained in
this
Section 2.01 shall be construed to limit in any way
the
Trustee's right to sell the Trust Property by private
sale under the laws of the State of Texas or by public
or private sale after entry of a judgment by any court
of competent jurisdiction ordering same. At any such
sale: (i) whether made under the power herein
contained, the Property Code, the Texas Business and
Commerce Code or by virtue of any judicial proceedings
or any other legal right, remedy or recourse, it shall
not be necessary for the Trustee to have physically
present, or to have constructive possession of, the
Trust Property (the Grantor shall deliver to the
Trustee any portion of the Trust Property not actually
or constructively possessed by the Trustee immediately
upon demand by the Trustee) and the title to and right
of possession of any such property shall pass to the
purchaser thereof as completely as if the same had
been
actually present and delivered to purchaser at such
sale; (ii) each instrument of conveyance executed by
the Trustee shall contain a general warranty of title,
binding upon the Grantor and its successors; (iii)
each
and every recital contained in any instrument of
conveyance made by the Trustee shall be conclusive
evidence of the truth and accuracy of the matters
recited therein, including, without limitation, non-
payment of the indebtedness, advertisement and conduct
of such sale in the manner provided herein and
otherwise by law and appointment of any successor to
the Trustee hereunder; (iv) any and all prerequisites
to the validity thereof shall be presumed to have been
performed; (v) the receipt of the Trustee or of such
other party or officer making the sale shall be
sufficient to discharge to the purchaser or purchasers
for his or their purchase money, and no such purchaser
or purchasers, or his or their assigns or personal
representatives, shall thereafter be obligated to see
to the application of such purchase money or be in any
way answerable for any loss, misapplication or non-
application thereof; (vi) to the fullest extent
permitted by law, the Grantor shall be completely and
irrevocably divested of all of its right, title,
interest, claim and demand whatsoever, either at law
or
in equity, in and to the property sold, and such sale
shall be a perpetual bar, both at law and in equity,
against the Grantor and against all other persons
claiming or to claim the property sold or to any part
thereof by, through or under the Grantor; and (vii) to
the extent and under such circumstances as are
permitted by law, the Beneficiary may be a purchaser
at
any such sale.
SECTION 2.02. Separate Sales. The Trustee may
sell all or any portion of the Trust Property together or
in
lots or parcels and in such manner and order as the
Trustee,
in its sole discretion, may elect. The sale or sales by
the
Trustee of less than the whole of the Trust Property shall
not exhaust the power of sale herein granted, and the
Trustee is specifically empowered to make successive sale
or
sales under such power until the whole of the Trust
Property
shall be sold; and if the proceeds of such sale or sales of
less than the whole of the Trust Property shall be less
than
the aggregate of the indebtedness and the expense of
executing this trust, this Deed of Trust and the lien,
security interest and assignment hereof shall remain in
full
force and effect as to the unsold portion of the Trust
Property just as though no sale or sales had been made;
provided, however, that the Grantor shall never have any
right to require the sale or sales of less than the whole
of
the Trust Property, but the Beneficiary shall have the
right, at its sole election, to request the Trustee to sell
less than the whole of the Trust Property. As among the
various counties in which items of the Trust Property may
be
situated, sales in such counties may be conducted in any
order that the Trustee may deem expedient; and any one or
more of such sales may be conducted in the same month, or
in
successive or different months, as the Trustee may deem
expedient. If default is made hereunder, the holder of the
indebtedness or any part thereof on which the payment is
delinquent shall have the option to proceed as if under a
full foreclosure, conducting the sale as herein provided
without declaring the entire indebtedness due, and if sale
is made because of default of an installment, or a part of
an installment, such sale may be made subject to the
unmatured part of the indebtedness; and such sale, if so
made, shall not in any manner affect the unmatured part of
the indebtedness but as to such unmatured part, this Deed
of
Trust shall remain in full force and effect as though no
sale had been made under the provision of this paragraph.
Any number of sales may be made hereunder without
exhausting
the right of sale for any unmatured part of the
indebtedness
secured hereby.
SECTION 2.03. Release of and Resort to
Collateral. Any part of the Trust Property may be released
by the Beneficiary without affecting, subordinating or
releasing the lien, security interest and assignment hereof
against the remainder. The lien, security interest and
other rights granted hereby shall not affect or be affected
by any other security taken for the same indebtedness or
any
part thereof. The taking of additional security, or the
rearrangement, extension, modification, reinstatement or
renewal of the indebtedness, or any part thereof, shall not
release or impair the lien, security interest and other
rights granted hereby or affect the liability of any
endorser, guarantor or surety, or improve the right of any
permitted junior lienholder; and this Deed of Trust, as
well
as any instrument given to secure any rearrangement,
modification, renewal or extension of the indebtedness
secured hereby, or any part thereof, shall be and remain a
first and prior lien on all of the Trust Property not
expressly released until the indebtedness is completely
paid.
SECTION 2.04. Waiver of Redemption, Notice and
Marshalling of Assets. To the fullest extent permitted by
law, the Grantor hereby irrevocably and unconditionally
waives and releases:
(a) all benefits that might accrue to the
Grantor, by any present or future laws exempting the
Trust Property from attachment, levy or sale on
execution or providing for any appraisement,
valuation,
stay of execution, exemption from civil process,
redemption or extension of time for payment;
(b) all notices of acceleration, notices of
intent
to accelerate, notices of demand, notices of intent to
demand, notices of any Event of Default and notices of
the Beneficiary's or the Trustee's election to
exercise
or the actual exercise of any right, remedy or
recourse
provided for under the Loan Documents, except to the
extent, if at all, expressly otherwise provided in the
Credit Agreement;
(c) any right to appraisal or marshalling of
assets or a sale in inverse order of alienation;
(d) the exemption of homestead;
(e) the administration of estates of decedents,
or
other matter whatever to defeat, reduce or affect the
right of the Beneficiary under the terms of this Deed
of Trust, to sell the Trust Property for the
collection
of the indebtedness secured hereby (without any prior
or different resort for collection) or the right of
the
Beneficiary, under the terms of this Deed of Trust, to
the payment of the indebtedness out of the proceeds of
sale of the Trust Property in preference of every
other
person and claimant whatever (only reasonable expenses
of such sale being first deducted); and
(f) any right or remedy which it may have or be
able to assert by reason of the provisions of
Chapter 34 of the Business and Commerce Code of the
State of Texas, as currently in effect or hereafter
amended, and any other, further or future laws, rules
and/or judicial doctrines pertaining to the rights and
remedies of sureties.
ARTICLE III
The Trustee's Duties and Liability
SECTION 3.01. No Liability. The Trustee shall
not be liable for any error of judgment or act done by the
Trustee, or be otherwise responsible or accountable under
any circumstances whatsoever, except if the result of the
Trustee's gross negligence or willful misconduct. The
Trustee shall not be personally liable in case of entry by
him or anyone acting by virtue of the powers herein granted
him upon the Trust Property for debts contracted or
liability or damages or damages incurred in the management
or operation of the Trust Property. The Trustee shall have
the right to rely on any instrument, document or signature
authorizing or supporting any action taken or proposed to
be
taken by him hereunder or believed by him to be genuine.
The Trustee shall be entitled to reimbursement for actual
expenses incurred by him in the performance of his duties
hereunder and to reasonable compensation for such of his
services hereunder as shall be rendered. The Grantor will,
from time to time, reimburse the Trustee for and save and
hold him harmless from and against any and all loss, cost,
liability, damage and expense whatsoever incurred by him in
the performance of his duties.
SECTION 3.02. Retention of Monies. All monies
received by the Trustee shall, until used or applied as
herein provided, be held in trust for the purposes for
which
they were received, but need not be segregated in any
manner
from any other monies (except to the extent required by
law)
and the Trustee shall be under no liability for interest on
any monies received by him hereunder.
SECTION 3.03. Successor Trustees. The Trustee
may resign by giving of notice of such resignation in
writing to the Beneficiary. If the Trustee shall die,
resign or become disqualified from acting in the execution
of this trust or shall fail or refuse to exercise the same
when requested by the Beneficiary or if for any or no
reason
and without cause the Beneficiary shall prefer to appoint
a
substitute trustee to act instead of the original Trustee
named herein, or any prior successor or substitute trustee,
the Beneficiary shall, without any formality or notice to
the Grantor or any other person, have full power to appoint
a substitute trustee and, if the Beneficiary so elects,
several substitute trustees in succession who shall succeed
to all the estate, rights, powers and duties of the
aforenamed Trustee.
SECTION 3.04. Succession Instruments. Any new
Trustee appointed pursuant to any of the provisions hereof
shall, without any further act, deed or conveyance, become
vested with all the estates, properties, rights, powers and
trusts of its or his predecessor in the rights hereunder
with like effect as if originally named as the Trustee
herein; but, nevertheless, upon the written request of the
Beneficiary or his successor trustee, the Trustee ceasing
to
act shall execute and deliver an instrument transferring to
such successor trustee, upon the trust herein expressed,
all
the estates, properties, rights, powers and trusts of the
Trustee so ceasing to act, and shall duly assign, transfer
and deliver any of the property and monies held by the
Trustee to the successor trustee so appointed in its or his
place.
SECTION 3.05. Performance of Duties by Agents.
The Trustee may authorize one or more parties to act on his
behalf to perform the ministerial functions required of him
hereunder, including, without limitation, the transmittal
and posting of any notices.
ARTICLE IV
Fixture Filing and Assignment of Rents
SECTION 4.01. Fixture Filing. Pursuant to the
Texas Business and Commerce Code, this Deed of Trust shall
be effective as a Financing Statement filed as a fixture
filing from the date of its filing for record covering and
including any and all fixtures of every kind and type
affixed to all or any portion of the Premises or forming
part of all or any portion of the Improvements. The name
and address of the Grantor, as Debtor, and the Beneficiary
(where information concerning the security interest granted
hereby may be obtained), as Secured Party, are as set forth
on page 1 of this Deed of Trust. The above described goods
are or are to become fixtures related to the Premises and
the Improvements of which the Grantor is the record title
owner. This Deed of Trust shall also be effective as a
financing statement covering minerals or the like
(including
oil and gas) and accounts subject to Section 9.103(e) of
the
Texas Business and Commerce Code, as amended. A carbon,
photographic or other reproduction of this Deed of Trust or
any financing statement relating to this Deed of Trust
shall
be sufficient as a financing statement.
SECTION 4.02. Assignment of Rents. The Grantor
acknowledges and agrees that the assignment set forth in
Section 1.09(c) of the body of this Deed of Trust shall be
upon the following additional terms:
(a) until receipt from the Beneficiary of written
notice each tenant may pay any and all Rents and other
sums set forth above directly to the Grantor, but
after
written notice, the Grantor covenants to hold any and
all such sums in trust for the use and benefit of the
Beneficiary;
(b) upon receipt from the Beneficiary of a
written
notice, each tenant is hereby authorized and directed,
without the need for the prior consent, approval or
joinder by the Grantor or any other person, to pay
directly to the Beneficiary any and all of such Rents
and other sums thereafter accruing;
(c) the Beneficiary shall not be liable for its
failure to exercise diligence in the collection of any
and all of such Rents and other sums;
(d) the assignment set forth herein shall
terminate upon the release of this instrument, but no
tenant shall be required to accept notice of any such
termination until a copy of any such release, as
executed by the Beneficiary, has been delivered to
such
tenant;
(e) in no event shall the rights set forth in
this
assignment effect or be construed so as to effect a
pro
tanto reduction of the indebtedness secured hereby
except to the extent, if at all, that the Beneficiary
actually receives, after the occurrence of a default
and the Beneficiary's election to pursue its rights
under this Section, Rents and other sums directly from
any tenant of all or any portion of the Trust Property
and applies same, in the Beneficiary's discretion, to
such indebtedness; and
(f) the Beneficiary need not institute, prosecute
or resort to any legal, equitable or other action, nor
deliver any notice or demand, nor take any affirmative
action whatsoever after the occurrence of a default in
order to enforce and obtain the benefits of the
provisions set forth herein.
Notwithstanding anything to the contrary contained herein
or
otherwise, the Grantor and the Beneficiary intend, clearly
and without ambiguity, that the assignment set forth herein
shall be deemed and otherwise construed for all purposes to
be an absolute, unconditional and presently effective
assignment of the Rents and the provisions of clause (a)
and
clause (b) above are intended solely for the benefit of
each
tenant and shall never inure to the benefit of the Grantor
or any person claiming by, through or under the Grantor.
ARTICLE V
Miscellaneous
SECTION 5.01. Releases. Upon payment in full of
the Obligations and all other indebtedness secured hereby,
the Beneficiary shall, at the Grantor's expense, cause the
lien created by this Deed of Trust to be released by an
instrument in form and substance reasonably satisfactory to
the Grantor and the Beneficiary.
SECTION 5.02. Subrogation. If any or all of the
proceeds of the indebtedness secured hereby have been used
to extinguish, extend or renew any indebtedness heretofore
existing against all or any portion of the Trust Property
or
to satisfy any indebtedness or obligation secured by a lien
or encumbrance of any kind (including liens securing the
payment of any taxes), such proceeds have been advanced by
the Beneficiary at the Grantor's request and, to the extent
of such funds so used, the indebtedness and obligations in
this Deed of Trust shall be subrogated to and extend to all
of the rights, claims, liens, titles and interests
heretofore existing against the Trust Property (or such
portion thereof) to secure the indebtedness or obligation
so
extinguished, paid, extended or renewed, and the former
rights, claims, liens, titles and interests, if any, shall
not be waived but rather shall be continued in full force
and effect and in favor of the Beneficiary and shall be
merged with the lien and security interest created herein
as
cumulative security for the repayment of the indebtedness
and satisfaction of the Obligations.
SECTION 5.03. No Partnership. That
notwithstanding anything to the contrary contained herein
or
otherwise (a) the relationship between the Grantor and the
Beneficiary hereunder and otherwise shall be deemed,
construed and treated by the Grantor and the Beneficiary
for
all purposes to be solely that of debtor/creditor; (b) the
various consent, approval and other rights afforded to the
Beneficiary under this Deed of Trust have been granted and
designed solely to protect the value of the Trust Property
and to assure the Grantor's payment of the indebtedness and
all of such rights are customarily granted lenders in
secured lending transactions; (c) the Grantor and the
Beneficiary hereby expressly disclaim any sharing of
liabilities, losses, costs or expenses with respect to the
ownership or operation of all or any portion of the Trust
Property, or otherwise; and (d) the terms contained herein
are not intended by the Grantor and the Beneficiary and
shall not for any purpose be deemed, construed or treated
by
the Grantor and the Beneficiary so as (i) to create a
partnership or joint venture between the Beneficiary and
the
Grantor or between the Beneficiary and any other party, or
(ii) to cause the Beneficiary to be or become liable in any
way for the debts and obligations of the Grantor
(including,
without limitation, any losses attributable to the
Grantor's
operation of the Trust Property) or any other party.
SECTION 5.04. Incorporation by Reference. The
terms, covenants and provisions of the Credit Agreement and
the other Loan Documents have been incorporated into this
Deed of Trust by this reference. All references to the
"Beneficiary" shall be deemed to include Chemical Bank and
any successor, further or substitute entity appointed now
or
at any time hereafter as the collateral agent hereunder.
All references to the "Lenders", the "Swingline Lenders"
the
"Fronting Banks", the "Managing Agents", the
"Administrative
Agent" and the "Documentation Agent" shall include all
persons and entities currently acting as such and their
respective successors and assigns. All persons from time
to
time having an interest in all or any portion of the Trust
Property are hereby placed on notice of all of the terms,
covenants and provisions of the instruments incorporated
herein and that copies of same may be obtained, subject to
such confidentiality restrictions as may be reasonably
acceptable to both the Beneficiary and the Grantor, by
those
having an appropriate interest in the Trust Property or any
portion thereof upon written request to the Beneficiary at
the address set forth on page 1 of this Deed of Trust. Any
such request shall include the name and address of the
requesting party and also contain a brief explanation of
the
nature and reason for such request.
SECTION 5.05. Section 26.02 Notice. IN
ACCORDANCE WITH SECTION 26.02 OF THE TEXAS BUSINESS AND
COMMERCE CODE, THIS DEED OF TRUST AND THE OTHER DOCUMENTS
EVIDENCING, SECURING OR PERTAINING TO ALL OR ANY PORTION OF
THE OBLIGATIONS REPRESENT THE FINAL AGREEMENT BETWEEN THE
GRANTOR AND THE BENEFICIARY AS TO THE SUBJECT MATTER
THEREOF
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF SUCH
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
SUCH PARTIES.
MONTGOMERY COUNTY,
TEXAS
EXHIBIT A
BEING 26.00 acres of land, more or less, being out of the
James McCambridge Survey, Abstract No. 390, Montgomery
County, Texas, and being more particularly described by
metes and bounds as follows, to-wit:
A tract of land situated in the State of Texas, County of
Montgomery, containing 26.00 acres of land out of the James
McCambridge Survey, A-390, Montgomery County, Texas, and
being out of Tract 2, (Called 139.814 acres of land) as
described in that certain Deed of Trust, dated November 4,
1974, to W. C. McClain, Trustee, recorded in Volume 314,
Page 56 of the Deed of Trust Records, Montgomery County,
Texas, and being more particularly described by metes and
bounds as follows: All control is referred to the Texas
Plane Coordinate System, Lambert Projection, South Central
Zone.
BEGINNING at a concrete monument with brass cap, being the
Southwest corner of this tract and being at its
intersection
with the Westerly boundary of the aforementioned Tract 2
(Called 139.814 acres of land), and being common with the
East right-of-way boundary of Interstate Highway No. 45,
said Point of Beginning having a Texas Plane Coordinate
value of X-3,119,220.39; Y-882,949.68, and being referenced
from the Southeast corner of the aforementioned James
McCambridge Survey, A-390, common with the Northeast corner
of the George Taylor Survey, A-555, at its intersection
with
the Westerly boundary of the Richard Vince Survey, A-583,
marked by a 5/8' steel reinforcing rod, and being N 62 deg.
18, 37, W, 2,459.59 feet to said Point of Beginning, and
being also referenced from a concrete monument with brass
cap stamped *NW-11' set for control of The Woodlands
Development Corporation Property by Cadastral Surveying and
Mapping Corporation and having a Texas Plane Coordinate
value of X-3,119,166.69; Y-880,096.41 and being N 01 deg.
04' 41' E, 2,853-78 feet to said Point of Beginning;
THENCE along the Westerly boundary of this tract, common
with the Easterly boundary of said Interstate Highway No.
45, as follows:
N 06 deg. 24' 58' W, 666 . 30 feet to a concrete monument
with brass cap and being a point of curvature (P.C.) AND
Along an arc (To the Right) having a central angle of 00
deg. 21' 40' (Right), based on a radius of 11,399.54 feet,
having an arc length of 71.85 feet and having a chord call
of N 06 deg. 14' 09' W, 71.84 feet to a point on curve and
a
concrete monument with brass cap for corner, being the
Northwest corner of this tract;
THENCE, severing the aforementioned Tract 2 (Called 139.814
acres of land), N 87 deg. 21' 47' E, 1,526.57 feet to a
concrete monument with brass cap for corner, being the
Northeast corner of this tract, and being 10.00 feet
parallel to the Westerly right-of-way of the Missouri
Pacific Railroad 200 foot right-of-way boundary.
THENCE S 13 deg. 57' 29, E, 580.64 feet along the Easterly
boundary of this tract, being parallel to and 10.00 feet
West of the aforementioned Missouri Pacific Railroad 200
foot right-of-way, to a concrete monument with brass cap,
and being a point of curvature (P.C.), and being also the
Easternmost Southeast corner of this tract, and being also
on the North right-of-way of a proposed road;
THENCE, severing said Tract 2 (Called 139.814 acres of
land), as follows:
Along an arc (To the Left) and around the North
right-of-way
of said proposed road, having a central angle of 32 deg.
32'
19' (Left), based on a radius of 541.87 feet, having an arc
length of 307.73 feet, and having a chord call of S 53 deg.
56' 49, W, 303.61 feet to a point on curve (P.O.C.) and
concrete monument with brass cap for corner, being the
Southernmost Southeast corner of this tract AND S 87 deg.
21' 47' W, 1,338.70 feet to said Point of Beginning
Containing 26.00 acres of land.
AMENDMENT, CONSENT AND WAIVER dated as
October 31, 1994 (this "Amendment"), to
(a) the Credit Agreement dated as of June
14,
1993, as amended and restated as of August
3,
1994 (the "Credit Agreement"), among Eckerd
Corporation, a Delaware corporation (the
"Borrower"); the financial institutions
party
to the Credit Agreement (the "Lenders");
Chemical Bank and NationsBank of Florida,
N.A., as managing agents for the Lenders
(the
"Managing Agents") and as swingline lenders
(the "Swingline Lenders"); Chemical Bank, as
administrative agent (in such capacity, the
"Administrative Agent") for the Lenders, the
Swingline Lenders and the Fronting Banks
(such term and each other capitalized term
used without definition in this Amendment
having the meanings assigned thereto in the
Credit Agreement); and NationsBank, as
documentation agent (the "Documentation
Agent") for the Lenders, the Swingline
Lenders and the Fronting Banks; (b) the
Guarantee Agreement dated as of June 14,
1993, as amended and restated as of August
3,
1994 (the "Guarantee Agreement"), among each
subsidiary of the Borrower party thereto
(collectively, the "Guarantors") and
Chemical, as collateral agent for the
Secured
Parties (the "Collateral Agent"); and (c)
the
Indemnity, Subrogation and Contribution
Agreement dated as of June 14, 1993, as
amended and restated as of August 3, 1994
(the "Indemnity, Subrogation and
Contribution
Agreement"), among the Borrower, the
Guarantors and the Collateral Agent.
WHEREAS, the Borrower intends to consummate the
sale of Insta-Care Holdings, Inc., a Florida corporation
("IC Holdings"), as permitted by the Credit Agreement (such
sale, the "IC Holdings Sale") and, in connection therewith,
the Borrower has requested that the Required Lenders agree
to (a) waive the provisions of the Credit Agreement to the
extent necessary to provide that if, upon consummation of
the IC Holdings Sale, the Borrower applies to the
prepayment
of outstanding Revolving Credit Borrowings the portion of
the Net Proceeds from the IC Holdings Sale that the
Borrower
is permitted under the Credit Agreement to apply to the
redemption or repurchase of 11-1/8% Subordinated
Debentures,
the Borrower may subsequently use the proceeds of Revolving
Credit Borrowings, in an amount not in excess of the amount
of Net Proceeds from the IC Holdings Sale so applied to
prepay outstanding Revolving Credit Borrowings, to redeem
or
repurchase 11-1/8% Subordinated Debentures, (b) amend the
Guarantee Agreement to release, upon the consummation of
the
IC Holdings Sale, the guarantee of each Subsidiary of
IC Holdings under the Guarantee Agreement and (c) amend the
Indemnity, Contribution and Subrogation Agreement to
release, upon the consummation of the IC Holdings Sale, IC
Holdings and its Subsidiaries from all their respective
obligations under the Indemnity, Contribution and
Subrogation Agreement;
WHEREAS, the Borrower intends, on or prior to
August 1, 1995, to make a public offering of convertible
subordinated indebtedness (the "Convertible Subordinated
Debentures") the proceeds of which will be used by the
Borrower to redeem or repurchase 11-1/8% Subordinated
Debentures and, in connection therewith, the Borrower has
requested that the Required Lenders agree to (a) waive the
provisions of the Credit Agreement to the extent necessary
to permit the Borrower to make such offering and (b) waive
the provisions of the Credit Agreement to the extent
necessary to provide that if, upon consummation of such
offering, the Borrower applies to the prepayment of
outstanding Revolving Credit Borrowings all or a portion of
the Net Proceeds from such offering, the Borrower may
subsequently use the proceeds of Revolving Credit
Borrowings, in an amount not in excess of the amount of Net
Proceeds from such offering so applied to prepay
outstanding
Revolving Credit Borrowings, to redeem or repurchase
11-1/8%
Subordinated Debentures; and
WHEREAS, the Required Lenders are willing, on the
terms, subject to the conditions and to the extent set
forth
below, to grant such waivers and to effect such amendments.
NOW, THEREFORE, in consideration of the premises
and the agreements, provisions and covenants herein
contained, the Borrower, each of the Guarantors and the
Required Lenders hereby agree, on the terms and subject to
the conditions set forth herein, as follows:
SECTION 1. Amendment of the Credit Agreement.
(a) The Borrower and the Required Lenders hereby amend
Article I of the Credit Agreement by deleting the
definition
of the term "IC Holdings Sale Balance" in its entirety and
substituting therefor the following material:
"IC Holdings Sale Balance" shall mean (a) 100% of
the Net Proceeds from the IC Holdings Sale minus
(b) the aggregate amount of such Net Proceeds that has
been applied by the Borrower to (i) redeem or
repurchase 11-1/8% Subordinated Debentures pursuant to
Section 7.09(a)(iii)(A) or (ii) prepay outstanding
Revolving Credit Borrowings pursuant to Section
2.13(c).
(b) The Borrower and the Required Lenders hereby
amend Section 2.13(c) of the Credit Agreement by deleting
such Section in its entirety and substituting therefor the
following material:
(c) In the event that the IC Holdings Sale
occurs, the Borrower shall, within five Business Days
following the occurrence of the IC Holdings Sale,
(i) provide written notice to each Lender of the
aggregate amount of the Net Proceeds from the
IC Holdings Sale that has been or will be applied by
the Borrower to redeem or repurchase 11-1/8%
Subordinated Debentures pursuant to
Section 7.09(a)(iii)(A), (ii) apply to the prepayment
of outstanding Revolving Credit Borrowings the portion
of such amount that will be so applied to the
redemption or repurchase of 11-1/8% Subordinated
Debentures after the date of such written notice and
(iii) apply to the repayment of outstanding Loans and
Swingline Loans, in accordance with Section 2.13(e),
an
amount equal to 100% of the IC Holdings Sale Balance.
(c) The Required Lenders and the Borrower hereby
amend Section 7.09(a) of the Credit Agreement by inserting,
following the words "equal to" on the ninth line of such
Section, the phrase "or less than".
(d) The Required Lenders and the Borrower hereby
amend Section 7.09(b) of the Credit Agreement by inserting,
following the word "Debentures" on the second line of such
Section, the phrase "(or any Subordinated Debt Refinancing
Indebtedness)".
(e) The Required Lenders and the Borrower hereby
amend Section 7.10 of the Credit Agreement by deleting the
phrase "and (k) the Investor Stock Subscription Agreements"
on the seventh line of such Section and substituting
therefor the phrase ", (k) the Investor Stock Subscription
Agreements, (l) any Subordinated Debt Refinancing
Indebtedness and (m) the indenture relating to any
Subordinated Debt Refinancing Indebtedness".
SECTION 2. Amendment of the Guarantee Agreement.
(a) The Guarantors and the Collateral Agent hereby amend
Section 12(b) of the Guarantee Agreement by deleting such
Section in its entirety and substituting therefor the
following material:
(b) Upon the sale of all or substantially all of
the assets or all of the capital stock of any
Guarantor
(or the sale of all of the capital stock of any
corporation that owns all of the capital stock of any
Guarantor) in a manner that is permitted by the Credit
Agreement, the guarantees of such Guarantor made
hereunder shall automatically terminate.
(b) The Required Lenders hereby consent to the
amendment of the Guarantee Agreement provided for in the
immediately preceding paragraph.
SECTION 3. Amendment of the Indemnity,
Subrogation and Contribution Agreement. (a) The Borrower,
the Guarantors and the Collateral Agent hereby amend
Section 4 of the Indemnity, Subrogation and Contribution
Agreement by (i) adding, immediately after the word
"Termination." on the first line of such Section, the term
"(a)" and (ii) adding, immediately following Section 4 of
the Indemnity, Subrogation and Contribution Agreement, the
following material:
(b) Upon the sale of all or substantially all of
the assets or all of the capital stock of any
Guarantor
(or the sale of all of the capital stock of any
corporation that owns all of the capital stock of any
Guarantor) in a manner that is permitted by the Credit
Agreement, such Guarantor's obligations hereunder
shall
automatically terminate.
(b) The Required Lenders hereby consent to the
amendment of the Indemnity, Subrogation and Contribution
Agreement provided for in the immediately preceding
paragraph.
SECTION 4. Waivers. (a) The Required Lenders
hereby waive the provisions of Sections 7.01(j)(i),
7.01(j)(iii) and 7.01(j)(vi) of the Credit Agreement to the
extent, but only to the extent, necessary to permit the
Borrower to issue the Convertible Subordinated Debentures
and to use an amount equal to or less than the Net Proceeds
of the issuance of the Convertible Subordinated Debentures
to redeem 11-1/8% Subordinated Debentures; provided,
however, that (i) no material terms applicable to the
Convertible Subordinated Debentures (including the
subordination provisions thereof) shall be more favorable
to
the holders of the Convertible Subordinated Debentures than
the terms that are applicable to the holders of the 9-1/4%
Senior Subordinated Notes and (ii) the closing of the
issuance of the Convertible Subordinated Debentures shall
occur on or prior to August 1, 1995. The Borrower and the
Required Lenders hereby agree that (i) the Convertible
Subordinated Debentures shall for all purposes constitute
Subordinated Debt Refinancing Indebtedness and be deemed to
be Indebtedness permitted under Section 7.01(j) and (ii)
the
issuance of the Convertible Subordinated Debentures shall
not constitute for any purpose either an Equity Issuance or
a Prepayment Event.
(b) The Required Lenders hereby waive the
provisions of Sections 6.08 and 7.09 of the Credit
Agreement
to the extent, but only to the extent, necessary to
(i) permit the Borrower, following the consummation of the
IC Holdings Sale and the prepayment of outstanding
Revolving
Credit Borrowings pursuant to Section 2.13(c), to use the
proceeds of Revolving Credit Borrowings, in an aggregate
amount not in excess of the amount of such prepayment of
Revolving Credit Borrowings, to redeem or repurchase
11-1/8%
Subordinated Debentures pursuant to Section 7.09(a)(iii)(A)
and (ii) permit the Borrower, following the application to
the prepayment of outstanding Revolving Credit Borrowings
of
all or a portion of the Net Proceeds of the offering of the
Convertible Subordinated Debentures, to use the proceeds of
Revolving Credit Borrowings, in an aggregate amount not in
excess of the amount of such prepayment of Revolving Credit
Borrowings, to redeem or repurchase 11-1/8% Subordinated
Debentures.
SECTION 5. Release of Security Interests.
Simultaneously with the consummation of the IC Holdings
Sale, the Collateral Agent shall execute and deliver to the
Borrower, at the Borrower's expense, all Uniform Commercial
Code termination statements and similar documents that the
Borrower shall reasonably request in order to evidence the
termination of the Security Interest in (a) the capital
stock of IC Holdings and its Subsidiaries and (b) the
assets
of IC Holdings and its Subsidiaries. Any execution and
delivery of such termination statements or similar
documents
shall be without recourse to or warranty by the Collateral
Agent.
SECTION 6. Representations and Warranties.
The Borrower and each of the Guarantors represent and
warrant to each of the Lenders that:
(a) The execution, delivery and performance by
the Borrower and each of the Guarantors of this
Amendment (a) have been duly authorized by all
requisite corporate and, if required, stockholder
action and (b) will not (i) violate (A) any provision
of any law, statute, rule or regulation, other than
any
law, statute, rule or regulation, the violation of
which will not result in a Material Adverse Effect, or
of the certificate or articles of incorporation or
other constitutive documents or By-laws of the
Borrower
or any Subsidiary, (B) any order of any Governmental
Authority or (C) any provision of any material
indenture, agreement or other instrument to which the
Borrower or any Subsidiary is a party or by which any
of them or any of their property is or may be bound,
(ii) constitute (alone or with notice or lapse of time
or both) a default under any such indenture, agreement
or other instrument or (iii) result in the creation or
imposition of any Lien (other than any Lien created
under the Security Documents) upon any property or
assets of the Borrower or any Subsidiary.
(b) This Amendment has been duly executed and
delivered by the Borrower and each of the Guarantors
and constitutes a legal, valid and binding obligation
of the Borrower and each of the Guarantors,
enforceable
against the Borrower and each of the Guarantors in
accordance with its terms (a) except as the
enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights
generally and (b) subject to general principals of
equity.
SECTION 7. Loan Documents. This Amendment and
each certificate and instrument delivered by any party in
connection herewith shall be a Loan Document for all
purposes.
SECTION 8. Effectiveness. This Amendment shall
become effective as of the date hereof when the
Administrative Agent shall have received copies hereof
that,
when taken together, bear the signatures of the Borrower,
each of the Guarantors and the Required Lenders.
SECTION 9. Notices. All notices hereunder shall
be given in accordance with the provisions of Section 10.01
of the Credit Agreement.
SECTION 10. Applicable Law. THIS AMENDMENT
SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK.
SECTION 11. No Novation. Except as expressly
set
forth herein, this Amendment shall not by implication or
otherwise limit, impair, constitute a waiver of, or
otherwise affect the rights and remedies of any party under
the Credit Agreement or any other Loan Document, nor alter,
modify, amend or in any way affect any of the terms,
conditions, obligations, covenants or agreements contained
in the Credit Agreement or any other Loan Document, all of
which are ratified and affirmed in all respects and shall
continue in full force and effect. This Amendment shall
apply and be effective only with respect to the provisions
of the Credit Agreement, the Guarantee Agreement and the
Indemnity, Subrogation and Contribution Agreement
specifically referred to herein.
SECTION 12. Counterparts. This Amendment may be
executed in two or more counterparts, each of which shall
constitute an original but all of which when taken together
shall constitute but one contract. Delivery of an executed
counterpart of a signature page of this Amendment by
facsimile transmission shall be as effective as delivery of
a manually executed counterpart of this Amendment.
SECTION 13. Headings. Section headings used
herein are for convenience of reference only, are not part
of this Amendment and are not to affect the construction
of,
or to be taken into consideration in interpreting, this
Amendment.
IN WITNESS WHEREOF, the Borrower, each of the
Guarantors and the Required Lenders have caused this
Amendment to be duly executed by their duly authorized
officers, all as of the date and year first above written.
ECKERD CORPORATION,
by
/s/ Martin W. Gladysz
Name: Martin W. Gladysz
Title: VP Treasurer
Lenders:
CHEMICAL BANK, individually
and as Administrative Agent,
Managing Agent, Swingline
Lender and Collateral Agent,
by
/s/ Hans von Nolde
Name: Hans von Nolde
Title: Vice President
NATIONSBANK OF FLORIDA, N.A.,
individually and as Managing
Agent, Swingline Lender and
Documentation Agent,
by
/s/ Joseph J. Troy
Name: Joseph J. Troy
Title: Vice President
THE FIRST NATIONAL BANK OF
CHICAGO,
by
/s/ Margaret H. Harper
Name: Margaret H. Harper
Title: Vice President
THE FIRST NATIONAL BANK OF
BOSTON,
by
/s/ William C. Purinton
Name: William C.
Purinton
Title: Vice President
WELLS FARGO BANK, N.A.,
by
/s/ Peter W. Clark
Name: Peter W. Clark
Title: Assistant Vice
President
NATIONAL WESTMINSTER BANK
USA,
by
/s/ W. Wakefield Smith
Name: W. Wakefield Smith
Title: Vice President
THE LONG-TERM CREDIT BANK OF
JAPAN,
LIMITED, NEW YORK BRANCH,
by
/s/ John J. Sullivan
Name:
Title:
BANQUE PARIBAS, BANQUE PARIBAS,
by by
/s/ Ann C. Pifer /s/ Richard G. Burrows
Name: Ann C. Pifer Name: Richard G. Burrows
Title: Assistant Vice Title: Vice President
President
THE NIPPON CREDIT BANK, LTD.,
by
/s/ Lori A. Ravit
Name: Lori A. Ravit
Title: Assistant Vice
President
GENERAL ELECTRIC CAPITAL
CORPORATION,
by
/s/ Elaine L. Moore
Name: Elaine L. Moore
Title: Senior Vice President
SOCIETE GENERALE,
by
/s/ John J. Wiener
Name: John J. Wiener
Title: Vice President
UNION BANK OF SWITZERLAND, UNION BANK OF SWITZERLAND,
NEW YORK BRANCH, NEW YORK BRANCH,
by by
Name: Name:
Title: Title:
MELLON BANK, N.A.,
by
/s/ Lisa M. Pellow
Name: Lisa M. Pellow
Title: Vice President
UNION BANK OF FINLAND LTD.
GRAND
CAYMAN BRANCH,
by
/s/ Eric I. Mann
Name: Eric I. Mann
Title: Vice President
by
/s/ John F. Kehnle
Name: John F. Kehnle
Title: Vice President
NATIONAL CITY BANK,
by
/s/ Brian G. Karrip
Name: Brian G. Karrip
Title: Vice President
FIRST INTERSTATE BANK OF
TEXAS
N.A.,
by
/s/ Frank W. Schageman
Name: Frank W. Schageman
Title: Assistant Vice
President
VAN KAMPEN MERRITT, PRIME
RATE
INCOME TRUST,
by
/s/ [illegible]
Name:
Title:
THE BANK OF TOKYO,
by
Name:
Title:
THE FUJI BANK, LIMITED,
by
/s/ Katsunori Nozawa
Name: Katsunori Nozawa
Title: Vice President &
Manager
CREDIT LYONNAIS CAYMAN ISLAND
BRANCH,
by
/s/ Frederick Haddad
Name: Frederick Haddad
Title: Authorized
Signatory
CREDIT LYONNAIS NEW YORK
BRANCH,
by
/s/ H. Frederick Haddad
Name: Frederick Haddad
Title: Senior Vice
President
SHAWMUT NATIONAL BANK OF
CONNECTICUT, N.A.,
by
Name:
Title:
ABN-AMRO BANK, N.V.,
by
Name:
Title:
by
Name:
Title:
BANK OF SCOTLAND,
by
/s/ Catherine M.
Oriffrey
Name: Catherine M.
Oriffrey
Title: Vice President
BANKERS TRUST COMPANY,
by
/s/ Mary Jo Jolly
Name: Mary Jo Jolly
Title: Assistant Vice
President
HIBERNIA NATIONAL BANK,
by
/s/ Troy S. Williamson
Name: Troy S. Williamson
Title: Assistant Vice
President
MCI CAPITAL INC.,
by
/s/ Bruce N. Komuro
Name: Bruce N. Komuro
Title: Executive Vice
President
FLEET BANK OF MASSACHUSETTS,
N.A.,
by
/s/ Thomas J. Bullard
Name: Thomas J. Bullard
Title: Vice President
THE SAKURA BANK, LIMITED,
by
/s/ Hiroyasu Imanishi
Name: Hiroyasu Imanishi
Title: VP and Senior
Manager
NATIONAL CANADA FINANCE
CORP.,
by
/s/ Michael S.
Bloomenfeld
Name: Michael S.
Bloomenfeld
Title: Vice President
GIROCREDIT BANK,
by
/s/ Dhuane G. Stephens
Name: Dhuane G. Stephens
Title: Vice President
by
/s/ John P. Redding
Name: John P. Redding
Title: Vice President
RESTRUCTURED OBLIGATIONS
BACKED BY
SENIOR ASSETS B.V.,
by
/s/ Christopher E.
Jansen
Name: Christoper E.
Jansen
Title: Managing Director
CHANCELLOR SENIOR SECURED
MANAGEMENT, INC., as
Portfolio Advisor
STICHTING RESTRUCTURED
OBLIGATIONS
BACKED BY SENIOR ASSETS 2
(ROSA 2),
by
/s/ Christopher E.
Jansen
Name: Christopher E.
Jansen
Title: Managing Director
CHANCELLOR SENIOR SECURED
MANAGEMENT, INC., as
Portfolio Advisor
PROSPECT STREET SENIOR
PORTFOLIO,
L.P.,
by PROSPECT STREET SENIOR
LOAN
CORP., as Managing
General
Partner,
by
Name:
Title:
PEARL STREET, L.P.,
by
Name:
Title:
COMPAGNIE FINANCIeRE DE CIC
ET DE
L'UNION EUROPeENNE,
by
/s/ Marcus Edward
Name: Marcus Edward
Title: Vice President
by
/s/ Sean Mounier
Name: Sean Mounier
Title: Vice President
THE MITSUBISHI TRUST AND
BANKING
CORPORATION,
by
/s/ Patricia Loret de
Mola
Name: Patricia Loret de
Mola
Title: Senior Vice
President
UNITED STATES NATIONAL BANK
OF
OREGON,
by
/s/ Jeffrey W. Jones
Name: Jeffrey W. Jones
Title: Senior Vice
President
THE YASUDA TRUST & BANKING
COMPANY,
LIMITED, NEW YORK BRANCH,
by
/s/ Neil T. Chau
Name: Neil T. Chau
Title: First Vice
President
BANK OF IRELAND, GRAND CAYMAN
BRANCH,
by
Name:
Title:
BANK POLSKA,
by
Name:
Title:
BANQUE FRANCAISE DU COMMERCE
EXTERIEUR,
by
/s/ Iain A. Whyte
Name: Iain A. Whyte
Title: Assistant Vice
President
BANQUE FRANCAISE DU COMMERCE
EXTERIEUR,
by
/s/ Mark A. Harrington
Name: Mark A. Harrington
Title: Vice President or
Reg. Manager
FIRST AMERICAN NATIONAL BANK,
by
/s/ Russell S. Goyes
Name: Russell S. Goyes
Title:
MITSUBISHI BANK, LTD.,
by
Name:
Title:
STRATA FUNDING LIMITED,
by
/s/ Christopher E.
Jansen
Name: Christopher E.
Jansen
Title: Managing Director
CHANCELLOR SENIOR SECURED
MANAGEMENT INC., as
Financial
Manager
VIA BANQUE,
by
/s/ F. Fonduri
Name: F. Fonduri
Title: DGA
by
/s/ J.L. Simon
Name: J.L. Simon
Title: DGA
Guarantors:
CLORWOOD DISTRIBUTORS, INC.,
by
/s/ Martin W. Gladysz
Name: Martin W. Gladysz
Title: Vice President -
Treasurer
ECKERD CONSUMER PRODUCTS,
INC.,
by
/s/ Martin W. Gladysz
Name: Martin W. Gladysz
Title: Vice President -
Treasurer
ECKERD FLEET, INC.,
by
/s/ Martin W. Gladysz
Name: Martin W. Gladysz
Title: Vice President -
Treasurer
ECKERD HOLDINGS II, INC.,
by
/s/ Martin W. Gladysz
Name: Martin W. Gladysz
Title: Vice President -
Treasurer
ECKERD'S WESTBANK, INC.,
by
/s/ Martin W. Gladysz
Name: Martin W. Gladysz
Title: Vice President -
Treasurer
ECKERD TOBACCO COMPANY, INC.,
by
/s/ James M. Santo
Name: James M. Santo
Title: President
E.I.T., INC.,
by
/s/ Martin W. Gladysz
Name: Martin W. Gladysz
Title: Vice President -
Treasurer
INSTA-CARE HOLDINGS, INC.,
by
/s/ James M. Santo
Name: James M. Santo
Title: Vice President
INSTA-CARE PHARMACY SERVICES
CORPORATION,
by
/s/ James M. Santo
Name: James M. Santo
Title: Vice President
P.C.V., INC.,
by
/s/ Martin W. Gladysz
Name: Martin W. Gladysz
Title: Vice President -
Treasurer
PHARMACY DYNAMICS GROUP,
INC.,
by
/s/ Martin W. Gladysz
Name: Martin W. Gladysz
Title: Vice President -
Treasurer
PREPARED BY AND RETURN TO:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
Attention: Gary R. Eisenman, Esq.
AMENDED AND RESTATED MORTGAGE,
SECURITY AGREEMENT
AND ASSIGNMENT OF LEASES AND RENTS
Dated as of August 3, 1994
between
ECKERD CORPORATION
Mortgagor,
and
CHEMICAL BANK
Mortgagee
THIS MORTGAGE AMENDS AND RESTATES THAT CERTAIN
MORTGAGE,
SECURITY AGREEMENT AND ASSIGNMENT OF RENTS AND LEASES
DATED
JUNE 14, 1993. PROPER DOCUMENTARY STAMP AND
INTANGIBLE
TAXES WERE PAID IN CONNECTION WITH THE ORIGINAL 1993
TRANSACTION AS EVIDENCED BY THE CLERK ON THAT CERTAIN
DOCUMENT RECORDED AT O.R. BOOK 8307, PAGE 1036 OF THE
PUBLIC
RECORDS OF PINELLAS COUNTY, FLORIDA. THIS MORTGAGE
CONTAINS
A LIMITATION ON THE AMOUNT OF INDEBTEDNESS SECURED
HEREUNDER
EQUAL TO $14,886,630.
AMENDED AND RESTATED
MORTGAGE, SECURITY AGREEMENTAND ASSIGNMENT OF LEASES
AND
RENTS
THIS AMENDED AND RESTATED
MORTGAGE,
SECURITY AGREEMENT AND ASSIGNMENT OF
LEASES
AND RENTS dated as of August 3, 1994
(which
amends and restates that certain
mortgage
dated as of June 14, 1993(this
"Mortgage"),
by ECKERD CORPORATION, formerly known
as Jack
Eckerd Corporation, a Delaware
corporation,
having an office at 8333 Bryan Dairy
Road,
Largo, Florida 34647 (the "Mortgagor"),
to
CHEMICAL BANK, a New York banking
corporation
("Chemical"), having an office at 270
Park
Avenue, New York, New York 10017, as
Collateral Agent for the Secured
Parties (as
defined herein)(in such capacity, the
"Mortgagee").
WITNESSETH THAT:
A. The Mortgagor as the Borrower (such term
and
each other capitalized term used herein but not
defined
herein shall have the meaning given to such term in
the
Credit Agreement (as defined herein)), has entered
into an
amended and restated credit agreement dated as of the
date
hereof of the credit agreement dated as of June 14,
1993
(the "1993 Agreement"), (such amended and restated
credit
agreement, as amended or modified from time to time,
the
"Credit Agreement"), with the financial institutions
party
thereto, as lenders (the "Lenders"), Chemical and
NationsBank of Florida, N.A., a national banking
association
("NationsBank"), as managing agents and swingline
lenders
(in such latter capacity, each a "Swingline Lender")
and
Chemical, as administrative agent (in such capacity,
the
"Administrative Agent").
B. Pursuant to the Credit Agreement the
Lenders
have agreed to extend credit in order to enable the
Mortgagor to borrow on a term basis, Term Loans in an
aggregate principal amount not to exceed $500,000,000.
C. On the Restatement Date, Term Borrowings
shall
be used solely to continue or convert all term loans
outstanding under the 1993 Credit Agreement.
D. The obligations of the Lenders under the
Credit Agreement are conditioned upon, among other
things,
the execution and delivery by the Mortgagor of this
Mortgage, in the form hereof, to secure (a) the due
and
punctual payment of (i) the principal of and premium,
if
any, and interest (including interest accruing during
the
pendency of any bankruptcy, insolvency, receivership
or
other similar proceeding, regardless of whether
allowed or
allowable in such proceeding) on the Term Loans, when
and as
due, whether at maturity, by acceleration, upon one or
more
dates set for prepayment or otherwise and (ii) all
other
monetary obligations, including fees, costs, expenses
and
indemnities, whether primary, secondary, direct,
contingent,
fixed or otherwise (including monetary obligations
incurred
during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless
of
whether allowed or allowable in such proceeding) of
the
Borrower to the Secured Parties under the Credit
Agreement,
this Mortgage and the other Loan Documents, to which
the
Borrower is or is to be a party, (b) the due and
punctual
performance of all covenants, agreements, obligations
and
liabilities of the Borrower under or pursuant to the
Credit
Agreement, this Mortgage and the other Loan Documents
and
(c) unless otherwise agreed upon in writing by the
applicable Lender, all obligations of the Borrower,
monetary
or otherwise, under each Rate Protection Agreement
entered
into with any Lender, whether pursuant to Section 6.11
of
the Credit Agreement or otherwise (all the obligations
referred to in this clause (c) and in the preceding
clauses (a) and (b) being referred to, collectively,
as the
"Obligations").
E. Pursuant to the requirements of the
Credit
Agreement, the Mortgagor is entering into this
Mortgage to
create a security interest in the Mortgaged Property
(as
defined herein) to secure the performance and payment
by the
Mortgagor of the Obligations. The Credit Agreement
also
requires the granting by Mortgagor of mortgages (the
"Other
Mortgages") that create security interests in certain
Mortgaged Properties other than the Mortgaged Property
to
secure the performance by the Mortgagor of the
Obligations.
Granting Clauses
NOW, THEREFORE, IN CONSIDERATION OF the
foregoing
and in order to secure the (a) due and punctual
payment and
performance of the Obligations by the Mortgagor, (b)
the due
and punctual payment by the Mortgagor of all taxes and
insurance premiums relating to the Mortgaged Property
and
(c) all disbursements made by Mortgagee for the
payment of
taxes or insurance premiums, all fees, expenses or
advances
in connection with or relating to the Mortgaged
Property,
and interest on such disbursements and other amounts
with
respect to the Term Loans not timely paid in
accordance with
the terms of the Credit Agreement, this Mortgage and
the
Loan Documents, Mortgagor hereby assigns and conveys
as
security, grants a security interest in, hypothecates,
mortgages, pledges and sets over unto Mortgagee, with
mortgage covenants, all the following described
property
(the "Mortgaged Property") whether now owned or held
or
hereafter acquired; provided, however, that the
maximum
amount secured by this Mortgage in the State of
Florida upon
recordation or upon any contingency which may be
secured
hereby at any time hereafter is $14,886,630:
(1) all of the Mortgagor's right, title and
interest in all the fee estate in the land more
particularly described on Exhibit A hereto (the
"Land"), together with all rights appurtenant
thereto,
including the easements over certain other
adjoining
land granted by any easement agreements, covenant
or
restrictive agreements and all air rights,
mineral
rights, water rights, oil and gas rights and
development rights, if any, relating thereto, and
also
together with all of the other easements, rights,
privileges, interests, permits, hereditaments and
appurtenances thereunto belonging or in anywise
appertaining and all of the estate, right, title,
interest, claim or demand whatsoever of Mortgagor
therein and in the streets and ways adjacent
thereto,
either in law or in equity, in possession or
expectancy, now or hereafter acquired (the
"Premises");
(2) all of the Mortgagor's right, title and
interest in all buildings, improvements,
structures,
paving, parking areas, walkways and landscaping
now or
hereafter erected or located upon the Land, and
all
legal fixtures of every kind and type affixed to
the
Premises or attached to or forming part of any
structures, buildings or improvements and
replacements
thereof now or hereafter erected or located upon
the
Land (the "Improvements");
(3) all of Mortgagor's right, title and
interest
in all apparatus, movable appliances, building
materials, equipment, fittings, furnishings,
furniture,
machinery and other articles of tangible personal
property of every kind and nature, and
replacements
thereof, now or at any time hereafter owned by
Mortgagor and placed upon or used in any way in
connection with the use, enjoyment, occupancy or
operation of the Improvements or the Premises,
including all of Mortgagor's books and records
relating
thereto and including all pumps, tanks, goods,
machinery, tools, equipment, lifts (including
fire
sprinklers and alarm systems, fire prevention or
control systems, cleaning rigs, air conditioning,
heating, boilers, refrigerating, electronic
monitoring,
water, loading, unloading, lighting, power,
sanitation,
waste removal, entertainment, communications,
computers, recreational, window or structural,
maintenance, truck or car repair and all other
equipment of every kind), restaurant, bar and all
other
indoor or outdoor furniture (including tables,
chairs,
booths, serving stands, planters, desks, sofas,
racks,
shelves, lockers and cabinets), bar equipment,
glasses,
cutlery, uniforms, linens, memorabilia and other
decorative items, furnishings, appliances,
supplies,
inventory, rugs, carpets and other floor
coverings,
draperies, drapery rods and brackets, awnings,
venetian
blinds, partitions, chandeliers and other
lighting
fixtures, freezers, refrigerators, walk-in
coolers,
signs (indoor and outdoor), computer systems,
cash
registers and inventory control systems, and all
other
apparatus, equipment, furniture, furnishings and
articles used in connection with the use or
operation
of the Improvements or the Premises, it being
understood that the enumeration of any specific
articles of property shall in no way result in or
be
held to exclude any items of property not
specifically
mentioned (the property referred to in this
paragraph (3), including Mortgagor's interest as
lessee
under any lease of personal property to the
extent such
lease does not prohibit such grant, being
hereinafter
called the "Personal Property");
(4) all of Mortgagor's right, title and
interest
in all general intangibles now owned or hereafter
acquired by Mortgagor relating to design,
development,
operation, management and use of the Premises or
the
Improvements, all certificates of occupancy,
zoning
variances, building, use or other permits,
approvals,
authorizations and consents obtained from and all
materials prepared for filing or filed with any
governmental agency in connection with the
development,
use, operation or management of the Premises and
Improvements, all construction, service,
engineering,
consulting, leasing, architectural and other
similar
contracts concerning the design, construction,
management, operation, occupancy and/or use of
the
Premises and Improvements, all architectural
drawings,
plans, specifications, soil tests, feasibility
studies,
appraisals, environmental studies, engineering
reports
and similar materials relating to any portion of
or all
of the Premises and Improvements, and all payment
and
performance bonds or warranties or guarantees
relating
to the Premises or the Improvements, all to the
extent
assignable (the "Permits, Plans and Warranties");
(5) Mortgagor's interest in and rights under
all
leases or licenses (under which Mortgagor is
landlord
or licensor) and subleases (under which Mortgagor
is
sublandlord), concession, management, mineral or
other
agreements of a similar kind that permit the use
or
occupancy of the Premises or the Improvements for
any
purpose in return for any payment, or the
extraction or
taking of any gas, oil, water or other minerals
from
the Premises in return for payment of any fee,
rent or
royalty (collectively, "Leases"), and all
agreements of
contracts for the sale or other disposition of
all or
any part of the Premises or the Improvements, now
or
hereafter entered into by Mortgagor, together
with all
charges, fees, income, issues, profits, receipts,
rents, revenues or royalties payable thereunder
("Rents");
(6) all of Mortgagor's right, title and
interest
in and to all real estate tax refunds and all
proceeds
of the conversion, voluntary or involuntary, of
any of
the Mortgaged Property into cash or liquidated
claims,
including Proceeds of insurance maintained by the
Mortgagor and condemnation awards, any awards
which may
become due by reason of the taking by eminent
domain or
any transfer in lieu thereof of the whole or any
part
of the Premises or Improvements or any rights
appurtenant thereto, and any awards for change of
grade
of streets ("Proceeds"), together with any and
all
moneys now or hereafter on deposit for the
payment of
real estate taxes or assessments levied against
the
Mortgaged Property, unearned premiums on policies
of
fire and other insurance maintained by the
Mortgagor
covering any interest in the Mortgaged Property
or
required by the Credit Agreement; and
(7) all right, title and interest of the
Mortgagor
in and to all extensions, improvements,
betterments,
renewals, substitutes and replacements of and all
additions and appurtenances to, the Land, the
Premises,
the Improvements, the Personal Property, the
Permits,
Plans and Warranties and the Leases, hereinafter
acquired by or released to the Mortgagor or
constructed, assembled or placed by the Mortgagor
on
the Land, the Premises or the Improvements, and
all
conversions of the security constituted thereby,
immediately upon such acquisition, release,
construction, assembling, placement or
conversion, as
the case may be, and in each such case, without
any
further mortgage, deed of trust, conveyance,
assignment
or other act by the Mortgagor, all of which shall
become subject to the lien of this Mortgage as
fully
and completely, and with the same effect, as
though now
owned by the Mortgagor and specifically described
herein.
TO HAVE AND TO HOLD by Mortgagee and its
successors and assigns forever, subject only to the
Permitted Encumbrances (as hereinafter defined) and to
satisfaction and cancellation as provided in Section
3.05.
ARTICLE I
Representations, Warranties and Covenants of
Mortgagor
Mortgagor agrees, covenants, represents
and/or
warrants as follows:
SECTION 1.01. Title. (a) Mortgagor has
good and
marketable title to a fee estate in the Land and
Improvements subject to no lien, charge or encumbrance
except for, and this Mortgage is and will remain a
valid and
enforceable first and prior lien on the Premises,
Improvements and the Rents subject only to, in each
case,
Liens permitted by Section 7.02 of the Credit
Agreement and
the exceptions and encumbrances referred to in
Schedule A
annexed hereto (collectively, the "Permitted
Encumbrances").
(b) Mortgagor has good and marketable title
to
all the Personal Property subject to no lien, charge
or
encumbrance other than this Mortgage and those allowed
under
Section 7.02 of the Credit Agreement. The Personal
Property
is not and will not become the subject matter of any
lease
or other arrangement that is not allowed under Section
7.02
of the Credit Agreement, whereby the ownership of any
Personal Property will be held by any person or entity
other
than Mortgagor; except as expressly permitted by
Section 7.05 of the Credit Agreement, none of the
Personal
Property will be removed from the Premises or the
Improvements unless the same is no longer needed for
the
continued operation of the Premises and the
Improvements as
currently operated (or as then operated, to the extent
that
any change from the current manner of operation was
permitted by the Credit Agreement) or is replaced by
other
Personal Property of substantially equal or greater
utility
and value; and, except as expressly permitted by
Section 7.05 of the Credit Agreement, Mortgagor will
not
create or cause to be created (other than those
allowed
under Section 7.02 of the Credit Agreement) any
security
interest covering any of the Personal Property that
Mortgagor owns other than the security interest in the
Personal Property created in favor of Mortgagee by
this
Mortgage or any other agreement collateral hereto.
(c) All easement agreements, covenant or
restrictive agreements, supplemental agreements and
any
other instruments hereinabove referred to and
mortgaged
hereby are and will remain valid, subsisting and in
full
force and effect, unless the failure to remain valid,
subsisting and in full force and effect, individually
or in
the aggregate, would not have a material adverse
effect on
the Mortgaged Property, and Mortgagor is not in
default
thereunder and has fully performed the material terms
thereof required to be performed through the date
hereof,
and has no knowledge of any default thereunder or
failure to
fully perform the terms thereof by any other party,
nor of
the occurrence of any event which after notice or the
passage of time or both will constitute a default
thereunder, unless the default thereunder by Mortgagor
or by
any other party, individually or in the aggregate,
would not
have a material adverse effect on the Mortgaged
Property.
(d) Mortgagor has good and lawful right and
full
power and authority to mortgage or grant a security
interest
in the Mortgaged Property. Mortgagor will forever
warrant
and defend its title to the Mortgaged Property, the
rights
of Mortgagee therein under this Mortgage and the
validity
and priority of the lien of this Mortgage thereon
against
the claims of all persons and parties except those
having
rights under Permitted Encumbrances to the extent of
those
rights and those having rights under any exception or
matter
permitted by Section 7.02 of the Credit Agreement.
(e) This Mortgage, when duly recorded in
the
appropriate public records and when financing
statements are
duly filed in the appropriate public records, will
create a
valid, perfected and enforceable lien upon and
security
interest in all the Mortgaged Property and there will
be no
defenses or offsets to this Mortgage or to any of the
Obligations secured hereby, (i) except as the
enforcement
thereof may be limited by bankruptcy, insolvency or
similar
laws affecting creditor's rights generally and (ii)
subject
to general principles of equity.
SECTION 1.02. Credit Agreement; Certain
Amounts.
(a) This Mortgage is given pursuant to the Credit
Agreement. Each and every term and provision of the
Credit
Agreement, including the rights, remedies,
obligations,
covenants, conditions, agreements, indemnities,
representations and warranties of the parties thereto
shall
be considered as if a part of this Mortgage.
(b) If any remedy or right of Mortgagee
pursuant
hereto is acted upon by Mortgagee or if any actions or
proceedings (including any bankruptcy, insolvency or
reorganization proceedings) are commenced in which
Mortgagee
is made a party and is obliged to defend or uphold or
enforce this Mortgage or the rights of Mortgagee
hereunder
or the terms of any Lease, or if a condemnation
proceeding
is instituted affecting the Mortgaged Property,
Mortgagor
will pay all sums, including reasonable attorneys'
fees and
disbursements, incurred by Mortgagee related to the
exercise
of any remedy or right of Mortgagee pursuant hereto or
for
the expense of any such action or proceeding together
with
all statutory or other costs, disbursements and
allowances,
interest thereon from the date of demand for payment
thereof
at the Default Rate, and such sums and the interest
thereon
shall, to the extent permissible by law, be a lien on
the
Mortgaged Property prior to any right, title to,
interest in
or claim upon the Mortgaged Property attaching or
accruing
subsequent to the recording of this Mortgage and shall
be
secured by this Mortgage to the extent permitted by
law.
(c) Any payment of amounts due under this
Mortgage not made on or before the due date for such
payments shall accrue interest daily without notice
from the
due date until paid at the Default Rate, and such
interest
at the Default Rate shall be immediately due upon
demand by
Mortgagee.
SECTION 1.03. Payment of Taxes, Liens and
Charges. (a) Except as may be permitted by Section
6.03 of
the Credit Agreement, Mortgagor will pay and discharge
from
time to time when the same shall become due and
payable, and
before any interest or penalty accrues thereon or
attaches
thereto, all taxes of every kind and nature, all
general and
special assessments, levies, permits, inspection and
license
fees, all water and sewer rents, all vault charges,
and all
other public charges, and all service charges, common
area
charges, private maintenance charges, utility charges
and
all other private charges, whether of a like or
different
nature, imposed upon or assessed against the Mortgaged
Property or any part thereof or upon the Rents from
the
Mortgaged Property or arising in respect of the
occupancy,
use or possession thereof. At Mortgagee's option,
Mortgagee
may require Mortgagor to contract with a tax service
firm to
provide to Mortgagee on or about the same times each
year,
receipts evidencing the payment of all such taxes,
assessments, levies, fees and other public charges
imposed
upon or assessed against the Mortgaged Property or may
provide such information to Mortgagee from internal
sources.
(b) In the event of the passage of any
state,
Federal, municipal or other governmental law, order,
rule or
regulation subsequent to the date hereof (i) deducting
from
the value of real property for the purpose of taxation
any
lien or encumbrance thereon or in any manner changing
or
modifying the laws now in force governing the taxation
of
this Mortgage or debts secured by mortgages (other
than laws
governing income, franchise and similar taxes
generally) or
the manner of collecting taxes thereon and (ii)
imposing a
tax to be paid by Mortgagee, either directly or
indirectly,
on this Mortgage, the Notes or any of the Loan
Documents or
to require an amount of taxes to be withheld or
deducted
therefrom, Mortgagor will promptly notify Mortgagee of
such
event. In such event Mortgagor shall (i) agree to
enter
into such further instruments, including but not
limited to
new notes to be issued in exchange for the Notes
theretofore
issued, as may be reasonably necessary or desirable to
obligate Mortgagor to make any applicable additional
payments, and (ii) Mortgagor shall make such
additional
payments under the Notes. If Mortgagor is not
permitted by
law to do that which is required by the preceding
sentence,
Mortgagor shall be required to do so to the extent
there are
unencumbered assets of Mortgagor to substitute
collateral
for the Mortgaged Property which is of equivalent
value upon
notice from Mortgagee promptly after such
determination is
reached.
(c) At any time that an Event of Default
shall
occur hereunder, or if required by any law applicable
to
Mortgagor or to Mortgagee, Mortgagee shall have the
right to
direct Mortgagor to make an initial deposit on account
of
real estate taxes and assessments, insurance premiums
and
common area charges, levied against or payable in
respect of
the Mortgaged Property in advance and thereafter
semiannually, each such deposit to be equal to
one-half of
any such annual charges reasonably estimated by
Mortgagee in
order to accumulate with Mortgagee sufficient funds to
pay
such taxes, assessments, insurance premiums and
charges.
SECTION 1.04. Payment of Closing Costs.
Mortgagor shall pay all reasonable costs in connection
with,
relating to or arising out of the preparation,
execution and
recording of this Mortgage, including title company
premiums
and charges for a customary loan policy with such
endorsements as may be reasonably requested by
Mortgagee,
inspection costs, survey costs, recording fees and
taxes,
attorneys', engineers', appraisers' and consultants'
fees
and disbursements and all other similar expenses of
every
kind.
SECTION 1.05. Alterations and Waste; Plans.
(a) No Improvements will be materially altered or
demolished or removed in whole or in part by Mortgagor
except as provided by Section 1.05(c) hereof.
Mortgagor
will not commit any waste on the Mortgaged Property or
make
any alteration to, or change in the use of, the
Mortgaged
Property which will diminish the fair market value
thereof
or materially increase any ordinary fire or other
hazard
arising out of construction or operation, but in no
event
shall any such alteration or change be contrary to the
terms
of any insurance policy required to be kept pursuant
to
Section 1.06. Mortgagor will maintain and operate,
the
Improvements and Personal Property in good repair,
working
order and condition, reasonable wear and tear
excepted.
(b) Mortgagor shall maintain a complete set
of
final plans, specifications, blueprints and drawings
for the
Mortgaged Property currently in possession of
Mortgagor
either at the Mortgaged Property or in a particular
office
at the headquarters of Mortgagor to which Mortgagee
shall
have access upon reasonable advance notice.
(c) Mortgagor shall in connection with any
lease
or sublease permitted by Section 7.05(j) of the Credit
Agreement have the right to alter the Mortgaged
Property for
purposes of performing reasonable improvements in
connection
with such lease or sublease.
SECTION 1.06. Insurance. Mortgagor will
(a) keep
the Mortgaged Property (including improvements and
Personal
Property (each as defined in the Mortgage)) insured at
all
times by financially sound and reputable insurers
against
loss by fire, casualty and such other hazards as may
be
afforded by an "all risk" policy or a fire policy
covering
"special" causes of loss, including building ordinance
law
endorsements; cause all such policies to be endorsed
or
otherwise amended to include a "standard" or "New
York"
lender's loss payable endorsement, in form and
substance
reasonably satisfactory to the Collateral Agent, which
endorsement shall provide that, from and after the
Restatement Date, the insurance carrier subject to the
provisions of Sections 1.07 and 1.08 hereof, shall pay
all
proceeds otherwise payable to the Mortgagor under such
policies directly to the Collateral Agent; cause all
such
policies to provide that neither the Mortgagor, the
Collateral Agent nor any other party shall be a
coinsurer
thereunder and to contain a "Replacement Cost
Endorsement",
without any deduction for depreciation, and such other
provisions as the Collateral Agent may reasonably
require
from time to time to protect its interest; provided,
however, that if additional coverage is required,
Mortgagor
will obtain such coverage only if such coverage is
(i) customarily maintained by others in the same or
similar
business in the geographic region of the Mortgaged
Property,
and (ii) available at commercially reasonable rates
(if
available to Mortgagor); deliver, original or
certified
copies of all such policies to the Collateral Agent
confirming that the terms of such policy are in
compliance
with the provisions of this Section 1.06; cause each
such
policy to provide that it shall not be canceled,
modified or
not renewed for any reason upon not less than 30 days'
prior
written notice thereof by insurer to the Collateral
Agent;
deliver to the Collateral Agent, prior to the
cancellation,
modification or nonrenewal of any such policy of
insurance,
a copy of a renewal or replacement policy (or other
evidence
of renewal of a policy previously delivered to the
Collateral Agent), together with evidence reasonably
satisfactory to the Collateral Agent of timely payment
of
the premium therefor promptly after making such
payment.
(b) If at any time the area in which the
Premises
(as defined in the Mortgage) are located is designated
a
"flood hazard area" in any Flood Insurance Rate Map
published by the Federal Emergency Management Agency,
obtain
flood insurance in such total amount as the Collateral
Agent
may from time to time reasonably require, and
otherwise
comply with the National Flood Insurance Program as
set
forth in said Flood Disaster Protection Act of 1973,
as it
may be amended from time to time.
(c) With respect to any Mortgaged Property,
carry
and maintain comprehensive general liability insurance
including the "broad form endorsement" and coverage on
an
occurrence basis against claims made for personal
injury
(including bodily injury, death and property damage)
and
umbrella liability insurance against any and all
claims, in
no event for a combined single limit of less than
$5,000,000, naming the Collateral Agent as an
additional
insured, on forms reasonably satisfactory to the
Collateral
Agent.
(d) Notify the Collateral Agent immediately
whenever any separate insurance concurrent in form or
contributing in the event of loss with that required
to be
maintained under this Section 1.06 is taken out by the
Mortgagor; and promptly deliver to the Collateral
Agent a
duplicate original copy of such policy or policies.
SECTION 1.07. Casualty; Restoration of
Casualty
Damage. Notwithstanding any other provisions of this
Mortgage or the other Loan Documents, the Collateral
Agent
is authorized, at its option, to collect and receive,
all
insurance Proceeds, damages, claims and rights of
action and
the right thereto under any insurance policies with
respect
to a casualty relating to any portion of the Mortgaged
Property; provided, however, that if the Collateral
Agent
shall determine, in its sole and reasonable
discretion, that
(a) no Prepayment Event has occurred and (b) if no
Event of
Default has occurred, then in such event, the
Collateral
Agent shall direct the insurance carrier to pay such
proceeds directly to the Mortgagor. Mortgagor agrees
to
notify the Collateral Agent, in writing, in reasonable
detail of any casualty to the Mortgaged Property,
promptly
after the Mortgagor obtains notice of any casualty to
all or
any portion of the Mortgaged Property.
SECTION 1.08. Condemnation/Eminent Domain.
Mortgagor will notify the Collateral Agent immediately
upon
obtaining notice of the institution, or the proposed,
contemplated or threatened institution, of any action
or
proceeding for the taking of the Mortgaged Property,
for
public or quasi-public use under the power of eminent
domain, by reason of any public improvement or
condemnation
proceeding, or in any other manner (a "Condemnation").
The
Collateral Agent is authorized, at its option, to
collect
and receive, all Proceeds of any such Condemnation;
provided, however, that if the Collateral Agent shall
determine, in its sole and reasonable discretion, that
(a) no Prepayment Event has occurred and (b) if no
Event of
Default has occurred, then in such event, the
Collateral
Agent shall direct the governmental authority to pay
such
proceeds directly to the Mortgagor.
SECTION 1.09. Assignment of Leases and
Rents. (a) Mortgagor hereby irrevocably and
absolutely
grants, transfers and assigns all of its right title
and
interest in all Leases, together with any and all
extensions
and renewals thereof for purposes of securing and
discharging the performance by Mortgagor of the
obligations.
Mortgagor has not assigned or executed any assignment
of,
and will not assign or execute any assignment of, any
other
Lease or their respective Rents to anyone other than
Mortgagee.
(b) (i) Without Mortgagee's prior written
consent, Mortgagor will not (A) modify, amend,
terminate or
consent to the cancellation or surrender of any lease
if
such modification, amendment, termination or consent
would,
in the reasonable judgment of the Mortgagee, be
adverse in
any material respect to the Lenders, the value of the
Mortgaged Property or the lien created by this
Mortgage or
(B) consent to an assignment of a tenant's interest in
any
Lease or to a subletting thereof covering a material
portion
of the Mortgaged Property unless such assignment or
sublease
conforms with Section 7.05 of the Credit Agreement.
(ii) If requested
by
Mortgagor, Mortgagee shall
execute and deliver to Mortgagor's tenant a
nondisturbance
attornment and recognition agreement in form and
substance
satisfactory to Mortgagee.
(c) Subject to Section 1.09(d) below,
Mortgagor
has assigned and transferred to Mortgagee all of
Mortgagor's
right, title and interest in and to the Rents now or
hereafter arising from Leases heretofore or hereafter
made
or agreed to by Mortgagor, it being intended that this
assignment establish, subject to Section 1.09(d)
below, an
absolute transfer and assignment of all Rents and all
Leases
to Mortgagee and not merely to grant a security
interest
therein. Subject to Section 1.09(d) below, Mortgagee
may in
Mortgagor's name and stead (with or without first
taking
possession of any of the Mortgaged Property personally
or by
receiver as provided herein) operate the Mortgaged
Property
and rent, lease or let all or any portion of any of
the
Mortgaged Property to any party or parties at such
rental
and upon such terms as Mortgagee shall, in its sole
discretion, determine, and may collect and have the
benefit
of all of said Rents arising from or accruing at any
time
thereafter or that may thereafter become due under any
Lease.
(d) Until an Event of Default occurs or
after an
Event of Default has occurred but is no longer
continuing,
Mortgagee will not exercise any of its rights under
Section 1.09(c) above, and Mortgagor shall receive and
collect the Rents accruing under any Lease; but after
the
happening of any Event of Default (but only while such
Event
of Default continues), Mortgagee may, at its option,
receive
and collect all Rents and enter upon the Premises and
Improvements through its officers, agents, employees
or
attorneys for such purpose and for the operation and
maintenance thereof. Upon the happening of an Event
of
Default, Mortgagor hereby irrevocably authorizes and
directs
each tenant, if any, and each successor, if any, to
the
interest of any tenant under any Lease, respectively,
to
rely upon any notice of a claimed Event of Default
sent by
Mortgagee to any such tenant or any of such tenant's
successors in interest, and thereafter to pay Rents to
Mortgagee without any obligation or right to inquire
as to
whether an Event of Default actually exists and even
if some
notice to the contrary is received from the Mortgagor,
who
shall have no right or claim against any such tenant
or
successor in interest for any such Rents so paid to
Mortgagee. Each tenant or any of such tenant's
successors
in interest from whom Mortgagee or any officer, agent,
attorney or employee of Mortgagee shall have collected
any
Rents, shall be authorized to pay Rents to Mortgagor
only
after such tenant or any of such tenant's successors
in
interest shall have received written notice from
Mortgagee
that the Event of Default is no longer continuing,
which
notice Mortgagee shall be obligated to give if
Mortgagee
determines in its reasonable discretion such Event of
Default is no longer continuing, unless and until a
further
notice of an Event of Default is given by Mortgagee to
such
tenant or any of such tenant's successors in interest.
(e) Mortgagee will not become a mortgagee
in
possession so long as it does not enter or take actual
possession of the Mortgaged Property. In addition,
Mortgagee shall not be responsible or liable for
performing
any of the obligations of the landlord under any
Lease, for
any waste by any tenants, or others, for any dangerous
or
defective conditions of any of the Mortgaged Property,
for
negligence in the management, upkeep, repair or
control of
any of the Mortgaged Property or any other act or
omission
by any other person.
(f) Mortgagor shall furnish to Mortgagee,
within
30 days after a request by Mortgagee to do so, a
written
statement containing the names of all tenants,
subtenants
and concessionaires of the Premises or Improvements,
the
terms of any Lease, the space occupied and the rentals
or
license fees payable thereunder.
SECTION 1.10. Restrictions on Transfers and
Encumbrances. Except as permitted hereby or by the
Credit
Agreement, Mortgagor shall not directly or indirectly
sell,
convey, alienate, assign, lease, sublease, license,
mortgage, pledge, encumber or otherwise transfer,
create,
consent to or suffer the creation of any lien, charges
or
any form of encumbrance upon any interest in or any
part of
the Mortgaged Property, or be divested of its title to
the
Mortgaged Property or any interest therein in any
manner or
way, whether voluntarily or involuntarily (other than
resulting from a taking), or engage in any common,
cooperative, joint, time-sharing or other congregate
ownership of all or part thereof; provided, however,
that
Mortgagor may in the ordinary course of business
within
reasonable commercial standards, enter into easement
or
covenant agreements which relate to and/or benefit the
operation of the Mortgaged Property or which do not
materially or adversely affect the use and operation
of the
same (except for customary utility easements which
service
the Mortgaged Property).
SECTION 1.11. Security Agreement. This
Mortgage
is both a mortgage of real property and a grant of a
security interest in personal property, and shall
constitute
and serve as a "Security Agreement" within the meaning
of
the uniform commercial code as adopted in the state
wherein
the Premises are located. Mortgagor has hereby
granted unto
Mortgagee a security interest in and to all the
Mortgaged
Property described in this Mortgage that is not real
property, and simultaneously with the recording of
this
Mortgage, Mortgagor has filed or will file UCC
financing
statements, and will file continuation statements
prior to
the lapse thereof, at the appropriate offices in the
state
in which the Premises are located to perfect the
security
interest granted by this Mortgage in all the Mortgaged
Property that is not real property. Mortgagor hereby
appoints Mortgagee as its true and lawful
attorney-in-fact
and agent, for Mortgagor and in its name, place and
stead,
in any and all capacities, to execute any document and
to
file the same in the appropriate offices (to the
extent it
may lawfully do so), and to perform each and every act
and
thing requisite and necessary to be done to perfect
the
security interest contemplated by the preceding
sentence.
Mortgagee shall have all rights with respect to the
part of
the Mortgaged Property that is the subject of a
security
interest afforded by the uniform commercial code as
adopted
in the state wherein the Premises are located in
addition
to, but not in limitation of, the other rights
afforded
Mortgagee hereunder.
SECTION 1.12. Filing and Recording.
Mortgagor
will cause this Mortgage, any other security
instrument
creating a security interest in or evidencing the lien
hereof upon the Mortgaged Property and each instrument
of
further assurance to be filed, registered or recorded
in
such manner and in such places as may be required by
any
present or future law in order to publish notice of
and
fully to protect the lien hereof upon, and the
security
interest of Mortgagee in, the Mortgaged Property.
Mortgagor
will pay all filing, registration or recording fees,
and all
expenses incidental to the execution and
acknowledgment of
this Mortgage, any mortgage supplemental hereto, any
security instrument with respect to the Personal
Property,
and any instrument of further assurance and all
Federal,
state, county and municipal recording, documentary or
intangible taxes and other taxes, duties, imposts,
assessments and charges arising out of or in
connection with
the execution, delivery and recording of this
Mortgage, any
mortgage supplemental hereto, any security instrument
with
respect to the Personal Property or any instrument of
further assurance.
SECTION 1.13. Further Assurances. Upon
demand by
Mortgagee, Mortgagor will, at the cost of Mortgagor
and
without expense to Mortgagee, do, execute, acknowledge
and
deliver all such further acts, deeds, conveyances,
mortgages, assignments, notices of assignment,
transfers and
assurances as Mortgagee shall from time to time
reasonably
require for the better assuring, conveying, assigning,
transferring and confirming unto Mortgagee the
property and
rights hereby conveyed or assigned or intended now or
hereafter so to be, or which Mortgagor may be or may
hereafter become bound to convey or assign to
Mortgagee, or
for carrying out the intention or facilitating the
performance of the terms of this Mortgage, or for
filing,
registering or recording this Mortgage, and on demand,
Mortgagor will also execute and deliver and hereby
appoints
Mortgagee as its true and lawful attorney-in-fact and
agent
for Mortgagor and in its name, place and stead, in any
and
all capacities, to execute and file to the extent it
may
lawfully do so, one or more financing statements,
chattel
mortgages or comparable security instruments
reasonably
requested by Mortgagee to evidence more effectively
the lien
hereof upon the Personal Property and to perform each
and
every act and thing requisite and necessary to be done
to
accomplish the same.
SECTION 1.14. Additions to Mortgaged
Property.
All right, title and interest of Mortgagor in and to
all
extensions, improvements, betterments, renewals,
substitutes
and replacements of, and all additions and
appurtenances to,
the Mortgaged Property hereafter acquired by or
released to
Mortgagor or constructed, assembled or placed by
Mortgagor
upon the Premises or the Improvements, and all
conversions
of the security constituted thereby, immediately upon
such
acquisition, release, construction, assembling,
placement or
conversion, as the case may be, and in each such case
without any further mortgage, conveyance, assignment
or
other act by Mortgagor, shall become subject to the
lien and
security interest of this Mortgage as fully and
completely
and with the same effect as though now owned by
Mortgagor
and specifically described in the grant of the
Mortgaged
Property above, but at any and all times Mortgagor
will
execute and deliver to Mortgagee any and all such
further
assurances, mortgages, conveyances or assignments
thereof as
Mortgagee may reasonably require for the purpose of
expressly and specifically subjecting the same to the
lien
and security interest of this Mortgage.
SECTION 1.15. No Claims Against Mortgagee.
Nothing contained in this Mortgage shall constitute
any
consent or request by Mortgagee, express or implied,
for the
performance of any labor or services or the furnishing
of
any materials or other property in respect of the
Mortgaged
Property or any part thereof, nor as giving Mortgagor
any
right, power or authority to contract for or permit
the
performance of any labor or services or the furnishing
of
any materials or other property in such fashion as
would
permit the making of any claim against Mortgagee in
respect
thereof.
ARTICLE II
Defaults and Remedies
SECTION 2.01. Events of Default. It shall
be an
Event of Default under this Mortgage if any Event of
Default
(as therein defined) shall exist pursuant to (a) the
Credit
Agreement or (b) any Other Mortgage. Notwithstanding
the
provisions of Article VIII, Section (e), of the Credit
Agreement, if Mortgagor shall default in the
observance or
performance of any covenant, condition or agreement
expressly set forth in this Mortgage and the subject
matter
of any such covenant, condition or agreement is not
otherwise set forth in the Credit Agreement or any
other
Loan Document, and Mortgagor's default in its
observance or
performance of such covenant, condition or agreement
(a) is
not susceptible of cure by the payment of money or (b)
could
not, if left uncured, have a material adverse effect
on the
Mortgaged Property, then in such case an Event of
Default
shall not occur until such default shall continue
unremedied
for a period of 30 days after written notice thereof
from
Mortgagee; provided, however, that, in the case of any
such
default described in clause (a) or (b) above, which
cannot
with the exercise by the Mortgagor of due diligence be
cured
within such 30-day period, the period within which
such
default may be cured may be extended for up to an
additional
90 days, so long as Mortgagor shall have promptly
commenced
to cure the same during its initial 30-day cure period
and
thereafter continuously prosecutes the curing thereof
with
diligence.
SECTION 2.02. Demand for Payment. If an
Event of
Default as set forth herein shall occur and be
continuing,
then, upon written demand of Mortgagee, Mortgagor will
pay
to Mortgagee upon demand all amounts due hereunder and
such
further amounts as shall be incurred to cover the
costs and
expenses of collection, including attorneys' fees,
disbursements and expenses incurred by Mortgagee. In
case
Mortgagor shall fail forthwith to pay such amounts or
any
amounts due under any other Section of this Mortgage
upon
Mortgagee's demand, Mortgagee shall be entitled and
empowered to institute an action or proceedings at law
or in
equity as advised by counsel for the collection of the
sums
so due and unpaid, to prosecute any such action or
proceedings to judgment or final decree, to enforce
any such
judgment or final decree against Mortgagor and to
collect,
in any manner provided by law, all moneys adjudged or
decreed to be payable.
SECTION 2.03. Rights To Take Possession,
Operate
and Apply Revenues. (a) If an Event of Default shall
occur
and be continuing, Mortgagor shall, upon demand of
Mortgagee, forthwith surrender to Mortgagee actual
possession of the Mortgaged Property and, if and to
the
extent permitted by law, Mortgagee itself, or by such
officers or agents as it may appoint, may then enter
and
take possession of all the Mortgaged Property without
the
appointment of a receiver or an application therefor,
exclude Mortgagor and its agents and employees wholly
therefrom, and have access (with Mortgagor) to the
books,
papers and accounts of Mortgagor.
(b) If Mortgagor shall for any reason fail
to
surrender or deliver the Mortgaged Property or any
part
thereof after such demand by Mortgagee, Mortgagee may
obtain
a judgment or decree conferring upon Mortgagee the
right to
immediate possession or requiring Mortgagor to deliver
immediate possession of the Mortgaged Property to
Mortgagee,
to the entry of which judgment or decree Mortgagor
hereby
specifically consents. Mortgagor will pay to
Mortgagee,
upon demand, all expenses of obtaining such judgment
or
decree, including compensation to Mortgagee's
attorneys and
agents with interest thereon at the Default Rate; and
all
such expenses and compensation shall, until paid, be
secured
by this Mortgage.
(c) Upon every such entry or taking of
possession, Mortgagee may hold, store, use, operate,
manage
and control the Mortgaged Property, conduct the
business
thereof and, from time to time, (i) make all
necessary,
proper and reasonable maintenance, repairs, renewals,
replacements, additions, betterments and improvements
thereto and thereon, (ii) purchase or otherwise
acquire
additional fixtures, personalty and other property,
(iii) insure or keep the Mortgaged Property insured,
(iv) manage and operate the Mortgaged Property and
exercise
all the rights and powers of Mortgagor to the same
extent as
Mortgagor could in its own name or otherwise with
respect to
the same or (v) enter into any and all agreements with
respect to the exercise by others of any of the powers
herein granted Mortgagee, all as may from time to time
be
directed or determined by Mortgagee to be in its best
interest and Mortgagor hereby appoints Mortgagee as
its true
and lawful attorney-in-fact and agent, for Mortgagor
and in
its name, place and stead, in any and all capacities,
to
perform any of the foregoing acts. Mortgagee may
collect
and receive all the Rents, issues, profits and
revenues from
the Mortgaged Property, including those past-due as
well as
those accruing thereafter, and, after deducting (i)
all
expenses of taking, holding, managing and operating
the
Mortgaged Property (including compensation for the
services
of all persons employed for such purposes), (ii) the
costs
of all such maintenance, repairs, renewals,
replacements,
additions, betterments, improvements, purchases and
acquisitions, (iii) the costs of insurance, (iv) such
taxes,
assessments and other similar charges as Mortgagee may
at
its option pay, (v) other proper charges upon the
Mortgaged
Property or any part thereof and (vi) the reasonable
compensation, expenses and disbursements of the
attorneys
and agents of Mortgagee, Mortgagee shall apply the
remainder
of the moneys and proceeds so received first to the
payment
of the Mortgagee for the payment in full of
Indebtedness and
satisfaction of the Obligations, and second, if there
is any
surplus, to Mortgagor, subject to the entitlement of
others
thereto under applicable law.
(d) Whenever, before any sale of the
Mortgaged
Property under Section 2.06, all Obligations which are
then
due shall have been paid and all Events of Default
fully
cured, Mortgagee will surrender possession of the
Mortgaged
Property back to Mortgagor, its successors or assigns.
The
same right of taking possession shall, however, arise
again
if any subsequent Event of Default shall occur and be
continuing.
SECTION 2.04. Right To Cure Mortgagor's
Failure
To Perform. Prior to the occurrence of an Event of
Default
upon five business days' written notice to Mortgagor
(except
in the case of an emergency), or after the occurrence
of an
Event of Default at any time and without notice,
should
Mortgagor fail in the payment, performance or
observance of
any term, covenant or condition required by this
Mortgage or
the Credit Agreement (with respect to the Mortgaged
Property), Mortgagee may pay, perform or observe the
same,
and all payments made or costs or expenses incurred by
Mortgagee in connection therewith shall be secured
hereby
and shall be, without demand, immediately repaid by
Mortgagor to Mortgagee with interest thereon at the
Default
Rate. Mortgagee shall make reasonable judgment as to
the
necessity for any such actions and of the amounts to
be
paid. Subject to the notice provisions of the first
sentence of this Section 2.04, Mortgagee is hereby
empowered
to enter and to authorize others to enter upon the
Premises
or the Improvements or any part thereof for the
purpose of
performing or observing any such defaulted term,
covenant or
condition without having any obligation so to perform
or
observe and without thereby becoming liable to
Mortgagor, to
any person in possession holding under Mortgagor or to
any
other person.
SECTION 2.05. Right to a Receiver. If an
Event
of Default shall occur and be continuing, Mortgagee,
upon
application to a court of competent jurisdiction,
shall be
entitled as a matter of right to the appointment of a
receiver to take possession of and to operate the
Mortgaged
Property and to collect and apply the Rents. The
receiver
shall have all of the rights and powers permitted
under the
laws of the state wherein the Mortgaged Property is
located.
Mortgagor will pay to Mortgagee upon demand all
reasonable
amounts of expenses, including receiver's fees,
attorney's
fees and disbursements, costs and agent's compensation
incurred pursuant to the provisions of this Section
2.05;
and all such expenses shall be secured by this
Mortgage and
shall be, without demand, immediately repaid by
Mortgagor to
Mortgagee with interest thereon at the Default Rate.
SECTION 2.06. Foreclosure and Sale. (a)
If an
Event of Default shall occur and be continuing,
Mortgagee
may elect to sell the Mortgaged Property or any part
of the
Mortgaged Property by exercise of the power of
foreclosure
or of sale granted to Mortgagee by applicable law or
this
Mortgage. In such case, Mortgagee may commence a
civil
action to foreclose this Mortgage, or it may proceed
and
sell the Mortgaged Property to satisfy any obligation.
Mortgagee or an officer appointed by a judgment of
foreclosure to sell the Mortgaged Property may sell
all or
such parts of the Mortgaged Property as may be chosen
by
Mortgagee at the time and place of sale fixed by it in
a
notice of sale, either as a whole or in separate lots,
parcels or items as Mortgagee shall deem expedient,
and in
such order as it may determine, at public auction to
the
highest bidder. Mortgagee or an officer appointed by
a
judgment of foreclosure to sell the Mortgaged Property
may
postpone any foreclosure or other sale of all or any
portion
of the Mortgaged Property by public announcement at
such
time and place of sale, and from time to time
thereafter may
postpone such sale by public announcement or
subsequently
noticed sale. Without further notice, Mortgagee or an
officer appointed to sell the Mortgaged Property may
make
such sale at the time fixed by the last postponement,
or
may, in its discretion, give a new notice of sale.
Any
person, including Mortgagor or Mortgagee or any
designee or
affiliate thereof, may purchase at such sale.
(b) The Mortgaged Property may be sold
subject to
unpaid taxes and Permitted Encumbrances, and after
deducting
all costs, fees and expenses of Mortgagee, including
costs
of evidence of title in connection with the sale,
Mortgagee
or an officer that makes any sale shall apply the
proceeds
of sale in the manner set forth in Section 2.08
hereof.
(c) Any foreclosure or other sale of less
than
the whole of the Mortgaged Property or any defective
or
irregular sale made hereunder shall not exhaust the
power of
foreclosure provided for herein; and subsequent sales
may be
made hereunder until the Obligations have been
satisfied, or
the entirety of the Mortgaged Property has been sold.
(d) Mortgagor waives, to the extent not
prohibited by law, (i) the benefit of all laws now
existing
or that hereafter may be enacted providing for any
appraisement before sale of any portion of the
Mortgaged
Property, (ii) the benefit of all laws now existing or
that
may be hereafter enacted in any way extending the time
for
the enforcement or the collection of amounts due under
any
of the Obligations or creating or extending a period
of
redemption from any sale made in collecting said debt
or any
other amounts due Mortgagee, (iii) any right to at any
time
insist upon, plead, claim or take the benefit or
advantage
of any law now or hereafter in force providing for any
appraisement, valuation, stay, extension or
redemption, or
sale of the Mortgaged Property as separate tracts,
units or
estates or as a single parcel in the event of
foreclosure
and (iv) all rights of redemption, valuation,
appraisement,
stay of execution, notice of election to mature or
declare
due the whole of or each of the Obligations and
marshalling
in the event of foreclosure of this Mortgage.
(e) If an Event of Default shall occur and
be
continuing, Mortgagee may instead of, or in addition
to,
exercising the rights described in Section 2.06(a)
above and
either with or without entry or taking possession as
herein
permitted, proceed by a suit or suits in law or in
equity or
by any other appropriate proceeding or remedy (i) to
specifically enforce payment of some or all of the
terms of
the Loan Documents or the performance of any term,
covenant,
condition or agreement of this Mortgage or any other
right
or (ii) to pursue any other remedy available to it,
all as
Mortgagee shall determine most effectual for such
purposes.
SECTION 2.07. Other Remedies. (a) In case
an
Event of Default shall occur and be continuing,
Mortgagee
may also exercise, to the extent not prohibited by
law, any
or all of the remedies available to a secured party
under
the uniform commercial code of the State wherein the
Premises are located, including, to the extent not
prohibited by applicable law, the following:
(i) Either personally or by means of a
court-
appointed receiver, to take possession of all or
any of
the Personal Property and exclude therefrom
Mortgagor
and all others claiming under Mortgagor, and
thereafter
to hold, store, use, operate, manage, maintain
and
control, make repairs, replacements, alterations,
additions and improvements to and exercise all
rights
and powers of Mortgagor with respect to the
Personal
Property or any part thereof.
(ii) To make such
payments
and do such acts as
Mortgagee may deem necessary to protect its
security
interest in the Personal Property including
paying,
purchasing, contesting or compromising any
encumbrance,
charge or lien which is prior or superior to the
security interest granted hereunder, and, in
exercising
any such powers or authority, paying all expenses
incurred in connection therewith.
(iii) To assemble
the
Personal Property or any
portion thereof at a place designated by
Mortgagee and
reasonably convenient to both parties, to demand
prompt
delivery of the Personal Property to Mortgagee or
an
agent or representative designated by it, and to
enter
upon any or all of the Premises or Improvements
to
exercise Mortgagee's rights hereunder.
(iv) To sell or otherwise dispose of or
purchase
the Personal Property at public sale, with or
without
having the Personal Property at the place of
sale, upon
such terms and in such manner as Mortgagee may
determine, after Mortgagee shall have given
Mortgagor
at least 10 days' prior written notice of the
time and
place of any public sale or other intended
disposition
of the Personal Property by mailing a copy to
Mortgagor
at the address set forth in Section 3.02.
(b) In connection with a sale of the
Mortgaged
Property or any Personal Property and the application
of the
proceeds of sale as provided in Section 2.08 of this
Mortgage, Mortgagee shall be entitled to enforce
payment of
and to receive up to the principal amount of the
Obligations, plus all other charges, payments and
costs due
under this Mortgage, and to recover a deficiency
judgment
for any portion of the aggregate principal amount of
the
Obligations remaining unpaid, with interest.
SECTION 2.08. Application of Sale Proceeds
and
Rents. After any foreclosure sale of all or any of
the
Mortgaged Property, Mortgagee shall receive the
proceeds of
sale, no purchaser shall be required to see to the
application of the proceeds and Mortgagee shall apply
the
proceeds of the sale together with any Rents that may
have
been collected and any other sums which then may be
held by
Mortgagee under this Mortgage as follows:
First: to the payment of the costs and
expenses
of such sale, including compensation to
Mortgagee's
attorneys and agents, and of any judicial
proceedings
wherein the same may be made, and of all
expenses,
liabilities and advances made or incurred by
Mortgagee
under this Mortgage, together with interest at
the
Default Rate on all advances made by Mortgagee,
including all taxes or assessments (except any
taxes,
assessments or other charges subject to which the
Mortgaged Property shall have been sold) and the
cost
of removing any Permitted Encumbrance (except any
Permitted Encumbrance subject to which the
Mortgaged
Property was sold);
Second: to the payment in full of the
Obligations
owed to the Lenders, the Swingline Lenders and
the
Fronting Banks in respect of the Loans and the
Swingline Loans made by them and outstanding and
the
amounts owing in respect of any LC Disbursement
of BA
Disbursement or under any Rate Protection
Agreement
entered into with any Lender pursuant to Section
6.11
of the Credit Agreement, pro rata as among the
Lenders,
the Swingline Lenders and the Fronting Banks in
accordance with the amount of such Obligations
owed to
them;
Third: to the payment and discharge in full
of
the Obligations (other than those referred to
above)
pro rata as among the Secured Parties in
accordance
with the amount of such Obligations owed to them;
and
Fourth: to the Mortgagor, its successors or
assigns, or as a court of competent jurisdiction
may
otherwise direct.
The Mortgagee shall promptly make application of any
such
proceeds, moneys or balances in accordance with this
Mortgage. Upon any sale of the Mortgaged Property by
Mortgagee (including pursuant to a power of sale
granted by
statute or under a judicial proceeding), the receipt
of
Mortgagee or of the officer making the sale shall be
a
sufficient discharge to the purchaser or purchasers of
the
Mortgaged Property so sold and such purchaser or
purchasers
shall not be obligated to see to the application of
any part
of the purchase money paid over to Mortgagee or such
officer
or be answerable in any way for the misapplication
thereof.
SECTION 2.09. Mortgagor as Tenant Holding
Over.
If Mortgagor remains in possession of any of the
Mortgaged
Property after any foreclosure sale by Mortgagee, at
Mortgagee's election Mortgagor shall be deemed a
tenant
holding over and shall forthwith surrender possession
to the
purchaser or purchasers at such sale or be summarily
dispossessed or evicted according to provisions of law
applicable to tenants holding over.
SECTION 2.10. Waiver of Appraisement,
Valuation,
Stay, Extension and Redemption Laws. (a) Mortgagor
will
not object to any sale of the Mortgaged Property in
its
entirety pursuant to Section 2.06 and for itself and
all who
may claim under it, Mortgagor waives, to the extent
that it
lawfully may, all right to have the Mortgaged Property
marshalled or to have the Mortgaged Property sold as
separate estates, parcels, tracts or units in the
event of
any foreclosure of this Mortgage.
(b) To the full extent permitted by the law
of
the state wherein the Mortgaged Property is located or
other
applicable law, neither Mortgagor nor anyone claiming
through or under it shall or will set up, claim or
seek to
take advantage of any appraisement, valuation, stay,
extension, homestead-exemption or redemption laws now
or
hereafter in force in order to prevent or hinder the
enforcement or foreclosure of this Mortgage, the
absolute
sale of the Mortgaged Property or the final and
absolute
putting of the purchasers into possession thereof
immediately after any sale; and Mortgagor, for itself
and
all who may at any time claim through or under it,
hereby
waives, to the full extent that it may lawfully do so,
the
benefit of all such laws and any and all right to have
the
assets covered by the security interest created hereby
marshalled upon any foreclosure of this Mortgage.
SECTION 2.11. Discontinuance of
Proceedings. In
case Mortgagee shall proceed to enforce any right,
power or
remedy under this Mortgage by foreclosure, entry or
otherwise, and such proceedings shall be discontinued
or
abandoned for any reason, or shall be determined
adversely
to Mortgagee, then and in every such case Mortgagor
and
Mortgagee shall be restored to their former positions
and
rights hereunder, and all rights, powers and remedies
of
Mortgagee shall continue as if no such proceeding had
been
taken.
SECTION 2.12. Suits To Protect the
Mortgaged
Property. Mortgagee shall have power (a) to institute
and
maintain suits and proceedings to prevent any
impairment of
the Mortgaged Property by any acts which may be
unlawful or
in violation of this Mortgage, (b) to preserve or
protect
its interest in the Mortgaged Property and in the
Rents
arising therefrom and (c) at its sole cost and
expense, to
restrain the enforcement of or compliance with any
legislation or other governmental enactment, rule or
order
that may be unconstitutional or otherwise invalid if
the
enforcement of or compliance with such enactment, rule
or
order would impair the security or be prejudicial to
the
interest of Mortgagee hereunder; provided there is no
adverse impact on Mortgagor and its interest in the
Mortgaged Property.
SECTION 2.13. Filing Proofs of Claim. In
case of
any receivership, insolvency, bankruptcy,
reorganization,
arrangement, adjustment, composition or other
proceedings
affecting Mortgagor, Mortgagee shall, to the extent
permitted by law, be entitled to file such proofs of
claim
and other documents as may be necessary or advisable
in
order to have the claims of Mortgagee allowed in such
proceedings for the Obligations secured by this
Mortgage at
the date of the institution of such proceedings and
for any
interest accrued, late charges and additional interest
or
other amounts due or which may become due and payable
hereunder after such date.
SECTION 2.14. Possession by Mortgagee.
Notwithstanding the appointment of any receiver,
liquidator
or trustee of Mortgagor, any of its property or the
Mortgaged Property, Mortgagee shall be entitled, to
the
extent not prohibited by law, to remain in possession
and
control of all parts of the Mortgaged Property now or
hereafter granted under this Mortgage to Mortgagee in
accordance with the terms hereof and applicable law.
SECTION 2.15. Waiver. (a) No delay or
failure
by Mortgagee to exercise any right, power or remedy
accruing
upon any breach or Event of Default shall exhaust or
impair
any such right, power or remedy or be construed to be
a
waiver of any such breach or Event of Default or
acquiescence therein; and every right, power and
remedy
given by this Mortgage to Mortgagee may be exercised
from
time to time and as often as may be deemed expedient
by
Mortgagee. No consent or waiver by Mortgagee to or of
any
breach or default by Mortgagor in the performance of
the
Obligations shall be deemed or construed to be a
consent or
waiver to or of any other breach or Event of Default
in the
performance of the same or any other Obligations by
Mortgagor hereunder. No failure on the part of
Mortgagee to
complain of any act or failure to act or to declare an
Event
of Default, irrespective of how long such failure
continues,
shall constitute a waiver by Mortgagee of its rights
hereunder or impair any rights, powers or remedies
consequent on any future Event of Default by
Mortgagor.
(b) Even if Mortgagee (i) grants some
forbearance
or an extension of time for the payment of any sums
secured
hereby, (ii) takes other or additional security for
the
payment of any sums secured hereby, (iii) waives or
does not
exercise some right granted herein or under the Loan
Documents, (iv) releases a part of the Mortgaged
Property
from this Mortgage, (v) agrees to change some of the
terms,
covenants, conditions or agreements of any of the Loan
Documents, (vi) consents to the filing of a map, plat
or
replat affecting the Premises, (vii) consents to the
granting of an easement or other right affecting the
Premises or (viii) makes or consents to an agreement
subordinating Mortgagee's lien on the Mortgaged
Property
hereunder; no such act or omission shall preclude
Mortgagee
from exercising any other right, power or privilege
herein
granted or intended to be granted in the event of any
breach
or Event of Default then made or of any subsequent
default;
nor, except as otherwise provided in an instrument
executed
by Mortgagee, shall this Mortgage be altered thereby.
In
the event of the sale or transfer by operation of law
or
otherwise of all or part of the Mortgaged Property,
Mortgagee is hereby authorized and empowered to deal
with
any vendee or transferee with reference to the
Mortgaged
Property secured hereby, or with reference to any of
the
terms, covenants, conditions or agreements hereof, as
fully
and to the same extent as it might deal with the
original
parties hereto and without in any way releasing or
discharging any liabilities, obligations or
undertakings.
SECTION 2.16. Remedies Cumulative. No
right,
power or remedy conferred upon or reserved to
Mortgagee by
this Mortgage is intended to be exclusive of any other
right, power or remedy, and each and every such right,
power
and remedy shall be cumulative and concurrent and in
addition to any other right, power and remedy given
hereunder or now or hereafter existing at law or in
equity
or by statute.
ARTICLE III
Miscellaneous
SECTION 3.01. Partial Invalidity. In the
event
any one or more of the provisions contained in this
Mortgage
shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such validity,
illegality or
unenforceability shall, at the option of Mortgagee,
not
affect any other provision of this Mortgage, and this
Mortgage shall be construed as if such invalid,
illegal or
unenforceable provision had never been contained
herein or
therein.
SECTION 3.02. Notices. All notices to be
sent
and all documents to be delivered hereunder shall be
in
writing, shall be delivered by hand or overnight
courier
service, mailed or sent by telex, graphic scanning or
other
telegraphic communications equipment of the sending
party
and shall be deemed to have been given on the date of
receipt if delivered by hand or overnight courier
service or
sent by telex, telecopy or other telegraphic
communications
equipment of the sender, or on the date five Business
Days
after dispatch by certified or registered mail if
mailed, in
each case delivered, sent or mailed (properly
addressed) to
such party as provided in Section 10.01 of the Credit
Agreement or in accordance with the latest unrevoked
direction from such party given in accordance with
said
Section 10.01.
SECTION 3.03. Successors and Assigns. All
of the
grants, covenants, terms, provisions and conditions
herein
shall run with the Premises and the Improvements and
shall
apply to, bind and inure to, the benefit of the
permitted
successors and assigns of Mortgagor and the successors
and
assigns of Mortgagee.
SECTION 3.04. Counterparts. This Mortgage
may be
executed in any number of counterparts and all such
counterparts shall together constitute but one and the
same
mortgage.
SECTION 3.05. Satisfaction and
Cancellation.
(a) The conveyance to Mortgagee of the Mortgaged
Property
as security, created and consummated by this Mortgage,
shall
be null and void when all the Obligations have been
indefeasibly paid in full in accordance with the terms
of
the Loan Documents.
(b) The lien of this conveyance shall be
released
from the Mortgaged Property pursuant to and in
accordance
with the operative provisions of Section 7.05 of the
Credit
Agreement.
(c) In connection with any termination or
release
pursuant to paragraph (a) or (b), to the extent
applicable,
the Mortgage shall be marked "satisfied" by the
Mortgagee,
and this Mortgage may be canceled of record at the
request
and at the expense of the Mortgagor. Mortgagee shall
execute any documents reasonably requested by
Mortgagor to
accomplish the foregoing or to accomplish any release
contemplated by paragraph (a) or (b) and Mortgagor
will pay
all costs and expenses, including attorneys' fees and
disbursements, incurred by Mortgagee in connection
with the
preparation and execution of such documents.
SECTION 3.06. Definitions. As used in this
Mortgage, the singular shall include the plural as the
context requires and the following words and phrases
shall
have the following meanings: (a) "including" shall
mean
"including but not limited to"; (b) "provisions" shall
mean
"provisions, terms, covenants and/or conditions"; (c)
"lien"
shall mean "lien, charge, encumbrance, security
interest,
mortgage or deed of trust"; (d) "obligation" shall
mean
"obligation, duty, covenant and/or condition"; and (e)
"any
of the Mortgaged Property" shall mean "the Mortgaged
Property or any part thereof or interest therein".
Any act
which Mortgagee is permitted to perform hereunder may
be
performed at any time and from time to time by
Mortgagee or
any person or entity designated by Mortgagee. Any act
which
is prohibited to Mortgagor hereunder is also
prohibited to
all lessees of any of the Mortgaged Property. Each
appointment of Mortgagee as attorney-in-fact for
Mortgagor
under the Mortgage is irrevocable, with power of
substitution and coupled with an interest. Subject to
the
applicable provisions hereof, Mortgagee has the right
to
refuse to grant its consent, approval or acceptance or
to
indicate its satisfaction, in its sole discretion,
whenever
such consent, approval, acceptance or satisfaction is
required hereunder.
SECTION 3.07. Multisite Real Estate
Transaction.
Mortgagor acknowledges that this Mortgage is one of a
number
of Other Mortgages and Security Documents which secure
the
Obligations. Mortgagor agrees that the lien of this
Mortgage shall be absolute and unconditional and shall
not
in any manner be affected or impaired by any acts or
omissions whatsoever of Mortgagee and, without
limiting the
generality of the foregoing, the lien hereof shall not
be
impaired by any acceptance by the Mortgagee of any
security
for or guarantees of any of the Obligations hereby
secured,
or by any failure, neglect or omission on the part of
Mortgagee to realize upon or protect any Obligation or
indebtedness hereby secured or any collateral security
therefor including the Other Mortgages and other
Security
Documents. The lien hereof shall not in any manner be
impaired or affected by any release (except as to the
property released), sale, pledge, surrender,
compromise,
settlement, renewal, extension, indulgence,
alteration,
changing, modification or disposition of any of the
Obligations secured or of any of the collateral
security
therefor, including the Other Mortgages and other
Security
Documents or of any guarantee thereof, and Mortgagee
may at
its discretion foreclose, exercise any power of sale,
or
exercise any other remedy available to it under any or
all
of the Other Mortgages and other Security Documents
without
first exercising or enforcing any of its rights and
remedies
hereunder. Such exercise of Mortgagee's rights and
remedies
under any or all of the Other Mortgages and other
Security
Documents shall not in any manner impair the
indebtedness
hereby secured or the lien of this Mortgage and any
exercise
of the rights or remedies of Mortgagee hereunder shall
not
impair the lien of any of the Other Mortgages and
other
Security Documents or any of Mortgagee's rights and
remedies
thereunder. The undersigned specifically consents and
agrees that Mortgagee may exercise its rights and
remedies
hereunder and under the Other Mortgages and other
Security
Documents separately or concurrently and in any order
that
it may deem appropriate and the undersigned waives any
rights of subrogation.
ARTICLE IV
Particular Provisions
This Mortgage is subject to the following
provisions relating to the particular laws of the
state
wherein the Premises are located:
SECTION 4.01. Applicable Law; Certain
Particular
Provisions. This Mortgage shall be governed by and
construed in accordance with the internal law of the
State
of New York; provided, however, that the provisions of
this
Mortgage relating to the creation, perfection and
enforcement of the lien and security interest created
by
this Mortgage in respect of the Mortgaged Property and
the
exercise of each remedy provided hereby, including the
power
of foreclosure or power of sale procedures set forth
in this
Mortgage, shall be governed by and construed in
accordance
with the internal law of the state where the Mortgaged
Property is located, and Mortgagor and Mortgagee will
submit
to jurisdiction and the laying of venue for any suit
on this
Mortgage in such state. The terms and provisions set
forth
in Appendix A attached hereto are hereby incorporated
by
reference as though fully set forth herein. In the
event of
any conflict between the terms and provisions
contained in
the body of this Mortgage and the terms and provisions
set
forth in Appendix A, the terms and provisions set
forth in
Appendix A shall govern and control.
IN WITNESS WHEREOF, this Mortgage has been
duly
authorized and has been executed and delivered to
Mortgagee
by Mortgagor on the date first written above.
ECKERD CORPORATION,
a
Delaware
corporation,
by
/s/ Martin W.
Gladysz
Name: Martin W.
Gladysz
Title: Vice
President
[Corporate Seal]
WITNESSES
/s/ Mark C. Brooks
Name: Mark C. Brooks
/s/ Randall L. Nixon
Name: Randall L. Nixon
THE STATE OF NEW YORK
COUNTY OF NEW YORK
The foregoing instrument was acknowledged before
me
this 2nd day of August 1994, by Martin W. Gladysz as
Vice
President of ECKERD CORPORATION, a Delaware
corporation, on
behalf of the corporation. He is [ ] personally known
to be
or [x] produced Florida Dr. Lic. as identification
(check
one).
/s/ Deborah M. Voytovich
Name: Deborah M. Voytovich
NOTARY PUBLIC
My commission number: 4950596
APPENDIX A to Mortgage,
Security Agreement and
Assignment of Leases
and Rents
FLORIDA OVERRIDE PROVISIONS
This Appendix A (this "Appendix A") has been
attached to and shall be deemed incorporated into that
certain Mortgage, Security Agreement and Assignment of
Leases and Rents (the "Mortgage") dated as of June 14,
1993,
as amended and restated as of August 3, 1994, by
Eckerd
Corporation, formerly known as Jack Eckerd
Corporation, a
Delaware corporation (the "Mortgagor"), to Chemical
Bank, as
Collateral Agent for the secured Parties (in such
capacity
the "Mortgagee"). As set forth in Section 4.01 of the
Mortgage, in the event of any conflict between the
terms and
provisions contained in the body of the Mortgage and
the
terms and provisions set forth in this Appendix A, the
terms
and provisions set forth in this Appendix A shall
govern and
control. All references in this Appendix A to
Articles and
Sections shall, unless otherwise provided, refer to
Articles
and Sections of this Appendix A, and all references to
"this
Mortgage" or similar language shall refer to the
Mortgage,
as supplemented, and, if applicable, overridden by
this
Appendix A.
ARTICLE I
Section 1.01. Future Advances. This Mortgage is
also
intended to be and is a lien and mortgage to secure
not only
the existing indebtedness secured by the Mortgage, but
also
and all future advances, whether such advances are
obligatory or made at the option of the Lenders under
the
Loan Documents with respect to the Term Loans, or
otherwise,
as are made within twenty (20) years from the date of
this
Mortgage, to the same extent as if such future
advances were
made on the date of the execution of this Mortgage,
although
there may be no advance made at the time of the
execution of
this Mortgage and although there may be no
indebtedness
secured by the Mortgage outstanding at the time the
advances
are made. This Mortgage, as to third persons without
actual
notice thereof, shall be valid as to all indebtedness
and
future advances secured by the Mortgage from the time
the
Mortgage is filed for record as provided by law. The
total
amount of indebtedness that may be so secured may
decrease
or increase from time to time, but the total unpaid
balance
so secured at any one time shall not exceed Fourteen
Million, Eight Hundred Eighty-six Thousand, Six
Hundred
Thirty and 00/100 Dollars ($14,886,630.00) plus
interest
thereon. Any increase in the principal balance of the
indebtedness secured by the Mortgage as a result of a
disbursement made for the payment of taxes, levies, or
insurance, and to the extent provided by law, other
sums
advanced in accordance herewith to protect the
security of
this Mortgage, or as a result of negative amortization
or
deferred interest, shall be secured by this Mortgage
even
though the resulting increase causes the total
indebtedness
secured by the Mortgage to exceed Fourteen Million,
Eight
Hundred Eighty-Six Thousand, Six Hundred Thirty and
00/100
Dollars ($14,886,630.00). Notwithstanding the
foregoing,
the Mortgagee and the Lenders under the Loan Documents
shall
have such additional protections provided by Section
697.04,
Florida Statutes (1992), as amended.
Exhibit 12.2
ECKERD CORPORATION AND SUBSIDIARIES
Computation of Ratio of Earnings to Fixed Charges
Year Ended January 28, 1995
Earnings before income taxes and extraordinary item $ 87,084
Add:
Portion of rents representative of the interest
factor(*) 37,282
Interest expense 93,735
Income as adjusted $218,101
Fixed charges:
Interest expense 93,735
Portion of rents representative of interest factor 37,282
Total fixed charges $131,017
Ratio of earnings to fixed charges 1.66
(*) The portion of rents representative of the interest factor is
calculated as 33-1/3% of minimum rentals.
<TABLE>
Five Year Financial Operating Summary
(Dollars in thousands, except per share amounts and drug stores)
Fiscal years ended January 28, January 29, January 30,
February 1, and February 2, respectively (1) (2)
1995
1994 1993 1992 1991
<S> <C> <C>
<C> <C> <C>
Summary of Operations Data:
Sales and other operating revenue $4,549,031(3)
4,190,539 3,887,027 3,739,852 3,456,134
Cost of sales, including store
occupancy, warehousing and
delivery expense 3,444,141
3,175,375 2,896,479 2,738,545 2,527,544
Operating and administrative
expenses 924,071(3)
857,980 855,165 854,209 817,263
Earnings before interest expense 180,819
157,184 135,383 147,098 111,327
Net interest expense 93,735
113,215 137,404 143,194 147,309
Earnings (loss) before income taxes
and extraordinary items 87,084
43,969 (2,021) 3,904 (35,982)
Income tax expense 8,753(3)
2,556 2,864 2,927 -
Earnings (loss) before
extraordinary items 78,331
41,413 (4,885) 977 (35,982)
Extraordinary item-early retirement
of debt and preferred stock,
net of tax benefit (30,523)
(44,354) - - -
Extraordinary item-tax effect of
utilization of net operating loss
carryforward -
- 762 1,680 -
Net earnings (loss) for the year 47,808
(2,941) (4,123) 2,657 (35,982)
Preferred stock dividends -
4,924 10,815 10,823 10,866
Net earnings (loss) available
to common shares $ 47,808
(7,865) (14,938) (8,166) (46,848)
Earnings (loss) before extraordinary
items per common share $ 2.41
1.24 (.59) (.38) (1.97)
Net earnings (loss) per common share $ 1.47
(.27) (.56) (.32) (1.97)
Dividends per common share $ -
- - - -
Weighted average common
shares outstanding 32,432
29,393 26,574 25,677 23,793
Balance Sheet Data:
Working capital $ 280,289
306,588 367,027 328,617 347,775
Total assets 1,342,347
1,420,137 1,418,922 1,412,249 1,443,167
Long-term debt (4) 787,013
954,891 1,048,222 1,023,106 1,084,088
Preferred stock -
- 75,000 75,000 75,000
Stockholders' deficit (122,742)
(179,022) (243,291) (228,353) (220,187)
Drug Store Data:
Stores open at end of year 1,735
1,718 1,696 1,675 1,673
Comparable sales growth 8.2%
6.1 3.1 5.7 6.9
</TABLE>
Notes:
(1) Years ended the Saturday nearest January 31. All fiscal years
include 52 weeks of operations.
(2) Fiscal years prior to January 29, 1994 have been restated to
reflect the reclassification of previously issued Class A and Class
B common stock into Common Stock, to reflect a 2-for-3 reverse stock
split and the exchange of EDS Holdings Inc. common stock and
merger into the Company.
(3) Sales and other operating revenue includes $54,125 and income tax
expense includes $4,655 from the gain on the sale of Insta-Care
Pharmacy Services and operating and administrative expenses includes
$48,988 charge for future drug store closings.
(4) Includes current installments and Convertible Debentures.
Management's Discussion and Analysis of Results of Operations and
Financial Condition
<TABLE>
Condensed Consolidated Statements of Operations
(In thousands) Fiscal years ended January 28 and January 29,
respectively
1995 1994
As Reported
As Adjusted (1) As Reported As Adjusted (2)
<S> <C>
<C> <C> <C>
Sales and other operating revenue $4,549,031
4,494,906 4,190,539 4,108,683
Cost of sales 3,444,141
3,444,141 3,175,375 3,123,899
Operating and administrative expenses 924,071
875,083 857,980 829,654
Earnings before interest expense 180,819
175,682 157,184 155,130
Interest expense 93,735
93,735 113,215 113,215
Income tax expense 8,753
4,098 2,556 2,556
Earnings before extraordinary item 78,331
77,849 41,413 39,359
Extraordinary items (30,523)
(30,523) (44,354) (44,354)
Net earnings (loss) for the year $ 47,808
47,326 (2,941) (4,995)
</TABLE>
(1) Excludes $54,125 from sales and other operating revenue and
$4,655 from income taxes for the gain on the sale of Insta-Care and
$48,988 from operating and administrative expenses for the charge for
future store closings.
(2) Excludes Vision Group operations for the full fiscal year and
Insta-Care operations from November 16, 1993 through January 29,
1994.
Results of Operations
Fiscal Year 1994 compared with Fiscal Year 1993
The preceding as adjusted condensed consolidated statements
of operations and the following management's discussion and analysis
exclude the following items: The fiscal 1993 results exclude the
Company's Vision Group operations, its retail optical business, which
was sold effective January 30, 1994 and the Company's Insta-Care
Holdings, Inc.'s ("Insta-Care") operations, its institutional
pharmacy services business, from November 16, 1993 through January
29, 1994, since it was sold effective November 15, 1994. The fiscal
1994 sales and other operating revenue exclude a pretax gain of $54.1
million (before income taxes of $4.6 million) from the sale of
Insta-Care. The fiscal 1994 operating and administrative expenses
exclude a reserve of $49.0 million for future store closings.
The Company's sales and other operating revenue for fiscal
1994 were $4.495 billion, a 9.4% increase over fiscal 1993. Sales
benefited from significant increases in drug store prescription sales
and increases in front end sales. For fiscal 1994, prescription sales
were $2.237 billion, a 15.2% increase over fiscal 1993. In addition,
drug store front end sales increased to $2.160 billion, a 4.2%
increase over fiscal 1993.
Comparable drug store sales (stores open for one year or
more) increased 8.2% during fiscal 1994 compared to a 6.1% increase
in fiscal 1993. The increase in comparable drug store sales was
primarily attributable to the increase in sales of prescription
drugs. Comparable drug store sales growth was also positively
affected by increased sales of non-prescription categories such as
health, toiletries, convenience food and photofinishing items
resulting from increased marketing emphasis and shelf space for these
categories.
Prescription sales as a percentage of drug store sales was
50.8% for fiscal 1994 compared with 48.3% for fiscal 1993. The growth
in prescription sales was primarily the result of increased
third-party prescription sales and the Company's competitive cash
pricing strategy.
These sales were strong despite a lower incidence of cough and
cold/flu virus during the first and fourth quarters of fiscal 1994
compared to fiscal 1993. Third-party prescription sales represented
64.6% and 58.0% of the Company's prescription sales in fiscal 1994
and 1993, respectively. The Company expects prescription sales to
third-party payors, in terms of both dollar volume and as a
percentage of total prescription sales, to continue to increase in
fiscal 1995 and the foreseeable future. Third-party payors typically
negotiate lower prescription prices than those on non third-party
prescriptions, resulting in decreasing gross profit margins on the
Company's prescription sales. However, third-party sales contracts
have resulted in increased volume of prescription sales and gross
profit dollars.
Cost of sales and related expenses in fiscal 1994 were $3.444
billion, a 10.2% increase over fiscal 1993. As a percentage of sales,
cost of sales and related expenses were 76.6% and 76.0% for fiscal
1994 and 1993, respectively. The increase in cost of sales and
related expenses as a percentage of sales resulted primarily from the
continued increase in third-party prescription sales with typically
lower gross profit margins than non third-party prescription sales.
The LIFO charge was $10.8 million in fiscal 1994 compared to $8.5
million in fiscal 1993.
Operating and administrative expenses in fiscal 1994 were
$875.1 million, a 5.5% increase over fiscal 1993. As a percentage of
sales, operating and administrative expenses were reduced to 19.5%
for fiscal 1994 from 20.2% for fiscal 1993. The decrease in operating
and administrative expenses in fiscal 1994 as a percentage of sales
resulted primarily from the economies of scale related to the higher
sales, and cost controls which helped produce lower costs as a
percentage of sales in such expense categories as payroll, insurance
and supplies. Additionally, non-cash tax deductible amortization of
intangibles included in operating and administrative expenses for
fiscal 1994 and 1993 were $31.9 million and $35.4 million,
respectively, a decrease of 9.9%.
In the fourth quarter of fiscal 1994, the Company decided to
accelerate the closing of approximately 90 geograhically dispersed,
under-performing stores over the next twelve to eighteen months, and
established a $49.0 million reserve for future store closings. These
closings are in addition to the small number of stores the Company
closes in the normal course of business. The $49.0 million reserve
includes approximately $27.0 million for lease settlements and
obligations, approximately $4.0 million for severance and other
expenses directly related to the store closings, and approximately
$18.0 million for the write-off of impaired assets which include
inventory liquidation and the write-off of intangible and fixed
assets.
Earnings before interest expense and income taxes in fiscal
1994 were $175.7 million a 13.3% increase over fiscal 1993. The
increase in earnings before interest expense and income taxes was due
primarily to the increase in gross profit dollars as a result of
higher sales and other operating revenue and the decrease in
operating and administrative expenses as a percentage of sales in
fiscal 1994 compared to fiscal 1993.
Total interest expense was $93.7 million in fiscal 1994, a
decrease of 17.2% from fiscal 1993. The decrease was due primarily to
the lower cost of debt to the Company resulting from fiscal 1993's
refinancing, initial public offering of stock and 9.25% senior
subordinated note issuance and the bank credit agreement revision
which provided improved pricing. In addition, the decrease in
interest expense was due to lower average borrowings in fiscal 1994,
due primarily to paydowns of borrowings from net proceeds from the
sale of Vision Group and Insta-Care operations, partially offset by
the numerous marketplace interest rate increases during fiscal 1994.
Amortization of original issue discount and deferred debt expenses
decreased to $5.9 million in fiscal 1994 from $7.2 million in fiscal
1993 resulting from the refinancing and early retirement of certain
debt issues in fiscal 1994 and 1993.
Income tax expense was $4.1 million and $2.6 million in
fiscal 1994 and 1993, respectively. Income tax expense in both fiscal
years represents alternative minimum tax and state income taxes for
the Company, and reflects the utilization of net operating loss
carryforwards.
As a result of the foregoing factors, the Company had
earnings on an adjusted basis before extraordinary items of $77.8
million in fiscal 1994 compared to $39.4 million in fiscal 1993, an
increase of $38.4 million or 97.5%, net income of $47.3 million in
fiscal 1994 compared to a net loss of $5.0 million in fiscal 1993, a
$52.3 million increase.
The Company had extraordinary items of $30.5 million (net of
tax benefit of $1.6 million) and $44.4 million (net of tax benefit of
$0.9 million) in fiscal 1994 and 1993, respectively. The
extraordinary item in fiscal 1994 is primarily from the write-off of
deferred costs related to the significant revision of the bank credit
agreement, as well as from the early retirement of $50.0 million of
the 11.125% subordinated debentures. The extraordinary item in fiscal
1993 is primarily from the write-off of deferred costs from the early
retirement of a portion of the 11.125% subordinated debentures, all
of the 13% subordinated debentures and the redemption of the 14.5%
preferred stock.
Fiscal Year 1993 compared with Fiscal Year 1992
The following fiscal 1993 comparison is based on previously
reported numbers as opposed to adjusted numbers.
The Company's competitive pricing and cost reduction programs
were both largely reflected in fiscal 1993. The Company's sales and
other operating revenue for fiscal 1993 were $4.191 billion, a 7.8%
increase over fiscal 1992. The increase in sales and other operating
revenue was due primarily to a $245 million increase in sales of
prescription drugs.
Prescription sales as a percentage of drug store sales was
approximately 48.3% for fiscal 1993 as compared with approximately
45.4% for fiscal 1992. The growth in prescription sales was primarily
the result of increased third-party prescription sales, the Company's
competitive pricing program and a high incidence of cough and
cold/flu virus during the first and fourth quarters of fiscal 1993.
Third-party prescription sales represented approximately 58.0% and
49.6% of the Company's prescription sales in fiscal 1993 and 1992,
respectively.
Comparable drug store sales increased 6.1% during fiscal 1993
compared to a 3.1% increase in fiscal 1992. The increase in
comparable drug store sales was due primarily to the increase in
sales of prescription drugs resulting from sales related to new
third-party prescription plan contracts, the Company's competitive
pricing program, and a high incidence of cough and cold/flu virus
during the first and fourth quarters of fiscal 1993. In addition,
comparable drug store sales growth was positively affected by
increased sales of non-prescription itemsin the health and beauty,
greeting card, convenience food and photofinishing categories
resulting from increased marketing emphasis and shelf space for these
categories, as well as increased sales of over-the-counter drugs
because of the high incidence of cough and cold/flu virus during the
first and fourth quarters of fiscal 1993. Total sales growth was
positively affected by the growth in comparable drug store sales, as
well as the inclusion of 34 drug stores acquired during the second
half of fiscal 1992 and 19 drug stores acquired in the fourth quarter
of fiscal 1993.
Cost of sales and related expenses in fiscal 1993 were $3.175
billion, a 9.6% increase over fiscal 1992. As a percentage of sales,
cost of sales and related expenses were 75.8% and 74.5% for fiscal
1993 and 1992, respectively. The competitive pricing strategy for non
third-party prescription sales and the continued increase in
third-party prescription sales, which typically have lower gross
profit margins than non third-party prescription sales, partially
offset by a lower LIFOcharge of $8.5 million ($15.0 million in fiscal
1992), were the primary reasons for the increase in cost of sales and
related expenses as a percentage of sales in fiscal 1993.
Operating and administrative expenses in fiscal 1993 were
$858.0 million, a 0.3% increase over fiscal 1992. As a percentage of
sales, operating and administrative expenses were reduced to 20.5% in
fiscal 1993 from 22.0% for fiscal 1992 as a result of the higher
sales in fiscal 1993 and lower costs as a percentage of sales in such
expense categories as payroll, advertising, insurance and supplies as
a result of the cost reduction program initiated in the second half
of fiscal 1992. The implementation of the cost reduction program
eliminated operating expenses of approximately $70.0 million in
fiscal 1993, and the Company estimates that $10.0 million of such
savings was recognized in fiscal 1992. Non-cash, tax deductible
amortization of intangibles included in operating and administrative
expenses in fiscal 1993 and 1992 were $35.6 million and $39.0
million, respectively, a decrease of 8.7%.
Earnings before interest expense and income taxes increased
to $157.2 million in fiscal 1993, a 16.1% increase over fiscal 1992,
due primarily to the increase in gross profit dollars as a result of
higher sales and
other operating revenue and the lower rate of increase of operating
and administrative expenses compared to the rate of increase in sales
and other operating revenue.
Total interest expense was $113.2 million in fiscal 1993, a
decrease of 17.6% from fiscal 1992. The decrease was due primarily to
lower interest rates in the marketplace and lower cost of debt for
the Company after the June 1993 bank refinancing (Refinancing) and
the 9.25% senior subordinated note issuance (Note Issuance) and the
consummation of the initial public offering (IPO) of stock on August
12, 1993.
The income tax provision for fiscal 1993 and 1992 was $2.6
million and $2.9 million, respectively. The income tax provision for
fiscal 1993 and 1992 represents alternative minimum tax and state
income taxes.
As a result of the foregoing factors, the Company had
earnings before extraordinary items in fiscal 1993 of $41.4 million,
compared with a loss of $4.9 million in fiscal 1992, a net loss in
fiscal 1993 of $2.9 million compared with a net loss of $4.1 million
in fiscal 1992.
The Company had an extraordinary item of $44.4 million (net
of an income tax benefit of $0.9 million) in fiscal 1993, which was
recognized as a result of the early retirement of existing
indebtedness and the redemption of the Company's 14.5% preferred
stock in connection with the Refinancing, the IPO and the Note
Issuance. In fiscal 1992, the Company had an extraordinary item of
$0.8 million which represented the tax effect of the utilization of
the Company's net operating loss carryforward.
Liquidity and Capital Resources
On August 3, 1994, the Company entered into a significant
revision to the bank credit agreement. The revised agreement provides
for a total loan facility of $850 million. Although the revision did
not provide any additional proceeds to the Company, it does provide
improved pricing and increased operating flexibility with respect to
acquisitions, capital expenditures and lease payments. The revolving
loan facility was extended a year and increased to $350 million. The
previous Tranche A and B term loan facilities were reduced to $500
million and combined into a six-year amortizing term loan facility.
At January 28, 1995, the Company had approximately $434.4
million outstanding under the term loan facility, $21.0 million
outstanding under the revolving loan facility and had $255.9 million
available for borrowing under the revolving loan facility portion of
the bank credit agreement which is net of $73.1 million of letters of
credit. Pursuant to the bank credit agreement, the Company is
required to make scheduled payments of the outstanding principal
amount of the term loan facility in unequal quarterly payments.
Prepayments made pursuant to the bank credit agreement are applied
pro rata among the remaining scheduled term loan principal payments.
The bank credit agreement matures in July 2000.
On January 28, 1995 the Company had working capital of $280.3
million and a current ratio of 1.5 to 1 compared to $306.6 million
and 1.5 to 1 at January 29, 1994. Although the Company's net earnings
were $47.8 million for fiscal 1994, compared to a net loss of $2.9
million for fiscal 1993, cash flow provided by operating activities
declined $50.9 million to $119.0 million for fiscal 1994 compared
with $169.9 million for fiscal 1993. This decline was principally
attributable to higher than normal cash payments to merchandise
vendors in fiscal 1994, resulting in the reduction of accounts
payable from an abnormally high balance at January 29, 1994 due
primarily from the timing of vendor payment due dates. The decline
was partially offset by an increase in certain accrued liabilities
and a decrease in accounts receivable in fiscal 1994.
Net cash from investing activities for fiscal 1994 and 1993
provided $50.6 million and used $19.0 million, respectively. Uses of
cash were principally for capital expenditures of $57.2 million and
$39.3 million for fiscal 1994 and 1993, respectively, for additions
to the Company's drug stores and Express Photo units and improvements
to existing stores, and in addition, in fiscal year 1994 for the
installation of point-of-sale product scanning equipment and
satellite communication equipment. In fiscal 1994, a source of cash
to the Company from investing activities was provided by the sales of
the Insta-Care operations and the Vision Group operations. In fiscal
1993, the sale and leaseback arrangement of photo processing
equipment
provided a source of approximately $35.0 million in cash to the
Company. Capital improvements planned for fiscal 1995, including
those to be acquired under a deferred payment arrangement and through
operating leases, are expected to total approximately $119 million.
Funds for the planned cash capital expenditures are expected to come
from cash flow from operating activities and available borrowings, if
necessary.
Financing activities for fiscal 1994 used $172.8 million
primarily for the reduction of bank borrowings and the early
retirement of $50.0 million of the 11.125% subordinated debentures.
Financing activities for fiscal 1993 used $157.4 million primarily
for costs of approximately $57.0 million associated with the
Refinancing and for the redemption of the Company's $75.0 million
14.5% redeemable preferred stock and payment of $4.9 million of cash
dividends on such stock, and the net repayment of $106.0 million of
debt. These uses of funds were offset partially by $64.6 million of
net proceeds from the IPOand a $28.7 million increase in bank debit
balances.
The Company anticipates that the combination of amortization
of intangibles and interest on debt will have a negative impact upon
future earnings and, to a lesser degree, cash flow from operating
activities. The Company does not believe, however, that the impact
of such planned amortization and interest expense upon earnings
indicates a present or future impairment of liquidity.
Based upon the Company's ability to generate cash flow from
operating activities, the available unused portion of the revolving
loan facility under the bank credit agreement and other existing
sources, the Company believes that it will have the funds necessary
to meet the principal and interest payments on its debt as they
become due and to operate and expand its businesses.
The payment of dividends and other distributions by the
Company is subject to restrictions under certain of the financing
agreements to which the Company is a party, including the bank credit
agreement, the 9.25% senior subordinated notes and the 11.125%
subordinated debentures. The Company currently does not plan to pay
dividends on its Common Stock.
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share amounts)
January 28, January 29, and
January 30, respectively
1995
1994 1993
<S> <C>
<C> <C>
Sales and other operating revenue (note 1(c)) $4,549,031
4,190,539 3,887,027
Costs and expenses:
Cost of sales, including store occupancy,
warehousing, and delivery expense 3,444,141
3,175,375 2,896,479
Operating and administrative expenses 924,071
857,980 855,165
4,368,212
4,033,355 3,751,644
Earnings before interest expense 180,819
157,184 135,383
Interest expense:
Interest expense, net 87,838
105,999 130,435
Amortization of original issue discount
and deferred debt expenses 5,897
7,216 6,969
Total interest expense 93,735
113,215 137,404
Earnings (loss) before income taxes and
extraordinary items 87,084
43,969 (2,021)
Income tax expense (note 5) 8,753
2,556 2,864
Earnings (loss) before extraordinary items 78,331
41,413 (4,885)
Extraordinary items:
Early retirement of debt and preferred stock,
net of tax benefit of $1,607 and $929 (note 4(a)) (30,523)
(44,354) -
Tax effect of utilization of net operating loss
carryforward (note 5) -
- 762
Net earnings (loss) for the year 47,808
(2,941) (4,123)
Preferred stock dividends -
4,924 10,815
Net earnings (loss) attributable to common shares $ 47,808
(7,865) (14,938)
Earnings (loss) per common share:
Earnings (loss) before extraordinary items $ 2.41
1.24 (.59)
Extraordinary items (.94)
(1.51) .03
Net earnings (loss) $ 1.47
(.27) (.56)
</TABLE>
See accompanying notes to consolidated financial statements.
<TABLE>
Consolidated Balance Sheets
(In thousands, except share amounts)
January 28 and January 29, respectively
1995 1994
Assets
<S>
<C> <C>
Current assets:
Cash and short-term interest-bearing deposits plus accrued
interest $ 8,898 12,110
Receivables, less allowance for doubtful receivables of $3,000
and $5,000 52,487 92,672
Merchandise inventories
771,122 765,653
Prepaid expenses and other current assets
2,366 6,232
Total current assets
834,873 876,667
Property, plant and equipment, at cost:
Land
17,814 19,260
Buildings
74,002 73,404
Furniture and equipment
306,962 282,736
Transportation equipment
11,911 13,050
Leasehold improvements
131,502 127,480
542,191 515,930
Less accumulated depreciation
249,214 239,017
Net property, plant and equipment
292,977 276,913
Excess of cost over net assets acquired, less accumulated
amortization of
$16,715 and $15,083
27,667 31,594
Favorable lease interests, less accumulated amortization of $383,708
and $357,912 153,664 177,803
Unamortized debt expenses (note 4(a))
10,138 38,779
Other assets
23,028 18,381
$1,342,347 1,420,137
</TABLE>
See accompanying notes to consolidated financial statements.
<TABLE>
(In thousands, except share amounts)
January 28 and January 29, respectively
1995 1994
Liabilities and Stockholders' Equity (Deficit)
<S>
<C> <C>
Current liabilities:
Bank debit balances
$ 44,373 40,974
Current installments of long-term debt (note 4)
1,452 1,905
Accounts payable
287,551 363,136
Accrued interest
19,246 17,749
Accrued payroll
70,640 69,085
Other accrued expenses (note 9)
131,322 77,230
Total current liabilities
554,584 570,079
Other noncurrent liabilities (note 9)
124,944 76,094
Long-term debt, excluding current installments (note 4)
785,561 952,986
Stockholders' equity (deficit) (notes 1 and 6):
Preferred stock of $.01 par value. Authorized 20,000,000 shares;
none issued or outstanding
- -
Voting common stock of $.01 par value. Authorized 96,481,272
shares; issued 32,105,774 and 31,031,811
321 310
Nonvoting common stock of $.01 par value. Authorized
3,518,728 shares; issued 0 and 605,022 shares
- 6
Capital in excess of par value
234,027 225,560
Retained deficit
(357,090) (404,898)
Total stockholders' equity (deficit)
(122,742) (179,022)
Commitments and related party transactions (notes 7 and 8)
$1,342,347 1,420,137
</TABLE>
<TABLE>
Consolidated Statements of Stockholders' Equity
(In thousands, except share amounts) Years ended
January 28, 1995, January 29, 1994, and January 30, 1993
Capital Total
Voting Nonvoting
in stockholders'
common common
excess of Retained equity
stock stock
par value deficit (deficit)
<S> <C> <C>
<C> <C> <C>
Balance at February 1, 1992 $236 6
153,500 (382,095) (228,353)
Net loss for the year - -
- (4,123) (4,123)
14 1/2% preferred stock
cash dividends - -
- (10,815) (10,815)
Balance at January 30, 1993 236 6
153,500 (397,033) (243,291)
Reclassification of common
stock previously subject
to put options 21 -
7,279 - 7,300
Common stock sold under
employee stock option plan 1 -
272 - 273
Common stock sold in public
stock offering, net of
expenses of sale 52 -
64,509 - 64,561
Net loss for the year - -
- (2,941) (2,941)
14 1/2% preferred stock
cash dividends - -
- (4,924) (4,924)
Balance at January 29, 1994 310 6
225,560 (404,898) (179,022)
Expenses for secondary public
stock offering - -
(953) - (953)
Common stock sold under
employee stock option plan 1 -
952 - 953
Contribution of common stock
to profit sharing plan 1 -
895 - 896
Issuance of 303,060 shares of
common stock at $25.00 per share
for drug store acquisition 3 -
7,573 - 7,576
Conversion of nonvoting common
stock to voting common stock 6 (6)
- - -
Net income for the year - -
- 47,808 47,808
Balance at January 28, 1995 $321 -
234,027 (357,090) (122,742)
</TABLE>
See accompanying notes to consolidated financial statements.
<TABLE>
Consolidated Statements of Cash Flows
(In thousands)
January 28, January 29, and January 30, respectively
1995 1994 1993
Cash flows from operating activities:
<S>
<C> <C> <C>
Net earnings (loss) for the year
$ 47,808 (2,941) (4,123)
Adjustments to reconcile net earnings (loss) for the
year to net cash provided by operating activities:
Gain on sale of subsidiary
(54,125) - -
Reserve for store closing provision
48,988 - -
Extraordinary charge related to early retirement of debt
and preferred stock
32,130 45,283 -
Depreciation and amortization
77,794 85,660 92,759
Amortization of original issue discount and
deferred debt expenses
5,897 7,216 6,969
Decrease (increase) in receivables
12,047 (13,867) (633)
Increase in merchandise inventories
(22,621) (35,455) (19,104)
Decrease (increase) in prepaid expenses and other
current assets
3,048 (3,408) 1,108
Increase (decrease) in accounts payable and accrued expenses
(31,978) 87,393 1,852
Net cash provided by operating activities
118,988 169,881 78,828
Cash flows from investing activities:
Additions to property, plant and equipment*
(57,246) (39,327) (51,389)
Sale of property, plant and equipment
4,253 37,942 3,303
Net proceeds from sale of subsidiaries
114,912 - -
Sale/purchase of long-term investments (net)
- 1,173 1,161
Acquisition of certain drug store assets
(5,253) (14,314) (30,475)
Other
(6,043) (4,514) 1,437
Net cash provided by (used in) investing activities
50,623 (19,040) (75,963)
Cash flows from financing activities:
Increase (decrease) in bank debit balances
3,399 28,743 (5,919)
14 1/2% preferred stock cash dividends
- (4,924) (10,815)
Additions to long-term debt
1,604 1,476 1,435
Reductions of long-term debt
(2,926) (3,769) (4,730)
Net additions (reductions) under prior credit agreement
- (221,723) 34,913
Net additions (reductions) under current credit agreement
(120,816) 576,189 -
Redemption of 141/2% preferred stock
- (75,000) -
Common stock sold in public stock offering, net of
expenses of sale
- 64,561 -
Issuance of 91/4% senior subordinated notes
- 200,000 -
Redemption of 13% and 111/8% subordinated debentures
(50,000) (490,165) -
Redemption of senior notes
- (168,000) -
Other, including redemption fees and deferred financing costs
(4,084) (64,761) (7,545)
Net cash provided by (used in) financing activities
(172,823) (157,373) 7,339
Net increase (decrease) in cash and cash equivalents
(3,212) (6,532) 10,204
Cash and short-term interest-bearing deposits plus
accrued interest at beginning of year
12,110 18,642 8,438
Cash and short-term interest-bearing deposits plus
accrued interest at end of year
$ 8,898 12,110 18,642
</TABLE>
See accompanying notes to consolidated financial statements.
* Total capital expenditures for fiscal years 1994 and 1993 were
$84,694 and $41,960, of which $27,448 and $2,633 were acquired
under a deferred payment arrangement.
Notes to Consolidated Financial Statements
January 28, 1995, January 29, 1994, and January 30, 1993
(In thousands, except share amounts)
(1) Organization of Business
(a) Acquisitions and Merger. On April 30, 1986, all
of the outstanding capital stock of Jack Eckerd Corporation
(predecessor company) was acquired by certain affiliates of Merrill
Lynch Capital Partners, Inc., affiliates of certain banks which
provided a portion of the financing for the acquisition and certain
members of management. The acquisition was accounted for using the
purchase method of accounting. The cost of acquiring the capital
stock was allocated to assets based on fair market values at April
30, 1986 as determined by American Appraisal Associates, Inc.
The excess of cost over net assets acquired at May 1, 1986,
as well as subsequent acquisitions, are being amortized on a
straight-line basis over a period of 20 years.
During 1992, 1993 and 1994, Eckerd Corporation (Company)
purchased sixty-five drug stores (17 stores were closed subsequent to
the acquisition) in four transactions at an aggregate cost of
$51,302. The operations of such stores, which have been included in
the consolidated financial statements from dates of acquisition, are
not material to the Company and, accordingly, pro forma comparative
operating numbers are not presented.
(b) Initial and Secondary Public Offerings. On August 12, 1993, the
Company completed an initial public offering (IPO) in which it issued
and sold 5,175,000 shares of its Common Stock par value $.01 per
share (Common Stock) for $14.00 per share. In connection with the
IPO, the Company amended its Restated Certificate of Incorporation to
affect, among other things: (i) the reclassification of its Class A
common stock and Class B common stock into Common Stock at certain
specified rates (Reclassification); (ii) a 2-for-3 reverse stock
split (Stock Split); (iii) the adoption of certain provisions, such
as a classified board of directors and the prohibition of stockholder
action by written consent, which could make non-negotiated
acquisitions of the Company more difficult; and (iv) the change of
the Company's name from "Jack Eckerd Corporation" to "Eckerd
Corporation."
On May 2, 1994, the Company completed an underwritten
secondary offering of 3,199,056 shares of its common stock for $19.00
per share. The secondary offering only included shares owned by
certain institutional stockholders. The Company did not receive any
of the proceeds from the sale of shares of common stock; and was
required to pay certain expenses of the secondary offering.
(c) Sales of Subsidiaries. On March 31, 1994, the Company closed on
the sale of its Vision Group operations which were sold effective
January 30, 1994 for an amount in cash and notes approximately equal
to the book value of the related assets. In 1993, Vision Group sales
were approximately $61,000 and earnings before interest and taxes
were approximately $3,000.
On November 15, 1994, the Company closed on the sale of its
Insta-Care Pharmacy Services (Insta- Care) operations for a total
consideration of $112,000 in cash. The net proceeds after certain
closing adjustments was approximately $94,000. Insta-Care operations
are included in the consolidated financial statements up to the
closing date of the sale. In 1994, Insta-Care sales were
approximately $89,000 and earnings before interest and income taxes
were approximately $3,000. The Company recognized a gain on the sale
of Insta-Care of $49,470, net of income taxes of $4,655. The gain of
$54,125 before income taxes is reported in the consolidated statement
of operations as part of sales and other operating revenue.
(2) Summary of Significant Accounting Policies
(a) Principles of Consolidation. The consolidated financial
statements include the accounts of the Company and its wholly-owned
subsidiaries. All significant intercompany accounts have been
eliminated in the consolidation.
(b) Definition of Fiscal Year. The fiscal year ends on the Saturday
nearest January 31. Fiscal years 1994, 1993 and 1992 ended January
28, 1995, January 29, 1994 and January 30, 1993, respectively, and
consisted of 52 weeks.
(c) Merchandise Inventories. Inventories consist principally of
merchandise held for resale and are based on physical inventories
taken throughout the year. Inventories are stated at the lower of
cost (last-in, first-out) or market. At January 28, 1995 and January
29, 1994, if the first-in, first-out method of valuing inventories
had been used by the Company, inventories would have been higher than
reported by approximately $76,900 and $66,100, respectively.
(d) Income Taxes. Effective January 31, 1993, the Company adopted
Statement of Financial Accounting Standards No. 109 (SFAS No. 109),
"Accounting for Income Taxes." Under the asset and liability method
of SFAS No. 109, deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are
expected to be recovered or settled. Under SFAS No. 109, the effect
of a change in tax rates on deferred tax assets or liabilities is
recognized in income in the period that included the enactment.
Previously, the Company accounted for income taxes under
Accounting Principles Board Opinion No. 11, which did not give
recognition to future events other than the recovery of assets and
settlement of liabilities at their carrying amounts. The adoption of
SFAS No. 109 had no material effect on the Company's financial
position or results of operations. Prior years' financial statements
were not restated.
(e) Depreciation Policy and Maintenance and Repairs. Plant and
equipment is depreciated principally by the straight-line method over
the estimated useful lives of such assets. The principal lives used
to compute depreciation are: Buildings 16-45; furniture and equipment
1-10; transportation equipment 1-8; and leasehold improvements 2-20.
Maintenance and repairs are charged to expense as incurred.
The Company's policy is to capitalize expenditures for renewals and
betterments and to reduce the asset accounts and the related
allowance for depreciation for the cost and accumulated depreciation
of items replaced, retired or fully depreciated.
(f) Favorable Lease Interests. Favorable lease interests represent
the present value of the excess of current market rents at dates of
acquisition over the below market rents of leases acquired
(principally store locations). Such costs are amortized by the
interest method over the lives of the favorable leases averaging
approximately twenty years.
(g) Unamortized Debt Expenses. Unamortized debt expenses represent
underwriting discounts, professional fees and other costs related to
the subordinated debentures and long-term debt refinancings (see note
4) which are amortized over the life of the debt instruments.
(h) Original Issue Debt Discount. Original issue debt discount is the
difference between the principal amount of the subordinated
debentures and their issue price to the public. Such discount, which
is treated as a reduction of the principal amount of such debentures,
is amortized to provide a level interest cost over the term of the
debentures.
(i) Advertising Costs. Net advertising costs are expensed
whenincurred and were $24,050, $26,758 and $45,918 for the years
ended January 28, 1995, January 29, 1994 and January 30, 1993,
respectively.
(j) Reclassification. Certain amounts have been reclassified in the
1992 and 1993 financial statements to conform to the 1994 financial
statement presentation.
(k) Supplemental Cash Flow Information. The Company considers all
liquid investments with a maturity of three months or less when
purchased to be cash equivalents.
During 1992, the Company converted debentures, which were
held by certain members of management, totaling $8,092 to 1,304,289
shares of Common Stock.
During 1994, the Company issued $7,576 of Common Stock in
connection with the acquisition of certain drug stores.
Cash paid for interest was $86,821, $120,329 and $128,896 for
the years ended January 28, 1995, January 29, 1994 and January 30,
1993, respectively.
Cash paid for income taxes was $7,294, $1,273 and $1,816 for
the years ended January 28, 1995, January 29, 1994 and January 30,
1993, respectively.
(l) Earnings (Loss) Per Share. Primary earnings per share have been
computed based on the weighted average number of shares of common
stock outstanding during each fiscal year (32,431,719 in 1994,
29,392,805 in 1993 and 26,573,902 in 1992) restated for the August
12, 1993 Reclassification and Stock Split.
(3) Employees' Benefit Plans
(a) Profit Sharing Plan. The Company has in effect a noncontributory
profit sharing plan which covers all regular, full-time employees.
The Company makes annual contributions to the Plan at the discretion
of the Company's Board of Directors. All funds are held by a bank as
trustee under a trust agreement. Included in operating and
administrative expenses are charges accrued for contributions to the
Plan of $9,712, $8,765 and $7,433 for January 28, 1995, January 29,
1994 and January 30, 1993, respectively.
Plan assets at fair value, consisting of fixed income
securities, the Company's stock and listed stocks, amounted to
approximately $201,400 for the plan year ended December 31, 1994.
(b) Pension Plans. The Company has in effect a noncontributory
pension plan covering all full-time employees who qualify as to age
and length of service. Benefits are computed based on the average
annual compensation for the five consecutive years that produce the
highest average during the final ten years of creditable service. The
Company's policy is to fund the Plan in accordance with minimum
Internal Revenue Service requirements.
The Company accounts for pension costs in accordance with
Statement of Financial Accounting Standards No. 87, "Employers'
Accounting for Pensions."
The funded status of the Company's pension plan at January
28, 1995 and January 29, 1994 was:
As of January 28 and January 29, respectively
1995 1994
(Projected)
Accumulated benefit obligation
(including vested benefits of $32,504
and $24,210 at January 1, 1994
(most recent valuation date) and at
January 1, 1993, respectively) $(36,482) (36,829)
Effect of anticipated future compensation
levels and other events (7,110) (1,806)
Projected benefit obligation for service
rendered to date (43,592) (38,635)
Plan assets at fair value, consisting of
fixed income securities and listed stocks 34,567 34,809
Plan assets less than
projected benefit obligation (9,025) (3,826)
Unrecognized prior service cost (1,508) (1,281)
Unrecognized net loss 11,223 7,304
Unrecognized net transition asset at
January 1, 1987, which is
being amortized over 13 years (2,777) (3,454)
Accrued pension cost $ (2,087) (1,257)
Net periodic pension costs for the years ended January 28,
1995, January 29, 1994 and January 30, 1993 included the following
(income) expense components:
Years ended January 28, January 29, and January 30, respectively
1995 1994 1993
Service costs (benefits earned
during the period) $ 3,552 2,818 1,300
Interest cost on projected
benefit obligation 3,159 2,548 2,245
Return on assets (3,411) (3,271) (2,707)
Amortization of prior service cost (204) (161) (161)
Amortization of net transition asset (677) (677) (677)
Amortization of net loss 461 - -
Net periodic pension cost $ 2,880 1,257 -
Assumptions used in determining the accumulated and projected
benefit obligations were:
Weighted average discount rate 8.25% 7.5% 9%
Weighted average long-term
rate of return on assets 9% 9% 9%
Rate of compensation increases 5% 5% 5%
The Company has in effect an Executive Supplemental Benefit
Plan to provide additional income for its executives after their
retirement as well as pre-retirement death benefits to beneficiaries
of such executives. Annual benefits will generally be no greater than
25 percent of the participant's salary mid-point on the date the
participant retires or separates from service with the Company.
(4) Long-Term Debt
Long-term debt at January 28, 1995 and January 29, 1994 was:
As of January 28 and January 29, respectively
1995 1994
Term loans, due July 29, 2000 (a) $434,373 -
Tranche A term loans, due July 31, 1999 (a) - 429,948
Tranche B term loans, due June 15, 2000 (a) - 141,741
Revolving credit and bankers acceptances (a) 21,000 4,500
91/4% senior subordinated notes due
February 15, 2004, $200,000
face amount (b) 200,000 200,000
111/8% subordinated debentures due
May 1, 2001, $95,500 and $145,500
face amount, net of original issue
discount of $6,542 and $10,943 (b) (c) 88,958 134,557
Variable rate demand industrial development
revenue refunding bonds, due $8,250
March 1, 2009 and $10,000 May 1, 2013 (d) 18,250 18,250
Other (principally notes secured by fixtures
and equipment) 24,432 25,895
Total long-term debt 787,013 954,891
Less amounts due within one year 1,452 1,905
Amounts due after one year $785,561 952,986
The aggregate minimum annual maturities of long-term debt for
the next five fiscal years are: 1995 - $30,091; 1996 - $77,187; 1997
- - $76,903; 1998 - $81,684; and 1999 - $91,231. Although the Term Loan
commitment requires a repayment of $28,640 during fiscal year 1995,
the Company has excess availability under the revolving credit
commitment, and accordingly, has not treated the 1995 required
repayment as current.
a) On June 15, 1993, the Company entered into a Credit
Agreement which provided for (i) a $650,000 term loan facility
consisting of a six-year amortizing Tranche A term loan facility of
$500,000 (Tranche A Term Loans) and a seven-year amortizing Tranche
B term loan facility of $150,000 (Tranche B Term Loans); and (ii) a
$300,000 six-year revolving credit facility ($30,000 of which was
available as a swingline loan facility and $155,000 as a letter of
credit and bankers' acceptance facility) (Revolving Loans).
The Company used the proceeds of (i) Tranche A Term Loan
borrowings of $500,000, (ii) Tranche B Term Loan borrowings of
$150,000, and (iii) Revolving Loan borrowings of $70,000 to (a) repay
in full all amounts outstanding under the prior credit agreement
dated as of July 13, 1990, as amended, with Morgan Guaranty Trust
Company of New York and other lenders, which consisted of a revolving
credit facility and a term loan facility; (b) to prepay in full the
Hancock Senior Notes and the 113/4% Senior Notes, (c) to deposit with
a trustee an amount sufficient to satisfy and discharge in full all
indebtedness under the Floating Rate Notes; (d) to redeem
approximately $295,200 of the 13% Discount Subordinated Debentures
(the remaining $50,000 was subsequently redeemed with the proceeds
from the issuance of the 91/4% Senior Subordinated Notes (note 4(b));
(e) to redeem the 141/2% Preferred Stock in full; and (f) to pay fees
and expenses in connection with these transactions.
An extraordinary charge of $44,354 (net of tax benefit of
$929) was recognized during the year ended January 29, 1994 in
connection with the early repayment of debt and preferred stock from
the proceeds of the Credit Agreement, IPO and the Note issuance (note
4(b)).
On August 3, 1994, the Company entered into a significant
revision to the Credit Agreement. The new agreement provides for a
total loan facility of $850,000. The new loan facility did not
provide any additional proceeds to the Company, but it does provide
improved pricing and increased operating flexibility with respect to
acquisitions, capital expenditures and lease payments. The Revolving
Loan facility was extended a year and increased to $350,000 (with the
bank swingline loan facility and letter of credit and bankers'
acceptance facility) and a six-year amortizing term loan facility
(Term Loan) combined the Tranche A and Tranche B Term Loan facilities
and was reduced to $500,000.
An extraordinary charge of $30,523 (net of tax benefit of
$1,607) was recognized during the year ended January 28, 1995,
principally from the write-off of unamortized debt expenses related
to the significant revision of the Credit Agreement, as well as the
early repayment of debt from a portion of the net proceeds from the
sale of Insta-Care.
The Term Loans and the Revolving Loans bear interest at
various rates approximating, at the Company's option (i) Alternate
Base Rate (ABR) (as defined) plus 1/2% or (ii) adjusted LIBOR plus
11/2%. The spread above ABR may decrease by 1/4 of 1% in two separate
instances and the spread above LIBOR may decrease by 1/4 of 1% in
three separate instances if certain ratios of funded debt to
specified measures of earnings are achieved by the Company.
Interest on ABR borrowings is payable quarterly. Interest on
LIBOR borrowings is payable at the end of the relevant interest
period (one, two, three or six month periods, except that with
respect to six-month periods, interest shall be payable every three
months). The Company is required to pay a commitment fee of 1/2 of 1%
per annum on the undrawn amount of the revolving facilities and it
may decrease by 1/8 of 1% in two separate instances if certain ratios
of funded debt to specified measures of earnings are achieved by the
Company. The Company is also required to pay letter of credit fees
and bankers' acceptance fees.
The Company has entered into interest rate cap agreements
relating to the Credit Agreement. The cap agreements are for $200,000
and mature at various dates over the next three years. The cap
agreements have an approximate 6% interest rate. At January 28, 1995,
these agreements had a value to the Company of approximately $2,000
in excess of their carrying values.
Principal of the Term Loans by fiscal year will be amortized
on the following schedule: 1995 - $28,640; 1996 - $76,373; 1997 -
$76,373; 1998 - $81,147; 1999 - $90,693; and 2000 - $81,147.
Principal of the Term Loans will be amortized in quarterly
payments and mature in full on July 29, 2000. The Company has the
right to prepay any borrowings under the Credit Agreement in whole or
in part at any time.
The Company is required to prepay borrowings under the Credit
Agreement with (i) in any fiscal year, the excess of the aggregate
net proceeds of dispositions of assets of the Company and its
subsidiaries over $6,000; (ii) in any fiscal year, the net proceeds
of any incurrence of debt (other than indebtedness permitted under
the Credit Agreement); and (iii) 50% of all of the net proceeds of
any equity issuance after net proceeds have been applied to redeem or
repurchase the Company's 111/8% Subordinated Debentures. Prepayments
are to be applied pro rata between outstanding Term Loans, applied
pro rata among scheduled payments, and, after such loans are paid in
full, to the swingline loans and then the Revolving Loans.
The borrowings under the Credit Agreement are secured by a
pledge of all capital stock of the Company's subsidiaries, as well as
substantially all personal property, including inventory and accounts
receivable and certain real property (as defined), contain certain
restrictive covenants which provide limitations on the Company with
respect to incurring debt, the incurring of liens, making investments
in excess of $7,000, payment of dividends and purchase of shares of
stock of the Company, consolidations and mergers, sale of assets, and
transactions with affiliates. The Credit Agreement also requires the
Company to satisfy certain financial ratios. At January 28, 1995, the
Company was in compliance with these covenants.
(b) On November 2, 1993, the Company issued $200,000
aggregate principal amount of 91/4% Senior Subordinated Notes (Notes)
due February 15, 2004. The Notes are unsecured and subordinated to
all existing and future senior debt (as defined) of the Company and
are redeemable at the option of the Company, in whole or in part, at
any time after February 15, 1999 at various redemption prices (as
defined) plus accrued interest to the date of redemption. Interest is
payable semi-annually on February 15 and August 15 of each year.
The Company used the net proceeds from the issuance of the
Notes to redeem the remaining $50,000 of the 13% Discount
Subordinated Debentures and $145,000 of the 111/8% Subordinated
Debentures (note 4(c)).
(c) The 111/8% Subordinated Debentures are subordinated to
all existing and future senior debt (as defined) of the Company, and
are redeemable at the option of the Company, in whole or in part, at
anytime at 100% of their principal amount plus accrued interest to
the date of redemption. During 1993, $145,000 face amount of these
subordinated debentures were redeemed by the Company (note 4(b)).
During 1994, $50,000 face amount of these subordinated debentures
were redeemed by the Company from a portion of the net proceeds from
the sale of Insta-Care.
(d) The variable rate demand industrial development revenue
refunding bonds currently have an interest rate which is a daily rate
established by First National Bank of Chicago and is indicative of
current bid-side yields of high grade tax-exempt securities. At the
Company's option, and under certain conditions, the interest rate may
be changed to a monthly rate or a fixed rate. The bonds are secured
by the related buildings, leases and letters of credit.
(5) Income Taxes
Income tax expense before extraordinary items was:
Years ended January 28, January 29, and January 30, respectively
1995 1994 1993
Current:
Federal $5,278 2,232 2,252
State 3,475 324 612
Total $8,753 2,556 2,864
For fiscal years 1994, 1993 and 1992, the income tax expense
differs from amounts computed by applying the Federal statutory rates
of 35% for the years ended January 28, 1995, and January 29, 1994 and
34% for the year ended January 30, 1993 to earnings (loss) before
income taxes and extraordinary items. The actual tax differs from the
expected tax (benefit) as follows:
Years ended January 28, January 29, and January 30, respectively
1995 1994 1993
Expected tax (benefit) $30,479 15,389 (687)
State taxes, net of
Federal benefit 2,259 211 404
Changes in valuation allowance
through the use of loss
carryforwards (29,263) (15,276) -
Other 5,278 2,232 3,147
$ 8,753 2,556 2,864
"Other" consists principally of alternative minimum tax for
which no future benefit has been provided.
In addition to alternative minimum tax credit carryforwards,
the Company has Federal income tax loss carryforwards of
approximately $218,000, which are available to offset future taxable
income, if any, through 2008.
The Company's Federal income tax returns have been examined
through April 30, 1986 and any assessments have been paid or accrued.
The Federal income tax returns for the fiscal periods ended January
31, 1987 and January 30, 1988 are currently being examined. The
Company believes that an adequate provision for income taxes has been
made for all open years.
Temporary differences and carryforwards which give rise to
deferred tax assets and liabilities are as follows:
As of January 28 and January 29, respectively
1995 1994
Deferred tax assets:
Reserves and other liabilities $23,880 16,104
Amortization 7,804 7,009
Other 7,613 1,309
Loss carryforwards 82,745 125,377
Credit carryforwards 8,364 5,246
Gross deferred tax assets 130,406 155,045
Less valuation allowance (94,176) (108,958)
Net deferred tax assets $36,230 46,087
Deferred tax liabilities:
Inventory $23,481 22,091
Fixed assets 12,749 23,996
Gross deferred tax liabilities $36,230 46,087
Upon adoption of SFAS No. 109, effective January 31, 1993,
the Company determined a valuation allowance requirement in the
amount of approximately $108,400.
(6) Stockholders' Equity
(a) Common Stock. The Company's authorized common stock consists of
100,000,000 shares of Common Stock, par value $.01 per share (of
which 3,518,728 shares are Nonvoting Common Stock (Series I), par
value $.01 per share).
(b) Preferred Stock. The Company's authorized preferred stock
consists of 20,000,000 shares. The preferred stock is issuable in
series with terms as fixed by the Board of Directors. No preferred
stock has been issued.
(c) Stock Options. The Company has reserved 1,666,667 shares of its
Common Stock for the granting of stock options and other incentive
awards to officers, directors and key employees under the 1993 Stock
Option and Incentive Plan of Eckerd Corporation. Options are granted
at prices which are not less than the fair market value of a share of
common stock on
the date of grant. Commencing three years after the date of grant,
all options are exercisable to the extent of 50%, with an additional
25% exercisable after each of the next two successive years.
Unexercised options expire ten years after the date of grant. Options
granted under prior plans were surrendered and granted under the
terms of the 1993 plan. Shares under option and option prices have
been adjusted to reflect the Reclassification and the Stock Split
(note 1(b)).
As of January 28, 1995, January 29, 1994 and January 30,
1993, 229,177, 222,668 and 363,451 shares of Common Stock were
availale for grant. At January 28, 1995, options for 349,860 shares
of Common Stock were exercisable at $.56 - $14.00 per share. At
January 29, 1994, options for 450,393 shares of Common Stock were
exercisable at $.56 - $14.00 per share. At January 30, 1993, options
for 490,777 shares of Common Stock were exercisable at $.56 - $30.00
per share.
A summary of changes during the years ended January 28, 1995,
January 29, 1994 and January 30, 1993 is set forth below:
Shares under Option
option prices
Outstanding February 1, 1992 672,467 $ .56- $37.50
Granted 44,392 $27.00- $31.47
Exercised (24,100) $ 5.64- $26.75
Cancelled (5,799) $ 5.16- $36.00
Outstanding January 30, 1993 686,960 $ .56- $37.50
Granted 855,915 $10.00- $14.00
Exercised (74,395) $ 5.64- $ 9.23
Cancelled (61,476) $ 5.64- $36.00
Outstanding January 29, 1994 1,407,004 $ .56- $14.00
Granted 85,500 $14.00- $29.25
Exercised (124,499) $ .56- $14.00
Cancelled (92,009) $ .56- $24.63
Outstanding January 28, 1995 1,275,996 $ .56- $29.25
Options previously granted at prices greater than $14.00 per
share were modified to $14.00 per share at the date of the IPO.
(7) Commitments
The Company conducts the major portion of its retail
operations from leased store premises under leases that will expire
within the next 25 years. Such leases generally contain renewal
options exercisable at the option of the Company. In addition to
minimum rental payments, certain leases provide for payment of taxes,
maintenance, and percentage rentals based upon sales in excess of
stipulated amounts.
The rental expense for the years ended January 28, 1995,
January 29, 1994 and January 30, 1993 was:
Years ended January 28, January 29, and January 30, respectively
1995 1994 1993
Minimum rentals $111,845 111,072 104,536
Percentage rentals 20,971 18,369 16,938
$132,816 129,441 121,474
At January 28, 1995, minimum rental commitments for the next
five fiscal years and thereafter under noncancelable leases were as
follows: 1995 - $100,802; 1996 - $96,644; 1997 - $90,968; 1998 -
$78,618; 1999 - $71,277; and thereafter - $444,054. These amounts
include approximately 90 under-performing drug stores to be closed
(note 9).
In 1987, the Company entered into an operating lease
agreement for 72 stores with a third-party lessor established by an
affiliate of Merrill Lynch & Co. (which, through affiliated entities,
controls approximately 39% of the Company's common stock). The lease
agreement has certain restrictive covenants, which, upon violation by
the Company, gives the lessor the right to require the lessee to
purchase the leased stores at the remaining balance of the lease
contract. At January 28, 1995, the balance subject to the repurchase
terms is $36,910. At January 28, 1995, the Company was in compliance
with these covenants.
During 1994 and 1993, the Company sold certain photo
processing equipment to an unrelated third party for approximately
$11,900 and $35,000, respectively, and entered into five-year leases
with respect to such equipment. No gain or loss was recorded in
connection with these transactions. Annual lease payments of $9,785
are required over the term of the leases.
During 1993, the Company and Integrated Systems
Solutions Corporation (ISSC) entered into a Systems Operations
Service Agreement (Service Agreement) pursuant to which ISSC will
manage the Company's entire information systems operation, including
the implementation of a new point-of-sale system with scanning
capabilities. The Service Agreement has a ten year term and the total
payments to be made by the Company are expected to be between
$400,000 and $440,000 over such term, depending on the optional
services utilized. A portion of these payments is being accounted for
as capital expenditures. As of January 28, 1995, the Company has
acquired $52,428 of equipment, of which $30,081 has been acquired
under a deferred payment arrangement.
(8) Transactions With Related Parties
In April 1989, the Company entered into a "Master Lease"
agreement with a third-party lessor established by an affiliate of
Merrill Lynch & Co. (which, through affiliated entities, controls
approximately 39% of the Company's common stock) whereby such lessor
would finance the acquisition of store sites and the construction of
buildings and acquisition of equipment. As of January 28, 1995, there
were 12 stores leased under the agreement with an aggregate cost of
approximately $18,400. The Company pays the Merrill Lynch affiliate
a structure fee of 1% of the cost of land, buildings and equipment
financed under the Master Lease plus an administration fee. The
Company paid the Merrill Lynch affiliate fees aggregating $43, $44
and $45 for the years ended January 28, 1995, January 29, 1994 and
January 30, 1993, respectively.
In July 1989, the Company entered into a Placement Agency
Agreement with an affiliate of Merrill Lynch & Co. whereby such
affiliate would act as exclusive placement agent for the private
placement of up to a maximum of $200,000 at any one time, of
unsecured notes. The Company did not issue any of these unsecured
notes during the years ended January 28, 1995 and January 29, 1994.
There were no notes outstanding under this facility at January 28,
1995 and January 29, 1994.
During 1993, Merrill Lynch & Co., as one of the
representatives of the underwriters in the IPO, received underwriting
commissions and related fees of $1,847. In addition, as sole
underwriter in the issuance of the Notes, Merrill Lynch & Co.
received approximately $4,000 in underwriting discounts from the
Company.
During 1994, Merrill Lynch & Co. acted as financial advisors
to the Company in connection with the sale of Insta-Care and received
a fee of $1,417 for its services.
(9) Store Closing Charges
In prior years, the Company's accounting policy was to record
the loss related to store closings upon the closing of the store. In
the current year, the Company changed its accounting policy for
closed stores to record the loss at the time the decision is made to
close the store, in accordance with Emerging Issues Task Force Issue
No. 94-3.
In the fourth quarter of 1994, the Company established a
$48,988 provision for future drug store closings. In addition to the
small number of stores the Company will close in the normal course of
business, the Company plans to accelerate the closing of
approximately 90 geographically dispersed under-performing stores
over the next 12 to 18 months. The total charge of $48,988 is
included in operating and administrative expenses on the consolidated
statement of operations. Of the total charge, approximately $31,000
relates to lease settlements and obligations and other expenses to be
incurred subsequent to the store closings. The remaining charge of
approximately $18,000 is for the write-off of impaired assets which
includes inventory liquidation and the write-off of intangible and
fixed assets. The effect of this accounting change on prior periods
is immaterial.
Independent Auditors' Report
The Board of Directors
Eckerd Corporation and Subsidiaries:
We have audited the accompanying consolidated balance sheets
of Eckerd Corporation and subsidiaries as of January 28, 1995 and
January 29, 1994, and the related consolidated statements of
operations, stockholders' equity, and cash flows for each of the
years in the three-year period ended January 28, 1995. These
consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects, the
financial position of Eckerd Corporation and subsidiaries at January
28, 1995 and January 29, 1994, and the results of their operations
and their cash flows for each of the years in the three-year period
ended January 28, 1995, in conformity with generally accepted
accounting principles.
As described in note 9, the Company changed its accounting
policy in the current year related to the timing of the recognition
of closed store obligations.
KPMG Peat Marwick LLP
Tampa, Florida
March 20, 1995
<TABLE>
Quarterly Information (Unaudited)
(Dollars in thousands, except per share amounts)
Fiscal 1994 Quarters Ended
04/30/94 07/30/94 10/29/94 01/28/95
Financial Information
<S> <C>
<C> <C> <C>
Sales and other operating revenue
$1,126,806 1,057,924 1,061,704 1,302,597
Cost of sales, including store occupancy,
warehousing and delivery expense
856,694 811,315 822,181 953,951
Operating and administrative expenses
217,846 215,767 215,476 274,982
Interest expense
23,901 24,491 23,410 21,933
Earnings before income taxes
and extraordinary item
28,365 6,351 637 51,731
Income taxes
1,420 330 32 6,971
Earnings before extraordinary item
26,945 6,021 605 44,760
Extraordinary item-early retirement
of debt, net of tax benefit
- - (26,620) (3,903)
Net earnings (loss) available to common shares $
26,945 6,021 (26,015) 40,857
Earnings before extraordinary
item per common share $
.84 .19 .02 1.36
Net earnings (loss) per common share $
.84 .19 (.80) 1.24
Weighted average common shares outstanding
32,224 32,246 32,422 32,835
Market Price Per Share Information
High $
24 251/4 311/2 32
Low
181/2 181/8 231/4 253/8
(Dollars in thousands, except per share amounts)
Fiscal 1993 Quarters Ended
05/01/93 07/31/93 10/30/93 01/29/94
Financial Information
Sales and other operating revenue
$1,055,152 981,195 972,675 1,181,517
Cost of sales, including store occupancy,
warehousing and delivery expense
793,329 742,672 744,906 894,468
Operating and administrative expenses
210,420 209,526 212,200 225,834
Interest expense
32,660 30,870 25,161 24,524
Earnings (loss) before income taxes
and extraordinary item
18,743 (1,873) (9,592) 36,691
Income taxes
923 1,332 (455) 756
Earnings (loss) before extraordinary item
17,820 (3,205) (9,137) 35,935
Extraordinary item-early retirement
of debt and preferred stock, net of tax benefit
- (27,663) (2,421) (14,270)
Net earnings (loss)
17,820 (30,868) (11,558) 21,665
Preferred stock dividends
2,708 2,216 - -
Net earnings (loss) available to common shares $
15,112 (33,084) (11,558) 21,665
Earnings (loss) before extraordinary
item per common share $
.56 (.20) (.29) 1.12
Net earnings (loss) per common share $
.56 (1.25) (.37) .68
Weighted average common shares outstanding
26,917 26,505 31,606 32,073
Market Price Per Share Information
High $
- - 18 203/4
Low
- - 123/4 133/4
</TABLE>
The Company's stock is listed on the New York Stock Exchange
(Symbol: ECK) and started trading August 6, 1993. The approximate
number of shareholders of record on March 31, 1995 was 937.
The Company is subject to restrictive covenants under its bank
credit agreement and its 91/4% senior subordinated notes which
restrict the payment of dividends. The Company has not paid or
declared any dividend distributions on its common stock.
Earnings (loss) per common share are computed independently for
each of the quarters. Therefore, the sum of the quarterly earnings
per share may not equal the annual earnings (loss) per common share.
All quarters reflect the reclassification of previously issued
Class A and Class B common stock into Common Stock, a 2-for-3 reverse
stock split and the exchange of EDS Holdings Inc. common stock and
merger into the Company.
The third quarter of fiscal 1994 was restated to recognize an
extraordinary item of $26,620 (net of a tax benefit of $1,402) for
the write-off of unamortized debt expenses related to the significant
revision of the Company's bank credit agreement.
Exhibit 21.1
ECKERD CORPORATION
Subsidiaries of the Company
At January 28, 1995, Eckerd Corporation, incorporated in the
State of Delaware, had eight wholly-owned subsidiaries, which are
included in the consolidated financial statements of the Company.
The names of the eight subsidiaries have been omitted because these
unnamed subsidiaries, considered in the aggregate as a single
subsidiary, do not constitute a significant subsidiary.
Exhibit 23.1
The Board of Directors
Eckerd Corporation and Subsidiaries
Re: Registration Statement on Form S-3 (No. 33-50223)
Registration Statement on Form S-8 (No. 33-49977)
Registration Statement on Form S-3 (No. 33-10721)
Registration Statement on Form S-8 (No. 33-50755)
Registration Statement on Form S-3 (No. 33-56261)
We consent to the incorporation by reference in the above referenced
registration statements of Eckerd Corporation and subsidiaries of
our report dated March 20, 1995, relating to the consolidated
balance sheets of Eckerd Corporation and subsidiaries as of January
28, 1995 and January 29, 1994, and the related consolidated
statements of operations, stockholders' equity, and cash flows, and
related schedules for each of the years in the three-year period
ended January 28, 1995, which report appears in the January 28,
1995 Annual Report on Form 10-K405 of Eckerd Corporation and
subsidiaries.
KPMG Peat Marwick LLP
Tampa, Florida
April 27, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000031364
<NAME> ECKERD CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-28-1995
<PERIOD-END> JAN-28-1995
<CASH> 8,898
<SECURITIES> 0
<RECEIVABLES> 55,487
<ALLOWANCES> 3,000
<INVENTORY> 771,122
<CURRENT-ASSETS> 834,873
<PP&E> 542,191
<DEPRECIATION> 249,214
<TOTAL-ASSETS> 1,342,347
<CURRENT-LIABILITIES> 554,584
<BONDS> 785,561
<COMMON> 321
0
0
<OTHER-SE> (123,063)
<TOTAL-LIABILITY-AND-EQUITY> 1,342,347
<SALES> 4,549,031
<TOTAL-REVENUES> 4,549,031
<CGS> 3,444,141
<TOTAL-COSTS> 3,444,141
<OTHER-EXPENSES> 916,923
<LOSS-PROVISION> 7,148
<INTEREST-EXPENSE> 93,735
<INCOME-PRETAX> 87,084
<INCOME-TAX> 8,753
<INCOME-CONTINUING> 78,331
<DISCONTINUED> 0
<EXTRAORDINARY> (30,523)
<CHANGES> 0
<NET-INCOME> 47,808
<EPS-PRIMARY> 1.47
<EPS-DILUTED> 1.47
</TABLE>
