<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) November 6, 1995
--------------------
KMART CORPORATION
(Exact Name of Registrant as Specified in its Charter)
MICHIGAN
(State or Other Jurisdiction of Incorporation)
1-327 38-0729500
(Commission File Number) (I.R.S. Employer Identification No.)
3100 WEST BIG BEAVER ROAD, TROY, MICHIGAN 48084
(Address of Principal Executive Offices)(Zip Code)
(810) 643-1000
(Registrant's Telephone Number, Including Area Code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
<PAGE> 2
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) The following exhibits are filed herewith:
99.1 Three Year Credit Agreement dated as of October 7, 1994
among Kmart Corporation, Bank of America National Trust
and Savings Association, as Documentation Agent, and the
other financial institutions party hereto
($1,465,000,000)
99.2 Warehouse Facility Credit Agreement dated as of October
7, 1994 among Kmart Corporation, Bankers Trust as
Documentation Agent, and the other financial institutions
party hereto ($500,000,000)
99.3 Guaranty Agreement dated as of October 7,
1994 made by Kmart Corporation in favor of the
lenders referred to herein
99.4 364 Day Credit Agreement dated as of October 5, 1995
among Kmart Corporation, Bank of America National Trust
and Savings Association, as Documentation Agent, and the
other financial institutions party hereto ($700,000,000)
99.5 Seasonal Credit Agreement dated as of October 5, 1995
among Kmart Corporation, Bank of America National Trust
and Savings Association, as Documentation Agent, and the
other financial institutions party hereto ($300,000,000)
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
KMART CORPORATION
(Registrant)
By: /s/ Marvin P. Rich
--------------------------------
Marvin P. Rich
Executive Vice President,
Strategic Planning, Finance and
Administration
Date: November 6, 1995
<PAGE> 4
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
99.1 Three Year Credit Agreement dated as of October 7, 1994 among Kmart
Corporation, Bank of America National Trust and Savings
Association, as Documentation Agent, and the other financial
institutions party hereto ($1,465,000,000)
99.2 Warehouse Facility Credit Agreement dated as of October 7, 1994 among
Kmart Corporation, Bankers Trust as Documentation Agent, and
the other financial institutions party hereto ($500,000,000)
99.3 Guaranty Agreement dated as of October 7, 1994 made by Kmart
Corporation in favor of the lenders referred to herein
99.4 364 Day Credit Agreement dated as of October 5, 1995 among Kmart
Corporation, Bank of America National Trust and Savings
Association, as Documentation Agent, and the other financial
institutions party hereto ($700,000,000)
99.5 Seasonal Credit Agreement dated as of October 5, 1995 among Kmart
Corporation, Bank of America National Trust and Savings
Association, as Documentation Agent, and the other financial
institutions party hereto ($300,000,000)
</TABLE>
<PAGE> 1
EXHIBIT 99.1
EXECUTION COPY
================================================================================
THREE YEAR CREDIT AGREEMENT
DATED AS OF OCTOBER 7, 1994
AMONG
KMART CORPORATION,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
AS DOCUMENTATION AGENT,
AND
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
================================================================================
$1,465,000,000
<PAGE> 2
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1.01 Defined Terms................................................... 1
1.02 Other Definitional Provisions................................... 15
(a) Defined Terms.............................................. 15
(b) The Agreement.............................................. 15
(c) Certain Common Terms....................................... 15
(d) Performance; Time.......................................... 16
(e) Contracts.................................................. 16
(f) Laws....................................................... 16
(g) Captions................................................... 16
1.03 Accounting Principles........................................... 16
ARTICLE II
THE CREDITS
2.01 Amounts and Terms of Commitments................................ 16
2.02 Loan Accounts; Notes............................................ 17
2.03 Procedure for Committed Borrowings.............................. 18
2.04 Conversion and Continuation Elections for
Committed Borrowings............................................ 19
2.05 Competitive Bid Borrowings...................................... 21
2.06 Procedure for Competitive Bid Borrowings........................ 21
2.07 Voluntary Termination or Reduction of Commitments............... 26
2.08 Optional Prepayments of Committed Loans......................... 26
2.09 Repayment....................................................... 27
(a) The Committed Loans........................................ 27
(b) The Competitive Bid Loans.................................. 27
2.10 Interest........................................................ 27
2.11 Fees............................................................ 28
(a) Facility Fee............................................... 28
(b) Syndication Fees........................................... 29
(c) Administration Fees........................................ 29
2.12 Computation of Fees and Interest................................ 29
2.13 Payments by the Company......................................... 30
2.14 Payments by the Banks to the Documentation Agent................ 31
2.15 Sharing of Payments, Etc........................................ 32
2.16 Amount and Terms of Letters of Credit........................... 33
(a) Letter of Credit Commitments; Terms of
Letters of Credit.......................................... 33
(b) Procedure for Issuance of Letters of Credit................ 34
(c) Draws upon Letters of Credit; Reimbursement
Obligations................................................ 34
(d) Banks; Participation in Letters of Credit.................. 35
</TABLE>
i
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<TABLE>
<S> <C> <C>
(e) Interest and Fees for Letters of Credit................... 36
(f) LC Obligations Unconditional.............................. 37
(g) Indemnification........................................... 38
(h) Stated Amount............................................. 39
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 Taxes.......................................................... 39
3.02 Inability to Determine Rates................................... 42
3.03 Increased Costs; Capital Adequacy.............................. 43
3.04 Illegality..................................................... 44
3.05 Funding Losses................................................. 45
3.06 Survival....................................................... 45
ARTICLE IV
CONDITIONS PRECEDENT
4.01 Conditions to Occurrence of the Closing Date and
Effectiveness of this Agreement................................ 45
(a) Credit Agreement.......................................... 46
(b) By-laws; Resolutions; Incumbency.......................... 46
(c) Articles of Incorporation................................. 46
(d) Legal Opinions............................................ 46
(e) Payment of Transaction Fees and Expenses.................. 46
(f) Certificate............................................... 47
(g) Financial Statements...................................... 47
(h) Other Credit Facilities................................... 47
(i) Other Documents........................................... 47
4.02 Conditions to All Borrowings and Letter of Credit
Issuances...................................................... 47
(a) Notice of Borrowing or Issuance........................... 47
(b) Continuation of Representations and
Warranties................................................ 48
(c) No Existing Default....................................... 48
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 Organization and Good Standing................................. 48
5.02 Authorization; No Contravention................................ 48
5.03 Consents and Approvals......................................... 48
5.04 Binding Effect................................................. 49
5.05 Litigation..................................................... 49
5.06 Financial Statements........................................... 49
5.07 Use of Proceeds; Margin Regulations............................ 49
</TABLE>
ii
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<TABLE>
<S> <C> <C>
5.08 No Default..................................................... 50
5.09 Taxes.......................................................... 50
5.10 Insurance...................................................... 50
5.11 Compliance With Laws........................................... 50
ARTICLE VI
AFFIRMATIVE COVENANTS
6.01 Payment of Taxes............................................... 50
6.02 Insurance...................................................... 50
6.03 Preservation of Corporate Existence, Etc....................... 50
6.04 Maintenance of Property........................................ 51
6.05 Compliance with Laws........................................... 51
6.06 Books and Records; Other Information........................... 51
6.07 Financial Information.......................................... 51
6.08 Notices........................................................ 52
ARTICLE VII
NEGATIVE COVENANTS
7.01 Consolidations and Mergers..................................... 53
7.02 Disposition of Assets.......................................... 53
7.03 Limitation on Liens............................................ 54
7.04 EBITDAR Coverage Ratio......................................... 55
7.05 Consolidated Net Worth......................................... 55
ARTICLE VIII
EVENTS OF DEFAULT
8.01 Event of Default............................................... 55
(a) Non-Payment of Principal.................................. 55
(b) Non-Payment of Interest or Fees........................... 55
(c) Specific Defaults......................................... 55
(d) Other Defaults............................................ 55
(e) Representation or Warranty................................ 56
(f) Cross-Acceleration........................................ 56
(g) ERISA..................................................... 56
(h) Monetary Judgments........................................ 56
(i) Insolvency; Voluntary Proceedings......................... 56
(j) Involuntary Proceedings................................... 57
8.02 Remedies....................................................... 57
8.03 Rights Not Exclusive........................................... 58
</TABLE>
iii
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ARTICLE IX
THE DOCUMENTATION AGENT
<TABLE>
<S> <C> <C>
9.01 Appointment and Authorization................................. 58
9.02 Delegation of Duties.......................................... 59
9.03 Liability of Agent-Related Persons............................ 59
9.04 Reliance by Documentation Agent............................... 59
9.05 Notice of Default............................................. 60
9.06 Credit Decision............................................... 60
9.07 Indemnification............................................... 61
9.08 Documentation Agent in Individual Capacity.................... 62
9.09 Successor Documentation Agent................................. 62
9.10 Withholding Tax............................................... 63
ARTICLE X
MISCELLANEOUS
10.01 Amendments and Waivers........................................ 64
10.02 Notices....................................................... 65
10.03 No Waiver..................................................... 66
10.04 Costs and Expenses............................................ 66
10.05 Indemnity..................................................... 67
10.06 Marshalling; Payments Set Aside............................... 67
10.07 Successors and Assigns........................................ 67
10.08 Assignments, Participations, Etc.............................. 68
10.09 Set-off....................................................... 70
10.10 Notification of Addresses, Lending Offices, Etc............... 71
10.11 Counterparts.................................................. 71
10.12 Severability.................................................. 71
10.13 No Third Parties Benefited.................................... 71
10.14 Governing Law and Jurisdiction................................ 71
10.15 Waiver of Jury Trial.......................................... 72
10.16 Entire Agreement.............................................. 72
10.17 Termination of Existing Facilities............................ 73
</TABLE>
iv
<PAGE> 6
SCHEDULES
Schedule 1.01 Existing Facilities
Schedule 2.01 Commitments; Lending Offices
Schedule 5.03 Consents and Approvals
Schedule 7.03 Liens
EXHIBITS
Exhibit A Form of Notice of Borrowing
Exhibit B Form of Notice of Conversion/Continuation
Exhibit C Form of Committed Loan Note
Exhibit D Form of Competitive Bid Note
Exhibit E Form of Competitive Bid Request
Exhibit F Form of Invitation for Competitive Bids
Exhibit G Form of Competitive Bid
Exhibit H-1 Form of Opinion of Counsel to the Company
Exhibit H-2 Form of Opinion of Special Counsel to the
Company
Exhibit I Form of Assignment and Assumption Agreement
Exhibit J Form of Letter of Credit Request
v
<PAGE> 7
THREE YEAR CREDIT AGREEMENT
This THREE YEAR CREDIT AGREEMENT is entered into as of October 7, 1994,
among KMART CORPORATION, a Michigan corporation (the "Company"), the several
financial institutions party to this Agreement (collectively, the "Banks";
individually, a "Bank") and BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as Documentation Agent.
WHEREAS, the Banks have agreed to make available to the Company a
revolving credit facility upon the terms and conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.01 Defined Terms. In addition to the terms defined elsewhere in this
Agreement, the following terms have the following meanings:
"Absolute Rate" has the meaning specified in Section 2.06(c)(ii)(D).
"Absolute Rate Auction" means a solicitation of Competitive Bids
setting forth Absolute Rates pursuant to Section 2.06.
"Absolute Rate Bid Loan" means any Competitive Bid Loan that bears
interest at a rate determined with reference to an Absolute Rate.
"Affiliate" means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, by contract or otherwise. In no
event shall any Bank be deemed an "Affiliate" of the Company or any Subsidiary
of the Company.
"Agent-Related Persons" means BofA and any successor agent under
Section 9.09, together with their respective Affiliates (including, in the case
of BofA, BA Securities, Inc.) and the officers, directors, employees, agents
and attorneys-in-fact of such Persons and Affiliates.
"Aggregate Commitment" means the sum of the Commitments of the Banks,
in the initial amount of One Billion Four Hundred Sixty Five
<PAGE> 8
Million Dollars ($1,465,000,000), as such amount may be reduced from time to
time pursuant to this Agreement.
"Agreement" means this Credit Agreement, as amended, restated,
supplemented or modified from time to time.
"Arrangers" means Bankers Trust Company and BA Securities, Inc.
"Assignee" has the meaning specified in Section 10.08(a).
"Assignment and Acceptance" has the meaning specified in Section
10.08(a).
"Attorney Costs" means and includes all reasonable fees and
disbursements of any law firm or other external counsel, the reasonable
allocated cost of internal legal services and all reasonable disbursements of
internal counsel.
"Bank" and "Banks" means any or all, as the case may be, of the banks
listed in Schedule 2.01 hereof and any entity which becomes a Bank pursuant to
Section 10.08.
"Bank Affiliate" means a Person engaged primarily in the business of
commercial banking that is an Affiliate of a Bank and (i) is organized under
the laws of the United States, or any state thereof, or (ii) is organized under
the laws of any other country which is a member of the Organization for
Economic Cooperation and Development, or a political subdivision of any such
country, and is acting through a branch or agency located in the United States.
"BofA" means Bank of America National Trust and Savings Association, a
national banking association.
"Borrowing" means a borrowing hereunder, consisting of Loans of the
same Type made to the Company on the same day by the Banks pursuant to Article
II, and may be a Competitive Bid Borrowing or a Committed Borrowing.
"Borrowing Date" means a date on which a Borrowing is made or a Letter
of Credit is issued hereunder.
"Business Day" means any day other than a Saturday, Sunday or other day
on which commercial banks in New York City or San Francisco are authorized or
required by law to close and, if the applicable Business Day relates to any
LIBOR Loan, means such a day on which dealings in Dollars are carried on in the
London interbank market.
"Capital Adequacy Regulation" means any guideline, request or directive
of any central bank or other Governmental Authority, or
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<PAGE> 9
and other law, rule or regulation, whether or not having the force of law, in
each case, regarding capital adequacy of any Bank.
"CD Rate" means the arithmetic average (rounded upward to the nearest
1/100th of 1%) of the sum of (x) the consensus bid rates determined by each
Reference Bank as the bid rates per annum, at 10:00 a.m. (New York City time)
on the first day of the Interest Period to be applicable, of two or more New
York or Chicago, as the case may be, certificate of deposit dealers of
recognized standing selected by such Reference Bank in New York or Chicago, as
the case may be, for certificates of deposit of such Reference Bank in an
amount approximately comparable to the principal amount of the CD Rate
Committed Loan for such Reference Bank and with a maturity equal to the
Interest Period applicable to such CD Rate Committed Loan; provided, that if
any Reference Bank fails to provide the Documentation Agent with its aforesaid
rate, then the CD Rate shall equal the arithmetic average of the rates provided
to the Documentation Agent by the other Reference Bank or Banks, such average
rate to be grossed up for the maximum cost of reserves applicable to
certificates of deposit under Regulation D of the Federal Reserve Board by
dividing the same by a percentage equal to 100% minus the maximum rate of all
reserve requirements (expressed as a percentage) as specified in Regulation D
(including any marginal, emergency, supplemental, special or other reserves)
that for the date the CD Rate is being determined would be applicable during
the Interest Period to a negotiable certificate of deposit of such Reference
Bank in excess of $100,000 and with a maturity period equal to such Interest
period, plus (y) the then daily net annual assessment payable to the Federal
Deposit Insurance Corporation for insuring such Certificate of Deposit by a
member of the Bank Insurance Fund that is classified as adequately capitalized
and within supervisory sub-group "A" (or a comparable successor assessment risk
classification within the meaning of 12 C.F.R. Section 327.3(d)).
"CD Rate Committed Loan" means any Committed Loan that bears interest
at a rate determined with reference to the CD Rate.
"Closing Date" means the date on which all conditions precedent set
forth in Section 4.01 are satisfied or waived by all Banks.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any regulations promulgated thereunder.
"Commitment" has the meaning specified in Section 2.01 with respect to
each Bank.
"Commitment Percentage" means, as to any Bank, the percentage
equivalent of such Bank's Commitment divided by the Aggregate Commitment.
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"Committed Borrowing" means a borrowing consisting of Committed Loans
made on the same day by the Banks ratably according to their respective
Commitment Percentages and, in the case of LIBOR Committed Loans or CD
Committed Loans, having the same Interest Period.
"Committed Loan" means a Loan under Section 2.01, and may be a LIBOR
Committed Loan, a CD Rate Committed Loan or a Reference Rate Committed Loan.
"Committed Loan Notes" means those promissory notes of the Company to
the order of each of the Banks, substantially in the form of Exhibit C.
"Competitive Bid" means an offer by a Bank to make a Competitive Bid
Loan pursuant to Section 2.06(c).
"Competitive Bid Borrowing" means a Borrowing hereunder consisting of
one or more Competitive Bid Loans made to the Company on the same day by one or
more Banks.
"Competitive Bid Commitment Sublimit" means an aggregate amount equal
to Five Hundred Million Dollars ($500,000,000).
"Competitive Bid Loan" means a Loan by a Bank to the Company under
Section 2.06, which may be a LIBOR Bid Loan or an Absolute Rate Bid Loan.
"Competitive Bid Loan Lender" means in respect of any Competitive Bid
Loan, the Bank making such Competitive Bid Loan.
"Competitive Bid Notes" means those master promissory notes of the
Company to the order of each of the Banks, substantially in the form of Exhibit
D.
"Competitive Bid Request" means a notice by the Company requesting the
Banks to make Competitive Bids, given in the form of Exhibit E.
"Consolidated Net Worth" means as of the date of any determination
thereof, the consolidated net worth of the Company, determined in accordance
with GAAP; provided, however, that any gains or losses from the disposition of
any Specialty Retail Subsidiary and any changes after the Closing Date in the
foreign currency translation adjustment account as presented in the Company's
financial statements (and in accordance with GAAP) shall be excluded from the
determination of Consolidated Net Worth.
"Continuation Date" has the meaning set forth in Section 2.04(a).
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"Contract Documents" has the meaning specified in Section 10.05.
"Controlled Group" means the Company and all Persons (whether or not
incorporated) under common control or treated as a single employer with the
Company pursuant to Sections 414(b), (c), (m) or (o) of the Code.
"Conversion Date" means any date on which the Company elects to convert
one Type of Committed Loan to another Type of Committed Loan.
"Debt Rating" means the rating assigned to the Company's senior
unsecured debt as publicly announced by Moody's or S&P, as the case may be.
"Dollars", "dollars" and "$" each mean lawful money of the United
States.
"Documentation Agent" means BofA in its capacity as documentation agent
for the Banks hereunder, and any successor agent in such capacity.
"EBITDAR" means, for any applicable period, for the Company the
aggregate of the following, without duplication: (a) consolidated net income
for such period, plus (b) consolidated interest expense (net of any interest
income) for such period, plus (c) consolidated provision for taxes for such
period, plus (d) consolidated depreciation expense for such period, plus (e)
consolidated amortization expense for such period, plus (f) consolidated Rent
Expenses for such period, minus (or plus, as applicable) (g) on a consolidated
basis, any extraordinary gains (or plus extraordinary losses) for such period,
minus (or plus, as applicable) (h) any gains (or plus any losses) attributable
to the Specialty Retail Subsidiaries for such period other than results of
operations in the ordinary course of business, plus (i) solely with respect to
the four fiscal quarters ending in October 1994, the $1.348 billion
restructuring charge recorded in the fourth fiscal quarter of the Company's
fiscal year ending January 26, 1994.
"Eligible Assignee" means (i) a commercial bank or other financial
institution organized under the laws of the United States, or any state
thereof, and having a combined capital and surplus of at least One Hundred
Million Dollars ($100,000,000); (ii) a commercial bank organized under the laws
of any other country which is a member of the Organization for Economic
Cooperation and Development, or a political subdivision of any such country,
and having a combined capital and surplus of at least One Hundred Million
Dollars ($100,000,000), provided that such bank is acting through a branch or
agency located in the United States; and (iii) any Bank Affiliate.
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"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any regulations promulgated thereunder.
"Event of Default" means any of the events or circumstances specified
in Section 8.01.
"Existing Facilities" means the bilateral lines of credit with the
institutions and in the amounts set forth on Schedule 1.01.
"Facing Agent" has the meaning specified in Section 2.16(a)(i).
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day
(or, if such day is not a Business Day, for the preceding Business Day) in the
weekly statistical release designated as H.15 (519), or any successor
publication, by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day that is a Business Day, the average of the quotations
for such day on such transactions received by the Documentation Agent from
three (3) Federal funds brokers of recognized standing selected by the
Documentation Agent.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any successor thereof.
"Form 1001" has the meaning specified in Section 9.10(a)(i).
"Form 4224" has the meaning specified in Section 9.10(a)(ii).
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be in general use by significant segments of the U.S.
accounting profession, which are applicable to the circumstances as of the date
of determination.
"Government Acts" has the meaning specified in Section 2.16(g).
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, or any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to
government.
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"Guaranty Obligation" means, as applied to any Person, any obligation,
direct or indirect, of that Person guaranteeing any Indebtedness of any other
Person, and, without limiting the generality of the foregoing, any obligation,
direct or indirect, contingent or otherwise, of such Person:
(i) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness (whether arising by
agreement to keep-well, to purchase assets, goods, securities or
services, to take-or-pay, or to maintain financial statement
conditions or otherwise); or
(ii) entered into for the purpose of assuring in any other
manner the obligee of such Indebtedness of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or in
part);
provided, that the term Guaranty Obligation shall not include:
(a) endorsements for collection or deposit in the ordinary
course of business;
(b) obligations that are not required in accordance with GAAP
to be included in the financial statements of such Person or the
footnotes thereto; or
(c) "unconditional purchase obligations" (including
take-or-pay contracts) as defined in and as required to be disclosed
pursuant to Statement of Financial Accounting Standards No. 47 and the
related interpretations, as the same may be amended from time to time.
"Indebtedness" of any Person means at any date without duplication,
(a) all obligations of such Person for borrowed money;
(b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments;
(c) all obligations of such Person to pay the deferred purchase
price of property or services, except trade accounts payable and other
expenses and accounts payable arising in the ordinary course of
business;
(d) all reimbursement obligations with respect to letters of
credit (other than the Letters of Credit and the LC Obligations) and
bankers' acceptances except ordinary trade credits;
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<PAGE> 14
(e) all Indebtedness of others secured by a Lien on any asset
of such Person whether or not such Indebtedness is assumed by such
Person;
(f) all obligations (to the extent capitalized for accounting
purposes) of such Person as lessee under any lease of any
property by that Person as lessee which, in conformity with GAAP, is
accounted for as a capital lease on the balance sheet of that Person;
and
(g) all Guaranty Obligations of such Person.
"Indemnified Person" has the meaning specified in Section 10.05.
"Insolvency Proceeding" means (a) any case, action or proceeding before
any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution, winding-up
or relief of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshalling of assets for creditors or other, similar
arrangement in respect of its creditors generally or any substantial portion of
its creditors; in each case (a) and (b) undertaken under U.S. Federal, State or
foreign law.
"Interest Payment Date" means, with respect to any LIBOR Loan, Absolute
Rate Bid Loan or CD Rate Committed Loan, the last day of each Interest Period
applicable to such Loan, and, with respect to any Reference Rate Committed
Loan, the last Business Day of each calendar quarter and the Termination Date;
provided, that if any Interest Period for a LIBOR Loan (other than a LIBOR Bid
Loan) exceeds three months, the date which falls three months after the
beginning of such Interest Period shall also be an Interest Payment Date.
"Interest Period" means: (a) with respect to any LIBOR Loan, the period
commencing on the Business Day the LIBOR Loan is disbursed or continued (or on
the Conversion Date on which any Loan is converted to a LIBOR Committed Loan)
and ending on the date one, two, three or six months thereafter, as selected by
the Company in its Notice of Borrowing, Competitive Bid Request or Notice of
Conversion/Continuation; (b) with respect to any CD Rate Committed Loan, the
period commencing on the Business Day the CD Rate Committed Loan is disbursed
or continued (or on the Conversion Date on which any Loan is converted to a CD
Rate Committed Loan) and ending 30, 60 or 90 days thereafter, as selected by
the Company in its Notice of Borrowing, or Notice of Conversion/Continuation;
and (c) with respect to any Absolute Rate Bid Loan, a period of not less than 7
days nor more than 183 days, as selected by the Company in its Competitive Bid
Request;
provided, that:
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<PAGE> 15
(i) if any Interest Period would otherwise end on a day which
is not a Business Day, that Interest Period shall be extended
to the next succeeding Business Day unless, in the case of a LIBOR
Loan, the result of such extension would be to carry such Interest
Period into another calendar month, in which event such Interest Period
shall end on the immediately preceding Business Day;
(ii) any Interest Period pertaining to a LIBOR Loan that
begins on the last Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on the last
Business Day of the calendar month which is one, two, three or six
months, as the case may be, after the calendar month in which such
Interest Period began; and
(iii) no Interest Period for any Loan shall extend beyond the
Termination Date.
"Invitation for Competitive Bids" means a solicitation for Competitive
Bids, substantially in the form of Exhibit F.
"IRS" means the Internal Revenue Service, or any successor thereto.
"LC Commission" has the meaning specified in Section 2.16(e)(ii).
"LC Obligations" means, at any time, an amount equal to the sum of (a)
the aggregate Stated Amount of the outstanding Letters of Credit and (b) the
aggregate amount of drawings under Letters of Credit which have not then been
reimbursed pursuant to Section 2.16(c). The LC Obligation of any Bank at any
time shall mean the amount equal to (x) the aggregate amount of LC Obligations
outstanding at such time times (y) such Bank's Commitment Percentage.
"Lending Office" means, with respect to each Bank, the office of that
Bank designated as such on Section 2.01 hereto or such other office of the Bank
as it may from time to time specify to the Company and the Documentation Agent
in accordance with this Agreement.
"Letter of Credit" means any letter of credit issued hereunder.
"Letter of Credit Cash Collateral Account" has the meaning specified in
Section 8.02.
"Letter of Credit Commitment Sublimit" means the aggregate amount of
the Standby Letter of Credit Commitment Sublimit and the
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Trade Letter of Credit Commitment Sublimit, as in effect from time to time.
"Letter of Credit Payment" means, as applicable, (a) all payments made
by the Facing Agent pursuant to either a draft or demand for payment under a
Letter of Credit or (b) all payments made by the Banks to the Facing Agent in
respect thereof.
"Letter of Credit Request" has the meaning specified in Section
2.16(b).
"Level I Status" exists at any date if, at such date (i) the Debt
Rating is either A2 (or the equivalent) or higher by Moody's or A (or the
equivalent) or higher by S&P and (ii) the Debt Rating is not lower than Baa3
(or the equivalent) by Moody's or BBB- (or the equivalent) by S&P.
"Level II Status" exists at any date if, at such date (i) the Debt
Rating is either Baa1 (or the equivalent) or higher by Moody's or BBB+ (or the
equivalent) or higher by S&P, (ii)the Debt Rating is not lower than Baa3 (or the
equivalent) by Moody's or BBB- (or the equivalent) by S&P and (iii) Level I
Status does not exist.
"Level III Status" exists at any date if, at such date (i) the Debt
Rating is either Baa3 (or the equivalent) or higher by Moody's or BBB- (or the
equivalent) or higher by S&P, (ii) the Debt Rating is not lower than Baa3 (or
the equivalent) by Moody's or BBB- (or the equivalent) by S&P and (iii) Level I
Status and Level II Status do not exist.
"Level IV Status" exists at any date if, at such date (i) the Debt
Rating is lower than Baa3 (or the equivalent) by Moody's or lower than BBB- (or
the equivalent) by S&P, or (ii) the Company's senior unsecured indebtedness is
unrated by either S&P or Moody's.
"LIBOR" means, with respect to any Interest Period, the rate of
interest per annum determined by the Documentation Agent to be equal to:
(a) the rate of interest per annum for deposits in U.S. Dollars
for a period equal to the relevant Interest Period quoted on Telerate,
page 3750 (or its successor if such page number changes) at or about
11:00 a.m. (London time) on the second Business Day before the
commencement of such Interest Period,
divided (and rounded upward to the nearest 1/16 of 1%) by
(b) a percentage equal to 100% minus the then stated maximum
rate of all reserve requirements (including any marginal, emergency,
supplemental, special or other reserves required by applicable law)
applicable to any member bank of
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the Federal Reserve System in respect of eurocurrency funding or
liabilities as defined in Regulation D of the Federal Reserve Board.
If no quotation is available on Telerate, the rate of interest under clause (a)
above for any Interest Period shall be determined by the Documentation Agent to
be the arithmetic mean (rounded upward to the nearest 1/16 of 1%) of the rates
of interest per annum notified to the Documentation Agent by each Reference
Bank as the rate of interest (rounded upward to the nearest 1/16 of 1%) at
which deposits in an amount approximately equal to the aggregate amount of the
LIBOR Loans requested to be borrowed, and having a maturity equal to such
Interest Period, are offered to major banks in the London interbank market at
or about 11:00 a.m. (London time) on the second Business Day before the
commencement of such Interest Period.
"LIBOR Auction" means a solicitation of Competitive Bids setting forth
a LIBOR Bid Margin pursuant to Section 2.06 hereof.
"LIBOR Bid Loan" means any Competitive Bid Loan that bears interest at
a rate determined with reference to LIBOR.
"LIBOR Bid Margin" has the meaning specified in Section 2.06(c)(ii)(C).
"LIBOR Committed Loan" means any Committed Loan that bears interest at
a rate determined with reference to LIBOR.
"LIBOR Loan" means any LIBOR Bid Loan or LIBOR Committed Loan.
"Lien" means any mortgage, deed of trust, pledge, charge, encumbrance,
lien (statutory or other) or security interest of any nature whatsoever
(including those created by, arising under or evidenced by any conditional sale
or other title retention agreement), and any assignment or deposit arrangement
intended as or having the effect of security.
"Loan" means an extension of credit by a Bank to the Company pursuant
to Article II and may be a Committed Loan or Competitive Bid Loan and "Loans"
means Loans made by all of the Banks.
"Loan Documents" means this Agreement, each Note and any other
agreement, instrument, certificate or other document evidencing, guaranteeing
or securing the Loans.
"Loss" has the meaning specified in Section 3.05.
"Material Adverse Effect" means a material adverse change in, or a
material adverse effect upon, the assets, liabilities, business, operations or
condition of the Company and its Subsidiaries taken as a whole.
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"Moody's" means Moody's Investors Services, Inc., or any successor to
the rating agency business thereof.
"Note" means any Competitive Bid Note or Committed Loan Note issued
under this Agreement, as the same may be amended, restated, supplemented or
modified and in effect from time to time.
"Notice of Borrowing" means a notice given by the Company to the
Documentation Agent pursuant to Section 2.03 in substantially the form of
Exhibit A.
"Notice of Conversion/Continuation" means a notice given by the Company
to the Documentation Agent pursuant to Section 2.04 in substantially the form
of Exhibit B.
"Obligations" means all Loans, all LC Obligations and other liabilities
(if any), whether actual or contingent, of the Company in respect of Letters of
Credit and all other Indebtedness, advances, debts, liabilities, obligations,
covenants and duties owing by the Company to any Bank, the Documentation Agent,
or to any other Person required to be indemnified under any Loan Document, of
any kind or nature, present or future, whether or not evidenced by any note,
guaranty or other instrument, arising under this Agreement or under any other
Loan Document, whether direct or indirect (including those acquired by
assignment), absolute or contingent, due or to become due, now existing or
hereafter arising and however acquired.
"Other Credit Facilities" means, collectively: (a) the revolving credit
facility evidenced by that certain 364 Day Credit Agreement dated as of the
date hereof among the Company, the Documentation Agent and the financial
institutions signatory thereto, as amended, restated, supplemented or modified
from time to time; (b) the revolving credit facility evidenced by that certain
Seasonal Credit Agreement dated as of the date hereof among the Company, the
Documentation Agent and the financial institutions signatory thereto, as
amended, restated, supplemented or modified from time to time; and (c) the
credit facilities evidenced by that certain Warehouse Facility Revolving Credit
Agreement dated as of the date hereof among the Company, the other borrowers
named therein, Bankers Trust Company, as documentation agent thereunder, and
the financial institutions signatory thereto, as amended, restated,
supplemented or modified from time to time.
"Other Taxes" means any present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies which arise from
any payment made hereunder or from the execution, delivery or registration of,
or otherwise with respect to, this Agreement or any other Loan Document.
"Participant" has the meaning specified in Section 10.08(e).
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<PAGE> 19
"Payment Office" means the address for payments set forth on the
signature page hereto in relation to the Documentation Agent, or such other
address as the Documentation Agent may from time to time specify in accordance
with Section 10.02.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, estate,
unincorporated association, joint venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which the Company or any member of the Controlled Group sponsors or
maintains or to which the Company or any member of the Controlled Group makes,
is making or is obligated to make contributions.
"Potential Default" means any event or circumstance which, with the
giving of notice, the lapse of time, or both, would (if not cured or otherwise
remedied) constitute an Event of Default.
"Reference Banks" means Bankers Trust Company and BofA.
"Reference Rate" means, for any day, the higher of:
(a) 0.5% per annum above the latest Federal Funds Rate for such day;
and
(b) the rate of interest publicly announced from time to time of BofA
in San Francisco, California, as its "reference rate" for such day.
The "reference rate" is a rate set by BofA based upon various factors,
including BofA's costs and desired return, general economic conditions and
other factors, and is used as a reference point for pricing some loans, which
may be priced at, above or below such announced rate. Any change in the
Reference Rate announced by BofA shall take effect at the opening of business
on the day specified in the public announcement of such change.
"Reference Rate Committed Loan" means a Committed Loan that bears
interest based on the Reference Rate.
"Rent Expenses" means, for any period, consolidated rent expense of the
Company for such period determined in accordance with GAAP, less consolidated
rental income for such period.
"Reportable Event" means, as to any Plan, (a) any of the events set
forth in Section 4043(b) of ERISA or the regulations thereunder, other than any
such event for which the 30-day notice
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requirement under ERISA has been waived in regulations issued by the PBGC, (b)
a withdrawal from a Plan described in Section 4063 of ERISA, or (c) a cessation
of operations described in Section 4062(e) of ERISA.
"Required Banks" means at any time Banks holding at least 51% of the
aggregate of (a) the then Aggregate Commitment (or, if the Commitments shall
have then been terminated in full, the then aggregate unpaid principal amount
of the Loans plus the aggregate amount of the then outstanding LC Obligations)
plus (b) the then aggregate commitments under the Other Credit Facilities (or,
if the commitments under any of such facilities shall have then been terminated
in full, then with respect to such terminated facilities the then aggregate
unpaid principal amount of all loans outstanding under such terminated
facilities).
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of a court or of a
Governmental Authority, in each case applicable to or binding upon the Person
or any of its property or to which the Person or any of its property is
subject.
"Responsible Officer" means the Company's chief executive officer,
chief financial officer or treasurer.
"S&P" means Standard & Poors's Ratings Group or any successor to the
rating agency business thereof.
"Specialty Retail Subsidiary" means any of the following Subsidiaries
of the Company (or the continuing investment of the Company in any such
entity): Builders Square, Inc.; Borders, Inc.; Coles Myer, Ltd.; OfficeMax,
Inc.; PACE Membership Warehouse, Inc.; PayLess Drug Stores Northwest, Inc.; The
Sports Authority, Inc.; and Walden Book Company, Inc.
"Standby Letter of Credit" means a Letter of Credit which is not a Trade
Letter of Credit.
"Standby Letter of Credit Commitment Sublimit" means an aggregate
amount of Three Hundred Million Dollars ($300,000,000).
"Stated Amount" means the stated or face amount of a Letter of Credit
to the extent available at the time for drawing (subject to presentment of all
requested documents), as the same may be increased or decreased from time to
time in accordance with the terms of such Letter of Credit.
"Subsidiary" means any corporation of which stock having by the terms
thereof ordinary voting power to elect at least a majority of the board of
directors of said corporation is at the time directly or indirectly owned by
the Company or by the Company and one or more Subsidiaries or by one or more
Subsidiaries.
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"Taxes" means any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Bank and the Documentation Agent, such taxes
(including income taxes and franchise taxes) as are imposed on or measured by
such Bank's or the Documentation Agent's net income.
"Termination Date" means the earlier to occur of
(a) October 6, 1997; and
(b) the date on which the Commitments shall terminate in
accordance with the provisions of this Agreement.
"Trade Letter of Credit" means a trade or commercial Letter of Credit
issued by a the Facing Agent pursuant to Section 2.16.
"Trade Letter of Credit Commitment Sublimit" means an aggregate amount
of Six Hundred Million Dollars ($600,000,000).
"Transferee" has the meaning specified in Section 10.08(f).
"Type" means, with respect to any Committed Loan, its nature as a
Reference Rate Committed Loan, a CD Rate Committed Loan or a LIBOR Committed
Loan.
"United States" and "U.S." each means the United States of America.
1.02 Other Definitional Provisions.
(a) Defined Terms. Unless otherwise specified herein or
therein, all terms defined in this Agreement shall have such defined
meanings when used in any certificate or other document made or
delivered pursuant hereto. The meaning of defined terms shall be
equally applicable to the singular and plural forms of the defined
terms.
(b) The Agreement. The words "hereof", "herein", "hereunder"
and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision
of this Agreement; and section, schedule and exhibit references are to
this Agreement unless otherwise specified.
(c) Certain Common Terms.
(i) The term "documents" includes any and all
instruments, documents, agreements, certificates,
indentures, notices and other writings, however evidenced.
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(ii) The term "including" is not limiting and means
"including without limitation."
(d) Performance; Time. Subject to the definition of "Interest
Period" in Section 1.01, whenever any performance obligation hereunder
(other than a payment obligation) shall be stated to be due or required
to be satisfied on a day other than a Business Day, such performance
shall be made or satisfied on the next succeeding Business Day. In the
computation of periods of time from a specified date to a later
specified date, the word "from" means "from and including"; the words
"to" and "until" each mean "to but excluding," and the word "through"
means "to and including". If any provision of this Agreement refers to
any action taken or to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be interpreted to
encompass any and all means, direct or indirect, of taking, or not
taking, such action.
(e) Contracts. Unless otherwise expressly provided herein,
references to agreements and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications
thereto, but only to the extent such amendments and other
modifications are not prohibited by the terms of any Loan Document.
(f) Laws. References to any statute or regulation are to be
construed as including all statutory and regulatory provisions
consolidating, amending or replacing the statute or regulation.
(g) Captions. The captions and headings of this Agreement are
for convenience of reference only and shall not affect the
construction of this Agreement.
1.03 Accounting Principles.
(a) Unless the context otherwise clearly requires, all
accounting terms not expressly defined herein shall be construed, and
all financial computations required under this Agreement shall be
made, in accordance with GAAP, consistently applied.
(b) References herein to "fiscal year" and "fiscal quarter"
refer to such fiscal periods of the Company.
ARTICLE II
THE CREDITS
2.01 Amounts and Terms of Commitments. Each Bank severally agrees, on
the terms and conditions hereinafter set forth, and upon
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request by the Company, to make Loans in Dollars to the Company (each such
Loan, a "Committed Loan") and to participate in Letters of Credit from time to
time on any Business Day during the period from the Closing Date to the
Termination Date, in an aggregate principal amount not to exceed at any time
outstanding the amount set forth opposite the Bank's name in Schedule 2.01,
(such amount as the same may be reduced pursuant to Section 2.07 or as a result
of one or more assignments pursuant to Section 10.08, being herein referred to
as a Bank's "Commitment"); provided, that, after giving effect to any Committed
Borrowing or Letter of Credit issuance, the aggregate principal amount of all
outstanding Committed Loans and all Competitive Bid Loans plus the aggregate
amount of outstanding LC Obligations shall not exceed the Aggregate Commitment.
Within the limits of each Bank's Commitment, and subject to the other terms and
conditions hereof, the Company may borrow under this Section 2.01, prepay
pursuant to Section 2.07 and reborrow pursuant to this Section 2.01.
2.02 Loan Accounts; Notes.
(a) The Loans made by each Bank shall be evidenced by one or more loan
accounts maintained by such Bank in the ordinary course of business. The loan
accounts maintained by the Documentation Agent and each Bank shall be prima
facie evidence of the amount of the Loans made by the Banks to the Company and
the interest and payments thereon. Any failure so to record or any error in
doing so shall not, however, limit or otherwise affect the Obligations of the
Company hereunder to pay any amount owing with respect to the Loans. In case of
a discrepancy between the entries in the Documentation Agent's books and any
Bank's books relating to such loan accounts, the Bank's books shall be
considered correct in the absence of manifest error.
(b) The Competitive Bid Loans made by each Bank shall be further
evidenced by a Competitive Bid Note payable to the order of such Bank. Each
such Bank shall endorse on the schedules annexed to its Competitive Bid Note
the date, amount, applicable interest rate and maturity of each Competitive Bid
Loan made by it and the amount of each payment of principal and interest made by
the Company with respect thereto. Each Bank is irrevocably authorized by the
Company to so endorse its Competitive Bid Note and each Bank's record shall
constitute prima facie evidence of the accuracy of the information so recorded;
provided, however, that the failure of a Bank to make, or an error in making, a
notation thereon with respect to any Competitive Bid Loan shall not limit or
otherwise affect the obligations of the Company hereunder or under such
Competitive Bid Note to pay any amount with respect to the Competitive Bid
Loans made by such Bank.
(c) If any Bank shall request, for purposes of Section 10.08(g), the
obligation to repay the Committed Loans may also be evidenced by a Committed
Loan Note. Each Bank shall endorse on the
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schedules annexed to its Committed Loan Note the date, amount, applicable
interest rate and maturity of each Committed Loan made by it and the amount of
each payment of principal and interest made by the Company with respect
thereto. Each Bank is irrevocably authorized by the Company to so endorse its
Committed Loan Note and each Bank's record shall constitute prima facie
evidence of the accuracy of the information so recorded; provided, however,
that the failure of a Bank to make, or an error in making, a notation thereon
with respect to any Committed Loan shall not limit or otherwise affect the
obligations of the Company hereunder or under such Committed Loan Note to pay
any amount with respect to the Committed Loans made by such Bank. Any such
request shall be made by such Bank to the Documentation Agent, which will
prepare (or cause to be prepared) such Committed Loan Note and send the same to
the Company for execution by the Company. Upon such execution, the Company will
promptly deliver such Committed Loan Note to the Bank which requested the same.
2.03 Procedure for Committed Borrowings.
(a) Each Committed Borrowing shall be made upon the irrevocable request
of the Company by a facsimile to the Documentation Agent (which shall be
confirmed promptly by a telephone call) in the form of a Notice of Borrowing
which facsimile must be received by the Documentation Agent prior to 11:00 a.m.
(New York City time) (i) three (3) Business Days prior to the requested
borrowing date, in the case of LIBOR Committed Loans, (ii) two Business Days
prior to the requested borrowing date, in the case of CD Rate Committed Loans
and (iii) on the requested borrowing date, in the case of Reference Rate
Committed Loans, specifying:
(A) the amount of the Committed Borrowing, which shall
be in an aggregate minimum principal amount of Ten Million
Dollars ($10,000,000) or any multiple of Five Million Dollars
($5,000,000) in excess thereof;
(B) the requested borrowing date, which shall be a Business Day;
(C) whether the Committed Borrowing is to be comprised of
LIBOR Committed Loans, CD Rate Committed Loans or Reference Rate
Committed Loans; and
(D) if the Borrowing is to be comprised of LIBOR Committed
Loans or CD Rate Committed Loans, the duration of the initial
Interest Period applicable to such Loans. If the Notice of Borrowing
shall fail to specify the duration of the initial Interest Period for
any LIBOR Committed Loans or CD Rate Committed Loans, the Company shall
be deemed to have elected an Interest Period of one month or 30 days,
respectively;
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provided, however, that with respect to any Committed Borrowings to be made on
the Closing Date, a Notice of Borrowing shall be delivered to the Documentation
Agent not later than 11:00 a.m. (New York City time) on the Closing Date (such
Borrowing will consist of Reference Rate Committed Loans only).
(b) Upon receipt of the Notice of Borrowing, the Documentation Agent
shall promptly notify each Bank thereof and of the amount of such Bank's share
of the requested Committed Borrowing based on such Bank's Commitment
Percentage.
(c) Each Bank will make its Commitment Percentage of each Committed
Borrowing available to the Documentation Agent for the account of the Company
at the Documentation Agent's Payment Office by 2:00 p.m. (New York City time)
on the borrowing date requested by the Company by payment in Dollars and in
funds immediately available to the Documentation Agent. Unless any applicable
condition specified in Article IV has not been satisfied, the proceeds of all
such Loans will then be made available to the Company by the Documentation
Agent at such office by crediting the account of the Company with the aggregate
of the amounts made available to the Documentation Agent by the Banks and in
like funds as received by the Documentation Agent.
(d) After giving effect to any Borrowing, unless consented to by the
Documentation Agent in its sole discretion, there shall not be more than ten
(10) different Interest Periods in effect in respect of all Committed Loans
then outstanding, and not more than fifteen (15) Interest Periods in respect of
all Loans then outstanding.
2.04 Conversion and Continuation Elections for Committed Borrowings.
(a) The Company may upon notice to the Documentation Agent in
accordance with Section 2.04(b):
(i) elect to convert, as of any Business Day, any
Reference Rate Committed Loans (or any part thereof in an
aggregate amount not less than Ten Million Dollars
($10,000,000), or that is in an integral multiple of Five Million
Dollars ($5,000,000) in excess thereof) into LIBOR Committed Loans or
CD Rate Committed Loans; or
(ii) elect to convert, as of the last day of any Interest
Period, any LIBOR Committed Loans maturing on such day (or any
part thereof in an aggregate amount not less than Ten Million Dollars
($10,000,000), or that is in an integral multiple of Five Million
Dollars ($5,000,000) in excess thereof) into Reference Rate Committed
Loans or CD Rate Committed Loans; or
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(iii) elect to convert, as of the last day of any Interest
Period, any CD Rate Committed Loans maturing on such day (or any part
thereof in an aggregate amount not less than Ten Million Dollars
($10,000,000), or that is in an integral multiple of Five Million
Dollars ($5,000,000) in excess thereof) into Reference Rate Committed
Loans or LIBOR Committed Loans; or
(iv) elect to continue as of the last day of any Interest
Period (a "Continuation Date") any LIBOR Committed Loans or CD Rate
Committed Loans maturing on such day (or any part thereof in an
aggregate amount not less than Ten Million Dollars ($10,000,000), or
that is in an integral multiple of Five Million Dollars ($5,000,000) in
excess thereof);
provided, that if the aggregate amount of all LIBOR Committed Loans or CD Rate
Committed Loans comprised in any Borrowing shall have been or would be reduced,
by payment, prepayment, or conversion of part thereof to an amount less than
Ten Million Dollars ($10,000,000), such LIBOR Committed Loans or CD Rate
Committed Loans shall automatically convert into Reference Rate Committed
Loans, on and as of the end of the applicable Interest Period.
(b) If the Company desires to convert or continue any Committed Loan
pursuant to Section 2.04(a), it shall irrevocably request a conversion or
continuation by a facsimile (confirmed promptly by telephone) of a Notice of
Conversion/Continuation to be received by the Documentation Agent not later
than 11:00 a.m. (New York time) at least (i) three (3) Business Days in advance
of the Conversion Date or Continuation Date, if the Committed Loans are to be
converted into or continued as LIBOR Committed Loans, (ii) two (2) Business
Days in advance of the Conversion Date or Continuation Date, if the Committed
Loans are to be converted into or continued as CD Rate Committed Loans and
(iii) on the same Business Day as the Conversion Date, if the Committed Loans
are to be converted into Reference Rate Committed Loans, specifying:
(A) the proposed Conversion Date or Continuation Date;
(B) the aggregate amount of Committed Loans to be converted or
continued;
(C) the nature of the proposed conversion or continuation; and
(D) the duration of the requested Interest Period, if the Loans
are to be converted into or continued as LIBOR Committed Loans or CD
Rate Committed Loans.
(c) If prior to the time set forth in Section 2.04(b), (i) the Company
has failed to give a timely Notice of Conversion/Continuation with respect to
such LIBOR Committed Loans
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or CD Rate Committed Loans or (ii) the Company has failed to select a new
Interest Period to be applicable to such LIBOR Committed Loans or CD Rate
Committed Loans, the Company shall be deemed to have elected to convert such
Loans into Reference Rate Loans effective as of the expiration of the
applicable Interest Period.
(d) During the existence of a Potential Default or Event of Default,
unless the Required Banks otherwise agree, the Company may not elect to have a
Committed Loan be converted into or continued as a LIBOR Committed Loan or a CD
Rate Committed Loan pursuant to Section 2.04.
(e) Upon receipt of a Notice of Conversion/Continuation, the
Documentation Agent will promptly notify each Bank thereof, or, if no timely
notice is provided, the Documentation Agent will promptly notify each Bank of
the details of any automatic conversion or continuation. All conversions and
continuations pursuant to this Section 2.04 shall be made pro rata according to
the respective outstanding principal amounts of the Committed Loans being
converted or continued held by each Bank.
2.05 Competitive Bid Borrowings. In addition to Committed Borrowings
pursuant to Section 2.03, each Bank severally agrees that the Company may, as
set forth in Section 2.06, from time to time prior to the Termination Date,
request the Banks through the Documentation Agent to submit offers to make
Competitive Bid Loans to the Company; provided, however, that the Banks may,
but shall have no obligation to, submit such offers and the Company may, but
shall have no obligation to, accept any such offers; and provided, further, that
at no time shall (a) the aggregate principal amount of all outstanding Loans
exceed the Aggregate Commitment less the aggregate outstanding LC Obligations,
(b) the aggregate principal amount of all outstanding Competitive Bid Loans
exceed the Competitive Bid Commitment Sublimit, or (c) the number of Interest
Periods for Competitive Bid Loans then outstanding plus the number of Interest
Periods for Committed Loans then outstanding exceeds fifteen (15).
2.06 Procedure for Competitive Bid Borrowings.
(a) When the Company wishes to request the Banks to submit offers to
make Competitive Bid Loans hereunder, it shall request the Documentation Agent,
by telephone call (confirmed promptly by facsimile in substantially the form of
Exhibit E (a "Competitive Bid Request")) so as to be received (x) no later than
10:00 a.m. (New York City time) four (4) Business Days prior to the date of a
proposed Competitive Bid Borrowing in the case of a LIBOR Auction, or (y) no
later than 10:00 a.m. (New York City time) two (2) Business Days prior to the
date of a proposed Competitive Bid Request in the case of an Absolute Rate
Auction, specifying:
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(i) the date of such Competitive Bid Borrowing, which shall be
a Business Day;
(ii) the aggregate amount of such Competitive Bid Borrowing,
which shall be a minimum amount of Ten Million Dollars ($10,000,000) or
in multiples of Five Million Dollars ($5,000,000) in excess thereof;
(iii) whether the Competitive Bids requested are to be for
LIBOR Bid Loans or Absolute Rate Bid Loans; and
(iv) the duration of the Interest Period applicable thereto,
subject to the provisions of the definition of "Interest Period."
Subject to Section 2.06(c), the Company may not request Competitive Bids for
more than three (3) Interest Periods in a single Competitive Bid Request and
may not request Competitive Bids more than once in any period of five (5)
Business Days (or more frequently, subject to the agreement of the
Documentation Agent).
(b) Upon receipt of a Competitive Bid Request, the Documentation Agent
will promptly send to the Banks by facsimile transmission an Invitation for
Competitive Bids in substantially the form of Exhibit F, which shall constitute
an invitation by the Company to each Bank to submit Competitive Bids offering
to make the Competitive Bid Loans to which such Competitive Bid Request relates
in accordance with this Section 2.06.
(c) (i) Each Bank may at its discretion submit a Competitive
Bid containing an offer or offers to make Competitive Bid Loans in
response to any Invitation for Competitive Bids. Each Competitive Bid
must comply with the requirements of this Section 2.06(c) and must be
submitted to the Documentation Agent by facsimile transmission, at the
Documentation Agent's office for notices set forth on the signature
pages hereto not later than (1) 9:30 a.m. (New York City time) three
(3) Business Days prior to the proposed date of Borrowing, in the case
of a LIBOR Auction, or (2) 9:30 a.m. (New York City time) on the
proposed date of Borrowing, in the case of an Absolute Rate Auction;
provided, that Competitive Bids submitted by the Documentation Agent
(or any Affiliate of the Documentation Agent) in the capacity of a Bank
may be submitted, and may only be submitted, if the Documentation Agent
or such Affiliate notifies the Company of the terms of the offer or
offers contained therein not later than (A) 9:15 a.m. (New York City
time) three (3) Business Days prior to the proposed date of Borrowing,
in the case of a LIBOR Auction, or (B) 9:15 a.m. (New York City time)
on the proposed date of Borrowing, in the case of an Absolute Rate
Auction.
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(ii) Each Competitive Bid submitted by a Bank shall be in
substantially the form of Exhibit G, specifying therein:
(A) the proposed date of Borrowing;
(B) the principal amount of each Competitive Bid Loan
for which such Competitive Bid is being made, which principal
amount (x) may be equal to, greater than or less than
the Commitment of the quoting Bank, (y) must be in a minimum
amount of Ten Million Dollars ($10,000,000) or in multiples of
Five Million Dollars ($5,000,000) in excess thereof, and (z)
may not exceed the principal amount of Competitive Bid Loans
for which Competitive Bids were requested;
(C) in case the Company requests a LIBOR Auction, the
margin above or below LIBOR (the "LIBOR Bid Margin") offered
for each such Competitive Bid Loan, expressed as a percentage
(rounded upward to the nearest 1/16th of 1%) to be added to or
subtracted from the applicable LIBOR for the Interest Period
elected by the Company;
(D) in case the Company requests an Absolute Rate
Auction, the rate of interest per annum (rounded upward to the
nearest 1/1000th of 1%) (the "Absolute Rate") offered for each
such Competitive Bid Loan; and
(E) the identity of the quoting Bank.
A Competitive Bid may contain up to three separate offers by the quoting Bank
with respect to each Interest Period specified in the related Invitation for
Competitive Bids.
(iii) Any Competitive Bid shall be disregarded if it:
(A) is not substantially in conformity with Exhibit G
or does not specify all of the information required by Section
2.06(c)(ii);
(B) contains qualifying, conditional or similar
language;
(C) proposes terms other than or in addition to those
set forth in the applicable Invitation for Competitive Bids;
or
(D) arrives after the time set forth in Section
2.06(c)(i).
(d) Promptly on receipt and not later than 10:00 a.m. (New York City
time) three (3) Business Days prior to the proposed date of Borrowing in the
case of a LIBOR Auction, or 10:00 a.m. (New
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York City time) on the proposed date of Borrowing, in the case of an
Absolute Rate Auction, the Documentation Agent will notify the Company of the
terms (i) of any Competitive Bid submitted by a Bank that is in accordance with
Section 2.06(c), and (ii) of any Competitive Bid that amends, modifies or is
otherwise inconsistent with a previous Competitive Bid submitted by such Bank
with respect to the same Competitive Bid Request. Any such subsequent
Competitive Bid shall be disregarded by the Documentation Agent unless such
subsequent Competitive Bid is submitted solely to correct a manifest error in
such former Competitive Bid and only if received within the times set forth in
Section 2.06(c). The Documentation Agent's notice to the Company shall specify
(1) the aggregate principal amount of Competitive Bid Loans for which offers
have been received for each Interest Period specified in the related
Competitive Bid Request; and (2) the respective principal amounts and LIBOR Bid
Margins or Absolute Rates, as the case may be, so offered. Subject only to the
provisions of Sections 3.04 and 4.02 hereof relating to a Competitive Bid Loan
and the provisions of this Section 2.06(d), any Competitive Bid relating to a
Competitive Bid Loan shall be irrevocable except with the written consent of
the Documentation Agent given on the written instructions of the Company.
(e) Not later than 10:30 a.m. (New York City time) three (3) Business
Days prior to the proposed date of Borrowing, in the case of a LIBOR Auction,
or 10:30 a.m. (New York City time) on the proposed date of Borrowing, in the
case of an Absolute Rate Auction, the Company shall notify the Documentation
Agent of the Company's acceptance or non-acceptance of the Competitive Bids so
notified to it pursuant to Section 2.06(d). The Company shall be under no
obligation to accept any offer and may choose to reject all offers. In the case
of acceptance, such notice shall specify the aggregate principal amount of
offers for each Interest Period that is accepted. The Company may accept any
Competitive Bid in whole, or, with the prior consent of the bidding Bank, in
part; provided, that:
(i) the aggregate principal amount of each Competitive Bid
Borrowing may not exceed the applicable amount set forth in the
related Competitive Bid Request;
(ii) the acceptance of Competitive Bids may only be made on the
basis of ascending LIBOR Bid Margins or Absolute Rates within
each Interest Period, as the case may be;
(iii) the aggregate principal amount of each Competitive Bid
Borrowing must be Ten Million Dollars ($10,000,000) or in any
multiple of Five Million Dollars ($5,000,000) in excess thereof; and
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(iv) the Company may not accept any Competitive Bid
that is described in Section 2.06(c)(iii) or that otherwise fails to
comply with the requirements of this Agreement.
(f) If offers are made by two or more Banks with the same LIBOR Bid
Margins or Absolute Rates, as the case may be, for a greater aggregate
principal amount than the amount in respect of which such offers are accepted
for the related Interest Period, the principal amount of Competitive Bid Loans
in respect of which such offers are accepted shall be allocated by the
Documentation Agent among such Banks as nearly as possible (in such multiples,
not less than One Million Dollars ($1,000,000), as the Documentation Agent may
deem appropriate) in proportion to the aggregate principal amounts of such
Competitive Bids. Determination by the Documentation Agent of the allocation of
the amounts of Competitive Bid Loans shall be conclusive in the absence of
manifest error.
(g) The Documentation Agent will promptly notify each Bank having
submitted a Competitive Bid if its offer has been accepted and, if its
Competitive Bid has been accepted, of the amount of the Competitive Bid Loan or
Competitive Bid Loans to be made by it on the date of the Competitive Bid
Borrowing.
(h) Each Bank which has received notice pursuant to Section 2.06(g)
that its Competitive Bid has been accepted, shall make the amounts of such
Competitive Bid Loans available to the Documentation Agent for the account of
the Company at the Documentation Agent's Payment Office, by 11:00 a.m. (New
York City time) on the date of such Competitive Bid Borrowing, in funds
immediately available to the Documentation Agent.
(i) If, on or prior to the proposed date of Borrowing, the Commitments
have not been terminated and if, on such proposed date of Borrowing all
applicable conditions to funding referenced in Sections 3.02, 3.04 and 4.02
hereof are satisfied, the Bank or Banks whose offers the Company has accepted
will fund each Competitive Bid Loan so accepted. Nothing in this Section 2.06
shall be construed as a right of first offer in favor of the Banks or to
otherwise limit the ability of the Company to request and accept any other
credit facilities from any Person (including any of the Banks); provided, that
no Potential Default or Event of Default would otherwise arise or exist as a
result of the Company executing, delivering or performing under such other
credit facilities.
(j) Each outstanding Competitive Bid Loan shall reduce pro tanto the
available Aggregate Commitment, but shall not otherwise reduce or affect the
available Commitment or Commitment Percentage of any Bank which made a
Competitive Bid Loan.
(k) Promptly following each Competitive Bid Borrowing, the
Documentation Agent shall notify each Bank of the ranges of bids
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submitted and the highest and lowest bids accepted for each Interest Period
requested by the Company and the aggregate amount borrowed pursuant to such
Competitive Bid Borrowing. From time to time, the Company and the Banks shall
furnish such information to the Documentation Agent as the Documentation Agent
may request relating to the making of Competitive Bid Loans, including the
amounts, interest rates, dates of Borrowings and maturities thereof, for
purposes of the allocation of amounts received from the Company for payment of
all amounts owing hereunder.
2.07 Voluntary Termination or Reduction of Commitments. The Company
may, upon not less than five (5) Business Days' prior notice to the
Documentation Agent, terminate the Aggregate Commitment or permanently reduce
the Aggregate Commitment by a minimum amount of Ten Million Dollars
($10,000,000) or in multiples of Five Million Dollars ($5,000,000) in excess
thereof; provided, that no such reduction or termination of the Aggregate
Commitment shall be permitted if, after giving effect thereto and to any
prepayments of the Loans made on the effective date thereof, the then
outstanding LC Obligations would exceed the amount of the Aggregate Commitment;
provided, further, that once reduced in accordance with this Section 2.07, the
Aggregate Commitment may not thereafter be increased. Any reduction of the
Aggregate Commitment shall be applied to each Bank's Commitment pro rata in
accordance with such Bank's relevant Commitment Percentage. If the Aggregate
Commitment is terminated in its entirety, all accrued unpaid interest and all
fees with respect thereto accrued to the effective date of such termination
shall be payable on the effective date of such termination without any premium
or penalty.
2.08 Optional Prepayments of Committed Loans.
(a) Subject to Section 3.05, the Company may, at any time or from time
to time, upon at least five (5) Business Days' notice to the Documentation
Agent prepay LIBOR Committed Loans or CD Rate Committed Loans or upon at least
one Business Day's notice to the Documentation Agent prepay Reference Rate
Committed Loans, in whole or in part, in minimum amounts of Ten Million Dollars
($10,000,000) or in multiples of Five Million Dollars ($5,000,000) in excess
thereof. Such notice of prepayment shall specify the date and amount of such
prepayment and whether such prepayment is of Reference Rate Committed Loans,
LIBOR Committed Loans or CD Rate Committed Loans. Such notice shall not
thereafter be revocable by the Company, and the Documentation Agent will
promptly notify each Bank thereof and of such Bank's Commitment Percentage of
such prepayment. If such notice is given, the Company shall make such
prepayment and the payment amount specified in such notice shall be due and
payable on the date specified therein, together with accrued interest to each
such date on the amount prepaid and the amounts required pursuant to Section
3.05.
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(b) The Company may not voluntarily prepay all or any portion of the
principal amount of any Competitive Bid Loan prior to the maturity thereof.
2.09 Repayment.
(a) The Committed Loans. The Company shall repay the aggregate
outstanding principal amount of the Committed Loans on the Termination Date.
(b) The Competitive Bid Loans. Each Competitive Bid Loan shall mature,
and the principal amount thereof shall be due and payable, on the last day of
the Interest Period applicable thereto.
2.10 Interest.
(a) Subject to Sections 2.10(d) and (e), each Committed Loan shall bear
interest on the outstanding principal amount thereof from the date when made
until paid in full, at the option of the Company as set forth in its Notice of
Borrowing or Notice of Conversion/Continuation,
(i) if such Committed Loan is a Reference Rate Committed Loan,
at a rate per annum equal to the Reference Rate;
(ii) if such Loan is a LIBOR Committed Loan, at a rate per
annum equal to the sum of LIBOR plus the applicable margin set forth
below:
Debt Rating Applicable Margin
Level I Status .225%
Level II Status .2625%
Level III Status .3125%
Level IV Status .50%; and
(iii) if such Committed Loan is a CD Rate Committed Loan, at a
rate per annum equal to the sum of the CD Rate plus the applicable
margin set forth below:
Debt Rating Applicable Margin
Level I Status .35%
Level II Status .3875%
Level III Status .4375%
Level IV Status .625%
(b) Any change in the Debt Rating shall be effective as of the date on
which such change is first publicly announced by Moody's or S&P. Any change in
the applicable margin due to a change in the applicable Debt Rating shall be
effective on the effective date of such change in the Debt Rating and shall
apply to
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all Committed Loans that are outstanding at any time during the period
commencing on the effective date of such change in the Debt Rating and ending
on the date immediately preceding the effective date of the next such change in
the Debt Rating which results in a change in the applicable margin.
(c) Interest on each Loan shall be payable in arrears on each
applicable Interest Payment Date. Interest shall also be payable on the date of
any prepayment of Committed Loans for the portion of the Loans so prepaid and,
in the case of conversion of any Reference Rate Committed Loan, on the date of
conversion thereof into a LIBOR Committed Loan or a CD Rate Committed Loan.
(d) During the continuation of any Event of Default or after
acceleration, the Company shall pay, on demand, interest (after as well as
before judgment) on the principal amount of all Loans then outstanding, at a
rate per annum which is determined by increasing the rate of interest then in
effect by 2% per annum; provided, however, that, on and after the expiration of
the Interest Period applicable to any LIBOR Committed Loan or CD Rate Committed
Loan on the date of occurrence of such Event of Default or acceleration, the
principal amount of such Loan shall, during the continuation of such Event of
Default or acceleration, bear interest at a rate per annum equal to the
Reference Rate plus 2%.
(e) Anything herein to the contrary notwithstanding, the obligations of
the Company hereunder shall be subject to the limitation that payments of
interest shall not be required, for any period for which interest is computed
hereunder, to the extent (but only to the extent) that contracting for or
receiving such payment by any Bank would be contrary to the provisions of any
law applicable to such Bank limiting the highest rate of interest which may be
lawfully contracted for, charged or received by such Bank, and in such event
the Company shall pay such Bank interest at the highest rate permitted by
applicable law.
2.11 Fees.
(a) Facility Fee.
(i) The Company shall pay to the Documentation Agent for the
account of each Bank a facility fee equal to the percentage per annum
set forth below times such Bank's Commitment (regardless of
utilization):
Debt Rating Facility Fee
Level I Status .125%
Level II Status .1375%
Level III Status .1875%
Level IV Status .25%
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(ii) Any change in the Debt Rating shall be effective as of the
date on which such change is first publicly announced by Moody's or
S&P. Any change in the facility fee due to a change in the applicable
Debt Rating shall be effective on the effective date of such change in
the Debt Rating and shall apply at any time during the period
commencing on the effective date of such change in the Debt Rating and
ending on the date immediately preceding the effective date of the next
such change in the Debt Rating which results in a change in the
facility fee.
(iii) The facility fee shall accrue from the Closing Date to
the Termination Date and shall be due and payable quarterly in arrears
on the last Business Day of each calendar quarter, commencing with the
calendar quarter ending on December 31, 1994, and on the Termination
Date.
(b) Syndication Fees. The Company shall pay in Dollars to the Arrangers
on the Closing Date fees in the amount set forth in a letter agreement between
the Company and BofA and Bankers Trust Company dated August 29, 1994.
(c) Administration Fees. The Company shall pay to the Documentation
Agent administration and transaction fees in Dollars in the amounts and at the
times set forth in a letter agreement between the Company and BofA and Bankers
Trust Company dated August 29, 1994.
2.12 Computation of Fees and Interest.
(a) All computations of fees and interest under this Agreement shall be
made on the basis of a 360-day year and actual days elapsed. Interest and fees
shall accrue during each period during which interest on such fees are computed
from and including the first day thereof to but excluding the last day thereof.
Any Interest or fees not paid when due after any applicable grace period, shall
bear interest at a rate equal to the Reference Rate plus 2%.
(b) The Documentation Agent will, with reasonable promptness, notify
the Company and the Banks of each determination of LIBOR, the CD Rate and the
Reference Rate; provided, that any failure to do so shall not relieve the
Company of any liability hereunder. The Documentation Agent will, with
reasonable promptness, notify the Company and the Banks of the effective date
and the amount of any change in the Debt Rating resulting in a change in the
applicable rate of interest or fees; provided, that any failure to do so shall
not relieve the Company of any liability hereunder.
(c) Each determination of an interest rate by the Documentation Agent
pursuant to any provision of this Agreement shall be conclusive and binding on
the Company and the Banks in the
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absence of manifest error. The Documentation Agent, at the request of the
Company or any Bank, will deliver to the Company or such Bank, as the case may
be, a statement showing the quotations used by the Documentation Agent in
determining any interest rate.
(d) If either Reference Bank's Commitment shall terminate (otherwise
than on termination of the Aggregate Commitment), or for any reason whatsoever
either Reference Bank shall cease to be a Bank hereunder, then such Reference
Bank shall thereupon cease to be a Reference Bank, and, when necessary (until
such Reference Bank shall have been replaced pursuant to Section 2.12(e)),
LIBOR and the CD Rate shall be determined on the basis of the rates as notified
by the remaining Reference Bank.
(e) Each Reference Bank shall use its best efforts to furnish
quotations of rates to the Documentation Agent as contemplated hereby. If
either Reference Bank shall be unable or otherwise fail to supply such rates to
the Documentation Agent upon its request, the rate of interest shall be
determined on the basis of the quotations of the remaining Reference Bank. The
Company and the Documentation Agent may select a new Reference Bank to replace
any Reference Bank that shall cease to be a Bank hereunder or that fails to
supply rates as required hereunder.
2.13 Payments by the Company.
(a) All payments (including prepayments) to be made by the Company on
account of principal, interest, fees and other amounts required hereunder shall
be made without set-off or counterclaim and shall, except as otherwise
expressly provided herein, be made to the Documentation Agent at its Payment
Office for the ratable account of the Banks in Dollars and in immediately
available funds, no later than 2:00 p.m. (New York City time) on the date
specified herein. The Documentation Agent will promptly distribute to each Bank
its Commitment Percentage (or other applicable share as expressly provided
herein) of such principal, interest, fees or other amounts, in like funds as
received. Unless otherwise waived by the Documentation Agent with respect to a
payment, any payment which is received by the Documentation Agent later than
2:00 p.m. (New York City time) shall be deemed to have been received on the
immediately succeeding Business Day and any applicable interest or fee shall
continue to accrue until such payment is deemed to have been received.
(b) Except as otherwise set forth in the definition of Interest Period,
whenever any payment hereunder shall be stated to be due on a day other than a
Business Day, such payment shall be made on the next succeeding Business Day,
and such extension of time shall in such case be included in the computation of
interest or fees, as the case may be.
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(c) Unless the Documentation Agent shall have received notice from the
Company prior to the date on which any payment is due to the Banks hereunder
that the Company will not make such payment in full, the Documentation Agent
may assume that the Company has made such payment in full to the Documentation
Agent as required hereunder on such date and the Documentation Agent may (but
shall not be so required), in reliance upon such assumption, cause to be
distributed to each Bank on such due date an amount equal to the amount then
due such Bank. If and to the extent the Company shall not have made such
payment in full to the Documentation Agent, each bank shall repay to the
Documentation Agent on demand such amount distributed to such Bank, together
with interest thereon for each day from the date such amount was distributed to
such Bank until the date such Bank repays such amount to the Documentation
Agent at the Federal Funds Rate.
2.14 Payments by the Banks to the Documentation Agent.
(a) Unless the Documentation Agent shall have received notice from a
Bank on the Closing Date or, with respect to each Borrowing after the Closing
Date, at least one (1) Business Day prior to the date of any proposed Borrowing
of LIBOR Committed Loans or CD Rate Committed Loans or prior to 11:00 a.m. (New
York City time) on the date of the proposed Borrowing of any Reference Rate
Committed Loans, that such Bank will not make available to the Documentation
Agent for the account of the Company the amount of that Bank's share of Loans
included in the Borrowing, the Documentation Agent may assume that each Bank
has made such amount and the full amount of any Competitive Bid Loans of such
Bank that are included in the Borrowing available to the Documentation Agent as
required hereunder on the Borrowing Date and the Documentation Agent may (but
shall not be so required), in reliance upon such assumption, make available to
the Company on such date a corresponding amount. If and to the extent any Bank
shall not have made its full amount available to the Documentation Agent and
the Documentation Agent in such circumstances has made available to the Company
such amount, that Bank shall on the next Business Day following the date of
such Borrowing make such amount available to the Documentation Agent, together
with interest at the Federal Funds Rate, in each case as in effect for each
such day. A notice of the Documentation Agent submitted to any Bank with
respect to amounts owing under this Section 2.14(a) shall be conclusive, absent
manifest error. If such amount is so made available, such payment to the
Documentation Agent shall constitute such Bank's Loan on the date of Borrowing
for all purposes of this Agreement. If such amount is not made available to the
Documentation Agent on the next Business Day following the date of such
Borrowing, the Documentation Agent shall notify the Company of such failure to
fund and, upon demand by the Documentation Agent, the Company shall pay such
amount to the Documentation Agent for the Documentation Agent's account,
together with interest thereon for each day elapsed since the date of such
Borrowing, at a rate per annum equal to the interest rate
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applicable at the time to the Loans comprising such Borrowing without making or
being responsible for any payment under Section 3.05.
(b) The failure of any Bank to make any Committed Loan on any date of
Borrowing shall not relieve any other Bank of any obligation hereunder to make
a Committed Loan on the date of such Borrowing, but no Bank shall be
responsible for the failure of any other Bank to make the Committed Loan to be
made by such other Bank on the date of any Borrowing.
2.15 Sharing of Payments, Etc.
(a) If, other than as expressly set forth elsewhere herein, any Bank
shall obtain on account of the Committed Loans made by it any payment (whether
voluntary, involuntary, through the exercise of any right of set-off, or
otherwise) in excess of its Commitment Percentage of payments on account of the
Committed Loans obtained by all the Banks, such Bank shall forthwith (x) notify
the Documentation Agent of such fact, and (y) purchase from the other Banks
such participations in the Committed Loans made by them as shall be necessary
to cause such purchasing Bank to share the excess payment ratably with each of
them; provided, however, that if all or any portion of such excess payment is
thereafter recovered from the purchasing Bank, such purchase shall to that
extent be rescinded and each other Bank shall repay to the purchasing Bank the
purchase price paid thereto together with an amount equal to such paying Bank's
Commitment Percentage (according to the proportion of (i) the amount of such
paying Bank's required repayment to (ii) the total amount so recovered from the
purchasing Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered. The Documentation
Agent will keep records (which shall be conclusive and binding in the absence
of manifest error), of participations purchased pursuant to this Section
2.15(a) and will in each case notify the Banks and the Company following any
such purchases. Any Bank having outstanding both Committed Loans and
Competitive Bid Loans at any time a right of set-off is exercised by such Bank
shall apply the proceeds of such set-off first to such Bank's Committed Loans
hereunder, until its Committed Loans are reduced to zero, and thereafter to
its Competitive Bid Loans.
(b) The Company agrees that any Bank so purchasing a participation from
another Bank pursuant to this Section 2.15 may, to the fullest extent permitted
by law, exercise all its rights of payment (including the right of set-off, but
subject to Section 10.09) with respect to such participation as fully as if such
Bank were the direct creditor of the Company in the amount of such
participation.
(c) Nothing herein shall require any Bank to exercise any right of
set-off or similar rights or shall affect the right of any
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Bank to exercise, and retain the benefits of exercising any such right with
respect to any other indebtedness or obligation of the Company.
2.16 Amount and Terms of Letters of Credit.
(a) Letter of Credit Commitments; Terms of Letters of Credit.
(i) Subject to and upon the terms and conditions herein set
forth, at any time and from time to time on or after the date hereof
and to but not including a date which is thirty (30) days prior to the
Termination Date, each Bank selected by the Company which is reasonably
acceptable to the Documentation Agent (and which agrees to perform the
services of a fronting bank) agrees to issue (in such capacity, a
"Facing Agent") in its own name or through an Affiliate, one or more
Letters of Credit for the account of the Company in an aggregate Stated
Amount in Dollars at any one time that, together with the aggregate
Stated Amount of all other Letters of Credit issued pursuant hereto,
does not exceed the Letter of Credit Commitment Sublimit; provided,
however, that no Facing Agent shall issue or extend the expiration of
any Letter of Credit if, immediately after giving effect to such
issuance or extension, (A) the aggregate LC Obligations in respect of
Standby Letters of Credit at such time would exceed the Standby Letter
of Credit Commitment Sublimit, or (B) the aggregate LC Obligations in
respect of Trade Letters of Credit at such time would exceed the Trade
Letter of Credit Commitment Sublimit, or (C) the Commitment of any Bank
would be exceeded. Each Bank severally, but not jointly, agrees to
participate in each such Letter of Credit issued by a Facing Agent
ratably according to its Commitment Percentage and to make available to
such Facing Agent such Bank's Commitment Percentage of any payment made
to the beneficiary of such Letter of Credit to the extent not
reimbursed by the Company; provided, however, that no Bank shall be
required to participate in any Letter of Credit to the extent that its
participation therein would exceed such Bank's Commitment then in
effect. No Bank's obligation to participate in any Letter of Credit or
to make available to a Facing Agent such Bank's Commitment Percentage
of any Letter of Credit Payment made by the Facing Agent shall be
affected by any other Bank's failure to participate in the same or any
other Letter of Credit or by any other Bank's failure to make available
to the relevant Facing Agent such other Bank's Commitment Percentage of
any Letter of Credit Payment.
(ii) Each Letter of Credit issued or to be issued hereunder
shall have an expiration date of one (1) year or less from the issuance
date thereof; provided, however, that each Standby Letter of Credit may
provide by its terms that it will be automatically renewed for
additional successive
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periods of up to one (1) year unless the relevant Facing Agent
shall have given notice to the applicable beneficiary
(with a copy to the Company) of the election by such Facing Agent (such
election to be in the sole and absolute discretion of such Facing
Agent) not to extend such Letter of Credit, such notice to be given not
less than thirty (30) days prior to the then current expiration date of
such Letter of Credit; provided, further, that no Standby Letter of
Credit or renewal thereof shall be dated to expire later than the
Termination Date and no Trade Letter of Credit or renewal thereof shall
be stated to expire later than the day thirty (30) days prior to the
Termination Date.
(b) Procedure for Issuance of Letters of Credit. Whenever the Company
desires the issuance of a Letter of Credit hereunder, it shall give the
relevant Facing Agent (with a copy to the Documentation Agent) at least five
(5) Business Days' prior written notice specifying the requested day of
issuance thereof (which day shall be a Business Day), such notice to be given
prior to 10:00 a.m. (New York City time) on the date specified for the giving
of such notice. Each such notice (each, a "Letter of Credit Request") shall be
in the form of Exhibit J hereto and shall specify (A) the name of the Bank
which the Company would like to act as the Facing Agent, (B) the proposed
issuance date and expiration date of the requested Letter of Credit, (C) the
name and address of the beneficiary (which Person shall be reasonably
acceptable to the Facing Agent), (D) the Stated Amount of such Letter of
Credit, (E) the purpose of such Letter of Credit (which shall be acceptable to
the Facing Agent), and (F) such other information as the Documentation Agent or
the Facing Agent may reasonably request. In addition, each Letter of Credit
Request shall contain a description of the terms and conditions to be included
in the proposed Letter of Credit (all of which terms and conditions shall be
acceptable to the Facing Agent). No Letter of Credit shall contain any
provision for payment thereunder at any time earlier than 2:00 p.m. (New York
City time) on the first Business Day after the presentation of all drafts,
demands for payment and all other documents, if any, required to be presented
pursuant to such Letter of Credit. Unless otherwise specified, all Letters of
Credit will be governed by the Uniform Customs and Practice for Documentary
Credits of the International Chamber of Commerce as in effect on the date of
issuance of such Letter of Credit. On the Business Day specified by the Company
and upon fulfillment or waiver of the applicable conditions set forth in
Article IV, the Facing Agent will issue the requested Letter of Credit to the
applicable beneficiary.
(c) Draws upon Letters of Credit; Reimbursement Obligations. In the
event of any request for drawing under any Letter of Credit by the beneficiary
thereof, the Facing Agent shall give telephonic notice to the Company and the
Documentation Agent (x) confirming receipt of such request and (y) of the date
on or before which the Facing Agent intends to honor such drawing, and the
Company shall
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reimburse the Facing Agent on the day on which such drawing is honored in an
amount in Dollars in same day funds equal to the amount of such drawing;
provided, however, that, anything contained in this Agreement to the contrary
notwithstanding, (i) unless the Company shall have notified the Documentation
Agent and the Facing Agent prior to 10:00 a.m. (New York City time) on
the Business Day of such drawing that the Company intends to reimburse the
Facing Agent for the amount of such drawing with funds other than the proceeds
of Loans, the Company shall be deemed to have timely given a Notice of
Borrowing to the Documentation Agent requesting each Bank to make Reference
Rate Committed Loans on the date on which such drawing is honored in an amount
equal to the amount of such drawing and (ii) subject to satisfaction or waiver
of the conditions specified in Section 4.02, each such Bank shall, on the date
of such drawing, make Reference Rate Committed Loans in the amount of its
Commitment Percentage of such drawing, the proceeds of which shall be applied
directly by the Documentation Agent to reimburse the Facing Agent for the
amount of such drawing; provided, further, that, if for any reason,
proceeds of Reference Rate Committed Loans are not received by the Facing
Agent on such date in an amount equal to the amount of such drawing, the
Company shall reimburse the Facing Agent, on the Business Day immediately
following the date of such drawing, in an amount in same day funds equal to
the excess of the amount of such drawing over the amount of such Reference
Rate Committed Loans, if any, which are so received, plus accrued interest on
such amount at the Reference Rate.
(d) Banks' Participation in Letters of Credit. In the event that the
Company shall fail to reimburse the Facing Agent as provided in Section 2.16(c)
in an amount equal to the amount of any drawing honored by the Facing Agent
under a Letter of Credit issued by it in accordance with the terms hereof, the
Facing Agent shall promptly notify the Documentation Agent and the
Documentation Agent shall promptly notify each Bank of the unreimbursed amount
of such drawing and of such Bank's respective participation therein. Each such
Bank shall make available to the Facing Agent an amount equal to its Commitment
Percentage of such drawing in same day funds, together with interest thereon at
the Federal Funds Rate for the period from the date of funding of such drawing
to the date of payment by such Bank, at the office of the Facing Agent
specified in such notice, not later than 1:00 p.m. (New York City time) on the
Business Day after the date such Bank is notified by the Documentation Agent.
In the event that any such Bank fails to make available to the Facing Agent the
amount of such Bank's participation in such Letter of Credit as provided in
this Section 2.16(d), the Facing Agent shall be entitled to recover such amount
on demand from such Bank together with interest at the Federal Funds Rate for
two Business Days and thereafter at the Reference Rate. Nothing in this Section
2.16(d) shall be deemed to prejudice the right of any Bank to recover from the
Facing Agent any amounts made available by such Bank to the Facing Agent
pursuant to this
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Section 2.16(d) in the event that it is determined by a court of competent
jurisdiction that the payment with respect to a Letter of Credit by the Facing
Agent in respect of which payment was made by such Bank constituted gross
negligence or willful misconduct on the part of the Facing Agent. The Facing
Agent shall distribute to each Bank which has paid all amounts payable by it
under this Section 2.16(d) with respect to any Letter of Credit issued by such
Facing Agent such Bank's Commitment Percentage of all payments received by such
Facing Agent from the Company in reimbursement of drawings honored by such
Facing Agent under such Letter of Credit when such payments are received and
shall promptly notify the Documentation Agent of such payment.
(e) Interest and Fees for Letters of Credit.
(i) Facing Agent Fees. The Company agrees to pay the
following amount to each Facing Agent with respect to Letters of
Credit issued by it for the account of the Company:
(A) with respect to drawings made under any Letter of
Credit, interest, payable on demand, on the amount paid by
such Facing Agent in respect of each such drawing from the date
of the drawing through the date such amount is reimbursed by
the Company (including any such reimbursement out of the
proceeds of Loans pursuant to Section 2.16(c)) or the Banks at
a rate which is at all times equal to 2% per annum in excess
of the Reference Rate;
(B) with respect to the issuance or amendment of each
Letter of Credit and each drawing made thereunder, documentary
and processing charges in accordance with the Facing Agent's
agreement with the Company for such charges in effect at the
time of such issuance, amendment, transfer or drawing, as the
case may be; and
(C) a facing fee in respect of Trade Letters of Credit
as agreed from time to time by the Company and the Facing Agent.
(ii) Participating Bank Fees. The Company agrees to pay to the
Documentation Agent for distribution to each participating Bank in
respect of all Standby Letters of Credit outstanding such Bank's
Commitment Percentage of a commission equal to the applicable margin
then in effect in respect of LIBOR Committed Loans pursuant to Section
2.10(a) multiplied by the maximum Stated Amount under such outstanding
Letters of Credit (the "LC Commission"), payable in arrears on and
through the last Business Day of each calendar quarter, on the
Termination Date and thereafter, on demand. The LC Commission shall be
computed from the first day of issuance of each
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Standby Letter of Credit and on the basis of the actual number of days
elapsed over a year of 360 days.
Promptly upon receipt by the Facing Agent of any amount described in
clause (i)(A) of this Section 2.16(e), the Facing Agent shall distribute to
each Bank that has reimbursed the Facing Agent in accordance with Section
2.16(d) its Commitment Percentage of such amount. Amounts payable under clauses
(i)(B) and (C) of this Section 2.16(e) shall be payable directly to the Facing
Agent for its own account.
(f) LC Obligations Unconditional. Subject to the last paragraph of
Section 2.16(g), the obligation of the Company to reimburse a Facing Agent for
drawings made under any Letter of Credit issued by it and the obligations of
each Bank under Section 2.16(d) with respect thereto shall be unconditional and
irrevocable and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances, including the following circumstances:
(i) any lack of validity or enforceability of such Letter of
Credit;
(ii) the existence of any claim, setoff, defense or other right
which the Company or any of its Affiliates may have at any time
against a beneficiary or any transferee of such Letter of Credit (or
any Persons for which any such beneficiary or transferee may be
acting), the Facing Agent, any Bank or any other Person, whether in
connection with this Agreement, the transactions contemplated herein or
any unrelated transaction (including any underlying transaction between
the Company or one of its Subsidiaries and the beneficiary of such
Letter of Credit);
(iii) any draft, demand, certificate or any other document
presented under such Letter of Credit proving to be forged, fraudulent
invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect;
(iv) payment by the Facing Agent under such Letter of Credit
against presentation of a demand, draft or certificate or other
document which does not comply with the terms of such Letter of Credit;
(v) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing; or
(vi) the fact that an Event of Default or a Potential Default
shall have occurred and be continuing.
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(g) Indemnification. In addition to amounts payable as elsewhere
provided in this Agreement, the Company hereby agrees to indemnify and hold
harmless, the Facing Agent from and against any and all actions, suits,
proceedings, liabilities, damages, or other claims of any kind or nature
whatsoever which may be made by or asserted against the Facing Agent as a
result of (i) the issuance of the Letters of Credit, other than as a result of
the gross negligence or willful misconduct of the Facing Agent (including
without limitation (A) the Facing Agent's wrongful dishonor of any Letter of
Credit after the presentation to it by the beneficiary thereunder of a draft or
other demand for payment and other documentation strictly complying with the
terms and conditions of such Letter of Credit, or (B) the payment by the Facing
Agent to the beneficiary under any Letter of Credit against presentation of
documents which do not substantially comply with the terms of the Letter of
Credit) or (ii) the failure of the Facing Agent to honor a drawing under any
Letter of Credit as a result of any act or omissions, whether rightful or
wrongful, of any present or future de jure or de facto government or
Governmental Authority (all such acts or omissions herein called "Government
Acts"). As between the Company and the Facing Agent, the Company assumes all
risks of the acts and omissions of, or misuse of the Letters of Credit issued
by the Facing Agent by, the respective beneficiaries of such Letters of Credit.
In furtherance and not in limitation of the foregoing, the Facing Agent shall
not be responsible: (i) for the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any party in
connection with the application for the issuance of or any drawing under such
Letters of Credit, even if it should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged; (ii) for the validity
or sufficiency of any instrument transferring or assigning or purporting to
transfer or assign and such Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) for failure of the beneficiary of
any such Letter of Credit to comply fully with conditions required in order to
draw upon such Letter of Credit; (iv) for errors, omissions interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher, (v) for errors in
interpretation of technical terms; (vi) for any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any such Letter of Credit or of the proceeds thereof; (vii) for the
misapplication by the beneficiary of any such Letter of Credit or the proceeds
of any drawing under such Letter of Credit; and (viii) for any consequences
arising from causes beyond the control of the Facing Agent (including any
Government Acts). None of the above shall affect, impair, or prevent the
vesting of any of the Facing Agent's rights or powers hereunder.
In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or
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omitted by the Facing Agent under or in connection with the Letters of Credit
issued by it or the related certificates, if taken or omitted in good faith,
shall not put the Facing Agent under any resulting liability to the Company.
Notwithstanding anything to the contrary contained in this Agreement, the
Company shall have no obligation to indemnify the Facing Agent in respect of
any liability incurred by the Facing Agent arising solely out of the gross
negligence or willful misconduct of the Facing Agent. The right of
indemnification in the first paragraph of this Section 2.16(g) shall not
prejudice any rights that the Company may otherwise have against the Facing
Agent with respect to a Letter of Credit issued hereunder.
(h) Stated Amount. The Stated Amount of each Letter of Credit shall be
such amount as the Company and the Facing Agent have agreed to. For purposes of
calculating the Stated Amount of any Letter of Credit at any time:
(i) any increase in the Stated Amount of any Letter of Credit
by reason of any amendment to any Letter of Credit shall be deemed
effective under this Agreement as of the date the Facing Agent
actually issues an amendment purporting to increase the Stated Amount
of such Letter of Credit, whether or not the Facing Agent received the
consent of the Letter of Credit beneficiary or beneficiaries to the
amendment; and
(ii) any reduction in the Stated Amount of any Letter of Credit
by reason of any amendment to any Letter of Credit shall be deemed
effective under this Agreement as of the later of (x) the date the
Facing Agent actually issues an amendment purporting to reduce the
Stated Amount of such Letter of Credit, whether or not the amendment
provides that the reduction be given effect as of an earlier date, or
(y) the date the Facing Agent receives the written consent (including
by telex or facsimile transmission) of the Letter of Credit
beneficiary or beneficiaries to such reduction, which written consent
must be dated on or after the date of the amendment issued by the
Facing Agent purporting to effect such reduction.
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 Taxes.
(a) All payments of principal of and interest on the Loans (other than
Reference Rate Committed Loans) shall be made by the Company without
set-off or counterclaim for or on account of, and free and clear of, and
without deduction or withholding for, or on
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account of, any Taxes. In addition, the Company shall pay all Other Taxes.
(b) The Company agrees to indemnify and hold harmless each Bank and the
Documentation Agent for the full amount of Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section 3.01 paid by such Bank or
the Documentation Agent and any liability (including penalties, interest,
additions to tax and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted.
Payment under this indemnification shall be made within thirty (30) days after
the date any Bank or the Documentation Agent makes written demand therefor.
(c) If the Company shall be required by law to deduct or withhold any
Taxes or Other Taxes from or in respect of any sum payable hereunder to any
Bank or the Documentation Agent, then:
(i) the sum payable shall be increased as necessary so that
after making all required deductions and withholdings (including
deductions and withholdings applicable to additional sums payable under
this Section 3.01) such Bank or the Documentation Agent, as the case
may be, receives an amount equal to the sum it would have received had
no such deductions or withholdings been made;
(ii) the Company shall make such deductions and withholdings;
(iii) the Company shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in
accordance with applicable law; and
(iv) the Company shall also pay to each Bank or the
Documentation Agent for the account of such Bank, at the time interest
is paid, all additional amounts which the respective Bank specifies as
necessary to preserve the after-tax yield such Bank would have received
if such Taxes or Other Taxes had not been imposed.
(d) Within thirty (30) days after its receipt thereof, the Company
shall furnish the Documentation Agent the original or a certified copy of a
receipt evidencing payment of such Taxes or Other Taxes, or other evidence of
payment satisfactory to the Documentation Agent.
(e) Each Bank which is a foreign person (i.e., a person other than a
United States person for United States Federal income tax purposes) agrees that
it will comply with the requirements of Section 9.10 hereof and further agrees
that if such Bank claims or is entitled to claim exemption from withholding tax
under a United States tax treaty by providing a Form 1001 and such Bank sells
or
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grants a participation of all or part of its rights under this Agreement, such
Bank shall notify the Documentation Agent of the percentage amount in which it
is no longer the beneficial owner under this Agreement. To the extent of this
percentage amount, the Company or the Documentation Agent shall treat such
Bank's Form 1001 as no longer in compliance with this Section 3.01(e). In the
event a Bank claiming exemption from United States withholding tax by filing
Form 4224 with the Company or the Documentation Agent sells or grants a
participation in its rights under this Agreement, such Bank agrees to undertake
sole responsibility for complying with the withholding tax requirements imposed
by Sections 1441 and 1442 of the Code.
(f) Notwithstanding anything herein to the contrary, the Company will
not be required to pay any additional amounts in respect of Taxes described
below:
(i) if such Bank shall have delivered to the Company
and the Documentation Agent a Form 4224 or a Form 1001 in respect of
its Lending Office and such Bank shall not at any time be entitled to
exemption from deduction or withholding of United States Federal income
tax in respect of payments by the Company hereunder for the account of
such Lending Office for any reason other than a change in United
States law or regulations or in the official interpretation of such law
or regulations by any governmental authority charged with the
interpretation or administration thereof (whether or not having the
force of law) after the date of delivery of such Form 4224 or Form
1001, as applicable;
(ii) taxes that are imposed as a result of any sale,
assignment, transfer or other disposition (whether voluntary or
involuntary) by such Bank or any interest in such Bank's Commitment,
Loans or the Loan Documents, unless such sale, assignment, transfer or
disposition by such Bank takes place while an Event of Default has
occurred and is continuing or pursuant to Section 3.03(c);
(iii) taxes to the extent resulting from (A) the gross
negligence, fraud or willful misconduct of a Bank or the Documentation
Agent, (B) any act or omission of a Bank or the Documentation Agent
that is in violation of any of the terms of the Loan Documents, or (C)
the inaccuracy or breach of any representation, warranty or covenant by
a Bank or the Documentation Agent in any document required to be
furnished thereby.
(g) If the Company is required to pay additional amounts to any Bank
pursuant to this Section 3.01, then such Bank shall use its reasonable best
efforts (consistent with legal and regulatory restrictions) to change the
jurisdiction of its Lending Office so as to eliminate any such additional
payment by the Company which
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may thereafter accrue if such change in the judgment of such Bank is not
otherwise materially disadvantageous to such Bank.
(h) If any Bank or the Documentation Agent receives a written
notification from a taxing authority of proposed taxes for which an amount may
be payable by the Company in accordance with this Section 3.01, such Bank or
the Documentation Agent shall notify the Company promptly after receipt of such
notification and shall furnish the Company with such related information as the
Company may reasonably request. If requested by the Company in writing, such
Bank or the Documentation Agent shall in good faith diligently contest
(including pursuing all judicial appeals as of right, if any) the validity,
applicability and amount of such Taxes or Other Taxes; provided, that (x) prior
to taking such action the Company shall have agreed to indemnify such Bank or
the Documentation Agent for all reasonable out of pocket costs and expenses
that such indemnitee may incur in connection with contest such claim and (y)
the amount of such claim, when aggregated with all amounts owing to such Bank
under comparable provisions of the Other Credit Facilities to which such Bank
is a party, shall exceed $5,000.
(i) Each Bank receiving a receipt or other evidence of payment pursuant
to Section 3.03(d) shall reimburse the Company for the amount of any credit or
other economic benefit available to such Bank by reason or on account of such
payment by the Company or such Bank's possession of such receipt or other
evidence of payment under any tax, levy, impost, duty, fee, assessment or other
charge of any nature imposed by any Governmental Authority applicable to such
Bank. The amount of such reimbursement calculated by such Bank shall be
conclusive and binding absent manifest error in computation.
3.02 Inability to Determine Rates. If and to the extent that market or
other conditions existing in the domestic money market relevant to CD Rate
Committed Loans or in the London inter-bank market relevant to LIBOR Committed
Loans make it impossible or impracticable for the Banks to make such Loans,
then the obligations of the Banks to make CD Rate Committed Loans or LIBOR
Committed Loans, as applicable, and the right of the Company to originate,
continue or convert any Committed Loan as or to a CD Rate Committed Loan or a
LIBOR Committed Loan shall be suspended until the circumstances giving rise to
such suspension shall no longer exist.
Upon receipt from the Documentation Agent of a notice of the Banks'
inability to make, convert or continue the requested Committed Loan due to any
of the reasons referred to above, notwithstanding anything in this Agreement to
the contrary, the Company may revoke any Notice of Borrowing or Notice of
Conversion/Continuation then submitted by it. If the Company does not revoke
such notice relating to a LIBOR Committed Loan or CD Rate Committed Loan, the
Banks shall, with respect to such LIBOR
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Committed Loan or CD Rate Committed Loan only, make or convert such Loan in the
amount specified in the applicable notice submitted by the Company, but such
Committed Loan shall be made as or converted into a Reference Rate Committed
Loan instead of a LIBOR Committed Loan or a CD Rate Committed Loan. Except as
provided in the immediately preceding sentence, if, notwithstanding the
provisions of this Section 3.02, any Bank has made available to the Company its
Commitment Percentage of any such proposed Loan, then the Company shall
immediately repay the amount so made available to it by such Bank, together
with accrued interest thereon, if any.
3.03 Increased Costs; Capital Adequacy.
(a) If, after the Closing Date, a Bank shall reasonably determine that
any change in applicable laws, rules or regulations or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force of
law):
(i) shall change the basis of taxation to such Bank of any
amounts payable by the Company under this Agreement (other than taxes
imposed on or measured by the overall income of such Bank in the
jurisdiction in which such Bank has its principal office), or
(ii) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement against assets of, deposits
with or for the account of, or credit extended by, such Bank with
respect to this Agreement or any Note, or
(iii) shall impose any other condition with respect to this
Agreement or any Note,
and the result of any of the foregoing is to increase the cost to such Bank or
to reduce the amount of any sum receivable by such Bank with respect to making
or maintaining any CD Rate Committed Loan or LIBOR Loan by an amount reasonably
deemed by such Bank to be material, then the Company shall from time to time,
upon written demand by such Bank, pay to such Bank additional amounts
sufficient to compensate such Bank for any such increased cost or reduced sum
receivable to the extent resulting from outstanding CD Rate Committed Loans or
LIBOR Loans and not compensated in connection with the computation of the CD
Rate or LIBOR (as applicable).
(b) If any Bank shall have determined that (i) the introduction of any
Capital Adequacy Regulation, (ii) any change in any Capital Adequacy
Regulation, (iii) any change in the interpretation or administration of any
Capital Adequacy Regulation by any central bank or other Governmental Authority
charged with the interpretation or administration thereof, or (iv) compliance
by such Bank (or its Lending Office) with any such change in Capital Adequacy
Regulations, affects or would affect the amount of capital
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required or expected to be maintained by such Bank and (taking into
consideration such Bank's policies with respect to capital adequacy and such
Bank's desired return on capital) determines that the amount of such capital is
increased by an amount deemed material by such Bank as a consequence of its
Commitment, Loans (other than Reference Rate Committed Loans) or other
obligations under this Agreement, then, upon demand of such Bank to the Company
through the Agent, the Company shall pay to such Bank, from time to time as
specified by such Bank, additional amounts sufficient to compensate for such
increase.
(c) Upon receipt of notice from any Bank of a claim for compensation
under this Section 3.03, the Company shall be afforded ninety (90) days to find
a replacement financial institution reasonably acceptable to the Documentation
Agent and, if an acceptable replacement financial institution is available such
replacement institution will purchase such Bank's Committed Loans and
Commitment and other interests under the Loan Documents in accordance with
Section 10.08 or such Bank will withdraw such request for payment.
(d) A detailed statement as to the amount of such increased cost or
reduced sum receivable, along with documentation supporting the payment of such
amount under this subsection, shall be prepared by such Bank and submitted to
the Company (with a copy to the Documentation Agent) with such Bank's written
demand. Such Bank's statement of such increased cost or reduced sum receivable
shall be prima facie evidence of such increased cost or reduced sum absent
manifest error.
3.04 Illegality.
(a) If any Bank shall determine that, after the date hereof, (i) the
introduction of any Requirement of Law or any change in or in the
interpretation or administration thereof has made it unlawful, or (ii) any
central bank or other Governmental Authority has asserted that it is unlawful,
for such Bank or its Lending Office to make any Loan of the Type requested by
the Company (including in respect of any Competitive Bid Loan as to which the
Company has accepted such Bank's Competitive Bid, but which has not been
funded), then, on notice thereof by such Bank to the Company through the
Documentation Agent, the obligation of such Bank to make any such Loans shall
be suspended until such Bank shall have notified the Documentation Agent and
the Company that the circumstances giving rise to such determination no longer
exists.
(b) If a Bank shall determine that it is unlawful to maintain any Loan
then outstanding, then, on notice thereof by such Bank to the Company through
the Documentation Agent, the Company shall prepay in full all such Loans of
such Bank then outstanding, together with interest accrued thereon, either on
the last day of the Interest Period thereof if such Bank may lawfully continue
to
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maintain such Loans to such day, or immediately, if such Bank may not lawfully
continue to maintain such Loans.
(c) If the Company is required to prepay any LIBOR Committed Loan
or CD Rate Committed Loan as provided in Section 3.04 (b), then concurrently
with such prepayment, the Company shall borrow from the affected Bank, in the
amount of such repayment, a Reference Rate Committed Loan.
3.05 Funding Losses. The Company agrees to reimburse each Bank and to
hold each Bank harmless from any loss, cost or expense which such Bank may
sustain or incur as a consequence of:
(a) any failure by the Company to borrow, or to continue or convert
a Committed Loan (other than a Reference Rate Committed Loan) after it has
given (or is deemed to have given) a Notice of Borrowing or a Notice of
Conversion/Continuation, as the case may be;
(b) any payment by it of a LIBOR Loan or a CD Rate Committed Loan
or Absolute Rate Bid Loan on a day which is not the last day of the Interest
Period with respect thereto;
(c) the conversion of a LIBOR Committed Loan or a CD Rate Committed
Loan to a Reference Rate Committed Loan on a day that is not the last day of
the respective Interest Period pursuant to Section 2.04; or
(d) any failure by it to borrow any Competitive Bid Loan after
accepting the applicable Competitive Bid;
by paying to each Bank, on demand by such Bank, an additional amount equal to
the amount of any interest which such Bank would have earned for the remainder
of the Interest Period in question reduced by the amount of income earned by
such Bank during such Interest Period with respect to the amount prepaid or not
borrowed (the "Loss"). A detailed statement as to the amount of such Loss,
prepared by the Bank incurring the same, shall be prima facie evidence of such
Loss absent manifest error.
3.06 Survival. The agreements and obligations of the Company in this
Article III shall survive the payment of all other Obligations.
ARTICLE IV
CONDITIONS PRECEDENT
4.01 Conditions to Occurrence of the Closing Date and Effectiveness of
this Agreement. The occurrence of the Closing Date and the binding effect of
this Agreement on each Bank are
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subject to the condition that the Documentation Agent shall have received on
or before the Closing Date all of the following, in form and substance
satisfactory to the Documentation Agent and each Bank, in sufficient copies
for each Bank:
(a) Credit Agreement. This Agreement executed by the Company, the
Documentation Agent and each of the Banks;
(b) By-laws; Resolutions; Incumbency.
(i) Copies of the by-laws of the Company and of the
resolutions of the board of directors of the Company approving and
authorizing the execution, delivery and performance by the Company of
this Agreement and the other Loan Documents to be delivered hereunder,
and authorizing the borrowing of the Loans, each certified as of the
Closing Date by the Secretary or an Assistant Secretary of the Company;
and
(ii) A certificate of the Secretary or Assistant Secretary
of the Company certifying the names and true signatures of its
respective officers authorized to execute and deliver and perform, as
applicable, this Agreement and all other Loan Documents and notices to
be delivered by it hereunder;
(c) Articles of Incorporation. (i) A copy of the Company's
Articles of Incorporation as in effect on the Closing Date, including any
amendments thereto, certified by the Michigan Department of Commerce, and
(ii) good standing certificates for the Company from the Michigan
Department of Commerce and from the Secretaries of State of California and
New York, each dated not earlier than October 1, 1994 and not more than
seven (7) days prior to the Closing Date;
(d) Legal Opinions.
(i) an opinion of A.N. Palizzi, counsel to the Company, and
addressed to the Documentation Agent and the Banks, substantially in
the form of Exhibit H-1; and
(ii) an opinion of Dickinson, Wright, Moon, Van Dusen &
Freeman, special counsel to the Company and addressed to the
Documentation Agent and the Banks in substantially the form of
Exhibit H-2;
(e) Payment of Transaction Fees and Expenses. Evidence of payment
of all costs, accrued and unpaid fees and expenses (including Attorney
Costs) to the extent then due and payable on the Closing Date;
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(f) Certificate. A certificate signed by a Responsible Officer of
the Company, dated as of the Closing Date, stating that:
(i) the representations and warranties of the Company
contained in Article V are true and correct on and as of such date, as
though made on and as of such date;
(ii) no Potential Default or Event of Default exists as of
the date of such certificate;
(iii) no material adverse change in the assets, liabilities,
business, operations or condition of the Company and its Subsidiaries
has occurred since January 26, 1994;
(iv) no default has occurred and is continuing in respect of
any Indebtedness of the Company and its Subsidiaries with an aggregate
principal amount in excess of $100,000,000;
(v) all consents and approvals required to consummate the
transactions contemplated by this Agreement have been obtained or
waived; and
(vi) the Existing Facilities have been terminated and all
Indebtedness outstanding thereunder has been satisfied;
(g) Financial Statements. The financial statements of the Company
referred to in Section 5.06;
(h) Other Credit Facilities. The Company shall have entered into
the Other Credit Facilities and the conditions to closing thereunder shall
have been satisfied; and
(i) Other Documents. Such other approvals, opinions or documents
as the Documentation Agent may reasonably request.
4.02 Conditions to All Borrowings and Letter of Credit Issuances. The
obligation of each Bank to make any Committed Loan to be made by it
hereunder, or any Competitive Bid Loan as to which the Company has accepted
the relevant Competitive Bid (including its initial Loan) and of any Facing
Agent to issue a Letter of Credit hereunder is subject to the satisfaction of
the following conditions precedent on the relevant Borrowing Date:
(a) Notice of Borrowing or Issuance. In the case of any Committed
Loan, the Documentation Agent shall have received a Notice of Borrowing and
executed Notes evidencing the requested Loans to the extent required hereby
and in the case
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of any Letter of Credit issuance, the Facing Agent shall have
received a Letter of Credit Request;
(b) Continuation of Representations and Warranties. The
representations and warranties made by the Company contained in Article
V shall be true and correct on and as of such Borrowing Date with the
same effect as if made on and as of such Borrowing Date (except to the
extent such representations and warranties expressly refer to an
earlier date, in which case they shall be true and correct as of such
earlier date); and
(c) No Existing Default. No Potential Default or Event of
Default shall exist or shall result from such Borrowing or issuance of
such Letter of Credit.
Each Notice of Borrowing, Competitive Bid Request and Letter of Credit
Request submitted by the Company hereunder shall constitute a representation
and warranty by the Company, as of the date of each such notice or request and
as of the Borrowing Date relating thereto, that the conditions in Section 4.02
are satisfied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Documentation Agent and each
Bank that:
5.01 Organization and Good Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, and is duly qualified to do business and is
in good standing in each additional jurisdiction where failure to so qualify
would have an effect which, when taken together with the simultaneous effect of
failure to qualify in any other jurisdictions, would in the aggregate have a
Material Adverse Effect.
5.02 Authorization; No Contravention. The execution, delivery and
performance of this Agreement and the issuance of the Notes by the Company are
within its corporate powers, have been duly authorized by all necessary
corporate action, and are not in contravention of any Requirement of Law or of
the terms of the Company's Articles of Incorporation or by-laws, or of any
agreement, undertaking, contract or other obligation to which the Company is a
party or by which it is bound.
5.03 Consents and Approvals. No consent, waiver, approval, notification
of, or registration or filing with, any Governmental Authority or any
non-governmental Person is required in connection with the execution and
delivery by the Company of this Agreement or
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any Notes or the borrowing by the Company hereunder or in connection with the
consummation of any transaction contemplated hereby, except those disclosed in
Schedule 5.03 and which the Company has obtained or made.
5.04 Binding Effect. This Agreement is, and each Note when issued will
be, valid, binding and enforceable against the Company in accordance with the
terms thereof (subject, as to enforcement of remedies, to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws relating to
or affecting the enforcement of creditors' rights and general equitable
principles which may limit the right to obtain the remedy of specific
performance of executory covenants and other equitable remedies).
5.05 Litigation. No litigation or governmental proceeding is pending
or, to the knowledge of the Company, threatened, against the Company for which
sufficient provision has not been made in the financial statements of the
Company and which could have a material adverse effect on the Company's
condition or business, financial or otherwise, or which purport to affect or
pertain to this Agreement or any of the transactions contemplated hereby.
5.06 Financial Statements. The balance sheet dated as of January 26,
1994 and the related statements of income and stockholders' equity and cash
flows, of the Company and its Subsidiaries contained in the annual report of
the Company to its stockholders have been audited and certified by Price
Waterhouse, independent certified public accountants, and are complete and
accurate in all material respects and present fairly the financial condition of
the Company and its Subsidiaries as of the dates of such statements and the
results of their operations for the periods covered thereby, in accordance with
GAAP, consistently applied. The balance sheet dated as of July 27, 1994 and the
related statements of income, stockholders' equity and cash flows of the
Company and its Subsidiaries contained in the quarterly report of the Company
filed with the U.S. Securities and Exchange Commission (the "SEC") on Form 10-Q
are complete and accurate in all material respects and present fairly the
financial condition of the Company and its Subsidiaries as of the dates of such
statements and the results of their operations for the periods covered thereby,
in accordance with GAAP, consistently applied.
5.07 Use of Proceeds; Margin Regulations. After applying the proceeds
of any borrowings hereunder, not more than 25% of the value of the assets of
the Company and its Subsididaries will consist of "margin stock" as such term
is defined in Regulation G, T, U or X of the Federal Reserve Board. The Company
is not generally engaged in the business of purchasing or selling margin stock
or extending credit for the purpose of purchasing or carrying margin stock.
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5.08 No Default. No Potential Default or Event of Default exists or would
result from the incurring of any Obligations by it.
5.09 Taxes. The Company has filed all Federal and other material tax
returns and reports required to be filed, and has paid all Federal and other
material taxes, assessments, fees and other governmental charges levied or
imposed upon it or its properties, income or assets otherwise due and payable,
except those which are being contested in good faith by appropriate proceedings
and for which adequate reserves have been provided in accordance with GAAP.
There is no proposed tax assessment against the Company that could, if made,
have a Material Adverse Effect.
5.10 Insurance. The properties and business of the Company are insured in
such amounts, with such deductibles and covering such risks as are customarily
carried by similar companies of comparable size engaged in similar businesses
and owning or operating similar properties in localities where the Company
operates.
5.11 Compliance With Laws. The Company is in compliance with all
applicable laws, rules and regulation (including environmental laws, rules and
regulations and the Employee Retirement Income Security Act of 1976, as
amended, and all regulations thereunder) except where the failure to be in such
compliance could not reasonably be expected to have a Material Adverse Effect.
ARTICLE VI
AFFIRMATIVE COVENANTS
The Company covenants and agrees that, so long as any Bank shall have any
Commitment hereunder, or any Loan or other Obligation shall remain unpaid or
unsatisfied:
6.01 Payment of Taxes. The Company will pay, when due, all taxes assessed
against the Company or its property and all other claims which may become a
Lien upon any of its property, except to the extent that (a) the same are being
contested in good faith by appropriate proceedings, and (b) adequate reserves
for payment thereof have been established in accordance with GAAP.
6.02 Insurance. The Company shall maintain insurance with respect to its
properties and business in such amounts, with such deductibles and covering such
risks as are customarily carried by similar companies of comparable size
engaged in similar businesses and owning or operating similar properties in
localities where the Company operates.
6.03 Preservation of Corporate Existence, Etc. The Company shall:
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(a) preserve and maintain in full force and effect its
corporate existence and good standing under the laws of its state
or jurisdiction of incorporation; and
(b) preserve and maintain in full force and effect all
governmental rights, privileges, qualifications, permits, licenses
and franchises necessary or desirable in the normal conduct of its
business except in connection with transactions permitted by Section
7.01 and dispositions of assets permitted by Section 7.02.
6.04 Maintenance of Property. The Company shall maintain and preserve
all its property which is used or useful in its business in good working order
and condition, ordinary wear and tear excepted, and make all necessary repairs
thereto and renewals and replacements thereof except where the failure to do so
could not reasonably be expected to have a Material Adverse Effect, and except
as permitted by Section 7.02.
6.05 Compliance with Laws. The Company shall comply in all material
respects with all Requirements of Law of any Governmental Authority having
jurisdiction over it or its business, except such as may be contested in good
faith or as to which a bona fide dispute may exist.
6.06 Books and Records; Other Information. The Company shall maintain
proper books of record and account in which full, true and correct entries in
conformity with GAAP consistently applied shall be made of all financial
transactions and matters involving the assets and business of the Company, and
will provide to the Documentation Agent and the Banks such other information as
they may reasonably request and which is reasonably available to the Company or
can be reasonably computed from the Company's books and records.
6.07 Financial Information. The Company shall deliver to the
Documentation Agent for distribution to the Banks (and, if requested, with
sufficient copies for each Bank):
(a) within sixty (60) days after the end of each of
the first three (3) fiscal quarters of the Company, copies of (i)
the consolidated balance sheet of the Company and its Subsidiaries as
of the end of such quarter, (ii) the consolidated statement of income
of the Company and its Subsidiaries for such quarter and for the period
from the end of the most recent fiscal year of the Company through the
end of such quarter, (iii) the consolidated statement of cash flows of
the Company and its Subsidiaries for the period from the end of the
most recent fiscal year of the Company through the end of such quarter,
all prepared in accordance with GAAP and certified by a Responsible
Officer as being a fair
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statement of results for the periods covered thereby; subject to ordinary
year-end audit adjustments;
(b) concurrently with the delivery of the financial statements referred
to in Sections 6.07(a) and (c), a certificate duly completed and executed by a
Responsible Officer, as to compliance by the Company with the covenants
contained in Sections 7.04 and 7.05 hereof, and stating that no Potential
Default or Event of Default then exists (or, if any should then exist,
identifying the same and stating any actions being taken by the Company with
respect thereto);
(c) within one hundred twenty (120) days after the end of each fiscal
year of the Company, copies of (i) the consolidated balance sheet of the
Company and its Subsidiaries as at the end of such fiscal year, (ii) the
consolidated statement of income of the Company and its Subsidiaries for such
fiscal year, and (iii) the consolidated statement of cash flows of the Company
and its Subsidiaries for such fiscal year, setting forth in each case in
comparative form the corresponding figures for the previous fiscal year, all in
reasonable detail and prepared in accordance with GAAP and certified by a
nationally recognized independent public accounting firm; and
(d) promptly, copies of all financial statements and reports that the
Company sends to its shareholders and copies of all Forms 10K, 10Q and 8K that
the Company files with the SEC.
6.08 Notices.
(a) The Company shall notify each Bank promptly, but not later than
three (3) Business Days after the Company becomes aware thereof, of the
occurrence of any Event of Default.
(b) The Company shall notify the Documentation Agent for distribution to
the Banks promptly, but not later than three (3) Business Days after the
Company becomes aware thereof, of the occurrence of:
(i) any Potential Default;
(ii) any Material Adverse Effect or any event or other
development which could have a Material Adverse Effect;
(iii) any change in the Debt Rating by Moody's or S&P; or
(iv) any Reportable Event.
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ARTICLE VII
NEGATIVE COVENANTS
The Company hereby covenants and agrees that, so long as any Bank shall
have any Commitment hereunder, or any Loan or other Obligation shall remain
unpaid or unsatisfied:
7.01 Consolidations and Mergers. The Company shall not merge or
consolidate with any other Person, unless:
(a) the successor formed by or resulting from such
consolidation or merger is the Company or a Subsidiary of the Company
(and, if the survivor is a Subsidiary of the Company, such Subsidiary
shall affirm the Company's Obligations under the Loan Documents in
writing), and
(b) no Event of Default or Potential Default shall have
occurred and then be continuing or would arise after giving effect
thereto.
7.02 Disposition of Assets. The Company shall not, directly or
indirectly, sell, assign, lease, convey, transfer or otherwise dispose of
(whether in one or a series of transactions) any property (including accounts
and notes receivable, with or without recourse) or enter into any agreement to
do any of the foregoing except:
(a) dispositions of inventory, or used, worn-out or surplus equipment,
all in the ordinary course of business;
(b) the sale of equipment to the extent that such equipment is
exchanged for credit against the purchase price of similar replacement
equipment, or the proceeds of such sale are reasonably promptly applied
to the purchase price of such replacement equipment;
(c) dispositions of inventory or equipment by the Company to any
Subsidiary pursuant to reasonable business requirements; and
(d) other dispositions of assets having, in any fiscal year of the
Company, an aggregate book value not exceeding 10% of the Company's
consolidated total assets as of the end of the most recently ended
fiscal year of the Company, as reflected in the Company's balance sheet
contained in its audited financial statements for such fiscal year;
provided, however, that this Section 7.02 shall not be deemed to prohibit the
sale of all, substantially all, or a part of the
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capital stock or of all, substantially all, or a part of the assets of any
Specialty Retail Subsidiary of the Company, even if such an entity is no longer
a Subsidiary of the Company, if (x) consideration received is fair market value
(as determined by the Company), or (y) the Company's board of directors deems
such transaction to be necessary by reason of applicable laws, regulations or
governmental policies applicable to the Company.
7.03 Limitation on Liens. The Company shall not incur any
Indebtedness which is secured by a Lien on any assets of the Company, whether
now owned or hereafter acquired, unless, concurrently with creation of any such
Lien securing Indebtedness in an aggregate amount of $50,000,000 or more, the
Company shall cause the Obligations and its obligations under the Other Credit
Facilities to be equally and ratably secured by the same assets, provided,
however, that such restriction shall not apply with respect to any of the
following types of Liens:
(a) Liens for taxes not delinquent or being contested in good
faith:
(b) Liens created in connection with workers'
compensation, unemployment insurance and other social security
legislation, or to secure the performance of bids, tenders, contracts
(other than for the repayment of borrowed money), statutory
obligations, surety and appeal bonds and other similar obligations
incurred in the ordinary course;
(c) purchase money mortgages (including vendors' rights under
purchase or land contracts or under other agreements whereby
title or other interest is retained by the vendor for the purpose of
securing the purchase price thereof) on property acquired or
constructed after the Closing Date, or the acquisition after the
Closing Date of property subject to such a Lien which is limited to
such property and was not created in anticipation of such acquisition;
(d) mortgages on real property which is the sole security for
Indebtedness the amount of which does not exceed the greater of
the cost of such property and improvements or the fair market value
thereof;
(e) mortgages, security interests and Liens on assets of the
Company existing on the Closing Date and set forth on Schedule
7.03, or any refundings or extensions for an amount not exceeding the
principal amount of such Indebtedness and applying only to the same
property or assets; and
(f) mortgages, security interests and Liens in connection with
indebtedness under industrial revenue bond financings or
similar government agency supported financings.
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7.04 EBITDAR Coverage Ratio. The Company shall not permit its ratio of
(a) EBITDAR (measured as of the end of any fiscal quarter
ending after the Closing Date for the four fiscal quarters then ended)
to
(b) the sum of (i) consolidated net interest expense for such
four fiscal quarter period plus (ii) consolidated Rent Expense for
such four fiscal quarter period
to be less than 1.50 to 1.00.
7.05 Consolidated Net Worth. The Company shall not permit its
Consolidated Net Worth at any time to be less than Four Billion Five Hundred
Million Dollars ($4,500,000,000).
ARTICLE VIII
EVENTS OF DEFAULT
8.01 Event of Default. Any of the following shall constitute an "Event
of Default":
(a) Non-Payment of Principal. The Company fails to pay, when
and as required to be paid herein, any amount of principal of any Loan
and such default shall continue unremedied for a period of two (2)
Business Days after the date upon which notice thereof is received by
the Company from the Documentation Agent; or
(b) Non-Payment of Interest or Fees. The Company fails to pay,
when and as required to be paid herein, any interest or any fees
payable hereunder and such default shall continue unremedied for a
period of five (5) Business Days after the date upon which notice
thereof is received by the Company from the Documentation Agent; or
(c) Specific Defaults. The Company fails to perform or observe
any term, covenant or agreement contained in Sections 6.02, 6.03,
6.08(a), 7.01, 7.02 and 7.03; or
(d) Other Defaults. The Company fails to perform or observe any
other term or covenant contained in this Agreement and such default
shall continue unremedied for a period of thirty (30) days after the
date upon which written notice thereof is given to the Company by the
Documentation Agent or any Bank; or
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(e) Representation or Warranty. Any representation or warranty by the
Company made or deemed made herein proves to have been inaccurate or untrue in
any material respect on or as of the date made or deemed made; or
(f) Cross-Default; Cross-Acceleration. (i) The Company fails to make
any payment of principal or interest or fees under any of the Other Credit
Facilities when due after taking into account any applicable grace periods, or
(ii) by reason of any action taken by the Company with the intent and capacity
promptly to satisfy any obligation of the Company resulting therefrom,
including, without limitation, the calling for payment by the Company of any of
its Indebtedness or the termination by the Company of any of its guaranty
obligations, any Indebtedness shall mature or be declared due and payable prior
to its stated maturity and such Indebtedness shall remain unpaid for a period
of two (2) Business Days thereafter, or (iii) the Company fails to perform or
observe any condition or covenant or any other event shall occur or condition
exist (other than with respect to matters described under clause (ii)
immediately preceding) relating to Indebtedness (other than Indebtedness under
the Other Credit Facilities) having an aggregate principal amount (including
undrawn committed or available amounts) of more than One Hundred Million
Dollars ($100,000,000) if the effect of any such failure, event or condition is
to cause such Indebtedness to be declared to be due and payable or otherwise
become due and payable prior to its stated maturity, or (iv) the Company fails
to pay any such other Indebtedness in full at its stated maturity; or
(g) ERISA. The occurrence of a Reportable Event which the PBGC deems
grounds to terminate any employee pension benefit plan or for the appointment
of a trustee to administer such plan and such Reportable Event is not corrected
and such determination by the PBGC is not revoked within thirty (30) days after
notice thereof; or the institution of proceedings by the PBGC to terminate any
such plan; or the appointment of a trustee to administer any such plan; or
(h) Monetary Judgments. A final judgment or judgments in excess of One
Hundred Million Dollars ($100,000,000) shall be entered against the Company by
a court of record and not discharged in accordance with its terms or, within
sixty (60) days from the date of entry thereof, stayed from execution and
(within said period of sixty (60) days or such longer period during which
execution of such judgment(s) shall have been stayed) appeal taken therefrom
and execution thereof stayed during such appeal; or
(i) Insolvency; Voluntary Proceedings. The Company (i) generally fails
to pay, or admits in writing its inability to
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pay, its debts as they become due, subject to applicable grace
periods, if any, whether at stated maturity or otherwise; (ii)
voluntarily ceases to conduct its business in the ordinary course;
(iii) commences any Insolvency Proceeding with respect to itself; or
(iv) takes any action to effectuate or authorize any of the foregoing;
or
(j) Involuntary Proceedings. (i) Any involuntary Insolvency
Proceeding is commenced or filed against the Company, or any writ,
judgment, warrant of attachment, execution or similar process, is
issued or levied against a substantial part of the Company's
properties, and any such proceeding or petition is not dismissed, or
such writ, judgment, warrant of attachment, execution or similar
process is not released, vacated or fully bonded within 60 days after
commencement, filing or levy; (ii) the Company admits the material
allegations of a petition against it in any Insolvency Proceeding, or
an order for relief is entered in any Insolvency Proceeding; or (iii)
the Company acquiesces in the appointment of a receiver, trustee,
custodian, conservator, liquidator, mortgagee in possession (or agent
therefor), or other similar Person for itself or a substantial portion
of its business.
8.02 Remedies. If any Event of Default occurs, the Documentation Agent
shall, at the request of, or may, with the consent of, the Required Banks,
(a) declare the Commitment of each Bank to make Committed Loans
and to issue Letters of Credit to be terminated, whereupon such
Commitments shall forthwith be terminated;
(b) declare the unpaid principal amount of all outstanding
Loans, all interest accrued and unpaid thereon, and all other amounts
owing or payable hereunder or under any other Loan Document to be
immediately due and payable; without presentment, demand, protest or
other notice of any kind, all of which are hereby expressly waived by
the Company; and
(c) exercise on behalf of itself and the Banks all rights and
remedies available to it and the Banks under the Loan Documents or
applicable law;
provided, that upon the occurrence of any event specified in Section 8.01(i) or
8.01(j) above (upon the expiration of the 60-day period mentioned therein, if
applicable), the Commitment of each Bank shall automatically terminate and the
unpaid principal amount of all outstanding Loans and all interest and other
amounts as aforesaid shall automatically become due and payable without further
act of the Documentation Agent or any Bank. If any Bank which made a
Competitive Bid Loan shall suffer an Event of Default
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under Section 8.01(a) due to the Company's failure to pay any amount of
principal on any Competitive Bid Loan, such Bank may send a written request to
the Documentation Agent to obtain approval of the Required Banks to terminate
the Commitments and, if such approval is not obtained within ten (10) Business
days after the date such request is received, the requesting Bank (or assignee)
may commence enforcement of such default by any and all legal means. Any
payments received after the Banks have taken action pursuant to Section 8.02(b)
shall be allocated ratably among the Committed Loans.
In addition to the foregoing, following the occurrence and during the
Continuance of an Event of Default, so long as any Letter of Credit has not
been fully drawn and has not been cancelled or expired by its terms, upon
demand by the Documentation Agent, the Company shall deposit in an account (the
"Letter of Credit Cash Collateral Account") maintained with BofA in the name of
the Documentation Agent, for the ratable benefit of the Banks and the
Documentation Agent, cash in an amount equal to the aggregate undrawn face
amount of all outstanding Letters of Credit and all fees and other amounts due
or which may become due with respect thereto. The Company shall have no control
over funds in the Letter of Credit Cash Collateral Account, which funds shall
be invested by the Documentation Agent from time to time in certificates of
deposit of BofA having a maturity not exceeding thirty days. Such funds shall
be promptly applied by the Documentation Agent to reimburse the Facing Agent
for drafts drawn from time to time under such Letters of Credit, and if there
are insufficient funds available to reimburse the Facing Agent for all such
drafts, then such funds shall be applied ratably in accordance with the Stated
Amounts of the related Letters of Credit. Such funds, if any, remaining in the
Letter of Credit Cash Collateral Account following the payment of all
Obligations in full or the earlier termination of all Events of Default shall,
unless the Documentation Agent is otherwise directed by a court of competent
jurisdiction, be promptly paid over to the Company.
8.03 Rights Not Exclusive. The rights provided for in this Agreement
and the Other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement now existing or hereafter arising.
ARTICLE IX
THE DOCUMENTATION AGENT
9.01 Appointment and Authorization. Each Bank hereby irrevocable
(except as otherwise set forth in Section 9.09) appoints, designates and
authorizes the Documentation Agent to take such action on its behalf under the
provisions of this Agreement
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and each other Loan Document and to exercise such poweres and perform such
duties as are expressly delegated to it by the terms of this Agreement or any
other Loan Document, together with such powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary contained elsewhere in
this Agreement or in any other Loan Document, the Documentation Agent shall not
have any duties or responsibilities, except those expressly set forth herein,
nor shall the Documentation Agent have or be deemed to have any fiduciary
relationship with any Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Documentation Agent.
9.02 Delegation of Duties. The Documentation Agent may execute any of
its duties under this Agreement or any other Loan Document by or through
agents, employees or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Documentation
Agent shall not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects with reasonable care.
9.03 Liability of Agent-Related Persons. No Agent-Related Persons shall
(i) be liable for any action taken or omitted to be taken by any of them under
or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own negligence under or breach
or default of its obligations under this Agreement), or (ii) be responsible in
any manner to any of the Banks for any recital, statement, representation or
warranty made by the Company or any Subsidiary or Affiliate of the Company, or
any officer thereof, contained in this Agreement or in any other Loan
Document, or in any certificate, report, statement or other document referred
to or provided for in, or received by the Documentation Agent under or in
connection with, this Agreement or any other Loan Document, or the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other loan document, or for any failure of the Company or any other party
to any Loan Document to preform its obligations hereunder or thereunder. No
Agent-Related Person shall be under any obligation to any Bank to ascertain
or to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document, or
to inspect the Properties, books or records of the Company or any the
Company's Subsidiaries or Affiliates.
9.04 Reliance by Documentation Agent.
(a) The Documentation Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons, and
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upon advice and statements of legal counsel (including counsel to the Company),
independent accountants and other experts selected by the Documentation Agent.
The Documentation Agent shall be fully justified in failing or refusing to take
any action under this Agreement or any other Loan Document unless it shall
first receive such advice or concurrence of the Required Banks as it deems
appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Banks against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action.
The Documentation Agent shall in all cases by fully protected in acting, or in
refraining from acting, under this Agreement or any other Loan Document in
accordance with a request or consent of all of the Banks or the Required Banks,
as applicable, and such request and any action taken or failure to act pursuant
thereto shall be binding upon all of the Banks.
(b) For purposes of determining compliance with the conditions
specified in Section 4.01, each Bank that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with each
document or other matter either sent by the Documentation Agent to such Bank
for consent, approval, acceptance or satisfaction or required thereunder to be
consented to or approved by or acceptable or satisfactory to the Bank.
9.05 Notice of Default. The Documentation Agent shall not be deemed
to have knowledge or notice of the occurrence of any Potential Default or Event
of Default, except with respect to defaults in the payment of principal,
interest and fees required to be paid to the Documentation Agent for the
account of the Banks, unless the Documentation Agent shall have received
written notice from a Bank or the Company referring to this Agreement,
describing such Potential Default or Event of Default and stating that such
Notice is a "notice of default". The Documentation Agent will notify the Banks
of its receipt of any such notice. The Documentation Agent shall take such
action with respect to such Potential Default or Event of Default as shall be
requested by the Required Banks in accordance with Article VIII; provided,
however, that unless and until the Documentation Agent has received any such
request, the Documentation Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Potential
Default or Event of Default as it shall deem advisable or in the best interest
of the Banks.
9.06 Credit Decision. Each Bank expressly acknowledges that none of
the Agent-Related Persons has made any representation or warranty to it and
that no act by the Documentation Agent hereinafter taken, including any review
of the affairs of the Company and its Subsidiaries shall be deemed to
constitute any representation or warranty by any Agent-Related Person to any
Bank. Each Bank represents to the Documentation Agent that it has,
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independently and without reliance upon any Agent-Related Person and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Company and
its Subsidiaries, and all applicable bank regulatory laws relating to the
transactions contemplated hereby and made its own decision to enter into this
Agreement and extend credit to the Company hereunder. Each Bank also represents
that it will, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to
the business, prospects, operations, property, financial and other condition
and creditworthiness of the Company. Except for notices, reports and other
documents expressly herein required to be furnished to the Banks by the
Documentation Agent, the Documentation Agent shall not have any duty or
responsibility to provide any Bank with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of the Company which may come into the possession
of any of the Agent-Related Persons.
9.07 Indemnification. Whether or not the transactions contemplated
hereby are consummated, the Banks shall indemnify upon demand the Agent-Related
Persons (to the extent not reimbursed by or on behalf of the Company and
without limiting the obligation of the Company to do so), pro rata (as
determined in accordance with their respective Commitment Percentages) from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses and disbursements of any kind
whatsoever which may at any time (including at any time following the repayment
of the Loans) be imposed on, incurred by or asserted against any such Person
any way relating to or arising out of this Agreement or any document
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by any such
Person under or in connection with any of the foregoing; provided, however,
that no Bank shall be liable for the payment to the Agent-Related Persons of
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting solely
from such Person's gross negligence or willful misconduct. Without limitation
of the foregoing, each Bank shall reimburse the Documentation Agent upon demand
for its ratable share of any costs or out-of-pocket expenses (including
Attorney Costs) incurred by the Documentation Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein
to the extent
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that the Documentation Agent is not reimbursed for such expenses by or on
behalf of the Company. The obligation of the Banks in this Section 9.07 shall
survive the payment of all Obligations hereunder and the resignation or
replacement of the Documentation Agent.
9.08 Documentation Agent in Individual Capacity. BofA and its
Affiliates may make loans to, issue letters of credit for the account of,
accept deposits from, acquire equity interests in and generally engage in any
kind of banking, trust, financial advisory, underwriting or other business with
the Company and its Affiliates as though BofA were not the Documentation Agent
hereunder and without notice to or consent of the Banks. The Banks acknowledge
that, pursuant to such activities, BofA or its Affiliates may receive
information regarding the Company or its Subsidiaries and Affiliates (including
information that may be subject to confidentiality obligations in favor of the
Company or such Subsidiary or Affiliate) and acknowledge that the Documentation
Agent shall be under no obligation to provide such information to them. With
respect to its Loans, the Documentation Agent shall have the same rights and
powers under this Agreement as any other Bank and may exercise the same as
though it were not the Documentation Agent and the terms "Bank" and "Banks"
shall include BofA in its individual capacity.
9.09 Successor Documentation Agent. The Documentation Agent may, and at
the request of the Required Banks shall, resign as Documentation Agent, upon
thirty days' notice to the Banks and the Company. If the Documentation Agent
resigns under this Agreement, the Required Banks shall appoint from among the
Banks a successor Documentation Agent which successor Documentation Agent shall
be subject to the reasonable approval of the Company, provided no Event of
Default then exists. If no successor Documentation Agent is appointed prior
to the effective date of the resignation of the resigning Documentation Agent,
the Documentation Agent may appoint, after consulting with the Banks and
subject to the approval of the Company, a successor Documentation Agent from
among the Banks. Upon the acceptance of its appointment as successor
Documentation Agent hereunder, such successor Documentation Agent
shall succeed to all the rights, powers and duties of the retiring
Documentation Agent and the term "Documentation Agent" shall mean such
successor Documentation Agent and the retiring Documentation Agent's
appointment, rights, powers and duties in such capacity shall be terminated.
After any retiring Documentation Agent's resignation hereunder as
Documentation Agent, the provisions of this Article IX and Sections 10.04 and
10.05 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was the Documentation Agent under this Agreement. If no
successor Documentation Agent has accepted appointment as Documentation Agent
by the date which is thirty days following a retiring Documentation Agent's
notice of resignation, the retiring Documentation Agent's notice of resignation
shall nevertheless thereupon become effective and the Banks shall perform all
of the duties of the Documentation
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Agent until such time, if any, as the Required Banks appoint a successor
Documentation Agent as provided for above.
9.10 Withholding Tax.
(a) If any Bank is a "foreign corporation, partnership or trust" within
the meaning of the Code and such Bank claims exemption from, or a reduction of,
U.S. withholding tax under Sections 1441 or 1442 of the Code, such Bank agrees
with and in favor of the Documentation Agent, to deliver to the Documentation
Agent:
(i) if such Bank claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, two (2) properly
completed and executed originals of IRS Form 1001 ("Form 1001") before
the payment of any interest in the first calendar year and before the
payment of any interest in each third succeeding calendar year during
which interest may be paid under this Agreement;
(ii) if such Bank claims that interest paid under this
Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such
Bank, two (2) properly completed and executed originals of IRS Form
4224 ("Form 4224") before the payment of any interest is due in the
first taxable year of such Bank and in each succeeding taxable year of
such Bank during which interest may be paid under this Agreement; and
(iii) such other form or forms as may be required under the
Code or other laws of the United States as a condition to exemption
from, or reduction of, United States withholding tax.
Such Bank agrees to promptly notify the Documentation Agent of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Bank claims exemption from, or reduction of, withholding
tax under a United States tax treaty by providing IRS Form 1001 and such Bank
sells, assigns, grants a participation in, or otherwise transfers all or part of
the Obligations of the Company to such Bank, such Bank agrees to notify the
Documentation Agent of the percentage amount in which it is no longer the
beneficial owner of Obligations of the Company to such Bank. To the extent of
such percentage amount, the Documentation Agent will treat such Bank's Form
1001 as no longer valid.
(c) If any Bank claiming exemption from United States withholding tax by
filing IRS Form 4224 with the Documentation Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations of the
Company to such
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Bank, such Bank agrees to undertake sole responsibility for complying with the
withholding tax requirements imposed by Sections 1441 and 1442 of the Code.
(d) If any Bank is entitled to a reduction in the applicable
withholding tax, the Documentation Agent may withhold from any interest payment
to such Bank an amount equivalent to the applicable withholding tax after
taking into account such reduction. If the forms or other documentation
required by subsection (a) of this Section are not delivered to the
Documentation Agent, then the Documentation Agent may withhold from any
interest payment to such Bank not providing such forms or other documentation
an amount equivalent to the applicable withholding tax.
(e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that the Documentation Agent did
not properly withhold tax from amounts paid to or for the account of any Bank
(because the appropriate form was not delivered or properly executed, because
such Bank failed to notify the Documentation Agent of a change in circumstances
which rendered the exemption from, or reduction of, withholding tax
ineffective, or for any other reason) such Bank shall indemnify the
Documentation Agent fully for all amounts paid, directly or indirectly, by the
Documentation Agent as tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the amounts payable to the
Documentation Agent under this Section, together with all costs and expenses
(including Attorney Costs). The obligation of the Banks under this subsection
shall survive the payment of all Obligations and the resignation or replacement
of the Documentation Agent.
ARTICLE X
MISCELLANEOUS
10.01 Amendments and Waivers. No amendment or waiver of any provision
of this Agreement or any other Loan Document, and no consent with respect to
any departure by the Company therefrom, shall be effective unless the same
shall be in writing and signed by the Required Banks and acknowledged in
writing by the Documentation Agent, and then such waiver shall be effective
only in the specific instance and for the specific purpose for which given;
provided, however, that no such waiver, amendment, or consent shall, unless in
writing and signed by all the Banks, do any of the following:
(a) increase the Commitment of any Bank;
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(b) postpone or delay any date fixed for any payment of
principal, interest, fees or other amounts due hereunder or under any
Loan Document;
(c) reduce the principal of, or the rate of interest specified
herein on any Loan, or of any fees or other amounts payable hereunder
or under any Loan Document;
(d) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans which shall be required
for the Banks or any of them to take any action hereunder;
(e) amend this Section 10.01 or Section 2.12;
(f) extend the Termination Date or permit any Letter of Credit
to have an expiry date beyond the Termination Date; or
(g) amend the definition of "Required Banks";
provided, further, that no amendment, waiver or consent shall, unless
in writing and consented to and signed by the Documentation Agent, in addition
to the Required Banks or all the Banks, as the case may be, affect the rights
or duties of the Documentation Agent under this Agreement or any other Loan
Document.
10.02 Notices.
(a) All notices, requests and other communications provided for
hereunder shall be in writing (including, unless the context expressly
otherwise provides, by facsimile transmission) and mailed, faxed, or delivered,
(i) if to the Company, to its address specified on the signature pages hereof,
(ii) if to any Bank, to its Lending Office, and (iii) if to the Documentation
Agent, to its address specified on the signature pages hereof; or (iv) as to
any party to such other address as shall be designated by such party in a
written notice to the other parties.
(b) All such notices and communications shall, when transmitted by
overnight delivery or by facsimile, be effective when delivered for overnight
delivery or transmitted by facsimile (to be promptly confirmed by sender by
telephone), respectively, or if delivered, upon delivery, except that notices
pursuant to Article II or VIII shall not be effective until actually received
by the Documentation Agent.
(c) The Company acknowledges and agrees that any agreement of the
Documentation Agent and the Banks in Article II herein to receive certain
notices by telephone and facsimile is solely for the convenience and at the
request of the Company. The Documentation Agent and the Banks shall be entitled
to rely in good faith on the authority of any Person purporting to be a Person
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authorized by the Company to give such notice and the Documentation Agent and
the Banks shall not have any liability to the Company or other Person on
account of any action taken or not taken by the Documentation Agent and the
Banks in good faith reliance upon such telephonic or facsimile notice. The
obligation of the Company to repay the Loans or any other Obligations shall not
be affected in any way or to any extent by any failure by the Documentation
Agent and the Banks to receive written confirmation of any telephonic or
facsimile notice or the receipt by the Documentation Agent and the Banks of a
confirmation which is at variance with the terms conveyed to the Documentation
Agent and the Banks in the telephonic or facsimile notice.
10.03 No Waiver. No failure to exercise and no delay in exercising, on
the part of the Documentation Agent or any Bank, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege.
10.04 Costs and Expenses. The Company shall, whether or not the
transactions contemplated hereby shall be consummated:
(a) pay or reimburse the Documentation Agent on demand for all
costs and expenses incurred by the Documentation Agent in connection
with the development, preparation, delivery, administration and
execution of, and any amendment, supplement, waiver or modification to,
this Agreement, any Loan Document and any other documents prepared in
connection herewith or therewith, and the consummation of the
transactions contemplated hereby and thereby, including the Attorney
Cost incurred by it with respect thereto; provided, that the fees and
expenses of outside counsel in connection with the preparation of this
Agreement and the other Loan Documents shall be in accordance with a
letter agreement dated August 30, 1994 from Winston & Strawn to the
Documentation Agent;
(b) pay or reimburse each Bank and the Documentation Agent on
demand for all reasonable costs and expenses incurred by them in
connection with the enforcement, attempted enforcement, or preservation
of any rights or remedies (including the connection with any "workout"
or restructuring regarding the Loans or any Event of Default or
Potential Default) under this Agreement, any other Loan Document, and
any such other documents, including Attorney Costs incurred by the
Documentation Agent and any Bank; and
(c) pay or reimburse the Documentation Agent on demand for all
reasonable appraisal (including the allocated cost of internal
appraisal services), audit, environmental inspection
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and review (including the allocated cost of such internal
services), search and filing costs, fees and expenses, incurred or
sustained by the Documentation Agent in connection with the matters
referred to under clause (b) of this Section 10.04.
10.05 Indemnity. The Company agrees to indemnify and hold harmless the
Banks, the Documentation Agent, the Arrangers and each director, officer and
employee of each of them (each, an "Indemnified Person") from and against any
and all action, suits, proceedings, damages, liabilities or expenses of any
kind or nature whatsoever which may be incurred by or asserted against any such
Indemnified Person: (a) as a result of the Company's making any untrue
statement of a material fact or omitting to state a material fact under or
pursuant to the Contract Documents, or the Company's negligence under, or
breach or default of, the Contract Documents; or (b) by any third party who has
a relationship with the Company and asserts in connection therewith that an
Indemnified Person is liable to such third party by reason of the Contract
Documents between the Company and the Banks, the Documentation Agent and/or the
Arrangers; provided, that no Indemnified Person shall be indemnified with
respect to such party's breach, default, negligence or bad faith in performning
its duties and obligations under any of the Contract Documents. For purposes
hereof, the term "Contract Documents" means the Loan Documents and any
further agreements or instruments entered into pursuant to this Agreement. Any
Indemnified Person seeking indemnification pursuant hereto with respect to a
third party claim must give the Company timely notice of any such claim and
cooperate in the defense thereof, and the Company shall have the right to
control the defense thereof and, if the same shall not involve any payment
or performance by the Indemnified Person, settlement of such claim.
10.06 Marshalling; Payments Set Aside. Neither the Documentation Agent
nor any Bank shall be under any obligation to marshall any assets in favor of
the Company or any other person or against or in payment of any or all of the
Obligations. To the extent that the Company makes a payment or payments to the
Documentation Agent or the Banks, or the Documentation Agent or the Banks
enforce their Liens or exercise their rights of set-off, and such payment or
payments or the proceeds of such enforcement or set-off or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party in
connection with any Insolvency Proceeding, or otherwise, then to the extent of
such recovery the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or set-off had not occurred.
10.07 Successors and Assigns. Subject to Section 10.08 hereof, the
provisions of this Agreement shall be binding upon and
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inure to the benefit of the parties hereto and their respective successors and
assigns, except that the Company may not assign or transfer any of its rights
or obligations under this Agreement without the prior written consent of the
Documentation Agent and each Bank.
10.08 Assignments, Participations, Etc.
(a) Any Bank may, with the written consent of the Company and the
Documentation Agent, which consents shall not be unreasonably withheld, at any
time assign and delegate to one or more Eligible Assignees (provided that no
written consent of the Company or the Documentation Agent shall be required in
connection with any assignment and delegation by a Bank to a Bank Affiliate of
such Bank or to any other Bank) (each an "Assignee") all, or any part of all,
of its Loans, its Commitment Percentage of all LC Obligations, its Commitment
and the other rights and obligations of such Bank hereunder, in a minimum
amount (except with respect to assignments to other Banks) of Ten Million
Dollars ($10,000,000)); provided, however, that the Company and the
Documentation Agent may continue to deal solely and directly with such Bank in
connection with the interest so assigned to an Assignee until (A) written
notice of such assignment in form and substance satisfactory to the Company and
the Documentation Agent, together with payment instructions, addresses and
related information with respect to the Assignee, shall have been given to the
Company and the Documentation Agent by such Bank and the Assignee; (B) such
Bank and its Assignee shall have delivered to the Company and the Documentation
Agent an Assignment and Acceptance in the form of Exhibit I ("Assignment and
Acceptance"); (C) such Bank or its Assignee shall have paid the processing fee
of $3,000 to the Documentation Agent; and (D) the assigning Bank shall have
delivered any Committed Loan Note and any Competitive Bid Note payable to such
Bank to the Documentation Agent.
(b) From and after the date that the Documentation Agent notifies the
assignor Bank that the Requirements of Section 10.08(a) are satisfied (i) the
Assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, shall have the rights and obligations of a Bank under the Loan
Documents, and (ii) the assignor Bank shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its additional
obligations under the Loan Documents.
(c) Within five (5) Business Days after its receipt of notice by the
Documentation Agent that the requirements of Section 10.08(a) are satisfied the
Company shall execute and deliver to the Documentation Agent a Competitive Bid
Note payable to the order of the Assignee; provided, that unless the Assignor
Bank has retained
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a portion of its Commitment, the new Competitive Bid Note will only be
delivered upon receipt of the assignor Bank's Competitive Bid Note.
(d) Immediately upon each Assignee's making its payment under the
Assignment and Acceptance, this Agreement shall be deemed to be amended to the
extent, but only to the extent, necessary to reflect the addition of the
Assignee and the resulting adjustment of the Commitments arising therefrom. The
Commitment allocated to each Assignee shall reduce the Commitment of the
assigning Bank pro tanto.
(e) Any Bank may at any time sell to one or more commercial banks and,
in respect of Competitive Bid Loans, to any other Person (a "Participant")
participating interests in any Loans, LC Obligations, the Commitment of that
Bank and the other interests of that Bank (the "Originating Bank") hereunder
and under the other Loan Documents; provided, however, that (i) the Originating
Bank's obligations under this Agreement shall remain unchanged, (ii) the
Originating Bank shall remain solely responsible for the performance of such
obligations, (iii) the Company and the Documentation Agent shall continue to
deal solely and directly with the Originating Bank in connection with the
Originating Bank's rights and obligations under this Agreement and the other
Loan Documents, and (iv) no Bank shall transfer or grant any participating
interest under which the Participant shall have rights to approve any amendment
to, or any consent or waiver with respect to, this Agreement or any other Loan
Document, except to the extent such amendment, consent or waiver would require
unanimous consent as described in the first proviso to Section 10.01. In the
case of any such participation, the Participant shall be entitled to the
benefits of Sections 3.01, 3.03 and 3.05 but only to the extent it would be
entitled to the same if it were also a Bank which is an Eligible Assignee, but
shall not have any other rights under this Agreement, or any of the other Loan
Documents, and all amounts payable by the Company hereunder shall be determined
as if such Bank had not sold such participation; except that, if amounts
outstanding under this Agreement are due and unpaid, or shall have been
declared or shall have become due and payable upon the occurrence of an Event
of Default, each Participant shall be deemed to have the right of set-off in
respect of its participating interest in amounts owing under this Agreement to
the same extent as if the amount of its participating interest were owing
directly to it as a Bank under this Agreement.
(f) Each Bank and the Documentation Agent agrees to take normal and
reasonable precautions and exercise due care to maintain the confidentiality of
all information identified as "confidential" by the Company provided to it by
the Company or by the Documentation Agent on the Company's behalf, in
connection with this Agreement or any other Loan Document, and neither it nor
any of its Affiliates shall use or disclose any such information for
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any purpose or in any manner other than pursuant to the terms contemplated by
this Agreement, except to the extent such information (i) was or becomes
generally available to the public other than as a result of a disclosure by a
party to this Agreement, or (ii) was or becomes available on a non-confidential
basis from a source other than the Company, provided that such source is not
bound by a confidentiality agreement with the Company known to the Bank;
provided, however, that the Documentation Agent or any Bank may disclose such
information (A) at the request or pursuant to any requirement of any
Governmental Authority to which the Documentation Agent or such Bank is subject
or in connection with an examination of the Documentation Agent or such Bank by
any such authority; (B) pursuant to subpoena or other court process; (C) when
required to do so in accordance with the provisions of any applicable
Requirement of Law; and (D) to the Documentation Agent's or such Bank's
independent auditors and other professional advisors in the ordinary course of
and within the scope of such advisors' engagements. Notwithstanding the
foregoing, the Company authorizes each Bank to disclose to any Participant or
Assignee (each, a "Transferee") and to any prospective Transferee, such
financial and other information in such Bank's possession concerning the
Company or its Subsidiaries which has been delivered to the Documentation Agent
or the Banks pursuant to this Agreement or which has been delivered to the
Documentation Agent or the Banks by the Company in connection with the Banks'
credit evaluation of the Company prior to entering into this Agreement;
provided, that unless otherwise agreed by the Company, such Transferee or
prosepctive Transferee agrees in writing to such Bank to keep such information
confidential to the same extent required of the Banks hereunder. Each Bank
agrees that its obligations under this Section 10.08 shall survive any sale or
assignment of its interests to a Transferee.
(g) Notwithstanding any other provision contained in this Agreement or
any other Loan Document to the contrary, any Bank may assign all or any portion
of the Loans held by it to any Federal Reserve Bank or the United States
Treasury as collateral security pursuant to Regulation A of the Federal Reserve
Board and any Operating Circular issued by such Federal Reserve Bank, provided
that any payment in respect of such assigned Loans or Notes made by the Company
to or for the account of the assigning Bank in acordance with the terms of this
Agreement shall satisfy the Company's obligations hereunder in respect to such
assigned Loans or Notes to the extent of such payment. No such assignment shall
release the assigning Bank from its obligations hereunder. Each Bank agrees to
give the Company prompt written notice prior to any disclosure or release of
any confidential material pursuant to the first proviso of Section 10.08(f).
10.09 Set-off. In addition to any rights and remedies of the Banks
provided by law, if the Obligations shall have become due and payable in full,
each Bank is authorized at any time and from time
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to time, without prior notice to the Company, any such notice being waived by
the Company 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 by, and other indebtedness at any time owing to, such Bank to or
for the credit or the account of the Company against any and all obligations
owing to such Bank, now or hereafter existing, irrespective of whether or not
the Documentation Agent or such Bank shall have made demand under this
Agreement or any Loan Document. Each Bank agrees promptly to notify the Company
and the Documentation Agent after any such set-off and application made by such
Bank; provided, that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Bank under this
Section 10.09 are in addition to the other rights and remedies (including other
rights of set-off) which such Bank may have.
10.10 Notification of Addresses, Lending Offices, Etc. Each Bank
shall notify the Documentation Agent and the Company in writing of any changes
in the address to which notices to the Bank should be directed, of the
addresses of any of its Lending Offices of payment instructions in respect of
all payments to be made to it hereunder and of such other administrative
information as the Documentation Agent or the Company shall reasonably request.
10.11 Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement in any number of separate counterparts, each of
which, when so executed, shall be deemed an original, and all of said
counterparts taken together shall be deemed to constitute but one and the same
instrument. A set of the copies of this Agreement signed by all the parties
shall be lodged with the Company and the Documentation Agent.
10.12 Severability. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder.
10.13 No Third Parties Benefited. This Agreement is made and entered
into for the sole protection and legal benefit of the Company, the Banks and
the Documentation Agent and their permitted successors and assigns, and no
other Person shall be a direct or indirect legal beneficiary of, or have any
direct or indirect cause of action or claim in connection with, this Agreement
or any of the other Loan Documents. Neither the Documentation Agent nor any
Bank shall have any obligation to any Person not a party to this Agreement or
other Loan Documents.
10.14 Governing Law and Jurisdiction.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK (WITHOUT REGARD
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TO CONFLICTS OF LAW PROVISIONS THEREOF); PROVIDED THAT THE COMPANY, THE
DOCUMENTATION AGENT AND THE BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL
LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK
OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANY, THE DOCUMENTATION AGENT
AND THE BANKS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
JURISDICTION OF THOSE COURTS. EACH OF THE COMPANY, THE DOCUMENTATION AGENT AND
THE BANKS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE
COMPANY, THE DOCUMENTATION AGENT AND THE BANKS EACH WAIVE PERSONAL SERVICE OF
ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS
PERMITTED BY NEW YORK LAW.
10.15 Waiver of Jury Trial. THE COMPANY, THE BANKS AND THE
DOCUMENTATION AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY
ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE COMPANY, THE BANKS AND THE
DOCUMENTATION AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE
TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE
PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED
BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY
OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR
THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
10.16 Entire Agreement. This Agreement, together with the other Loan
Documents, embodies the entire agreement, and understanding among the Company,
the Banks and the Documentation Agent, and supersedes all prior or
contemporaneous agreements and understandings of such Persons, verbal or
written, relating to the subject matter hereof and thereof, except for the fee
letters referenced in Sections 2.11(b) and 2.11(c) and any prior arrangements
made with respect to the payment by the Company of (or any indemnification for)
any fees, costs or expenses payable to or incurred (or to be incurred) by or on
behalf of the Documentation Agent or the Banks.
-72-
<PAGE> 79
10.17 Termination of Existing Facilities. The Company and each Bank
party to this Agreement which is also party to an Existing Facility hereby
agree to terminate such Existing Facility effective upon the execution of this
Agreement. The Company hereby agrees to pay any fees outstanding to any such
Bank in connection with such Existing Facility as soon as practicable following
invoice thereof by such Bank.
[BALANCE OF PAGE LEFT INTENTIONALLY BLANK; SIGNATURE PAGES FOLLOW.]
-73-
<PAGE> 80
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in Chicago, Illinois by their proper and duly
authorized officers as of the day and year first above written.
KMART CORPORATION
By: James P. Churilla
-------------------------------
Title: Vice President and Treasurer
----------------------------
Address for Notices:
3100 West Big Beaver Road
Troy, MI 48084
Attn: Treasurer
Facsimile: (810) 643-5398
Telephone: (810) 643-1000
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Documentation Agent
By: _______________________________
Title: ____________________________
Address for Notices:
1455 Market Street, 12th Floor
San Francisco, California 94103
Attn: Agency Management Services
Facsimile: (415) 622-4894
Telephone: (415) 953-8501
<PAGE> 81
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
KMART CORPORATION
By: __________________________
Title: _______________________
Address for Notices:
3100 West Big Beaver Road
Troy, MI 48084
Attn: Treasurer
Facsimile: (810) 643-5398
Telephone: (810) 643-1000
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Documentation Agent
By: Dietmar Schiel
---------------------------
Title: Vice President
------------------------
Address for Notices:
1455 Market Street, 12th Floor
San Francisco, California 94103
Attn: Agency Management Services
Facsimile: (415) 622-4894
Telephone: (415) 953-8501
<PAGE> 82
Banks Signatory to Credit Agreement
Banca Commerciale Italiana, Chicago Branch
Banca Nazionale del Lavoro S.p.A. - New York Branch
Bankers Trust Company
Bank of America National Trust and Savings Association
The Bank of California, N.A.
Bank of Hawaii
The Bank of New York
The Bank of Tokyo Trust Company
Barnett Bank of South Florida, N.A.
Caisse Nationale de Credit Agricole
Canadian Imperial Bank of Commerce
Comerica Bank
Credit Lyonnais Chicago Branch
Credit Lyonnais Cayman Island Branch
The Dai-Ichi Kangyo Bank, Ltd., Chicago Branch
The Daiwa Bank, Limited
Deutsche Bank AG, Chicago and/or Cayman Islands Branches
<PAGE> 83
First Interstate Bank of California
The First National Bank of Boston
The First National Bank of Chicago
First Tennessee Bank National Association
Fleet Bank of Massachusetts, N.A.
The Fuji Bank, Limited
Istitutio Bancario San Paolo di Torino S.p.A.
The Long-Term Credit Bank of Japan, Ltd. Chicago Branch
Michigan National Bank
The Mitsubishi Trust and Banking Corp.
National City Bank, Columbus
Nationsbank of North Carolina, N.A.
NBD Bank, N.A.
Royal Bank of Canada
The Sakura Bank, Limited
The Sanwa Bank, Limited, Chicago Branch
Shawmut Bank, N.A.
Societe Generale
Society National Bank
<PAGE> 84
The Sumitomo Bank, Limited, Chicago Branch
The Tokai Bank, Ltd., Chicago Branch
UMB Bank, n.a.
Union Bank
Union Bank of Switzerland - Chicago Branch
United States National Bank of Oregon
Westdeutsche Landesbank Girozentrale New York and Cayman Islands Branches
Yasuda Trust and Banking Company, Limited
<PAGE> 85
SCHEDULE 5.03
CONSENTS AND APPROVALS
None.
<PAGE> 86
SCHEDULE 7.03
EXISTING MORTGAGES, SECURITY INTEREST AND LIENS ON ASSETS OF THE COMPANY
EXISTING ON THE CLOSING DATE
Liens/Security Interests/Mortgages on PACE properties
Current Mortgages existing on Kmart Corporation's properties as of September
21, 1994 was $336 million
Kmart Corporation has guaranteed indebtedness related to certain of its
properties financed by industrial revenue bonds. At January 26, 1994, the total
amount of such guaranteed indebtedness was $284 million, of which $92 million
was included in capital lease obligations.
<PAGE> 87
EXHIBIT A
FORM OF NOTICE OF BORROWING
___________________, 19___
Bank of America National Trust
and Savings Association, as
Documentation Agent
1455 Market Street, 12th Floor
San Francisco, California 94103
Attention: Agency Management Services
Re: Three Year Credit Agreement dated as of October 7, 1994 (as from
time to time amended, restated, supplemented or otherwise
modified, the "Credit Agreement") among KMART CORPORATION (the
"Company"), the Banks named therein and BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION, as Documentation Agent
Ladies and Gentlemen:
The undersigned refers to the Credit Agreement, the terms defined
therein being used herein as therein defined, and hereby gives you notice
irrevocably, pursuant to Section 2.03 of the Credit Agreement, of the Committed
Borrowing specified herein:
(1) The Business Day of the proposed Borrowing is ________________
____________________, 19___.
(2) The aggregate amount of the proposed Borrowing is
$_______________.
(3) The proposed Borrowing is to be comprised of [LIBOR] [CD Rate]
[Reference Rate] Committed Loans.
[(4) The duration of the initial Interest Period for the [LIBOR
Committed Loans] [CD Rate Committed Loans] included in the proposed
Borrowing shall be ______________________ [months] [days].]
(5) Payment for this Borrowing is to be made to account number _____ at
the Documentation Agent.
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date of the proposed Borrowing,
before and after giving effect thereto and to the application of the proceeds
therefrom:
<PAGE> 88
(a) the representations and warranties of the undersigned contained in
Article V of the Credit Agreement are true and correct on and as of each such
date as if made on and as of each such date (except to the extent such
representations and warranties expressly refer to an earlier date, in which
case they shall be true and correct as of such earlier date); and
(b) no Potential Default or Event of Default exists or shall result
from such proposed Borrowing.
KMART CORPORATION
By: _____________________________
Title: __________________________
A-2
<PAGE> 89
EXHIBIT B
FORM OF NOTICE OF CONVERSION/CONTINUATION
__________, 19__
Bank of America National Trust
and Savings Association, as
Documentation Agent
1455 Market Street, 12th Floor
San Francisco, California 94103
Attention: Agency Management Services
Re: Three Year Credit Agreement dated as of October 7, 1994
(as from time to time amended, restated, supplemented or otherwise
modified, the "Credit Agreement") among KMART CORPORATION (the
"Company"), the Banks named therein and BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION, as Documentation Agent
Ladies and Gentlemen:
The undersigned refers to the Credit Agreement, the terms defined
therein being used herein as therein defined, and hereby gives you notice
irrevocably, pursuant to Section 2.04 of the Credit Agreement, of the
[conversion] [continuation] of the Committed Loans specified herein:
(1) The [Conversion Date] [Continuation Date] is ________, 19__.
(2) The aggregate amount of the Committed Loans to be [converted]
[continued] is $___________________.
(3) The Loans are to be [converted into] [continued as] [LIBOR] [CD
Rate] [Reference Rate] Committed Loans.
(4) Unless the Loans are to be converted into Reference Rate
Committed Loans, the duration of the Interest Period for
the Loans included in the [conversion] [continuation] shall be
____________ [months] [days].
The undersigned hereby certifies that no Potential Default or Event
of Default exists as of the date hereof.
KMART CORPORATION
By: ______________________
Title: ___________________
<PAGE> 90
EXHIBIT C
FORM OF COMMITTED LOAN NOTE
$_____________ __________________, 19___
FOR VALUE RECEIVED, the undersigned, KMART CORPORATION, a Michigan
corporation (the "Company"), hereby promises to pay to the order of
_____________________________ (the "Bank") the principal sum of ______________
Dollars ($_________) or, if less, the aggregate unpaid principal amount of the
Committed Loans made by the Bank to the Company pursuant to the Three Year
Credit Agreement dated as of October 7, 1994 (as from time to time amended,
restated, supplemented or otherwise modified, the "Credit Agreement"), among
the Company, the Bank, the other banks parties thereto and BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION, as Documentation Agent, on the
Termination Date.
The Company also promises to pay interest on the unpaid principal
amount hereof from the date hereof until paid at the rates and at the times
which shall be determined in accordance with the provisions of the Credit
Agreement.
This promissory note (this "Note") is one of the Company's Committed
Loan Notes issued pursuant to and entitled to the benefits of the Credit
Agreement to which reference is hereby made (including Section 2.02 thereof)
for a more complete statement of the terms and conditions under which the
Committed Loans evidenced hereby are made and are to be repaid and the amounts
owing hereunder. Capitalized terms used herein without definition shall have
the meanings set forth in the Credit Agreement.
All payments of principal and interest in respect of this Note shall be
made in lawful money of the United States of America in immediately available
funds at the office of the Administrative Agent at San Francisco, California or
at such other place as shall be designated in writing for such purpose in
accordance with the terms of the Credit Agreement. Each of the Bank and any
subsequent holder of this Note agrees that before disposing of this Note or any
part hereof it will make a notation hereon of all principal payments previously
made hereunder and of the date to which interest hereon has been paid;
provided, that the failure to make a notation of any payment made on this Note
shall not limit or otherwise affect the obligation of the Company hereunder
with respect to payments of principal or interest on this Note.
This Note is subject to prepayment as provided in the Credit Agreement.
Upon the occurrence of an Event of Default, the unpaid balance of the principal
amount of this Note may become, or may be declared to be, due and payable in
the manner, upon the conditions and with the effect provided in the Credit
Agreement.
The Company promises to pay all actual and reasonable costs and
expenses, including Attorney Costs, incurred in the collection
<PAGE> 91
and enforcement of this Note. The Company and endorsers of this Note hereby
consent to renewals and extensions of time at or after the maturity hereof,
without notice, and hereby waive diligence, presentment, protest, demand and
notice of every kind and, to the full extent permitted by law, the right to
plead any statute of limitations as a defense to any demand hereunder.
THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK (WITHOUT REGARD TO CONFLICTS
OF LAW PROVISIONS THEREOF).
IN WITNESS WHEREOF, the Company has caused this Note to be executed and
delivered by its duly authorized officer, as of the day and year first above
written.
KMART CORPORATION
By:__________________________________
Title:_______________________________
C-2
<PAGE> 92
TRANSACTIONS ON COMMITTED LOAN NOTE
(REFERENCE RATE)
<TABLE>
<CAPTION>
AMOUNT
INTEREST AMOUNT OF PRINCIPAL OR OUTSTANDING
RATE LOAN MADE PAID BALANCE PRINCIPAL NOTATION
DATE ON LOAN THIS DATE THIS DATE THIS DATE MADE BY
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
</TABLE>
C-3
<PAGE> 93
TRANSACTIONS ON COMMITTED LOAN NOTE
(LIBOR)
<TABLE>
<CAPTION>
AMOUNT
APPLICABLE AMOUNT OF PRINCIPAL OR OUTSTANDING
MARGIN LOAN MADE INTEREST PAID BALANCE PRINCIPAL NOTATION
DATE LIBOR THIS DATE PERIOD THIS DATE THIS DATE MADE BY
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
C-4
<PAGE> 94
TRANSACTIONS ON COMMITTED LOAN NOTE
(CD RATE)
<TABLE>
<CAPTION>
AMOUNT
APPLICABLE AMOUNT OF PRINCIPAL OR OUTSTANDING
MARGIN LOAN MADE INTEREST PAID BALANCE PRINCIPAL NOTATION
DATE CD RATE THIS DATE PERIOD THIS DATE THIS DATE MADE BY
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
C-5
<PAGE> 95
EXHIBIT D
FORM OF COMPETITIVE BID NOTE
______________, 19___
FOR VALUE RECEIVED, the undersigned, KMART CORPORATION, a Michigan
corporation (the "Company"), hereby promises to pay to the order of
_________________________________________________________________ (the "Bank")
the principal sum of each Competitive Bid Loan ("Bid Loan") made by the Bank to
the Company pursuant to the Three Year Credit Agreement dated as of October 7,
1994 (as from time to time amended, restated, supplemented or otherwise
modified, the "Credit Agreement"), among the Company, the Bank, the other banks
parties thereto and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as
Documentation Agent, on the last day of the Interest Period for such Bid Loan.
The Company also promises to pay interest on the unpaid principal
amount hereof from the date hereof until paid at the rates and at the times
which shall be determined in accordance with the provisions of the Credit
Agreement.
This promissory note (this "Note") is one of the Company's Competitive
Bid Notes issued pursuant to and entitled to the benefits of the Credit
Agreement to which reference is hereby made (including Section 2.02 thereof)
for a more complete statement of the terms and conditions under which the Bid
Loans evidenced hereby are made and are to be repaid and the amounts owing
hereunder. Capitalized terms used herein without definition shall have the
meanings set forth in the Credit Agreement.
All payments of principal and interest in respect of this Note shall be
made in lawful money of the United States of America in immediately available
funds at the office of the Documentation Agent at San Francisco, California or
at such other place as shall be designated in writing for such purpose in
accordance with the terms of the Credit Agreement. Each of the Bank and any
subsequent holder of this Note agrees that before disposing of this Note or any
part hereof it will make a notation hereon of all principal payments previously
made hereunder and of the date to which interest hereon has been paid;
provided, that the failure to make a notation of any payment made on this Note
shall not limit or otherwise affect the obligation of the Company hereunder
with respect to payments of principal or interest on this Note.
This Note is not subject to prepayment as provided in the Credit
Agreement. Upon the occurrence of an Event of Default, the unpaid balance of
the principal amount of this Note may become, or may be declared to be, due and
payable in the manner, upon the conditions and with the effect provided in the
Credit Agreement.
The Company promises to pay all actual and reasonable costs and
expenses, including Attorney Costs, incurred in the collection
<PAGE> 96
and enforcement of this Note. The Company and endorsers of this Note hereby
consent to renewals and extensions of time at or after the maturity hereof,
without notice, and hereby waive diligence, presentment, protest, demand and
notice of every kind and, to the full extent permitted by law, the right to
plead any statute of limitations as a defense to any demand hereunder.
THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK (WITHOUT REGARD TO CONFLICTS
OF LAW PROVISIONS THEREOF).
IN WITNESS WHEREOF, the Company has caused this Note to be executed and
delivered by its duly authorized officer, as of the day and year first above
written.
KMART CORPORATION
By: _____________________________
Title: __________________________
D-2
<PAGE> 97
<TABLE>
<CAPTION>
TRANSACTIONS ON COMPETITIVE BID NOTE
(ABSOLUTE RATE)
AMOUNT
INTEREST AMOUNT OF END OF PRINCIPAL OR OUTSTANDING
RATE LOAN MADE INTEREST PAID BALANCE PRINCIPAL NOTATION
DATE ON LOAN THIS DATE PERIOD THIS DATE THIS DATE MADE BY
_______________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
D-3
<PAGE> 98
<TABLE>
<CAPTION>
TRANSACTIONS ON COMPETITIVE BID NOTE
(LIBOR)
AMOUNT
APPLICABLE AMOUNT OF PRINCIPAL OR OUTSTANDING
MARGIN LOAN MADE INTEREST PAID BALANCE PRINCIPAL NOTATION
DATE LIBOR BID THIS DATE PERIOD THIS DATE THIS DATE MADE BY
________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
D-4
<PAGE> 99
EXHIBIT E
FORM OF COMPETITIVE BID REQUEST
____________________, 19___
Bank of America National Trust
and Savings Association, as
Documentation Agent
1455 Market Street, 12th Floor
San Francisco, California 94103
Attention: Agency Management Services
Fax No.: (415) 622-4894
Reference is made to the Three Year Credit Agreement dated as of
October 7, 1994 (as from time to time amended, restated, supplemented or
otherwise modified, the "Credit Agreement"; capitalized terms used herein shall
have the meanings assigned to them in the Credit Agreement) among KMART
CORPORATION (the "Company"), the Banks party thereto and BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION, as Documentation Agent.
This is a Competitive Bid Request for [Absolute Rate] [LIBOR] Bid Loans
pursuant to Section 2.06 of the Credit Agreement as follows:
<TABLE>
<S> <C> <C> <C>
Aggregate Principal Amount: $__________ $__________ $__________
Date of Advance: __________ __________ __________
Maturity Date: __________ __________ __________
Interest Period: __________ __________ __________
Interest Payment Dates: __________ __________ __________
[other relevant information] __________ __________ __________
</TABLE>
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date of the proposed Borrowing,
before and after giving effect thereto and to the application of the proceeds
therefrom:
(a) the representations and warranties of the undersigned contained in
Article V of the Credit Agreement are true and correct on and as of each such
date as if made on and as of each such date (except to the extent such
representations and warranties expressly refer to an earlier date, in which case
they shall be true and correct as of such earlier date); and
<PAGE> 100
(b) no Potential Default or Event of Default exists or shall result
from such proposed Borrowing.
Very truly yours,
KMART CORPORATION
By: ________________________
Title: _____________________
E-2
<PAGE> 101
EXHIBIT F
FORM OF INVITATION FOR COMPETITIVE BIDS
___________________, 19__
TO: [Name of Bank]
FROM: Bank of America National Trust and Savings Association, as
Documentation Agent
RE: Three Year Credit Agreement dated as of October 7, 1994 (as from time
to time amended, restated, supplemented or otherwise modified, the
"Credit Agreement" among KMART CORPORATION (the "Company"), the Banks
party thereto and Bank of America National Trust and Savings
Association, as Documentation Agent. Capitalized terms used herein but
not defined herein have the meanings assigned to them in the Credit
Agreement.
Pursuant to Section 2.06(b) of the Credit Agreement, we have received
from the Company a Competitive Bid Request inviting you to submit Competitive
Bids to the Company for the following proposed [Absolute Rate Bid Loan(s)]
[LIBOR Bid Loan(s)]:
Date of proposed Competitive Bid Borrowing: ____________________________, 19__
Aggregate
Principal Amount
Interest Period(s) of Loans Rate
- ------------------ ---------------- ----
Your Competitive Bid must comply with Section 2.06(c) of the Credit
Agreement and the foregoing terms on which the Competitive Bid Request was
made.
Please respond to this invitation by no later than ______ a.m. (New
York City time) _________________, 19__ to us at __________________________;
facsimile number ___________________________; telex number __________________.
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Documentation Agent
By: ___________________________
Title: _______________________
_
<PAGE> 102
EXHIBIT G
FORM OF COMPETITIVE BID
Bank of America National Trust
and Savings Association, as
Documentation Agent
1455 Market Street, 12th Floor
San Francisco, California 94103
Attention: Agency Management Services
Dear Sirs:
Reference is made to the Three Year Credit Agreement dated as of
October 7, 1994 (as from time to time amended, restated, supplemented or
otherwise modified, the "Credit Agreement"; capitalized terms used herein shall
have the meanings assigned to them in the Credit Agreement) among KMART
CORPORATION (the "Company"), the Banks party thereto and BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION, as Documentation Agent.
In response to the Invitation for Competitive Bids dated ____________
__, 19__ and in accordance with Section 2.06(c) of the Credit Agreement, the
undersigned Bank offers to make [Absolute Rate Bid Loan(s)] [LIBOR Bid Loan(s)]
thereunder in the following principal amount(s) at the following interest
rate(s) for the following Interest Period(s):
Date of Borrowing: ____________ __, 19__
OFFER 1: (MAXIMUM AMOUNT $__________)
(MINIMUM AMOUNT $__________).
<TABLE>
<CAPTION>
INTEREST PRINCIPAL [LIBOR Bid Margin]
PERIOD AMOUNT [Absolute Rate]
- -------- --------- ------------------
<S> <C> <C>
- -------------- -------------- --------------
- -------------- -------------- --------------
- -------------- -------------- --------------
- -------------- -------------- --------------
</TABLE>
OFFER 2: (MAXIMUM AMOUNT $__________)
(MINIMUM AMOUNT $__________).
<TABLE>
<CAPTION>
INTEREST PRINCIPAL [LIBOR Bid Margin]
PERIOD AMOUNT [Absolute Rate]
- -------- --------- ------------------
<S> <C> <C>
- -------------- -------------- --------------
- -------------- -------------- --------------
- -------------- -------------- --------------
- -------------- -------------- --------------
</TABLE>
<PAGE> 103
OFFER 3: (MAXIMUM AMOUNT $__________)
(MINIMUM AMOUNT $__________).
<TABLE>
<CAPTION>
INTEREST PRINCIPAL [LIBOR Bid Margin]
PERIOD AMOUNT [Absolute Rate]
_______________ _______________ __________________
<S> <C> <C>
_______________ _______________ _______________
_______________ _______________ _______________
_______________ _______________ _______________
_______________ _______________ _______________
</TABLE>
Subject to Section 2.06(e) of the Credit Agreement, the Company may not
later than 10:30 a.m. (New York City time) three Business Days prior to the
proposed date of Borrowing, in the case of a LIBOR Auction, or 10:30 a.m. (New
York City time) on the proposed date of Borrowing, in the case of an Absolute
Rate Auction, accept any combination of Interest Periods from one or more
offers for the principal amounts indicated; provided, that the aggregate
principal amount accepted from one offer does not exceed the maximum amount
specified for such offer and the aggregate principal amount of all [Absolute
Rate Bid Loans] [LIBOR Bid Loans] accepted does not exceed $_______________.
[NAME OF BIDDING BANK]
By:_________________________________
Name:___________________________
Title: _____________________________
Telephone No.:______________________
Telecopier No.:_____________________
G-2
<PAGE> 104
EXHIBIT H-1
(Letterhead of A.N. Palizzi, Esq.)
October 7, 1994
Bank of America National Trust
and Savings Association,
individually and as Documentation Agent
under the Three Year Credit Agreement referred
to below (the "Documentation Agent")
335 Madison Avenue
New York, New York 10017
and
The Financial Institutions
listed on Schedule I hereto
Ladies and Gentlemen:
I am General Counsel to Kmart Corporation, a Michigan corporation
("Kmart"). In my capacity as General Counsel, I am authorized to furnish
opinions on behalf of Kmart that may be required in connection with various
matters, including that certain Three Year Credit Agreement dated as of October
7, 1994 (the "Credit Agreement") among Kmart, the financial institutions
signatory thereto (the "Banks") and Bank of America National Trust and Savings
Association, as Documentation Agent ("Documentation Agent").
The Credit Agreement and the Committed Loan Notes dated as of October
7, 1994 payable to the Banks executed and delivered by Kmart thereunder (the
"Notes") are hereinafter collectively referred to as the "Transaction
Documents." Capitalized terms appearing herein but not otherwise defined herein
shall have the meanings ascribed thereto in the Credit Agreement.
In rendering the opinions set forth herein, I have examined originals
of the Transaction Documents executed by Kmart and originals or copies,
certified to my satisfaction, of such (i) certificates of public officials;
(ii) certificates of officers and representatives of Kmart; and (iii) other
documents, records and papers, and I have made such inquiries of officers and
representatives of Kmart as I have deemed relevant or necessary as the basis
for such opinions. I have relied upon, and assume the accuracy of, such
certificates and other statements, documents, records, and papers with respect
to the factual matters set forth therein and I have assumed the genuineness of
all of the signatures
<PAGE> 105
(other than the signatures of Kmart) and the authenticity of all documents
submitted to me as originals and the conformity to original documents of all
documents submitted to me as certified or photostatic copies.
Based on the foregoing and subject to the qualifications stated herein,
I am of the opinion that:
1. Kmart (i) is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization; (ii) is duly
authorized to do business in each jurisdiction in which it owns or leases
property and where the failure to do so would have a material adverse effect on
its condition (financial or otherwise), properties, business, assets or results
of operations; and (iii) has all requisite corporate power and authority to
enter into and perform its obligations under the Transaction Documents to which
it is a party and under any Competitive Bid Notes which it may issue from time
to time.
2. The execution, delivery and performance by Kmart of each Transaction
Document and of any Competitive Bid Notes which it may issue from time to time
hereafter, and the consummation of each of the transactions and performance of
each of the obligations on its part contemplated thereby;
(i) have been duly authorized by all necessary corporate
proceedings;
(ii) are not in contravention of its articles of incorporation,
bylaws or other organizational documents;
(iii) will not violate any provisions of any law, rule,
regulation (including any order, writ, judgment, decree, determination
or award of any court or governmental instrumentality) presently in
effect having applicability to it;
(iv) will not conflict with or result in a breach of or
constitute a default under or tortious interference with any indenture
or loan or credit agreement, or any other agreement or instrument of
which I have knowledge, to which it is a party or by which it or any of
its properties may be bound (which conflict, breach, default or
tortious interference would have a material adverse effect on its
condition (financial or otherwise), properties, business, assets or
results of operations);
(v) will not result in or require the creation or imposition of
any Lien of any nature upon or with respect to any of the properties
now owned or hereafter acquired by it; and
(vi) except as already applied for or received as of the date
hereof, do not require any authorization, consent, certificate,
inspection, franchise, approval, license,
H/1-2
<PAGE> 106
qualification or formal exemption from, or any filing, declaration or
registration with, any court, governmental agency or regulatory authority or
any other Person.
3. Kmart has duly executed and delivered the Transaction Documents, and
each Transaction Document constitutes and each Competitive Bid Note when issued
will constitute the valid and binding obligation, enforceable against it in
accordance with the terms of such Transaction Document or Competitive Bid Note.
4. There are no actions, suits, proceedings, investigations or
judgments before any court, governmental agency or regulatory authority
(foreign, Federal, state or local) outstanding, pending, or, to the best of my
knowledge and belief, threatened against or in any other way involving or
affecting Kmart or its properties, which, if determined adversely to it (i)
would enjoin or otherwise materially interfere with the completion of any of
the transactions contemplated by the Transaction Documents or any Competitive
Bid Note, or (ii) would materially impair its ability to perform its obligations
under the Transaction Documents or any Competitive Bid Note.
5. To the best of my knowledge after due inquiry, Kmart is not in
default with respect to any order of any court, arbitrator or governmental body
where such default would have a material adverse effect on its condition
(financial or otherwise), properties, business, assets or results of
operations, and it is not subject to or party to any order of any court or
governmental authority arising out of any action, suit or proceeding against it
under any statute or other law respecting antitrust, monopoly, restraint of
trade, unfair competition or similar matters the effect of which could be
reasonably expected to have a material adverse effect on its condition
(financial or otherwise), properties, business, assets or results of
operations.
6. To the best of my knowledge after due inquiry, Kmart is not in
violation of any statute, rule or regulation of any governmental authority
where such violation would have a material adverse effect on its condition
(financial or otherwise), properties, business, assets or results of operations.
7. To the best of my knowledge after due inquiry, there is no existing
material default by Kmart under any written contract, lease agreement, or other
material agreement to which it is a party or by which any of its assets is
bound which has, or could be reasonably expected to have, a material adverse
effect upon its condition (financial or otherwise), properties, business,
assets or results of operations.
8. Kmart is not an "investment company" registered or required to be
registered under the Investment Company Act of 1940, as amended, nor is it
controlled by such a company.
H/1-3
<PAGE> 107
9. Kmart is not a "holding company" or a "subsidiary company" of a
"holding company" or an "affiliate" of a "holding company" within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
The opinions herein expressed are subject to the following limitations
and qualifications:
(a) The enforceability of the rights and remedies of the Documentation
Agent and the Banks under each of the Transaction Documents and any Competitive
Bid Notes is subject to the effect of any applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws of
general application affecting creditors' rights generally.
(b) Enforceability of each of the Transaction Documents and any
Competitive Bid Notes is subject to general principles of equity (regardless of
whether such enforceability is considered in proceeding in equity or at law),
including requirements of reasonableness and good faith in the exercise of
rights and remedies under any loan documents, and no opinion is expressed as to
any specific remedy that may be granted, imposed or rendered, including
equitable remedies such as those of specific performance, receivership and
injunction.
(c) The enforceability of particular rights and remedies provided in
the Transaction Documents and any Competitive Bid Notes may be limited by
applicable laws, provided, however, that sufficient rights and remedies are
available to afford the Documentation Agent and the Banks the practical
realization of the benefits afforded by the Transaction Documents and such
Competitive Bid Notes.
Without limitation of the foregoing, I express no opinion: (i) as to
any provisions for acceleration of indebtedness or imposition of penalties in
the event of, or remedies available for, breaches of the Transaction Documents
which might be determined by a court to be non-material (including material
breaches of non-material provisions), or where the enforcement of such
provisions or remedies might be found not to have been taken in good faith and
in a reasonable manner; (ii) as to remedies available in respect of breaches of
the Transaction Documents or provisions for indemnification against liabilities
or losses thereunder which breaches, liabilities or losses might be found to be
the proximate result of actions or omissions by the Documentation Agent or the
Banks; (iii) as to any provision of the Transaction Documents to the extent
such provisions would constitute waivers of rights that may be found to
constitute waivers that are against public policy; (iv) as to any provision of
the Transaction Documents to the extent that it purports to waive the
requirements of good faith, notice and commercial reasonableness under the
U.C.C. which requirements cannot be waived
H/1-4
<PAGE> 108
by consent; (v) as to provisions in the Transaction Documents which provide for
the imposition of penalties, the payment or reimbursement of costs and expenses
or the indemnification of claims, losses or liabilities that may be found to be
unrelated to the damage suffered by the Documentation Agent or the Banks or in
excess of a reasonable amount; (vi) as to any provisions of the Transaction
Documents which constitute rights that may be found to be against public
policy; (vii) as to the validity of any provision of any Transaction Document
which provides for the compounding of interest or payment or accrual of
interest on interest; and (viii) as to provisions in the Transaction Documents
which waive objection to jurisdiction, the manner of service of process, notice
or the effects of delay or failure to exercise rights and remedies.
(d) I am qualified to practice law in the State of Michigan and I do
not purport to express any opinion herein concerning any laws other than the
laws of the State of Michigan and applicable federal law.
(e) This opinion is predicated solely upon laws and regulations in
existence as of the present date and as they presently apply, and to the facts
as they presently exist. I assume no obligation to revise or supplement this
opinion should the present laws be changed by legislative action, judicial
decision or otherwise.
Whenever in this opinion I have used the phrase "to the best of our
knowledge" (or similar terms), this means the conscious awareness of those
attorneys in my department who have active involvement in the preparation of
this opinion or who are primarily responsible for providing the response
concerning a particular opinion issue or information regarding factual matters.
This opinion is rendered to you solely for your benefit in connection
with the above transactions and may not be relied upon by you for any other
purpose or by any other persons without my prior written consent. This opinion
is limited to the matters set forth herein and no opinion is intended to be
implied or inferred beyond those expressly stated herein.
Very truly yours,
H/1-5
<PAGE> 109
Schedule I
Financial Institutions
[to come]
H/1-6
<PAGE> 110
EXHIBIT H-2
{letterhead of Dickinson, Wright, Moon, Van Dusen & Freeman}
October 7, 1994
Bank of America National Trust
and Savings Association,
individually and as Documentation Agent
under the Three Year Credit Agreement referred
to below (the "Documentation Agent")
335 Madison Avenue
New York, New York 10017
and
The Financial Institutions
listed on Schedule I hereto
Ladies and Gentlemen:
We have acted as special counsel to Kmart Corporation, a Michigan
corporation ("Kmart"), in connection with the following agreements and
documents and the transactions contemplated thereby:
(i) that certain Three Year Credit Agreement dated as of October 7,
1994 by and among Kmart, the financial institutions signatory thereto (the
"Banks") and the Documentation Agent (the "Credit Agreement"); and
(ii) those certain Committed Loan Notes dated as of October 7, 1994
payable to the Banks, executed and delivered by Kmart thereunder (the
"Notes").
The Credit Agreement and the Notes are hereinafter collectively
referred to as the "Transaction Documents." Capitalized terms appearing
herein but not otherwise defined herein shall have the meanings ascribed
thereto in the Credit Agreement. Pursuant to Section 4.01(d) of the Credit
Agreement, this opinion is delivered to you upon the instruction of Kmart.
In rendering the opinions set forth herein, we have examined originals
of the Transaction Documents executed by Kmart and originals or copies,
certified to our satisfaction, of such (i) certificates of public officials;
(ii) certificates of officers and representatives of Kmart; and (iii) other
documents, records and papers, and we have made such inquiries of officers and
<PAGE> 111
representatives of such entity, as we have deemed relevant or necessary as the
basis for such opinions. We have relied upon, and assume the accuracy of, such
certificates and other statements, documents, records and papers with respect
to the factual matters set forth therein and we have assumed the genuineness of
all of the signatures (other than the signatures of Kmart) and the authenticity
of all documents submitted to us as originals and the conformity to original
documents of all documents submitted to us as certified or photostatic copies.
We have further assumed that negotiations with respect to the transactions
contemplated by the Transaction Documents took place in the State of New York,
Loans under the Credit Agreement shall be disbursed by the Documentation Agent
out of its offices in New York and payments under the Credit Agreement shall be
made to the Documentation Agent at its offices in New York.
Based on the foregoing and subject to the qualifications stated herein,
we are of the opinion that:
1. Kmart has duly executed and delivered the Transaction Documents, and
each such Transaction Document constitutes and each Competitive Bid Note when
issued will constitute the valid and binding obligation of Kmart, enforceable
against it in accordance with the terms of such Transaction Document.
2. In any action or proceeding in the State of Michigan arising out of
or relating to any of the Transaction Documents or any Competitive Bid Note,
the provisions of the Transaction Documents or such Competitive Bid Note
wherein the parties thereto agree that the Transaction Documents or such
Competitive Bid Note shall be governed by, and be construed in accordance with,
the laws of the State of New York, would be recognized and given effect.
3. The rates of interest applicable to the obligations of Kmart under
the Credit Agreement do not violate any law, rule or regulation of the State of
Michigan prescribing a maximum rate of interest. We call to your attention,
however, that the Michigan criminal usury statute makes it unlawful to
knowingly charge, take or receive interest on a loan at a rate exceeding 25%
per annum.
The opinions herein expressed are subject to the following limitations
and qualifications:
(a) The enforceability of the rights and remedies of the Documentation
Agent and the Banks under each of the Transaction Documents and any Competitive
Bid Notes is subject to the effect of any applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws of
general application affecting creditors' rights generally.
H/2-2
<PAGE> 112
(b) Enforceability of each of the Transaction Documents and any
Competitive Bid Notes is subject to general principles of equity (regardless of
whether such enforceability is considered in proceeding in equity or at law),
including requirements of reasonableness and good faith in the exercise of
rights and remedies under any loan documents, and no opinion is expressed as
to any specific remedy that may be granted, imposed or rendered, including
equitable remedies such as those of specific performance, receivership and
injunction.
(c) The enforceability of particular rights and remedies provided in
the Transaction Documents and any Competitive Bid Notes may be limited by
applicable laws, provided, however, that sufficient rights and remedies are
available to afford the Documentation Agent and the Banks the practical
realization of the benefits afforded by the Transaction Documents and such
Competitive Bid Notes.
Without limitation of the foregoing, we express no opinion: (i) as to
any provisions for acceleration of indebtedness or imposition of penalties in
the event of, or remedies available for, breaches of the Transaction Documents
which might be determined by a court to be non-material (including material
breaches of non-material provisions), or where the enforcement of such
provisions or remedies might be found not to have been taken in good faith and
in a reasonable manner; (ii) as to remedies available in respect of breaches of
the Transaction Documents or provisions for indemnification against liabilities
or losses thereunder which breaches, liabilities or losses might be found to be
the proximate result of actions or omissions by the Documentation Agent or the
Banks; (iii) as to any provision of the Transaction Documents to the extent
such provisions would constitute waivers of rights that may be found to
constitute waivers that are against public policy; (iv) as to any provision of
the Transaction Documents to the extent that it purports to waive the
requirements of good faith, notice and commercial reasonableness under the
U.C.C. which requirements cannot be waived by consent; (v) as to provisions in
the Transaction Documents which provide for the imposition of penalties, the
payment or reimbursement of costs and expenses or the indemnification of
claims, losses or liabilities that may be found to be unrelated to the damage
suffered by the Documentation Agent or the Banks or in excess of a reasonable
amount; (vi) as to any provisions of the Transaction Documents which constitute
rights that may be found to be against public policy; (vii) as to the validity
of any provision of any Transaction Document which provides for the compounding
of interest or payment or accrual of interest on interest; and (viii) as to
provisions in the Transaction Documents which waive objection to jurisdiction,
the manner of service of process, notice or the effects of delay or failure to
exercise rights and remedies.
H/2-3
<PAGE> 113
(d) We are qualified to practice law in the States of Michigan and we
do not purport to express any opinion herein concerning any laws other than the
laws of the State of Michigan and applicable federal law. In this regard, we
have noted that the Transaction Documents expressly provide that they are to be
governed by the laws of the State of New York.
(e) This opinion is predicated solely upon laws and regulations in
existence as of the present date and as they presently apply, and to the facts
as they presently exist. We assume no obligation to revise or supplement this
opinion should the present laws be changed by legislative action, judicial
decision or otherwise.
Whenever in this opinion we have used the phrase "to the best of our
knowledge" (or similar terms), this means the conscious awareness of those
attorneys in the Firm who have active involvement in the preparation of this
opinion or who are primarily responsible for providing the response concerning
a particular opinion issue or information regarding factual matters.
This opinion is rendered to you solely for your benefit in connection
with the above transactions and may not be relied upon by you for any other
purpose or by any other persons without our prior written consent. This opinion
is limited to the matters set forth herein and no opinion is intended to be
implied or inferred beyond those expressly stated herein.
Very truly yours,
H/2-4
<PAGE> 114
Schedule I
Financial Institutions
[to come]
H/2-5
<PAGE> 115
EXHIBIT I
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
This ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement") dated as
of ___________, 19__ is made between ____________________________________ (the
"Assignor" and ___________________________________________(the "Assignee").
RECITALS
WHEREAS, the Assignor is party to that certain Three Year Credit
Agreement dated as of October 7, 1994 among KMART CORPORATION, a Michigan
corporation (the "Company"), the banks named therein (including the Assignor,
the "Banks") and Bank of America National Trust and Savings Association, as
Documentation Agent (as from time to time amended, restated, supplemented or
otherwise modified, the "Credit Agreement"). Terms defined in the Credit
Agreement are used herein with the same meanings;
WHEREAS, as provided under the Credit Agreement, the Assignor has
committed to make Committed Loans (the "Committed Loans") to the Company in an
aggregate principal amount at any one time ($________) (the "Aggregate
Commitment");
WHEREAS, {the Assignor has made Committed Loans in the aggregate
outstanding principal amount of $____________ to the Company} {no Committed
Loans are outstanding under the Credit Agreement};
WHEREAS, the Assignor wishes to assign to the Assignee part of the
rights and obligations of the Assignor under the Credit Agreement in respect of
its Aggregate Commitment {together with a corresponding portion of each of its
outstanding Committed Loans,} in an amount equal to $____________ (the
"Assigned Amount") on the terms listed on Schedule I hereto and subject to the
conditions set forth herein, and the Assignee wishes to accept assignment of
such rights and to assume such obligations from the Assignor on such terms and
subject to such conditions;
WHEREAS, the Assignee will have no interest in any Absolute Rate Bid
Loans or LIBOR Bid Loans made by the Assignor;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
1. Assignment and Assumption.
(a) With effect on and after the Effective Date (as defined in
Section 5 hereof), the Assignor hereby sells and assigns to the Assignee, and
the Assignee hereby purchases and assumes from the Assignor, the Assigned
Amount, which shall be equal to __ percent
<PAGE> 116
(______%) (the "Assignee's Percentage Share") of all of the Assignor's rights
and obligations under the Credit Agreement, including, without limitation, the
Assignee's Percentage Share of the Aggregate Commitment [and any outstanding
Committed Loans made by the Assignor]. The sale, assignment, purchase and
assumption set forth in this Section 1(a) shall be without recourse to, or
representation or warranty (except as expressly provided in this Agreement) by,
the Assignor.
(b) With effect on and after the Effective Date, the Assignee shall
be a party to the Credit Agreement and succeed to all of the rights and be
obligated to perform all of the obligations of a Bank under the Credit
Agreement, including the requirements concerning confidentiality, with a
Commitment in an amount equal to the Assigned Amount. The Assignee agrees that
it will perform in accordance with their terms all of the obligations which by
the terms of the Credit Agreement are required to be performed by it as a Bank.
It is the intent of the parties hereto that the Commitment of the Assignor
shall, as of the Effective Date, be reduced by an amount equal to the Assigned
Amount and the Assignor shall relinquish its rights and be released from its
obligations under the Credit Agreement to the extent such obligations have been
assumed by the Assignee.
(c) After giving effect to the assignment and assumption, on the
Effective Date the Assignee's Commitment will be $________. After giving effect
to the assignment and assumption, on the Effective Date the Assignor's
Commitment will be $________.
2. Payments.
(a) As consideration for the sale and assignment contemplated in
Section 1 hereof, the Assignee shall pay to the Assignor on the Effective Date
in immediately available funds an amount equal to $________, representing the
Assignee's Percentage Share of the principal amount of all Committed Loans
previously made, and currently owned, by the Assignor to the Company under the
Credit Agreement and outstanding on the Effective Date.
(b) The [Assignor] [Assignee] further agrees to pay to the
Documentation Agent a processing fee in the amount of $3,000.
(c) To the extent payment to be made by the Assignee pursuant to
Section 2(a) hereof is not made when due, the Assignor shall be entitled to
recover from the Assignee such amount together with interest thereon at the
Federal Funds Rate per annum accruing from the date such amounts were due.
3. Reallocation of Payments.
Any interest, commissions, fees and other payments accrued to but
excluding the Effective Date with respect to the Committed
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<PAGE> 117
Loans and the Assignor's Commitment, shall be for the account of the Assignor.
Any interest, fees and other payments accrued on and after the Effective Date
with respect to the Assigned Amount shall be for the account of the Assignee.
Each of the Assignor and the Assignee agrees that it will hold in trust for the
other party any interest, commissions, fees and other amounts which it may
receive to which the other party is entitled pursuant to the preceding two
sentences and pay to the other party any such amounts which it may receive
promptly upon receipt. The Assignor's and the Assignee's obligations to make
the payments referred to in this Section 3 are non-assignable.
4. Independent Credit Decision.
The Assignee (a) acknowledges that it has received a copy of the Credit
Agreement and the Schedules and Exhibits thereto, together with copies of the
financial statements referred to in Section 6.01 thereof, and such other
documents and information as it has deemed appropriate to make its own credit
and legal analysis and decision to enter into this Agreement; and (b) agrees
that it will, independently and without reliance upon the Assignor, the
Administrative Agent or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit and legal decisions in taking or not taking action under the Credit
Agreement.
5. Effective Date; Notices.
(a) The effective date for this Agreement is ____________ (the
"Effective Date"); provided, that the following conditions precedent have been
satisfied on or before the Effective Date:
(i) this Agreement shall be executed and delivered by the
Assignor and the Assignee;
[(ii) the consent of the Company and the Documentation Agent
required for an effective assignment of the Assigned Amount by the
Assignor to the Assignee shall have been duly obtained and shall be in
full force and effect as of the Effective Date;]
(iii) the Assignee shall pay to the Assignor all amounts due
to the Assignor under this Agreement; and
(iv) the processing fee referred to in Section 2(b) of this
Agreement and in Section 10.08(a) of the Credit Agreement shall have
been paid by the [Assignor] [Assignee] to the Documentation Agent.
(b) Promptly following the execution of this Agreement, the Assignor
shall deliver to the Documentation Agent for acceptance
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<PAGE> 118
and recording by the Documentation Agent, such notices, agreements or other
documents as may be required under the Credit Agreement.
[6. Agent [INCLUDE ONLY IF ASSIGNOR IS DOCUMENTATION AGENT].
(a) The Assignee hereby appoints and authorizes the Assignor to take
such action as Documentation Agent on its behalf and to exercise such powers
under the Credit Agreement as are delegated to the Documentation Agent by the
Banks pursuant to the terms of the Credit Agreement.
(b) The Assignee shall assume no duties or obligations held by the
Assignor in its capacity as Documentation Agent under the Credit Agreement.]
7. Withholding Tax.
If the Assignee is a foreign person within the meaning of the Code, the
Assignee agrees to comply with Section 9.10 of the Credit Agreement as if the
Effective Date were the Closing Date of the Credit Agreement and, if such
Assignee fails to comply with Section 9.10 of the Credit Agreement, then this
Agreement shall not become effective.
8. Representations and Warranties.
(a) The Assignor represents and warrants that (i) it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any lien, security interest or other adverse
claim; (ii) it is duly organized and existing and it has the full power and
authority to take, and has taken, all action necessary to execute and deliver
this Agreement and any other documents required or permitted to be executed or
delivered by it in connection with this Agreement and to fulfill its
obligations hereunder; (iii) no notices to, or consents, authorizations or
approvals of, any Person are required (other than any already given or
obtained) for its due execution, delivery and performance of this Agreement,
and apart from any agreements or undertaking or filings required by the Credit
Agreement, no further action by, or notice to, or filing with, any Person is
required of it for such execution, delivery or performance; and (iv) this
Agreement has been duly executed and delivered by it and constitutes the legal,
valid and binding obligation of the Assignor, enforceable against the Assignor
in accordance with the terms hereof, subject, as to enforcement, to bankruptcy,
insolvency, moratorium, reorganization and other laws of general application
relating to or affecting creditors' rights and to general equitable principles.
(b) The Assignor makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the
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<PAGE> 119
Credit Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement or any other
instrument or document furnished pursuant thereto. The Assignor makes no
representation or warranty in connection with, and assumes no responsibility
with respect to, the solvency, financial condition or statements of the Company
or any Subsidiary or the performance or observance by the Company of any of its
obligations under the Credit Agreement or any other instrument or document
furnished in connection therewith.
(c) The Assignee represents and warrants that (i) it is duly organized
and existing and it has full power and authority to take, and has taken, all
action necessary to execute and deliver this Agreement and any other documents
required or permitted to be executed or delivered by it in connection with this
Agreement, and to fulfill its obligations hereunder; (ii) no notices to, or
consents, authorizations or approvals of, any Person are required (other than
any already given or obtained) for its due execution, delivery and performance
of this Agreement; and apart from any agreements or undertaking or filings
required by the Credit Agreement, no further action by, or notice to, or filing
with, any Person is required of it for such execution, delivery or performance;
(iii) this Agreement has been duly executed and delivered by it and constitutes
the legal, valid and binding obligation of the Assignee, enforceable against
the Assignee in accordance with the terms hereof, except subject, as to
enforcement, to bankruptcy, insolvency, moratorium, reorganization and other
laws of general application relating to or affecting creditors' rights and to
general equitable principles; and (iv) it is an Eligible Assignee under the
Credit Agreement.
9. Further Assurances.
The Assignor and the Assignee each hereby agrees to execute and deliver
such other instruments, and take such other action, as either party may
reasonably request in connection with the transactions contemplated by this
Agreement, including, without limitation, the delivery of any notices or other
documents or instruments to the Company or the Documentation Agent which may be
required in connection with the assignment and assumption contemplated hereby.
10. Indemnity.
The Assignee agrees to indemnify and hold harmless the Assignor against
any and all losses, costs, expenses (including, without limitation, Attorney
Costs) and liabilities incurred by the Assignor in connection with or arising
in any manner from the non-performance by the Assignee of any obligation
assumed by the Assignee under this Agreement.
11. Miscellaneous.
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<PAGE> 120
(a) Any amendment or waiver of any provision of this Agreement shall
be in writing signed by the parties hereto, and consented to in writing by the
Documentation Agent. No failure or delay by either party hereto in exercising
any right, power or privilege hereunder shall operate as a waiver thereof and
any waiver of any breach of the provisions of this Agreement shall be without
prejudice to any rights with respect to any other or further breach hereof.
(b) All payments made hereunder shall be made without any set-off or
counterclaim.
(c) All communications among the parties or notices in connection
herewith shall be in writing (including facsimile transmission or telex) and
delivered, telexed or telecopied, addressed as follows: (i) if to the Assignor
or the Assignee, at their respective addresses set forth on the signature pages
hereof and (ii) if to the Company or the Documentation Agent, at their
respective addresses set forth in the Credit Agreement or any other documents
or instruments delivered pursuant thereto. All such communications and notices
shall be effective upon receipt. The Assignee specifies as its Lending Office
the office set forth beneath its name on the signature pages hereof.
(d) The Assignor and the Assignee shall each pay its own costs and
expenses incurred in connection with the negotiation, preparation, execution
and performance of this Agreement.
(e) The representations and warranties made herein shall survive the
consummation of the transactions contemplated hereby.
(f) This Agreement shall be binding upon and inure to the benefit of
the Assignor and the Assignee and their respective successors and assigns;
provided, however, that no party shall assign its rights hereunder without the
prior written consent of the other party and any purported assignment, absent
such consent, shall be void. The preceding sentence shall not limit the right
of the Assignee to assign or participate all or part of the Assignee's
Percentage Share and the Assigned Amount and any outstanding Loans attributable
thereto in accordance with and subject to the Credit Agreement.
(g) The Assignor may at any time or from time to time grant to others
assignments or participations in Assignor's Aggregate Commitment or the Loans
but not in the portions thereof assigned to the Assignee pursuant to this
Agreement.
(h) This Agreement may be executed in any number of counterparts and
all of such counterparts taken together shall be deemed to constitute one and
the same instrument.
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<PAGE> 121
(i) This Agreement shall be governed by and construed in accordance
with the laws of the State of New York. The Assignor and the Assignee each
irrevocably submits to the non-exclusive jurisdiction of any New York State or
Federal court sitting in The City of New York over any suit, action or
proceeding arising out of or relating to this Agreement and irrevocably agrees
that all claims in respect of such action or proceeding may be heard and
determined in such New York State or Federal court. Each party to this
Agreement hereby irrevocably waives, to the fullest extent it may effectively
do so, the defense of an inconvenient forum to the maintenance of such action
or proceeding.
(j) This Agreement and any agreement, document or instrument attached
hereto or referred to herein integrate all the terms and conditions mentioned
herein or incidental hereto, constitute the entire agreement and understanding
between the parties hereto and supersede any and all prior agreements and
understandings related to the subject matter hereof. In the event of any
conflict between the terms, conditions and provisions of this Agreement and any
such agreement, document or instrument, the terms, conditions and provisions of
this Agreement shall prevail.
(k) In the event of any inconsistency between the provisions of this
Agreement and Schedule I hereto, this Agreement shall control. Headings are for
reference only and are to be ignored in interpreting this Agreement.
(l) The illegality or unenforceability of any provision of this
Agreement or any instrument or agreement required hereunder shall not in any
way affect or impair the legality or enforceability of the remaining provisions
of this Agreement or any instrument or agreement required hereunder.
(m) The Assignor and the Assignee each hereby knowingly, voluntarily
and intentionally waive any rights they may have to a trial by jury in respect
of any litigation based hereon, or arising out of, under, or in connection with
this Agreement, the Credit Agreement, any related documents and agreements or
any related course of conduct, course of dealing or statements (whether oral or
written).
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Agreement to be executed and delivered by their duly authorized officers as of
the date first above written.
____________________________________
Assignor
By:_________________________________
Title:______________________________
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<PAGE> 122
Address for Notices:
Lending Office:
Address for Payments
[Address]
_____________________________________
Assignee
By: _________________________________
Title: ______________________________
Address for Notices:
Lending Office:
Address for Payments
[Address]
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<PAGE> 123
SCHEDULE I
TO
ASSIGNMENT AND ASSUMPTION AGREEMENT
1. Company:
2. Date of Credit Agreement:
3. Assignor:
4. Assignee:
5. Date of Assignment Agreement:
6. Effective Date:
7. Assignee's Share
(a) Assignee's Percentage Share
(b) Assigned Amount
8. Fees: Payment by Company
to Assignee
------------------
Facility Fee
9. Interest: Payment by Company
to Assignee
------------------
(i) Reference Rate Committed Loan(s)
(ii) LIBOR Committed Loan(s)
(iii) CD Rate Committed Loan(s)
10. Payment Instructions:
Assignor:
Assignee:
11. Other Information:
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<PAGE> 124
SCHEDULE II
FORM OF NOTICE OF ASSIGNMENT AND ACCEPTANCE
______________, 19__
Bank of America National Trust
and Savings Association,
as Documentation Agent
315 Montgomery Street - 15th Floor
San Francisco, California 94104
Attention: Agency Management Services
Kmart Corporation
3100 West Big Beaver Road
Troy, Michigan 48084
Attention: Treasurer
Ladies and Gentlemen:
We refer to the Three Year Credit Agreement dated as of October 7, 1994
(as amended, supplemented or modified from time to time, the "Credit
Agreement") between Kmart Corporation (the "Company"), the Banks referred to
therein and Bank of America National Trust and Savings Association, as
Documentation Agent. Terms defined in the Credit Agreement are used herein as
therein defined.
1. We hereby give you notice of [, and request the consent of the
Company and the Administrative Agent to,] the assignment by ___________________
(the "Assignor") to ________________ (the "Assignee") of ___% of the right,
title and interest of the Assignor in and to the Credit Agreement (including,
without limitation, the right, title and interest of the Assignor in and to the
Commitment of the Assignor and all outstanding Committed Loans made by the
Assignor but excluding any Bid Loans made by the Assignor) pursuant to that
certain Assignment and Assumption Agreement, dated as of ________________, 19__
(the "Assignment and Assumption Agreement"), by and between Assignor and
Assignee. Before giving effect to such assignment the Assignor's Commitment is
$____________, and the aggregate principal amount of its outstanding Committed
Loans is $____________.
2. The Assignee agrees that [, upon receiving the consent of the
Company and the Administrative Agent to such assignment and] from and after the
Effective Date (as such term is defined in Section 5 of the Assignment and
Assumption Agreement), the Assignee will be bound by the terms of the Credit
Agreement, with respect to the interest in the Credit Agreement assigned to it
as specified
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<PAGE> 125
above, as fully and to the same extent as if the Assignee were the Bank
originally holding such interest in the Credit Agreement.
3. The following administrative details apply to the Assignee:
(A) Lending Office:
Assignee name: _____________________
Address: ___________________________
___________________________
Attention: _________________________
Telephone: ( ) ___________________
Telecopier: ( ) __________________
(B) Notice Address:
Assignee name: _____________________
Address: ___________________________
___________________________
Attention: _________________________
Telephone: ( ) ___________________
Telecopier: ( ) __________________
(C) Payment Instructions:
Account No.: _______________________
At: _______________________
_______________________
_______________________
Reference: _________________________
Attention: _________________________
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<PAGE> 126
IN WITNESS WHEREOF, the Assignor and the Assignor have caused this
Notice of Assignment and Acceptance to be executed by their respective duly
authorized officials, officers or agents as of the date first above mentioned.
Very truly yours,
[Name of Assignor]
By: ______________________________
Title: ___________________________
[Name of Assignee]
By: ______________________________
Title: ___________________________
[Agreed and Consented to this
____ day of ____________, 19___.
KMART CORPORATION
By: ____________________________
Title: _________________________
Agreed and Consented to this
____ day of ____________, 19___.
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Documentation Agent
By: ____________________________
Title: _________________________}
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<PAGE> 127
EXHIBIT J
FORM OF LETTER OF CREDIT REQUEST
TO: Documentation Agent
[and the applicable Facing Agent]
Pursuant to Section 2.16(b) of the Three Year Credit Agreement dated as
of October 7, 1994 among Kmart Corporation ("Borrower"), the financial
institutions party thereto and Bank of America National Trust and Savings
Association, as Documentation Agent, Borrower hereby requests the issuance of
the [Standby/Trade] Letter of Credit described below:
1. Facing Agent: ____________________________________.
2. Issuance Date: ___________________________________.(1)
3. Requested Expiration Date: _______________________.(2)
4. Name and Address of Beneficiary:
______________________________________
______________________________________
______________________________________
5. Stated Amount: _______________________.
6. Other Terms and Conditions of Proposed Letter of Credit:(3)
______________________________________
______________________________________
7. Other Information requested by the Documentation Agent or the
applicable Facing Agent (including, if applicable, the Facing Agent's
form of Letter of Credit Application):
______________________________________
______________________________________
In the case of Trade Letters of Credit, Borrower shall also provide to
the Facing Agent such other information regarding the sale or shipment of goods
and the documents evidencing same as may be required on the Facing Agent's
standard application for trade letters of credit.
This Letter of Credit Request constitutes the representation and
warranty of Borrower as of each of the date hereof and the Issuance Date set
forth in paragraph 2 hereof that each of the
<PAGE> 128
conditions set forth in Section 4.02 of the Credit Agreement has been
satisfied.
This Letter of Credit Request together with any attachment hereto
constitutes a Loan Document executed and delivered pursuant to the Agreement.
Capitalized terms used and not otherwise defined herein shall have the
respective meanings provided in the Credit Agreement.
This Letter of Credit Request may be executed in one or more
counterparts, each of which shall be an original, and all of which taken
together shall constitute one instrument.
IN WITNESS WHEREOF, Borrower has caused this Letter of Credit Request
to be executed by its officer thereunto duly authorized as of the date set
forth below.
KMART CORPORATION
Dated as of:__________________ By:____________________________
Name:
Title:
The foregoing Letter of Credit
Request dated as of __________
is hereby approved.
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Documentation Agent
By:____________________________
Name:
Title:
______________________________,
as Facing Agent
By:____________________________
Name:
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<PAGE> 129
Title:
1. At least five Business Days' prior notice is required.
Section 2.16(b)
2. Expiration date must be one year or less from date of issuance;
provided, that each Standby Letter of Credit may provide by its terms
that it will be automatically renewed for additional successive periods
of up to one (1) year unless the applicable Facing Agent shall have
given notice to the applicable beneficiary (with a copy to Borrower) of
the election by the Facing Agent (such election to be in the sole and
absolute discretion of the Facing Agent) not to extend such Letter of
Credit, such notice to be given not less than thirty (30) days prior to
the then current expiration date of the Letter of Credit; provided,
further, that no Standby Letter of Credit or renewal thereof shall be
stated to expire later than the Termination Date and no Trade Letter of
Credit or renewal thereof shall be stated to expire later than the day
thirty (30) days prior to the Termination Date. Section 2.16(a)(ii).
3. If possible, it would be preferable to attach a copy of the text
of the proposed Letter of Credit and incorporate it herein by
reference, although the text of the proposed Letter of Credit may be
changed during the course of discussions between the Facing Agent and
Borrower.
J-3
<PAGE> 1
EXHIBIT 99.2
EXECUTION COPY
WAREHOUSE FACILITY CREDIT AGREEMENT
DATED AS OF OCTOBER 7, 1994
among
KMART CORPORATION AND THE OTHER BORROWERS HEREUNDER,
BANKERS TRUST COMPANY,
As Documentation Agent,
and
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
$500,000,000
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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ARTICLE I
<S> <C> <C>
DEFINITIONS AND ACCOUNTING TERMS . . . . . . . . . . . 1
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Other Definitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 1.3 Accounting Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE II
LOAN PROVISIONS . . . . . . . . . . . . . . . . . . . . . 24
Section 2.1 Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2.2 Obligations; Notes; Loan Register; Waiver;
Application of Initial Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 2.3 Allocation of Total Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 2.4 Terms of Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 2.5 Notice of Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 2.6 Conversion and Continuation Elections for
Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 2.7 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 2.8 Computation of Fees and Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 2.9 Mandatory Reduction of the Commitments . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 2.10 Voluntary Reduction of the Total Commitment . . . . . . . . . . . . . . . . . . . . . . 40
Section 2.11 Voluntary Prepayments of the Loan Obligations . . . . . . . . . . . . . . . . . . . . . 40
Section 2.12 Mandatory Prepayment of the Loan Obligations . . . . . . . . . . . . . . . . . . . . . . 41
Section 2.13 Other Provisions With Respect to Prepayments . . . . . . . . . . . . . . . . . . . . . . 41
Section 2.14 Order of Prepayments and Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 2.15 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 2.16 Responsibility for Making Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
</TABLE>
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<TABLE>
<CAPTION>
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----
<S> <C> <C>
Section 2.17 Withholding Tax Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 2.18 Payments by the Borrowers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 2.19 Payments by the Banks to the Documentation
Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY . . . . . . . . . 46
Section 3.1 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 3.2 Inability to Determine Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 3.3 Increased Costs; Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 3.4 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 3.5 Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 3.6 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE IV
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . 52
Section 4.1 Representations and Warranties of the
Non-Kmart Borrowers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE V
COVENANTS . . . . . . . . . . . . . . . . . . . 58
Section 5.1 Affirmative Covenants of each Non-Kmart
Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 5.2 Negative Covenants of each Non-Kmart Borrower . . . . . . . . . . . . . . . . . . . 61
Section 5.3 Affirmative Covenants of the Kmart Borrower . . . . . . . . . . . . . . . . . . . . 61
Section 5.4 Negative Covenants of the Kmart Borrower . . . . . . . . . . . . . . . . . . . . . 64
ARTICLE VI
CONDITIONS OF CREDIT . . . . . . . . . . . . . . . . . . . . . 66
Section 6.1 Conditions Precedent to Occurrence of the
</TABLE>
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<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Closing Date and Effectiveness of Agreement . . . . . . . . . . . . . . . . . . . . . . 66
Section 6.2 Conditions Precedent to Effectiveness of
Agreement as to any Non-Kmart Borrower . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 6.3 Conditions Precedent to any Project Borrowing . . . . . . . . . . . . . . . . . . . . . 70
Section 6.4 Conditions Precedent to All Borrowings (other
than a Roll-over Borrowing) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 6.5 Conditions Precedent to All Roll-Over
Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
ARTICLE VII
EVENTS OF DEFAULT . . . . . . . . . . . . . . . 71
Section 7.1 Guarantor Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 7.2 Borrower Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
ARTICLE VIII
THE DOCUMENTATION AGENT. . . . . . . . . . . . . 77
Section 8.1 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 8.2 Nature of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 8.3 Rights, Exculpation, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 8.4 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 8.5 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 8.6 The Documentation Agent Individually . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 8.7 Resignation by the Documentation Agent . . . . . . . . . . . . . . . . . . . . . . . . 80
ARTICLE IX
MISCELLANEOUS . . . . . . . . . . . . . . . . . 81
Section 9.1 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 9.2 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 9.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
</TABLE>
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<TABLE>
<CAPTION>
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----
<S> <C> <C>
Section 9.4 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Section 9.5 Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Section 9.6 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 9.7 Marshalling; Payments Set Aside . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 9.8 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 9.9 Assignments, Participations, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 9.10 Confirmations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Section 9.11 Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Section 9.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Section 9.13 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Section 9.14 No Third Parties Benefited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Section 9.15 Governing Law and Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Section 9.16 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Section 9.17 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Section 9.18 Borrower Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Section 9.19 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Section 9.20 Termination of Existing Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
</TABLE>
Exhibits
Exhibit A - Form of Additional Borrower Agreement
Exhibit B - Form of Assignment
Exhibit C - Form of Notice of Borrowing
Exhibit D - Form of Notice of Conversion/Continuation
Exhibit E - Form of Note
Exhibit F - Form of Allocation Request
Exhibit G - Form of Notice of Swingline Borrowing
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<PAGE> 6
Schedules
Schedule 1.1(a) - Existing Facilities
Schedule 1.1(b) - Commitments; Lending Offices
Schedule 4.2(c) - Consents and Approvals
Schedule 5.4(c) - Liens
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<PAGE> 7
WAREHOUSE FACILITY CREDIT AGREEMENT
This WAREHOUSE FACILITY CREDIT AGREEMENT, dated as of October 7, 1994,
among the Borrowers (as hereinafter defined), the undersigned financial
institutions, including Bankers Trust Company, in their capacities as lenders
hereunder (collectively, the "Banks," and each individually, a "Bank") and
Bankers Trust Company, as Documentation Agent.
W I T N E S S E T H
WHEREAS, the Borrowers have requested the Banks to make loans to one or
more of the Borrowers in an aggregate principal amount not to exceed Five
Hundred Million Dollars ($500,000,000) to be used to refinance construction
loans used to acquire real estate and construct buildings and other improvements
thereto, and, in addition, the Kmart Borrower (as hereinafter defined) has
requested the Banks to make loans for other corporate purposes; and
WHEREAS, the Banks are willing to extend commitments to make loans to
the Borrowers for the purposes specified above and on the terms and subject to
the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants contained herein and in the Guaranty (as hereinafter defined), the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.1 Definitions. As used herein, and unless the context
requires a different meaning, the following terms have the meanings indicated:
"Additional Borrower Agreement" means an Additional Borrower Agreement
in the form of Exhibit A hereto.
"Affiliate" means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, by contract or otherwise. In no
event shall any Bank be deemed an "Affiliate" of any Borrower.
"Agent-Related Persons" means BT and any successor agent under Section
8.7, together with their respective Affiliates and the officers, directors,
employees, agents and attorneys-in-fact of such Persons and Affiliates.
<PAGE> 8
"Agreement" means this Warehouse Facility Credit Agreement, as amended,
restated, supplemented or modified from time to time.
"Allocation Request" has the meaning assigned to that term in Section
2.3.
"APUC" means a written agreement to purchase a Project upon
completion between an Eligible Borrower and Kmart Corporation.
"Arrangers" means BT and BA Securities, Inc.
"Assignee" has the meaning specified in Section 9.9(a).
"Assignment" means a written assignment agreement in favor of the
Documentation Agent for the benefit of the Banks, and in substantially the form
of Exhibit B hereto duly completed, of a Borrower's interest in (a) the APUC
which relates to a Project, and (b) all rents and profits with respect to
such Project.
"Attorney Costs" means and includes all reasonable fees and
disbursements of any law firm or other external counsel, the reasonable
allocated cost of internal legal services and all reasonable disbursements of
internal counsel.
"Average One-Month LIBOR" means the rate of interest per annum
determined by the Documentation Agent to be equal to the sum of the one month
LIBOR in effect on each day of the calendar month then ended divided by the
number of days of such calendar month.
"Bank" and "Banks" means any or all, as the case may be, of the banks
listed in Schedule 1.1(b) hereof and any entity which becomes a Bank pursuant
to Section 9.9.
"Bank Affiliate" means a Person engaged primarily in the business of
commercial banking that is an Affiliate of a Bank and (i) is organized under
the laws of the United States, or any state thereof, or (ii) is organized under
the laws of any other country which is a member of the Organization for
Economic Cooperation and Development, or a political subdivision of any such
country, and is acting through a branch or agency located in the United States.
"Board" means the Board of Governors of the Federal Reserve System.
"Borrower" means the Kmart Borrower and any Eligible Borrower as to
which an Additional Borrower Agreement shall, after the date of this Agreement,
have been delivered to the Documentation Agent, duly executed by such Eligible
Borrower, the Guarantor and the Documentation Agent on behalf of the Banks and
shall have become effective in accordance with its terms, until such time, if
any, as such Borrower shall have satisfied the conditions set forth in Section
9.18, and "Borrowers" means all of the foregoing.
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<PAGE> 9
"Borrower Event of Default" has the meaning assigned to that
term in Section 7.2.
"Borrower Termination Agreement" means an agreement by and between the
Documentation Agent and a Borrower on terms satisfactory to the Documentation
Agent to be executed and delivered following the payment in full of all
Obligations of such Borrower.
"Borrowing" means a borrowing hereunder, consisting of Loans of the
same Type made to a Borrower on the same day by the Banks pursuant to Article
I.
"Borrowing Date" means a date on which a Borrowing is made hereunder.
"Bridge Agreements" has the meaning assigned to that term in Section
2.2(e).
"Bridge Borrowers" has the meaning assigned to that term in Section
2.2(e).
"Bridge Notes" has the meaning assigned to that term in Section 2.2(e).
"BT" means Bankers Trust Company, a New York banking corporation.
"Business Day" means a day on which the Documentation Agent is open in
New York, New York at its address specified in or for the purposes of this
Agreement for the purpose of conducting commercial banking business, and, if the
applicable Business Day relates to any LIBOR Loan, means such a day on which
dealings in Dollars are carried on in the London interbank market.
"Capital Adequacy Regulation" means any guideline, request or directive
of any central bank or other Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any Bank.
"CD Rate" means the arithmetic average (rounded upward to the nearest
1/100th of 1%) of the consensus bid rates determined by each Reference Bank as
the sum of (x) the bid rates per annum, at 10:00 a.m. (New York City time) on
the first day of the Interest Period to be applicable, of two or more New York
or Chicago, as the case may be, certificate of deposit dealers of recognized
standing selected by such Reference Bank in New York or Chicago, as the case
may be, for certificates of deposit of such Reference Bank in an amount
approximately comparable to the principal amount of the CD Rate Loan for such
Reference Bank and with a maturity equal to the Interest Period applicable to
such CD Rate Loan, provided that if any Reference Bank fails to provide the
Documentation Agent with
-3-
<PAGE> 10
its aforesaid rate then the CD Rate shall equal the arithmetic average of the
rates provided to the Documentation Agent by the other Reference Bank or Banks,
such average rate to be grossed up in accordance herewith for the maximum cost
of reserves applicable to certificates of deposit under Regulation D of the
Federal Reserve Board by dividing the same by a percentage equal to 100% minus
the maximum rate of all reserve requirements (expressed as a percentage) as
specified in Regulation D (including any marginal, emergency, supplemental,
special or other reserves) that for the date the CD Rate is being determined
would be applicable during the Interest Period to a negotiable certificate of
deposit of such Reference Bank in excess of $100,000 and with maturity period
equal to such Interest period, plus (y) the then daily net annual assessment
payable to the Federal Deposit Insurance Corporation for insuring such
Certificate of Deposit by a member of the Bank Insurance Fund that is
classified as adequately capitalized and within supervisory sub-group "A" (or a
comparable successor assessment risk classification within the meaning of 12
C.F.R. Section 327.3(d)).
"CD Rate Loan" means any Loan that bears interest at a rate
determined with reference to the CD Rate.
"Closing Date" means the date on which all conditions precedent set
forth in Sections 6.1 are satisfied or waived by all Banks.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and any regulations promulgated thereunder.
"Commitment" means, with respect to any Bank, such Bank's aggregate
commitment to make Loans to the Borrowers hereunder in the principal amount set
forth opposite such Bank's name in Schedule 1.1(b) (or any supplement thereto)
under the caption "Amount of Commitment".
"Consolidated Net Worth" means as of the date of any determination
thereof, the consolidated net worth of Kmart Corporation, determined in
accordance with GAAP; provided, however, that any gains or losses from the
disposition of any Specialty Retail Subsidiary and any changes after the
Closing Date in the foreign currency translation adjustment account as
presented in Kmart Corporation's financial statements (and in accordance with
GAAP) shall be excluded from the determination of Consolidated Net Worth.
"Contaminant" means any waste, pollutant (as that term is defined in
42 U.S.C. 9601(33) or in 33 U.S.C. 1362(13)), hazardous substance (as that term
is defined in 42 U.S.C. 9601(14)), hazardous chemical (as that term is defined
by 29 CFR Section 1910.1200(c)), toxic substance, hazardous waste (as that term
is defined in 42 U.S.C. 6901), radioactive material, special waste,
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<PAGE> 11
petroleum, including crude oil or any petroleum-derived substance, waste, or
breakdown or decomposition product thereof, or any constituent of any such
substance or waste, including but not limited to polychlorinated biphenyls and
asbestos.
"Continuation Date" has the meaning set forth in Section 2.6.
"Contract Documents" has the meaning specified in Section 9.6.
"Controlled Group" means the Kmart Borrower and all Persons (whether
or not incorporated) under common control or treated as a single employer with
the Kmart Borrower pursuant to Sections 414(b), (c), (m) or (o) of the Code.
"Conversion Date" means any date on which Kmart Corporation, (which the
Borrowers hereby jointly and severally irrevocably designate as their collective
agent for such purpose) acting as agent for the Borrowers hereunder, elects to
convert one Type of Loan to another Type of Loan.
"Credit Exposure" has the meaning assigned to that term in
Section 9.9 (c).
"Debt Rating" means the rating assigned to the Guarantor's senior
unsecured debt as publicly announced by Moody's or S&P, as the case may be.
"Default Rate" has the meaning assigned to such term in
Section 2.7(f).
"Deposited Monies" has the meaning assigned to that term in Section
2.13.
"Dollars", "dollars" and "$" each mean lawful money of the United
States.
"Documentation Agent" means BT in its capacity as documentation agent
for the Banks hereunder, and any successor agent in such capacity.
"EBITDAR" means, for any applicable period, for Kmart Corporation the
aggregate of the following, without duplication: (a) consolidated net income
for such period, plus (b) consolidated interest expense (net of any interest
income) for such period, plus (c) consolidated provision for taxes for such
period, plus (d) consolidated depreciation expense for such period, plus (e)
consolidated amortization expense for such period, plus (f) consolidated
Rent Expenses for such period, minus (or plus, as applicable) (g) on a
consolidated basis any extraordinary gains (or plus extraordinary losses) for
such period, minus (or plus, as applicable) (h) any gains (or plus any losses)
attributable to the Specialty Retail Subsidiaries for such period other than
results of
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<PAGE> 12
operations in the ordinary course of business, plus (i) solely with respect to
the four fiscal quarter period ending in October, 1994, the $1.348 billion
restructuring charge recorded in the fourth fiscal quarter of Kmart
Corporation's fiscal year ending January 26, 1994.
"Eligible Assignee" means (i) a commercial bank or other financial
institution organized under the laws of the United States, or any state
thereof, and having a combined capital and surplus of at least One Hundred
Million Dollars ($100,000,000); (ii) a commercial bank organized under the laws
of any other country which is a member of the Organization for Economic
Cooperation and Development, or a political subdivision of any such country,
and having a combined capital and surplus of at least One Hundred Million
Dollars ($100,000,000), provided that such bank is acting through a branch or
agency located in the United States; and (iii) any Bank Affiliate.
"Eligible Borrower" means any of (a) Kmart Corporation, and (b) any
other Person which (i) has been designated as an Eligible Borrower in a
writing executed by the Guarantor and delivered to the Documentation Agent,
(ii) has executed an APUC with the Guarantor with respect to a Project in form
and substance reasonably satisfactory to the Documentation Agent, and (iii) owns
the real estate and improvements thereon comprising the Project which is
subject to such APUC.
"Environmental Lien" means a Lien in favor of any governmental
authority for (a) any liability under federal or state environmental laws or
regulations, or (b) damages arising from, or costs incurred by such
governmental authority in response to, a Release or threatened Release of a
Contaminant into the environment.
"ERISA" means the Employee Retirement income Security Act of 1974, as
amended from time to time, and any regulations promulgated thereunder.
"Existing Facilities" means the bilateral lines of credit with the
institutions and in the amounts set forth on Schedule 1.1(a).
"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day
(or, if such day is not a Business Day, for the preceding Business Day) in the
weekly statistical release designated as H.15 (519), or any successor
publication, by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day that is a Business Day, the average of the quotations
for such day on such transactions received by the Documentation Agent from
three (3)
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<PAGE> 13
Federal funds brokers of recognized standing selected by the Documentation
Agent.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be in general use by significant segments of the U.S.
accounting profession, which are applicable to the circumstances as of the date
of determination.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, or any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to
government.
"Guarantor" means Kmart Corporation, a Michigan corporation.
"Guarantor Event of Default" has the meaning assigned to that term in
Section 7.1.
"Guaranty" means that certain Guaranty Agreement dated the date hereof
made by Guarantor in favor of Documentation Agent and the Banks.
"Guaranty Obligation" means, as applied to any Person, any obligation,
direct or indirect, of that Person guaranteeing any Indebtedness of any other
Person, and, without limiting the generality of the foregoing, any obligation,
direct or indirect, contingent or otherwise, of such Person:
(i) to purchase or pay (or advance or supply funds for
the purchase or payment of) such Indebtedness (whether arising by
agreement to keep-well, to purchase assets, goods, securities or
services, to take-or-pay, or to maintain financial statement
conditions or otherwise); or
(ii) entered into for the purpose of assuring in any other
manner the obligee of such Indebtedness of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or in
part);
provided, that the term Guaranty Obligation shall not include:
(a) endorsements for collection or deposit in the ordinary
course of business;
(b) obligations that are not required in accordance with
GAAP to be included in the financial statements of such Person or the
footnotes thereto; or
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<PAGE> 14
(c) "unconditional purchase obligations" (including
take-or-pay contracts) as defined in and as required to be disclosed
pursuant to Statement of Financial Accounting Standards No. 47 and the
related interpretations, as the same may be amended from time to time.
"Indebtedness" of any Person means at any date without duplication,
(a) all obligations of such Person for borrowed money;
(b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments;
(c) all obligations of such Person to pay the deferred
purchase price of property or services, except trade accounts payable
and other expenses and accounts payable arising in the ordinary course
of business;
(d) all reimbursement obligations with respect to letters of
credit (other than "Letters of Credit" and "LC Obligations" under the
credit agreement described in clause (c) of the definition of Other
Credit Facilities) and bankers I acceptances except ordinary trade
credits;
(e) all Indebtedness of others secured by a Lien on any asset
of such Person whether or not such Indebtedness is assumed by such
Person;
(f) all obligations (to the extent capitalized for accounting
purposes) of such Person as lessee under any lease of any property by
that Person as lessee which, in conformity with GAAP, is accounted for
as a capital lease on the balance sheet of that Person; and
(g) all Guaranty Obligations of such Person.
"Indemnified Person" has the meaning specified in Section 9.6.
"Initial Borrowing" means the first Borrowing by any Borrower under this
Agreement.
"Initial Borrowing Date" means the date of the Initial Borrowing.
"Initial Loan" means the first Loan made by the Banks under this
Agreement.
"Initial Note" has the meaning assigned to that term in Section 2.2(b).
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<PAGE> 15
"Insolvency Proceeding" means (a) any case, action or proceeding
before any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution, winding-up
or relief of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshalling of assets for creditors or other, similar
arrangement in respect of its creditors generally or any substantial portion of
its creditors; in each case (a) and (b) undertaken under U.S. Federal, State or
foreign law.
"Interest Payment Date" means, with respect to any LIBOR Loan or CD
Rate Loan, the last day of each Interest Period applicable to such Loan, with
respect to any Reference Rate Loan, the last Business Day of each calendar
quarter and the Termination Date, and with respect to any Swingline Loan, the
last day of each calendar month and the Termination Date; provided, that if any
Interest Period for a LIBOR Loan exceeds three months, the date which falls
three months after the beginning of such Interest Period shall also be an
Interest Payment Date.
"Interest Period" means: (a) with respect to any LIBOR Loan, the
period commencing on the Business Day the LIBOR Loan is disbursed or continued
(or on the Conversion Date on which any Loan is converted to a LIBOR Loan) and
ending on the date one, two, three or six months thereafter, as selected by the
Kmart Borrower with respect to any Notice of Borrowing or Notice of
Conversion/Continuation; and (b) with respect to any CD Rate Loan, the period
commencing on the Business Day the CD Rate Loan is disbursed or continued (or
on the Conversion Date on which any Loan is converted to a CD Rate Loan) and
ending 30, 60 or 90 days thereafter, as selected by the Kmart Borrower with
respect to any Notice of Borrowing or Notice of Conversion/Continuation;
provided, that:
(i) if any Interest Period would otherwise end on a day
which is not a Business Day, that Interest Period shall be extended to
the next succeeding Business Day unless, in the case of a LIBOR Loan,
the result of such extension would be to carry such Interest Period
into another calendar month, in which event such Interest Period shall
end on the immediately preceding Business Day;
(ii) any Interest Period pertaining to a LIBOR Loan that
begins on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall end on the last Business Day
of the calendar month which is one, two, three or six months, as the
case may be, after the calendar month in which such Interest Period
began; and
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<PAGE> 16
(iii) no Interest Period for any Loan shall extend beyond the
Termination Date.
"Interim Maturity Date" means the last day of any Interest Period.
"IRS" means the Internal Revenue Service, or any successor thereto.
"Investment" means, with respect to any Person (such Person being
referred to in this definition as the "Investor"):
(a) any amount paid by the Investor, directly or indirectly,
or any transfer of property, directly or indirectly, by the Investor to
any other Person for capital stock of, or as a capital contribution
to, or any amount which the Investor has advanced, directly or
indirectly to, any other Person;
(b) the equity interest of the Investor in any Person;
(c) any indebtedness of any Person which is owed to the
Investor and which has been acquired for value by the Investor; and
(d) any Guaranty Obligation in respect of any Indebtedness
of any other Person.
"Kmart Borrower" shall mean Kmart Corporation in its capacity as a
Borrower under this Agreement, as distinct from its capacity as Guarantor of
the obligations of Non-Kmart Borrowers under this Agreement and the Notes.
"Lending Office" means, with respect to each Bank, the office of that
Bank designated as such in Schedule 1.1(b) hereto or such other office of the
Bank as it may from time to time specify to the Kmart Borrower and the
Documentation Agent in accordance with this Agreement.
"Level I Status" exists at any date if, at such date (i) the Debt
Rating is either A2 (or the equivalent) or higher by Moody's or A (or the
equivalent) or higher by S&P and (ii) the Debt Rating is not lower than Baa3 (or
the equivalent) by Moody's or BBB- (or the equivalent) by S&P.
"Level II Status" exists at any date if, at such date (i) the Debt
Rating is either Baa1 (or the equivalent) or higher by Moody's or BBB+ (or the
equivalent) or higher by S&P, (ii) the Debt Rating is not lower than Baa3 (or
the equivalent) by Moody's or BBB- (or the equivalent) by S&P and (iii) Level I
Status does not exist.
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<PAGE> 17
"Level III Status" exists at any date if, at such date (i) the Debt
Rating is either Baa3 (or the equivalent) or higher by Moody's or BBB- (or the
equivalent) or higher by S&P, (ii) the Debt Rating is not lower than Baa3 (or
the equivalent) by Moody's or BBB- (or the equivalent) by S&P and (iii) Level I
Status and Level II Status do not exist.
"Level IV Status" exists at any date if, at such date (i) the Debt
Rating is lower than Baa3 (or the equivalent) by Moody's or lower than BBB- (or
the equivalent) by S&P, or (ii) the Kmart Borrower's senior unsecured
indebtedness is unrated by either S&P or Moody's.
"LIBOR" means, with respect to any Interest Period, the rate of
interest per annum determined by the Documentation Agent to be equal to:
(a) the rate of interest per annum for deposits in U.S.
Dollars for a period equal to the relevant interest period quoted on
Telerate, page 3750 (or its successor if such page number changes) at
or about 11:00 a.m. (London time) on the second business day before
the commencement of such Interest Period,
divided (and rounded to the nearest 1/16 of 1%) by
(b) a percentage equal to 100% minus the then stated
maximum rate of all reserve requirements (including any marginal,
emergency, supplemental, special or other reserves required by
applicable law) applicable to any member bank of the Federal Reserve
System in respect of eurocurrency funding or liabilities as defined in
Regulation D of the Federal Reserve Board.
If no quotation is available on Telerate, the rate of interest under clause (a)
above for any Interest Period shall be determined by the Documentation Agent to
be the arithmetic mean (rounded upward to the nearest 1/16 of 1%) of the rates
of interest per annum notified to the Documentation Agent by each Reference
Bank as the rate of interest (rounded upward to the nearest 1/16th of 1%) at
which deposits in an amount approximately equal to the aggregate amount of the
LIBOR Loans requested to be borrowed, and having a maturity equal to such
Interest Period, are offered to major banks in the London interbank market at
or about 11:00 a.m. (London time) on the second Business Day before the
commencement of such Interest Period.
"LIBOR Loan" means any Loan, other than a Swingline Loan, that bears
interest at a rate determined with reference to LIBOR.
"Lien" means any mortgage, deed of trust, pledge, charge, encumbrance,
lien (statutory or other) or security interest of any
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<PAGE> 18
nature whatsoever (including those created by, arising under or evidenced by
any conditional sale or other title retention agreement), and any assignment or
deposit arrangement intended as or having the effect of security.
"Loan" means a Loan under Section 2.1, and may be a LIBOR Loan, a CD
Rate Loan, a Swingline Loan or a Reference Rate Loan, and, with respect to any
Borrower, means the loans by each of the Banks to such Borrower under Section
2.1 and, with respect to any Bank, the loans made by such Bank to a Borrower or
all the Borrowers, as the context may require, and "Loans" means all of such
Loans to all Borrowers collectively.
"Loan Documents" means, collectively, this Agreement, each Note, the
Guaranty, any Additional Borrower Agreement, any Assignment and all other
agreements, instruments and documents executed and delivered by or on behalf of
any Borrower or the Guarantor in connection with this Agreement.
"Loan Obligations" means, with respect to each Borrower, the
obligations of such Borrower to repay principal of, and to pay interest on the
Loans made to such Borrower pursuant to Section 2.1.
"Loss" has the meaning specified in Section 3.5.
"Material Adverse Effect" means a material adverse change in, or a
material adverse effect upon, the assets, liabilities, business, operations or
condition of the Guarantor and its Subsidiaries taken as a whole.
"Moody's" means Moody's Investors Services, Inc., or any successor to
the rating agency business thereof.
"Net Proceeds" means, with respect to any Project Sale by any
Non-Kmart Borrower, at any date of determination, cash proceeds (including any
cash received by way of deferred payment pursuant to a note receivable or
otherwise, but only as and when so received) through that date from such
Project Sale by a Non-Kmart Borrower or any of its Subsidiaries, net of the
expenses of such Project Sale and net of income taxes payable in respect of
such Project Sale.
"Non-Kmart Borrower" means any Borrower which is not Kmart Corporation.
"Non-Project Loan" means a Loan made to the Kmart Borrower for
purposes other than with respect to a Project.
"Non-Project Commitment" means, with respect to a Borrowing by the
Kmart Borrower which is not made with respect to a Project, for all Banks, the
portion of the Total Commitment allocated to said Borrowing pursuant to Section
2.3 hereof; and for each Bank with
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respect to any such requested Borrowing by the Kmart Borrower, such Bank's Pro
Rata Share of the portion of the Total Commitment allocated to such Borrowing,
in each case, as such amount may be reduced or increased from time to time
pursuant to the terms hereof.
"Note" means any Initial Note and any note issued in replacement of,
exchange for, or amendment or restatement of, any thereof, and "Notes" means
all such notes, collectively.
"Notice of Borrowing" means a notice given by a Borrower to the
Documentation Agent pursuant to Section 2.5 in substantially the form of Exhibit
C.
"Notice of Conversion/Continuation" means a notice given by the Kmart
Borrower, as agent for all Borrowers hereunder, to the Documentation Agent
pursuant to Section 2.6 in substantially the form of Exhibit D.
"Obligations" means, with respect to any Borrower at any time, the
aggregate of such Borrower's Loan Obligations at such time and all other
obligations and liabilities of such Borrower under the Loan Documents at such
time.
"Organizational Documents" means, with respect to any Borrower, the
partnership or joint venture agreement or, if applicable, the certificate of
incorporation and bylaws of such Borrower.
"Other Credit Facilities" means, collectively: (a) the revolving
credit facility evidenced by that certain 364 Day Credit Agreement dated as of
the date hereof among the Kmart Borrower, Bank of America National Trust and
Savings Association ("BofA") as documentation agent and the financial
institutions signatory thereto, as amended, restated, supplemented or modified
from time to time; (b) the revolving credit facility evidenced by that certain
Seasonal Credit Agreement dated as of the date hereof among the Kmart Borrower,
BofA as documentation agent and the financial institutions signatory thereto,
as amended, restated, supplemented or modified from time to time; and (c) the
revolving credit and letter of credit facilities evidenced by that certain
Three Year Credit Agreement dated as of the date hereof among the Kmart
Borrower, BofA, as documentation agent thereunder, and the financial
institutions signatory thereto, as amended, restated, supplemented or modified
from time to time.
"Other Taxes" means any present or future stamp or documentary taxes
or any other excise or property taxes, charges or similar levies which arise
from any payment made hereunder or from the execution, delivery or registration
of, or otherwise with respect to, this Agreement or any other Loan Document.
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<PAGE> 20
"Participants" has the meaning assigned to that term in Section 9.9(c).
"Partner" means, with respect to any Borrower organized as a
partnership or joint venture, any general partner or joint venturer of such
Borrower.
"Payment Office" means the address for payments set forth on the
signature page hereto in relation to the Documentation Agent, or such other
address as the Documentation Agent may from time to time specify in accordance
with Section 2.5(c).
"Payoff Letter" means, with respect to any Project, a letter addressed
to and otherwise in form and substance satisfactory to the Documentation Agent
from each Person which is an existing lender with respect to such Project,
stating the amount of principal and interest owed to such lender as of the date
of such letter and a per diem interest amount which will accrue thereafter
through the proposed Project Borrowing Date for funding of the Project Loan the
proceeds of which are to be used to repay principal and interest of such
existing indebtedness, and affirming that such existing lender will release all
liens and security interests securing such indebtedness upon repayment thereof.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
Permitted Investments" means (a) any evidence of indebtedness,
maturing not more than one year after the date of issue, issued by the United
States of America or any instrumentality or agency thereof the principal,
interest and premium, if any, of which is guaranteed fully by, or backed with
the full faith and credit of, the United States of America, (b) any certificate
of deposit, maturing not more than 90 days after the date of purchase, issued
by the Documentation Agent, or by another commercial banking institution which
is a member of the Federal Reserve System, has a combined capital and surplus
and undivided profits of not less than $200,000,000 and at the time has a
credit rating of AA or better from Standard & Poor's Ratings Group or Aa or
better from Moody's Investors Service, Inc., (c) commercial paper, maturing not
more than 90 days after the date of purchase, issued by a corporation (other
than Guarantor, any Borrower or any Subsidiary of any Borrower or any of their
respective Affiliates) organized and existing under the laws of any state
within the United States of America with a rating, at the time as of which any
determination thereof is to be made, of "P-1" (or higher) according to Moody's
Investors Service, Inc. or "A-1" (or higher) according to Standard & Poor's
Ratings Group, (d) shares or other evidences of participation in any mutual
fund which invests exclusively in one or more of the foregoing, and (e) demand
deposits with any bank or trust company, not exceeding, with respect to any
Non-Kmart Borrower (unless waived by the Guarantor) $100,000.
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<PAGE> 21
"Permitted Liens" means:
(a) Liens for taxes not yet due and payable or
which are being contested in good faith by appropriate
proceedings diligently pursued, provided that (i) if any
proceedings shall have been commenced for the enforcement of
such Liens, no adverse judgment or order of foreclosure or
other similar order, writ or relief shall have been granted or
issued, the effect of which is to permit such Lien to be
foreclosed or otherwise satisfied; and (ii) full provision for
the payment of all such taxes known to such Person has been
made on the books of such Person to the extent required by
GAAP;
(b) mechanics', materialmen's, carriers',
warehousemen's and similar Liens arising by operation of law
and arising in the ordinary course of business and securing
obligations of such Person that are not overdue for a period
of more than 30 days or are being contested in good faith by
appropriate proceedings diligently pursued, provided that in
the case of any such contest (i) if any proceedings shall have
been commenced for the enforcement of such Liens, no adverse
judgment or order of foreclosure or other similar order, writ
or relief shall have been granted or issued, the effect of
which is to permit such Lien to be foreclosed or otherwise
satisfied; and (ii) full provision for the payment of such
Liens has been made on the books of such Person to the extent
required by GAAP;
(c) Liens arising in connection with worker's
compensation, unemployment insurance, old age pensions and
social security benefits which are not overdue or are being
contested in good faith by appropriate proceedings diligently
pursued, provided that in the case of any such contest (i) any
proceedings commenced for the enforcement of such Liens shall
have been duly suspended; and (ii) full provision for the
payment of such Liens has been made on the books of such
Person to the extent required by GAAP;
(d) (i) Liens incurred or deposits made in the
ordinary course of business to secure the performance of bids,
tenders, statutory obligations, fee and expense arrangements
with trustees and fiscal agents (exclusive of obligations
incurred in connection with the borrowing of money or the
payment of the deferred purchase price of property) and (ii)
Liens securing surety, indemnity, performance, appeal and
release bonds, in the case of either clause (i) or clause
(ii), securing such bonds in an amount not to exceed
individually or in the aggregate $250,000 at any time
outstanding, provided that full provision for the payment of
all such obligations has been made on the books of such
Person to the extent required by GAAP;
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<PAGE> 22
(e) Permitted Mortgage Liens;
(f) Permitted Third Party Mortgage Liens, if at
the time such Lien is incurred, no Guarantor Event of Default
or Unmatured Guarantor Event of Default exists; and
(g) such other imperfections of title, covenants,
restrictions, easements and other encumbrances on real
property which in each case do not arise out of the incurrence
of any Indebtedness and which do not interfere with or impair
in any material respect the utility, operation, value or
marketability of the real property on which such Lien is
imposed; and
provided, however, to the extent that the amount of obligations of a
Borrower arising from claims being contested in good faith secured by
such Liens referred to in clauses (a), (b), (c) and (d) above exceeds
$1,000,000 in the aggregate, such Borrower shall have set aside full
cash reserves in the amount of the excess over $1,000,000 of such
obligations.
"Permitted Mortgage Lien" means a mortgage or deed of trust
created by a Non-Kmart Borrower in favor of Guarantor which encumbers
such Non-Kmart Borrower's ownership interest in a Project solely for
the purposes of securing such Non-Kmart Borrower's reimbursement
obligations to Guarantor with respect to any amounts actually paid by
Guarantor under the Guaranty; provided, however, that such mortgage
instrument shall expressly provide that:
(a) Guarantor shall have no right to foreclose
such mortgage, or to enforce any other rights thereunder
which conflict with or are inconsistent with Documentation
Agent's and the Banks' rights under this Agreement
(including, without limitation, any rights to collect
insurance proceeds), without Documentation Agent's prior
written consent unless:
(i) no Guarantor Event of Default has
occurred and is continuing and such foreclosure or
other exercise of rights is solely for the purpose
of, and does in fact have the effect of, causing
title to the relevant Project to be vested in
Guarantor or another Borrower hereunder and
concurrently therewith Guarantor or such other
Borrower assumes all of the transferring Borrower's
Obligations with respect to all Project Loans
outstanding with respect to such Project, or
(ii) all Project Loans with respect to
such Project have been paid in full and the
applicable Project Commitments have been terminated;
(b) the mortgage Lien, and all rights of Guarantor
under such mortgage, shall be subordinate to any Lien with
respect
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<PAGE> 23
to such Project at any time created in favor of Documentation
Agent or the Banks (including, without limitation, any
judgment Lien); and
(c) Guarantor shall have no rights with respect
to the rental income from such Project prior to foreclosure of
such mortgage.
"Permitted Third Party Mortgage Lien" means a mortgage or deed
of trust created by a Borrower in favor of any Person other than
Guarantor which encumbers such Borrower's ownership interest in a
Project for the purpose of refinancing all or a portion of the Project
Loans with respect to such Project, provided, that (a) all proceeds of
such refinancing (net of costs of such refinancing) are applied by
such Borrower to the prepayment of such Project Loans, and (b) the
Guarantor shall have given its prior written consent to such mortgage.
"Person" means any of an individual, corporation, limited
liability company, partnership, trust, incorporated or unincorporated
association, joint venture, joint stock company, government (or an
agency or political subdivision thereof) or other entity of any kind.
"Plan" means an employee benefit plan (as defined in Section 3
(3) of ERISA) which the Kmart Borrower or any member of the Controlled
Group sponsors or maintains or to which the Kmart Borrower or any
member of the Controlled Group makes, is making or is obligated to
make contributions.
"Project" means a newly constructed Super Kmart Center, Kmart
store or Kmart distribution center or other facility to be used by
Kmart Corporation or a Subsidiary of Kmart Corporation and in any case
located in the United States or a territory thereof and subject to an
APUC obligating Kmart Corporation to purchase such store or other
facility and for which the Documentation Agent has established a
Project Commitment.
"Project Borrowing" means, with respect to any Project, the
Project Loan made to a Borrower for such Project.
"Project Borrowing Date" means, with respect to any Project,
the date of the Project Borrowing.
"Project Commitment" means, with respect to any Project, for
all Banks, the portion of the Total Commitment allocated to said
Project pursuant to Section 2.3 hereof; and for each Bank with respect
to any Project, such Bank's Pro Rata Share of the portion of the Total
Commitment allocated to such Project, in each case, as such amount may
be reduced or increased from time to time pursuant to the terms
hereof.
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<PAGE> 24
"Project Loan" means with respect to any Project, at any time,
the aggregate amount of all Loans made with respect to such Project.
"Project Sale" means the sale, lease (other than leases of
space in a Project) or other disposition (including, without
limitation, any sale and leaseback transaction) to any Person (other
than to an Affiliate of the affected Borrower): (a) by any Non-Kmart
Borrower of all or substantially all of the assets of such Non-Kmart
Borrower; or (b) by any Non-Kmart Borrower of all or substantially all
of any Project.
"Pro Rata Share" means, when used with reference to any Bank
and any described aggregate or total amount, an amount equal to the
result obtained by multiplying such described aggregate or total
amount by a fraction the numerator of which shall be such Bank's
Commitment at such time and the denominator of which shall be the
Total Commitment at such time.
"Reference Banks" means BT and Bank of America National Trust
and Savings Association.
"Reference Rate" means, for any day, the higher of:
(a) 0.5% per annum above the latest Federal Funds Rate
for such day; and
(b) the rate of interest publicly announced from
time to time by BT in New York, New York, as its reference
rate or base rate for such day.
Any change in the Reference Rate announced by BT shall take effect at
the opening of business on the day specified in the public
announcement of such change. The "reference rate" is a rate set by BT
based upon various factors, including BT's costs and desired return,
general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above
or below such announced rate.
"Reference Rate Loan" means a Loan that bears interest based
on the Reference Rate.
"Regulation D" means Regulation D of the Board as from time to
time in effect and any successor to all or a portion thereof
establishing reserve requirements.
"Related Person" means, with respect to any Person, any trade
or business (whether or not incorporated) which, together with such
Person, is under common control as described in Section 414(c) of the
Code or is a member of a controlled group, as defined in Section
414(b) of the Code, which includes such Person.
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<PAGE> 25
"Release" means release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environment or into or out of any
Project, including the movement of Contaminants through or in the air,
soil, surface water, groundwater or property of such Project.
"Remedial Action" means actions required to (a) clean up,
remove, treat or in any other way address Contaminants in the indoor
or outdoor environment; (b) prevent the Release or threat of Release
or minimize the further Release of Contaminants so they do not migrate
or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment; or (c) perform pre-remedial studies and
investigations and post-remedial monitoring and care.
"Rent Expenses" means, for any period, consolidated rent
expense of the Kmart Borrower for such period determined in accordance
with GAAP, less consolidated rental income for such period.
"Reportable Event" means, as to any Plan, (a) any of the
events set forth in Section 4043(b) of ERISA or the regulations
thereunder, other than any such event for which the 30-day notice
requirement under ERISA has been waived in regulations issued by the
PBGC, (b) a withdrawal from a Plan described in Section 4063 of ERISA,
or (c) a cessation of operations described in Section 4062(e) of
ERISA.
"Required Banks" means at any time Banks holding at least 51%
of the aggregate of (a) the then Total Commitment (or, if the
Commitments shall have then been terminated in full, the then
aggregate unpaid principal amount of the Loans) plus (b) the then
aggregate commitments under the Other Credit Facilities (or, if the
commitments under any of such facilities shall have then been
terminated in full, then with respect to such terminated facilities
the then aggregate unpaid principal amount of all loans and letter of
credit obligations outstanding under such terminated facilities).
"Requirement of Law" means, as to any Person, any law
(statutory or common), treaty, rule or regulation or determination of
a court or of a Governmental Authority, in each case applicable to or
binding upon the Person or any of its property or to which the Person
or any of its property is subject.
"Responsible Officer" means, as to any Borrower at the
relevant time, any of the Chairman of the Board of Directors,
President, Executive Vice President, Treasurer or Chief Financial
Officer of such Borrower or, if such Borrower is a partnership, of a
Partner of such Borrower.
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<PAGE> 26
"Roll-Over Borrowing" means a Loan to a Borrower which, after
giving effect to such Loan and the application of the proceeds
thereof, does not increase the aggregate amount of outstanding Loans
to such Borrower. Roll-Over Borrowings do not constitute either new
borrowings or disbursements by the Banks of additional monies, the
term "Roll-Over Borrowing" being used merely for convenience of
definition and to denote changes in interest rates.
"S&P" means Standard & Poor's Ratings Group or any successor
to the rating agency business thereof.
"Solvent" shall mean, when used with respect to any Borrower,
that (a) after giving effect to the Borrowings which will be permitted
by such Borrower hereunder, it is able to pay its debts or obligations
in the ordinary course as they mature; and (b) such Borrower has
capital sufficient to carry on its business and all business in which
it is about to engage.
"Specialty Retail Subsidiary" means any of the following
Subsidiaries of the Kmart Borrower (or the continuing investment of
the Kmart Borrower in any such entity): Builders Square, Inc.;
Borders, Inc.; Coles Myer Ltd.; OfficeMax, Inc.; PACE Membership
Warehouse, Inc.; PayLess Drug Stores Northwest, Inc.; The Sports
Authority, Inc.; and Walden Book Company, Inc.
"Swingline Commitment" has the meaning assigned to that term
in Section 2.1(c).
"Swingline Interest Rate" means:
(a) with respect to each Swingline Loan which is
a Project Loan, (i) for each day during the period from and
including December 15th of each year through but excluding the
immediately following January 1st, a rate equal to the higher
of (i) Average One Month LIBOR plus the applicable margin set
forth below for such period, or (ii) the Federal Funds Rate
plus the applicable margin set forth below for such period:
<TABLE>
<CAPTION>
Debt Rating Applicable Margin
----------- -----------------
<S> <C>
Level I Status .275%
Level II Status .3125%
Level III Status .3625%
Level IV Status .55%;
</TABLE>
and (ii) at all other times, a rate equal to the Average One
Month LIBOR plus the applicable margin set forth in this clause (a)
above for such period;
and
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<PAGE> 27
(b) with respect to each Swingline Loan which is
not a Project Loan, (i) for each day during the period from and
including December 15th of each year through but excluding the
immediately following January 1st, a rate equal to the higher of
(i) Average One Month LIBOR plus the applicable margin set forth
below for such period, or (ii) the Federal Funds Rate plus the
applicable margin set forth below for such period:
<TABLE>
<CAPTION>
Debt Rating Applicable Margin
----------- -----------------
<S> <C>
Level I Status .225%
Level II Status .2625%
Level III Status .3125%
Level IV Status .50%;
</TABLE>
and (ii) at all other times, a rate equal to the Average One
Month LIBOR plus the applicable margin set forth in this clause (b)
above for such period;
"Swingline Lender" means the Documentation Agent acting in the
capacity of a Bank with respect to the Swingline Commitment and the
Swingline Loans.
"Swingline Loans" means the Loans to the Borrowers made by the
Swingline Lender pursuant to Section 2.1(c).
"Swingline Notice of Borrowing" means a notice given by a
Borrower to the Swingline Lender and Documentation Agent pursuant to
Section 2.1(c) in substantially the form of Exhibit G.
"Swingline Rate Loans" means Loans bearing interest at the
Swingline Interest Rate.
"Swingline Register" has the meaning assigned to that term in
Section 2.1(c) (x).
"Subsidiary" means any corporation of which stock having by
the terms thereof ordinary voting power to elect at least a majority
of the board of directors of said corporation is at the time directly
or indirectly owned by the Kmart Borrower or by the Kmart Borrower and
one or more Subsidiaries or by one or more Subsidiaries.
"Taxes" means any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding, in the case of each Bank and the
Documentation Agent, such taxes (including income taxes and franchise
taxes) as are imposed on or measured by each Bank's or the
Documentation Agent's net income.
"Termination Date" means the earlier to occur of
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<PAGE> 28
(a) October 6, 1997; and
(b) the date on which the Commitments shall
terminate in accordance with the provisions of this Agreement.
"Total Commitment" means, at the time any determination
thereof is to be made, the sum of the respective Commitments of the
Banks (which will initially be in the total amount of Five Hundred
Million Dollars ($500,000,000)), as such amount may be reduced from
time to time pursuant to this Agreement.
"Total Project Commitments" means, at any time any
determination thereof is to be made, the sum of the respective
Project Commitments for all Projects at such time.
"Total Unused Commitment" means, at the time any determination
thereof is to be made, the sum of the respective Unused Commitments of
the Banks at such time.
"Transferee" has the meaning specified in Section 9.9(d).
"Type" means, with respect to any Loan, its nature as a
Reference Rate Loan, a CD Rate Loan or a LIBOR Loan.
"Unallocated Total Commitment" means, at any time, the lesser
of (a) the Total Commitment less the total principal amount of all
Loans then outstanding or (b) the Total Unused Commitment.
"Unmatured Borrower Event of Default" means an event of
default or event, act or occurrence which with the giving of notice or
the lapse of time (or both) would become a Borrower Event of
Default.
"Umatured Guarantor Event of Default" means an event of
default or event, act or occurrence which with the giving of notice or
the lapse of time (or both) would become a Guarantor Event of Default.
"Unused Commitment" means, when used with reference to any
Bank at the time any determination thereof is to be made, the excess,
if any, of (a) such Bank's Commitment at such time over (b) such
Bank's Utilized Commitment at such time.
"United States" and "U.S." each means the United States of
America.
"Utilized Commitment" means, when used with reference to any
Bank at the time any determination thereof is to be made, the then
outstanding principal amount of all Loans made by such Bank pursuant
to this Agreement and its Pro Rata Share of any Swingline Loans
outstanding.
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<PAGE> 29
The foregoing definitions shall be equally applicable to both
the singular and plural forms of the defined terms. The words "herein,"
"hereof" and words of similar import as used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision
in the Agreement.
Section 1.2 Other Definitional Provisions.
(a) Defined Terms. Unless otherwise specified herein or
therein, all terms defined in this Agreement shall have such defined
meanings when used in any certificate or other document made or
delivered pursuant hereto. The meaning of defined terms shall be
equally applicable to the singular and plural forms of the defined
terms.
(b) The Agreement. The words "hereof", "herein",
"hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular
provision of this Agreement; and section, schedule and exhibit
references are to this Agreement unless otherwise specified.
(c) Certain Common Terms.
The term "documents" includes any and all
instruments, documents, agreements, certificates, indentures,
notices and other writings, however evidenced.
The term "including" is not limiting and means
"including without limitation."
(d) Performance; Time. Subject to the definition of
"Interest Period" in Section 1.1, whenever any performance obligation
hereunder (other than a payment obligation) shall be stated to be due
or required to be satisfied on a day other than a Business Day, such
performance shall be made or satisfied on the next succeeding Business
Day. In the computation of periods of time from a specified date to
a later specified date, the word "from" means "from and including";
the words "to" and "until" each mean "to but excluding"; and the word
"through" means "to and including". If any provision of this
Agreement refers to any action taken or to be taken by any Person,
or which such Person is prohibited from taking, such provision shall
be interpreted to encompass any and all means, direct or indirect, of
taking, or not taking, such action.
(e) Contracts. Unless otherwise expressly provided
herein, references to agreements and other contractual instruments
shall be deemed to include all subsequent amendments and other
modifications thereto, but only to the extent such amendments and
other modifications are not prohibited by the terms of any Loan
Document.
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<PAGE> 30
(f) Laws. References to any statute or
regulation are to be construed as including all statutory and
regulatory provisions consolidating, amending or replacing the statute
or regulation.
(g) Captions. The captions and headings of this
Agreement are for convenience of reference only and shall not affect
the construction of this Agreement.
Section 1.3 Accounting Principles.
(a) Unless the context otherwise clearly
requires, all accounting terms not expressly defined herein shall be
construed, and all financial computations required under this
Agreement shall be made, in accordance with GAAP, consistently
applied.
(b) References herein to "fiscal year" and
"fiscal quarter" refer to such fiscal periods of the applicable
Borrower, or, if no Borrower is specified, the Kmart Borrower.
ARTICLE II
LOAN PROVISIONS
Section 2.1 Loans.
(a) Banks' Commitments. Each Bank, severally and
for itself alone, hereby agrees, on the terms and subject to the
conditions hereinafter set forth, to make loans to one or more of the
Borrowers, on the date requested from time to time from and after the
date of this Agreement to, but not including, the Termination Date, in
the Pro Rata Share of such Bank of such amounts as a Borrower may
request with Guarantor's written approval, but not exceeding: (i) in
the aggregate at any one time outstanding, the Commitment of such
Bank; or (ii) with respect to any Project, such Bank's Project
Commitment for such Project; or (iii) with respect to any Non-Project
Commitment, such Bank's Pro Rata Share of such Non-Project Commitment.
(b) Project Borrowings to Initially be Made as
Swingline Loans. Notwithstanding the Provisions of Section 2.1(a),
unless otherwise required by the Documentation Agent, each Project
Borrowing under this Agreement shall initially be made as a Swingline
Loan pursuant to Section 2.1(c).
(c) Swingline Commitment.
(i) Subject to the terms and conditions
of this Agreement and in reliance upon the
representations and warranties of the Borrowers set
forth herein and in the other Loan Documents,
Swingline Lender hereby agrees to make a portion of
the Total
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<PAGE> 31
Commitments of the Banks available to the Borrowers for Project Loans
at any time and from time to time on and after the date hereof and
prior to the Termination Date, upon notice as set forth in Section
2.1(c)(v) below, in an aggregate principal amount of up to $100
million by making Swingline Loans, notwithstanding the fact that the
amount of such Swingline Loans, when aggregated with Swingline
Lender's outstanding Loans and its Pro Rata Share of the Unused
Commitments, may exceed Swingline Lender's Commitment in effect from
time to time. Swingline Lender's commitment to make Swingline Loans
pursuant to this Section 2.1(c) is herein called its "Swingline
Commitment." Swingline Lender's Swingline Commitment shall expire on
the Termination Date and all Swingline Loans shall be paid in full no
later than the Termination Date.
(ii) In no event shall the aggregate principal amount of
Swingline Loans outstanding at any time exceed the Swingline
Commitment and in no event shall the sum of the aggregate principal
amount of Loans (including Swingline Loans) and the aggregate Total
Unused Commitment outstanding at any one time exceed the Total
Commitments of all the Banks. In no event shall the Swingline
Commitment exceed the Total Commitments of all the Banks, and any
reduction of the Total Commitments which reduces the Total Commitments
below the then current amount of the Swingline Commitment shall result
in an automatic corresponding reduction of the Swingline Commitment to
the amount of the Total Commitments as so reduced, without any
further action on the part of Swingline Lender.
(iii) Amounts borrowed under this Section 2.1(c) may be repaid
and reborrowed, provided that no amounts may be reborrowed on or after
the Termination Date, and provided further than amounts borrowed and
repaid hereunder shall not be available to be reborrowed hereunder in
respect of the same Project.
(iv) All Swingline Loans shall bear interest at the Swingline
Interest Rate.
(v) Subject to Section 2.1(a), whenever a Borrower desires to
borrow under this Section 2.1(c), it shall deliver to the Swingline
Lender and the Documentation Agent a Swingline Notice of Borrowing no
later than 11:00 a.m. (New York City time) one Business Day prior to
the proposed Borrowing date (which shall be a Business Day). The
Swingline Notice of Borrowing shall specify the amount of the proposed
Swingline Loan. In lieu of delivering the above-described Swingline
Notice of Borrowing, a Borrower may give the Agent telephonic notice
by the required time of any proposed Borrowing under this Section
2.1(c), provided, that such notice shall be promptly confirmed in
writing by delivery of
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<PAGE> 32
a Swingline Notice of Borrowing to the Documentation Agent on or prior
to the proposed Borrowing Date of the requested Swingline Loan.
(vi) Swingline Lender shall not incur any liability to any
Borrower in acting upon any telephonic notice referred to above which
Swingline Lender believes in good faith to have been given by a duly
authorized officer or other person authorized to borrow on behalf of
a Borrower or for otherwise acting in good faith under this Section
2.1(c) and, upon the making of a Swingline Loan by Swingline Lender in
accordance with this Agreement pursuant to any telephonic notice, the
applicable Borrower shall be deemed to have borrowed such Swingline
Loan hereunder.
(vii) Each Swingline Notice of Borrowing given pursuant to
this Section 2.1(c) shall be deemed a representation that the Closing
Date shall have occurred and that all conditions to such Borrowing set
forth in Sections 6.2 and 6.3 (if applicable) and 6.4 of this
Agreement have been complied with.
(viii) Promptly after receipt of a Swingline Notice of
Borrowing pursuant to Section 2.1(c)(v) (or telephonic notice in
lieu thereof), and upon satisfaction or waiver by the Banks, the
Required Banks or the Documentation Agent, as applicable, of the
conditions precedent specified in Sections 6.2 and 6.3 (if applicable)
and 6.4, the Swingline Lender shall make the proceeds of such
Swingline Loan available to the applicable Borrower on such Borrowing
date by crediting the same to the account of the Borrower at the
Payment Office of the Documentation Agent.
(ix) Swingline Lender, at any time in its sole and absolute
discretion may, and not less often than once each month shall, on
three (3) Business Days' notice, require each Bank, including
Swingline Lender, either (A) to make a Loan to such Borrower (which,
provided that no Unmatured Guarantor Event of Default or Guarantor
Event of Default shall have occurred and be continuing, shall be of a
Type selected by Kmart Corporation, acting as agent for the applicable
Borrower), for which the applicable Borrower(s) shall be deemed to
have given a Notice of Borrowing pursuant to Section 2.5, in an amount
equal to such Bank's Pro Rata Share of such Swingline Loan, the
proceeds of which Loan shall be applied to repay such Swingline Loan,
or (B) if for any reason such Bank shall fail to make, or shall be
prevented from making, such Loan, to purchase from Swingline Lender a
participation in such Swingline Loan, and any such Bank hereby agrees
to and shall be deemed to have irrevocably purchased from Swingline
Lender, such participation in an amount equal to such Bank's Pro Rata
Share of the amount of such Swingline Loan; provided, however, that in
no event shall any Bank be required to make
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<PAGE> 33
a Loan to refinance a Swingline Loan or to purchase a participation in
a Swingline Loan if such Bank's Loan or its Pro Rata Share of the
amount of such Swingline Loan plus its outstanding Loans (including
its Pro Rata Share of any other Swingline Loans outstanding) and its
Pro Rata Share of the Total Unused Commitment outstanding would exceed
such Bank's Commitment. In the event that such refinancing Loans or
such purchases of participations are made by Banks other than
Swingline Lender under the two immediately preceding sentences, each
such Bank shall make available to Swingline Lender an amount equal to
its respective Loan or participation in same day funds, at the office
of Swingline Lender located at One Bankers Trust Plaza, New York, New
York, not later than 1:00 P.M. (New York City time) on the Business
Day after the date notified by Swingline Lender. Each Bank which
purchases such a participation shall be deemed to have the same rights
of set-off and obligation to share pursuant to Section 9.11 hereof as
it would have had if it were an assignee of Swingline Lender
hereunder. In the event that any Bank fails to make available to
Swingline Lender the amount of such Bank's Loan to refinance or
participation in such Swingline Loan as provided in this Section
2.1(c)(ix) , Swingline Lender shall be entitled to recover such amount
on demand from such Bank together with interest for each day after the
date when such funds were required to be made available hereunder at
the Federal Funds Rate. Each Borrower authorizes the Documentation
Agent to, upon one Business Day's prior written or telephone notice,
charge such Borrower's account with the Documentation Agent (up to the
amount available in each such account) in order immediately to pay
Swingline Lender the amount of such Swingline Loans to the extent
amounts received from the Banks are not sufficient to repay in full
or purchase participations in the full amount of such Swingline Loans.
Each Bank's obligation to make the refinancing Loan or to purchase the
participation referred to in this Section 2.1(c)(ix) shall be absolute
and unconditional and shall not be affected by any circumstance,
including, without limitation:
(1) any set-off, counterclaim, recoupment, defense or
other right which such Bank may have against Swingline Lender,
the applicable Borrower(s) or any other Person for any reason
whatsoever;
(2) the occurrence or continuance of an Unmatured
Borrower Event of Default or a Borrower Event of Default with
respect to any Swingline Borrower;
(3) the occurrence or continuance of an Unmatured
Guarantor Event of Default or a Guarantor Event of Default;
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<PAGE> 34
(4) any adverse change in the condition (financial or
otherwise) of the applicable Borrower or any of its
Subsidiaries or the condition of Guarantor;
(5) any breach of this Agreement by the applicable
Borrower or any other Bank;
(6) the failure to satisfy any of the conditions set
forth in Sections 6.1, 6.2, 6.3 or 6.4, as applicable; or
(7) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregone.
A copy of each notice given by Swingline Lender to the Banks
in respect of any Swingline Loan pursuant to this Section 2.1(c)(ix)
shall be promptly delivered by Swingline Lender to applicable
Borrower, with a copy to Guarantor.
(x) The Swingline Lender shall record in a register (the
"Swingline Lender") the Swingline Commitment from time to time of
Swingline Lender, the Swingline Loans made by Swingline Lender and
each repayment with respect to the principal amount of the Swingline
Loans of Swingline Lender. Any such recordation shall be conclusive,
absent manifest error.
(d) Project Borrowings. All Loans made with respect to a Project made
hereunder (other than Roll-Over Borrowings) shall be made in a single drawing
on the Borrowing Date for such Borrowing and no Borrower shall have any right
hereunder to borrow more than once with respect to any particular Project.
Amounts borrowed and repaid hereunder shall not be available to be reborrowed
hereunder in respect of the same Project but, during the period prior to the
Termination Date and subject to the other terms and conditions hereof, may be
reborrowed with respect to a different Project.
Section 2.2 Obligations; Notes; Loan Register; Waiver; Application of
Initial Loans.
(a) Loan Obligations. Each Borrower hereby severally and not jointly
agrees to repay to each Bank the principal amount of, and to pay to each Bank
interest on, such Bank's Loans to such Borrower (with payments hereunder to be
made to Documentation Agent for the benefit of the Banks as set forth in
Section 2.18 hereof). To secure such payment by each Non-Kmart Borrower, each
Non-Kmart Borrower hereby assigns to the Documentation Agent for the benefit of
the Banks all rents which may be payable by the Guarantor to such Borrower
under any lease of the Project or Projects which are the subject of such
Borrower's Borrowings hereunder and all payments which such Borrower may be
entitled to receive from the Guarantor pursuant to any related APUC(s) and
authorizes and
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<PAGE> 35
directs the Guarantor to make all such payments of rent and other amounts
directly to the Documentation Agent for the benefit of the Banks. Each
Borrower shall pay interest on the principal balance of its Loans from time to
time outstanding as provided in this Agreement. Subject to Section 2.6 and to
the earlier acceleration or prepayment of the Loans as permitted or required by
this Agreement, each Borrower shall repay the principal of its Loans in full on
the Termination Date with respect to Reference Rate Loans and Swingline Loans
and on the earlier of the Termination Date or each relevant Interim Maturity
Date with respect to LIBOR Loans and CD Rate Loans.
(b) Notes. Each Borrower's obligation to pay the principal of, and
interest on, each Bank's Loans to such Borrower hereunder shall be evidenced by
a master promissory note of such Borrower payable to the Documentation Agent
for the benefit of all the Banks in accordance with their respective Pro Rata
Shares of such Loan (each an "Initial Note") duly executed and delivered by
such Borrower to the Documentation Agent at the time when the Loan pursuant to
which such Initial Note is issued as requested by the applicable Borrower.
Each Initial Note shall:
(i) be payable to the order of the Documentation Agent for the
benefit of the Banks in accordance with their respective Pro Rata
Shares of the Loans evidenced thereby;
(ii) be dated the date of the Loan pursuant to which such Note
is issued;
(iii) if the Loan pursuant to which such Note is issued is
with respect to a Project, be in original principal amount equal to
the Project Commitment in effect with respect to the Project to which
such Note relates, and if the Loan pursuant to which such Note is
issued is not with respect to a Project, be in an original principal
amount equal to such Loan; and
(iv) otherwise be in substantially the form of Exhibit E
hereto, duly completed.
Notwithstanding the stated principal amount of each Note, such Note shall be
enforceable with respect to the applicable Borrower's obligation to pay the
principal amount thereof only to the extent of the Loans evidenced thereby, and
such Note shall bear interest from time to time only on the unpaid principal
amount of the Loan evidenced thereby.
(c) Loan Register. The Documentation Agent shall maintain a register
(the "Loan Register") on which it will record the Commitment of each Bank, the
Loans from time to time made by each Bank to each Borrower, the Borrowings made
by each Borrower from each Bank and each repayment in respect of any Loan made
to each Bank. Any such recordation by the Documentation Agent on the Loan
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<PAGE> 36
Register shall constitute prima facie evidence of the accuracy of the
information so recorded, absent manifest error. The Documentation Agent may
also record such information an the schedule attached to each Note for such
purpose, which recordation shall constitute prima facie evidence of the
accuracy of the information so recorded, absent manifest error.
Notwithstanding the foregoing, the failure to make a notation in the Loan
Register or such internal records or upon the schedule attached to any Note
with respect to any Borrowing or principal payment, or any error with respect
to any such notation, shall not limit or otherwise affect the obligation of any
Borrower hereunder or under any Note with respect to the Loans, and payments of
principal by any Borrower shall not be affected by the failure to make a
notation thereof or by an error in such notation, nor shall such failure or
error affect any rights of any Borrower hereunder or under applicable law.
(d) Waiver of Presentment, etc. Each Borrower waives presentment,
demand, protest and notice of dishonor in connection with the payment of its
Obligations.
(e) Application of Certain Project Loans. Borrowers acknowledge that:
(i) LAFGA Star Associates, L.P. (the "March 1994 Bridge
Borrower") is party to that certain loan agreement dated as of March
31, 1994 (the "March 1994 Bridge Agreement") and that certain
promissory note dated as of March 31, 1994 payable to BT (the "March
1994 Bridge Note") , pursuant to which the March 1994 Bridge Borrower
borrowed funds from BT with respect to the Project consisting of a
Kmart department store located at Lafayette, Georgia (the "Lafayette
Georgia Project");
(ii) Kmart Corporation (the "May 1994 Bridge Borrower") is
party to that certain loan agreement dated as of May 9, 1994 (the "May
1994 Bridge Agreement") and that certain promissory note dated as of
May 9, 1994 payable to BT (the "May 1994 Bridge Note"), pursuant to
which the May 1994 Bridge Borrower borrowed funds from BT with respect
to the Project consisting of a Kmart department store located at
Sherman, Texas (the "Sherman Project");
(iii) Douglas and Associates, Inc. (the "June 1994 Bridge
Borrower") is party to that certain loan agreement dated as of June
22, 1994 (the "June 1994 Bridge Agreement") and that certain
promissory note dated as of June 22, 1994 payable to BT (the "June
1994 Bridge Note"), pursuant to which the June 1994 Bridge Borrower
borrowed funds from BT with respect to the Project consisting of a
Kmart department store located a Hattiesburg, Mississippi (the
"Hattiesburg Project");
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<PAGE> 37
(iv) Lafayette Group Associates, L.P. (the "August 8, 1994
Bridge Borrower") is party to that certain loan agreement dated as of
August 8, 1994 (the "August 8, 1994 Bridge Agreement") and that
certain promissory note dated as of August 8, 1994 payable to BT (the
"August 8, 1994 Bridge Note"), pursuant to which the August 8, 1994
Bridge Borrower borrowed funds from BT with respect to the Project
consisting of a Kmart department store located at Lafayette, Louisiana
(the "Lafayette Louisiana Project");
(v) National Realty & Development Corp. (the "August 11, 1994
Bridge Borrower") is party to that certain loan agreement dated as of
August 11, 1994 (the "August 11, 1994 Bridge Agreement") and that
certain promissory note dated as of August 11, 1994 payable to BT (the
"August 11, 1994 Bridge Note"), pursuant to which the August 11, 1994
Bridge Borrower borrowed funds from BT with respect to the Project
consisting of a Kmart department store located at Sidney, New York
(the "Sidney Project");
(vi) Waco Star Associates, Ltd. (the "September 21, 1994 Bridge
Borrower") is party to that certain loan agreement dated as of
September 21, 1994 (the "September 21, 1994 Bridge Agreement") and
that certain promissory note dated as of September 21, 1994 payable to
BT (the "September 21, 1994 Bridge Note"), pursuant to which the
September 21, 1994 Bridge Borrower borrowed funds from BT with respect
to the Project consisting of a Kmart department store located at Waco,
Texas (the "Waco Project"); and
(vii) Continental 37 Fund Limited Partnership (the "October 5,
1994 Bridge Borrower" and, together with the March 1994 Bridge
Borrower, the May 1994 Bridge Borrower, the June 1994 Bridge Borrower,
the August 8, 1994 Bridge Borrower, the August 11, 1994 Bridge
Borrower and the September 21, 1994 Bridge Borrower, the "Bridge
Borrowers") is party to that certain loan agreement dated as of
October 5, 1994 (the "October 5, 1994 Bridge Agreement" and, together
with the March 1994 Bridge Agreement, the May 1994 Bridge Agreement,
the June 1994 Bridge Agreement, the August 8, 1994 Bridge Agreement,
the August 11, 1994 Bridge Agreement and the September 21, 1994 Bridge
Agreement, the "Bridge Agreements") and that certain promissory note
dated as of October 5, 1994 payable to BT (the "October 5, 1994 Bridge
Note" and, together with the March 1994 Bridge Note, the May 1994
Bridge Note, the June 1994 Bridge Note, the August 8, 1994 Bridge
Note, the August 11, 1994 Bridge Note and the September 21, 1994
Bridge Note, the "Bridge Notes"), pursuant to which the October 5,
1994 Bridge Borrower borrowed funds from BT with respect to the
Project consisting of a Kmart department store located at Mankato,
Minnesota (the "Mankato Project" and, together with the Lafayette
Georgia Project, the Sherman Project, the
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<PAGE> 38
Hattiesburg Project, the Lafayette Louisiana Project, the
Sidney Project and the Waco Project, the "Bridged Projects").
The Banks and the Documentation Agent hereby agree with the Borrowers that the
Indebtedness of the Bridge Borrowers to BT under the Bridge Agreements and the
Bridge Notes shall be refinanced under this Agreement and further agree that
the proceeds of the Project Loans made to the Bridge Borrowers hereunder with
respect to the Bridged Projects shall be applied to repayment of the Bridge
Notes to BT, and that no Loans shall be made to the Bridge Borrowers hereunder
for any other purpose until all Indebtedness of the Bridge Borrowers to BT
under the Bridge Agreements and the Bridge Notes shall be repaid in full.
Section 2.3 Allocation of Total Commitment.
(a) Each Borrower hereunder shall, on the date of the Notice of
Borrowing with respect to such Borrowing, submit to the Documentation Agent a
written request (an "Allocation Request") to establish a Project Commitment
(or, if such Borrowing is by the Kmart Borrower for other purposes, to
establish a Non-Project Commitment). Each Allocation Request shall:
(i) be in substantially the form of Exhibit F hereto, duly
completed to reflect the circumstances;
(ii) be approved in writing by Guarantor;
(iii) specify the aggregate amount of the then Unallocated
Total Commitment which such Borrower desires to be allocated pursuant
to such Allocation Request;
(iv) if made with respect to a Project, be accompanied by
Payoff Letters from all existing lenders with respect to such Project
and a title report with respect to such Project, in form and substance
(including recentness) satisfactory to the Documentation Agent,
confirming that no Person other than such existing lenders have liens
of record against such Project, and
(vi) be accompanied by the Initial Note to evidence such
Borrowing, duly executed by such Borrower.
(b) The Documentation Agent shall consider Allocation Requests in the
order received or if received on the same day, in the order so directed by
Guarantor or, if no such direction is given, in the Documentation Agent's sole
discretion. Subject to the foregoing, the Documentation Agent, within five (5)
Business Days, either shall establish a Project Commitment or Non-Project
Commitment (as applicable) in the amount set forth in the Allocation Request
or, if the Unallocated Total Commitment at such time is insufficient or the
conditions precedent to the Borrowing
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<PAGE> 39
requested in connection with such request are not otherwise satisfied (or
waived), shall notify the applicable Borrower, Guarantor and the Banks that
such commitment cannot be established.
Section 2.4 Terms of Borrowing. The Loans shall, except as otherwise
provided in this Agreement, be Swingline Rate Loans, Reference Rate Loans, CD
Rate Loans or LIBOR Loans. As to any LIBOR Loan, any Bank may, if it so
elects, fulfill its commitment by causing a foreign branch or Affiliate to make
or continue such Loan, provided that in such event that Bank's Loan shall, for
the purposes of this Agreement, be considered to have been made by that Bank
and the obligation of the applicable Borrower to repay that Bank's Loan shall
nevertheless be to that Bank and shall be deemed held by that Bank, for the
account of such branch or affiliate.
Section 2.5 Notice of Borrowing.
(a) Subject to Section 2.1 hereof, each Borrowing other than a
Swingline Borrowing shall be made upon the irrevocable request of the
applicable Borrower by a facsimile to the Documentation Agent (which shall be
confirmed promptly by a telephone call) in the form of a Notice of Borrowing,
appropriately completed, which specifies the Project for which such Borrowing
will be used, if any, or if such Borrowing is requested by the Kmart Borrower
for other purposes shall so state, which facsimile must be received by the
Documentation Agent prior to 11:00 a.m. (New York City time) (i) three (3)
Business Days prior to the requested borrowing date, in the case of LIBOR
Loan, (ii) two Business Days prior to the requested borrowing date, in the
case of CD Rate Loans and (iii) on the requested borrowing date, in the case of
Reference Rate Loans, and shall specify:
(i) the amount of the Borrowing, which shall be in an
aggregate minimum principal amount of Five Million Dollars
($5,000,000) or any amount in excess thereof for any Project Loan, and
shall be in an aggregate minimum principal amount of Ten Million
Dollars ($10,000,000) or any multiple of Five Million Dollars
($5,000,000) in excess thereof for any Loan for other purposes;
(ii) the requested Borrowing Date, which shall be a Business
Day;
(iii) whether the Borrowing is to be comprised of LIBOR Loans,
CD Rate Loans or Reference Rate Loans; and
(iv) if the Borrowing is to be comprised of LIBOR Loans or CD
Rate Loans, the duration of the initial Interest Period applicable to
such Loans. If the Notice of Borrowing shall fail to specify the
duration of the initial Interest Period for any LIBOR Loans or CD Rate
Loans, the applicable Borrower
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<PAGE> 40
shall be deemed to have elected an Interest Period of one month or 30
days, respectively;
provided, however, that with respect to any Borrowing to be made on the Closing
Date, a Notice of Borrowing shall be delivered to the Documentation Agent not
later than 11:00 a.m. (New York City time) on the Closing Date (such Borrowing
will consist of Swingline Rate Loans only).
(b) Upon receipt of the Notice of Borrowing, the Documentation Agent
shall promptly notify each Bank thereof and of the amount of such Bank's share
of the requested Borrowing based on such Bank's Pro Rata Share thereof.
(c) Each Bank will make its share of each Borrowing available to the
Documentation Agent for the account of the applicable Borrower at the
Documentation Agent's Payment Office specified on the signature page hereto or
at such other address as the Documentation Agent shall hereafter specify to the
Banks by 2:00 p.m. (New York City time) on the borrowing date requested by the
applicable Borrower by payment in Dollars and in funds immediately available to
the Documentation Agent. Unless any applicable condition specified in Sections
6.2 and 5.2 (if applicable) and Section 6.4 has not been satisfied, the
proceeds of all such Loans will then be made available to the applicable
Borrower by the Documentation Agent at such office by crediting the account of
such Borrower with the aggregate of the amounts made available to the
Documentation Agent by the Banks and in like funds as received by the
Documentation Agent.
(d) After giving effect to any Borrowing, unless consented to by the
Documentation Agent in its sole discretion, there shall not be more than six
(6) different Interest Periods in effect in respect of all LIBOR Loans then
outstanding, and not more than twelve (12) Interest Periods in respect of all
Loans then outstanding.
Section 2.6 Conversion and Continuation Elections for Borrowings.
(a) The Kmart Borrower (and Kmart Corporation, as agent for each
Non-Kmart Borrower) may, upon notice to the Documentation Agent in accordance
with Section 2.6(b):
(i) elect to convert, on any Business Day, any Reference Rate
Loans (or any part thereof) in an aggregate amount not less than Five
Million Dollars ($5,000,000), into LIBOR Loans or CD Rate Loans; or
(ii) elect to convert, as of the last day of any Interest
Period, any LIBOR Loans maturing on such day (or any part thereof in
an aggregate amount not less than Five Million
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<PAGE> 41
Dollars ($5,000,000) into Reference Rate Loans or CD Rate Loans; or
(iii) elect to convert, as of the last day end of
any Interest Period, any CD Rate Loans maturing on such day (or any
part thereof in an aggregate amount not less than Five Million
Dollars ($5,000,000) into Reference Rate Loans or LIBOR Loans; or
(iv) elect to continue as of the last day of any
Interest Period (a "Continuation Data") any LIBOR Loans or CD Rate
Loans maturing on such day (or any part thereof in an aggregate
amount not less than Five Million Dollars ($5,000,000);
provided, that if the aggregate amount of all LIBOR Loans or CD Rate
Loans comprised in any Borrowing shall have been or would be reduced, by
payment, prepayment, or conversion of part thereof to an amount less
than Five Million Dollars ($5,000,000), such LIBOR Loans or CD Rate Loans
shall automatically convert into Reference Rate Loans, on and as of the
end of the applicable Interest Period.
(b) If Kmart Corporation, as each Borrower's agent, desires to
convert or continue any Loan pursuant to Section 2.6(a), it shall
irrevocably request a conversion or continuation by a facsimile
(confirmed promptly by telephone) of a Notice of Conversion/Continuation
to be received by the Documentation Agent not later than 11:00 a.m. (New
York City time) at least (i) three (3) Business Days in advance of the
Conversion Date or Continuation Date, if the Loans are to be converted
into or continued as LIBOR Loans, (ii) two (2) Business Days in advance
of the Conversion Date or Continuation Date, if the Loans are to be
converted into or continued as CD Rate Loans and (iii) on the same
Business Day as the Conversion Date, if the Loans are to be converted
into Reference Rate Loans, specifying:
(A) the proposed Conversion Date or Continuation Date;
(B) the aggregate amount of Loans to be converted or
continued;
(C) the nature of the proposed conversion or continuation;
and
(D) the duration of the requested Interest Period, if the
Loans are to be converted into or continued as LIBOR Loans or CD
Rate Loans.
(c) If prior to the time set forth in Section 2.6(b),
Kmart Corporation, as agent for each Borrower, has failed to (i) give
a timely Notice of Conversion/Continuation with respect to such LIBOR
Loans or CD Rate Loans or (ii) select a new Interest Period to be
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applicable to such LIBOR Loans or CD Rate Loans, such Borrower shall
be deemed to have elected to convert such Loans into LIBOR Loans with
an Interest Period of one month effective as of the expiration of the
applicable interest Period.
(d) During the existence of an Unmatured Guarantor Event
of Default or a Guarantor Event of Default (or, with respect to a
particular Borrower, an Unmatured Borrower Event of Default or a
Borrower Event of Default), unless the Required Banks agree otherwise,
the affected Borrower(s) (or Kmart Corporation (which the Borrowers
hereby jointly and severally irrevocably designate as their collective
agent for such purpose), acting as their agent) may not elect to have
a Loan be converted into or continued as a LIBOR Loan or a CD Rate
Loan.
(e) Upon receipt of a Notice of Conversion/ Continuation,
the Documentation Agent will promptly notify each Bank thereof, or, if
no timely notice is provided, the Documentation Agent will promptly
notify each Bank of the details of any automatic conversion or
continuation. All conversions and continuations pursuant to this
Section 2.6 shall be made pro rata according to the respective
outstanding principal amounts of the Loans being converted or continued
held by each Bank.
Section 2.7 Interest.
(a) Subject to Sections 2.7(f) and (g) , each Project
Loan (other than Swingline Loans) shall bear interest on the
outstanding principal amount thereof from the date when made until
paid in full, at the option of the applicable Borrower or Kmart
Corporation (as agent for the Borrowers) as set forth in the
applicable Notice of Borrowing or Notice of Conversion/Continuation:
(i) if such Loan is a Reference Rate Loan, at a
rate per annum equal to the Reference Rate;
(ii) if such Loan is a LIBOR Loan, at a rate per
annum equal to the sum of LIBOR plus the applicable margin set
forth below:
<TABLE>
<CAPTION>
Debt Rating Applicable Margin
<S> <C>
Level I Status .275%
Level II Status .3125%
Level III Status .3625%
Level IV Status .55%
</TABLE>
and
(iii) if such Loan is a CD Rate Loan, at a rate per
annum equal to the sum of the CD Rate plus the applicable
margin set forth below:
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<PAGE> 43
<TABLE>
<CAPTION>
Debt Rating Applicable Margin
<S> <C>
Level I Status .40%
Level II Status .4375%
Level III Status .4875%
Level IV Status .6750%
</TABLE>
(b) Subject to Sections 2.7(f) and (g), each Loan, other than
Project Loans and Swingline Loans, shall bear interest on the
outstanding principal amount thereof from the date when made until paid
in full, at the option of the Kmart Borrower as set forth in the
applicable Notice of Borrowing or Notice of Conversion/Continuation:
(i) if such Loan is a Reference Rate Loan, at a rate per
annum equal to the Reference Rate;
(ii) if such Loan is a LIBOR Loan, at a rate per annum equal
to the sum of LIBOR plus the applicable margin set forth below:
<TABLE>
<CAPTION>
Debt Rating Applicable Margin
<S> <C>
Level I Status .225%
Level II Status .2625%
Level III Status .3125%
Level IV Status .50%
</TABLE>
and
(iii) if such Loan is a CD Rate Loan, at a rate per
annum equal to the sum of the CD Rate plus the applicable margin set
forth below:
<TABLE>
<CAPTION>
Debt Rating Applicable Margin
<S> <C>
Level I Status .35%
Level II Status .3875%
Level III Status .4375%
Level IV Status .625%
</TABLE>
(c) Any change in the Debt Rating shall be effective as of the
date on which such change is first publicly announced by Moody's or S&P.
Any change in the applicable margin due to a change in the applicable
Debt Rating shall be effective on the effective date of such change in
the Debt Rating and shall apply to all Loans that are outstanding at any
time during the period commencing on the effective date of such change in
the Debt Rating and ending on the date immediately preceding the
effective date of the next such change in the Debt Rating which results
in a change in the applicable margin.
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<PAGE> 44
(d) Subject to Sections 2.7(f) and (g), each Swingline Loan shall
bear interest on the outstanding principal amount thereof from the date
when made until paid in full at the Swingline Interest Rate.
(e) Interest on each Loan shall be payable in arrears an each
applicable Interest Payment Date. Interest shall also be payable on the
date of any prepayment of any LIBOR Loans or CD Rate Loans for the
portion of the Loans so prepaid, and, in the case of conversion of any
Reference Rate Loan, on the date of conversion thereof into a LIBOR Loan
or a CD Rate Loan.
(f) After acceleration, and after as well as before any entry of
judgment thereon, and at the election of the Documentation Agent or the
Required Banks during any period while a Guarantor Event of Default or,
with respect to a particular Borrower, a Borrower Event of Default as to
such Borrower, is continuing, each Borrower affected shall pay interest
(after as well as before judgment to the extent permitted by law) on the
principal amount of all Loans made to it which are due and unpaid, at a
rate per annum which is determined by increasing the rate(s) of interest
then in effect by 2% per annum; provided, however, that, if a Guarantor
Event of Default (or, with respect to such Borrower, a Borrower Event of
Default) has occurred and is continuing and the Documentation Agent or
the Required Banks have so elected, on and after the expiration of the
Interest Period applicable to any LIBOR Loan or CD Rate Loan outstanding
on the date of occurrence of such Event of Default or acceleration, the
principal amount of such Loan shall, during the continuation of such
Event of Default, bear interest at a fluctuating rate per annum equal to
the Reference Rate plus 2% (the "Default Rate").
(g) Anything herein to the contrary notwithstanding, the
obligations of the Borrowers hereunder shall be subject to the limitation
that payments of interest shall not be required, for any period for which
interest is computed hereunder, to the extent (but only to the extent)
that contracting for or receiving such payment by the respective Bank
would be contrary to the provisions of any law applicable to such Bank
limiting the highest rate of interest which may be lawfully contracted
for, charged or received by such Bank, and in such event the applicable
Borrower(s) shall pay such Bank interest at the highest rate permitted by
applicable law.
Section 2.8 Computation of Fees and Interest.
(a) All computation of fees and interest under this Agreement
shall be made on the basis of a 360-day year and actual days elapsed.
Interest and fees shall accrue during each period during which interest
or such fees are computed from and including the first day thereof to but
excluding the last day thereof. Any interest or fees not paid when due
after any applicable grace period shall bear interest at the Default
Rate.
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<PAGE> 45
(b) The Documentation Agent will, with reasonable promptness,
notify the Borrowers, Guarantor and the Banks of each determination of
LIBOR, the CD Rate and the Reference Rate; provided that any failure to
do so shall not relieve the Borrowers of any liability hereunder. The
Documentation Agent will, with reasonable promptness, notify the
Borrowers, Guarantor and the Banks of the effective date and the amount
of any change in the Debt Rating resulting in a change in the
applicable rate of interest or fees, provided, that any failure to do
so shall not relieve the Borrowers of any liability hereunder.
(c) Each determination of an interest rate by the Documentation
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on the Borrowers and the Banks in the absence of manifest error.
The Documentation Agent, at the request of any Borrower or any Bank, will
deliver to such Borrower or such Bank, as the case may be, a statement
showing the quotations used by the Documentation Agent in determining any
interest rate.
(d) If any Reference Bank's Commitment shall terminate (otherwise
than on termination of the Total Commitment), or for any reason
whatsoever either Reference Bank shall cease to be a Bank hereunder, then
such Reference Bank shall thereupon cease to be a Reference Bank, and,
when necessary (until such Reference Bank shall have been replaced
pursuant to Section 2.8(e), LIBOR and the CD Rate shall be determined on
the basis of the rates as notified by the remaining Reference Bank.
(e) Each Reference Bank shall use its best efforts to furnish
quotations of rates to the Documentation Agent as contemplated hereby.
If either Reference Bank shall be unable or otherwise fail to supply such
rates to the Documentation Agent upon its request, the rate of interest
shall be determined on the basis of the quotations of the remaining
Reference Bank. Guarantor and the Documentation Agent may select a new
Reference Bank to replace any Reference Bank that shall cease to be a
Bank hereunder or that fails to supply rates as required hereunder.
Section 2.9 Mandatory, Reduction of the Commitments. If at any time
for any Project, the principal amount of a Loan by any Bank for such
Project exceeds the Project Commitment of such Bank then in effect with
respect to such Project, the applicable Borrower shall immediately prepay
the Loan Obligations incurred with respect to such Project, and the Note
evidencing such Loan Obligations, in a principal amount equal to such
excess. If any Guarantor Event of Default shall have occurred and the
Documentation Agent shall have notified the Borrowers of the election of
the Required Banks to take any action specified in Section 7.1, the
Commitment and each Project Commitment and Non-Project Commitment of each
Bank shall be automatically reduced to $0 without any action on the part
of or the giving of notice to any
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<PAGE> 46
Borrower by the Documentation Agent or any Bank. If a Borrower
Event of Default shall have occurred and the Documentation Agent
shall have notified the relevant Borrower of the election of the
Required Banks to take any action specified in Section 7.2, the
Project Commitment of each Bank for all Projects of such Borrower
shall be automatically reduced to $0 without any action on the part
of or the giving of notice to such Borrower by the Documentation
Agent or any Bank.
Section 2.10 Voluntary Reduction of the Total Commitment. After the
Initial Borrowing Date, Kmart Corporation (which the Borrowers hereby
jointly and severally irrevocably designate as their collective agent for
such purpose) shall have the right, upon at least five (5) Business Days,
prior written notice to the Documentation Agent, without premium or
penalty, to permanently reduce or terminate the unutilized portion of the
Unallocated Total Commitment of the Banks, in whole at any time or in
part from time to time, in a minimum amount of $10 million (unless the
amount of such Unallocated Total Commitment at such time is less than $10
million, in which case, in an amount equal to the amount of such
Unallocated Total Commitment at such time) and, if such reduction is
greater than $10 million, in an integral multiple of $5 million, provided
that any such reduction shall apply proportionately to the Commitment of
each of the Banks. The Total Commitment shall not be so reduced below
the aggregate principal amount of outstanding Loans nor shall the Total
Commitment be reduced below the amount of the aggregate of the Total
Project Commitment and the aggregate of all Non-Project Commitments at
such time.
Section 2.11 Voluntary Prepayments of the Loan Obligations. Any
Borrower may, as hereinafter provided, prepay the Loan Obligations of
such Borrower, and the Notes evidencing the same, in whole at any time or
in part from time to time as provided herein, without premium or penalty,
but subject to the provisions of Article III. Any partial prepayment
of the Loan Obligations of such Borrower pursuant to this Section 2.11
shall be in a minimum aggregate amount of not less than $1 million. The
relevant Borrower shall irrevocably give notice (by telegram or
telecopier, or by telephone (confirmed in writing promptly thereafter))
to the Documentation Agent (which shall promptly advise each other Bank)
of each proposed prepayment hereunder, prior to 10:00 a.m., New York City
time, on the second Business Day prior to the proposed prepayment date,
which notice shall specify the proposed prepayment date (which shall be a
Business Day) and the aggregate principal amount of the proposed
prepayment and the Project or Projects (and the Notes) to which such
prepayment applies. Upon giving of such irrevocable notice, the amount
specified to be prepaid shall become due and payable in full on the date
specified in such notice. Neither the Total Commitment nor the
Commitment of any Bank shall be reduced pursuant to any such prepayment,
unless the Borrowers shall have requested such a reduction in compliance
with the provisions of Section 2.10.
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<PAGE> 47
Section 2.12 Mandatory Prepayment of the Loan Obligations.
(a) If any Non-Kmart Borrower receives any Net Proceeds with
respect to any Project (whether in cash or securities), then such
Borrower shall prepay any outstanding Loans relating to such Project, and
the Notes evidencing the same, promptly (but in any event within five (5)
Business Days) to the extent of such proceeds for the ratable benefit of
the Banks;
(b) If any Borrower receives any proceeds of a refinancing
incurred in connection with a Permitted Third Party Mortgage Lien, then
such Borrower shall immediately prepay any outstanding Loans relating to
the Project encumbered by such Permitted Third Party Mortgage, and the
Notes evidencing such Loans, to the extent of such proceeds (net of the
cost of such refinancing) and, in the event such proceeds are not
sufficient to pay in full all of the Project Loans (and Notes evidencing
such Loans) for such Project, then such Borrower shall, not later than
six (6) months after the date such Permitted Third Party Mortgage is
incurred (or at such earlier date as required by this Agreement, if
applicable), pay in full the unpaid principal balance of the Project
Loans for such Project and the Notes evidencing such Loans, together with
accrued interest thereon, and any Project Commitment with respect to such
Project shall thereupon terminate.
(c) Prepayments made pursuant to this Section 2.12 shall be
treated according to Section 2.13 to the extent that they are to be
applied to LIBOR Loans or CD Rate Loans for which the relevant Interest
Period has not expired at the time of prepayment. Prepayments made
pursuant to this Section 2.12 shall be treated according to Section 2.14
for determining the order of application of prepayments to the Loans.
Section 2.13 Other Provisions With Respect to Prepayments. Except
as otherwise provided herein, any repayment of a LIBOR Loan or a CD Rate
Loan which shall be made prior to the end of the applicable Interest
Period for such Loan shall be subject to the provisions of Article III
hereof. Subject to the obligations of the Documentation Agent provided
for in this Section 2.13, at the option of Kmart Corporation (as agent
for the affected Borrower), any monies otherwise required to be used to
repay such LIBOR Loan or CD Rate Loan may be so applied provided that
such Borrower concurrently pays any amount due under Article III hereof
in respect of such prepayment; otherwise if the relevant Interest Period
for such LIBOR Loan or CD Rate Loan has not expired such funds (the
"Deposited Monies") shall, until the end of the applicable Interest
Period when the Deposited Monies shall be applied to make such
prepayment, be held in trust by the Documentation Agent (or, at the
Documentation Agent's option, as cash collateral) for the Banks in a
non-interest bearing account and the relevant Borrower shall have no
right to or interest in such funds and such funds shall be used to prepay
such LIBOR Loan
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<PAGE> 48
or CD Rate Loan at the end of the applicable Interest Period;
provided, however, that any funds held in such account shall be
invested by the Documentation Agent (to the extent the Documentation
Agent is able to do so) on behalf of the relevant Borrower at the
direction of such Borrower in Permitted Investments selected by such
Borrower and having a maturity not exceeding the Business Day prior
to the end of the relevant Interest Period. Interest on the
applicable Project Loan Obligations shall continue to accrue until
the Deposited Monies are applied to the prepayment thereof. Any
such investments shall be held by the Documentation Agent or under
the control of the Documentation Agent. The interest accruing on
such investments and any profits realized from such investments
shall be, after giving effect to such repayment of such Loans and
any interest thereon with the Deposited Monies, paid to the relevant
Borrower; provided that any loss resulting from such investments
shall be charged to and be immediately payable by such Borrower upon
demand of the Documentation Agent. A prepayment so made by the
Documentation Agent from such Deposited Monies shall be treated as a
prepayment, by such Borrower pursuant to Section 2.12 (except that
such prepayment shall not be subject to the minimum prepayment amount
requirements of Section 2.12) and shall be otherwise governed by
such Section.
Section 2.14 Order of Prepayments and Payments.
(a) All prepayments of principal made by any Borrower pursuant to
Sections 2.12 and 2.13 shall be applied to the payment of the outstanding
balance of any applicable Project Loan and the Note evidencing the same
as directed by such Borrower with respect to breakage of Interest
Periods, provided that no Guarantor Event of Default has occurred and is
then continuing and no Borrower Event of Default as to such Borrower has
occurred and is then continuing. Any prepayment of principal made after
the occurrence and during the continuance of a Guarantor Event of Default
or a Borrower Event of Default as to the applicable Borrower shall be
applied against the Loan Obligations of such Borrower and the Notes
evidencing the same as the Documentation Agent shall, in its sole
discretion, determine.
(b) Any prepayments of a Loan pursuant to Sections 2.12 and 2.13
shall permanently reduce by a like amount the pro rata Project Commitment
of each of the Banks corresponding to the Project Loan so prepaid.
Section 2.15 Fees.
(a) From and after the date hereof the Borrowers shall pay in
Dollars to the Documentation Agent for the pro rata distribution to each
Bank a facility fee in an amount equal to the Total Commitments in effect
for each day (regardless of utilization), at a rate per annum, as
follows: (1) .125% if Level I Status exists on such day, (2) .1375% if
Level II Status exists on such day, (3)
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.1875% if Level III Status exists on such day, and (4) .2500% if Level IV
Status exists on such day. Such facility fee shall accrue from the
Closing Date to the Termination Date and shall be computed for each
calendar quarter and be payable quarterly in arrears on each January 15,
April 15, July 15 and October 15 (and on the Termination Date),
commencing with January 15, 1995, and ending on the Termination Date.
Such fee shall be allocated among the Borrowers as follows: (i) if no
Guarantor Event of Default has occurred and is continuing, in such manner
as Guarantor shall designate from time to time or, if no designation is
made, pro rata to each Borrower in proportion to its aggregate Project
Commitments and Non-Project Commitments outstanding as of the date such
fee is payable; and (ii) if a Guarantor Event of Default shall have
occurred and be continuing, then pro rata to each Borrower, in proportion
to its respective Project Commitments and Non-Project Commitments as of
the date such fee is payable or, if no Project Commitments and
Non-Project Commitments are then outstanding, equally to each Borrower.
(b) Syndication Fees. Guarantor shall pay in Dollars to the
Arrangers on the Closing Date fees in the amount set forth in a letter
agreement between Guarantor and BT and BofA dated August 29, 1994.
(c) Administration Fees. Guarantor shall pay to the Documentation
Agent administration and transaction fees in Dollars in the amounts and
at the times set forth in a letter agreement between Guarantor and BT and
BofA dated August 29, 1994.
Section 2.16 Responsibility for Making Loans. No Bank shall be
responsible for any default by any other Bank in its obligation to make
Loans hereunder and each Bank shall be obligated to make the Loans
provided to be made by it hereunder, regardless of the failure of any
other Bank to fulfill its Commitment hereunder.
Section 2.17 Withholding Tax Exemption. At least five (5) Business
Days prior to the first date on which interest or fees are payable
hereunder for the account of any Bank, each Bank that is not incorporated
under the laws of the United States of America, or a state thereof,
agrees that it will deliver to the Documentation Agent two duly completed
copies of United States Internal Revenue Service Form 1001 or 4224,
certifying in either case that such Bank is entitled to receive payments
under this Agreement and the Notes without deduction or withholding of
any United States federal income taxes. Each Bank which so delivers a
Form 1001 or 4224 further undertakes to deliver to the Documentation
Agent two additional copies of such form (or a successor form) on or
before the date that such form expires (currently, three successive
calendar years for Form 1001 and one calendar year for Form 4224) or
becomes obsolete or after the occurrence of any event requiring a change
in the most recent forms so delivered by it, and such amendments thereto
or extensions or renewals thereof as may be
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reasonably requested by the Documentation Agent, in each case certifying
that such Bank is entitled to receive payments under this Agreement and
the Notes without deduction or withholding of any United States federal
income taxes, unless an event (including without limitation any change in
treaty, law or regulation) has occurred prior to the date on which any
such delivery would otherwise be required which renders all such forms
inapplicable or which would prevent such Bank from duly completing and
delivering any such form with respect to it and such Bank advises the
Documentation Agent that it is not capable of receiving payments without
any deduction or withholding of United States federal income tax.
Section 2.18 Payments by the Borrowers.
(a) All payments (including prepayments) to be made by the
Borrowers on account of principal, interest, fees and other amounts
required hereunder shall be made without set-off or counterclaim and
shall, except as otherwise expressly provided herein, be made to the
Documentation Agent at its Payment Office for the ratable account of the
Banks in Dollars and in immediately available funds, no later than
(unless otherwise waived by the Documentation Agent with respect to a
payment) 2:00 p.m. (New York City time) on the date specified herein.
The Documentation Agent will promptly distribute to each Bank its Pro
Rata Share (or other applicable share as expressly provided herein) of
such principal, interest, fees or other amounts, in like funds as
received. Any payment which is received by the Documentation Agent later
than 2:00 p.m. (New York City time) shall be deemed to have been received
on the immediately succeeding Business Day and any applicable interest or
fee shall continue to accrue until such payment is deemed to have been
received.
(b) Except as otherwise set forth in the definition of Interest
Period, whenever any payment hereunder shall be stated to be due on a day
other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of interest or fees, as the case may be.
(c) Unless the Agent shall have received notice from a Borrower
prior to the date on which any payment is due to the Banks hereunder that
such borrower will not make such payment in full, the Documentation Agent
may assume that the Borrower has made such payment in full to the
Documentation Agent as required hereunder on such date and the
Documentation Agent may (but shall not be so required), in reliance upon
such assumption, cause to be distributed to each Bank on such due date an
amount equal to the amount then due such Bank. If and to the extent such
Borrower shall not have made such payment in full to the Documentation
Agent, each Bank shall repay to the Documentation Agent on demand such
amount distributed to such Bank, together with interest
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thereon for each day from the date such amount was distributed to such Bank
until the date such Bank repays such amount to the Documentation Agent at the
Federal Funds Rate.
Section 2.19 Payments by the Banks to the Documentation Agent.
(a) Unless the Documentation Agent shall have received notice from
a Bank on the Closing Date or, with respect to each Borrowing after the Closing
Date, at least one (1) Business Day prior to the date of the proposed
Borrowing, that such Bank will not make available to the Documentation Agent
for the account of the applicable Borrower the amount of that Bank's share of
Loans included in the Borrowing, the Documentation Agent may assume that each
Bank has made such amount available to the Documentation Agent as required
hereunder on the borrowing date and the Documentation Agent may (but shall not
be so required), in reliance upon such assumption, make available to the
applicable Borrower on such date a corresponding amount. If and to the extent
any Bank shall not have made its full amount available to the Documentation
Agent and the Documentation Agent in such circumstances has made available to
the applicable Borrower such amount, that Bank shall on the next Business Day
following the date of such Borrowing make such amount available to the
Documentation Agent, together with interest at the Federal Funds Rate, in each
case as in effect for each such day. A certificate of the Documentation Agent
submitted to any Bank with respect to amounts owing under this Section 2.19(a)
shall be conclusive, absent manifest error. If such amount is so made
available, such payment to the Documentation Agent shall constitute such Bank's
Loan on the date of Borrowing for all purposes of this Agreement. If such
amount is not made available to the Documentation Agent on the next Business
Day following the date of such Borrowing, the Documentation Agent shall notify
the applicable Borrower of such failure to fund and, upon demand by the
Documentation Agent, such Borrower shall pay such amount to the Documentation
Agent for the Documentation Agent's account, together with interest thereon
for each day elapsed since the date of such Borrowing, at a rate per annum
equal to the interest rate applicable at the time to the Loans comprising such
Borrowing without making or being responsible for any payment under Article
III.
(b) The failure of any Bank to make any Loan on any date of
Borrowing shall not relieve any other Bank of any obligation hereunder to make
a Loan on the date of such Borrowing, but no Bank shall be responsible for
the failure of any other Bank to make the Loan to be made by such other Bank
on the date of any Borrowing.
Section 2.20 Sharing of Payments, Etc.
(a) If, other than as expressly set forth elsewhere herein, any
Bank shall obtain on account of the Loans made by it any
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payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) in excess of its Pro Rata Share of payments on account
of the Loans obtained by all the Banks, such Bank shall forthwith (x) notify
the Documentation Agent of such fact, and (y) purchase from the other Banks
such participations in the Loans made by them as shall be necessary to cause
such purchasing Bank to share the excess payment ratably with each of them;
provided, however, that if all or any portion of such excess payment is
thereafter recovered from the purchasing Bank, such purchase shall to that
extent be rescinded and each other Bank shall repay to the purchasing Bank the
purchase price paid thereto together with an amount equal to such paying Bank's
Pro Rata Share (according to the proportion of (i) the amount of such paying
Bank's required repayment to (ii) the total amount so recovered from the
purchasing Bank) of any interest or other amount paid or payable by the
Purchasing Bank in respect of the total amount so recovered. The Documentation
Agent will keep records (which shall be conclusive and binding in the absence
of manifest error) , of participations purchased pursuant to this Section
2.20(a) and will in each case notify the Banks and the Borrowers following any
such purchases.
(b) Each Borrower agrees that any Bank so purchasing a
participation from another Bank pursuant to this Section 2.20 may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of set-off, but subject to Section 9.7) with respect to such
participation as fully as if such Bank were the direct creditor of such
Borrower in the amount of such participation.
(c) Nothing herein shall require any Bank to exercise any right of
set-off or similar rights or shall affect the right of any Bank to exercise,
and retain the benefits of exercising any such right with respect to any other
indebtedness or obligation of any Borrower.
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.1 Taxes.
(a) All payments of principal of and interest on the Loans (other
than Reference Rate Loans) shall be made by the applicable Borrower(s) without
set-off or counterclaim for or on account of, and free and clear of, and
without deduction or withholding for, or on account of, any Taxes. In
addition, the Borrowers shall pay all Other Taxes.
(b) Each Borrower agrees to indemnify and hold harmless each Bank
and the Documentation Agent for the full amount of Taxes or
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Other Taxes imposed by any jurisdiction on amounts payable under this Section
3.1 paid by such Bank or the Documentation Agent and any liability (including
penalties, interest, additions to tax and expenses) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. Payment under this indemnification shall be made within
thirty (30) days after the date any Bank or the Documentation Agent makes
written demand therefor.
(c) If any Borrower shall be required by law to deduct or withhold
any Taxes or Other Taxes from or in respect of any sum payable hereunder to any
Bank or the Documentation Agent, then:
(i) the sum payable shall be increased as necessary so
that after making all required deductions and withholdings (including
deductions and withholdings applicable to additional sums payable
under this Section 3.1) such Bank or the Documentation Agent, as the
case may be, receives an amount equal to the sum it would have
received had no such deductions or withholdings been made;
(ii) such Borrower shall make such deductions and
withholdings;
(iii) such Borrower shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in
accordance with applicable law; and
(iv) such Borrower shall also pay to each Bank or the
Documentation Agent for the account of such Bank or the Documentation
Agent, at the time interest is paid, all additional amounts which the
respective Bank or the Documentation Agent specifies as necessary to
preserve the after-tax yield such Bank or the Documentation Agent
would have received if such Taxes or Other Taxes had not been imposed.
(d) Within thirty (30) days after its receipt thereof, such
Borrower shall furnish the Documentation Agent the original or a certified
copy of a receipt evidencing payment of such Taxes or Other Taxes, or other
evidence of payment satisfactory to the Documentation Agent.
(e) Each Bank which is a foreign person (i.e., a person other than
a United States person for United States Federal income tax purposes) agrees
that it will comply with the requirements of Section 2.17 hereof and further
agrees that if such Bank claims or is entitled to claim exemption from
withholding tax under a United States tax treaty by providing a Form 1001 and
such Bank sells or grants a participation of all or part of its rights under
this Agreement, such Bank shall notify the Documentation Agent of the
percentage amount in which it is no longer the beneficial owner
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under this Agreement. To the extent of this percentage amount, each Borrower
or the Documentation Agent shall treat such Bank's Form 1001 as no longer in
compliance with this Section 3.1(e). In the event a Bank claiming exemption
from United States withholding tax by filing Form 4224 with the Borrowers or
the Documentation Agent sells or grants a participation in its rights under
this Agreement, such Bank agrees to undertake sole responsibility for complying
with the withholding tax requirements imposed by Sections 1441 and 1442 of the
Code.
(f) Notwithstanding anything herein to the contrary, no Borrower
will be required to pay any additional amounts in respect of Taxes described
below:
(i) if such Bank shall have delivered to the Borrowers
and the Documentation Agent a Form 4224 or a Form 1001 in respect of
its Lending Office and such Bank shall not at any time be entitled to
exemption from deduction or withholding of United States Federal
income tax in respect of payments by such Borrower hereunder for the
account of such Lending Office for any reason other than a change in
United States law or regulations or in the official interpretation of
such law or regulations by any governmental authority charged with the
interpretation or administration thereof (whether or not having the
force of law) after the date of delivery of such Form 4224 or Form
1001, as applicable;
(ii) taxes that are imposed as a result of any sale,
assignment, transfer or other disposition (whether voluntary or
involuntary) by such Bank of any interest in such Bank's Commitment,
Loans or the Loan Documents, unless such sale, assignment, transfer or
disposition by such Bank takes place while a Borrower Event of Default
or Guarantor Event of Default has occurred and is continuing or
pursuant to Section 3.3(c);
(iii) taxes to the extent resulting from (A) the gross
negligence, fraud or willful misconduct of a Bank or the Documentation
Agent, (B) any act or omission of a Bank or the Documentation Agent
that is in violation of any of the terms of the Loan Documents, or (C)
the inaccuracy or breach of any representation, warranty or covenant
by a Bank or the Documentation Agent in any document required to be
furnished thereby.
(g) If any Borrower is required to pay additional amounts to any
Bank pursuant to this Section 3.1, then such Bank shall use its reasonable best
efforts (consistent with legal and regulatory restrictions) to change the
jurisdiction of its Lending Office so as to eliminate any such additional
payment by such Borrower which may thereafter accrue if such change in the
judgment of such Bank is not otherwise materially disadvantageous to such
Bank.
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(h) If any Bank or the Documentation Agent receives a written
notification from a taxing authority of proposed taxes for which an amount may
be payable by any Borrower in accordance with this Section 3.1, such Bank or
the Documentation Agent shall notify such Borrower promptly after receipt of
such notification and shall furnish such Borrower with such related information
as such Borrower may reasonably request. If requested by any Borrower in
writing, such Bank or the Documentation Agent shall in good faith diligently
contest (including pursuing all judicial appeals as of right, if any) the
validity, applicability and amount of such Taxes or Other Taxes; provided, that
(x) prior to taking such action such Borrower shall have agreed to indemnify
such Bank or the Documentation Agent for all reasonable out of pocket costs and
expenses that such indemnitee may incur in connection with contest such claim
and (y) the amount of such claim, when aggregated with all amounts owing to
such Bank under comparable provisions of the Other Credit Facilities to which
such Bank is a party, shall exceed $5,000.
(i) Each bank receiving a receipt or other evidence of payment
pursuant to Section 3.1(d) shall reimburse the applicable Borrower for the
amount of any credit or other economic benefit available to such Bank by reason
or on account of such payment by such Borrower or such Bank's possession of
such receipt or other evidence of payment under any tax, levy, impost, duty,
fee, assessment or other charge of any nature imposed by any Governmental
Authority applicable to such Bank. The amount of such reimbursement calculated
by such Bank shall be conclusive and binding absent manifest error in
computation.
3.2 Inability to Determine Rates. If and to the extent that
market or other conditions existing in the domestic money market relevant to CD
Rate Loans or in the London inter-bank market relevant to LIBOR Loans make it
impossible or impracticable for the Banks to make such Loans, then the
obligations of the Banks to make CD Rate Loans or LIBOR Loans, as applicable,
and the right of any Borrower to originate, continue or convert any Loan as or
to a CD Rate Loan or a LIBOR Loan shall be suspended until the circumstances
giving rise to such suspension shall no longer exist.
Upon receipt from the Documentation Agent of a notice of the Banks'
inability to make, convert or continue the requested Loan due to any of the
reasons referred to above, notwithstanding anything in this Agreement to the
contrary, any Borrower may revoke any Notice of Borrowing or Notice of
Conversion/Continuation then submitted by it. If such Borrower does not revoke
such notice relating to a LIBOR Loan or CD Rate Loan, the Banks shall, with
respect to such LIBOR Loan or CD Rate Loan only, make or convert such Loan in
the amount specified in the applicable notice submitted by such Borrower, but
such Loan shall be made as or converted into a Reference Rate Committed Loan
instead of a LIBOR Loan or a CD Rate Loan. Except as provided in the
immediately
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preceding sentence, if, notwithstanding the provisions of this Section 3.2, any
Bank has made available to any Borrower its Commitment Percentage of any such
proposed Loan, then such Borrower shall immediately repay the amount so made
available to it by such Bank, together with accrued interest thereon, if any.
3.3 Increased Costs; Capital Adequacy.
(a) If, after the Closing Date, a Bank shall reasonably determine
that any change in applicable laws, rules or regulations or in the
interpretation or administration thereof by any Governmental Authority charged
with the interpretation or administration thereof (whether or not having the
force of law):
(i) shall change the basis of taxation to such Bank of
any amounts payable by any Borrower under this Agreement (other than
taxes imposed on or measured by the overall income of such Bank in the
jurisdiction in which such Bank has its principal office), or
(ii) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement against assets of, deposits
with or for the account of, or credit extended by, such Bank with
respect to this Agreement or any Note, or
(iii) shall impose any other condition with respect to this
Agreement or any Note,
and the result of any of the foregoing is to increase the cost to such Bank or
to reduce the amount of any sum receivable by such Bank with respect to making
or maintaining any CD Rate Loan or LIBOR Loan by an amount reasonably deemed by
such Bank to be material, then such Borrower shall from time to time, upon
written demand by such Bank, pay to such Bank additional amounts sufficient to
compensate such Bank for any such increased cost or reduced sum receivable to
the extent resulting from outstanding CD Rate Loans or LIBOR Loans and not
compensated in connection with the computation of the CD Rate or LIBOR (as
applicable).
(b) If any Bank shall have determined that (i) the introduction of
any Capital Regulation, (ii) any change in any Capital Adequacy Regulation,
(iii) any change in the interpretation or administration any Capital Adequacy
Regulation by any central bank or other Governmental Authority charged with the
interpretation or administration thereof, or (iv) compliance by such Bank (or
its Lending Office) with any such change in Capital Adequacy Regulations,
affects or would affect the amount of capital required or expected to be
maintained by such Bank and (taking into consideration such Bank's policies
with respect to capital adequacy and such Bank's desired return on capital)
determines that the amount of such capital is increased by an amount deemed
material by such Bank as a consequence of its Commitment, Loans (other than
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Reference Rate Loans) or other obligations under this Agreement, then, upon
demand of such Bank to such Borrower through the Agent, such Borrower shall pay
to such Bank, from time to time as specified by such Bank, additional amounts
sufficient to compensate for such increase.
(c) Upon receipt of notice from any Bank of a claim for
compensation under this Section 3.3, the applicable Borrower(s) shall be
afforded ninety (90) days to find a replacement financial institution
reasonably acceptable to the Documentation Agent and, if an acceptable
replacement financial institution is available such replacement institution
will purchase such Bank's Loans and Commitment and other interests under the
Loan Documents in accordance with Section 9.9 or such Bank will withdraw such
request for payment.
(d) A detailed statement as to the amount of such increased cost
or reduced sum receivable, along with documentation supporting the payment of
such amount under this subsection, shall be prepared by such Bank and submitted
to the applicable Borrower(s) (with a copy to the Documentation Agent) with
such Bank's written demand. Such Bank's statement of such increased cost or
reduced sum receivable shall be prima facie evidence of such increased cost or
reduced sum absent manifest error.
3.4 Illegality. If any Bank shall determine that, after the date
hereof, (i) the introduction of any Requirement of Law or any change in or in
the interpretation or administration thereof has made it unlawful, or (ii) any
central bank or other Governmental Authority has asserted that it is unlawful,
for such Bank or its Lending Office to make any Loan of the Type requested by a
Borrower, then, on notice thereof by such Bank to the applicable Borrower(s)
through the Documentation Agent, the obligation of such Bank to make any such
Loans shall be suspended until such Bank shall have notified the Documentation
Agent and such Borrower(s) that the circumstances giving rise to such
determination no longer exists.
If a Bank shall determine that it is unlawful to maintain any Loan
then outstanding, then, on notice thereof by such Bank to the applicable
Borrower(s) through the Documentation Agent, such Borrowers shall prepay in
full all such Loans of such Bank then outstanding, together with interest
accrued thereon, either on the last day of the Interest Period thereof if such
Bank may lawfully continue to maintain such Loans to such day, or immediately,
if such Bank may not lawfully continue to maintain such Loans.
If any Borrower is required to prepay any LIBOR Loan or CD Rate Loan
as provided in the preceding paragraph of this Section 3.4, then
concurrently with such prepayment, such Borrower shall borrow from the affected
Bank, in the amount of such repayment, a Reference Rate Loan.
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3.5 Funding Losses. Each Borrower agrees to reimburse each Bank
and to hold each Bank harmless from any loss, cost or expense which such Bank
may sustain or incur as a consequence of:
(a) any failure by such Borrower to borrow, or to
continue or convert a Loan (other than a Reference Rate Loan) after it
has given (or is deemed to have given) a Notice of Borrowing or a
Notice of Conversion/Continuation, as the case may be;
(b) any payment by it of a LIBOR Loan or a CD Rate Loan
on a day which is not the last day of the Interest Period with respect
thereto; or
(c) the conversion of a LIBOR Loan or a CD Rate Loan to a
Reference Rate Loan on a day that is not the last day of the
respective Interest Period;
by paying to each Bank, on demand by such Bank, an additional amount equal to
the amount of any interest which such Bank would have earned for the remainder
of the Interest Period in question reduced by the amount of income earned by
such Bank during such Interest Period with respect to the amount prepaid or not
borrowed (the "Loss"). A detailed statement as to the amount of such Loss,
prepared by the Bank incurring the same, shall be prima facie evidence of such
Loss absent manifest error.
3.6 Survival. The agreements and obligations of each Borrower in
this Article III shall survive the payment of all of such Borrower's Loan
Obligations.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties of the Non-Kmart
Borrowers. Each Non-Kmart Borrower represents and warrants to the
Documentation Agent and to each Bank with respect to itself and its partners
or joint venturers, as follows:
(a) Organization, Standing, etc. Such Non-Kmart Borrower
is a corporation or partnership duly organized, validly existing and in good
standing under the laws of the state of its organization. Such Non-Kmart
Borrower has all requisite corporate or partnership power and authority to own
and operate the Projects which are the subject of Loans made to such Borrower
hereunder and to execute, deliver and perform its obligations under each of the
Loan Documents to which it is a party and all other agreements and instruments
executed and delivered by it pursuant to or in connection with any Loan
Document to which it is a party.
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(b) Organizational Documents. A complete and correct copy of each
of the Organizational Documents of such Non-Kmart Borrower in effect on the
date of such Borrower's initial Borrowing has been delivered to the
Documentation Agent.
(c) Conflicting Agreements and Other Matters. The execution,
delivery and performance by such Non-Kmart Borrower of each of the Loan
Documents to which it is a party and all other agreements and instruments to be
executed and delivered by such Borrower pursuant thereto or in connection
herewith or therewith do not and will not:
(i) violate any provisions of any law, rule, regulation,
order, writ, judgment, decree, determination or award presently
in effect having applicability to such Borrower;
(ii) conflict with or result in a breach of or constitute
a tortious interference with or constitute a default under the
Organizational Documents of such Borrower or any indenture or loan or
credit agreement, or any other agreement or instrument, to which such
Borrower is a party or by which such Borrower or any of its properties
may be bound or affected, or any governmental permit, license or
order;
(iii) result in (except for Permitted Liens) or require the
creation or imposition of any Lien of any nature upon or with respect
to any of the properties now owned or hereafter acquired by such
Borrower; or
(iv) require any approval or consent of any Person, except
for such approvals or consents which will have been obtained before
the date hereof.
Such Non-Kmart Borrower is not in default under or in violation of any such
law, rule, regulation, license, order, permit, writ, judgment, decree,
determination, award, indenture, agreement or instrument described above or
under its organizational documents the consequences of which default or
violation would materially and adversely affect the condition (financial or
otherwise), properties, business, prospects or results of operations of such
Borrower.
(d) Due Execution, etc. The execution, delivery and performance
of each of the Loan Documents to which such Non-Kmart Borrower is a party and
the consummation of the transactions on its part contemplated thereby, have
been duly authorized by all necessary corporate or partnership proceedings and
no other proceedings on the part of such Borrower are necessary to authorize
each of the Loan Documents to which such Borrower is a party. Each of the Loan
Documents to which it is a party and each other agreement or instrument
executed and delivered by such Borrower pursuant hereto or thereto or in
connection herewith or therewith has been duly executed and delivered by such
Borrower and
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constitutes or will constitute a legal, valid and binding obligation of such
Borrower, enforceable against such Borrower in accordance with its respective
terms (subject, as to enforcement, to bankruptcy, insolvency, reorganization
and other similar laws affecting the enforcement of creditors, rights
generally and general equitable principles which may limit the right to obtain
the remedy of specific performance of executory covenants and other equitable
remedies). Each of the Loan Documents to which such Borrower is a party is in
full force and effect and no term or condition thereof has been amended,
modified or waived from the terms and conditions of the Loan Documents
delivered to the Documentation Agent pursuant to Section 6.1 or 6.2 hereof
without the prior written consent of the Required Banks or all the Banks, as
applicable, and such Borrower has performed and complied in all material
respects with all the terms, provisions, agreements and conditions set forth
therein and required to be performed or complied with by such parties on or
before the Borrowing Date, and no default by such Borrower or any of the other
parties thereto exists thereunder.
(e) Title to and Condition of Properties. Such Non-Kmart Borrower
is the owner of fee simple title to each Project, or, with respect to the real
estate on which a Project is located, the lessee under a valid ground lease
having an unexpired term of not less than twenty-five (25) years, which is the
subject of any Loans hereunder, subject only to Permitted Liens, rights of
Kmart Corporation under the related APUC and as lessee under the related
lease(s) of such Project(s) and rights of existing lenders in respect of such
Project(s) securing indebtedness owed to such lenders.
(f) Litigation, Proceedings, Licenses, Permits; etc.
There are no actions, suits, proceedings or investigations pending or, to the
knowledge of such Non-Kmart Borrower after due inquiry, threatened against or
affecting it or any of its Subsidiaries or any of its or their respective
properties before any court, governmental agency or regulatory authority
(foreign, Federal, state or local), which, if determined adversely to such
Borrower or any of its Subsidiaries, (i) would enjoin or otherwise materially
interfere with any Project or the transactions contemplated by the Loan
Documents, or (ii) would (individually or in the aggregate) materially impair
such Borrower's or any of its Subsidiaries' ability to perform fully any
obligations on a timely basis which any of them has under or in connection with
any Loan Document. Neither such Borrower nor any of its Subsidiaries, (i) is
in default with respect to any order of any court, arbitrator or governmental
body or is subject to or party to any order of any court or governmental
authority arising out of any action, suit or proceeding against it under any
statute or other law respecting antitrust, monopoly, restraint of trade, unfair
competition or similar matters, or (ii) has violated or is in violation of any
statute, rule or regulation of any governmental authority in each
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case where such violation or default would materially and adversely affect any
Project or the transactions contemplated by the Loan Documents. Such Borrower
and each of its Subsidiaries have been and are current and in good standing
with respect to all governmental approvals, permits, certificates, licenses,
inspections, consents and franchises necessary to continue to own or lease and
operate any Project.
(g) Governmental Consents, etc. Except as already received by such
Non-Kmart Borrower as of the date hereof, no authorization, consent, approval,
license, qualification or formal exemption from, nor any filing, declaration or
registration with, any court, governmental agency or regulatory authority or
any securities exchange or any other Person is required in connection with
the execution, delivery and performance by such Borrower of this Agreement or
any Loan Document to which it is or is to be a party.
(h) Governmental Regulation. Neither such Non-Kmart Borrower nor any
of its respective Subsidiaries is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, the Interstate
Commerce Act, the Investment Company Act of 1940 or any other federal or state
statute or regulation such that its ability to incur indebtedness is limited or
its ability to consummate the transactions contemplated hereby is materially
impaired.
(i) Federal Reserve Regulations. Neither such Non-Kmart Borrower nor
any of its respective Subsidiaries is engaged, directly or indirectly,
principally, or as one of its important activities, in the business of
extending, or arranging for the extension of, credit for the purpose of
purchasing or carrying any margin stock within the meaning of Regulation G, T,
U or X of the Board.
(j) Disclosure. The Loan Documents and any other document,
certificate or statement furnished or to be furnished to the Documentation
Agent or any Bank by or on behalf of such Non-Kmart Borrower or any of its
Subsidiaries in connection herewith or therewith do not and will not contain
any untrue statement of a material fact and do not and will not omit to state a
material fact necessary in order to make statements made by such Non-Kmart
Borrower or any of its Subsidiaries contained herein and therein not misleading
in light of the circumstances in which made.
(k) Solvency. Such Non-Kmart Borrower is Solvent and will continue
to be Solvent after giving effect to the transactions contemplated by the Loan
Documents to be executed by it.
(l) Survival of Warranties. All representations and warranties of
such Non-Kmart Borrower contained in this Agreement shall survive the execution
and delivery of this Agreement and the termination hereof. Any modifications
or supplements to the
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disclosures contained in this Agreement and provided by such Non-Kmart Borrower
after the date hereof shall not be deemed a part of the Agreement until
accepted in writing by the Banks or the Required Banks, as applicable.
Section 4.2 Representations and Warranties of the Kmart Borrower. The
Kmart Borrower represents and warrants to the Documentation Agent and to each
Bank with respect to itself, as follows:
(a) Organization and Good Standing. The Kmart Borrower is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, and is duly qualified to do
business and is in good standing in each additional jurisdiction where failure
to so qualify would have an effect which, when taken together with the
simultaneous effect of failure to qualify in any other jurisdictions, would in
the aggregate have a Material Adverse Effect.
(b) Authorization; No Contravention. The execution, delivery and
performance of this Agreement and the issuance of the Notes by the Kmart
Borrower are within its corporate powers, have been duly authorized by all
necessary corporate action, and are not in contravention of any Requirement of
Law or of the terms of the Kmart Borrower's Articles of Incorporation or
by-laws, or of any agreement, undertaking, contract or other obligation to
which the Kmart Borrower is a party or by which it is bound.
(c) Consents and Approvals. No consent, waiver, approval,
notification of, or registration or filing with, any Governmental Authority or
any non-governmental Person is required in connection with the execution and
delivery by the Kmart Borrower of this Agreement or the Notes or the borrowing
by the Kmart Borrower hereunder or in connection with the consummation of any
transaction contemplated hereby, except those disclosed in Schedule 4.2(c) and
which the Kmart Borrower has obtained or made.
(d) Binding Effect. This Agreement is, and each Note when issued
will be, valid, binding and enforceable against the Kmart Borrower in
accordance with the terms thereof (subject, as to enforcement of remedies, to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
relating to or affecting the enforcement of creditors' rights and general
equitable principles which may limit the right to obtain the remedy of specific
performance of executory covenants and other equitable remedies).
(e) Litigation. No litigation or governmental proceeding is pending
or, to the knowledge of the Kmart Borrower, threatened, against the Kmart
Borrower for which sufficient provision has not been made in the financial
statements of the Kmart Borrower and which could have a material adverse effect
on the Kmart Borrower's
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condition or business, financial or otherwise, or which purport to affect or
pertain to this Agreement or any of the transactions contemplated hereby.
(f) Financial Statements. The balance sheet as of January 26, 1994
and the related statements of income and stockholders' equity and cash flows,
of the Kmart Borrower and its Subsidiaries contained in the most recent annual
report of the Kmart Borrower to its stockholders have been audited and
certified by Price Waterhouse, independent certified public accountants, and
are complete and accurate in all material respects and present fairly the
financial condition of the Kmart Borrower and its Subsidiaries as of the dates
of such statements and the results of their operations for the periods covered
thereby, in accordance with GAAP, consistently applied. The balance sheet as
of July 27, 1994 and the related statements of income, stockholders' equity and
cash flows, of the Kmart Borrower and its Subsidiaries contained in the most
recent quarterly report of the Kmart Borrower filed with the U.S. Securities
and Exchange Commission (the "SEC") on Form 10-Q are complete and accurate
in all material respects and present fairly the financial condition of the
Kmart Borrower and its Subsidiaries as of the dates of such statements and the
results of their operations for the periods covered thereby, in accordance with
GAAP, consistently applied.
(g) Use of Proceeds; Margin Regulations. After applying the proceeds
of any borrowings hereunder, not more than 25% of the value of the assets of
the Kmart Borrower and its Subsidiaries will consist of "margin stock" as such
term is defined in Regulation G, T, U or X of the Federal Reserve Board. The
Kmart Borrower is not generally engaged in the business of purchasing or
selling margin stock or extending credit for the purpose of purchasing or
carrying margin stock.
(h) No Default. No Unmatured Guarantor Event of Default or Guarantor
Event of Default exists or would result from the incurring of any Obligations
by it.
(i) Taxes. The Kmart Borrower has filed all Federal and other
material tax returns and reports required to be filed, and has paid all Federal
and other material taxes, assessments, fees and other governmental charges
levied or imposed up it or its properties, income or assets otherwise due and
payable, except those which are being contested in good faith by appropriate
proceedings and for which adequate reserves have been provided in accordance
with GAAP. There is no proposed tax assessment against the Kmart Borrower that
could, if made, have a Material Adverse Effect.
(j) Insurance. The properties and business of the Kmart Borrower are
insured in such amounts, with such deductibles and covering such risks as are
customarily carried by similar companies
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of comparable size engaged in similar businesses and owning or operating
similar properties in localities where the Kmart Borrower operates.
(k) Compliance With Laws. The Kmart Borrower is in compliance with
all applicable laws, rules and regulation (including environmental laws, rules
and regulations and the Employee Retirement Income Security Act of 1976, as
amended, and all regulations thereunder) except where the failure to be in such
compliance could not reasonably be expected to have a Material Adverse Effect.
Section 4.3 Representations and Warranties of the Bridge Borrowers.
Each Bridge Borrower represents and warrants to the Documentation Agent and to
each Bank with respect to itself and not with respect to the other Bridge
Borrowers that, as of the date of this Agreement, no "Event of Default" or
"Unmatured Event of Default" (as such terms are defined in the respective
Bridge Agreements) exists under the Bridge Note or the Bridge Agreement to
which such Bridge Borrower is a party.
ARTICLE V
COVENANTS
Section 5.1 Affirmative Covenants of each Non-Kmart Borrower. Each
Non-Kmart Borrower covenants and agrees that, so long as any Bank shall have
any Commitment hereunder, or any Loan or other Obligation shall remain unpaid
or unsatisfied, such Non-Kmart Borrower will:
(a) Furnish to Kmart Corporation, and to the Documentation Agent, for
distribution to each Bank:
(i ) Within three (3) days after such Borrower shall have
obtained knowledge of the occurrence of a Borrower Event of Default
with respect to itself or of a Guarantor Event of Default, the written
statement of a Responsible Officer of such Borrower setting forth the
details of each such Event of Default which has occurred and is
continuing and the action which such Borrower proposes to take with
respect thereto.
(ii) Copies of any annual or interim financial statements
required to be provided by such Borrower to its equity holders or
partners by law or under its Organizational Documents, or to the
Guarantor under any agreements between such Borrower and the
Guarantor, as and when the same are provided to such equity holders or
partners or the Guarantor.
(iii) Unless waived by the Guarantor, promptly following such
Borrower's receipt thereof, copies of all financial or
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other reports or statements submitted to such Borrower by independent
public accountants relating to any annual or interim audit of the
books of such Borrower.
(iv) Promptly upon obtaining knowledge thereof, notice of any
action, suit, proceeding or investigation pending or threatened
against or affecting such Borrower or any of its properties before any
court, governmental agency or regulatory authority (foreign, Federal,
state or local), which, if determined adversely to such Borrower could
materially impair such Borrower's ability to perform its obligations
under the Loan Documents to which it is a party or could have a
material adverse effect on any of its Projects.
(v) Such other information respecting the properties,
business affairs, financial condition and/or operations of such
Borrower as the Documentation Agent or any Bank may from time to time
reasonably request.
(b) Preserve and maintain its corporate or partnership (as
applicable) existence.
(c) Comply with all laws, rules, regulations and governmental orders
(foreign, Federal, state and local) having applicability to it or to the
business or businesses at any time conducted by it, where the failure to so
comply could materially impair such Non-Kmart Borrower's ability to perform its
obligations under the Loan Documents to which it is a party or could have a
material adverse effect on any of its Projects.
(d) Duly and punctually pay and perform its obligations under
the Loan Documents in accordance with the terms thereof.
(e) Permit the Documentation Agent or its representatives, at any
reasonable time, and from time to time upon written notice and with the consent
of the Guarantor, to visit and inspect any Project of such Non-Kmart Borrower,
to examine and make copies of and take abstracts from its records and books of
account, and to discuss its finances and accounts with its principal officers
and, with the written consent of such Borrower, its independent public
accountants and other agents.
(f) Keep, or cause to be kept, adequate records and books of account.
(g) Use the proceeds of the Loans only for the purposes specified in
the introduction to this Agreement.
(h) Maintain or cause to be maintained each of its Projects in good
repair, working order and condition, excepting ordinary wear and tear and
damage due to casualty or condemnation, and make
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or cause to be made all appropriate repairs, renewals and replacements thereof,
consistent with past practice.
(i) Maintain in full force and effect all licenses, permits,
governmental approvals, franchises, authorizations or other rights necessary
for the operation of each of its Projects; and notify the Documentation Agent
in writing, promptly after learning thereof, of the suspension, cancellation,
revocation or discontinuance of or of any pending or threatened action or
proceeding seeking to suspend, cancel, revoke or discontinue any such license,
permit, governmental approval, franchise authorization or right.
(j) Notify the Documentation Agent, in writing, promptly, and in any
event within twenty (20) days after such Non-Kmart Borrower's learning thereof,
of any:
(i) notice or claim to the effect that such Borrower is or
may be liable to any Person as a result of the Release or threatened
Release of any Contaminant into the environment;
(ii) notice that such Borrower is subject to investigation by
any governmental authority evaluating whether any Remedial Action is
needed to respond to the Release or threatened Release of any
Contaminant into the environment;
(iii) notice that any property of such Borrower or any of its
Projects is subject to an Environmental Lien;
(iv) notice of violation to such Borrower or awareness by
such Borrower of a condition which might reasonably result in a notice
of violation of any environmental, health or safety requirement under
federal, state or local laws, which could materially impair such
Borrower's ability to perform its obligations under the Loan Documents
or could have a material adverse effect on any of its Projects;
(v) commencement or threat of, any judicial or administrative
proceeding alleging a violation of any environmental, health or safety
requirement under federal, state or local laws;
(vi) new or proposed changes to any existing environmental,
health or safety requirement under federal, state or local laws that
could materially impair such Borrower's ability to perform its
obligations under the Loan Documents or could have a material adverse
effect on any of its Projects; or
(vii) any proposed action by such Borrower that could
subject such Borrower to environmental, health or safety liabilities,
obligations or costs that could materially impair such Borrower's
ability to perform its obligations under the
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Loan Documents or could have a material adverse effect on any of its
Projects.
Section 5.2 Negative Covenants of each Non-Kmart Borrower. Each
Non-Kmart Borrower hereby covenants and agrees that, so long as any Bank shall
have any Commitment hereunder, or any Loan or other Obligation shall remain
unpaid or unsatisfied, such Non-Kmart Borrower will not nor will it permit any
of its subsidiaries to:
(a) Except for Permitted Liens: (i) Create, incur, assume or permit
to exist any Lien on any of its Projects; or (ii) enter into or assume any
other agreement containing a negative pledge with respect to its property that
would prohibit such Non-Kmart Borrower from granting any Permitted Mortgage
Lien or any Permitted Third Party Mortgage Lien on any of its Projects.
(b) After the occurrence and during the continuance of a Borrower
Event of Default with respect to such Non-Kmart Borrower (unless waived by the
Guarantor) or a Guarantor Event of Default, declare or pay any dividend
distribution, or purchase or redeem any shares of any equity interest or class
of capital stock of such Borrower, or make any other payment or distribution on
or in respect of any class of capital stock or ownership interest of such
Borrower or set aside any amounts for any such purposes.
(c) Merge or consolidate with or into any Person unless
waived by the Guarantor.
(d) Modify or amend any of such Non-Kmart Borrower's Organizational
Documents unless waived by the Guarantor.
Section 5.3 Affirmative Covenants of the Kmart Borrower. The Kmart
Borrower covenants and agrees that, so long as any Bank shall have any
Commitment hereunder, or any Loan or other Obligation shall remain unpaid or
unsatisfied:
(a) Payment of Taxes. The Kmart Borrower will pay, when due, all
taxes assessed against the Kmart Borrower or its property and all other claims
which may become a Lien upon any of its property, except to the extent that (a)
the same are being contested in good faith by appropriate proceedings, and (b)
adequate reserves for payment thereof have been established in accordance with
GAAP.
(b) Insurance. The Kmart Borrower will maintain insurance with
respect to its properties and business in such amounts, with such deductibles
and covering such risks as are customarily carried by similar companies of
comparable size engaged in similar businesses and owning or operating similar
properties in localities where the Kmart Borrower operates.
(c) Preservation of Corporate Existence, Etc. The Kmart Borrower
shall:
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(i) preserve and maintain in full force and effect its
corporate existence and good standing under the laws of its state or
jurisdiction of incorporation; and
(ii) preserve and maintain in full force and effect all
governmental rights, privileges, qualifications, permits, licenses and
franchises necessary or desirable in the normal conduct of its
business, except in connection with transactions permitted by Section
5.4(a) and dispositions of assets permitted by Section 5.4(b).
(d) Maintenance of Property. The Kmart Borrower shall maintain and
preserve all its property which is used or useful in its business in good
working order and condition, ordinary wear and tear excepted and make all
necessary repairs thereto and renewals and replacements thereof except where
the failure to do so could not reasonably be expected to have a Material
Adverse Effect, and except as permitted by Section 5.4(b).
(e) Compliance with Laws. The Kmart Borrower shall comply in all
material respects with all Requirements of Law of any Governmental Authority
having jurisdiction over it or its business, except such as may be contested in
good faith or as to which a bona fide dispute may exist.
(f) Books and Records; Other Information. The Kmart Borrower shall
maintain proper books of record and account, in which full, true and correct
entries in conformity with GAAP consistently applied shall be made of all
financial transactions and matters involving the assets and business of the
Kmart Borrower, and will provide to the Documentation Agent and the Banks such
other information as they may reasonably request and which is reasonably
available to the Kmart Borrower or can be reasonably computed from the Kmart
Borrower's books and records.
(g) Financial Information. The Kmart Borrower shall deliver to the
Documentation Agent for distribution to the Banks (and, if requested, with
sufficient copies for each Bank):
(i) within sixty (60) days after the end of each of the first
three (3) fiscal quarters of the Kmart Borrower, copies of (1) the
consolidated balance sheet of the Kmart Borrower and its Subsidiaries
as of the end of such quarter, (2) the consolidated statement of
income of the Kmart Borrower and its Subsidiaries for such quarter and
for the period from the end of the most recent fiscal year of the
Kmart Borrower through the end of such quarter, (3) the consolidated
statement of cash flows of the Kmart Borrower and its Subsidiaries for
the period from the end of the most recent fiscal year of the Kmart
Borrower through the end of such quarter, all prepared in accordance
with GAAP and certified by a Responsible Officer
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as being a fair statement of results for the periods covered thereby,
subject to ordinary year-end audit adjustments;
(ii) concurrently with the delivery of the financial
statements referred to in Sections 5.3(g)(i) and (iii), a
certificate duly completed and executed by a Responsible Officer, as
to compliance by the Kmart Borrower with the covenants contained in
Sections 5.4(d) and 5.4(e) hereof, and stating that no Unmatured
Guarantor Event of Default or Guarantor Event of Default then exists
(or, if any should then exist, identifying the same and stating any
actions being taken by the Kmart Borrower with respect thereto);
(iii) within one hundred twenty (120) days after the end of
each fiscal year of the Kmart Borrower, copies of (1) the consolidated
balance sheet of the Kmart Borrower and its Subsidiaries as at the end
of such fiscal year, (2) the consolidated statement of income of the
Kmart Borrower and its Subsidiaries for such fiscal year, and (3) the
consolidated statement of cash flows of the Kmart Borrower and its
Subsidiaries for such fiscal year, setting forth in each case in
comparative form the corresponding figures for the previous fiscal
year, all in reasonable detail and prepared in accordance with GAAP
and certified by a nationally recognized independent public accounting
firm; and
(iv) promptly, copies of all financial statements and reports
that the Kmart Borrower sends to its shareholders and copies of all
Forms 10K, 1OQ and 8K that the Kmart Borrower files with the SEC.
(e) Notices.
(i) The Kmart Borrower shall notify each Bank promptly, but
not later than three (3) Business Days after the Kmart Borrower
becomes aware thereof, of the occurrence of any Guarantor Event or
Default.
(ii) The Kmart Borrower shall notify the Documentation Agent
for distribution to the Banks promptly, but not later than three (3)
Business Days after the Kmart Borrower becomes aware thereof, of the
occurrence of:
(A) any Unmatured Guarantor Event of Default;
(B) any Material Adverse Effect or any event or other
development which could have a Material Adverse Effect;
(C) any change in the Debt Rating by Moody's or S&P; or
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(D) any Reportable Event.
Section 5.4 Negative Covenants of the Kmart Borrower. The Kmart
Borrower hereby covenants and agrees that, so long as any Bank shall have any
Commitment hereunder, or any Loan or other Obligation shall remain unpaid or
unsatisfied:
(a) Consolidations and Mergers. The Kmart Borrower shall not
merge or consolidate with any other Person, unless:
(i) the successor formed by or resulting from such
consolidation or merger is the Kmart Borrower or a Subsidiary of the
Kmart Borrower and, if the survivor is a Subsidiary of the Kmart
Borrower, such Subsidiary shall affirm the Kmart Borrower's
Obligations under the Loan Documents in writing; and
(ii)no Unmatured Guarantor Event of Default or Guarantor Event
of Default shall have occurred and then be continuing or would arise
after giving effect thereto.
(b) Dispositions of Assets. The Kmart Borrower shall not, directly
or indirectly, sell, assign, lease, convey, transfer or otherwise dispose of
(whether in one or a series of transactions) any property (including accounts
and notes receivable, with or without recourse) or enter into any agreement to
do any of the foregoing, except:
(i) dispositions of inventory, or used, worn-out or surplus
equipment, all in the ordinary course of business;
(ii) the sale of equipment to the extent that such equipment
is exchanged for credit against the purchase price of similar
replacement equipment, or the proceeds of such sale are reasonably
promptly applied to the purchase price of such replacement equipment;
(iii) dispositions of inventory or equipment by the Kmart
Borrower to any Subsidiary pursuant to reasonable business
requirements; and
(iv) other dispositions of assets having, in any fiscal year
of the Kmart Borrower, an aggregate book value not exceeding 10% of
the Kmart Borrower's consolidated total assets as of the end of the
most recently ended fiscal year of the Kmart Borrower, as reflected in
the Kmart Borrower's balance sheet contained in its audited financial
statements for such fiscal year;
provided, however, that this Section 5.4(b) shall not be deemed to prohibit the
sale of all, substantially all, or a part of the capital stock or of all,
substantially all, or a part of the assets
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of any Specialty Retail Subsidiary of the Kmart Borrower, even if such an
entity is no longer a Subsidiary of the Kmart Borrower, if (x) consideration
received is fair market value (as determined by the Kmart Borrower), or (y)
the Kmart Borrower's board of directors deems such transaction to be necessary
by reason of applicable laws, regulations or governmental policies applicable
to the Kmart Borrower.
(c) Limitation on Liens. The Kmart Borrower shall not incur any
Indebtedness which is secured by a Lien on any assets of the Kmart Borrower,
whether now owned or hereafter acquired, unless concurrently with creation of
any such Lien securing Indebtedness in an aggregate amount of $50,000,000 or
more, the Kmart Borrower shall cause the Obligations and its obligations under
the Other Credit Facilities to be equally and ratably secured by the same
assets, provided, however, that such restriction shall not apply with respect
to any of the following types of Liens:
(i) Liens for taxes not delinquent or being contested in
good faith;
(ii) Liens created in connection with workers' compensation,
unemployment insurance and other social security legislation, or to
secure the performance of bids, tenders, contracts (other than for the
repayment of borrowed money), statutory obligations, surety and appeal
bonds and other similar obligations incurred in the ordinary course;
(iii) purchase money mortgages (including vendors' rights under
purchase or land contracts or under other agreements whereby title or
other interest is retained by the vendor for the purpose of securing the
purchase price thereof) on property acquired or constructed after the
Closing Date, or the acquisition after the Closing Date of property
subject to such a Lien which is limited to such property and was not
created in anticipation of such acquisition;
(iv) mortgages on real property which is the sole security for
Indebtedness the amount of which does not exceed the greater of the cost
of such property and improvements or the fair market value thereof;
(v) mortgages, security interests and Liens on assets of the
Kmart Borrower existing on the Closing Date and set forth in Schedule
5.4(c), or any refundings or extensions for an amount not exceeding the
principal amount of such Indebtedness and applying only to the same
property or assets; and
(vi) mortgages, security interests and Liens in connection with
indebtedness under industrial revenue bond financings or similar
government agency supported financings.
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(d) EBITDAR Coverage Ratio. The Kmart Borrower shall not permit its
ratio of
(i) EBITDAR (measured as of the end of any fiscal quarter
ending after the Closing Date for the four fiscal quarters then ended)
to
(ii) the sum of (1) consolidated net interest expense for such
four fiscal quarter period plus (2) consolidated Rent Expense for such
four fiscal quarter period
to be less than 1.50 to 1.00.
(e) Consolidated Net Worth. The Kmart Borrower shall not permit its
Consolidated Net Worth at any time to be less than Four Billion Five Hundred
Million Dollars ($4,500,000,000).
ARTICLE VI
CONDITIONS OF CREDIT
Section 6.1 Conditions Precedent to Occurrence of the Closing Date and
Effectiveness of Agreement. The occurrence of the Closing Date and the
binding effect of this Agreement on each Bank are subject to the condition
that the Documentation Agent shall have received all of the following, in form
and substance satisfactory to the Documentation Agent and each Bank, in
sufficient copies for each Bank:
(a) Credit Agreement and Notes. This Agreement, executed by the Kmart
Borrower, the Documentation Agent and the Banks, and any Notes evidencing
initial Loans to be made to the Kmart Borrower concurrently with the closing
executed by the Kmart Borrower;
(b) By-laws; Resolutions; Incumbency.
(i) Copies of the by-laws of the Kmart Borrower and of the
resolutions of the board of directors of the Kmart Borrower approving
and authorizing the execution, delivery and performance by the Kmart
Borrower of this Agreement and the other Loan Documents to be delivered
by it hereunder, and authorizing the borrowing of the Loans, each
certified as of the Closing Date by the Secretary or an Assistant
Secretary of the Kmart Borrower; and
(ii) A certificate of the Secretary or Assistant Secretary of
the Kmart Borrower certifying the names and true signatures of its
respective officers authorized to execute and deliver and perform, as
applicable, this Agreement and all
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other Loan Documents and notices to be executed or delivered
by it hereunder;
(c) Articles of Incorporation. A copy of the Kmart Borrower's
Articles of Incorporation as in effect on the Closing Date, including any
amendments thereto, certified by the Michigan Department of Commerce; and (ii)
good standing certificates for the Kmart Borrower from the Michigan Department
of Commerce and from the Secretaries of State of California and New York, each
dated not earlier than October 1, 1994 and not more than seven (7) days prior
to the Closing Date;
(d) Legal Opinions.
(i) an opinion of A. N. Palizzi, counsel to the Kmart Borrower,
and addressed to the Documentation Agent and the Banks, dated the
Closing Date and in form and substance satisfactory to the Documentation
Agent; and
(ii) an opinion of Dickinson, Wright, Moon, Van Dusen & Freeman,
special counsel to the Kmart Borrower and addressed to the Documentation
Agent and the Banks, dated the Closing Date and in form and substance
satisfactory to the Documentation Agent.
(e) Payment of Transaction Fees and Expenses. Evidence of payment of
all costs, accrued and unpaid fees and expenses (including Attorney Costs) to
the extent then due and payable on the Closing Date;
(f) Certificate. A certificate signed by a Responsible Officer of the
Kmart Borrower, dated as of the Closing Date, stating that:
(i) the representations and warranties of the Kmart Borrower
contained in Section 4.2 are true and correct on and as of such date, as
though made on and as of such date;
(ii) no Unmatured Guarantor Event of Default or Guarantor Event
of Default exists as of the date of such certificate;
(iii) no material adverse change in the assets, liabilities,
business, operations or condition of the Kmart Borrower and its
Subsidiaries has occurred since January 26, 1994;
(iv) no default has occurred and is continuing in respect of any
Indebtedness of the Kmart Borrower and its Subsidiaries with an
aggregate principal amount in excess of $100,000,000; and
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(v) all consents and approvals required for the Kmart Borrower
to consummate the transactions contemplated by this Agreement have been
obtained or waived; and
(vi) the Existing Facilities shall have been terminated and all
Indebtedness outstanding thereunder has been satisfied;
(g) Financial Statements. The financial statements of the
Kmart Borrower referred to in Section 4.2;
(h) Other Credit Facilities. The Kmart Borrower shall have entered
into the Other Credit Facilities and the conditions to closing thereunder shall
have been satisfied.
(i) Other Documents. Such other approvals, opinions or documents as
the Documentation Agent may reasonably request.
Section 6.2 Conditions Precedent to Effectiveness of Agreement as to
any Non-Kmart Borrower. The binding effect of this Agreement on each Bank with
respect to a Non-Kmart Borrower is subject to the conditions that the Closing
Date shall have occurred and the Documentation Agent shall have received all of
the following in respect of such Non-Kmart Borrower, in form and substance
satisfactory to the Documentation Agent and each Bank, in sufficient copies for
each Bank:
(a) Loan Documents. This Agreement, executed by such Non-Kmart
Borrower, the Documentation Agent and the Banks, or an Additional Borrower
Agreement executed by such Non-Kmart Borrower, the Guarantor and the
Documentation Agent, together with Notes evidencing any Loans to be made to
such Non-Kmart Borrower, executed by such Non-Kmart Borrower and an Assignment
executed by such Non-Kmart Borrower with respect to each APUC relating to any
Project as to which a Loan is being requested;
(b) Guaranty. The Guaranty, executed by the Guarantor;
(c) Non-Kmart Borrower Organizational Documents; Resolutions;
Incumbency.
(i) Copies of the Organizational Documents for such Non-Kmart
Borrower, and each general partner of each such Non-Kmart Borrower which
is a partnership, and of the resolutions of the board of directors of
such Non-Kmart Borrower (or its general partner) approving and
authorizing the execution, delivery and performance by such Non-Kmart
Borrower of this Agreement and the other Loan Documents to be delivered
by it hereunder, and authorizing the borrowing of the Loans, each
certified as of the relevant date by the Secretary or an Assistant
Secretary of such Non-Kmart Borrower (or its general partner); and
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(ii) A certificate of the Secretary or Assistant Secretary of
such Non-Kmart Borrower (or its general partner) certifying the names
and true signatures of its respective officers authorized to execute and
deliver and perform, as applicable, this Agreement and all other Loan
Documents and notices to be executed or delivered by it hereunder;
(d) Guarantor Organizational Documents; Resolutions; Incumbency. Each
of the following items; provided, that any item described in (i), (ii) or
(iii) below shall not be required if the Guarantor states in writing to the
Documentation Agent that the same would be identical (except for the date
thereof) to the comparable delivery made by the Kmart Borrower pursuant to
Section 6.1 hereof in connection with the Closing Date:
(i) Copies of the Organizational Documents of the Guarantor,
and of the resolutions of the board of directors of the Guarantor
approving and authorizing the execution, delivery and performance by the
Guarantor of the Guaranty and all other Loan Documents to be executed
and performed by the Guarantor, each certified by the Secretary or an
Assistant Secretary of the Guarantor; and
(i) A certificate of the Secretary or Assistant Secretary of
the Guarantor certifying the names and true signatures of its respective
officers authorized to execute and deliver and perform, as applicable,
the Guaranty and all other Loan Documents and notices to be executed or
delivered by it hereunder; and
(iii) A certificate signed by a Responsible Officer of Guarantor
dated as of the relevant date, stating that:
(A) the representations and warranties of Guarantor
contained in Section 4.2 hereof are true and correct on and as of
such date, as though made on and as of such date (except to the
extent such representations and warranties expressly refer to an
earlier date, in which case they shall be true and correct as of
such earlier date); and
(B) no Unmatured Guarantor Event of Default or Guarantor
Event of Default exists or would result from the initial Borrowing
by such Non-Kmart Borrower;
(e) Legal Opinions.
(i) an opinion of A. N. Palizzi, counsel to the Guarantor, and
addressed to the Documentation Agent and the Banks, dated the date of
the Guaranty and in form and substance satisfactory to the Documentation
Agent; and
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(ii) an opinion of Dickinson, Wright, Moon, Van Dusen & Freeman,
special counsel to the Guarantor and addressed to the Documentation
Agent and the Banks, dated the date of the Guaranty and in form and
substance satisfactory to the Documentation Agent; and
(iii) such opinions of counsel to such Non-Kmart Borrower as may
be reasonably requested by the Documentation Agent;
(f) Such other approvals, opinions or documents as the
Documentation Agent may reasonably request.
Section 6.3 Conditions Precedent to any Project Borrowing. In addition to
the occurrence of the Closing Date and, in the case of a Non-Kmart Borrower,
the satisfaction of the conditions set forth in Section 6.2, the right of any
Borrower to make a Project Borrowing and the Obligation of the Banks to make
the Project Loan under this Agreement to such Borrower shall be subject to the
fulfillment, at or prior to the time of the making of such Project Loan, of
each of the following conditions:
(a) The Documentation Agent shall have received an Allocation Request
with respect to such Project, together with a Notice of Borrowing with respect
to the requested Loan, and duly executed Notes in accordance with Section
2.2(b) hereof, and shall have established a Project Commitment Amount in
accordance with the terms of this Agreement.
(b) The Guarantor or such Non-Kmart Borrower shall have paid the
Documentation Agent all costs, accrued and unpaid fees and expenses then due
and payable by either of them with respect to such Borrowing.
(c) The Documentation Agent shall have received all relevant Payoff
Letters with respect to such Project, each dated within ten (10) days of the
requested date of funding of such Project Loan.
(d) The representations and warranties contained in this Agreement
with respect to such Borrower and all of its Projects shall be true and correct
on and as of such Borrowing Date with the same effect as if made on and as of
such Borrowing Date (except to the extent such representations and warranties
expressly refer to an earlier date, in which case they shall be true and
correct as of such earlier date);
(e) No Guarantor Event of Default or Unmatured Guarantor Event of
Default or Borrower Event of Default or Unmatured Borrower Event of Default
with respect to such Borrower shall have occurred and shall then be continuing
on such date or will occur after giving effect to such Borrowing; and
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(f) The Documentation Agent shall have received such other
instruments, documents and opinions as the Documentation Agent shall reasonably
request in connection with such Loan, and all such instruments, documents and
opinions shall be reasonably satisfactory to the Documentation Agent.
Section 6.4 Conditions Precedent to All Borrowings (other than a
Roll-Over Borrowing). In addition to the occurrence of the Closing Date, and,
in the case of a Non-Kmart Borrower, the satisfaction of the conditions set
forth in Section 6.2, and with respect to any Project Borrowing, satisfaction
of the conditions set forth in Section 6.3, the right of any Borrower to make
any Borrowing (other than a Roll-Over Borrowing) hereunder and the obligation
of each Bank to make a Loan in respect of any such Borrowing hereunder in each
case shall be subject to the fulfillment at or prior to the time of the making
of such Borrowing of each of the following conditions:
(a) The representations and warranties contained in this Agreement
with respect to such Borrower shall be true and correct on and as of such
Borrowing Date with the same effect as if made on and as of such Borrowing Date
(except to the extent such representations and warranties expressly refer to an
earlier date, in which case they shall be true and correct as of such earlier
date);
(b) No Guarantor Event of Default or Unmatured Guarantor Event of
Default or Borrower Event of Default or Unmatured Borrower Event of Default
with respect to such Borrower shall have occurred and shall then be continuing
on such date or will occur after giving effect to such Borrowing.
Each Notice of Borrowing submitted by any Borrower hereunder shall constitute a
representation and warranty by it, as of the date of each such notice and as of
the Borrowing Date relating thereto, that the conditions in this Section 6.4
are satisfied.
Section 6.5 Conditions Precedent to All Roll-Over Borrowings. The right
of any Borrower to make any Roll-Over Borrowing hereunder and the obligation of
each Bank to make any Roll-Over Borrowing hereunder shall be subject to the
condition that the Loan Obligations of such Borrower shall not have been
accelerated.
ARTICLE VII
EVENTS OF DEFAULT
Section 7.1 Guarantor Events of Default. If any of the following
events, acts, occurrences or state of facts (herein called a "Guarantor Event
of Default") shall occur or exist (for
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any resason whatsoever, and whether such happening shall be voluntary or
involuntary or come about or be effected by operation of law pursuant to or in
accordance with any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):
(a) Guarantor shall fail to comply with any of its covenants or
agreements contained in the Guaranty and such failure shall continue
unremedied beyond any cure or grace period set forth therein with
respect thereto; or
(b) any representation or warranty of Guarantor contained in
this Agreement or the Guaranty proves to be inaccurate or untrue in any
material respect on or as of the date made or deemed made; or
(c) (i) The Guarantor fails to make any payment of principal or
interest or fees under any of the Other Credit Facilities when due after
taking into account any applicable grace periods, or (ii) by reason of
any action taken by the Guarantor with the intent and capacity promptly
to satisfy any obligation of the Guarantor resulting therefrom,
including, without limitation, the calling for payment by the Guarantor
of any of its Indebtedness or the termination by the Guarantor of any of
its Guaranty Obligations, any Indebtedness shall mature or be declared
due and payable prior to its stated maturity and such Indebtedness shall
remain unpaid for a period of two (2) Business Days thereafter, or (iii)
the Guarantor fails to perform or observe any condition or covenant or
any other event shall occur or condition exists (other than with respect
to matters described under clause (ii) immediately preceding) relating
to Indebtedness (other than Indebtedness under the Other Credit
Facilities) having an aggregate principal amount (including undrawn
committed or available amounts) of more than One Hundred Million Dollars
($100,000,000) if the effect of any such failure, event or condition is
to cause such Indebtedness to be declared to be due and payable or
otherwise become due and payable prior to its stated maturity, or (iv)
the Guarantor fails to pay any such other Indebtedness in full at its
stated maturity; or
(d) The occurrence of a Reportable Event with respect to the
Guarantor which the PBGC deems grounds to terminate any employee pension
benefit plan of the Guarantor or for the appointment of a trustee to
administer such plan and such Reportable Event is not corrected and such
determination by the PBGC is not revoked within thirty (30) days after
notice thereof; or the institution of proceedings by the PBGC to
terminate any such plan; or the appointment of a trustee to administer
any such plan; or
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(e) A final judgment or judgments in excess of One Hundred
Million Dollars ($100,000,000) shall be entered against the Guarantor by
a court of record and not discharged in accordance with its terms or,
within sixty (60) days from the date of entry thereof, stayed from
execution and (within said period of sixty (60) days or such longer
period during which execution of such judgment(s) shall have been stayed)
appeal taken therefrom and execution thereof stayed during such appeal;
or
(f) The Guarantor (i) generally fails to pay, or admits in
writing its inability to pay, its debts as they become due, subject to
applicable grace periods, if any, whether at stated maturity or
otherwise; (ii) voluntarily ceases to conduct its business in the
ordinary course; (iii) commences any Insolvency Proceeding with respect
to itself; or (iv) takes any action to effectuate or authorize any of
the foregoing; or
(g) (i) Any involuntary Insolvency Proceeding is commenced or
filed against the Guarantor, or any writ, judgment, warrant of
attachment, execution or similar process, is issued or levied against a
substantial part of the Guarantor's properties, and any such proceeding
or petition is not dismissed, or such writ, judgment, warrant of
attachment, execution or similar process is not released, vacated or
fully bonded within 60 days after commencement, filing or levy; (ii) the
Guarantor admits the material allegations of a petition against it in
any Insolvency Proceeding, or an order for relief is entered in any
Insolvency Proceeding; or (iii) the Guarantor acquiesces in the
appointment of a receiver, trustee, custodian, conservator, liquidator,
mortgagee in possession (or agent therefor), or other similar Person for
itself or a substantial portion of its business.
(h) The Guaranty shall cease for any reason to be in full force
and effect or Guarantor shall disavow any of its obligations under the
Guaranty;
then, and in any such event and at any time thereafter, the Documentation
Agent may and, at the direction of the Required Banks shall, take one or more
of the following actions: (i) by written or oral or telephonic notice in the
case of oral or telephonic notice confirmed in writing immediately thereafter)
to Guarantor, as agent for the Borrowers, declare the Total Commitment and each
Project Commitment to be terminated whereupon the Total Commitment and each
Project Commitment shall forthwith terminate, and/or (ii) by written or oral or
telephonic notice (in the case of oral or telephonic notice confirmed in
writing immediately thereafter) to each Borrower declare all sums then owing by
such Borrower hereunder and under any Notes to be forthwith due and payable,
whereupon all such sums shall become and be immediately due and payable without
presentment, demand, protest or notice of any kind,
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all of which are hereby expressly waived by each Borrower. In cases of any
occurrence of any event of default described in clause (f) or (g) of this
Section 7.1, the Commitments shall terminate and the Loans and the Notes,
together with accrued interest thereon, shall automatically become due and
payable forthwith without the requirement of any such acceleration or request,
and without presentment, demand, protest or other notice of kind, all of which
are expressly waived, any provision of this Agreement or the Notes to the
contrary notwithstanding and all other amounts payable by any Borrower
hereunder or under any Notes shall also become immediately due and payable all
without notice of any kind.
Anything in this Section 7.1 to the contrary notwithstanding, the
Documentation Agent shall, at the request of the Required Banks rescind and
annul any acceleration of the Notes by written instrument filed with each
Borrower; provided that at the time such acceleration is so rescinded and
annulled: (A) all past due interest and principal, if any, on the Notes and all
other sums payable under this Agreement and the Notes (except any principal and
interest which has become due and payable solely by reason of such acceleration
pursuant to this Section 7.1) shall have been duly paid in full, and (B) no
other Guarantor Event of Default shall have occurred and be continuing which
shall not have been waived pursuant to Section 9.1 hereof.
Section 7.2 Borrower Events of Default. if any of the following
events, acts, occurrences or state of facts (herein called a "Borrower Event of
Default") shall occur or exist (for any reason whatsoever with respect to a
Borrower, and whether such happening shall be voluntary or involuntary or come
about or be effected by operation of law pursuant to or in accordance with any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) Such Borrower shall fail to pay, when and as required
to be paid herein, any amount of principal of any Loan and such
default shall continue unremedied for a period of two (2) Business
Days after the date upon which notice thereof is received by such
Borrower and the Guarantor from the Documentation Agent;
(b) Such Borrower shall fail to pay, when and as required
to be paid herein, any interest or any fees payable hereunder and such
default shall continue unremedied for a period of five (5) Business
Days after the date upon which notice thereof is received by such
Borrower and the Guarantor from the Documentation Agent; or
(c) Any representation or warranty on the part of such
Borrower contained in any Loan Document shall have been incorrect in
any material respect when made or deemed made
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(unless, with respect to any Non-Kmart Borrower, the Guarantor shall
have notified the Documentation Agent in writing that the Guarantor
requests the same be waived and no Guarantor Event of Default then
exists, in which case the same shall be waived hereunder without
further action by the Documentation Agent or the Banks);
(d) Such Borrower shall default in the performance or
observance of any covenant or agreement on its part to be performed or
observed hereunder or under any Loan Document and such failure shall
continue unremedied for a period of thirty (30) days after written
notice thereof has been given to such Borrower and the Guarantor by
the Documentation Agent (unless, with respect to any Non-Kmart
Borrower, the Guarantor shall have notified the Documentation Agent in
writing that the Guarantor requests the same be waived and no
Guarantor Event of Default then exists, in which case the same shall
be waived hereunder without further action by the Documentation Agent
or the Banks);
(e) Such Borrower shall become insolvent or generally
fail to pay, or admit in writing its inability to pay, its debts as
they become due, or shall voluntarily commence any proceeding or file
any petition under any bankruptcy, insolvency or similar law or
seeking dissolution or reorganization or the appointment of a
receiver, trustee, custodian or liquidator for it or a substantial
portion of its property, assets or business or to effect a plan or
other arrangement with its creditors, or shall file any answer
admitting the jurisdiction of the court and the material allegations
of an involuntary petition filed against it in any bankruptcy,
insolvency or similar proceeding, or shall be adjudicated bankrupt, or
shall make a general assignment for the benefit of creditors, or shall
consent to, or acquiesce in the appointment of a receiver, trustee,
custodian or liquidator for a substantial portion of its property,
assets or business, or shall call a meeting of its creditors with a
view to arranging a composition or adjustment of its debts or shall
take any corporate action authorizing any of the foregoing; or
(f) Involuntary proceedings or an involuntary petition
shall be commenced or filed against such Borrower under any
bankruptcy, insolvency or similar law or seeking the dissolution or
reorganization of it or the appointment of a receiver, trustee,
custodian or liquidator for it or of a substantial part of its
property, assets or business, or any writ, judgment, warrant of
attachment, execution or similar process shall be issued or levied
against a substantial part of its property, assets or business, and
such proceedings or petition shall not be dismissed, or such writ,
judgment, warrant of attachment, execution or similar process shall
not
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be released, vacated or fully bonded, within sixty (60) days after
commencement, filing or levy, as the case may be, or any order for
relief shall be entered in any such proceeding; or
(g) Such Borrower shall disavow its obligations under
this Agreement or any Note or other Loan Document to which it is a
party or shall deny that it has any or further obligations hereunder
or thereunder (in each case other than by reason of the satisfaction
of all of such Borrower's obligations hereunder and thereunder or the
unlawful disavowal by any other party to such agreements of their
respective obligations thereunder); or
(h) With respect to any Non-Kmart Borrower, any lease of
any of its Projects to Guarantor shall terminate or Guarantor shall
disavow its obligations under such lease or shall deny that it has any
or further obligations thereunder; or
(i) With respect to any Non-Kmart Borrower, any APUC
relating to any of its Projects shall terminate or Guarantor shall
disavow its obligations under any such APUC or shall deny that it has
any or further obligations thereunder;
then, and in any such event and at any time thereafter, the Documentation
Agent may and, at the direction of the Required Banks shall, take one or more
of the following actions: (i) by written or oral or telephonic notice (in the
case of oral or telephonic notice confirmed in writing immediately thereafter)
to the Borrower or Borrowers as to which such Borrower Event of Default has
occurred declare any Project Commitment for such Borrower to be terminated
whereupon such Project Commitment shall forthwith terminate, and/or (ii) by
written or oral or telephonic notice (in the case of oral or telephonic notice
confirmed in writing immediately thereafter) to such Borrower declare all sums
then owing by such Borrower hereunder and under any Notes of such Borrower to
be forthwith due and payable, whereupon all such sums shall become and be
immediately due and payable without presentment, demand, protest or notice of
any kind, all of which are hereby expressly waived by such Borrower. In case
of any occurrence of any event of default described in clause (e) or (f) of
this Section 7.2, the Commitments in respect of such Borrower shall terminate
and such Borrower's Loans and Notes, together with accrued interest thereon,
shall automatically become due and payable forthwith, without the requirement
of any such acceleration or request, and without presentment, demand, protest
or other notice of any kind, all of which are expressly waived, any provision
of this Agreement or the Notes to the contrary notwithstanding and all other
amounts payable by such Borrower hereunder or under any Notes shall also become
immediately due and payable all without notice of any kind.
Anything in this Section 7.2 to the contrary notwithstanding,
the Documentation Agent shall, at the request of the Required
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Banks, rescind and annul any acceleration of such Borrower's Notes by written
instrument filed with such Borrower; provided that at the time such
acceleration is so rescinded and annulled: (A) all past due interest and
principal, if any, on such Borrower's Notes and all other sums payable by such
Borrower under this Agreement and the Notes (except any principal and interest
on such Borrower's Loan Obligations which has become due and payable solely by
reason of such acceleration pursuant to this Section 7.2) shall have been duly
paid in full and (B) no other Borrower Event of Default shall have occurred and
be continuing with respect to such Borrower which shall not have been waived
pursuant to Section 9.1 hereof.
Notwithstanding the foregoing, or anything else in this Agreement, any
Notes or any other Loan Documents to which any Non-Kmart Borrower is a party,
upon the occurrence of a Borrower Event of Default with respect to a Non-Kmart
Borrower, the Banks, prior to exercising any rights or remedies against such
Non-Kmart Borrower, shall first make demand upon the Guarantor under the
Guaranty. Only in the event that the Guarantor shall fail to perform under
the Guaranty within five (5) days of such demand shall the Banks and the
Documentation Agent proceed to exercise rights or remedies under or otherwise
enforce this Agreement, any Notes or any other Loan Documents to which such
Non-Kmart Borrower is a party against such Non-Kmart Borrower, and in such
case, notwithstanding anything in this Agreement, such Notes or such other Loan
Documents to the contrary, such Non-Kmart Borrower's liability hereunder and
thereunder shall be limited to the items of collateral which such Non-Kmart
Borrower has assigned to, and/or in which such Non-Kmart Borrower has granted a
security interest in favor of, the Documentation Agent, under and as provided
in each Assignment executed by such Non-Kmart Borrower, and such Non-Kmart
Borrower's obligations and liability to the Documentation Agent and the Banks
under this Agreement, any Notes and any other Loan Documents shall be without
recourse to any other property or assets of such Non-Kmart Borrower, its
partners or stockholders (as applicable).
ARTICLE VIII
THE DOCUMENTATION AGENT
In this Article VIII, the Banks agree among themselves as follows:
Section 8.1 Appointment. The Banks hereby appoint BT as
Documentation Agent to act as herein specified. Each Bank hereby irrevocably
authorizes and each holder of any Note by the acceptance thereof shall be
deemed irrevocably to authorize the Documentation Agent to take such action on
its behalf under the provisions of the Loan Documents (including, without
limitation, to
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give notices and take such actions on behalf of the Required Banks as are
consented to in writing by the Required Banks) and any other instruments,
documents and agreements referred to therein and to exercise such powers
hereunder and thereunder as are specifically delegated to the Documentation
Agent by the terms hereof and thereof and such other powers as are reasonably
incidental thereto. The Documentation Agent may perform any of its duties
hereunder, or under the Loan Documents, by or through its agents or employees.
Section 8.2 Nature of Duties. The Documentation Agent shall have no
duties or responsibilities except those expressly set forth in this Agreement.
The duties of the Documentation Agent shall be mechanical and administrative in
nature. Without limiting the effect of the foregoing sentence, the
Documentation Agent shall not have by reason of this Agreement a fiduciary
relationship in respect of any Bank. Nothing in any of the Loan Documents,
expressed or implied, is intended to or shall be so construed as to impose upon
the Documentation Agent any obligations in respect of any of the Loan Documents
except as expressly set forth herein or therein. Each Bank shall make its own
independent investigation of the financial condition and affairs of each
Borrower in connection with the making and the continuance of the Loans
hereunder and shall make its own appraisal of the creditworthiness of each
Borrower, and the Documentation Agent shall have no duty or responsibility,
either initially or on a continuing basis, to provide any Bank with any credit
or other information with respect to any Borrower, whether coming into its
possession before making of the Loans or at any time or times thereafter
provided, however, upon the request of any Bank, the Documentation Agent shall
use reasonable efforts to provide to such Bank, copies of any information
required to be furnished under Section 5.1 or 5.3 by any Borrower to the
Documentation Agent and not to each Bank. The Documentation Agent will
promptly notify each Bank at any time that the Required Banks have instructed
it to act or refrain from acting pursuant to Article VII.
Section 8.3 Rights, Exculpation, etc. Neither the Documentation
Agent nor any of its officers, directors, employees or agents shall be liable
to any Bank for any action taken or omitted by it hereunder or under any of the
Loan Documents, or in connection herewith or therewith, unless caused by its or
their gross negligence or willful misconduct. The Documentation Agent shall
not be responsible to any Bank for any recitals, statements, representations
or warranties herein or for the execution, effectiveness, genuineness,
validity, enforceability, collectibility, or sufficiency of any of the Loan
Documents or the financial condition of any Borrower. The Documentation Agent
shall not be required to make any inquiry concerning either the performance or
observance of any of the terms, provisions or conditions of this Agreement, any
of the Notes or any of the other Loan Documents or the financial condition of
any Borrower, or the existence or possible existence of any Unmatured Guarantor
Event of
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Default, Guarantor Event of Default, Unmatured Borrower Event of Default or
Borrower Event of Default unless requested to do so by the Required Banks. The
Documentation Agent may at any time request instructions from the Banks with
respect to any actions or approvals which by the terms of any of the Loan
Documents the Documentation Agent is permitted or required to take or to grant,
and if such instructions are requested, the Documentation Agent shall be
absolutely entitled to refrain from taking any action or to withhold any
approval and shall not be under any liability whatsoever to any Person for
refraining from any action or withholding any approval under any of the Loan
Documents until it shall have received such instructions from the Required
Banks. Without limiting the foregoing, no Bank shall have any right of action
whatsoever against the Documentation Agent as a result of the Documentation
Agent acting or refraining from acting under any of the Loan Documents in
accordance with the instructions of the Required Banks.
Section 8.4 Reliance. The Documentation Agent shall be entitled
to rely upon any written notice, statement, certificate, order or other
document or any telephone message reasonably believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person, and, with
respect to all matters pertaining to any of the Loan Documents and its duties
hereunder or thereunder, upon advice of counsel selected by it.
Section 8.5 Indemnification. To the extent that the
Documentation Agent is not reimbursed and indemnified by the Borrowers or the
Guarantor, the Banks will reimburse and indemnify the Documentation Agent for
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against the
Documentation Agent, acting pursuant hereto, in any way relating to or arising
out of any of the Loan Documents or any action taken or omitted by the
Documentation Agent under any of the Loan Documents, in proportion to each
Bank's respective Pro Rata Share of the Total Commitment; provided, however,
that no Bank shall be liable for any portion of such liabilites, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Documentation Agent's gross negligence or
willfull misconduct. The obligations of the Banks under this Section 8.5
shall survive the payment in full of the Notes and the termination of this
Agreement.
Section 8.6 The Documentation Agent Individually. With respect
to its Pro Rata Share of the Total Commitment hereunder and the Loans made by
it and any Notes issued to or held by it, the Documentation Agent shall have
and may exercise the same rights and powers hereunder and is subject to the
same obligations and liabilities as and to the extent set forth herein for any
other Bank or holder of a Note. The terms "Banks" or "Required Banks" or
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"holders of Notes" or any similar terms shall, unless the context clearly
otherwise indicates, include the Documentation Agent in its individual capacity
as a Bank, one of the Required Banks or a holder of a Note. The Documentation
Agent may accept deposits from, lend money to, and generally engage in any kind
of banking, trust or other business with any Borrower or any Subsidiary of any
Borrower as if it were not acting as Documentation Agent pursuant hereto.
Section 8.7 Resignation by the Documentation Agent; Removal.
(a) The Documentation Agent may resign from the performance of all
its functions and duties hereunder at any time by giving fifteen (15) Business
Days' prior written notice to the Borrowers, Guarantor and the Banks. Such
resignation shall take effect upon the acceptance by a successor Documentation
Agent of appointment pursuant to clauses (b) or (c) below or as otherwise
provided below.
(b) Upon any such notice of resignation, the Required Banks shall
appoint a successor Documentation Agent which, provided no Guarantor Event of
Default then exists, shall be reasonably satisfactory to the Guarantor and
shall be an incorporated bank or trust company.
(c) If a successor Documentation Agent shall not have been so
appointed within said fifteen (15) Business Day period, the Documentation
Agent, with the consent of Guarantor, shall then appoint a successor
Documentation Agent who shall serve as Documentation Agent until such time, if
any, as the Required Banks, with the consent of the Guarantor, appoint a
successor Documentation Agent as provided above.
(d) If no successor Documentation Agent has been appointed
pursuant to clause (b) or (c) by the 30th day after the date such notice of
resignation was given by the Documentation Agent, the Documentation Agent's
resignation shall become effective and the Required Banks shall thereafter
perform all the duties of the Documentation Agent hereunder until such time, if
any, as the Required Banks, with the consent of the Guarantor, appoint a
successor Documentation Agent as provided above.
(e) The Documentation Agent may be removed from the performance of
its functions and duties hereunder for cause (as defined herein) upon written
notice received by the Documentation Agent from the Required Banks and the
Guarantor. For purposes of this Section 8.7(e) "cause, shall mean gross
negligence or willful misconduct by the Documentation Agent in the performance
of its functions and duties hereunder.
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ARTICLE IX
MISCELLANEOUS
Section 9.1 Amendments and Waivers. No amendment, modification,
supplement, termination or waiver of or to any provision of this Agreement, nor
consent to any departure by any Borrower or any Subsidiary of any Borrower
therefrom, shall be effective unless the same shall be in writing and signed by
or on behalf of the Required Banks; provided, however, that no such amendment,
modification, supplement, termination, waiver or consent, as the case may be,
which has the effect of:
(i) changing the Commitment of any Bank hereunder;
(ii) reducing the rate or amount, or extending the stated
maturity or due date, of any sum payable by any Borrower to any Bank
hereunder or under any Loan Document;
(iii) changing this Section 9. 1 or the definitions of the
terms "Reauired Banks" and "Pro Rata Share";
(iv) amend, waive, modify, release or terminate the
Guaranty; or
(v) extend the Termination Date;
shall be effective unless the same shall be signed by or on behalf of each Bank
hereunder; provided, further, that no such amendment, modification,
supplement, termination, waiver or consent, as the case may be, which has the
effect of (i) increasing the duties or obligations of the Documentation Agent
hereunder, (ii) increasing the standard of care or performance required on the
part of the Documentation Agent hereunder, (iii) reducing or eliminating the
fees, indemnities or immunities to which the Documentation Agent is entitled
hereunder (including, without limitation, any amendment or modification of this
Section 9.1), or (iv) amending any provision which requires action by all the
Banks hereunder, shall be effective unless the same shall be signed by or on
behalf of the Documentation Agent. Any amendment, modification or supplement
of or to any provision of this Agreement, any waiver of any provision of this
Agreement, and any consent to any departure by any Borrower from the terms of
any provision of this Agreement, shall be effective only in the specific
instance and for the specific purpose for which made or given. Except where
notice is specifically required by any Loan Document, no notice to or demand on
any Borrower in any case shall entitle such Borrower to any other or further
notice or demand in similar or other circumstances. The Documentation Agent
will provide to Guarantor a copy of any proposed amendment, modification or
waiver relating to this Agreement not less than three (3) Business Days prior
to the anticipated date of execution thereof provided, however, that
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the failure of the Documentation Agent to provide such copy shall not affect
the validity of the Guaranty or any amendment, modification or waiver otherwise
properly executed.
Section 9.2 Further Assurances. Each Borrower agrees to do such
further acts and things and to execute and deliver to the Documentation Agent
such additional assignments, agreements, powers and instruments, as the
Documentation Agent may reasonably require or deem advisable to carry into
effect the purposes of this Agreement or to better assure and confirm unto the
Documentation Agent its rights, powers and remedies hereunder.
Section 9.3 Notices. Except where telephonic instructions or
notices are authorized herein to be given, all notices, demands, instructions
and other communications required or permitted to be given to or made upon any
party hereto or any other Person shall be in writing and shall be personally
delivered or sent by registered or certified mail, postage prepaid, return
receipt requested, or by a reputable overnight or courier delivery service, or
by telecopier, and shall be deemed to be given for purposes of this Agreement,
if by overnight or courier delivery service, on the day that such writing is
delivered, if by telecopy, on the day that such writing is sent and if by mail,
on the day which is four (4) Business Days after the day such writing is sent
to the intended recipient thereof in accordance with the provisions of this
Section 9.3. Unless otherwise specified in a notice sent or delivered in
accordance with the foregoing provisions of this Section 9.3, notices, demands,
instructions and other communications in writing shall be given to or made upon
the respective parties hereto at their respective addresses (or to their
respective telecopier numbers) indicated below and, in the case of telephonic
instructions or notices, by calling the telephone number or numbers indicated
for such party below:
If to a particular, Borrower, at its address as set forth on the
signature page hereto or on the most recent Additional Borrower
Agreement executed by such Borrower.
If to Bankers Trust Company, in its individual capacity and as
Documentation Agent
Bankers Trust Company
Real Estate Finance Group, Floor 23W
280 Park Avenue
New York, New York 10017
Attention: Amy Sinensky
Tel. No.: (212) 454-3515
Telecopier No.: (212) 454-3592
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With a copy to:
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attention: Andrew H. Connor, Esq.
Tel. No. (312) 558-5959
Telecopier No.: (312) 558-5700
If to a particular Bank, at its address as set forth on the signature
page hereto or in any notice of assignment delivered to each
Borrower pursuant to Section 9.9(b) hereof.
Each Borrower acknowledges and agrees that any agreement of the
Documentation Agent and the Banks in Article II herein to receive certain
notices by telephone and facsimile is solely for the convenience and at the
request of such Borrower. The Documentation Agent and the Banks shall be
entitled to rely in good faith on the authority of any Person purporting to be
a Person authorized by such Borrower to give such notice and the Documentation
Agent and the Banks shall not have any liability to such Borrower or other
Person on account of anv action taken or not taken by the Documentation Agent
and the Banks in good faith reliance upon such telephonic or facsimile notice.
The obligation of the Borrowers to repay the Loans shall not be affected in any
way or to any extent by any failure by the Documentation Agent and the Banks to
receive written confirmation of any telephonic or facsimile notice or the
receipt by the Documentation Agent and the Banks of a confirmation which is at
variance with the terms conveyed to the Documentation Agent and the Banks in
the telephonic or facsimile notice.
Section 9.4 No Waiver. No failure or delay on the part of the
Documentation Agent or any Bank in exercising any right, power or remedy
hereunder or under any Note shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power or remedy preclude any
other or further exercise thereof or the exercise of any other right, power or
remedy. The remedies provided for herein are cumulative and are not exclusive
of any remedies that may be available to the Documentation Agent or any Bank at
law or in equity, or otherwise.
Section 9.5 Costs and Expenses. Each Borrower agrees (without
duplication), whether or not the transactions contemplated hereby shall be
consummated, to:
(a) pay or reimburse the Documentation Agent on demand for all
costs and expenses incurred by the Documentation Agent in connection with the
development preparation, delivery, administration (including the costs of
recording each Assignment in the real estate records relating to the Project
affected thereby), and execution of, and any amendment, supplement, waiver or
modification to, this Agreement, any Loan Document and any other documents
prepared in
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connection herewith or therewith, and the consummation of the transactions
contemplated hereby and thereby including the Attorney Costs incurred by the
Documentation Agent with respect thereto; provided, that the fees and expenses
of outside counsel in connection with the preparation of this Agreement and the
other Loan Documents shall be in accordance with a letter agreement dated
August 30, 1994 from Winston & Strawn to the Documentation Agent; and provided,
further, that the fees and expenses of counsel to the Documentation Agent which
shall be payable by any Person becoming an additional Borrower after the date
hereof solely with respect to such Person's so becoming an additional Borrower
shall be limited to (x) a pro rata share of the fees and expenses of counsel to
the Documentation Agent incurred in connection with negotiation and
documentation of this Agreement and the other Loan Documents being executed in
connection with the Initial Borrowing hereunder, and (y) the fees of such
counsel incurred in connection with preparing the related Additional Borrower
Agreement, Notes and other Loan Documents and reviewing the deliveries of such
Person required hereunder in connection with such Person's becoming a Borrower
hereunder, which fees shall not exceed $2,500, and the reasonable expenses of
such counsel incurred in connection therewith;
(b) pay or reimburse each Bank and the Documentation Agent on demand for
all reasonable costs and expenses incurred by them in connection with the
enforcement, attempted enforcement, or preservation of any rights or remedies
(including in connection with any "workout" or restructuring regarding the
Loans or any Unmatured Guarantor Event of Default or Guarantor Event of
Default) under this Agreement, any other Loan Document, and any such other
documents, including Attorney Costs incurred by the Documentation Agent and any
Bank; and
(c) pay or reimburse the Documentation Agent on demand for all reasonable
appraisal (including the allocated cost of internal appraisal services),
audit, environmental inspection and review (including the allocated cost of
such internal services), search and filing costs, fees and expenses, incurred
or sustained by the Documentation Agent in connection with the matters referred
to under clause (b) of this Section 9.5.
(d) Any portion of the foregoing fees, costs and expenses which
remains unpaid at least ten (10) Business Days after the Documentation Agent's
or any Bank's statement and request for payment thereof shall bear interest
from the date of such statement and request to the date of payment at the
Default Rate applicable to Reference Rate Loans.
Section 9.6 Indemnity. Each Borrower hereby agrees to indenify and hold
harmless the Banks, the Documentation Agent, the Arrangers and each director,
officer and employee of each of them (each, an "Indemnified Person") from and
against any and all actions, suits, proceedings, damages, liabilities or
expenses of any
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kind or nature whatsoever which may be incurred by or asserted against
any such Indemnified Person: (a) as a result of such Borrower's making any
untrue statement of a material fact or omitting to state a material fact under
or pursuant to the Contract Documents, or such Borrower's negligence under, or
breach or default of, the Contract Documents; or (b) by any third party who has
a relationship with Kmart Corporation or such Borrower and asserts in
connection therewith that an Indemnified Person is liable to such third party
by reason of the Contract Documents between such Borrower and the Banks, the
Documentation Agent and/or the Arrangers; provided, that no Indemnified Person
shall be indemnified with respect to such party's breach, default, negligence
or bad faith in performing its duties and obligations under any of the Contract
Documents. For purposes hereof, the term "Contract Documents" means the
Loan Documents and any further agreements or instruments entered into pursuant
to this Agreement. Any Indemnified Person seeking indemnification pursuant
hereto with respect to a third party claim must give the applicable Borrower
timely notice of any such claim and cooperate in the defense thereof, and such
Borrower shall have the right to control the defense thereof and, if the same
shall not involve any payment or performance by the Indemnified Person,
settlement of such claim.
Section 9.7 Marshalling; Payments Set Aside. Neither the Documentation
Agent nor any Bank shall be under any obligation to marshall any assets in
favor of any Borrower or any other Person or against or in payment of any or
all Obligations. To the extent that any Borrower makes a payment or payments
to the Documentation Agent or the Banks, or the Documentation Agent or the
Banks enforce their Liens or exercise their rights of set-off against such
Borrower, and such payment or payments or the proceeds of such enforcement or
set-off or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
receiver or any other party in connection with any Insolvency Proceeding, or
otherwise, then to the extent of such recovery the obligation or part thereof
originally intended to be satisfied by such Borrower shall be revived and
continued in full force and effect as if such payment had not been made or such
enforcement or set-off had not occurred.
Section 9.8 Successors and Assigns. Subject to Section 9.9 hereof, the
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns, except that no
Borrower may assign or transfer any of its rights or obligations under this
Agreement without the prior written consent of the Documentation Agent and each
Bank.
Section 9.9 Assignments, Participations, Etc.
(a) Any Bank may, with the written consent of the Guarantor and the
Documentation Agent, which consents shall not be
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unreasonably withheld, at any time assign and delegate to one or more
Eligible Assignees (provided that no written consent of the Guarantor or the
Documentation Agent shall be required in connection with any assignment and
delegation by a Bank to a Bank Affiliate of such Bank or to any other
Bank) (each, an "Assignee") all, or any part of its Credit Exposure, provided
that (i) it assigns its Credit Exposure in an amount not less than Ten Million
Dollars ($10,000,000), and (ii) such Assignee pays to the Documentation
Agent an assignment fee of $3,000. Each Borrower and the Banks agree that to
the extent of any assignment to an Assignee in accordance with the foregoing
sentence, the Assignee shall be deemed to have the same rights and benefits
with respect to each Borrower under this Agreement and any Notes and the same
rights of set-off and obligation to share pursuant to Section 9.11 as it would
have had if it were a Bank hereunder, provided that each Borrower and the
Documentation Agent shall be entitled to continue to deal solely and directly
with the assignor Bank in connection with the interests so assigned to the
Assignee until written notice of such assignment, together with payment
instructions, addresses and related information with respect to the Assignee,
shall have been given to each Borrower and the Documentation Agent by the
assignor Bank and the Assignee (accompanied, in the case of the Documentation
Agent, by payment of the assignment fee).
(b) Upon the assignment of Credit Exposure provided for hereby, the
assignor Bank shall be relieved of its obligations hereunder to the extent of
such assignment and the Assignee shall become a Bank hereunder. In the event
that the holder of any Note (including any Bank) shall assign or transfer such
Note as permitted hereby, or any part of the obligations evidenced thereby, the
applicable Borrower shall, upon surrender of such Note, issue new Notes to
reflect such transfer or assignment payable to the order of the relevant
parties as their respective interests may appear; provided that such Borrower
and the Documentation Agent shall be entitled to continue to deal solely and
directly with the assignor holder of such Note in connection with the interests
so assigned until written notice of such assignment shall have been given to
such Borrower and the Documentation Agent by the assignor and the assignee of
such Note or interest therein.
(c) Each Bank may at any time sell to one or more banks or other
entities ("Participants") participating interests in all or any portion
of its Commitment and Loans made pursuant to this Agreement or any other
interest of such Bank hereunder or under any Note (in respect of any Bank, its
"Credit Exposure"), provided that, notwithstanding the foregoing, any Bank may
at any time sell participating interests in all or a part of its Credit
Exposure to any Affiliate of such Bank or to any other Bank. In the event of
any such sale by a Bank of participating interests to a Participant, such
Bank's obligations under this Agreement shall remain unchanged, such Bank shall
remain solely responsible for the performance thereof, such Bank shall remain
the holder of any such Notes for all
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purposes under this Agreement and each Borrower and the Documentation Agent
shall continue to deal solely and directly with such Bank in connection with
such Bank's rights and obligations under this Agreement. Each Borrower agrees
that if amounts outstanding under this Agreement and the Notes are due or
unpaid, or shall have been declared or shall have become due and payable upon
the occurrence of a Guarantor Event of Default or Borrower Event of Default,
each Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement and any Note to
the same extent as if the amount of its participating interest were owing
directly to it as a Bank under this Agreement or any Note, provided that such
right of set-off shall be subject to the obligation of such Participant to
share with the Banks, and the Banks agree to share with such Participant, as
provided in Section 9.11. Each Borrower also agrees that each Participant shall
be entitled to the benefits of Sections 3.1, 3.3 and 3.5 with respect to its
participation in the Loans outstanding from time to time, but only to the
extent it would be entitled to the same if it were also a Bank which is an
Eligible Assignee. Each Bank agrees that any agreement between such Bank and
any such Participant in respect of such participating interest shall not
restrict such Bank's right to agree to any amendment, supplement or
modification to the Agreement or any of the Loan Documents except to extend the
final maturity of any Note or reduce the rate or extend the time of payment of
interest thereon or reduce the principal amount thereof or release the
Guaranty.
(d) Each Bank and the Documentation Agent agrees to take normal and
reasonable precautions and exercise due care to maintain the confidentiality
of all information identified as "confidential" by the Borrowers provided to it
by the Borrowers or by the Documentation Agent on any Borrower's behalf, in
connection with this Agreement or any other Loan Document, and neither it nor
any of its Affiliates shall use or disclose any such information for any
purpose or in any manner other than pursuant to the terms contemplated by this
Agreement, except to the extent such information (i) was or becomes generally
available to the public other than as a result of a disclosure by a party to
this Agreement, or (ii) was or becomes available on a non-confidential basis
from a source other than the Borrowers, provided that such source is not bound
by a confidentiality agreement with the applicable Borrower known to the
Bank; provided, further, that the Documentation Agent or any Bank may disclose
such information (A) at the request or pursuant to any requirement of any
Governmental Authority to which the Documentation Agent or such Bank is subject
or in connection with an examination of the Documentation Agent or such Bank by
any such authority; (B) pursuant to subpoena or other court process; (C) when
required to do so in accordance with the provisions of any applicable
Requirement of Law; and (D) to the Documentation Agent's or such Bank's
independent auditors and other professional advisors in the ordinary course of
and within the scope of such advisors' engagements. Notwithstanding the
foregoing, the Company authorizes
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each Bank to disclose to any participant or Assignee (each, a "Transferee")
and to any prospective Transferee, such financial and other information in such
Bank's possession concerning any Borrower or its Subsidiaries which has been
delivered to the Documentation Agent or the Banks by such Borrower in
connection with the Banks' credit evaluation of such Borrower prior to entering
into this Agreement; provided, that unless otherwise agreed by such Borrower,
such Transferee or prospective Transferee agrees in writing to such Bank to
keep such information confidential to the same extent required of the Banks
hereunder. Each Bank agrees that its obligations under this Section 9.9 shall
survive any sale or assignment of its interests to a Transferee.
(e) In the event that the holder of any Note (including any Bank) shall
transfer such Note in accordance with the terms hereof, it shall immediately
advise the Documentation Agent and the applicable Borrower of such transfer,
and the Documentation Agent and the applicable Borrower shall be entitled
conclusively to assume that no transfer of any Note has been made by any holder
(including any Bank) unless and until Documentation Agent and such Borrower
shall have received written notice to the contrary. Except as otherwise
provided in this Agreement or as otherwise expressly agreed in writing by all
of the other parties hereto, no Bank shall, by reason of the transfer of a Note
or otherwise, be relieved of any of its obligations hereunder. Each transferee
of any Note shall take such Note subject to the provisions of this Agreement
and to any request made, waiver or consent given or other action taken
hereunder, prior to the receipt by the Documentation Agent and the applicable
Borrower of written notice of such transfer, by each previous holder of such
Note, and, except as expressly otherwise provided in such transfer by each
previous holder of such Note, and, except as expressly otherwise provided in
such notice, the Documentation Agent and the applicable Borrower shall be
entitled conclusively to assume that the transferee named in such notice shall
thereafter be vested with all rights and powers under this Agreement with
respect to the Pro Rata Share of the Loans of the Bank named as the payee of
the Note which is the subject of such transfer.
Section 9.10 Confirmations. Each Borrower and each holder of any
Note agree from time to time upon written request received by one from the
other or from Guarantor, to confirm to the other or Guarantor, as the case may
be, in writing (with a copy of each such confirmation to the Documentation
Agent) the aggregate unpaid principal amount of any Loan Obligation then
outstanding.
Section 9.11 Set-off. In addition to any rights and remedies of the Banks
provided by law, if the Obligations of any Borrower shall have become due and
payable in full, each Bank is authorized at any time and from time to time,
without prior notice to such Borrower, any such notice being waived by each
Borrower to the fullest extent permitted by law, to set off and apply any and
all
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deposits (general or special, time or demand, provisional or final) at any time
held by, and other indebtedness at any time owing to, such Bank to or for the
credit or the account of such Borrower against any and all Obligations of such
Borrower owing to such Bank, now or hereafter existing, irrespective of whether
or not the Documentation Agent or such Bank shall have made demand under this
Agreement or any Loan Document. Each Bank agrees promptly to notify the
affected Borrower, Kmart Corporation and the Documentation Agent after any such
set-off and application made by such Bank; provided, that the failure to give
such notice shall not affect the validity of such set-off and application. The
rights of each Bank under this Section 9.11 are in addition to the other rights
and remedies (including other rights of set-off) which the Bank may have.
Section 9.12 Counterparts. This Agreement may be executed by one or more
of the parties to this Agreement in any number of separate counterparts, each
of which, when so executed, shall be deemed an original, and all of said
counterparts taken together shall he deemed to constitute but one and the same
instrument. A set of the copies of this Agreement signed by all the parties
shall be lodged with the Guarantor and the Documentation Agent.
Section 9.13 Severability. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder.
Section 9.14 No Third Parties Benefited. This Agreement is made and
entered into for the sole protection and lecal benefit of each Borrower, the
Banks and the Documentation Agent and their permitted successors and assigns,
and no other Person shall be a direct or indirect legal beneficiary of, or have
any direct or indirect cause of action or claim in connection with, this
Agreement or any of the other Loan Documents. Neither the Documentation Agent
nor any Bank shall have any obligation to any Person not a party to this
Agreement or other Loan Documents.
Section 9.15 Governing Law and Jurisdiction.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, LAW OF THE STATE OF NEW YORK (WITHOUT REGARD TO CONFLICTS OF LAW
PROVISIONS THEREOF); PROVIDED THAT EACH BORROWER, THE GUARANTOR, THE
DOCUMENTATION AGENT, THE ARRANGERS AND THE BANKS SHALL RETAIN ALL RIGHTS
ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF
THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH OF THE BORROWERS, THE GUARANTOR, THE
DOCUMENTATION AGENT, THE ARRANGERS AND THE BANKS CONSENTS, FOR ITSELF AND IN
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RESPECT OF ITS PROPERTY, TO THE JURISDICTION OF THOSE COURTS. EACH OF THE
BORROWERS, THE GUARANTOR, THE DOCUMENTATION AGENT, THE ARRANGERS AND THE BANKS
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION
IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE BORROWERS,
THE GUARANTOR, THE DOCUMENTATION AGENT, THE ARRANGERS AND THE BANKS EACH WAIVE
PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE
BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.
Section 9.16 Waiver of Jury Trial. THE BORROWERS, THE GUARANTOR, THE
BANKS, THE ARRANGERS AND THE DOCUMENTATION AGENT EACH WAIVE THEIR RESPECTIVE
RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER
LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR
PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE.
THE BORROWERS, THE GUARANTOR, THE BANKS, THE ARRANGERS AND THE DOCUMENTATION
AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A
COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES
FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY
OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY
OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR
THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
Section 9.17 Entire Agreement. This Agreement, together with the other
Loan Documents, embodies the entire agreement, and understanding among the
Borrowers, the Guarantor, the Banks, and the Documentation Agent, and
supersedes all prior or contemporaneous agreements and understandings of such
Persons, verbal or written, relating to the subject matter hereof and thereof.
Section 9.l8 Borrower Termination. Any Borrower may, upon the delivery to
the Documentation Agent of a Borrower Termination Agreement, cease to be a
party hereto, if such Borrower's Obligations hereunder and all Notes evidencing
the same have been paid in full and all Project Commitments with respect to
such Borrower have been terminated; provided, however, that such Borrower's
obligations under Sections 2.9, 9.4, 9.7, 9.14, and 9.15 shall survive the
termination of such Borrower.
Section 9.19 Headings. The Table of Contents and Article and Section
headings used in this Agreement are for convenience of reference only and shall
not affect the construction of this Agreement.
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Section 9.20 Termination of Existing Facilities. The Kmart Borrower and
each Bank party to this Agreement which is also party to an Existing Facility
hereby agree to terminate such Existing Facility effective upon the execution
of this Agreement. The Kmart Borrower hereby agrees to pay any fees
outstanding to any such Bank in connection with such Existing Facility as soon
as practicable following invoice thereof by such Bank.
[BALANCE OF PAGE LEFT INTENTIONALLY BLANK; SIGNATURE PAGES FOLLOW.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
ADDRESS FOR NOTICES KMART CORPORATION, as a Borrower
Kmart Corporation
3100 West Big Beaver Road By: James P. Churillo
Troy, MI 48084 -------------------------------
Attn: Treasurer
Fax No.: (810) 643-5398 Title: Vice President & Treasurer
Tel. No.: (810) 643-1000 ----------------------------
BANKERS TRUST COMPANY,
ADDRESS FOR NOTICES as Documentation Agent
Bankers Trust Company
280 Park Avenue By:
Floor 23W -------------------------------
New York, NY 10017
Attn: Amy Sinensky Title:
Fax No.: (212) 454-3592 ----------------------------
Tel. No.: (212) 454-3515
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<PAGE> 99
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
ADDRESS FOR NOTICES KMART CORPORATION, as a Borrower
Kmart Corporation
3100 West Big Beaver Road By:
Troy, MI 48084 ----------------------------
Attn: Treasurer
Fax No.: (810) 643-5398 Title:
Tel. No.: (810) 643-1000 -------------------------
BANKERS TRUST COMPANY,
ADDRESS FOR NOTICES as Documentation Agent
Bankers Trust Company
280 Park Avenue
Floor 23W By: Jeffrey M. Baevsky
New York, NY 10017 ----------------------------
Attn: Amy Sinensky
Fax No.: (212) 454-3592 Title: Vice President
Tel. No.: (212) 454-3515 -------------------------
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<PAGE> 100
Banks Signatory to Credit Agreement
Banca Commerciale Italiana, Chicago
Branch
Banca Nazionale del Lavoro S.p.A. -
New York Branch
Bankers Trust Company
Bank of America National Trust and
Savings Association
The Bank of California, N.A.
Bank of Hawaii
The Bank of New York
The Bank of Tokyo Trust Company
Barnett Bank of South Florida, N.A.
Caisse Nationale de Credit Agricole
Canadian Imperial Bank of Commerce
Comerica Bank
Credit Lyonnais Chicago Branch
Credit Lyonnais Cayman Island Branch
The Dai-Ichi Kangyo Bank, Ltd., Chicago
Branch
The Daiwa Bank, Limited
Deutsche Bank AG, Chicago and/or Cayman
Islands Branches
<PAGE> 101
First Interstate Bank of California
The First National Bank of Boston
The First National Bank of Chicago
First Tennessee Bank
National Association
Fleet Bank of Massachusetts, N.A.
The Fuji Bank, Limited
Istitutio Bancario San Paolo
di Torino S.p.A.
The Long-Term Credit Bank of Japan, Ltd.
Chicago Branch
Michigan National Bank
The Mitsubishi Trust and Banking Corp.
National City Bank, Columbus
NationsBank of North Carolina, N.A.
NBD Bank, N.A.
Royal Bank of Canada
The Sakura Bank, Limited
The Sanwa Bank, Limited, Chicago Branch
Shawmut Bank, N.A.
Societe Generale
Society National Bank
<PAGE> 102
The Sumitomo Bank, Limited, Chicago
Branch
The Tokai Bank, Ltd., Chicago Branch
UMB Bank, n.a.
Union Bank
Union Bank of Switzerland - Chicago
Branch
United States National Bank of Oregon
Westdeutsche Landesbank Girozentrale
New York and Cayman Islands Branches
Yasuda Trust and Banking Company, Limited
<PAGE> 103
EXHIBIT A
FORM OF ADDITIONAL BORROWER AGREEMENT
__________________, 19__
Bankers Trust Company,
as Documentation Agent for the Banks
parties to the Credit Agreement
referred to below
Real Estate Finance Group, Floor 23W
280 Park Avenue
New York, New York 10017
Attention: ___________________________
Ladies and Gentlemen:
Reference is hereby made to that certain Warehouse Facility Credit
Agreement dated as of October 7, 1994 (as the same may be amended, restated,
modified or supplemented, the Credit Agreement") among the "Borrowers" (as
defined therein), the "Banks" (as defined therein) and Bankers Trust Company,
as Documentation Agent. All capitalized terms used but not otherwise defined
herein shall have the meanings ascribed thereto in the Credit Agreement.
The undersigned, ________________________________, a ________________
organized under the laws of the state of _________________________________
_______________________, desires to become a Borrower under the Credit
Agreement, effective on and as of the date hereof. In consideration of the
premises and of the mutual covenants contained in the Credit Agreement,
the undersigned hereby acknowledges and agrees as follows:
1. Upon execution and delivery of this Additional Borrower Agreement
by the undersigned, the undersigned hereby confirms that all of the
representations and warranties set forth in the Credit Agreement applicable to
Non-Kmart Borrowers are true and correct as to the undersigned as of the date
hereof.
2. By the execution and delivery of this Additional Borrower Agreement
by the undersigned, the undersigned hereby agrees to be bound by, and to comply
with and perform, all of the covenants, terms and conditions as set forth in
the Credit Agreement and the other Loan Documents from and after the date
hereof in the same manner and to the same extent as if the undersigned were an
original signatory party thereto.
3. The undersigned acknowledges that it is a condition precedent to
the effectiveness of this Additional Borrower Agreement that the Documentation
Agent shall have received copies of such Organizational Documents,
certificates, opinions and other documents as may be requested by the
Documentation Agent with respect to the undersigned.
<PAGE> 104
4. Upon execution and delivery of this Additional Borrower Agreement
by the undersigned, duly acknowledged by Kmart Corporation as Guarantor, and
the acceptance hereby of the Documentation Agent, the undersigned shall be a
Borrower under the Credit Agreement to the same extent as if the undersigned
were an original signatory party thereto.
5. The address to which all notices to the undersigned under the
Credit Agreement should be directed is:
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
6. This instrument shall be construed in accordance with and governed
by the laws of the state of New York.
Intending to be legally bound by the terms and conditions of the Credit
Agreement and all of the other Loan Documents, the undersigned hereby executes
and delivers this Additional Borrower Agreement.
Very truly yours,
(BORROWER]
By: __________________________________
Its: _________________________________
2
<PAGE> 105
GUARANTOR ACKNOWLEDGEMENT AND REAFFIRMATION
Kmart Corporation (the "Guarantor") hereby acknowledges and agrees that
shall be an Eligible Borrower for purposes of the Credit Agreement and further
acknowledges and agrees that the Guaranty, dated as of October ____, 1994 (the
"Guaranty"), made by Kmart Corporation in favor of the Lenders (as defined
therein) is in full force and effect and that the Guarantied Obligations (as
such term is defined in the Guaranty) shall apply to and include all Loans made
to such Borrower and all other Obligations of such Borrower. The Guarantor
further acknowledges and agrees that all of its obligations under the Guaranty
(including, without limitation, obligations pursuant to the preceding sentence)
shall be valid and enforceable and shall not be impaired by the execution,
delivery and effectiveness of this Additional Borrower Agreement and that the
Guaranty shall remain in full force and effect and is hereby reaffirmed,
confirmed and ratified in all respects as of the date hereof.
KMART CORPORATION, a Michigan
corporation
By: _____________________________________
Its: ____________________________________
Dated: __________________________________
Receipt of this Additional Borrower Agreement is hereby
acknowledged on and as of the date hereof.
BANKERS TRUST COMPANY, as
Documentation Agent
By: ______________________________________
Its: _____________________________________
Dated: ___________________________________
3
<PAGE> 106
EXHIBIT B - FORM OF ASSIGNMENT
This Assignment is made this ________ day of __________________, 199__
by ________________________________, a ___________________________
(hereinafter called the "Undersigned"), to Bankers Trust Company, a
New York state banking corporation, as Documentation Agent under the
Credit Agreement referred to below (the "Documentation Agent") for the
benefit of the "Banks" (as defined below).
W I T N E S S E T H:
WHEREAS, the Undersigned is a Borrower under that certain Warehouse
Facility Credit Agreement dated as of October 7, 1994 by and among the
Undersigned, the other "Borrowers" thereunder, the financial institutions
signatories thereto (the "Banks") and Bankers Trust Company, as the
Documentation Agent (the same, as amended, restated, modified or supplemented
and in effect from time to time, being herein referred to as the "Credit
Agreement") and, in connection therewith, the Undersigned desires to borrow
funds thereunder with respect to that certain project located in ______________
and commonly known as _____________________________ and a legal description of
which is set forth on Exhibit A attached hereto and made a part hereof
(the "Project") and has executed and delivered to the Documentation Agent that
certain promissory note payable to the order of the Documentation Agent for
the benefit of the Banks in the principal sum of ____________ Dollars ($______)
(the "Note") evidencing the Loans to be made by the Banks with
respect to the Project; and
WHEREAS, it is a condition precedent to the obligations of the Banks to
make the Loans to the Undersigned under the Credit Agreement that the
Undersigned execute this Assignment in favor of the Documentation Agent for the
benefit of the Banks for the purpose of securing the Note and the Loans
evidenced thereby and the other obligations and indebtedness of the Undersigned
under the Credit Agreement;
NOW, THEREFORE, the Undersigned agrees as follows:
1. Assignment and Grant of Security Interest. For and in consideration
of these presents and the mutual agreements herein contained and as security to
the Documentation Agent for the benefit of the Banks for the obligations of the
Undersigned under the Note, the Credit Agreement and the other Loan Documents
referred to therein, whether now existing or hereafter arising, the Undersigned
does hereby sell, assign and transfer unto the Documentation Agent, for the
benefit of the Banks, and grant to the Documentation Agent a lien on and
security interest in:
Prepared by and upon recording return to:
_________________________________________
_________________________________________
_________________________________________
_________________________________________
<PAGE> 107
(a) All right, title and interest of the Undersigned in, to
and under that certain [Agreement to Purchase Upon Completion] dated as
of _____________, 199_ between the Undersigned and Kmart Corporation
(the same, as it may be amended, restated, modified or supplemented and
in effect from time to time, being herein referred to as the "APUC"),
including, without limitation, the right of the Undersigned thereunder
to require Kmart Corporation to purchase the Project, and all proceeds
thereof; and
(b) All the rents, issues and profits now due and which may
hereafter become due by virtue of any lease, whether written or verbal,
or any letting of, or of any agreement for the use or occupancy of the
Project or any part thereof, which may have been heretofore or may be
hereafter made or agreed to, including, without limitation, that
certain [Lease] dated as of _________, 199_ between the Undersigned, as
lessor and [Kmart Corporation or name of Kmart Subsidiary which is
lessee], as lessee (the same, as amended, restated, modified or
supplemented and in effect from time to time, being herein referred to
as the "Kmart Lease"), or which may be made or agreed to by the
Documentation Agent under the powers herein granted, it being the
intention hereby to establish an absolute transfer and assignment of
all the rents, issues and profits from said leases and agreements, and
all the avails thereof (including all amounts payable under the Kmart
Lease), to the Documentation Agent for the benefit of the Banks, and
the Undersigned does hereby appoint irrevocably the Documentation Agent
its true and lawful attorney in its name and stead (with or without
taking possession of the aforesaid premises), to rent, lease or let all
or any portion of said premises to any party or parties at such rental
and upon such term, in its discretion as it may determine, and to
collect all of said avails, rents, issues and profits arising from or
accruing any time hereafter, and all now due, or that may hereafter
become due under each and all of the leases and agreements, written or
verbal, or other tenancy existing or which may hereafter exist on said
premises, with the same rights and powers and subject to the same
immunities, exoneration of liability and rights of recourse and
indemnity as the Documentation Agent would have upon taking possession
of the said premises pursuant to the provisions hereinafter set forth.
Nothing herein contained shall be construed as constituting the Documentation
Agent a "Mortgagee in Possession" in the absence of the taking of actual
possession of the said premises by the Documentation Agent pursuant to the
provisions hereinafter contained. In the exercise of the power herein granted
the Documentation Agent, no liability shall be asserted or enforced against the
Documentation Agent, all such liability being expressly waived and released by
the Undersigned.
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<PAGE> 108
2. Representations, Warranties and Covenants. (a) The Undersigned
represents and warrants to the Documentation Agent and the Banks that a true
and correct copy of each of the APUC and the Kmart Lease, as currently in
effect, has been delivered to the Documentation Agent, and that the APUC and
the Kmart Lease are each in full force and effect and no party to either
thereof is in default thereunder. The Undersigned further represents, warrants
and agrees that no rent has been or will be paid by any Person in possession of
any portion of the above described Project for more than one installment in
advance and that the payment of none of the rents to accrue for any portion of
said Project has been or will be waived, released, reduced, or discounted, or
otherwise discharged or compromised by the Undersigned. The Undersigned waives
any right of set off against any Person in possession of any portion of the
above described Project.
(b) The Undersigned further agrees that it will not assign any of the
rents or profits of the Project or any right to receive payments under the APUC
or the Kmart Lease or with respect to the Project except pursuant hereto. The
Undersigned further agrees that, without the prior written consent of the
Documentation Agent:
(i) the Undersigned will not enter into or consent to any
modification of or amendment to the APUC or any lease, verbal or
written, of all or any part of the Project;
(ii) the Undersigned will not waive or otherwise relinquish any
right of the Undersigned under the APUC or any lease, verbal or
written, of all or any part of the Project;
(iii) the Undersigned will duly perform on a timely basis
each and every obligation of the Undersigned under the APUC and each
lease, verbal or written, of all or any part of the Project;
(iv) the Undersigned will promptly notify the Documentation
Agent of the occurrence of any default by the Undersigned or any other
party thereto under the APUC or any lease, verbal or written, of all
or any part of the Project.
(c) The Undersigned further agrees to assign and transfer to the
Documentation Agent the rents, issues and profits from all future leases upon
all or any part of the above described premises and to execute and deliver,
immediately upon the request of the Documentation Agent, all such further
assurances and assignment in the premises as the Documentation Agent shall from
time to time require.
(d) Although it is the intention of the parties that this Assignment
shall be a present assignment, it is expressly understood and agreed, anything
herein contained to the contrary notwithstanding, that the Documentation Agent
shall not exercise
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<PAGE> 109
any of the rights and powers conferred upon it herein, other than to receive
directly the payment of all rents payable with respect to the Project and any
purchase price proceeds under the APUC for application to the obligations of
the Undersigned under the Credit Agreement and the Note, until and unless a
default shall occur in the payment of interest or principal due under the Note
or in the performance or observance of any of the terms or conditions or
representations, warranties and covenants of the Undersigned in the Credit
Agreement or any other instrument, document or agreement now or at any time
securing said Note or the debt secured or evidenced thereby or by any extension
thereof and nothing herein contained shall be deemed to affect or impair any
rights which the Documentation Agent and the Banks may have under the Credit
Agreement and the Note or any other such instrument, document or agreement.
(e) In any case of occurrence of a Borrower Event of Default with
respect to the Undersigned or a Guarantor Event of Default under the provisions
of the above described Credit Agreement, whether before or after the entire
principal sum secured hereby is declared to be immediately due, forthwith, upon
demand of the Documentation Agent, the Undersigned agrees to surrender to the
Documentation Agent and the Documentation Agent shall be entitled to take
actual possession of, personally, or by its agents or attorneys, and
Documentation Agent in its discretion may, with or without force and with or
without process of law, take and maintain possession of all or any part of, the
documents, books, records, papers and accounts of the Undersigned relating to
the Project, and may exclude the Undersigned, its agents or servants, wholly
therefrom and may as attorney in fact or agent of the Undersigned, or in its
own name as Documentation Agent and under the powers herein granted, enforce
all rights of the Undersigned in respect of the APUC and all leases and other
rights assigned hereby, either personally or by its agents, with full power to
use such measures, legal or equitable, as in its discretion or in the
discretion of its successors or assigns may be deemed proper or necessary to
enforce the payment of security of the avails, rents, issues, and profits of
the premises, including actions for the recovery of rent, actions in forcible
detainer and actions in distress or rent, hereby granting full power and
authority to exercise each and every of the rights, privileges and powers
herein granted at any and all times hereafter, without notice to the
Undersigned, and with full power to cancel or terminate any lease or sublease
for any cause or on any ground which would entitle undersigned to cancel the
same, to make all necessary or proper repairs, decorating, renewals,
replacements, alterations, additions, betterments and improvements to the above
described Project that may seem judicious, in its discretion, and to receive
all such avails, rents, issues and profits.
(f) The Documentation Agent shall not be obligated to perform or
discharge, nor does it hereby undertake to perform or discharge, any
obligation, duty or liability under the APUC or any
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<PAGE> 110
leases or rental agreements relating to said Project, and the Undersigned shall
and does hereby agree to indemnify and hold the Documentation Agent harmless of
and from any and all liability, loss or damage which it may or might incur
under any leases or the APUC or under or by reason of the assignment thereof
and of and from any and all claims and demands whatsoever which may be asserted
against it by reason of any alleged obligations or undertakings on its part to
perform or discharge any of the terms, covenants or agreements contained in
said leases or the APUC. Should the Documentation Agent incur any such
liability, loss or damage, under said leases or the APUC or under or by reason
of the assignment thereof, or in the defense of any claims or demands the
Undersigned agrees to reimburse the Documentation Agent for the amount thereof,
including reasonable Attorney Costs, immediately upon demand.
(g) The Documentation Agent in the exercise of the rights and powers
conferred upon it by this Assignment shall have full power to use and apply the
avails, rents, issues and profits of the Project to the payment of or on
account of the following, in such order as the Documentation Agent may
determine:
(i) To the payment of the operating expenses of said Project,
including cost of management and leasing thereof (which shall include
reasonable compensation to the Documentation Agent and its agent or
agents, if management be delegated to an agent or agents, and it shall
also include lease commissions and other compensation and expenses of
seeking and procuring tenants and entering into leases), established
claims for damages, if any, and premiums on insurance;
(ii) To the payment of taxes and special assessments now due or
which may hereafter become due on said Project;
(iii) To the payment of all repairs,, decorating, renewals,
replacements, alterations, additions, or betterments, and improvements
of said Project, including the cost from time to time of installing,
replacing refrigeration and gas or electric stoves therein, and of
placing said property in such condition as will, in the judgment of the
Documentation Agent, make it readily rentable;
(iv) To the payment of any indebtedness or other amounts owing
under the Credit Agreement or the Note; and
(v) Any excess, if any, after satisfaction in full of all of
the foregoing shall be delivered to the Undersigned.
3. Direction of Payments to Documentation Agent. The Undersigned
does further specifically and irrevocably authorize and instruct each and every
present and future lessee or tenant of the whole or any part of the above
described premises, including,
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<PAGE> 111
without limitation, [Kmart Corporation or name of Kmart Subsidiary which is
lessee] to pay all rental agreed upon in any tenancy of the Project, and Kmart
Corporation to pay all amounts payable under the APUC directly to the
Documentation Agent, for the benefit of the Banks, for application as described
above. The Undersigned agrees that, concurrently with the execution of this
Assignment and from time to time hereafter as requested by the Documentation
Agent, the Undersigned will give a written letter of direction to each lessee
of the Project or any part thereof and to Kmart Corporation confirming that all
payments under any leases of the Project or the APUC shall be paid directly to
the Documentation Agent for application against the obligations of the
Undersigned to the Banks and the Documentation Agent under the Note, the Credit
Agreement and the other Loan Documents referred to therein.
4. Remedies Not Exclusive. It is understood and agreed that the
provisions set forth in this Assignment shall be deemed a special remedy given
to the Documentation Agent, and shall not be deemed exclusive of any of the
remedies granted in the above described Credit Agreement or the other Loan
Documents described therein, but shall be deemed an additional remedy and shall
be cumulative with the remedies therein granted.
It is expressly understood that no judgment or decree which may be
entered on any debt secured or intended to be secured hereby shall operate to
abrogate or lessen the effect of this instrument, but that the same shall
continue in full force and effect until the payment and discharge of any and
all indebtedness secured hereby, in whatever form the said indebtedness may be
and until the indebtedness secured hereby shall have been paid in full and all
bills incurred by virtue of the authority herein contained have been fully paid
out of rents, issues and profits of the property, or the Undersigned, or until
such time as this instrument may be voluntarily released. This instrument
shall also remain in full force and effect during the pendency of any
foreclosure proceedings, both before and after sale, until the issuance of a
deed pursuant to a foreclosure decree (unless all indebtedness secured by the
mortgage pursuant to which foreclosure occurs is fully satisfied before the
expiration of any period of redemption) .
5. Miscellaneous.
(a) THIS ASSIGNMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE
INTERNAL LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE GOVERNED
BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH SUCH LAWS OF SAID STATE,
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS.
(b) Any provision of this Assignment that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or enforceability of such
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<PAGE> 112
provision in any other jurisdiction. Notwithstanding the foregoing, in lieu of
such prohibited or unenforceable provision, there shall automatically be deemed
incorporated herein (without further act or deed by any party hereto) a
provision as similar to such prohibited or unenforceable provision as possible
and as shall be enforceable and not prohibited pursuant to applicable law.
(c) No failure or delay on the part of the Documentation Agent in
exercising any right, power or remedy under this Assignment shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies provided for in this
Assignment are cumulative and are not exclusive of any remedies that may be
available to the Documentation Agent or any Bank at law or in equity or
otherwise.
(d) Notwithstanding anything to the contrary contained herein, no
amendment, modification, supplement, termination or waiver of or to any
provision of this Assignment, nor consent to any departure by the Undersigned
therefrom, shall be effective unless the same shall be consented to in writing
by the Documentation Agent. Any amendment, modification or supplement of or to
any provision of this Assignment, any waiver of any provision of this
Assignment, and any consent to any departure by the Undersigned from the terms
of any provision of this Assignment, shall be effective only in the specific
instance and for the specific purpose for which made or given.
(e) Except where notice is specifically required by this Assignment
or by the Credit Agreement, no notice to or demand on the Undersigned in any
case shall entitle the Undersigned to any other or further notice or demand in
similar or other circumstances.
(f) The Undersigned acknowledges receipt of a copy of the Credit
Agreement and the other Loan Documents in the form in which each was executed
and delivered by the parties thereto, as in effect on the date hereof, and
agrees that such copies constitute adequate notice of all matters contained
therein and consents to the execution and delivery of such agreements and the
performance of all transactions provided for or contemplated therein; provided
that neither the Documentation Agent nor any Bank shall be obligated to furnish
to the Undersigned any copies of any amendments, modifications or supplements
or waivers with respect to the Credit Agreement or any of the other Loan
Documents.
(g) Except where telephonic instructions or notices are authorized
herein to be given, all notices, demands, instructions and other communications
required or permitted to be given to or made upon any party hereto shall be in
accordance with the provisions of Section 9.3 of the Credit Agreement.
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<PAGE> 113
(h) The Undersigned hereby irrevocably and unconditionally consents
and submits to the nonexclusive jurisdiction of any United States Federal or
New York State court sitting in New York County in any action or proceeding
arising out of or relating to this Assignment, and the Undersigned hereby
irrevocably and unconditionally agrees that all claims in respect of such
action or proceeding brought against any of the Banks or the Documentation
Agent in respect of this Assignment shall be brought in such United States
Federal or New York State court. The Undersigned also irrevocably consents to
the service of any and all process in any such action or proceeding brought in
any court in or of the State of New York by the delivery of copies of such
process to the Undersigned at its address specified pursuant to Section 9.3 of
the Credit Agreement or by certified or registered mail directed to such
address.
(i) THE UNDERSIGNED AND THE DOCUMENTATION AGENT, BY ACCEPTANCE HEREOF,
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN CONNECTION WITH
ANY ACTION UNDER OR COUNTERCLAIM RELATING TO THIS ASSIGNMENT, THE CREDIT
AGREEMENT OR ANY OTHER LOAN DOCUMENT, AND THE UNDERSIGNED AND THE DOCUMENTATION
AGENT, BY ACCEPTANCE HEREOF, HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY
OBJECTION, INCLUDING WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, OR THAT IT OR ITS ASSETS IS
EXEMPT OR IMMUNE FROM ATTACHMENT OR EXECUTIONS WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OR MAINTAINING OF ANY SUCH ACTION OR PROCEEDING IN SUCH
RESPECTIVE JURISDICTIONS. Nothing herein shall affect the right of the
Documentation Agent to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against the Undersigned in any
other jurisdiction.
(j) The Undersigned agrees to pay promptly on demand (i) all
reasonable costs and expenses of the Documentation Agent in connection with the
filing and recording of this Assignment and any other documents which may be
delivered in connection with this Assignment, including, without limitation,
the reasonable fees and expenses of Winston & Strawn, special counsel for the
Documentation Agent, and any local counsel retained by the Documentation Agent,
with respect thereto; and (ii) from and after the occurrence of any Guarantor
Event of Default or Borrower Event of Default with respect to the Undersigned,
all costs and expenses (including reasonable Attorney Costs) of the
Documentation Agent in connection with (A) any and all amounts which
Documentation Agent may incur relative to the curing of any default resulting
from the acts or omissions of the Undersigned under this Assignment, (B) any
amendment or modification of, or waiver under, this Assignment and (C) the
enforcement of this Assignment and the preservation of the Documentation
Agent's and the Banks' rights hereunder. The obligations of the Undersigned
under this subsection shall survive the payment of the Undersigned's other
obligations hereunder and under the Credit Agreement and the other Loan
Documents and the termination of this Assignment.
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<PAGE> 114
(k) Section and other headings used in this Assignment are for
convenience only and shall not affect the construction of this Assignment.
(l) Whenever the word "Undersigned" is mentioned herein, it is
hereby understood that the same includes and shall be binding upon successors
and assigns (including successors by consolidation) of the Undersigned, and any
party or parties holding title to the above described Project by, through or
under the Undersigned. All of the rights, powers, privileges and immunities
herein granted and assigned to the Documentation Agent, for the benefit of the
Banks, shall also inure to its successors and assigns.
(m) Capitalized terms which are used herein and are not otherwise
defined herein are used with the meanings given such terms in the Credit
Agreement.
IN WITNESS WHEREOF the Undersigned has executed and delivered
this instrument as of this day of , 199 .
[NAME OF BORROWER)
By:
Its:
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<PAGE> 115
STATE OF )
) ss
COUNTY OF )
I, the undersigned, a Notary Public in and for the State of
, hereby certify that on this day of ,
199_, personally appeared before me to me known
to be the individual described in and who executed the foregoing instrument
as of , a ,
and acknowledged that he signed and sealed the same as his free and voluntary
act and deed and as the free and voluntary act and deed of said company, for
the uses and purposes therein mentioned.
Given under my hand and official seal the day and year first above written.
______________________________________
Notary Public
My commission expires:
-10-
<PAGE> 116
STATE OF )
) ss
COUNTY OF )
On this day of , 199 , before me, the undersigned, a
Notary Public in and for the State of , personally appeared
to me personally known, who, being duly sworn, did say that he
executed and delivered the foregoing instrument as his free and voluntary act
and as the free and voluntary act of .
IN TESTIMONY WHEREOF, I have hereunto set by hand and affixed my
official seal in the County and State aforesaid, the day and year first above
written.
_________________________________
Notary Public
My term expires:
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<PAGE> 117
EXHIBIT A
(Legal Description)
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<PAGE> 118
EXHIBIT C
FORM OF NOTICE OF BORROWING
______________________, 19_____
Bankers Trust Company
as Documentation Agent
Real Estate Finance Group, Floor 23W
280 Park Avenue
New York, New York 10017
Attention:
Ladies and Gentlemen:
Reference is hereby made to that certain warehouse Facility Credit
Agreement dated as of October 7, 1994 (as the same may be amended, restated,
modified or supplemented, the Credit Agreement") among the "Borrowers" (as
defined therein) including the undersigned Borrower, the "Banks" (as defined
therein) and Bankers Trust Company, as Documentation Agent. All capitalized
terms used but not otherwise defined herein shall have the meanings ascribed
thereto in the Credit Agreement.
Pursuant to Section 2.5(a) of the Credit Agreement, the undersigned
Borrower ("Borrower") hereby gives notice that it desires to borrow an
aggregate principal amount of $ (the "Borrowing"). The Borrowing
(is] [is not] a Project Borrowing. [N.B. only Kmart Corporation may make
Borrowings which are not Project Borrowings.]
[N.B. If the Borrowing is a Project Borrowing, include the following:] As a
condition precedent to the Borrowing, Borrower hereby acknowledges that this
Notice of Borrowing and acceptance by Borrower of proceeds of the Borrowing
contemplated hereby constitute a representation and warranty that all
applicable conditions with respect to the Borrowing requested hereby contained
in Section 6.2 and in Section 6.3 the Credit Agreement have been satisfied.
In order to induce Documentation Agent and each Bank to disburse
proceeds of the Borrowing requested hereby, Borrower hereby further certifies,
represents and warrants to Documentation Agent and each Bank as follows, which
certifications, representations and warranties shall have the same force and
effect as if made in the Credit Agreement:
1. The Project is completed in compliance in all material respects with all
applicable building codes, zoning ordinances, environmental protection,
health and safety laws
<PAGE> 119
and regulations and other laws, ordinances and regulations governing the
construction, development, use and operation of the Project, and all
required certificates of occupancy and other governmental approvals and
permits relating thereto have been issued.
2. Payoff Letters from all existing lenders with respect to the Project have
been provided to the Documentation Agent and a sufficient portion of the
proceeds of the Borrowing shall be used by Borrower to repay such existing
lenders and obtain releases of all liens of any of them with respect to
the Project.
3. A current title report confirming that no Person other than the lenders
referred to in 2 above has a lien of record with respect to the Project
has been delivered to the Documentation Agent.
4. Borrower is currently maintaining insurance with respect to the Project in
accordance with the requirements of the Credit Agreement.
Very truly yours,
[BORROWER]
By:
Its:
2
<PAGE> 120
EXHIBIT D
FORM OF NOTICE OF CONTINUATION/CONVERSION
___________________, 19_____
Bankers Trust Company
as Documentation Agent
Real Estate Finance Group, Floor 23W
280 Park Avenue
New York, New York 10017
Attention: __________________________
Ladies and Gentlemen:
Reference is hereby made to that certain Warehouse Facility Credit
Agreement dated as of October 7, 1994 (as the same may be amended, restated,
modified or supplemented, the Credit Agreement") among the "Borrowers" (as
defined therein) including the undersigned Borrower, the "Banks" (as defined
therein) and Bankers Trust Company, as Documentation Agent. All capitalized
terms used but not otherwise defined herein shall have the meanings ascribed
thereto in the Credit Agreement.
Pursuant to Section 2.6 of the Credit Agreement, the undersigned Kmart
Corporation, as agent for the Borrower(s) identified below hereby gives notice
irrevocably of the (conversion] (continuation] of the Loans specified herein:
(1) The [Conversion Date] [Continuation Date] is ________________,
19__.
(2) The aggregate amount of the Loans to be [converted]
[continued] is $ ______________________. The Borrower(s) and separate
amounts of such Loans are as follows:
[name(s) of Borrower(s) and amount(s) of Loan]
(3) The Loans are to be [converted into] [continued as] [LIBOR]
[CD Rate] [Reference Rate] Loans.
(4) Unless the Loans are to be converted into Reference Rate
Loans, the duration of the Interest Period for the Loans included
in the [conversion] [continuation] shall be ________ [months] [days].
The undersigned hereby certifies that no Unmatured Guarantor Event of Default
or Guarantor Event of Default, and no Unmatured Borrower Event of Default or
Borrower Event of Default as to any Borrower of any Loan to be continued or
converted hereby as a LIBOR
<PAGE> 121
Loan or a CD Rate Loan, exists as of the date hereof and no such Unmatured
Guarantor Event of Default, Unmatured Borrower Event of Default, Guarantor
Event of Default or Borrower Event of Default will exist or shall result from
such proposed Borrowing on the date of the proposed Borrowing, before and after
giving effect thereto and to the application of the proceeds therefrom.
KMART CORPORATION,
as Agent for the Borrowers
By:________________________
Title:_____________________
2
<PAGE> 122
EXHIBIT E
FORM OF PROMISSORY NOTE
$___________________________ ____________________, 199__
New York, New York
FOR VALUE RECEIVED, ___________________________, a
__________________________ ("Borrower"), promises to pay to the order of
Bankers Trust Company, as Documentation Agent for the "Banks" (as defined in
the Credit Agreement referred to below) ("Payee"), on or before the Termination
Date (as defined in the Credit Agreement referred to below), the principal sum
of___________________________________ Dollars ($_______________________).
Borrower also promises to pay interest on the unpaid principal amount
hereof from the date hereof until paid at the rates, at the times and from the
dates which shall be determined in accordance with the provisions of that
certain Warehouse Facility Credit Agreement dated as of October 7, 1994 (as the
same may be amended, restated, modified or supplemented and in effect from time
to time, the "Credit Agreement") among the Borrower, certain other "Borrowers"
named therein, the "Banks" named therein and Bankers Trust Company, as
Documentation Agent. Capitalized terms used herein without definition shall
have the meanings set forth in the Credit Agreement.
This Note is issued pursuant to and entitled to the benefits of the
Credit Agreement, to which reference is hereby made for a more complete
statement of the terms and conditions under which the Loans evidenced hereby
are made and are to be repaid.
All payments of principal and interest in respect of this Note shall
be made in lawful money of the United States of America in same day funds at
the office of Payee located at One Bankers Trust Plaza, New York, New York or
at such other place as shall be designated in writing by Payee for such purpose
in accordance with the terms of the Credit Agreement. Until notified in
writing of the transfer of this Note in accordance with the terms of the Credit
Agreement, Borrower shall be entitled to deem Payee, or such other Person who
has been so identified by the transferor in writing to Borrower as the owner
and holder of this Note, as the owner and holder of this Note. Each of Payee
and any subsequent holder of this Note agrees, by its acceptance hereof, that
before disposing of this Note or any part hereof it will make a notation hereon
of all advances and principal payments previously made hereunder and of the
date to which interest hereon has been paid; provided, however, that the
failure to make a notation of any advance under or payment made on this Note
shall not limit or otherwise affect the obligation of Borrower hereunder with
respect to payments of principal or interest on this Note.
<PAGE> 123
Whenever any payment on this Note shall be stated to be due on a day
which is not a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
the payment of interest on this Note; provided, however, that in the event that
the day on which payment relating to a LIBOR Loan is due is not a Business Day
but is a day of the month after which no further Business Day occurs in such
month, then the due date thereof shall be the next preceding Business Day.
This Note is subject to mandatory prepayment as provided in subsection
2.12 of the Credit Agreement and to prepayment at the option of the Borrower as
provided in subsection 2.11 of the Credit Agreement.
The Credit Agreement and this Note shall be governed and shall be
construed and enforced in accordance with the internal laws (as opposed to
conflict of laws principles) and decisions of the State of New York.
Upon the occurrence of a Guarantor Event of Default or occurrence of a
Borrower Event of Default as to Borrower, the unpaid balance of the principal
amount of this Note may become, or may be declared to be, due and payable in
the manner, upon the conditions and with the effect provided in the Credit
Agreement.
Borrower promises to pay all costs and expenses, including reasonable
Attorney Costs, all as provided in subsection 9.5 of the Credit Agreement,
incurred in the collection and enforcement of this Note. Borrower hereby
consents to renewals and extensions of time at or after the maturity hereof,
without notice, and hereby waives diligence, presentment, protest, demand and
notice of every kind to the fullest extent permitted by law.
IN WITNESS WHEREOF, Borrower has caused this Note to be executed and
delivered by its duly authorized officer as of the day and year and at the
place first written above.
[NAME OF BORROWER]
By:______________________________
Its:_____________________________
-2-
<PAGE> 124
TRANSACTIONS ON NOTE
<TABLE>
<CAPTION>
Outstanding
Type of Amount of Amount of Principal
Date Loan Made Loan Made Principal Balance Notation
Made This Date This Date Paid This Date This Date Made By
- ---- ----------- ----------- -------------- ------------ --------
<S> <C> <C> <C> <C> <C>
</TABLE>
-3-
<PAGE> 125
EXHIBIT F
FORM OF ALLOCATION REQUEST
_________________, 19____
Bankers Trust Company
as Documentation Agent
Real Estate Finance Group, Floor 23W
280 Park Avenue
New York New York 10017
Attention:
Ladies and Gentlemen:
Reference is hereby made to that certain warehouse Facility Credit
Agreement dated as of October 7, 1994 (as the same may be amended, restated,
modified or supplemented, the Credit Agreement") among the "Borrowers" (as
defined therein), including the undersigned Borrower, the "Banks" (as defined
therein) and Bankers Trust Company, as Documentation Agent. All capitalized
terms used but not otherwise defined herein shall have the meanings ascribed
thereto in the Credit Agreement.
This letter constitutes an Allocation Request pursuant to Section
2.3(a) of the Credit Agreement. [Subject to the terms of Section 2.3 of the
Credit Agreement, the undersigned ("Borrower") hereby submits this Allocation
Request with respect to that certain project located in
commonly known as
(the "Project") . In accordance with Section 2.3 of the Credit Agreement,
Borrower hereby requests that the aggregate amount of $
of the now Unallocated Total Commitment be allocated to the Project. Borrower
hereby certifies that attached hereto are true and correct copies of Payoff
Letters from each existing lender with respect to such Project and a title
report with respect to such Project confirming that no Person other than such
existing lenders have liens of record against such Project.]*/
Also accompanying this Allocation Request is an initial Note executed
by the undersigned Borrower, dated the date of the requested Borrowing, and
payable to the order of the Documentation Agent for the benefit of the Banks in
the amount of the (Project Commitment) [Non-Project Commitment) requested
hereby.
*/ Delete if Kmart Borrower is requesting a Non-Project Commitment.
<PAGE> 126
Borrower hereby certifies that the representations and warranties
contained in the Credit Agreement with respect to itself [and the Project] are
true and correct in all material respects as of the date hereof as though made
on and as of the date hereof and that no Guarantor Event of Default exists and
no Borrower Event of Default with respect to the Borrower identified herein
exists.
Very truly yours,
[BORROWER]
By: ___________________________________
Its:___________________________________
**/ [GUARANTOR ACKNOWLEDGEMENT AND REAFFIRMATION
Pursuant to the terms of Section 2.3 of the Credit Agreement, Kmart
Corporation ("Guarantor") pursuant to that certain Guaranty dated as of October
__, 1994 made by Guarantor in favor of the Lenders (as defined therein), hereby
approves this Allocation Request in all respects. Guarantor further
acknowledges and agrees that all of its obligations under the Guaranty
(including, without limitation, obligations incurred in connection with Loans
for the Project identified in this Allocation Request) shall be valid and
enforceable and shall not be impaired by the execution, delivery and
effectiveness of this Allocation Request; and further, that the Guaranty shall
remain in full force and effect and is hereby reaffirmed, confirmed and
ratified in all respects as of the date hereof.
KMART CORPORATION, a Michigan
corporation
By:_____________________________________
Its:___________________________________
**/ Delete if the Borrower is Kmart Corporation.
2
<PAGE> 127
EXHIBIT G
FORM OF NOTICE OF SWINGLINE BORROWING
________________, 19____
Bankers Trust Company
as Swingline Lender
and Documentation Agent
Real Estate Finance Group, Floor 23W
280 Park Avenue
New York, New York 10017
Attention: ________________
Ladies and Gentlemen:
Reference is hereby made to that certain Warehouse Facility Credit
Agreement dated as of October 7, 1994 (as the same may be amended, restated,
modified or supplemented, the Credit Agreement") among the "Borrowers" (as
defined therein) including the undersigned Borrower, the "Banks" (as defined
therein) and Bankers Trust Company, as Swingline Lender and as Documentation
Agent. All capitalized terms used but not otherwise defined herein shall have
the meanings ascribed thereto in the Credit Agreement.
Pursuant to Section 2.1(c) of the Credit Agreement, the undersigned
Borrower ("Borrower") hereby gives notice that it desires to borrow a Swingline
Loan in the principal amount of $________________ (the "Borrowing"). The
Borrowing [is] [is not] a Project Borrowing. [N.B. only Kmart Corporation may
make Borrowings which are not Project Borrowings.]
As a condition precedent to the Borrowing, Borrower hereby
acknowledges that this Notice of Borrowing and acceptance by Borrower of
proceeds of the Borrowing contemplated hereby constitute a representation and
warranty that all applicable conditions with respect to the Borrowing requested
hereby contained in Section 6.2 and in Section 6.3 the Credit Agreement have
been satisfied.
[N.B. If the Borrowing is a Project Borrowing, include the following:] In order
to induce Swingline Lender to disburse proceeds of the Borrowing requested
hereby, Borrower hereby further certifies, represents and warrants as
follows, which certifications, representations and warranties shall have the
same force and effect as if made in the Credit Agreement:
1. The Project is completed in compliance in all material respects with
all applicable building codes, zoning ordinances, environmental
protection, health and safety laws
<PAGE> 128
and regulations and other laws, ordinances and regulations governing
the construction, development, use and operation of the Project, and
all required certificates of occupancy and other governmental
approvals and permits relating thereto have been issued.
2. Payoff Letters from all existing lenders with respect to the Project
have been provided to the Documentation Agent and a sufficient portion
of the proceeds of the Borrowing shall be used by Borrower to repay
such existing lenders and obtain releases of all liens of any of them
with respect to the Project.
3. A current title report confirming that no Person other than the lenders
referred to in 2 above has a lien of record with respect to the
Project has been delivered to the Documentation Agent.
4. Borrower is currently maintaining insurance with respect to the
Project in accordance with the requirements of the Credit Agreement.
Very truly yours,
[BORROWER]
By: ___________________________________
Its:___________________________________
2
<PAGE> 129
SCHEDULE 4.2(c) -- CONSENTS AND APPROVALS
None.
<PAGE> 130
SCHEDULE 5.4(c)
EXISTING MORTGAGES, SECURITY INTEREST AND LIENS ON ASSETS OF KMART CORPORATION
EXISTING ON THE CLOSING DATE
Liens/Security Interests/Mortgages on PACE properties
Current Mortgages existing on Kmart Corporation's properties as of
September 21, 1994 was $336 million
Kmart Corporation has guaranteed indebtedness related to certain of its
properties financed by industrial revenue bonds. At January 26, 1994, the
total amount of such guaranteed indebtedness was $284 million, of which $92
million was included in capital lease obligations.
<PAGE> 1
EXHIBIT 99.3
CONFORMED COPY
________________________________________________________________________________
GUARANTY AGREEMENT
dated as of October 7, 1994
made by
KMART CORPORATION
in favor of
THE LENDERS REFERRED TO HEREIN
________________________________________________________________________________
<PAGE> 2
GUARANTY AGREEMENT
GUARANTY AGREEMENT dated as of October 7, 1994 (as the same may be
amended, restated, supplemented or otherwise modified from time to time, this
"Guaranty"), made by KMART CORPORATION, a Michigan corporation (the "Company"),
in favor of the Lenders (as hereinafter defined).
W I T N E S S E T H:
WHEREAS, the Borrowers (as hereinafter defined) have entered into that
certain Warehouse Facility Credit Agreement dated as of October 7, 1994 with
the "Banks" (as such term is defined therein) and Bankers Trust Company, as a
Bank and as Documentation Agent for the Banks (collectively, Bankers Trust
Company as a Bank and as such Documentation Agent, and the other Banks are
referred to herein as the "Lenders") (such Credit Agreement, as the same may be
amended, restated, modified or supplemented and in effect from time to time, is
hereinafter referred to as the "Credit Agreement") pursuant to which the Banks
have agreed to extend credit to the "Borrowers" (as defined in the Credit
Agreement), subject to the terms and conditions thereof; and
WHEREAS, the Company desires to induce the Lenders to extend credit to
the "Non-Kmart Borrowers" (as defined in the Credit Agreement) under and in
accordance with the terms of the Credit Agreement, and the Company will
benefit from such extensions of credit; and
WHEREAS, it is a continuing condition precedent to the obligations of
the Lenders to make any such extensions of credit under the Credit Agreement
that the Company shall have guarantied the payment and performance of the
obligations of the Non-Kmart Borrowers to the Lenders pursuant to this Guaranty
and shall have executed and delivered this Guaranty to the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce the
Lenders to make extensions of credit and loans to the Borrowers, the Company
hereby agrees as follows for the benefit of the Lenders:
Section 1. Definitions. Capitalized terms used in this Guaranty and not
otherwise defined herein have the respective meanings provided for such terms
in the Credit Agreement.
Section 2. Guaranty of Obligations. (a) The Company hereby absolutely,
unconditionally and irrevocably guaranties to each of the Lenders, as the
primary obligation of the Company and not as a surety, the due and punctual
payment of:
(i) all principal, interest (including, without limitation, any
post-petition interest whether or not allowed or accrued or payable under any
bankruptcy, insolvency or
<PAGE> 3
similar law), fees and other costs, expenses and amounts required to be
paid, from time to time, by each and every Non-Kmart Borrower under or in
connection with the Credit Agreement, when and as the same shall become due
and payable, whether on the due date therefor, upon stated maturity, by
acceleration, upon demand or otherwise, according to the terms of the
Credit Agreement and the other Loan Documents (and notwithstanding any
automatic stay or similar provision of any bankruptcy law); and
(ii) all other present and future obligations and liabilities (whether
absolute, fixed or contingent, matured or unmatured, joint, several or
independent and howsoever acquired) of each and every Non-Kmart Borrower to
the Lenders or any of them, arising out of or in any way relating to any
and all of the Loan Documents and the transactions contemplated thereby;
together with all reasonable costs (including, without limitation, reasonable
legal fees and disbursements) incurred by the Lenders in connection with
recovering the same from the Non-Kmart Borrowers or the Company. In case of the
failure of any Non-Kmart Borrower to duly, punctually and indefeasibly make any
such payment in full as and when due and payable, the Company hereby agrees to
duly, punctually and indefeasibly make such payment as and when the same shall
become due and payable, whether on the due date therefor, upon stated maturity,
by acceleration, upon demand or otherwise, in accordance with the terms of this
Guaranty.
(b) The payment and performance obligations guarantied by this Guaranty
are herein sometimes herein referred to collectively as the "Guarantied
Obligations".
(c) The Company hereby agrees that the Company's obligations hereunder
shall be continuing, absolute and unconditional under any and all circumstances
and not subject to any reduction, limitation, impairment, termination, defense
(other than prior, final and indefeasible payment of all of the Guarantied
Obligations in full), set-off, abatement, counterclaim or recoupment whatsoever
(all of which are hereby expressly and unconditionally waived by the Company),
whether by reason of any claim of any character whatsoever, including, without
limitation, any claim of waiver, release, surrender, alteration or compromise,
or by reason of any liability at any time to the Company or any Borrower or any
of their respective Subsidiaries or otherwise, whether based upon any
agreement, instrument or document evidencing or securing the Guarantied
Obligations or any other agreement, instrument or document (including, without
limitation, this Guaranty) or otherwise, and howsoever arising, whether out of
action or inaction or otherwise and whether resulting from default, willful
misconduct, negligence or otherwise, and without limiting the foregoing,
irrespective of:
2
<PAGE> 4
(i) any insolvency, bankruptcy, reorganization or dissolution, or any
proceeding in respect of any thereof, of the Company, any Borrower, any of
their respective Subsidiaries or any other guarantor of all or any portion of
the Guarantied Obligations;
(ii) the genuineness, validity, regularity or enforceability of any
Loan Document or any other agreement, instrument or document evidencing or
securing the Guarantied Obligations or any other agreement, instrument or
document, or the extension or renewal thereof, in whole or in part, with or
without notice to or assent from the Company, any Borrower, any of their
respective Subsidiaries or any other guarantor of all or any portion of the
Guarantied Obligations;
(iii) any rescission, compromise, alteration, amendment, modification,
extension, renewal, release, change, waiver, consent or other action in respect
of any of the terms, provisions, covenants or conditions contained in any Loan
Document or any other agreement, instrument or document evidencing or securing
the Guarantied Obligations or in any other agreement, instrument or document;
(iv) the absence of notice or the absence of or any delay in any
action to enforce any obligation or to exercise any right or remedy against the
Company, any Borrower, any of their respective Subsidiaries or any other
guarantor of all or any portion of the Guarantied Obligations, whether under
any Loan Document or any other agreement, instrument or document evidencing or
securing the Guarantied Obligations or under any other agreement, instrument or
document, or any indulgence or extension or waiver granted to or compromise
with the Company, any Borrower, any of their respective Subsidiaries or any
other guarantor of all or any portion of the Guarantied Obligations, or any
action or proceeding taken or not taken with respect to or by or on behalf of
the Company, any Borrower, any of their respective Subsidiaries or any other
guarantor of all or any portion of the Guarantied Obligations, or the holder of
any agreement, instrument or document evidencing or securing the Guarantied
Obligations;
(v) any default, failure or delay in the performance of any
obligation, covenant, duty, representation, warranty or agreement contained in
any Loan Document or any other agreement, instrument or document evidencing or
securing the Guarantied Obligations or in any other agreement, instrument or
document, or arising pursuant to law;
(vi) any act or thing or omission to do or delay in doing any act or
thing which might in any manner result in any lack of proper authorization or
any invalid execution of any Loan Document or any other agreement, instrument
or document
3
<PAGE> 5
evidencing or securing the Guarantied Obligations or any other agreement,
instrument or document;
(vii) any assignment by any Borrower or any assumption by any Person of
any obligation under any Loan Document or any other agreement, instrument or
document evidencing or securing the Guarantied Obligations or under any other
agreement, instrument or document;
(viii) any event of force majeure;
(ix) any release or substitution of any collateral for, or any obligor
in respect of, the payment of the Guarantied Obligations, in whole or in part,
with or without notice to or assent from the Company, any Borrower, any of
their respective Subsidiaries or any other guarantor of all or any portion of
the Guarantied Obligations;
(x) whether a lien or security interest on any collateral shall have
been perfected or shall continue to be perfected, or whether any collateral
shall be impaired in any manner, or whether any steps shall have been taken to
enforce rights against the Company, any Borrower, any of their respective
Subsidiaries or any other guarantor of all or any portion of the Guarantied
Obligations or any collateral;
(xi) the status of any Borrower as an Eligible Borrower under the
Credit Agreement; or
(xii) any other circumstances which might constitute a legal or
equitable discharge or defense of a surety or guarantor.
(d) The Company hereby:
(i) waives diligence, presentment, demand (of payment or otherwise),
protest, notice, filing of claims with a court in the event of the merger or
bankruptcy of any Borrower or any of any Borrower's Subsidiaries, any right to
require a proceeding first against any Borrower or any other guarantor of all
or any portion of the Guarantied Obligations or to marshall or realize on any
collateral, with respect to the Guarantied Obligations;
(ii) agrees that its obligations hereunder constitute guaranties of
payment and not of collection and are not in any way conditional or contingent
upon any attempt to collect from or enforce against any Borrower or any other
guarantor of all or any portion of the Guarantied Obligations or upon any other
condition or contingency;
4
<PAGE> 6
(iii) acknowledges that any agreement, instrument or document
evidencing and/or securing the Guarantied Obligations may be
transferred (upon and subject to the terms and conditions thereof) and
that the benefit of the Company's obligations hereunder shall extend to
each permitted holder of any agreement, instrument or document
evidencing and/or securing the Guaranteed Obligations automatically and
without notice to the Company;
(iv) covenants that this Guaranty will not be discharged except
by final, complete, indefeasible and irrevocable payment and
performance of the obligations contained in the agreements, instruments
and documents evidencing the Guarantied Obligations and this Guaranty;
and
(v) waives acceptance of this Guaranty by any of the Lenders.
(e) The Company further agrees that if at any time all or any part of
any payment theretofore applied by, or on behalf of, any Lender to any of the
Guarantied Obligations is, or must be, rescinded or returned by such Lender for
any reason whatsoever or such payment is declared invalid, void, preferential
or fraudulent for any reason whatsoever, including, without limitation, the
insolvency, bankruptcy or reorganization of any Borrower, any of the Company's
Subsidiaries or any other guarantor of all or any portion of the Guarantied
Obligations, such Guarantied Obligations or applicable portion thereof, for
purposes of this Guaranty, to the extent that such payment is or must be
rescinded or returned or is declared invalid, void, preferential or fraudulent,
shall be deemed to have continued in existence notwithstanding such
application, and this Guaranty shall continue to be effective or be reinstated,
as the case may be, as to such Guarantied Obligations or applicable portion
thereof as though such application had not been made, irrespective of whether
any note or other evidence of indebtedness has been surrendered or cancelled.
(f) All payments by the Company under this Guaranty shall be made
without set-off or counterclaim for or on account of, and free and clear of,
and without deduction or withholding for, or on account of, any Taxes. If the
Company shall be required by law to deduct or withhold any Taxes from or in
respect of any sum payable hereunder to any Lender, then:
(i) the sum payable shall be increased as necessary so that
after making all required deductions and withholdings (including
deductions and withholdings applicable to additional sums payable under
this Section 2(f)) such Lender receives an amount equal to the sum it
would have received had no such deductions or withholdings been made;
5
<PAGE> 7
(ii) the Company shall make such deductions and withholdings;
(iii) the Company shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in
accordance with applicable law;
(iv) within thirty (30) days after the date of its receipt
thereof, the Company shall furnish the relevant Lender(s) the original
or a certified copy of a receipt evidencing payment of such Taxes, or
other evidence of payment satisfactory to such Lender(s); and
(v) each Lender receiving such receipt or other evidence of
payment shall reimburse the Company for the amount of any credit or
other economic benefit available to such Lender by reason or on account
of such payment by the Company or such Lender's possession of such
receipt or other evidence of payment under any tax, levy, impost, duty,
fee, assessment or other charge of any nature imposed by any
Governmental Authority applicable to such Lender. The amount of such
reimbursement calculated by such Lender shall be conclusive and binding
absent manifest error in computation.
(g) Unless otherwise waived by the Documentation Agent with respect to
a payment, all payments to be made by the Company in respect of the Guarantied
Obligations shall be made to the Documentation Agent at its Payment Office in
New York, New York for the ratable account of the Lenders not later than 2:00
p.m. (New York City time) on the date when due in each case in lawful money of
the United States of America and in immediately available funds. If any payment
hereunder becomes due and payable on a day other than a Business Day, such
payment shall be extended to the next succeeding Business Day.
Section 3. Representations and Warranties. The Company hereby makes the
following representations and warranties to the Lenders, which representations
and warranties shall survive the execution and delivery of this Guaranty, the
Credit Agreement and the other Loan Documents:
(a) Organization and Good Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, and is duly qualified to do business and is
in good standing in each additional jurisdiction where failure to so qualify
would have an effect which, when taken together with the simultaneous effect of
failure to qualify in any other jurisdictions, would in the aggregate have a
Material Adverse Effect.
(b) Authorization; No Contravention. The execution, delivery and
performance of this Guaranty by the Company are within
6
<PAGE> 8
its corporate powers, have been duly authorized by all necessary corporate
action, and are not in contravention of any Requirement of Law or of the terms
of the Company's Articles of Incorporation or by-laws, or of any agreement,
undertaking, contract or other obligation to which the Company is a party or by
which it is bound.
(c) Consents and Approvals. No consent, waiver, approval, notification
of, or registration or filing with, any Governmental Authority or any
non-governmental Person is required in connection with the execution and
delivery by the Company of this Guaranty or in connection with the consummation
of any transaction contemplated hereby, except those disclosed in Schedule 3(c)
hereto and which the Company has obtained or made.
(d) Binding Effect. This Guaranty is valid, binding and enforceable
against the Company in accordance with the terms thereof (subject, as to
enforcement of remedies, to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws relating to or affecting the enforcement of
creditors' rights and general equitable principles which may limit the right to
obtain the remedy of specific performance of executory covenants and other
equitable remedies).
(e) Litigation. No litigation or governmental proceeding is pending or,
to the knowledge of the Company, threatened, against the Company for which
sufficient provision has not been made in the financial statements of the
Company and which could have a material adverse effect on the Company's
condition or business, financial or otherwise, or which purport to affect or
pertain to this Guaranty or any of the transactions contemplated hereby.
(f) Financial Statements. The balance sheet as of January 26, 1994, and
the related statements of income and stockholders' equity and cash flows, of
the Company and its Subsidiaries contained in the most recent annual report of
the Company to its stockholders have been audited and certified by Price
Waterhouse, independent certified public accountants, and are complete and
accurate in all material respects and present fairly the financial condition of
the Company and its Subsidiaries as of the dates of such statements and the
results of their operations for the periods covered thereby, in accordance with
GAAP, consistently applied. The balance sheet as of July 27, 1994, and the
related statements of income, stockholders' equity and cash flows, of the
Company and its Subsidiaries contained in the most recent quarterly report of
the Company filed with the U.S. Securities and Exchange Commission (the
"SEC") on Form 10-Q, are complete and accurate in all material respects and
present fairly the financial condition of the Company and its Subsidiaries as
of the dates of such statements and the results of their operations for the
periods covered thereby, in accordance with GAAP, consistently applied.
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<PAGE> 9
(g) No Default. No Unmatured Guarantor Event of Default or Guarantor
Event of Default exists or would result from the Company's execution and
delivery of this Guaranty.
(h) Taxes. The Company has filed all Federal and other material tax
returns and reports required to be filed, and has paid all Federal and other
material taxes, assessments, fees and other governmental charges levied or
imposed upon it or its properties, income or assets otherwise due and payable,
except those which are being contested in good faith by appropriate proceedings
and for which adequate reserves have been provided in accordance with GAAP.
There is no proposed tax assessment against the Company that could, if made,
have a Material Adverse Effect.
(i) Insurance. The properties and business of the Company are insured
in such amounts, with such deductibles and covering such risks as are
customarily carried by similar companies of comparable size engaged in similar
businesses and owning or operating similar properties in localities where the
Company operates.
(j) Compliance With Laws. The Company is in compliance with all
applicable laws, rules and regulation (including environmental laws, rules and
regulations and the Employee Retirement Income Security Act of 1976, as
amended, and all regulations thereunder) except where the failure to be in such
compliance could not reasonably be expected to have a Material Adverse Effect.
Section 4. Covenants. The Company hereby covenants and agrees that,
unless otherwise consented to in writing by the Required Banks:
(a) Affirmative Covenants:
(1) Payment of Taxes. The Company will pay, when due, all taxes
assessed against the Company or its property and all other claims which may
become a Lien upon any of its property, except to the extent that (a) the same
are being contested in good faith by appropriate proceedings, and (b) adequate
reserves for payment thereof have been established in accordance with GAAP.
(2) Insurance. The Company shall maintain insurance with respect to
its properties and business in such amounts, with such deductibles and covering
such risks as are customarily carried by similar companies of comparable size
engaged in similar businesses and owning or operating similar properties in
localities where the Company operates.
(3) Preservation of Existence; Compliance with Laws. The Company shall:
8
<PAGE> 10
(A) preserve and maintain in full force and effect its
corporate existence and good standing under the laws of
its state or jurisdiction of incorporation; and
(B) preserve and maintain in full force and effect all
governmental rights, privileges, qualifications,
permits, licenses and franchises necessary or desirable in the
normal conduct of its business except in connection with
transactions permitted by Section 4(b)(1) and dispositions of
assets permitted by Section 4(b)(2).
(4) Maintenance of Property. The Company shall maintain and
preserve all its property which is used or useful in its
business in good working order and condition, ordinary wear and tear
excepted, and make all necessary repairs thereto and renewals and
replacements thereof except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect, and except as
permitted by Section 4(b)(2).
(5) Compliance with Laws. The Company shall comply, in all
material respects with all Requirements of Law of any
Governmental Authority having jurisdiction over it or its business,
except such as may be contested in good faith or as to which a bona
fide dispute may exist.
(6) Books and Records; Other Information. The Company shall
maintain proper books of record and account, in which full,
true and correct entries in conformity with GAAP consistently applied
shall be made of all financial transactions and matters involving the
assets and business of the Company, and will provide to the
Documentation Agent and the Banks such other information as they may
reasonably request and which is reasonably available to the Company or
can be reasonably computed from the Company's books and records.
(7) Financial Information. The Company shall deliver to the
Documentation Agent for distribution to each Bank (and, if
requested, with sufficient copies for each Bank):
(A) within sixty (60) days after the end of each of the
first three (3) fiscal quarters of the Company, copies
of (i) the consolidated balance sheet of the Company and its
Subsidiaries as of the end of such quarter, (ii) the
consolidated statement of income of the Company and its
Subsidiaries for such quarter and for the period from the end
of the most reent fiscal year of the Company through the end of
such quarter, (iii) the consolidated statement of cash flows of
the Company and its Subsidiaries for the period from the end of
the most recent fiscal year of the Company through the end of
such quarter, all prepared in accordance with GAAP and
9
<PAGE> 11
certified by a Responsible Officer as being a fair
statement of results for the periods covered thereby, subject
to ordinary year-end audit and adjustments;
(B) concurrently with the delivery of the financial
statements referred to in Sections 4(a)(7)(A) and (C),
a certificate duly completed and executed by a Responsible
Officer, as to compliance by the Company with the covenants
contained in Section 4(b)(4) and (5) hereof, and stating that
no Guarantor Event of Default then exists (or, if any should
then exist, identifying the same and stating any actions being
taken by the Company with respect thereto);
(C) within one hundred twenty (120) days after the end of
each fiscal year of the Company, copies of (i) the
consolidated balance sheet of the Company and its Subsidiaries
as at the end of such fiscal year, (ii) the consolidated
statement of income of the Company and its Subsidiaries for
such fiscal year, and (iii) the consolidated statement of cash
flows of the Company and its Subsidiaries for such fiscal year,
setting forth in each case in comparative form the
corresponding figures for the previous fiscal year, all in
reasonable detail and prepared in accordance with GAAP and
certified by a nationally recognized independent public
accounting firm; and
(D) promptly, copies of all financial statements and
reports that the Company sends to its shareholders and
copies of all Forms 10K, 10Q and 8K that the Company files with
the SEC.
(8) Notices. (A) The Company shall notify each Lender
promptly, but not later than three (3) Business Days after the
Company becomes aware thereof, of the occurrence of any Guarantor Event
of Default.
(B) The Company shall notify the Documentation Agent promptly,
but not later than three (3) Business Days after the Company
becomes aware thereof, of the occurrence of:
(i) any Unmatured Guarantor Event of Default;
(ii) any Material Adverse Effect or any event or other
development which could have a Material Adverse Effect;
(iii) any change in the Debt Rating by Moody's or S&P; or
(iv) any Reportable Event.
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<PAGE> 12
(b) Negative Covenants:
(1) Consolidations and Mergers. The Company shall not merge or
consolidate with any other Person, unless:
(A) the successor formed by or resulting from such
consolidation or merger or to which such sale, lease, transfer or other
disposition shall have been made is the Company or a Subsidiary of the
Company (and, if the survivor is a Subsidiary of the Company, such
Subsidiary shall affirm the Company's Obligations under the Loan
Documents in writing), and
(B) no Guarantor Event of Default or Unmatured Guarantor
Event of Default shall have occurred and then be continuing or would
arise after giving effect thereto.
(2) Disposition of Assets. The Company shall not, directly or
indirectly, sell, assign, lease, convey, transfer or otherwise dispose of
(whether in one or a series of transactions) any property (including accounts
and notes receivable, with or without recourse) or enter into any agreement to
do any of the foregoing except:
(A) dispositions of inventory, or used, worn-out or surplus
equipment, all in the ordinary course of business;
(B) the sale of equipment to the extent that such equipment
is exchanged for credit against the purchase price of similar
replacement equipment, or the proceeds of such sale are reasonably
promptly applied to the purchase price of such replacement equipment;
(C) dispositions of inventory or equipment by the Company
to any Subsidiary pursuant to reasonable business requirements; and
(D) other dispositions of assets having, in any fiscal year
of the Company, an aggregate book value not exceeding 10% of the
Company's consolidated total assets as of the end of the most recently
ended fiscal year of the Company, as reflected in the Company's balance
sheet contained in its audited financial statements for such fiscal
year;
provided, however, that this Section 4(b)(2) shall not be deemed to prohibit
the sale of all, substantially all, or part of the capital stock of or all,
substantially all, or part of the assets of any Specialty Retail Subsidiary of
the Company, even if such entity is no longer a Subsidiary of the Company, if
(x) consideration received is fair market value (as
11
<PAGE> 13
determined by the Company), or (y) the Company's board of directors deems such
transaction to be necessary by reason of applicable laws, regulations or
governmental policies applicable to the Company.
(3) Limitation on Liens. The Company shall not incur any
Indebtedness which is secured by a Lien on any assets of the Company, whether
now owned or hereafter acquired, unless, concurrently with creation of any Lien
securing Indebtedness of $50,000,000 or more, the Company shall cause its
obligations under this guaranty to be equally and ratably secured by the same
assets, provided, however, that such restriction shall not apply with respect
to any of the following types of Liens:
(A) Liens for taxes not delinquent or being contested in
good faith;
(B) Liens created in connection with workers' compensation,
unemployment insurance and other social security legislation, or to
secure the performance of bids, tenders, contracts (other than for the
repayment of borrowed money), statutory obligations, surety and appeal
bonds and other similar obligations incurred in the ordinary course;
(C) purchase money mortgages (including vendors' rights
under purchase or land contracts or under other agreements whereby
title or other interest is retained by the vendor for the purpose of
securing the purchase price thereof) on property acquired or
constructed after the date hereof, or the acquisition after the date
hereof of property subject to such a Lien which is limited to such
property and was not created in anticipation of such acquisition;
(D) mortgages on real property which is the sole security
for Indebtedness the amount of which does not exceed the greater of the
cost of such property and improvements or the fair market value
thereof;
(E) mortgages, security interests and Liens on assets of
the Company existing on the date hereof and set forth on Schedule
4(b)(3), or any refundings or extensions for an amount not exceeding
the principal amount of such Indebtedness and applying only to the same
property or assets; and
(F) mortgages, security interests and Liens in connection
with indebtedness under industrial revenue bond financings or similar
government agency supported financings.
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<PAGE> 14
(4) EBITDAR Coverage Ratio. The Company shall not permit its
ratio of
(A) EBITDAR (measured as of the end of any fiscal
quarter ending after the Closing Date for the four
fiscal quarters then ended)
to
(B) the sum of (i) consolidated net interest expense
for such four fiscal quarter period plus (ii)
consolidated Rent Expense for such four fiscal quarter period
to be less than 1.50 to 1.00.
(5) Consolidated Net Worth. The Company shall not permit its
Consolidated Net Worth at any time to be less than Four Billion
Five Hundred Million Dollars ($4,500,000,000).
Section 5. Miscellaneous.
(a) Amendments and Waivers. No amendment or waiver of any provision
of this Guaranty, and no consent with respect to any departure by the Company
therefrom, shall be effective unless the same shall be in writing and signed by
all the Banks and acknowledged in writing by the Documentation Agent, and then
such waiver shall be effective only in the specific instance and for the
specific purpose for which given.
(b) Notices. All notices, requests and other communications provided
for hereunder shall be in writing (including, unless the context expressly
otherwise provides, by facsimile transmission) and mailed, faxed or delivered,
(i) if to the Company, to its address specified on the signature pages hereof
and (ii) if to any Lender, to its Lending Office.
All such notices and communications shall, when transmitted by
overnight delivery or by facsimile, be effective when delivered for overnight
delivery or transmitted by facsimile (to be promptly confirmed by sender by
telephone), respectively, or if delivered, upon delivery.
(c) No Waiver. No failure to exercise and no delay in exercising, on
the part of any Lender, of any right, remedy, power or privilege hereunder,
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or
privilege.
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<PAGE> 15
(d) Costs and Expenses. The Company agrees to pay promptly on demand,
to the extent not previously finally and indefeasibly paid in full by any
Borrower:
(i) the Documentation Agent for all reasonable costs and
expenses incurred by the Documentation Agent in connection with the
development, preparation, delivery, administration and execution of,
and any amendment, supplement, waiver or modification to, this Guaranty
and any other documents prepared in connection herewith, and the
consummation of the transactions contemplated hereby, including the
Attorney Costs incurred by the Documentation Agent with respect
thereto; provided, that the fees and expenses of outside counsel in
connection with the preparation of this Guaranty and the Credit
Agreement and the other Loan Documents shall be in accordance with a
letter agreement dated August 30, 1994 from Winston & Strawn to the
Documentation Agent;
(ii) from and after the occurrence of any Guarantor Event of
Default or Unmatured Guarantor Event of Default, all costs and expenses
(including reasonable counsel fees and expenses) of any Lender in
connection with (A) any and all amounts which any Lender may incur
relative to the curing of any default resulting from the acts or
omissions of the Company under this Guaranty, (B) any amendment or
modification of, or waiver under, this Guaranty and (C) the enforcement
or attempted enforcement of this Guaranty and the preservation of the
Lenders' rights or remedies (including in connection with any "workout"
or restructuring) regarding this Guaranty, including Attorney Costs
incurred by the Documentation Agent or any other Lender; and
(iii) pay or reimburse the Documentation Agent on demand for
all reasonable appraisal (including the allocated cost of internal
appraisal services), audit, environmental inspection and review
(including the allocated cost of such internal services), search and
filing costs, fees and expenses, incurred or sustained by the
Documentation Agent in connection with this Guaranty.
The obligations of the Company under this subsection shall survive the payment
of the Company's other obligations hereunder until payment in full of the
Company's obligations under this Section 5(d).
(e) Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the Lenders and their respective
successors and permitted assigns.
(f) Set-off. In addition to any rights and remedies of the Lenders
provided by law, if the Obligations shall have become due and payable in full,
each Lender is authorized at any time and
14
<PAGE> 16
from time to time, without prior notice to the Company, any such notice being
waived by the Company 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 by, and other indebtedness at any time owing to, such
Lender to or for the credit or the account of the Company against any and all
Guarantied Obligations owing to such Lender, now or hereafter existing,
irrespective of whether or not such Lender shall have made demand under this
Guaranty or any Loan Document. Each Lender agrees promptly to notify the
Company and the Documentation Agent after any such set-off and application made
by such Lender; provided, that the failure to give such notice shall not affect
the validity of such set-off and application. The rights of each Lender under
this Section 5(g) are in addition to the other rights and remedies (including
other rights of set-off) which the Lender may have.
(g) Severability. The illegality or unenforceability of any provision
of this Guaranty shall not in any way affect or impair the legality or
enforceability of the remaining provisions of this Guaranty.
(h) No Third Parties Benefited. This Guaranty is made and entered into
for the sole protection and legal benefit of the Lenders and their permitted
successors and assigns, and no other Person shall be a direct or indirect legal
beneficiary of, or have any direct or indirect cause of action or claim in
connection with, this Guaranty.
(i) Governing Law and Jurisdiction.
THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF NEW YORK (WITHOUT REGARD TO CONFLICTS OF LAW PROVISIONS
THEREOF); PROVIDED THAT THE COMPANY AND THE LENDERS SHALL RETAIN ALL RIGHTS
ARISING UNDER FEDERAL LAW.
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS GUARANTY
BY THE GUARANTOR, AND ACCEPTANCE HEREOF BY THE LENDERS, EACH OF THE COMPANY AND
THE LENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
JURISDICTION OF THOSE COURTS AND IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS GUARANTY OR ANY DOCUMENT
RELATED HERETO, AND EACH OF THE COMPANY AND THE LENDERS WAIVES PERSONAL SERVICE
OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER
MEANS PERMITTED BY NEW YORK LAW.
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<PAGE> 17
(j) Enforcement. Each of the Lenders, by its acceptance of this
Guaranty, hereby severally agrees that notwithstanding any other provision of
this Guaranty to the contrary, any action, suit or proceeding with respect to
this Guaranty and the obligations of the Company hereunder may be instituted
only by the Documentation Agent in its capacity as such on behalf and for the
benefit of the Lenders.
(k) Waiver of Jury Trial. THE COMPANY, BY ITS EXECUTION AND DELIVERY
HEREOF, AND THE LENDERS, BY THEIR ACCEPTANCE HEREOF, EACH WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF OR RELATED TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED
HEREBY IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY
OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE, AND EACH AGREE THAT ANY SUCH CLAIM
OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT
LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT
TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE
THE VALIDITY OR ENFORCEABILITY OF THIS GUARANTY OR ANY PROVISION HEREOF. THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS GUARANTY.
(1) Entire Agreement. This Guaranty, together with the other Loan
Documents, embodies the entire agreement and understanding among the Company,
the Banks and the Documentation Agent with respect to the subject matter hereof
and thereof, and supersedes all prior or contemporaneous agreements and
understandings of such Persons, verbal or written, relating to the subject
matter hereof and thereof, except for the fee letters referenced in Sections
2.15(b) and 2.15(c) of the Credit Agreement, and any prior arrangements made
with respect to the payment by the Company of (or any indemnification for) any
fees, costs or expenses payable to or incurred (or to be incurred) by or on
behalf of the Lenders.
(m) Acknowledgement. The Company acknowledges receipt of a copy of
the Credit Agreement and the other Loan Documents in the form in which each was
executed and delivered by the parties thereto, as in effect on the date hereof,
and agrees that such copies constitute adequate notice of all matters contained
therein and consents to the execution and delivery of such agreements and the
performance of all transactions provided for or contemplated therein; provided
that none of the Lenders shall be obligated to furnish to the Company any
copies of any amendments, modifications or supplements or waivers with respect
to the Credit Agreement or any of the other Loan Documents.
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<PAGE> 18
(n) Sections and Headings. Section and other headings used in this
Guaranty are for convenience only and shall not affect the construction of this
Guaranty.
[Balance of page left intentionally blank; signature page follows.]
* * *
17
<PAGE> 19
IN WITNESS WHEREOF, the Company has caused this Guaranty Agreement to
be duly executed and delivered by its proper and duly authorized officer as of
the day and year first above written.
KMART CORPORATION
By: /s/ James P. Churilla
---------------------
Title: Vice President and Treasurer
Address for Notices:
Kmart Corporation
3100 West Big Beaver Road
Troy, Michigan 48084
Attention: Treasurer
Tel. No. (810) 643-1000
Telecopy No. (810) 643-5398
18
<PAGE> 1
EXHIBIT 99.4
EXECUTION COPY
________________________________________________________________________________
================================================================================
364 DAY CREDIT AGREEMENT
DATED AS OF OCTOBER 5, 1995
among
KMART CORPORATION,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
As Documentation Agent,
and
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
________________________________________________________________________________
================================================================================
$700,000,000
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
ARTICLE I
DEFINITIONS
1.01 Defined Terms...................................................... 1
1.02 Other Definitional Provisions...................................... 13
(a) Defined Terms................................................. 13
(b) The Agreement................................................. 13
(c) Certain Common Terms.......................................... 13
(d) Performance; Time............................................. 13
(e) Contracts..................................................... 14
(f) Laws.......................................................... 14
(g) Captions...................................................... 14
1.03 Accounting Principles.............................................. 14
ARTICLE II
THE CREDITS
2.01 Amounts and Terms of Commitments................................... 14
2.02 Loan Accounts; Notes............................................... 15
2.03 Procedure for Borrowings........................................... 15
2.04 Conversion and Continuation Elections for Borrowings............... 16
2.05 Voluntary Termination or Reduction of Commitments.................. 18
2.06 Optional Prepayments of Loans...................................... 19
2.07 Repayment.......................................................... 19
2.08 Interest........................................................... 19
2.09 Fees............................................................... 20
(a) Facility Fee.................................................. 20
(b) Syndication Fees.............................................. 20
(c) Transaction Fees.............................................. 20
(d) Closing Fee................................................... 20
2.10 Computation of Fees and Interest................................... 20
2.11 Payments by the Company............................................ 21
2.12 Payments by the Banks to the Documentation Agent................... 22
2.13 Sharing of Payments, Etc........................................... 23
2.14 Extensions of the Commitments...................................... 24
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 Taxes.............................................................. 25
3.02 Inability to Determine Rates....................................... 28
3.03 Increased Costs; Capital Adequacy.................................. 28
3.04 Illegality......................................................... 30
3.05 Funding Losses..................................................... 30
3.06 Survival........................................................... 31
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE IV
CONDITIONS PRECEDENT
4.01 Conditions to Occurrence of the Closing Date and
Effectiveness of this Agreement . . . . . . . . . . . . . 31
(a) Credit Agreement . . . . . . . . . . . . . . . . . 31
(b) By-laws; Resolutions; Incumbency . . . . . . . . . . 31
(c) Articles of Incorporation . . . . . . . . . . . . . 31
(d) Legal Opinions . . . . . . . . . . . . . . . . . . . 32
(e) Payment of Transaction Fees and Expenses . . . . . . 32
(f) Certificate . . . . . . . . . . . . . . . . . . . . 32
(g) Financial Statements . . . . . . . . . . . . . . . . 32
(h) Seasonal Credit Facility . . . . . . . . . . . . . . 32
(i) Other Documents . . . . . . . . . . . . . . . . . . 33
4.02 Conditions to All Borrowings . . . . . . . . . . . . . . 33
(a) Notice of Borrowing . . . . . . . . . . . . . . . . 33
(b) Continuation of Representations and Warranties . . . 33
(c) No Existing Default . . . . . . . . . . . . . . . . 33
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 Organization and Good Standing . . . . . . . . . . . . . 33
5.02 Authorization; No Contravention . . . . . . . . . . . . . 33
5.03 Consents and Approvals . . . . . . . . . . . . . . . . . 34
5.04 Binding Effect . . . . . . . . . . . . . . . . . . . . . 34
5.05 Litigation . . . . . . . . . . . . . . . . . . . . . . . 34
5.06 Financial Statements . . . . . . . . . . . . . . . . . . 34
5.07 Use of Proceeds; Margin Regulations . . . . . . . . . . . 34
5.08 No Default . . . . . . . . . . . . . . . . . . . . . . . 35
5.09 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.10 Insurance . . . . . . . . . . . . . . . . . . . . . . . . 35
5.11 Compliance With Laws . . . . . . . . . . . . . . . . . . 35
ARTICLE VI
AFFIRMATIVE COVENANTS
6.01 Payment of Taxes . . . . . . . . . . . . . . . . . . . . 35
6.02 Insurance . . . . . . . . . . . . . . . . . . . . . . . . 36
6.03 Preservation of Corporate Existence, Etc. . . . . . . . . 36
6.04 Maintenance of Property . . . . . . . . . . . . . . . . . 36
6.05 Compliance with Laws . . . . . . . . . . . . . . . . . . 36
6.06 Books and Records; Other Information . . . . . . . . . . 36
6.07 Financial Information . . . . . . . . . . . . . . . . . . 36
6.08 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 37
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE VII
NEGATIVE COVENANTS
7.01 Consolidations and Mergers . . . . . . . . . . . . . . . . . . . . 38
7.02 Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . 38
7.03 Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . 39
7.04 EBITDAR Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . 40
7.05 Consolidated Net Worth . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE VIII
EVENTS OF DEFAULT
8.01 Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . 40
(a) Non-Payment of Principal . . . . . . . . . . . . . . . . . . 40
(b) Non-Payment of Interest or Fees . . . . . . . . . . . . . . 40
(c) Specific Defaults . . . . . . . . . . . . . . . . . . . . . 41
(d) Other Defaults . . . . . . . . . . . . . . . . . . . . . . . 41
(e) Representation or Warranty . . . . . . . . . . . . . . . . . 41
(f) Cross Default; Cross-Acceleration . . . . . . . . . . . . . 41
(g) ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(h) Monetary Judgments . . . . . . . . . . . . . . . . . . . . . 42
(i) Insolvency; Voluntary Proceedings . . . . . . . . . . . . . 42
(j) Involuntary Proceedings . . . . . . . . . . . . . . . . . . 42
8.02 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.03 Rights Not Exclusive . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE IX
THE DOCUMENTATION AGENT
9.01 Authorization; "Documentation Agent" . . . . . . . . . . . . . . . 43
9.02 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . . 43
9.03 Liability of Agent-Related Persons . . . . . . . . . . . . . . . . 44
9.04 Reliance by Documentation Agent . . . . . . . . . . . . . . . . . 44
9.05 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . 45
9.06 Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . 45
9.07 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.08 Documentation Agent in Individual Capacity . . . . . . . . . . . . 46
9.09 Successor Documentation Agent . . . . . . . . . . . . . . . . . . 47
9.10 Withholding Tax . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE X
MISCELLANEOUS
10.01 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . 49
10.02 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C> <C>
10.03 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . 51
10.04 Costs and Expenses . . . . . . . . . . . . . . . . . . . 51
10.05 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . 51
10.06 Marshalling; Payments Set Aside . . . . . . . . . . . . . 52
10.07 Successors and Assigns . . . . . . . . . . . . . . . . . 52
10.08 Assignments, Participations, Etc. . . . . . . . . . . . 52
10.09 Set-off . . . . . . . . . . . . . . . . . . . . . . . . . 55
10.10 Notification of Addresses, Lending Offices, Etc. . . . . 55
10.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . 56
10.12 Severability . . . . . . . . . . . . . . . . . . . . . . 56
10.13 No Third Parties Benefited . . . . . . . . . . . . . . . 56
10.14 Governing Law and Jurisdiction . . . . . . . . . . . . . 56
10.15 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . 57
10.16 Entire Agreement . . . . . . . . . . . . . . . . . . . . 57
</TABLE>
<TABLE>
<S> <C>
SCHEDULES
Schedule 2.01 Commitments; Lending Offices
Schedule 5.03 Consents and Approvals
Schedule 7.03 Liens
EXHIBITS
Exhibit A Form of Notice of Borrowing
Exhibit B Form of Notice of Conversion/Continuation
Exhibit C Form of Note
Exhibit D-1 Form of Opinion of Counsel to the Company
Exhibit D-2 Form of Opinion of Special Counsel to the Company
Exhibit E Form of Assignment and Assumption Agreement
</TABLE>
iv
<PAGE> 6
364 DAY CREDIT AGREEMENT
This 364 DAY CREDIT AGREEMENT is entered into as of October 5, 1995,
among KMART CORPORATION, a Michigan corporation (the "Company"), the several
financial institutions party to this Agreement (collectively, the "Banks";
individually, a "Bank") and BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as Documentation Agent.
WHEREAS, the Banks have agreed to make available to the Company a
credit facility upon the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.01 Defined Terms. In addition to the terms defined elsewhere in
this Agreement, the following terms have the following meanings:
"Affiliate" means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, by contract or otherwise. In no
event shall any Bank be deemed an "Affiliate" of the Company or any Subsidiary
of the Company.
"Agent-Related Persons" means BofA and any successor agent under
Section 9.09, together with their respective Affiliates (including, in the case
of BofA, BA Securities, Inc.) and the officers, directors, employees, agents
and attorneys-in-fact of such Persons and Affiliates.
"Aggregate Commitment" means the sum of the Commitments of the Banks,
in the initial amount of Seven Hundred Million Dollars ($700,000,000), as such
amount may be reduced from time to time pursuant to this Agreement.
"Agreement" means this 364 Day Credit Agreement, as amended, restated,
supplemented or modified from time to time.
"Arrangers" means Bankers Trust Company and BA Securities, Inc.
"Assignee" has the meaning specified in Section 10.08(a).
<PAGE> 7
"Assignment and Acceptance" has the meaning specified in Section
10.08(a).
"Attorney Costs" means and includes all reasonable fees and
disbursements of any law firm or other external counsel, the reasonable
allocated cost of internal legal services and all reasonable disbursements of
internal counsel.
"Bank" and "Banks" means any or all, as the case may be, of the banks
listed in Schedule 2.01 hereof and any entity which becomes a Bank pursuant to
Section 10.08.
"Bank Affiliate" means a Person engaged primarily in the business of
commercial banking that is an Affiliate of a Bank and (i) is organized under
the laws of the United States, or any state thereof, or (ii) is organized under
the laws of any other country which is a member of the Organization for
Economic Cooperation and Development, or a political subdivision of any such
country, and is acting through a branch or agency located in the United States.
"BofA" means Bank of America National Trust and Savings Association, a
national banking association.
"Borrowing" means a borrowing consisting of Loans of the same Type made
to the Company on the same day by the Banks ratably according to their
respective Commitment Percentages and, in the case of LIBOR Loans or CD Loans,
having the same Interest Period.
"Borrowing Date" means a date on which a Borrowing is made hereunder.
"Business Day" means any day other than a Saturday, Sunday or other day
on which commercial banks in New York City or San Francisco are authorized or
required by law to close and, if the applicable Business Day relates to any
LIBOR Loan, means such a day on which dealings in Dollars are carried on in the
London interbank market.
"Capital Adequacy Regulation" means any guideline, request or directive
of any central bank or other Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any Bank.
"CD Rate" means the arithmetic average (rounded upward to the nearest
1/100th of 1%) of the sum of (x) the consensus bid rates determined by each
Reference Bank as the bid rates per annum, at 10:00 a.m. (New York City time)
on the first day of the Interest Period to be applicable, of two or more New
York or Chicago, as the case may be, certificate of deposit dealers of
recognized standing selected by such Reference Bank in New York or Chicago, as
the case may be, for certificates of deposit of such Reference Bank in an
amount approximately comparable to the principal amount of the CD
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<PAGE> 8
Rate Loan for such Reference Bank and with a maturity equal to the Interest
Period applicable to such CD Rate Loan, provided, that if any Reference Bank
fails to provide the Documentation Agent with its aforesaid rate, then the CD
Rate shall equal the arithmetic average of the rates provided to the
Documentation Agent by the other Reference Bank or Banks, such average rate to
be grossed up for the maximum cost of reserves applicable to certificates of
deposit under Regulation D of the Federal Reserve Board by dividing the same by
a percentage equal to 100% minus the maximum rate of all reserve requirements
(expressed as a percentage) as specified in Regulation D (including any
marginal, emergency, supplemental, special or other reserves) that for the date
the CD Rate is being determined would be applicable during the Interest Period
to a negotiable certificate of deposit of such Reference Bank in excess of
$100,000 and with a maturity period equal to such Interest period, plus (y) the
then daily net annual assessment payable to the Federal Deposit Insurance
Corporation for insuring such Certificate of Deposit by a member of the Bank
Insurance Fund that is classified as adequately capitalized and within
supervisory subgroup "A" (or a comparable successor assessment risk
classification within the meaning of 12 C.F.R. Section 327.3(d)).
"CD Rate Loan" means any Loan that bears interest at a rate determined
with reference to the CD Rate.
"Closing Date" means the date on which all conditions precedent set
forth in Section 4.01 are satisfied or waived by all Banks.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any regulations promulgated thereunder.
"Commitment" has the meaning specified in Section 2.01 with respect to
each Bank.
"Commitment Percentage" means, as to any Bank, the percentage
equivalent of such Bank's Commitment divided by the Aggregate Commitment.
"Consolidated Net Worth" means as of the date of any determination
thereof, the consolidated net worth of the Company, determined in accordance
with GAAP; provided, however, that any gains or losses from the disposition of
any Specialty Retail Subsidiary and any changes after October 7, 1994 in the
foreign currency translation adjustment account as presented in the Company's
financial statements (and in accordance with GAAP) shall be excluded from the
determination of Consolidated Net Worth.
"Continuation Date" has the meaning set forth in Section 2.04(a).
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<PAGE> 9
"Contract Documents" has the meaning specified in Section 10.05.
"Controlled Group" means the Company and all Persons (whether or not
incorporated) under common control or treated as a single employer with the
Company pursuant to Sections 414(b), (c), (m) or (o) of the Code.
"Conversion Date" means any date on which the Company elects to convert
one Type of Loan to another Type of Loan.
"Current Commitment Termination Date" means the earlier to occur of
(a) the Current Commitment Termination Date then in effect, as
defined in Section 2.14; and
(b) the date on which the Commitments shall terminate pursuant
to Section 2.14 or otherwise in accordance with the provisions of this
Agreement.
"Debt Rating" means the rating assigned to the Company's senior
unsecured debt as publicly announced by Moody's or S&P, as the case may be.
"Dollars", "dollars" and "$" each mean lawful money of the United
States.
"Documentation Agent" means BofA in its capacity as documentation agent
for the Banks hereunder, and any successor agent in such capacity.
"Earlier Termination Date" has the meaning specified in Section
2.14(c).
"EBITDAR" means, for any applicable period, for the Company the
aggregate of the following, without duplication: (a) consolidated net income
for such period, plus (b) consolidated interest expense (net of any interest
income) for such period, plus (c) consolidated provision for taxes for such
period, plus (d) consolidated depreciation expense for such period, plus
(e) consolidated amortization expense for such period, plus (f) consolidated
Rent Expenses for such period, minus (or plus, as applicable) (g) on a
consolidated basis, any extraordinary gains (or plus extraordinary losses) for
such period, minus (or plus, as applicable) (h) any gains (or plus any losses)
attributable to the Specialty Retail Subsidiaries for such period other than
results of operations in the ordinary course of business.
"Eligible Assignee" means (i) a commercial bank or other financial
institution organized under the laws of the United States, or any state
thereof, and having a combined capital and
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<PAGE> 10
surplus of at least One Hundred Million Dollars ($100,000,000); (ii) a
commercial bank organized under the laws of any other country which is a member
of the Organization for Economic Cooperation and Development or a political
subdivision of any such country, and having a combined capital and surplus of
at least One Hundred Million Dollars ($100,000,000), provided that such bank is
acting through a branch or agency located in the United States; and (iii) any
Bank Affiliate.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any regulations promulgated thereunder.
"Event of Default" means any of the events or circumstances specified
in Section 8.01.
"Existing Facility" means the revolving credit facility evidenced by
that certain 364 Day Credit Agreement dated as of October 7, 1994 among the
Company, BofA, as documentation agent thereunder, and the financial
institutions signatory thereto.
"Extended Termination Date" has the meaning specified in Section
2.14(c).
"Extension Confirmation Date" has the meaning specified in Section
2.14(b).
"Extension Confirmation Notice" has the meaning specified in Section
2.14(b).
"Extension Request" has the meaning specified in Section 2.14(a).
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day
(or, if such day is not a Business Day, for the preceding Business Day) in the
weekly statistical release designated as H.15 (519), or any successor
publication, by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day that is a Business Day, the average of the quotations
for such day on such transactions received by the Documentation Agent from
three (3) Federal funds brokers of recognized standing selected by the
Documentation Agent.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any successor thereof.
"Form 1001" has the meaning specified in Section 9.10(a)(i).
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<PAGE> 11
"Form 4224" has the meaning specified in Section 9.10(a)(ii).
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be in general use by significant segments of the U.S.
accounting profession, which are applicable to the circumstances as of the date
of determination.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, or any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to
government.
"Guaranty Obligation" means, as applied to any Person, any obligation,
direct or indirect, of that Person guaranteeing any Indebtedness of any other
Person, and, without limiting the generality of the foregoing, any obligation,
direct or indirect, contingent or otherwise, of such Person:
(i) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness (whether arising by agreement
to keep-well, to purchase assets, goods, securities or services, to
take-or-pay or to maintain financial statement conditions or
otherwise); or
(ii) entered into for the purpose of assuring in any other
manner the obligee of such Indebtedness of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or in
part);
provided, that the term Guaranty Obligation shall not include:
(a) endorsements for collection or deposit in the ordinary
course of business;
(b) obligations that are not required in accordance with
GAAP to be included in the financial statements of such Person or the
footnotes thereto; or
(c) "unconditional purchase obligations" (including
take-or-pay contracts) as defined in and as required to be disclosed
pursuant to Statement of Financial Accounting Standards No. 47 and the
related interpretations, as the same may be amended from time to time.
"Indebtedness" of any Person means at any date without duplication,
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<PAGE> 12
(a) all obligations of such Person for borrowed money;
(b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments;
(c) all obligations of such Person to pay the deferred
purchase price of property or services, except trade accounts payable
and other expenses and accounts payable arising in the ordinary course
of business;
(d) all reimbursement obligations with respect to letters
of credit (other than the "Letters of Credit" and the "LC Obligations"
under the credit agreement described in clause (a) of the definition of
Other Credit Facilities) and bankers' acceptances except ordinary trade
credits;
(e) all Indebtedness of others secured by a Lien on any
asset of such Person whether or not such Indebtedness is assumed by
such Person;
(f) all obligations (to the extent capitalized for
accounting purposes) of such Person as lessee under any lease of any
property by that Person as lessee which, in conformity with GAAP, is
accounted for as a capital lease on the balance sheet of that Person;
and
(g) all Guaranty Obligations of such Person.
"Indemnified Person" has the meaning specified in Section 10.05.
"Insolvency Proceeding" means (a) any case, action or proceeding before
any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution, winding-up
or relief of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshalling of assets for creditors or other, similar
arrangement in respect of its creditors generally or any substantial portion
of its creditors; in each case (a) and (b) undertaken under U.S. Federal,
State or foreign law.
"Interest Payment Date" means, with respect to any LIBOR Loan or CD
Rate Loan, the last day of each Interest Period applicable to such Loan, and,
with respect to any Reference Rate Loan, the last Business Day of each calendar
quarter and the Termination Date; provided, that if any Interest Period for a
LIBOR Loan exceeds three months, the date which falls three months after the
beginning of such Interest Period shall also be an Interest Payment Date.
"Interest Period" means: (a) with respect to any LIBOR Loan, the period
commencing on the Business Day the LIBOR Loan is disbursed or continued (or on
the Conversion Date on which any Loan
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<PAGE> 13
is converted to a LIBOR Loan) and ending on the date one, two, three or six
months thereafter, as selected by the Company in its Notice of Borrowing or
Notice of Conversion/Continuation; and (b) with respect to any CD Rate Loan, the
period commencing on the Business Day the CD Rate Loan is disbursed or
continued (or on the Conversion Date on which any Loan is converted to a CD
Rate Loan) and ending 30, 60 or 90 days thereafter, as selected by the Company
in its Notice of Borrowing or Notice of Conversion/Continuation; provided,
that:
(i) if any Interest Period would otherwise end on a day which
is not a Business Day, that Interest Period shall be extended to the
next succeeding Business Day unless, in the case of a LIBOR Loan, the
result of such extension would be to carry such Interest Period into
another calendar month, in which event such Interest Period shall end
on the immediately preceding Business Day;
(ii) any Interest Period pertaining to a LIBOR Loan that begins
on the last Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the
end of such Interest Period) shall end on the last Business Day of the
calendar month which is one, two, three or six months, as the case may
be, after the calendar month in which such Interest Period began; and
(iii) no Interest Period for any Loan shall extend beyond the
Termination Date.
"IRS" means the Internal Revenue Service, or any successor thereto.
"Lending Office" means, with respect to each Bank, the office of that
Bank designated as such on Schedule 2.01 hereto or such other office of the
Bank as it may from time to time specify to the Company and the Documentation
Agent in accordance with this Agreement.
"LIBOR" means, with respect to any Interest Period, the rate of
interest per annum determined by the Documentation Agent to be equal to:
(a) the rate of interest per annum for deposits in U.S. Dollars
for a period equal to the relevant Interest Period quoted on Telerate,
page 3750 (or its successor if such page number changes) at or about
11:00 a.m. (London time) on the second Business Day before the
commencement of such Interest Period,
divided (and rounded upward to the nearest 1/16 of 1%) by
-8-
<PAGE> 14
(b) a percentage equal to 100% minus the then stated maximum
rate of all reserve requirements (including any marginal, emergency,
supplemental, special or other reserves required by applicable law)
applicable to any member bank of the Federal Reserve System in respect
of eurocurrency funding or liabilities as defined in Regulation D of
the Federal Reserve Board.
If no quotation is available on Telerate, the rate of interest under
clause (a) above for any Interest Period shall be determined by the
Documentation Agent to be the arithmetic mean (rounded upward to the nearest
1/16 of 1%) of the rates of interest per annum notified to the Documentation
Agent by each Reference Bank as the rate of interest (rounded upward to the
nearest 1/16 of 1%) at which deposits in an amount approximately equal to the
aggregate amount of the LIBOR Loans requested to be borrowed, and having a
maturity equal to such Interest Period, are offered to major banks in the
London interbank market at or about 11:00 a.m. (London time) on the second
Business Day before the commencement of such Interest Period.
"LIBOR Loan" means any Loan that bears interest at a rate determined
with reference to LIBOR.
"Lien" means any mortgage, deed of trust, pledge, charge, encumbrance,
lien (statutory or other) or security interest of any nature whatsoever
(including those created by, arising under or evidenced by any conditional sale
or other title retention agreement), and any assignment or deposit arrangement
intended as or having the effect of security.
"Loan" means an extension of credit by a Bank to the Company under
Section 2.01 and may be a LIBOR Loan, a CD Rate Loan or a Reference Rate Loan,
and "Loans" means Loans made by all of the Banks.
"Loan Documents" means this Agreement, each Note and any other
agreement, instrument, certificate or other document evidencing, guaranteeing
or securing the Loans.
"Loss" has the meaning specified in Section 3.05.
"Material Adverse Effect" means a material adverse change in, or a
material adverse effect upon, the assets, liabilities, business, operations or
condition of the Company and its Subsidiaries taken as a whole.
"Moody's" means Moody's Investors Service, Inc. or any successor to the
rating agency business thereof.
"Notes" means those promissory notes of the Company to the order of
each of the Banks, substantially in the form of Exhibit C,
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<PAGE> 15
as the same may be amended, restated, supplemented or modified and in effect
from time to time.
"Notice of Borrowing" means a notice given by the Company to the
Documentation Agent pursuant to Section 2.03 in substantially the form of
Exhibit A.
"Notice of Conversion/Continuation" means a notice given by the Company
to the Documentation Agent pursuant to Section 2.04 in substantially the form
of Exhibit B.
"Obligations" means all Loans and all other Indebtedness, advances,
debts, liabilities, obligations, covenants and duties owing by the Company to
any Bank, the Documentation Agent, or to any other Person required to be
indemnified under any Loan Document, of any kind or nature, present or future,
whether or not evidenced by any note, guaranty or other instrument, arising
under this Agreement or under any other Loan Document, whether direct or
indirect (including those acquired by assignment), absolute or contingent, due
or to become due, now existing or hereafter arising and however acquired.
"Other Credit Facilities" means, collectively: (a) the revolving credit
facility evidenced by that certain Three Year Credit Agreement dated as of
October 7, 1994 among the Company, BofA, as documentation agent thereunder, and
the financial institutions signatory thereto, as amended, restated,
supplemented or modified from time to time; (b) the Seasonal Credit Facility;
and (c) the credit facilities evidenced by that certain Warehouse Facility
Credit Agreement dated as of October 7, 1994 among the Company, the other
borrowers named therein, Bankers Trust Company, as documentation agent
thereunder, and the financial institutions signatory thereto, as amended,
restated, supplemented or modified from time to time.
"Other Taxes" means any present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies which arise from
any payment made hereunder or from the execution, delivery or resignation of,
or otherwise with respect to, this Agreement or any other Loan Document.
"Participant" has the meaning specified in Section 10.08(d).
"Payment Office" means the address for payments set forth on the
signature page hereto in relation to the Documentation Agent, or such other
address as the Documentation Agent may from time to time specify in accordance
with Section 10.02.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
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"Person" means an individual, partnership, corporation, limited
liability company, business trust, estate, joint stock company, trust,
unincorporated association, joint venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which the Company or any member of the Controlled Group sponsors or
maintains or to which the Company or any member of the Controlled Group makes,
is making or is obligated to make contributions.
"Potential Default" means any event or circumstance which, with the
giving of notice, the lapse of time, or both, would (if not cured or otherwise
remedied) constitute an Event of Default.
"Reference Banks" means Bankers Trust Company and BofA.
"Reference Rate" means, for any day, the higher of:
(a) 0.5% per annum above the latest Federal Funds Rate for
such day; and
(b) the rate of interest publicly announced from time to
time by BofA in San Francisco, California, as its "reference rate" for
such day.
The "reference rate" is a rate set by BofA based upon various factors including
BofA's costs and desired return, general economic conditions and other factors,
and is used as a reference point for pricing some loans, which may be priced
at, above or below such announced rate. Any change in the Reference Rate
announced by BofA shall take effect at the opening of business on the day
specified in the public announcement of such change.
"Reference Rate Loan" means a Loan that bears interest based on the
Reference Rate.
"Rent Expenses" means, for any period, consolidated rent expense of the
Company for such period determined in accordance with GAAP, less consolidated
rental income for such period.
"Reportable Event" means, as to any Plan, (a) any of the events set
forth in Section 4043(b) of ERISA or the regulations thereunder, other than any
such event for which the 30-day notice requirement under ERISA has been waived
in regulations issued by the PBGC, (b) a withdrawal from a Plan described in
Section 4063 of ERISA, or (c) a cessation of operations described in Section
4062(e) of ERISA.
"Required Banks" means at any time Banks holding at least 51% of the
aggregate of (a) the then Aggregate Commitment (or, if the Commitments shall
have then been terminated in full, the then
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<PAGE> 17
aggregate unpaid principal amount of the Loans) plus (b) the then aggregate
commitments under the Other Credit Facilities (or, if the commitments under any
of such facilities shall have then been terminated in full, then with respect
to such terminated facilities the then aggregate unpaid principal amount of all
loans and letter of credit obligations outstanding under such terminated
facilities).
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of a court or of a
Governmental Authority, in each case applicable to or binding upon the Person
or any of its property or to which the Person or any of its property is
subject.
"Responsible Officer" means the Company's chief executive officer,
chief financial officer or treasurer.
"Seasonal Credit Facility" means the revolving credit facility
evidenced by that certain Seasonal Credit Agreement dated as of October 5, 1995
among the Company, BofA, as documentation agent thereunder, and the financial
institutions signatory thereto, as amended, restated, supplemented or modified
from time to time.
"S&P" means Standard & Poor's Ratings Group or any successor to the
rating agency business thereof.
"Specialty Retail Subsidiary" means any of the following Subsidiaries
of the Company (or the continuing investment of the Company in any such
entity): Builders Square, Inc.; Borders, Inc.; Coles Myer, Ltd.; OfficeMax,
Inc.; PACE Membership Warehouse, Inc.; PayLess Drug Stores Northwest, Inc.; The
Sports Authority, Inc.; and Walden Book Company, Inc.
"Subsidiary" means any corporation of which stock having by the terms
thereof ordinary voting power to elect at least a majority of the board of
directors of said corporation is at the time directly or indirectly owned by
the Company or by the Company and one or more Subsidiaries or by one or more
Subsidiaries.
"Taxes" means any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Bank and the Documentation Agent, such taxes
(including income taxes and franchise taxes) as are imposed on or measured by
such Bank's or the Documentation Agent's net income.
"Termination Date" means the earlier to occur of
(a) the one year anniversary of the Current Commitment Termination
Date; and
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(b) the date (other than the Current Commitment Termination Date) on
which the Commitments shall terminate in accordance with the provisions of this
Agreement (other than Section 2.14 hereof).
"Transferee" has the meaning specified in Section 10.08(e).
"Type" means, with respect to any Loan, its nature as a Reference Rate
Loan, a CD Rate Loan or a LIBOR Loan.
"United States" and "U.S." each means the United States of America.
1.02 Other Definitional Provisions.
(a) Defined Terms. Unless otherwise specified herein or
therein, all terms defined in this Agreement shall have such defined
meanings when used in any certificate or other document made or
delivered pursuant hereto. The meaning of defined terms shall be
equally applicable to the singular and plural forms of the defined
terms.
(b) The Agreement. The words "hereof", "herein", "hereunder"
and words of similar import when used in this Agreement shall refer to
this Agreement as a whole and not to any particular provision of this
Agreement; and section, schedule and exhibit references are to this
Agreement unless otherwise specified.
(c) Certain Common Terms.
(i) The term "documents" includes any and all
instruments, documents, agreements, certificates, indentures,
notices and other writings, however evidenced.
(ii) The term "including" is not limiting and means
"including without limitation."
(d) Performance; Time. Subject to the definition of "Interest
Period" in Section 1.01, whenever any performance obligation hereunder
(other than a payment obligation) shall be stated to be due or
required to be satisfied on a day other than a Business Day, such
performance shall be made or satisfied on the next succeeding Business
Day. In the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including"; the
words "to" and "until" each mean "to but excluding", and the word
"through" means "to and including". If any provision of this Agreement
refers to any action taken or to be taken by any Person, or which such
Person is prohibited from taking, such provision shall be interpreted
to
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encompass any and all means, direct or indirect, of taking, or not
taking, such action.
(e) Contracts. Unless otherwise expressly provided herein,
references to agreements and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications
thereto, but only to the extent such amendments and other modifications
are not prohibited by the terms of any Loan Document.
(f) Laws. References to any statute or regulation are to be
construed as including all statutory and regulatory provisions
consolidating, amending or replacing the statute or regulation.
(g) Captions. The captions and headings of this Agreement are
for convenience of reference only and shall not affect the construction
of this Agreement.
1.03 Accounting Principles.
(a) Unless the context otherwise clearly requires, all
accounting terms not expressly defined herein shall be construed, and
all financial computations required under this Agreement shall be made,
in accordance with GAAP, consistently applied.
(b) References herein to "fiscal year" and "fiscal quarter"
refer to such fiscal periods of the Company.
ARTICLE II
THE CREDITS
2.01 Amounts and Terms of Commitments. Each Bank severally agrees, on
the terms and conditions hereinafter set forth, and upon request by the
Company, to make Loans in Dollars to the Company from time to time on any
Business Day during the period from the Closing Date to the Current Commitment
Termination Date, in an aggregate principal amount not to exceed at any time
outstanding the amount set forth opposite the Bank's name in Schedule 2.01,
(such amount as the same may be reduced pursuant to Section 2.05 or reduced or
increased as a result of one or more assignments pursuant to Section 10.08,
being herein referred to as a Bank's "Commitment"); provided, that, after
giving effect to any Borrowing, the aggregate principal amount of all
outstanding Loans shall not exceed the Aggregate Commitment. Within the limits
of each Bank's Commitment, and subject to the other terms and conditions
hereof, the Company may borrow under this Section 2.01, prepay pursuant to
Section 2.06 and reborrow pursuant to this Section 2.01. On the Current
Commitment Termination Date, the
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Aggregate Commitment shall be terminated, the outstanding principal amount of
the Loans shall be frozen, and such amount shall become a term loan which is
due and payable on the Termination Date. Amounts repaid or prepaid following
the Current Commitment Termination Date may not be reborrowed.
2.02 Loan Accounts; Notes. (a) The Loans made by each Bank shall
be evidenced by one or more loan accounts maintained by such Bank in the
ordinary course of business. The loan accounts maintained by the Documentation
Agent and each Bank shall be prima facie evidence of the amount of the Loans
made by the Banks to the Company and the interest and payments thereon. Any
failure so to record or any error in doing so shall not, however, limit or
otherwise affect the Obligations of the Company hereunder to pay any amount
owing with respect to the Loans. In case of a discrepancy between the entries
in the Documentation Agent's books and any Bank's books relating to such loan
accounts, the Bank's books shall be considered correct in the absence of
manifest error.
(b) If any Bank shall so request, for purposes of Section 10.08(f),
the obligation to repay the Loans may also be evidenced by a Note. Each such
Bank shall endorse on the schedules annexed to its Note the date, amount,
applicable interest rate and maturity of each Loan made by it and the amount of
each payment of principal and interest made by the Company with respect
thereto. Each Bank is irrevocably authorized by the Company to so endorse its
Note and each Bank's record shall constitute prima facie evidence of the
accuracy of the information so recorded; provided, however, that the failure of
a Bank to make, or an error in making, a notation thereon with respect to any
Loan shall not limit or otherwise affect the obligations of the Company
hereunder or under such Note to pay any amount with respect to the Loans made
by such Bank. Any such request shall be made by such Bank to the Documentation
Agent, which will prepare (or cause to be prepared) such Note and send the same
to the Company for execution by the Company. Upon such execution, the Company
will promptly deliver such Note to the Bank which requested the same.
2.03 Procedure for Borrowings.
(a) Each Borrowing shall be made upon the irrevocable request of
the Company by a facsimile to the Documentation Agent (which shall be confirmed
promptly by a telephone call) in the form of a Notice of Borrowing which
facsimile must be received by the Documentation Agent prior to 11:00 a.m. (New
York City time) (i) three (3) Business Days prior to the requested borrowing
date, in the case of LIBOR Loans, (ii) two Business Days prior to the requested
borrowing date, in the case of CD Rate Loans and (iii) on the requested
borrowing date, in the case of Reference Rate Loans, specifying:
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(A) the amount of the Borrowing, which shall be in an
aggregate minimum principal amount of Ten Million Dollars ($10,000,000)
or any multiple of Five Million Dollars ($5,000,000) in excess thereof;
(B) the requested borrowing date, which shall be a Business
Day;
(C) whether the Borrowing is to be comprised of LIBOR
Loans, CD Rate Loans or Reference Rate Loans; and
(D) if the Borrowing is to be comprised of LIBOR Loans or
CD Rate Loans, the duration of the initial Interest Period applicable
to such Loans. If the Notice of Borrowing shall fail to specify the
duration of the initial Interest Period for any LIBOR Loans or CD Rate
Loans, the Company shall be deemed to have elected an Interest Period
of one month or 30 days, respectively;
provided, however, that with respect to any Borrowing to be made on the Closing
Date, a Notice of Borrowing shall be delivered to the Documentation Agent not
later than 11:00 a.m. (New York City time) on the Closing Date (such Borrowing
will consist of Reference Rate Loans only).
(b) Upon receipt of the Notice of Borrowing, the Documentation
Agent shall promptly notify each Bank thereof and of the amount of such Bank's
share of the requested Borrowing based on such Bank's Commitment Percentage.
(c) Each Bank will make its Commitment Percentage of each Borrowing
available to the Documentation Agent for the account of the Company at the
Documentation Agent's Payment Office by 2:00 p.m. (New York City time) on the
borrowing date requested by the Company by payment in Dollars and in funds
immediately available to the Documentation Agent. Unless any applicable
condition specified in Article IV has not been satisfied, the proceeds of all
such Loans will then be made available to the Company by the Documentation
Agent at such office by crediting the account of the Company with the aggregate
of the amounts made available to the Documentation Agent by the Banks and in
like funds as received by the Documentation Agent.
(d) After giving effect to any Borrowing, unless consented to by
the Documentation Agent in its sole discretion, there shall not be more than
(10) different Interest Periods in effect in respect of all Loans then
outstanding.
2.04 Conversion and Continuation Elections for Borrowings.
(a) The Company may upon notice to the Documentation Agent in
accordance with Section 2.04(b):
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(i) elect to convert, as of any Business Day, any Reference
Rate Loans (or any part thereof in an aggregate amount not less
than Ten Million Dollars ($10,000,000), or that is in an integral
multiple of Five Million Dollars ($5,000,000) in excess thereof) into
LIBOR Loans or CD Rate Loans; or
(ii) elect to convert, as of the last day of any Interest
Period, any LIBOR Loans maturing on such day (or any part
thereof in an aggregate amount not less than Ten Million Dollars
($10,000,000), or that is in an integral multiple of Five Million
Dollars ($5,000,000) in excess thereof) into Reference Rate Loans or CD
Rate Loans; or
(iii) elect to convert, as of the last day of any Interest
Period, any CD Rate Loans maturing on such day (or any part
thereof in an aggregate amount not less than Ten Million Dollars
($10,000,000), or that is in an integral multiple of Five Million
Dollars ($5,000,000) in excess thereof) into Reference Rate Loans or
LIBOR Loans; or
(iv) elect to continue as of the last day of any Interest
Period (a "Continuation Date") any LIBOR Loans or CD Rate Loans
maturing on such day (or any part thereof in an aggregate amount not
less than Ten Million Dollars ($10,000,000), or that is in an integral
multiple of Five Million Dollars ($5,000,000) in excess thereof);
provided, that if the aggregate amount of all LIBOR Loans or CD Rate Loans
comprised in any Borrowing shall have been or would be reduced, by payment,
prepayment, or conversion of part thereof to an amount less than Ten Million
Dollars ($10,000,000), such LIBOR Loans or CD Rate Loans shall automatically
convert into Reference Rate Loans, on and as of the end of the applicable
Interest Period.
(b) If the Company desires to convert or continue any Loan pursuant to
Section 2.04(a), it shall irrevocably request a conversion or continuation by a
facsimile (confirmed promptly by telephone) of a Notice of
Conversion/Continuation to be received by the Documentation Agent not later
than 11:00 a.m. (New York time) at least (i) three (3) Business Days in advance
of the Conversion Date or Continuation Date, if the Loans are to be converted
into or continued as LIBOR Loans, (ii) two (2) Business Days in advance of the
Conversion Date or Continuation Date, if the Loans are to be converted into or
continued as CD Rate Loans and (iii) on the same Business Day as the Conversion
Date, if the Loans are to be converted into Reference Rate Loans, specifying:
(A) the proposed Conversion Date or Continuation Date;
(B) the aggregate amount of Loans to be converted or
continued;
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<PAGE> 23
(C) the nature of the proposed conversion or continuation; and
(D) the duration of the requested Interest Period, if the Loans
are to be converted into continued as LIBOR Loans or CD Rate Loans.
(c) If prior to the time set forth in Section 2.04(b), (i) the Company
has failed to give a timely Notice of Conversion/Continuation with respect to
such LIBOR Loans or CD Rate Loans or (ii) the Company has failed to select a
new Interest Period to be applicable to such LIBOR Loans or CD Rate Loans, the
Company shall be deemed to have elected to convert such Loans into Reference
Rate Loans effective as of the expiration of the applicable Interest Period.
(d) During the existence of a Potential Default or Event of Default,
unless the Required Banks otherwise agree, the Company may not elect to have a
Loan be converted into or continued as a LIBOR Loan or a CD Rate Loan pursuant
to Section 2.04.
(e) Upon receipt of a Notice of Conversion/Continuation, the
Documentation Agent will promptly notify each Bank thereof, or, if no timely
notice is provided, the Documentation Agent will promptly notify each Bank of
the details of any automatic conversion or continuation. All conversions and
continuations pursuant to this Section 2.04 shall be made pro rata according to
the respective outstanding principal amounts of the Loans being converted or
continued held by each Bank.
2.05 Voluntary Termination or Reduction of Commitments. The Company
may, upon not less than five (5) Business Days' prior notice to the
Documentation Agent, terminate the Aggregate Commitment or permanently reduce
the Aggregate Commitment by a minimum amount of Ten Million Dollars
($10,000,000) or in multiples of Five Million Dollars ($5,000,000) in excess
thereof; provided, that no such reduction or termination of the Aggregate
Commitment shall be permitted if, after giving effect thereto and to any
prepayments of the Loans made on the effective date thereof, the then
outstanding aggregate principal amount of all Loans would exceed the amount of
the Aggregate Commitment; provided, further, that once reduced in accordance
with this Section 2.05, the Aggregate Commitment may not thereafter be
increased. Any reduction of the Aggregate Commitment shall be applied to each
Bank's Commitment pro rata in accordance with such Bank's relevant Commitment
Percentage. If the Aggregate Commitment is terminated in its entirety, all
accrued unpaid interest and all fees with respect thereto accrued to the
effective date of such termination shall be payable on the effective date of
such termination without any premium or penalty.
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2.06 Optional Prepayments of Loans. Subject to Section 3.05, the
Company may, at any time or from time to time, upon at least five (5) Business
Days' notice to the Documentation Agent prepay LIBOR loans or CD Rate Loans or
upon at least one Business Day's notice to the Documentation Agent prepay
Reference Rate Loans, in whole or in part, in minimum amounts of Ten Million
Dollars ($10,000,000) or in multiples of Five Million Dollars ($5,000,000) in
excess thereof. Such notice of prepayment shall specify the date and amount of
such prepayment and whether such prepayment is of Reference Rate Loans, LIBOR
Loans or CD Rate Loans. Such notice shall not thereafter be revocable by the
Company, and the Documentation Agent will promptly notify each Bank thereof and
of such Bank's Commitment Percentage of such prepayment. If such notice if
given, the Company shall make such prepayment and the payment amount specified
in such notice shall be due and payable on the date specified therein, together
with accrued interest in each such date on the amount prepaid and the amounts
required pursuant to Section 3.05.
2.07 Repayment. The Company shall repay the aggregate outstanding
principal amount of the Loans on the Termination Date.
2.08 Interest.
(a) Subject to Sections 2.08(c) and 2.08(d), each Loan shall bear
interest on the outstanding principal amount thereof from the date when made
until paid in full, at the option of the Company as set forth in its Notice
of Borrowing or Notice of Conversion/Continuation,
(i) if such Loan is a Reference Rate Loan, at a rate per annum
equal to the Reference Rate;
(ii) if such Loan is a Reference Rate Loan, at a rate per annum
equal to the sum of LIBOR plus .3000%; and
(iii) if such Loan is a CD Rate Loan, at a rate per annum equal
to the sum of the CD Rate plus .4250%.
(b) Interest on each Loan shall be payable in arrears on each
applicable Interest Payment Date. Interest shall also be payable on the date of
any prepayment of Loans for the portion of the Loans so prepaid and, in the
case of conversion of any Reference Rate Loan, on the date of conversion
thereof into a LIBOR Loan or a CD Rate Loan.
(c) During the continuation of any Event of Default or after
acceleration, the Company shall pay, on demand, interest (after as well as
before judgment) on the principal amount of all Loans then outstanding, at a
rate per annum which is determined by increasing the rate of interest then in
effect by 2% per annum; provided, however, that, on and after the expiration of
the Interest Period
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applicable to any LIBOR Loan or CD Rate Loan on the date of occurrence
of such Event of Default or acceleration, the principal amount of such Loan
shall, during the continuance of such Event of Default or acceleration, bear
interest at a rate per annum equal to the Reference Rate plus 2%.
(d) Anything herein to the contrary notwithstanding, the obligations of
the Company hereunder shall be subject to the limitation that payments of
interest shall not be required, for any period for which interest is computed
hereunder, to the extent (but only to the extent) that contracting for or
receiving such payment by any Bank would be contrary to the provisions of any
law applicable to such Bank limiting the highest rate of interest which may be
lawfully contracted for, charged or received by such Bank, and in such event
the Company shall pay such Bank interest at the highest rate permitted by
applicable law.
2.09 Fees.
(a) Facility Fee.
(i) the Company shall pay to the Documentation Agent for the
account of each Bank a facility fee equal to .10% of such Bank's
Commitment (regardless of utilization) or, after the Current Commitment
Termination Date, the average daily aggregate outstanding principal
amount of such Bank's Loans.
(ii) The facility fee shall accrue from the Closing Date to the
Termination Date and shall be due and payable quarterly in arrears on
the last Business Day of each calendar quarter, commencing with the
calendar quarter ending on December 31, 1995, and on the Termination
Date.
(b) Syndication Fees. The Company shall pay in Dollars to the Arrangers
on the Closing Date syndication fees in the amount set forth in a letter
agreement between the Company and BofA and Bankers Trust Company dated July 7,
1995.
(c) Transaction Fees. The Company shall pay to the Documentation Agent
transaction fees in Dollars in the amounts and at the times set forth in a
letter agreement between the Company and BofA and Bankers Trust Company dated
July 7, 1995.
(d) Closing Fee. The Company shall pay to the Documentation Agent on
the Closing Date for the account of each Bank a closing fee equal to .03% of
such Bank's Commitment.
2.10 Computation of Fees and Interest.
(a) All computations of fees and interest under this Agreement shall be
made on the basis of a 360-day year and actual
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days elapsed. Interest and fees shall accrue during each period during which
interest or such fees are computed from and including the first day thereof to
but excluding the last day thereof. Any interest or fees not paid when due
after any applicable grace period shall bear interest at a rate equal to the
Reference Rate plus 2%.
(b) The Documentation Agent will, with reasonable promptness, notify
the Company and the Banks of each determination of LIBOR, the CD Rate and the
Reference Rate; provided, that any failure to do so shall not relieve the
Company of any liability hereunder. The Documentation Agent will, with
reasonable promptness, notify the Company and the Banks of the effective date
and the amount of any change in the Debt Rating resulting in a change in the
applicable rate of interest or fees; provided, that any failure to do so shall
not relieve the Company of any liability hereunder.
(c) Each determination of an interest rate by the Documentation Agent
pursuant to any provision of this Agreement shall be conclusive and binding on
the Company and the Banks in the absence of manifest error. The Documentation
Agent, at the request of the Company or any Bank, will deliver to the Company
or such Bank, as the case may be, a statement showing the quotations used by
the Documentation Agent in determining any interest rate.
(d) If either Reference Bank's Commitment shall terminate (otherwise
than on termination of the Aggregate Commitment), or for any reason whatsoever
either Reference Bank shall cease to be a Bank hereunder, then such Reference
Bank shall thereupon cease to be a Reference Bank, and, when necessary (until
such Reference Bank shall have been replaced pursuant to Section 2.10(e)),
LIBOR and the CD Rate shall be determined on the basis of the rates as notified
by the remaining Reference Bank.
(e) Each Reference Bank shall use its best efforts to furnish
quotations of rates to the Documentation Agent as contemplated hereby. If
either Reference Bank shall be unable or otherwise fail to supply such rates to
the Documentation Agent upon its request, the rate of interest shall be
determined on the basis of the quotations of the remaining Reference Bank. The
Company and the Documentation Agent may select a new Reference Bank to replace
any Reference Bank that shall cease to be a Bank hereunder or that fails to
supply rates as required hereunder.
2.11 Payments by the Company.
(a) All payments (including prepayments) to be made by the Company on
account of principal, interest, fees and other amounts required hereunder shall
be made without set-off or counterclaim and shall, except as otherwise
expressly provided herein, be made to the Documentation Agent at its Payment
Office for the ratable account of the Banks in Dollars and in immediately
available funds,
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no later than 2:00 p.m. (New York City time) on the date specified herein. The
Documentation Agent will promptly distribute to each Bank its Commitment
Percentage (or other applicable share as expressly provided herein) of such
principal, interest, fees or other amounts, in like funds as received. Unless
otherwise waived by the Documentation Agent with respect to a payment, any
payment which is received by the Documentation Agent later than 2:00 p.m. (New
York City time) shall be deemed to have been received on the immediately
succeeding Business Day and any applicable interest or fee shall continue to
accrue until such payment is deemed to have been received.
(b) Except as otherwise set forth in the definition of Interest Period,
whenever any payment hereunder shall be stated to be due on a day other than a
Business Day, such payment shall be made on the next succeeding Business Day,
and such extension of time shall in such case be included in the computation of
interest or fees, as the case may be.
(c) Unless the Documentation Agent shall have received notice from the
Company prior to the date on which any payment is due to the Banks hereunder
that the Company will not make such payment in full, the Documentaion Agent may
assume that the Company has made such payment in full to the Documentation
Agent as required hereunder on such date and the Documentation Agent may (but
shall not be so required), in reliance upon such assumption, cause to be
distributed to each Bank on such due date an amount equal to the amount then
due such Bank. If and to the extent the Company shall not have made such
payment in full to the Documentation Agent, each Bank shall repay to the
Documentation Agent on demand such amount distributed to such Bank, together
with interest thereon for each day from the date such amount was distributed to
such Bank until the date such Bank repays such amount to the Documentation
Agent at the Federal Funds Rate.
2.12 Payments by the Banks to the Documentation Agent.
(1) Unless the Documentation Agent shall have received notice from a
Bank on the Closing Date or, with respect to each Borrowing after the Closing
Date, at least one (1) Business Day prior to the date of any proposed Borrowing
of LIBOR Loans or CD Rate Loans or prior to 11:00 a.m. (New York City time) on
the date of the proposed Borrowing of any Reference Rate Loans, that such Bank
will not make available to the Documentation Agent for the account of the
Company the amount of that Bank's share of Loans included in the Borrowing, the
Documentation Agent may assume that each Bank has made such amount available to
the Documentation Agent as required hereunder on the Borrowing Date and the
Documentation Agent may (but shall not be so required), in reliance upon such
assumption, make available to the Company on such date a corresponding amount.
If and to the extent any Bank shall not have made its full amount available to
the Documentation Agent and the
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Documentation Agent in such circumstances has made available to the Company
such amount, that Bank shall on the next Business Day following the date of
such Borrowing make such amount available to the Documentation Agent, together
with interest at the Federal Funds Rate, in each case as in effect for each
such day. A notice of the Documentation Agent submitted to any Bank with respect
to amounts owing under this Section 2.12(a) shall be conclusive, absent
manifest error. If such amount is so made available, such payment to the
Documentation Agent shall constitute such Bank's Loan on the date of Borrowing
for all purposes of this Agreement. If such amount is not made available to the
Documentation Agent on the next Business Day following the date of such
Borrowing, the Documentation Agent shall notify the Company of such failure to
fund and, upon demand by the Documentation Agent, the Company shall pay such
amount to the Documentation Agent for the Documentation Agent's account,
together with interest thereon for each day elapsed since the date of such
Borrowing, at a rate per annum euqal to the interest rate applicable at the
time to the Loans comprising such Borrowing without making or being responsible
for any payment under Section 3.05.
(b) The failure of any Bank to make any Loan on any date of Borrowing
shall not relieve any other Bank of any obligation hereunder to make a Loan on
the date of such Borrowing, but no Bank shall be responsible for the failure of
any other Bank to make the Loan to be made by such other Bank on the date of
any Borrowing.
2.13 Sharing of Payments, Etc.
(a) If, other than as expressly set forth elsewhere herein, any Bank
shall obtain an account of the Loans made by it any payment (whether voluntary,
involuntary, through the exercise of any right of set-off, or otherwise) in
excess of its Commitment Percentage of payments on account of the Loans
obtained by all the Banks, such Bank shall forthwith (x) notify the
Documentation Agent of such fact, and (y) purchase from the other Banks such
participations in the Loans made by them as shall be necessary to cause such
purchasing Bank to share the excess payment ratably with each of them;
provided, however, that if all or any portion of such excess payment is
thereafter recovered from the purchasing Bank, such purchase shall to that
extent be rescinded and each other Bank shall repay to the purchasing Bank the
purchase price paid thereto together with an amount equal to such paying Bank's
Commitment Percentage (according to the proportion of (i) the amount of such
paying Bank's required repayment to (ii) the total amount so recovered from the
purchasing Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered. The Documentation
Agent will keep records (which shall be conclusive and binding in the absence
of manifest error), of participations purchased pursuant to this Section
2.13(a) and will in each case notify the Banks and the Company following any
such purchases.
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(b) The Company agrees that any Bank so purchasing a participation from
another Bank pursuant to this Section 2.13 may, to the fullest extent permitted
by law, exercise all its rights of payment (including the right of set-off, but
subject to Section 10.09) with respect to such participation as fully as if
such Bank were the direct creditor of the Company in the amount of such
participation.
(c) Nothing herein shall require any Bank to exercise any right of
set-off or similar rights or shall affect the right of any Bank to exercise,
and retain the benefits of exercising any such right with respect to any other
indebtedness or obligation of the Company.
2.14 Extensions of the Commitments.
(a) "Current Commitment Termination Date" shall initially mean October
3, 1996. On the date that is 60 days prior to the Current Commitment
Termination Date then in effect (or if such date is not a Business Day, then on
the next preceding Business Day), the Company may, by written notice (an
"Extension Request") given to the Documentation Agent, request that the Current
Commitment Termination Date be extended. Each such Extension Request shall
contemplate an extension of the Current Commitment Termination Date to a date
that is 364 days after the Current Commitment Termination Date then in effect.
(b) The Documentation Agent shall promptly advise each Bank of its
receipt of any Extention Request. Each Bank may, in its sole discretion,
consent to a requested extension by giving written notice thereof to the Agent
by not later than the Business Day (the "Extension Confirmation Date")
immediately preceding the date that is 31 days after the date of the Extension
Request. Failure on the part of any Bank to respond to an Extension Request by
the applicable Extension Confirmation Date shall be deemed to be a denial of
such request by such Bank. If each Bank shall consent in writing to the
requested extension, such request shall be granted. Promptly following the
opening of business on the first Business Day following the applicable
Extension Confirmation Date, the Documentation Agent shall notify the Company
in writing as to whether the Extension Request has been granted (such written
notice being an "Extension Confirmation Notice") and, if granted, such
extension shall be confirmed upon the issuance of such Extension Confirmation
Notice. The Documentation Agent shall promptly thereafter provide a copy of
such Extension Confirmation Notice to each Bank.
(c) Each Extension Confirmation Notice shall, if applicable, specify
therein the date to which the Current Commitment Termination Date is to be
extended (such date being referred to herein as the "Extended Termination
Date"). The Current Commitment Termination Date, in the event that fewer than
all of the Banks
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shall consent in writing to such Extension Request, shall continue to be the
then existing Current Commitment Termination Date (the "Earlier Termination
Date"). The Current Commitment Termination Date, in the event that all of the
Banks shall consent in writing to such Extension Request, shall continue to be
the Earlier Termination Date until the end of the day immediately preceding the
Current Commitment Termination Date then in effect, at which time the Current
Commitment Termination Date then in effect shall become the Extended
Termination Date provided for in such Extension Confirmation Notice.
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 Taxes.
(a) All payments of principal of and interest on the Loans (other than
Reference Rate Loans) shall be made by the Company without set-off or
counterclaim for or on account of, and free and clear of, and without deduction
or withholding for, or on account of, any Taxes. In addition, the Company shall
pay all Other Taxes.
(b) The Company agrees to indemnify and hold harmless each Bank and
the Documentation Agent for the full amount of Taxes or Other Taxes imposed by
any jurisdiction on amounts payable under this Section 3.01 paid by such Bank
or the Documentation Agent and any liability (including penalties, interest,
additions to tax and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted.
Payment under this indemnification shall be made within thirty (30) days after
the date any Bank or the Documentation Agent makes written demand therefor.
(c) If the Company shall be required by law to deduct or withhold any
Taxes or Other Taxes from or in respect of any sum payable hereunder to any
Bank or the Documentation Agent, then:
(i) the sum payable shall be increased as necessary so that
after making all required deductions and withholdings
(including deductions and withholdings applicable to additional sums
payable under this Section 3.01) such Bank or the Documentation Agent,
as the case may be, receives an amount equal to the sum it would have
received had no such deductions or withholdings been made;
(ii) the Company shall make such deductions and withholdings;
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(iii) the Company shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in
accordance with applicable law; and
(iv) the Company shall also pay to each Bank or the
Documentation Agent for the account of such Bank, at the time interest
is paid, all additional amounts which the respective Bank specifies as
necessary to preserve the after-tax yield such Bank would have received
if such Taxes or Other Taxes had not been imposed.
(d) Within thirty (30) days after its receipt thereof, the Company
shall furnish the Documentation Agent the original or a certified copy of a
receipt evidencing payment of such Taxes or Other Taxes, or other evidence of
payment satisfactory to the Documentation Agent.
(e) Each Bank which is a foreign person (i.e., a person other than a
United States person for United States Federal income tax purposes) agrees that
it will comply with the requirements of Section 9.10 hereof and further agrees
that if such Bank claims or is entitled to claim exemption from withholding tax
under a United States tax treaty by providing a Form 1001 and such Bank sells
or grants a participation of all or part of its rights under this Agreement,
such Bank shall notify the Documentation Agent of the percentage amount in
which it is no longer the beneficial owner under this Agreement. To the extent
of this percentage amount, the Company or the Documentation Agent shall treat
such Bank's Form 1001 as no longer in compliance with this Section 3.01(e). In
the event a Bank claiming exemption from United States withholding tax by
filing Form 4224 with the Company or the Documentation Agent sells or grants a
participation in its rights under this Agreement, such Bank agrees to undertake
sole responsibility for complying with the withholding tax requirements imposed
by Sections 1441 and 1442 of the Code.
(f) Notwithstanding anything herein to the contrary, the Company will
not be required to pay any additional amounts in respect of Taxes described
below:
(i) if such Bank shall have delivered to the Company and the
Documentation Agent a Form 4224 or a Form 1001 in respect of its
Lending Office and such Bank shall not at any time be entitled to
exemption from deduction or withholding of United States Federal income
tax in respect of payments by the Company hereunder for the account of
such Lending Office for any reason other than a change in United States
law or regulations or in the official interpretation of such law or
regulations by any governmental authority charged with the
interpretation or administration thereof (whether or not having the
force of law) after the date of delivery of such Form 4224 or Form
1001, as applicable;
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(ii) taxes that are imposed as a result of any sale, assignment,
transfer or other disposition (whether voluntary or involuntary) by such
Bank of any interest in such Bank's Commitment, Loans or the Loan
Documents, unless such sale, assignment, transfer or disposition by such
Bank takes place while an Event of Default has occurred and is continuing
or pursuant to Section 3.03(c);
(iii) taxes to the extent resulting from (A) the gross negligence,
fraud or willful misconduct of a Bank or the Documentation Agent, (B) any
act or omission of a Bank or the Documentation Agent, that is in violation
of any of the terms of the Loan Documents, or (C) the inaccuracy or breach
of any representation, warranty or covenant by a Bank or the Documentation
Agent in any document required to be furnished thereby.
(g) If the Company is required to pay additional amounts to any
Bank pursuant to this Section 3.01, then such Bank shall use its reasonable
best efforts (consistent with legal and regulatory restrictions) to change the
jurisdiction of its Lending Office so as to eliminate any such additional
payment by the Company which may thereafter accrue if such change in the
judgment of such Bank is not otherwise materially disadvantageous to such Bank.
(h) If any Bank or the Documentation Agent receives a written
notification from a taxing authority of proposed taxes for which an amount may
be payable by the Company in accordance with this Section 3.01, such Bank or
the Documentation Agent shall notify the Company promptly after receipt of such
notification and shall furnish the Company with such related information as the
Company may reasonably request. If requested by the Company in writing, such
Bank or the Documentation Agent shall in good faith diligently contest
(including pursuing all judicial appeals as of right, if any) the validity,
applicability and amount of such Taxes or Other Taxes; provided, that (x) prior
to taking such action the Company shall have agreed to indemnify such Bank or
the Documentation Agent for all reasonable out of pocket costs and expeses that
such indemnitee may incur in connection with contest such claim and (y) the
amount of such claim, when aggregated with all amounts owing to such Bank under
comparable provisions of the Other Credit Facilities to which such Bank is a
party, shall exceed $5,000.
(i) Each Bank receiving a receipt or other evidence of payment
pursuant to Section 3.01(d) shall reimburse the Company for the amount of any
credit or other economic benefit available to such Bank by reason or on account
of such payment by the Company or such Bank's possession of such receipt or
other evidence of payment under any tax, levy, impost, duty, fee, assessment or
other charge of any nature imposed by any Governmental Authority applicable to
such Bank. The amount of such reimbursement calculated by such
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Bank shall be conclusive and binding absent manifest error in computation.
3.02 Inability to Determine Rates. If and to the extent that
market or other conditions existing in the domestic money market relevant to CD
Rate Loans or in the London inter-bank market relevant to LIBOR Loans make it
impossible or impracticable for the Banks to make such Loans, then the
obligations of the Banks to make CD Rate Loans or LIBOR Loans, as applicable,
and the right of the Company to originate, continue or convert any Loan as or
to a CD Rate Loan or a LIBOR Loan shall be suspended until the circumstances
giving rise to such suspension shall no longer exist.
Upon receipt from the Documentation Agent of a notice of the Banks'
inability to make, convert or continue the requested Loan due to any of the
reasons referred to above, notwithstanding anything in this Agreement to the
contrary, the Company may revoke any Notice of Borrowing or Notice of
Conversion/Continuation then submitted by it. If the Company does not revoke
such notice relating to a LIBOR Loan or CD Rate Loan, the Banks shall, with
respect to such LIBOR Loan or CD Rate Loan only, make or convert such Loan in
the amount specified in the applicable notice submitted by the Company, but
such Loan shall be made as or converted into a Reference Rate Loan instead of a
LIBOR Loan or a CD Rate Loan. Except as provided in the immediately preceding
sentence, if, notwithstanding the provisions of this Section 3.02, any Bank has
made available to the Company its Commitment Percentage of any such proposed
Loan, then the Company shall immediately repay the amount so made available to
it by such Bank, together with accrued interest thereon, if any.
3.03 Increased Costs; Capital Adequacy.
(a) If, after the Closing Date, a Bank shall reasonably determine
that any change in applicable laws, rules or regulations or in the
interpretation or administration thereof by any Governmental Authority charged
with the interpretation or administration thereof (whether or not having the
force of law):
(i) shall change the basis of taxation to such Bank of any
amounts payable by the Company under this Agreement (other than taxes
imposed on or measured by the overall income of such Bank in the
jurisdiction in which such Bank has its principal office), or
(ii) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement against assets of, deposits with
or for the account of, or credit extended by, such Bank with respect to
this Agreement or any Note, or
(iii) shall impose any other condition with respect to this
Agreement or any Note,
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and the result of any of the foregoing is to increase the cost to such Bank or
to reduce the amount of any sum receivable by such Bank with respect to making
or maintaining any CD Rate Loan or LIBOR Loan by an amount reasonably deemed by
such Bank to be material, then the Company shall from time to time, upon
written demand by such Bank, pay to such Bank additional amounts sufficient to
compensate such Bank for any such increased cost or reduced sum receivable to
the extent resulting from outstanding CD Rate Loans or LIBOR Loans and not
compensated in connection with the computation of the CD Rate or LIBOR (as
applicable).
(b) If any Bank shall have determined that (i) the introduction of
any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy
Regulation, (iii) any change in the interpretation or administration of any
Capital Adequacy Regulation by any central bank or other Governmental Authority
charged with the interpretation or administration thereof, or (iv) compliance
by such Bank (or its Lending Office) with any such change in Capital Adequacy
Regulations, affects or would affect the amount of capital required or expected
to be maintained by such Bank and (taking into consideration such Bank's
policies with respect to capital adequacy and such Bank's desired return on
capital) determines that the amount of such capital is increased by an amount
deemed material by such Bank as a consequence of its Commitment, Loans (other
than Reference Rate Loans) or other obligations under this Agreement, then,
upon demand of such Bank to the Company through the Agent, the Company shall
pay to such Bank, from time to time as specified by such Bank, additional
amounts sufficient to compensate for such increase.
(c) Upon receipt of notice from any Bank of a claim for
compensation under this Section 3.03, the Company shall be afforded ninety (90)
days to find a replacement financial institution reasonably acceptable to the
Documentation Agent and, if an acceptable replacement financial institution is
available such replacement institution will purchase such Bank's Loans and
Commitment and other interests under the Loan Documents in accordance with
Section 10.08 or such Bank will withdraw such request for payment.
(d) A detailed statement as to the amount of such increased cost or
reduced sum receivable, along with documentation supporting the payment of such
amount under this subsection, shall be prepared by such Bank and submitted to
the Company (with a copy to the Documentation Agent) with such Bank's written
demand. Such Bank's statement of such increased cost or reduced sum receivable
shall be prima facie evidence of such increased cost or reduced sum absent
manifest error.
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3.04 Illegality.
(a) If any Bank shall determine that, after the date hereof, (i)
the introduction of any Requirement of Law or any change in or in the
interpretation or administration thereof has made it unlawful, or (ii) any
central bank or other Governmental Authority has asserted that it is unlawful,
for such Bank or its Lending Office to make any Loan of the Type requested by
the Company, then, on notice thereof by such Bank to the Company through the
Documentation Agent, the obligation of such Bank to make any such Loans shall
be suspended until such Bank shall have notified the Documentation Agent and
the Company that the circumstances giving rise to such determination no longer
exists.
(b) If a Bank shall determine that it is unlawful to maintain any
Loan then outstanding, then, on notice thereof by such Bank to the Company
through the Documentation Agent, the Company shall prepay in full all such
Loans of such Bank then outstanding, together with interest accrued thereon,
either on the last day of the Interest Period thereof if such Bank may lawfully
continue to maintain such Loans to such day, or immediately, if such Bank may
not lawfully continue to maintain such Loans.
(c) If the Company is required to prepay any LIBOR Loan or CD Rate
Loan as provided in Section 3.04(b), then concurrently with such prepayment,
the Company shall borrow from the affected Bank, in the amount of such
repayment, a Reference Rate Loan.
3.05 Funding Losses. The Company agrees to reimburse each Bank and
to hold each Bank harmless from any loss, cost or expense which such Bank may
sustain or incur as a consequence of:
(a) any failure by the Company to borrow, or to continue or convert
a Loan (other than a Reference Rate Loan) after it has given (or is deemed to
have given) a Notice of Borrowing or a Notice of Conversion/Continuation, as
the case may be;
(b) any payment by it of a LIBOR Loan or a CD Rate Loan on a day
which is not the last day of the Interest Period with respect thereto; or
(c) the conversion of a LIBOR Loan or a CD Rate Loan to a Reference
Rate Loan on a day that is not the last day of the respective Interest Period
pursuant to Section 2.04;
by paying to each Bank, on demand by such Bank, an additional amount equal to
the amount of any interest which such Bank would have earned for the remainder
of the Interest Period in question reduced by the amount of income earned by
such Bank during such Interest Period with respect to the amount prepaid or not
borrowed (the "Loss"). A detailed statement as to the amount of such Loss,
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prepared by the Bank incurring the same, shall be prima facie evidence of such
Loss absent manifest error.
3.06 Survival. The agreements and obligations of the Company in this
Article III shall survive the payment of all other Obligations.
ARTICLE IV
CONDITIONS PRECEDENT
4.01 Conditions to Occurrence of the Closing Date and Effectiveness of
this Agreement. The occurrence of the Closing Date and the binding effect of
this Agreement on each Bank are subject to the condition that the Documentation
Agent shall have received on or before the Closing Date all of the following,
in form and substance satisfactory to the Documentation Agent and each Bank, in
sufficient copies for each Bank:
(a) Credit Agreement. This Agreement executed by the Company,
the Documentation Agent and each of the Banks;
(b) By-laws; Resolutions; Incumbency.
(i) Copies of the by-laws of the Company and of the
resolutions of the board of directors of the Company
approving and authorizing the execution, delivery and
performance by the Company of this Agreement and the other Loan
Documents to be delivered hereunder, and authorizing the
borrowing of the Loans, each certified as of the Closing Date
by the Secretary or an Assistant Secretary of the Company; and
(ii) A certificate of the Secretary or Assistant
Secretary of the Company certifying the names and true
signatures of its respective officers authorized to execute and
deliver and perform, as applicable, this Agreement and all
other Loans Documents and notices to be delivered by it
hereunder;
(c) Articles of Incorporation. (i) A copy of the Company's
Articles of Incorporation as in effect on the Closing Date,
including any amendments thereto, certified by the Michigan Department
of Commerce, and (ii) good standing certificates for the Company from
the Michigan Department of Commerce and from the Secretaries of State
of California and New York, each dated not more than seven (7) days
prior to the Closing Date;
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(d) Legal Opinions.
(i) an opinion of A.N. Palizzi, counsel to the Company,
and addressed to the Documentation Agent and the Banks,
substantially in the form of Exhibit D-1; and
(ii) an opinion of Dickinson, Wright, Moon, Van Dusen &
Freeman, special counsel to the Company and addressed to the
Documentation Agent and the Banks in substantially the form of
Exhibit D-2;
(e) Payment of Transaction Fees and Expenses. Evidence of
payment of all costs, accrued and unpaid fees and expenses (including
Attorney Costs) to the extent then due and payable on the Closing Date;
(f) Certificate. A certificate signed by a Responsible Officer
of the Company, dated as of the Closing Date, stating that:
(i) the representations and warranties of the Company
contained in Article V are true and correct on and as of
such date, as though made on and as of such date;
(ii) no Potential Default or Event of Default exists
as of the date of such certificate;
(iii) no material adverse change in the assets,
liabilities, business, operations or condition of the
Company and its Subsidiaries has occurred since January 25,
1995;
(iv) no default has occurred and is continuing in
respect of any Indebtedness of the Company and its
Subsidiaries with an aggregate principal amount in excess
of $100,000,000;
(v) all consents and approvals required to consummate
the transactions contemplated by this Agreement have been
obtained or waived; and
(vi) the Existing Facility has terminated and all
Indebtedness outstanding thereunder has been satisfied;
(g) Financial Statements. The financial statements of the
Company referred to in Section 5.06;
(h) Seasonal Credit Facility. The Borrower shall have entered
into the Seasonal Credit Facility and the conditions to closing
thereunder shall have been satisfied; and
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(i) Other Documents. Such other approvals, options or documents
as the Documentation Agent may reasonably request.
4.02 Conditions to All Borrowings. The obligation of each Bank to make
any Loan to be made by it hereunder is subject to the satisfaction of the
following conditions precedent on the relevant Borrowing Date:
(a) Notice of Borrowing. In the case of any Loan, the
Documentation Agent shall have received a Notice of Borrowing and
executed Notes evidencing the requested Loans to the extent required
hereby;
(b) Continuation of Representations and Warranties. The
representations and warranties made by the Company contained in
Article V shall be true and correct on and as of such Borrowing Date
with the same effect as if made on and as of such Borrowing Date
(except to the extent such representations and warranties expressly
refer to an earlier date, in which case they shall be true and correct
as of such earlier date); and
(c) No Existing Default. No Potential Default or Event of
Default shall exist or shall result from such Borrowing.
Each Notice of Borrowing submitted by the Company hereunder shall constitute a
representation and warranty by the Company, as of the date of each such notice
and as of the Borrowing Date relating thereto, that the conditions in
Section 4.02 are satisfied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Documentation Agent and each
Bank that:
5.01 Organization and Good Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, and is duly qualified to do business and is
in good standing in each additional jurisdiction where failure to so qualify
would have an effect which, when taken together with the simultaneous effect of
failure to qualify in any other jurisdictions, would in the aggregate have a
Material Adverse Effect.
5.02 Authorization; No Contravention. The execution, delivery and
performance of this Agreement and the issuance of the Notes by the Company are
within its corporate powers, have been duly authorized by all necessary
corporate action, and are not in contravention of any Requirement of Law or of
the terms of the
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Company's Articles of Incorporation or by-laws, or of any agreement,
undertaking, contract or other obligation to which the Company is a party
or by which it is bound.
5.03 Consents and Approvals. No consent, waiver, approval,
notification of, or registration or filing with, any Governmental
Authority or any non-governmental Person is required in connection with
the execution and delivery by the Company of this Agreement or any Notes
or the borrowing by the Company hereunder or in connection with the
consummation of any transaction contemplated hereby, except those
disclosed in Schedule 5.03 and which the Company has obtained or made.
5.04 Binding Effect. This Agreement is, and each Note when issued
will be, valid, binding and enforceable against the Company in accordance
with the terms thereof (subject, as to enforcement of remedies, to
applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws relating to or affecting the enforcement of creditors'
rights and general equitable principles which may limit the right to
obtain the remedy of specific performance of executory covenants and
other equitable remedies).
5.05 Litigation. No litigation or governmental proceeding is
pending or, to the knowledge of the Company, threatened, against the
Company for which sufficient provision has not been made in the financial
statements of the Company and which could have a material adverse effect
on the Company;s condition or business, financial or otherwise, or which
purport to affect or pertain to this Agreement or any of the transactions
contemplated hereby.
5.06 Financial Statements. The balance sheet dated as of January
25, 1995 and the related statements of income and stockholders' equity
and cash flow, of the Company and its Subsidiaries contained in the
annual report of the Company to its stockholders have been audited and
certified by Price Waterhouse, independent certified public accountants,
and are complete and accurate in all material respects and present fairly
the financial condition of the Company and its Subsidiaries as of the
dates of such statements and the results of their operations for the
periods covered thereby, in accordance with GAAP, consistently applied.
The balance sheet dated as of July 26, 1995 and the related statements of
income, stockholders' equity and cash flows of the Company and its
Subsidiaries contained in the quarterly report of the Company filed with
the U.S. Securities and Exchange Commission (the "SEC") on Form 10-Q are
complete and accurate in all material respects and present fairly the
financial condition of the Company and its Subsidiaries as of the dates
of such statements and the results of their operations for the periods
covered thereby, in accordance with GAAP, consistently applied.
5.07 Use of Proceeds; Margin Regulations. The proceeds of the
Loans will be used for general corporate and working capital
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purposes, including commercial paper backup. After applying the proceeds
of any borrowings hereunder, not more than 25% of the value of the assets
of the Company and its Subsidiaries will consist of "margin stock" as
such term is defined in Regulation G, T, U or X of the Federal Reserve
Board. The Company is not generally engaged in the business of
purchasing or selling margin stock or extending credit for the purpose of
purchasing or carrying margin stock.
5.08 No Default. No Potential Default or Event of Default exists
or would result from the incurring of any Obligations by it.
5.09 Taxes. The Company has filed all Federal and other material
tax returns and reports required to be filed, and has paid all Federal
and other material taxes, assessments, fees and other governmental
charges levied or imposed upon it or its properties, income or assets
otherwise due and payable, except those which are being contested in good
faith by appropriate proceedings and for which adequate reserves have
been provided in accordance with GAAP. There is no proposed tax
assessment against the Company that could, if made, have a Material
Adverse Effect.
5.10 Insurance. The properties and business of the Company are
insured in such amounts, with such deductibles and covering such risks as
are customarily carried by similar companies of comparable size engaged
in similar businesses and owning or operating similar properties in
localities where the Company operates.
5.11 Compliance With Laws. The Company is in compliance with all
applicable laws, rules and regulation (including environmental laws,
rules and regulations and the Employee Retirement Income Security Act of
1976, as amended, and all regulations thereunder) except where the
failure to be in such compliance could not reasonably be expected to have
a Material Adverse Effect.
ARTICLE VI
AFFIRMATIVE COVENANTS
The Company covenants and agrees that, so long as any Bank shall
have any Commitment hereunder, or any Loan or other Obligation shall
remain unpaid or unsatisfied:
6.01 Payment of Taxes. The Company will pay, when due, all taxes
assessed against the Company or its property and all other claims which
may become a Lien upon any of its property, except to the extent that (a)
the same are being contested in good faith by appropriate proceedings,
and (b) adequate reserves for payment thereof have been established in
accordance with GAAP.
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6.02 Insurance. The Company shall
maintain insurance with respect to its properties and business
in such amounts, with such deductibles and covering such risks
as are customarily carried by similar companies of comparable
size engaged in similar businesses and owning or operating
similar properties in localities where the Company operates.
6.03 Preservation of Corporate Existence,
Etc. The Company shall:
(a) preserve and maintain in full force
and effect its corporate existence and good standing
under the laws of its state or jurisdiction of
incorporation; and
(b) preserve and maintain in full force
and effect all governmental rights, privileges,
qualifications, permits, licenses and franchises
necessary or desirable in the normal conduct of its
business except in connection with transaction
permitted by Section 7.01 and dispositions of assets
permitted by Section 7.02.
6.04 Maintenance of Property. The
Company shall maintain and preserve all its property which is
used or useful in its business in good working order and
condition, ordinary wear and tear excepted, and make all
necessary repairs thereto and renewals and replacements
thereof except where the failure to do so could not reasonably
be expected to have a Material Adverse Effect, and except
as permitted by Section 7.02.
6.05 Compliance with Laws. The Company
shall comply in all material respects with all Requirements of
Law of any Governmental Authority having jurisdiction over it
or its business, except such as may be contested in good faith
or as to which a bona fide dispute may exist.
6.06 Books and Records; Other Information. The
Company shall maintain proper books of record and account in
which full, true and correct entries in conformity with GAAP
consistently applied shall be made of all financial
transactions and matters involving the assets and business of
the Company, and will provide to the Documentation Agent and
the Banks such other information as they may reasonably
request and which is reasonable available to the Company or
can be reasonable computed from the Company's books and
records.
6.07 Financial Information. The Company
shall deliver to the Documentation Agent for distribution to
the Banks (and, if requested, with sufficient copies for each
Bank):
(a) within sixty (60) days after the
end of each of the first three (3) fiscal quarters
of the Company, copies of (i) the consolidated
balance sheet of the Company and its
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Subsidiaries as of the end of such quarter, (ii) the consolidated
statement of income of the Company and its Subsidiaries for
such quarter and for the period from the end of the most recent fiscal
year of the Company through the end of such quarter, (iii) the
consolidated statement of cash flows of the Company and its Subsidaries
for the period from the end of the most recent fiscal year of the
Company through the end of such quarter, all prepared in accordance
with GAAP and certified by a Responsible Officer as being a fair
statement of results for the periods covered thereby, subject to
ordinary year-end audit adjustments;
(b) concurrently with the delivery of the financial
statements referred to in Sections 6.07(a) and (c) a
certificate duly completed and executed by a Responsible Officer, as to
compliance by the Company with the covenants contained in Sections 7.04
and 7.05 hereof, and stating that no Potential Default or Event of
Default then exists (or, if any should then exist, identifying the same
and stating any actions being taken by the Company with respect
thereto);
(c) within one hundred twenty (120) days after the end of
each fiscal year of the Company, copies of (i) the consolidated
balance sheet of the Company and its Subsidiaries as at the end of such
fiscal year, (ii) the consolidated statement of income of the Company
and its Subsidiaries for such fiscal year, and (iii) the consolidated
statement of cash flows of the Company and its Subsidiaries for such
fiscal year, setting forth in each case in comparative form the
corresponding figures for the previous fiscal year, all in reasonable
detail and prepared in accordance with GAAP and certified by a
nationally recognized independent public accounting firm; and
(d) promptly, copies of all financial statements and reports
that the Company sends to its shareholders and copies of all
Forms 10K, 10Q and 8K that the Company files with the SEC.
6.08 Notices.
(a) The Company shall notify each Bank promptly, but not later
than three (3) Business Days after the Company becomes aware
thereof, of the occurrence of any Event of Default.
(b) The Company shall notify the Documentation Agent for
distribution to the Banks promptly, but not later than three
(3) Business Days after the Company becomes aware thereof, of the
occurrence of:
(i) any Potential Default;
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(ii) any Material Adverse Effect or any event or other
development which could have a Material Adverse Effect;
(iii) any change in the Debt Rating by Moody's or S&P; or
(iv) any Reportable Event.
ARTICLE VII
NEGATIVE COVENANTS
The Company hereby covenants and agrees that, so long as any Bank
shall have any Commitment hereunder, or any Loan or other Obligation shall
remain unpaid or unsatisfied:
7.01 Consolidations and Mergers. The Company shall not merge or
consolidate with any other Person, unless:
(a) the successor formed by or resulting from such
consolidation or merger is the Company or a Subsidiary of the Company
(and, if the survivor is a Subsidiary of the Company, such Subsidiary
shall affirm the Company's Obligations under the Loan Documents in
writing), and
(b) no Event of Default or Potential Default shall have
occurred and then be continuing or would arise after giving effect
thereto.
7.02 Disposition of Assets. The Company shall not, directly or
indirectly, sell, assign, lease, convey, transfer or otherwise dispose of
(whether in one or a series of transactions) any property (including accounts
and notes receivable, with or without recourse) or enter into any agreement to
do any of the foregoing except:
(a) dispositions of inventory, or used, worn-out or surplus
equipment, all in the ordinary course of business;
(b) the sale of equipment to the extent that such equipment
is exchanged or credit against the purchase price of similar
replacement equipment, or the proceeds of such sale are reasonably
promptly applied to the purchase price of such replacement equipment;
(c) dispositions of inventory or equipment by the Company to
any Subsidiary pursuant to reasonable business requirements; and
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(d) other dispositions of assets having, in any fiscal year of the
Company, an aggregate book value not exceeding 10% of the Company's
consolidated total assets as of the end of the most recently ended
fiscal year of the Company, as reflected in the Company's balance sheet
contained in its audited financial statements for such fiscal year;
provided, however, that this Section 7.02 shall not be deemed to prohibit the
sale of all, substantially all, or a part of the capital stock or of all,
substantially all, or a part of the assets of any Specialty Retail Subsidiary
of the Company, even if such an entity is no longer a Subsidiary of the
Company, if (x) consideration received is fair market value (as determined by
the Company), or (y) the Company's board of directors deems such transaction to
be necessary by reason of applicable laws, regulations or governmental policies
applicable to the Company.
7.03 Limitation on Liens. The Company shall not incur any Indebtedness
which is secured by a Lien on any assets of the Company whether now owned or
hereafter acquired, unless, concurrently with creation of any such Lien
securing Indebtedness in an aggregate amount of $50,000,000 or more, the
Company shall cause the Obligations and its obligations under the Other Credit
Facilities to be equally and ratably secured by the same assets, provided,
however, that such restriction shall not apply with respect to any of the
following types of Liens:
(a) Liens for taxes not delinquent or being contested in good
faith;
(b) Liens created in connection with workers' compensation,
unemployment insurance and other social security legislation, or to
secure the performance of bids, tenders, contracts (other than for the
repayment of borrowed money), statutory obligations, surety and appeal
bonds and other similar obligations incurred in the ordinary course;
(c) purchase money mortgages (including vendors' rights under
purchase or land contracts or under other agreements whereby title or
other interest is retained by the vendor for the purpose of securing
the purchase price thereof) on property acquired or constructed after
the Closing Date, or the acquisition after the Closing Date of property
subject to such a Lien which is limited to such property and was not
created in anticipation of such acquisition;
(d) mortgages on real property which is the sole security for
Indebtedness the amount of which does not exceed the greater of the
cost of such property and improvements or the fair market value
thereof;
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(e) mortgages, security interests and Liens on assets of the
Company existing on the Closing Date and set forth on Schedule 7.03, or
any refundings or extensions for an amount not exceeding the principal
amount of such Indebtedness and applying only to the same property or
assets; and
(f) mortgages, security interests and Liens in connection with
indebtedness under industrial revenue bond financings or similar
government agency supported financings.
7.04 EBITDAR Coverage Ratio. The Company shall not permit its ratio of
(a) EBITDAR (measured as of the end of any fiscal quarter
ending after the Closing Date for the four fiscal quarters then ended)
to
(b) the sum of (i) consolidated net interest expense for such
four fiscal quarter period plus (ii) consolidated Rent Expense for such
four fiscal quarter period
to be less than 1.50 to 1.00.
7.05 Consolidated Net Worth. The Company shall not permit its
Consolidated Net Worth at any time to be less than Four Billion Five Hundred
Million Dollars ($4,500,000,000).
ARTICLE VIII
EVENTS OF DEFAULT
8.01 Event of Default. Any of the following shall constitute an "Event
of Default":
(a) Non-Payment of Principal. The Company fails to pay, when
and as required to be paid herein, any amount of principal of any Loan
and such default shall continue unremedied for a period of two (2)
Business Days after the date upon which notice thereof is received by
the Company from the Documentation Agent; or
(b) Non-Payment of Interest or Fees. The Company fails to pay,
when and as required to be paid herein, any interest or any fees
payable hereunder and such default shall continue unremedied for a
period of five (5) Business Days after the date upon which notice
thereof is received by the Company from the Documentation Agent; or
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(c) Specific Defaults. The Company fails to perform or observe
any term, covenant or agreement contained in Sections 6.02,
6.03, 6.08(a), 7.01, 7.02 and 7.03; or
(d) Other Defaults. The Company fails to perform or observe
any other term or covenant contained in this Agreement and such
default shall continue unremedied for a period of thirty (30) days
after the date upon which written notice thereof is given to the
Company by the Documentation Agent or any Bank; or
(e) Representation or Warranty. Any representation or
warranty by the Company made or deemed made herein proves to have been
inaccurate or untrue in any material respect on or as of the date made
or deemed made; or
(f) Cross-Default; Cross-Acceleration. (i) The Company fails
to make any payment of principal or interest or fees under any of
the Other Credit Facilities when due after taking into account any
applicable grace periods, or (ii) by reason of any action taken by
the Company with the intent and capacity promptly to satisfy any
obligation of the Company resulting therefrom, including, without
limitation, the calling for payment by the Company of any of
its Indebtedness or the termination by the Company of any of its
guaranty obligations, any Indebtedness shall mature or be declared
due and payable prior to its stated maturity and such Indebtedness
shall remain unpaid for a period of two (2) Business Days thereafter,
or (iii) the Company fails to perform or observe any condition or
covenant or any other event shall occur or condition exist (other
than with respect to matters described under clause (ii) immediately
preceding) relating to Indebtedness (other than Indebtedness under the
Other Credit Facilities) having an aggregate principal amount
(including undrawn committed or available amounts) of more than
One Hundred Million Dollars ($100,000,000) if the effect of any
such failure, event or condition is to cause such Indebtedness to be
declared to be due and payable or otherwise become due and payable
prior to its stated maturity, or (iv) the Company fails to pay any
such other Indebtedness in full at its stated maturity; or
(g) ERISA. The occurrence of a Reportable Event which the
PBGC deems grounds to terminate any employee pension benefit plan
or for the appointment of a trustee to administer such plan
and such Reportable Event is not corrected and such determination
by the PBGC is not revoked within thirty (30) days after notice
thereof; or the institution of proceedings by the PBGC to terminate
any such plan; or appointment of a trustee to administer any such
plan; or
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(h) Monetary Judgments. A final judgment or judgments in excess
of One Hundred Million Dollars ($100,000,000) shall be entered against
the Company by a court of record and not discharged in accordance with
its terms or, within sixty (60) days from the date of entry thereof,
stayed from execution and (within said period of sixty (60) days or
such longer period during which execution of such judgment(s) shall
have been stayed) appeal taken therefrom and execution thereof stayed
during such appeal; or
(i) Insolvency; Voluntary Proceedings. The Company (i)
generally fails to pay, or admits in writing its inability to pay, its
debts as they become due, subject to applicable grace periods, if any,
whether at stated maturity or otherwise; (ii) voluntarily ceases to
conduct its business in the ordinary course; (iii) commences any
Insolvency Proceeding with respect to itself; or (iv) takes any action
to effectuate or authorize any of the foregoing; or
(j) Involuntary Proceedings. (i) Any involuntary Insolvency
Proceeding is commenced or filed against the Company, or any writ,
judgment, warrant of attachment, execution or similar process, is
issued or levied against a substantial part of the Company's
properties, and any such proceeding or petition is not dismissed, or
such writ, judgment, warrant of attachment, execution or similar
process is not released, vacated or fully bonded within 60 days after
commencement, filing or levy; (ii) the Company admits the material
allegations of a petition against it in any Insolvency Proceeding, or
an order for relief is entered in any Insolvency Proceeding; or (iii)
the Company acquiesces in the appointment of a receiver, trustee,
custodian, conservator, liquidator, mortgagee in possession (or agent
therefor), or other similar Person for itself or a substantial portion
of its business.
8.02 Remedies. If any Event of Default occurs, the Documentation Agent
shall, at the request of, or may, with the consent of, the Required Banks,
(a) declare the Commitment of each Bank to make Loans to be
terminated, whereupon such Commitments shall forthwith be terminated;
(b) declare the unpaid principal amount of all outstanding
Loans, all interest accrued and unpaid thereon, and all other amounts
owing or payable hereunder or under any other Loan Document to be
immediately due and payable; without presentment, demand, protest or
other notice of any kind, all of which are hereby expressly waived by
the Company; and
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(c) exercise on behalf of itself and the Banks all rights and
remedies available to it and the Banks under the Loan Documents
or applicable law;
provided, that upon the occurrence of any event specified in Section 8.01(i) or
8.01(j) above (upon the expiration of the 60-day period mentioned therein, if
applicable), the Commitment of each Bank shall automatically terminate and the
unpaid principal amount of all outstanding Loans and all interest and other
amounts as aforesaid shall automatically become due and payable without further
act of the Documentation Agent or any Bank. Any payments received after the
Banks have taken action pursuant to Section 8.02(b) shall be allocated ratably
among the Loans.
8.03 Rights Not Exclusive. The rights provided for in this Agreement
and the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement now existing or hereafter arising.
ARTICLE IX
THE DOCUMENTATION AGENT
9.01 Authorization; "Documentation Agent". Each Bank hereby
irrevocably (except as otherwise set forth in Section 9.09) appoints,
designates and authorizes the Documentation Agent to take such action on its
behalf under the provisions of this Agreement and each other Loan Document and
to exercise such powers and perform such duties as are expressly delegated to
it by the terms of this Agreement or any other Loan Document, together with
such powers as are reasonably incidental thereto. Notwithstanding any
provision to the contrary contained elsewhere in this Agreement or in any other
Loan Document, the Documentation Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall the
Documentation Agent have or be deemed to have any fiduciary relationship with
any Bank, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against the Documentation Agent. Without limiting
the generality of the foregoing sentence, the use of the term "agent" in this
Agreement with reference to the Documentation Agent is not intended to connote
any fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable law. Instead, such term is used merely as a matter
of market custom and is intended to create or reflect only an administrative
relationship between independent contracting parties.
9.02 Delegation of Duties. The Documentation Agent may execute any of
its duties under this Agreement or any other Loan
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Document by or through agents, employees or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
The Documentation Agent shall not be responsible for the negligence or
misconduct of any agent or attorney-in-fact that it selects with reasonable
care.
9.03 Liability of Agent-Related Persons. No Agent-Related Persons
shall (i) be liable for any action taken or omitted to be taken by any of them
under or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own negligence under or breach
or default of its obligations under this Agreement), or (ii) be responsible in
any manner to any of the Banks for any recital, statement, representation or
warranty made by the Company or any Subsidiary or Affiliate of the Company, or
any officer thereof, contained in this Agreement or in any other Loan Document,
or in any certificate, report, statement or other document referred to or
provided for in, or received by the Documentation Agent under or in connection
with, this Agreement or any other Loan Document, or the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document, or for any failure of the Company or any other party
to any Loan Document to perform its obligations hereunder or thereunder. No
Agent-Related Person shall be under any obligation to any Bank to ascertain or
to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document, or
to inspect the Properties, books or records of the Company or any the Company's
Subsidiaries or Affiliates.
9.04 Reliance by Documentation Agent.
(a) The Documentation Agent shall be entitled to rely, and shall
be fully protected in relying, upon any writing, resolution, notice, consent,
certificated, affidavit, letter, telegram, facsimile, telex or telephone
message, statement or other document or conversion believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons, and upon advice and statements of legal counsel (including counsel to
the Company), independent accountants and other experts selected by the
Documentation Agent. The Documentation Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the
Required Banks as it deems appropriate and, if it so requests, it shall first
be indemnified to its satisfaction by the Banks against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Documentation Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement or any
other Loan Document in accordance with a request or consent of all of the Banks
or the Required Banks, as applicable, and such request and any action
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taken or failure to act pursuant thereto shall be binding upon all of the
Banks.
(b) For purposes of determining compliance with the conditions
specified in Section 4.01, each Bank that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with each
document or other matter either sent by the Documentation Agent to such Bank
for consent, approval, acceptance or satisfaction or required thereunder to be
consented to or approved by or acceptable or satisfactory to the Bank.
9.05 Notice of Default. The Documentation Agent shall not be deemed
to have knowledge or notice of the occurrence of any Potential Default or Event
of Default, except with respect to defaults in the payment of principal,
interest and fees required to be paid to the Documentation Agent for the
account of the Banks, unless the Documentation Agent shall have received
written notice from a Bank or the Company referring to this Agreement,
describing such Potential Default or Event of Default and stating that such
notice is a "notice of default". The Documentation Agent will notify the Banks
of its receipt of any such notice. The Documentation Agent shall take such
action with respect to such Potential Default or Event of Default as shall be
requested by the Required Banks in accordance with Article VIII; provided,
however, that unless and until the Documentation Agent has received any such
request, the Documentation Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Potential
Default or Event of Default as it shall deem advisable or in the best interest
of the Banks.
9.06 Credit Decision. Each Bank expressly acknowledges that none
of the Agent-Related Persons has made any representation or warranty to it and
that no act by the Documentation Agent hereinafter taken, including any review
of the affairs of the Company and its Subsidiaries shall be deemed to
constitute any representation or warranty by any Agent-Related Person to any
Bank. Each Bank represents to the Documentation Agent that it has,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Company and
its Subsidiaries, and all applicable bank regulatory laws relating to the
transactions contemplated hereby and made its own decision to enter into this
Agreement and extend credit to the Company hereunder. Each Bank also represents
that it will, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents
and to make such investigations as it deems necessary to
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inform itself as to the business, prospects, operations, property, financial
and other condition and creditworthiness of the Company. Except for notices,
reports and other documents expressly herein required to be furnished to the
Banks by the Documentation Agent, the Documentation Agent shall not have any
duty or responsibility to provide any Bank with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of the Company which may come into the possession
of any of the Agent-Related Persons.
9.07 Indemnification. Whether or not the transactions contemplated
hereby are consummated, the Banks shall indemnify upon demand the Agent-Related
Persons (to the extent not reimbursed by or on behalf of the Company and
without limiting the obligation of the Company to do so), pro rata (as
determined in accordance with their respective Commitment Percentages) from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses and disbursements of any kind
whatsoever which may at any time (including at any time following the repayment
of the Loans) be imposed on, incurred by or asserted against any such Person
any way relating to or arising out of this Agreement or any document
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by any such
Person under or in connection with any of the foregoing; provided, however,
that no Bank shall be liable for the payment to the Agent-Related Persons of
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting solely
from such Person's gross negligence or willful misconduct. Without limitation
of the foregoing, each Bank shall reimburse the Documentation Agent upon demand
for its ratable share of any costs or out-of-pocket expenses (including
Attorney Costs) incurred by the Documentation Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein
to the extent that the Documentation Agent is not reimbursed for such expenses
by or on behalf of the Company. The obligation of the Banks in this Section
9.07 shall survive the payment of all Obligations hereunder and the resignation
or replacement of the Documentation Agent.
9.08 Documentation Agent in Individual Capacity. BofA and its
Affiliates may make loans to, issue letters of credit for the account of,
accept deposits from, acquire equity interests in and generally engage in any
kind of banking, trust, financial advisory, underwriting or other business with
the Company and its Affiliates as though BofA were not the Documentation Agent
hereunder and without notice to or consent of the Banks. The Banks acknowledge
that, pursuant to such activities, BofA or its Affiliates may receive
information regarding the Company or its Subsidiaries and
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Affiliates (including information that may be subject to confidentiality
obligations in favor of the Company or such Subsidiary or Affiliate) and
acknowledge that the Documentation Agent shall be under no obligation to
provide such information to them. With respect to its Loans, the Documentation
Agent shall have the same rights and powers under this Agreement as any other
Bank and may exercise the same as though it were not the Documentation Agent
and the terms "Bank" and "Banks" shall include BofA in its individual capacity.
The Banks further acknowledge that BofA acts as documentation agent under the
credit facilities described in clauses (a) and (b) of the definition of "Other
Credit Facilities".
9.09 Successor Documentation Agent. The Documentation Agent may, and at
the request of the Required Banks shall, resign as Documentation Agent, upon
thirty days' notice to the Banks and the Company. If the Documentation Agent
resigns under this Agreement, the Required Banks shall appoint from among the
Banks a successor Documentation Agent which successor Documentation Agent shall
be subject to the reasonable approval of the Company, provided no Event of
Default then exists. If no successor Documentation Agent is appointed prior to
the effective date of the resignation of the resigning Documentation Agent, the
Documentation Agent may appoint, after consulting with the Banks and subject to
the approval of the Company, a successor Documentation Agent from among the
Banks. Upon the acceptance of its appointment as successor Documentation Agent
hereunder, such successor Documentation Agent shall succeed to all the rights,
powers and duties of the retiring Documentation Agent and the term
"Documentation Agent" shall mean such successor Documentation Agent and the
retiring Documentation Agent's appointment, rights, powers and duties in such
capacity shall be terminated. After any retiring Documentation Agent's
resignation hereunder as Documentation Agent, the provisions of this Article IX
and Sections 10.04 and 10.05 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was the Documentation Agent under this
Agreement. If no successor Documentation Agent has accepted appointment as
Documentation Agent by the date which is thirty days following a retiring
Documentation Agent's notice of resignation, the retiring Documentation Agent's
notice of resignation shall nevertheless thereupon become effective and the
Banks shall perform all of the duties of the Documentation Agent until such
time, if any, as the Required Banks appoint a successor Documentation Agent as
provided for above.
9.10 Withholding Tax.
(a) If any Bank is a "foreign corporation, partnership or trust" within
the meaning of the Code and such Bank claims exemption from, or a reduction of,
U.S. withholding tax under Sections 1441 or 1442 of the Code, such Bank agrees
with and in favor of the Documentation Agent, to deliver to the Documentation
Agent:
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(i) if such Bank claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, two (2)
properly completed and executed originals of IRS Form 1001 ("Form
1001") before the payment of any interest in the first calendar year
and before the payment of any interest in each third succeeding
calendar year during which interest may be paid under this Agreement;
(ii) if such Bank claims that interest paid under this
Agreement is exempt from United States withholding tax because
it is effectively connected with a United States trade or business of
such Bank, two (2) properly completed and executed originals of IRS
Form 4224 ("Form 4224") before the payment of any interest is due in
the first taxable year of such Bank and in each succeeding taxable year
of such Bank during which interest may be paid under this Agreement;
and
(iii) such other form or forms as may be required under the
Code or other laws of the United States as a condition to
exemption from, or reduction of, United States withholding tax.
Such Bank agrees to promptly notify the Documentation Agent of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Bank claims exemption from, or reduction of, withholding
tax under a United States tax treaty by providing IRS Form 1001 and such Bank
sells, assigns, grants a participation in, or otherwise transfers all or part
of the Obligations of the Company to such Bank, such Bank agrees to notify the
Documentation Agent of the percentage amount in which it is no longer the
beneficial owner of Obligations of the Company to such Bank. To the extent of
such percentage amount, the Documentation Agent will treat such Bank's IRS Form
1001 as no longer valid.
(c) If any Bank claiming exemption from United States withholding tax
by filing IRS Form 4224 with the Documentation Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations of the
Company to such Bank, such Bank agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the Code.
(d) If any Bank is entitled to a reduction in the applicable
withholding tax, the Documentation Agent may withhold from any interest payment
to such Bank an amount equivalent to the applicable withholding tax after
taking into account such reduction. If the forms or other documentation
required by subsection (a) of this Section are not delivered to the
Documentation Agent, then the Documentation Agent may withhold from any
interest payment to such Bank not providing such forms or other
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documentation an amount equivalent to the applicable withholding tax.
(e) If the IRS or any other Governmental Authority of the United States
or other jurisdiction asserts a claim that the Documentation Agent did not
properly withhold tax from amounts paid to or for the account of any Bank
(because the appropriate form was not delivered or properly executed, because
such Bank failed to notify the Documentation Agent of a change in circumstances
which rendered the exemption from, or reduction of, withholding tax
ineffective, or for any other reason) such Bank shall indemnify the
Documentation Agent fully for all amounts paid, directly or indirectly, by the
Documentation Agent as tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the amount payable to the
Documentation Agent under this Section, together with all costs and expenses
(including Attorney Costs). The obligation of the Banks under this subsection
shall survive the payment of all Obligations and the resignation or replacement
of the Documentation Agent.
ARTICLE X
MISCELLANEOUS
10.01 Amendments and Waivers. No amendment or waiver of any provision
of this Agreement or any other Loan Document, and no consent with respect to
any departure by the Company therefrom, shall be effective unless the same
shall be in writing and signed by the Required Banks and acknowledged in
writing by the Documentation Agent, and then such waiver shall be effective
only in the specific instance and for the specific purpose for which given;
provided, however, that no such waiver, amendment, or consent shall, unless in
writing and signed by all the Banks, do any of the following:
(a) increase the Commitment of any Bank;
(b) postpone or delay any date fixed for any payment of
principal, interest, fees or other amounts due hereunder or under any
Loan Document;
(c) reduce the principal of, or the rate of interest specified
herein on any Loan, or of any fees or other amounts payable hereunder
or under any Loan Document;
(d) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans which shall be required
for the Banks or any of them to take any action hereunder;
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(e) amend this Section 10.01 or Section 2.10;
(f) extend the Current Commitment Termination Date or the
Termination Date; or
(g) amend the definition of "Required Banks";
provided, further, that no amendment, waiver or consent shall, unless in
writing and consented to and signed by the Documentation Agent, in addition to
the Required Banks or all the Banks, as the case may be, affect the rights or
duties of the Documentation Agent under this Agreement or any other Loan
Agreement.
10.02 Notices.
(a) All notices, requests and other communications provided for
hereunder shall be in writing (including, unless the context expressly
otherwise provides, by facsimile transmission) and mailed, faxed, or delivered,
(i) if to the Company, to its address specified on the signature pages hereof,
(ii) if to any Bank, to its Lending Office, and (iii) if to the Documentation
Agent, to its address specified on the signature pages hereof; or (iv) as to
any party to such other address as shall be designated by such party in a
written notice to the other parties.
(b) All such notices and communications shall, when transmitted by
overnight delivery or by facsimile, be effective when delivered for overnight
delivery or transmitted by facsimile (to be promptly confirmed by sender by
telephone), respectively, or if delivered, upon delivery, except that notices
pursuant to Article II or VIII shall not be effective until actually received
by the Documentation Agent.
(c) The Company acknowledges and agrees that any agreement of the
Documentation Agent and the Banks in Article II herein to receive certain
notices by telephone and facsimile is solely for the convenience and at the
request of the Company. The Documentation Agent and the Banks shall be entitled
to rely in good faith on the authority of any Person purporting to be a Person
authorized by the Company to give such notice and the Documentation Agent and
the Banks shall not have any liability to the Company or other Person on
account of any action taken or not taken by the Documentation Agent and the
Banks in good faith reliance upon such telephonic or facsimile notice. The
obligation of the Company to repay the Loans or any other Obligations shall not
be affected in any way or to any extent by any failure by the Documentation
Agent and the Banks to receive written confirmation of any telephonic or
facsimile notice or the receipt by the Documentation Agent and the Banks of a
confirmation which is at variance with the terms conveyed to the Documentation
Agent and the Banks in the telephonic or facsimile notice.
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10.03 No Waiver. No failure to exercise and no delay in
exercising, on the part of the Documentation Agent or any Bank, any right,
remedy, power or privilege hereunder, shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege.
10.04 Costs and Expenses. The Company shall, whether or not the
transactions contemplated hereby shall be consummated:
(a) pay or reimburse the Documentation Agent on demand for
all costs and expenses incurred by the Documentation Agent in
connection with the development, preparation, delivery, administration
and execution of, and any amendment, supplement, waiver or modification
to, this Agreement, any Loan Document and any other documents prepared
in connection herewith or therewith, and the consummation of the
transactions contemplated hereby and thereby, including the Attorney
Costs incurred by it with respect thereto; provided, that the allocated
cost of internal legal services and the disbursements of internal
counsel incurred in connection with the development, preparation,
delivery and execution of this Agreement and the other Loan Documents
shall not be reimbursed by the Company;
(b) pay or reimburse each Bank and the Documentation Agent
on demand for all reasonable costs and expenses incurred by them in
connection with the enforcement, attempted enforcement, or preservation
of any rights or remedies (including in connection with any "workout"
or restructuring regarding the Loans or any Event of Default or
Potential Default) under this Agreement, any other Loan Document, and
any such other documents, including Attorney Costs incurred by the
Documentation Agent and any Bank; and
(c) pay or reimburse the Documentation Agent on demand for
all reasonable appraisal (including the allocated cost of internal
appraisal services), audit, environmental inspection and review
(including the allocated cost of such internal services), search and
filing costs, fees and expenses, incurred or sustained by the
Documentation Agent in connection with the matters referred to under
clause (b) of this Section 10.04.
10.05 Indemnity. The Company agrees to indemnify and hold
harmless the Banks, the Documentation Agent, the Arrangers and each director,
officer and employee of each of them (each, an "Indemnified Person") from and
against any and all actions, suits, proceedings, damages, liabilities or
expenses of any kind of nature whatsoever which may be incurred by or asserted
against any such Indemnified Person: (a) as a result of the Company's making
any
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<PAGE> 57
untrue statement of a material fact or omitting to state a material fact under
or pursuant to the Contract Documents, or the Company's negligence under, or
breach or default of, the Contract Documents; or (b) by any third party who has
a relationship with the Company and asserts in connection therewith that an
Indemnified Person is liable to such third party by reason of the Contract
Documents between the Company and the Banks, the Documentation Agent and/or the
Arrangers; provided, that no Indemnified Person shall be indemnified with
respect to such party's breach, default, negligence or bad faith in performing
its duties and obligations under any of the Contract Documents. For purposes
hereof, the term "Contract Documents" means the Loan Documents and any further
agreements or instruments entered into pursuant to this Agreement. Any
Indemnified Person seeking indemnification pursuant hereto with respect to a
third party claim must give the Company timely notice of any such claim and
cooperate in the defense thereof, and the Company shall have the right to
control the defense thereof and, if the same shall not involve any payment or
performance by the Indemnified Person, settlement of such claim.
10.06 Marshalling; Payments Set Aside. Neither the Documentation
Agent nor any Bank shall be under any obligation to marshall any assets in
favor of the Company or any other Person or against or in payment of any or all
of the Obligations. To the extent that the Company makes a payment or payments
to the Documentation Agent or the Banks, or the Documentation Agent or the
Banks enforce their Liens or exercise their rights of set-off, and such payment
or payments or the proceeds of such enforcement or set-off or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside or required to be repaid to a trustee, receiver or any other party in
connection with any Insolvency Proceeding, or otherwise, then to the extent of
such recovery the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or set-off had not occurred.
10.07 Successors and Assigns. Subject to Section 10.08 hereof, the
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns, except that the
Company may not assign or transfer any of its rights or obligations under this
Agreement without the prior written consent of the Documentation Agent and each
Bank.
10.08 Assignments, Participations, Etc.
(a) Any Bank may, with the written consent of the Company and the
Documentation Agent, which consents shall not be unreasonably withheld, at any
time assign and delegate to one or more Eligible Assignees (provided that no
written consent of the Company or the Documentation Agent shall be required in
connection with any
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<PAGE> 58
assignment and delegation by a Bank to a Bank Affiliate of such Bank or
to any other Bank) (each an "Assignee") all, or any part of all, of its Loans,
its Commitment and the other rights and obligations of such Bank hereunder, in
a minimum amount (except with respect to assignments to other Banks or Bank
Affiliates) of Ten Million Dollars ($10,000,000); provided, however, that the
Company and the Documentation Agent may continue to deal solely and directly
with such Bank in connection with the interest so assigned to an Assignee until
(A) written notice of such assignment in form and substance satisfactory to the
Company and the Documentation Agent, together with payment instructions,
addresses and related information with respect to the Assignee, shall have been
given to the Company and the Documentation Agent by such Bank and the Assignee;
(B) such Bank and its Assignee shall have delivered to the Company and the
Documentation Agent an Assignment and Acceptance in the form of Exhibit E
("Assignment and Acceptance"); (C) such Bank or its Assignee shall have paid
the processing fee of $3,000 to the Documentation Agent (with only one such fee
to be payable in respect of all concurrent assignments made by such Bank to
such Assignee regarding this Agreement and such of the Other Credit Facilities
as to which BofA acts as documentation agent); and (D) the assigning Bank shall
have delivered any Note payable to such Bank to the Documentation Agent.
(b) From and after the date that the Documentation Agent notifies the
assignor Bank that the requirements of Section 10.08(a) are satisfied (i) the
Assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, shall have the rights and obligations of a Bank under the Loan
Documents, and (ii) the assignor Bank shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its additional
obligations under the Loan Documents.
(c) Immediately upon each Assignee's making its payment under the
Assignment and Acceptance, this Agreement shall be deemed to be amended to the
extent, but only to the extent, necessary to reflect the addition of the
Assignee and the resulting adjustment of the Commitments arising therefrom. The
Commitment allocated to each Assignee shall reduce the Commitment of the
assigning Bank pro tanto.
(d) Any Bank may at any time sell to one or more commercial banks (a
"Participant") participating interests in any Loans, the Commitment of that
Bank and the other interests of that Bank (the "Originating Bank") hereunder
and under the other Loan Documents; provided, however, that (i) the Originating
Bank's obligations under this Agreement shall remain unchanged, (ii) the
Originating Bank shall remain solely responsible for the performance of such
obligations, (iii) the Company and the Documentation Agent shall
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<PAGE> 59
continue to deal solely and directly with the Originating Bank in connection
with the Originating Bank's rights and obligations under this Agreement and the
other Loan Documents, and (iv) no Bank shall transfer or grant any
participating interest under which the Participant shall have rights to approve
any amendment to, or any consent or waiver with respect to, this Agreement or
any other Loan Document, except to the extent such amendment, consent or waiver
would require unanimous consent as described in clause (b), (c) or (f) of the
first proviso to Section 10.01. In the case of any such participation, the
Participant shall be entitled to the benefits of Section 3.01, 3.03 and 3.05
but only to the extent it would be entitled to the same if it were also a Bank
which is an Eligible Assignee, but shall not have any other rights under this
Agreement, or any of the other Loan Documents, and all amounts payable by the
Company hereunder shall be determined as if such Bank had not sold such
participation; except that, if amounts outstanding under this Agreement are due
and unpaid, or shall have been declared or shall have become due and payable
upon the occurrence of an Event of Default, each Participant shall be deemed to
have the right of set-off in respect of its participating interest in amounts
owing under this Agreement and the obligation under Section 2.13 to share any
excess payment received by such Participant, all to the same extent as if the
amount of its participating interest were owing directly to it as a Bank under
this Agreement.
(e) Each Bank and the Documentation Agent agrees to take normal and
reasonable precautions and exercise due care to maintain the confidentiality of
all information identified as "confidential" by the Company provided to it by
the Company or by the Documentation Agent on the Company's behalf, in
connection with this Agreement or any other Loan Document, and neither it nor
any of its Affiliates shall use or disclose any such information for any
purpose or in any manner other than pursuant to the terms contemplated by this
Agreement, except to the extent such information (i) was or becomes generally
available to the public other than as a result of a disclosure by a party to
this Agreement, or (ii) was or becomes available on a non-confidential basis
from a source other than the Company, provided that such source is not bound by
a confidentiality agreement with the Company known to the Bank; provided,
however, that the Documentation Agent or any Bank may disclose such information
(A) at the request or pursuant to any requirement of any Governmental Authority
to which the Documentation Agent or such Bank is subject or in connection with
an examination of the Documentation Agent or such Bank by any such authority;
(B) pursuant to subpoena or other court process; (C) when required to do so in
accordance with the provisions of any applicable Requirement of Law; and (D) to
the Documentation Agent's or such Bank's independent auditors and other
professional advisors in the ordinary course of and within the scope of such
advisors' engagements. Notwithstanding the foregoing, the Company authorizes
each Bank to disclose to any Participant or Assignee (each, a "Transferee") and
to any prospective Transferee, such financial and
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<PAGE> 60
other information in such Bank's possession concerning the Company or its
Subsidiaries which has been delivered to the Documentation Agent or the
Banks pursuant to this Agreement or which has been delivered to the
Documentation Agent or the Banks by the Company in connection with the
Banks' credit evaluation of the Company prior to entering into this
Agreement; provided, that unless otherwise agreed by the Company, such
Transferee or prospective Transferee agrees in writing to such Bank to
Keep such information confidential to the same extent required of the
Banks hereunder. Each Bank agrees that its obligations under this Section
10.08 shall survive any sale or assignment of its interests to a
Transferee.
(f) Notwithstanding any other provision contained in this
Agreement or any other Loan Document to the contrary, any Bank may assign
all or any portion of the Loans held by it to any Federal Reserve Bank or
the United States treasury as collateral security pursuant to Regulation
A of the Federal Reserve Board and any Operating Circular issued by such
Federal Reserve Bank, provided that any payment in respect of such
assigned Loans or Notes made by the Company to or for the account of the
assigning Bank in accordance with the terms of this Agreement shall
satisfy the Company's obligations hereunder in respect to such assigned
Loans or Notes to the extent of such payment. No such assignment shall
release the assigning Bank from its obligations hereunder. Each Bank
agrees to give the Company prompt written notice prior to any disclosure
or release of any confidential material pursuant to the first proviso of
Section 10.08 (e).
10.09 Set-off. In addition to any rights and remedies of the
Banks provided by law, if the Obligations shall have become due and
payable in full, each Bank is authorized at any time and from time to
time, without prior notice to the Company, any such notice being waived
by the Company 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 by, and other indebtedness at any
time owing to, such Bank to or for the credit or the account of the
Company against any and all Obligations owing to such Bank, now or
hereafter existing, irrespective of whether or not the Documentation
Agent or such Bank shall have made demand under this Agreement or any
Loan Document. Each Bank agrees promptly to notify the Company and the
Documentation Agent after any such set-off and application made by such
Bank; provided, that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Bank under
this Section 10.09 are in addition to the other rights and remedies
(including other rights of set-off) which such Bank may have.
10.10 Notification of Addresses, Lending Offices, Etc. Each
Bank shall notify the Documentation Agent and the Company in writing of
any changes in the address to which notices to the Bank should be
directed, of the addresses of any of its Lending Offices
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<PAGE> 61
of payment instructions in respect of all payments to be made to it
hereunder and of such other administrative information as the
Documentation Agent or the Company shall reasonably request.
10.11 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement in any number of separate
counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument. A set of the copies of this
Agreement signed by all the parties shall be lodged with the Company and
the Documentation Agent.
10.12 Severability. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required
hereunder shall not in any way affect or impair the legality or
enforceability of the remaining provisions of this Agreement or any
instrument or agreement required hereunder.
10.13 No Third Parties Benefited. This Agreement is made and
entered into for the sole protection and legal benefit of the Company,
the Banks and the Documentation Agent and their permitted successors and
assigns, and no other Person shall be a direct or indirect legal
beneficiary of, or have any direct or indirect cause of action or claim
in connection with, this Agreement or any of the other loan Documents.
Neither the Documentation Agent nor any Bank shall have any obligation to
any Person not a party to this Agreement or other Loan Documents.
10.14 Governing Law and Jurisdiction.
(A) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK (WITHOUT REGARD TO
CONFLICTS OF LAW PROVISIONS THEREOF); PROVIDED THAT THE COMPANY, THE
DOCUMENTATION AGENT AND THE BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER
FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF
NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK,
AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANY, THE
DOCUMENTATION AGENT AND THE BANKS CONSENTS, FOR ITSELF AND IN RESPECT OF
ITS PROPERTY, TO THE JURISDICTION OF THOSE COURTS. EACH OF THE COMPANY,
THE DOCUMENTATION AGENT AND THE BANKS IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING
OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE COMPANY, THE DOCUMENTATION
AGENT AND THE BANKS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT
OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW
YORK LAW.
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<PAGE> 62
10.15 Waiver of Jury Trial. THE COMPANY, THE BANKS AND THE
DOCUMENTATION AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED
TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER
LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER
PARTY OR PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS,
OR OTHERWISE. THE COMPANY, THE BANKS AND THE DOCUMENTATION AGENT EACH
AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT
TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES
FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRAIL BY JURY IS WAIVED BY
OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER
PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY
PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS.
10.16 Entire Agreement. This Agreement, together with the
other Loan Documents, embodies the entire agreement and understanding
among the Company, the Banks and the Documentation Agent, and supersedes
all prior or contemporaneous agreements and understandings of such
Persons, verbal or written, relating to the subject matter hereof and
thereof, except for the fee letters referenced in Sections 2.09(b) and
2.09(c), and any prior arrangements made with respect to the payment by
the Company of (or any indemnification for) any fees, costs or expenses
payable to or incurred (or to be incurred) by or on behalf of the
Documentation Agent or the Banks.
[BALANCE OF PAGE LEFT INTENTIONALLY BLANK; SIGNATURE PAGES FOLLOW.]
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<PAGE> 63
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
KMART CORPORATION
By: James P. Churillo
Title: Vice President and Treasurer
Address for Notices:
3100 West Big Beaver Road
Troy, MI 48084
Attn: Treasurer
Facsimile: (810) 643-5398
Telephone: (810) 643-1000
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Documentation Agent
By: _____________________________
Title: __________________________
Address for Notices:
1455 Market Street, 12th Floor
San Francisco, CA 94103
Attn: Agency Management Services
Facsimile: (415) 622-4894
Telephone: (415) 953-8501
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<PAGE> 64
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
KMART CORPORATION
By: ______________________________
Title: ___________________________
Address for Notices:
3100 West Big Beaver Road
Troy, MI 48084
Attn: Treasurer
Facsimile: (810) 643-5398
Telephone: (810) 643-1000
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Documentation Agent
By: /S/ DIETMAR SCHIEL
Title: Vice President
Address for Notices:
1455 Market Street, 12th Floor
San Francisco, CA 94103
Attn: Agency Management Services
Facsimile: (415) 622-4894
Telephone: (415) 953-8501
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<PAGE> 65
Schedule I
Banca Comerciale Italiana, Chicago Branch
Banca Nazionale del Lavoro S.p.A. - New York Branch
Bankers Trust Company
Bank of America National Trust and Savings Association
The Bank of California, N.A.
Bank of Hawaii
The Bank of New York
The Bank of Tokyo Trust Company
Barnett Bank of South Florida, N.A.
Caisse Nationale de Credit Agricole
Canadian Imperial Bank of Commerce
Comerica Bank
Credit Lyonnais Chicago Branch
Credit Lyonnais Cayman Island Branch
Credit Suisse
The Dai-Ichi Kangyo Bank, Ltd., Chicago Branch
The Daiwa Bank, Limited, New York Branch
<PAGE> 66
Deutsche Bank AG, Chicago and/or Cayman Islands Branches
First Interstate Bank of California
The First National Bank of Boston
The First National Bank of Maryland
First Tennessee Bank National Association
Fleet Bank of Massachusetts, N.A.
The Fuji Bank, Limited
Instituto Bancario San Paolo di Torino S.p.A.
Lloyds Bank Plc
The Long-Term Credit Bank of Japan, Ltd. Chicago Branch
Michigan National Bank
Morgan Guaranty Trust Company of New York
Mitsubishi Trust and Banking Corp.
National City Bank, Columbus
NationsBank, N.A. (Carolinas)
NBD Bank
Royal Bank of Canada
The Sakura Bank, Limited
<PAGE> 67
The Sanwa Bank, Limited, Chicago Branch
Societe Generale
Society National Bank
The Sumitomo Trust & Banking Co., Ltd.
New York Branch
The Sumitomo Bank, Limited, Chicago
Branch
The Tokai Bank, Ltd., Chicago Branch
UMB Bank, n.a.
Union Bank
Union Bank of Switzerland - Chicago
Branch
United States National Bank of Oregon
Yasuda Trust and Banking Company, Limited
<PAGE> 68
SCHEDULE 5.03
CONSENTS AND APPROVALS
None.
<PAGE> 69
SCHEDULE 7.03
EXISTING MORTGAGES, SECURITY INTERESTS AND
LIENS ON ASSETS OF THE COMPANY
Liens/Security Interests/Mortgages on PACE properties
Current Mortgages existing on Kmart Corporation's properties as of August 23,
1995 was $312 million
Kmart Corporation has guaranteed indebtedness related to certain of its
properties financed by industrial revenue bonds. At January 25, 1995, the total
amount of such guaranteed indebtedness was $238 million, of which $92 million
was included in capital lease obligations.
<PAGE> 70
EXHIBIT A
FORM OF NOTICE OF BORROWING
_______________________, 19___
Bank of America National Trust
and Savings Association,
individually and as Documentation Agent
under the 364 Day Credit Agreement referred
to below (the "Documentation Agent")
1455 Market Street, 12th Floor
San Francisco, California 94103
Attn: Agency Management Services
Re: 364 Day Credit Agreement dated as of October 5, 1995
(as from time to time amended, restated, supplemented or otherwise
modified, the "Credit Agreement") among KMART CORPORATION (the
"Company"), the Banks named therein and BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION, as Documentation Agent
Ladies and Gentlemen:
The undersigned refers to the Credit Agreement, the terms defined
therein being used herein as therein defined, and hereby gives you notice
irrevocably, pursuant to Section 2.03 of the Credit Agreement, of the Borrowing
specified herein:
(1) The Business Day of the proposed Borrowing is _______________
__________________, 19___.
(2) The aggregate amount of the proposed Borrowing is $__________
______________________.
(3) The proposed Borrowing is to be comprised of [LIBOR] [CD Rate]
[Reference Rate] Loans.
[(4) The duration of the initial Interest Period for the [LIBOR
Loans] [CD Rate Loans] included in the proposed Borrowing shall
be ________ [months] [days].]
(5) Payment for this Borrowing is to be made to account number
____________ at the Documentation Agent.
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date of the proposed Borrowing,
before and after giving effect thereto and to the application of the proceeds
therefrom:
<PAGE> 71
(a) the representations and warranties of the undersigned contained in
Article V of the Credit Agreement are true and correct on and as of each such
date as if made on and as of each such date (except to the extent such
representations and warranties expressly refer to an earlier date, in which
case they shall be true and correct as of such earlier date); and
(b) no Potential Default or Event of Default exists or shall result
from such proposed Borrowing.
KMART CORPORATION
By: _____________________
Title: __________________
A-2
<PAGE> 72
EXHIBIT B
FORM OF NOTICE OF CONVERSION/CONTINUATION
________________, 19______
Bank of America National Trust
and Savings Association,
individually and as Documentation Agent
under the 364 Day Credit Agreement referred
to below (the "Documentation Agent")
1455 Market Street, 12th Floor
San Francisco, California 94103
Attn: Agency Management Services
Re: 364 Day Credit Agreement dated as of October 5, 1995 (as
from time to time amended, restated, supplemented or
otherwise modified, the "Credit Agreement") among KMART
CORPORATION (the "Company"), the Banks named therein and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as
Documentation Agent
Ladies and Gentlemen:
The undersigned refers to the Credit Agreement, the terms defined
therein being used herein as therein defined, and hereby gives you notice
irrevocably, pursuant to Section 2.04 of the Credit Agreement, of the
[conversion] [continuation] of the Loans specified herein:
(1) The [Conversion Date] [Continuation Date] is __________, 19__.
(2) The aggregate amount of the Loans to be [converted] [continued] is
$________________.
(3) The Loans are to be [converted into] [continued as] [LIBOR] [CD
Rate] [Reference Rate] Loans.
(4) Unless the Loans are to be converted into Reference Rate
Loans, the duration of the Interest Period for the Loans included in
the [conversion] [continuation] shall be ______________ [months]
[days].
The undersigned hereby certifies that no Potential Default or Event of
Default exists as of the date hereof.
KMART CORPORATION
By: ______________________
Title: ___________________
<PAGE> 73
EXHIBIT C
FORM OF NOTE
$_________________ _______________, 19__
FOR VALUE RECEIVED, the undersigned, KMART CORPORATION, a Michigan
corporation (the "Company"), hereby promises to pay to the order of
_____________________________________________ (the "Bank") the principal sum
of _____________________ Dollars ($_________) or, if less, the aggregate unpaid
principal amount of the Loans made by the Bank to the Company pursuant to the
364 Day Credit Agreement dated as of October 5, 1995 (as from time to time
amended, restated, supplemented or otherwise modified, the "Credit Agreement"),
among the Company, the Bank, the other banks parties thereto and BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Documentation Agent, on the
Termination Date.
The Company also promises to pay interest on the unpaid principal
amount hereof from the date hereof until paid at the rates and at the times
which shall be determined in accordance with the provisions of the Credit
Agreement.
This promissory note (this "Note") is one of the Company's Notes issued
pursuant to and entitled to the benefits of the Credit Agreement to which
reference is hereby made for a more complete statement of the terms and
conditions under which the Loans evidenced hereby are made and are to be
repaid. Capitalized terms used herein without definition shall have the
meanings set forth in the Credit Agreement.
All payments of principal and interest in respect of this Note shall be
made in lawful money of the United States of America in immediately available
funds at the office of the Administrative Agent at San Francisco, California or
at such other place as shall be designated in writing for such purpose in
accordance with the terms of the Credit Agreement. Each of the Bank and any
subsequent holder of this Note agrees that before disposing of this Note or any
part hereof it will make a notation hereon of all principal payments previously
made hereunder and of the date to which interest hereon has been paid;
provided, that the failure to make a notation of any payment made on this Note
shall not limit or otherwise affect the obligation of the Company hereunder
with respect to payments of principal or interest on this Note.
This Note is subject to prepayment as provided in the Credit Agreement.
Upon the occurrence of an Event of Default, the unpaid balance of the principal
amount of this Note may become, or may be declared to be, due and payable in
the manner, upon the conditions and with the effect provided in the Credit
Agreement.
The Company promises to pay all actual and reasonable costs and
expenses, including Attorney Costs, incurred in the collection and enforcement
of this Note. The Company and endorsers of this
<PAGE> 74
Note hereby consent to renewals and extensions of time at or after the maturity
hereof, without notice, and hereby waive diligence, presentment, protest,
demand and notice of every kind and, to the full extent permitted by law, the
right to plead any statute of limitations as a defense to any demand hereunder.
THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK (WITHOUT REGARD TO CONFLICTS
OF LAW PROVISIONS THEREOF).
IN WITNESS WHEREOF, the Company has caused this Note to be executed and
delivered by its duly authorized officer, as of the day and year first above
written.
KMART CORPORATION
By: ________________________________
Title: _____________________________
C-2
<PAGE> 75
TRANSACTIONS ON NOTE
(REFERENCE RATE)
<TABLE>
<CAPTION>
AMOUNT
INTEREST AMOUNT OF PRINCIPAL OR OUTSTANDING
RATE LOAN MADE PAID BALANCE PRINCIPAL NOTATION
DATE ON LOAN THIS DATE THIS DATE THIS DATE MADE BY
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
</TABLE>
C-3
<PAGE> 76
TRANSACTIONS ON NOTE
(LIBOR)
<TABLE>
<CAPTION>
AMOUNT
APPLICABLE AMOUNT OF PRINCIPAL OR OUTSTANDING
MARGIN LOAN MADE INTEREST PAID BALANCE PRINCIPAL NOTATION
DATE LIBOR THIS DATE PERIOD THIS DATE THIS DATE MADE BY
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
C-4
<PAGE> 77
TRANSACTIONS ON NOTE
(CD RATE)
<TABLE>
<CAPTION>
AMOUNT
APPLICABLE AMOUNT OF PRINCIPAL OR OUTSTANDING
MARGIN LOAN MADE INTEREST PAID BALANCE PRINCIPAL NOTATION
DATE CD RATE THIS DATE PERIOD THIS DATE THIS DATE MADE BY
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
C-5
<PAGE> 78
Exhibit D-1
[Letterhead of A. N. Palizzi, Esq.]
October 5, 1995
Bank of America National Trust
and Savings Association,
individually and as Documentation Agent
under the 364 Day Credit Agreement referred
to below (the "Documentation Agent")
335 Madison Avenue
New York, New York 10017
and
The Financial Institutions
listed on Schedule I hereto
Ladies and Gentlemen:
I am General Counsel to Kmart Corporation, a Michigan corporation
("Kmart"). In my capacity as General Counsel, I am authorized to furnish
opinions on behalf of Kmart that may be required in connection with various
matters, including that certain 364 Day Credit Agreement dated as of October 5,
1995 (the "Credit Agreement") among Kmart, the financial institutions signatory
thereto (the "Banks") and Bank of America National Trust and Savings
Association, as Documentation Agent ("Documentation Agent").
The Credit Agreement and certain Notes dated as of October 5, 1995
payable to certain of the Banks executed and delivered by Kmart thereunder (the
"Notes") are hereinafter collectively referred to as the "Transaction
Documents." Notes evidencing the obligations of Kmart to repay the Loans under
the Credit Agreement that may be issued from time to time by Kmart pursuant to
Section 2.02(b) of the Credit Agreement are hereinafter collectively referred
to as "other Notes". Capitalized terms appearing herein but not otherwise
defined herein shall have the meanings ascribed thereto in the Credit
Agreement.
In rendering the opinions set forth herein, I have examined originals
of the Transaction Documents executed by Kmart and originals or copies,
certified to my satisfaction, of such (i) certificates of public officials;
(ii) certificates of officers and representatives of Kmart; and (iii) other
documents, records and papers, and I have made such inquiries of officers and
representatives of Kmart as I have deemed relevant or necessary as
<PAGE> 79
the basis for such opinions. I have relied upon, and assume the accuracy of,
such certificates and other statements, documents, records, and papers with
respect to the factual matters set forth therein and I have assumed the
genuineness of all of the signatures (other than the signatures of Kmart) and
the authenticity of all documents submitted to me as originals and the
conformity to original documents of all documents submitted to me as certified
or photostatic copies.
With your permission, I have further assumed the due authorization,
execution and delivery of the Credit Agreement by all of the parties thereto
other than Kmart, and that all parties thereto other than Kmart have complied
or will comply with all applicable laws and regulations in connection with the
consummation of the transactions contemplated thereby. I have also assumed that
each of the Transaction Documents and the other Notes is legal, valid, binding
and enforceable under the laws of the State of New York, by which each such
Transaction Document and other Note is stated to be governed.
Based on the foregoing and subject to the qualifications stated herein,
I am of the opinion that:
1. Kmart (i) is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization; (ii) is duly
authorized to do business in each jurisdiction in which it owns or leases
property and where the failure to do so would have a material adverse effect on
its condition (financial or otherwise), properties, business, assets or results
of operations; and (iii) has all requisite corporate power and authority to
enter into and perform its obligations under the Transaction Documents to which
it is a party and under any other Notes which it may issue from time to time.
2. The execution, delivery and performance by Kmart of each Transaction
Document, and the consummation of each of the transactions and performance of
each of the obligations on its part contemplated thereby:
(i) have been duly authorized by all necessary corporate
proceedings;
(ii) are not in contravention of its articles of
incorporation, bylaws or other organizational documents;
(iii) will not violate and provisions of any law, rule,
regulation (including any order, writ, judgment, decree, determination
or award of any court or governmental instrumentality) presently in
effect having applicability to it;
(iv) will not conflict with or result in a breach of or
constitute a default under or tortious interference with any
D/1-2
<PAGE> 80
indenture or loan or credit agreement, or any other agreement or instrument of
which I have knowledge, to which it is a party or by which it or any of its
properties may be bound (which conflict, breach, default or tortious
interference would have a material adverse effect on its condition (financial
or otherwise), properties, business, assets or results of operations);
(v) will not result in or require the creation or imposition of any
Lien of any nature upon or with respect to any of the properties now owned or
hereafter acquired by it; and
(vi) except as already applied for or received as of the date hereof,
do not require any authorization, consent, certificate, inspection, franchise,
approval, license, qualification or formal exemption from, or any filing,
declaration or registration with, any court, governmental agency or regulatory
authority or any other Person.
3. Kmart has duly executed and delivered the Transaction Documents, and
each such Transaction Document constitutes and each other Note when issued will
constitute its valid and binding obligation, enforceable against it in
accordance with its respective terms.
4. There are no actions, suits, proceedings, investigations or
judgments before any court, governmental agency or regulatory authority
(foreign, Federal, state or local) outstanding, pending, or, to the best of my
knowledge and belief, threatened against or in any other way involving or
affecting Kmart or its properties, which, if determined adversely to it
(i) would enjoin or otherwise materially interfere with the completion of any
of the transactions contemplated by the Transaction Documents or any other
Note, or (ii) would materially impair its ability to perform its obligations
under the Transaction Documents or any other Note.
5. To the best of my knowledge after due inquiry, Kmart is not in
default with respect to any order of any court, arbitrator or governmental body
where such default would have a material adverse effect on its condition
(financial or otherwise), properties, business, assets or results of
operations, and it is not subject to or party to any order of any court or
governmental authority arising out of any action, suit or proceeding against it
under any statute or other law respecting antitrust, monopoly, restraint of
trade, unfair competition or similar matters the effect of which could be
reasonably expected to have a material adverse effect on its condition
(financial or otherwise), properties, business, assets or results of
operations.
6. To the best of my knowledge after due inquiry, Kmart is not in
violation of any statute, rule or regulation of any governmental authority
where such violation would have a material
D/1-3
<PAGE> 81
adverse effect on its condition (financial or otherwise), properties, business,
assets or results of operations.
7. To the best of my knowledge after due inquiry, there is no existing
material default by Kmart under any written contract, lease agreement, or other
material agreement to which it is a party or by which any of its assets is
bound which has, or could be reasonably expected to have, a material adverse
effect upon its condition (financial or otherwise), properties, business,
assets or results of operations.
8. Kmart, is not an "investment company" registered or required to be
registered under the Investment Company Act of 1940, as amended, nor is it
controlled by such a company.
9. Kmart is not a "holding company" or a "subsidiary company" of a
"holding company" or an "affiliate" of a "holding company" within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
The opinions herein expressed are subject to the following limitations
and qualifications:
(a) The enforceability of the rights and remedies of the Documentation
Agent and the Banks under each of the Transaction Documents and any other Notes
is subject to the effect of any applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws of general
application affecting creditors' rights generally.
(b) Enforceability of each of the Transaction Documents and any other
Notes is subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law), including
requirements of reasonableness and good faith in the exercise of rights and
remedies under any loan documents, and no opinion is expressed as to any
specific remedy that may be granted, imposed or rendered, including equitable
remedies such as those of specific performance, receivership and injunction.
(c) The enforceability of particular rights and remedies provided in
the Transaction Documents may be limited by applicable laws, provided, however,
that sufficient rights and remedies are available to afford the Documentation
Agent and the Banks the practical realization of the benefits afforded by the
Transaction Documents and any other Notes.
Without limitation of the foregoing, I express no opinion: (i) as to
any provisions for acceleration of indebtedness or imposition of penalties in
the event of, or remedies available for, breaches of the Transaction Documents
or any other Notes which might be determined by a court to be non-material
(including
D/1-4
<PAGE> 82
material breaches of non-material provisions), or where the enforcement of such
provisions or remedies might be found not to have been taken in good faith and
in a reasonable manner; (ii) as to remedies available in respect of breaches of
the Transaction Documents or any other Notes or provisions for indemnification
against liabilities or losses thereunder which breaches, liabilities or losses
might be found to be the proximate result of actions or omissions by the
Documentation Agent or the Banks; (iii) as to any provisions of the Transaction
Documents or any other Notes to the extent such provisions would constitute
waivers of rights that may be found to constitute waivers that are against
public policy; (iv) as to any provision of the Transaction Documents or any
other Notes to the extent that it purports to waive the requirements of good
faith, notice and commercial reasonableness under the U.C.C. which requirements
cannot be waived by consent; (v) as to provisions in the Transaction Documents
or any other Notes which provide for the imposition of penalties, the payment
or reimbursement of costs and expenses or the indemnification of claims, losses
or liabilities that may be found to be unrelated to the damage suffered by the
Documentation Agent or the Banks or in excess of a reasonable amount; (vi) as
to any provisions of the Transaction Documents or any other Notes which
constitute rights that may be found to be against public policy; (vii) as to
the validity of any provision of any Transaction Document or any other Notes
which provides for the compounding of interest or payment or accrual of
interest on interest; (viii) as to provisions in the Transaction Documents or
any other Notes which waive objection to jurisdiction, the manner of service of
process, notice or the effects of delay or failure to exercise rights and
remedies; (ix) as to the enforceability of Sections 2.11, 2.13, 3.01 and 10.09
of the Credit Agreement pursuant to which payments are to be made without
set-off, defenses or counterclaims and free and clear of Taxes; (x) as to any
exhibits to the Credit Agreement not mentioned in this letter; and (xi) as to
Section 10.14 of the Credit Agreement and any similar provision of any other
Transaction Document or any other Note providing for the application of New
York law thereto.
(d) I am qualified to practice law in the State of Michigan and I do
not purport to express any opinion herein concerning any laws other than the
laws of the State of Michigan and applicable federal law. In this regard I call
to your attention that the Transaction Documents and the other Notes expressly
provide that they are to be governed by the laws of the State of New York.
(e) This opinion is predicated solely upon laws and regulations in
existence as of the present date and as they presently apply, and to the facts
as they presently exist. I assume no obligation to revise or supplement this
opinion should the present laws be changed by legislative action, judicial
decision or otherwise.
D/1-5
<PAGE> 83
Whenever in this opinion I have used the phrase "to the best of our
knowledge" (or similar terms), this means the conscious awareness of those
attorneys in my department who have active involvement in the preparation of
this opinion or who are primarily responsible for providing the response
concerning a particular opinion issue or information regarding factual matters.
This opinion is rendered to you solely for your benefit in connection
with the above transactions and may not be relied upon by you for any other
purpose or by any other persons without my prior written consent. This opinion
is limited to the matters set forth herein and no opinion is intended to be
implied or inferred beyond those expressly stated herein.
Very truly yours,
D/1-6
<PAGE> 84
Schedule I
Financial Institutions
[to come]
D/1-7
<PAGE> 85
EXHIBIT D-2
[letterhead of Dickinson, Wright, Moon, Van Dusen & Freeman]
October 5, 1995
Bank of America National Trust
and Savings Association,
individually and as Documentation Agent
under the 364 Day Credit Agreement referred
to below (the "Documentation Agent")
335 Madison Avenue
New York, New York 10017
and
The Financial Institutions
listed on Schedule I hereto
Ladies and Gentlemen:
We have acted as special counsel to Kmart Corporation, a Michigan
corporation ("Kmart"), in connection with the following agreements and documents
and the transactions contemplated thereby:
(i) that certain 364 Day Credit Agreement dated as of October 5, 1995
by and among Kmart, the financial institutions signatory thereto, (the "Banks")
and the Documentation Agent (the "Credit Agreement"); and
(ii) those certain Notes dated as of October 5, 1995 payable to certain
of the Banks, executed and delivered by Kmart thereunder (the "Notes").
The Credit Agreement and the Notes are hereinafter collectively
referred to as the "Transaction Documents." Notes evidencing the obligation of
Kmart to repay the Loans under the Credit Agreement that may be issued from
time to time by Kmart pursuant to Section 2.02(b) of the Credit Agreement are
hereinafter collectively referred to as "other Notes". Capitalized terms
appearing herein but not otherwise defined herein shall have the meanings
ascribed thereto in the Credit Agreement. Pursuant to Section 4.01(d) of the
Credit Agreement, this opinion is delivered to you upon the instruction of
Kmart.
In rendering the opinions set forth herein, we have examined originals
of the Transaction Documents executed by Kmart
<PAGE> 86
and originals or copies, certified to our satisfaction, of such (i)
certificates of public officials; (ii) certificates of officers and
representatives of Kmart; and (iii) other documents, records and papers, and we
have made such inquiries of officers and representatives of such entity, as we
have deemed relevant or necessary as the basis for such opinions. We have
relied upon, and assume the accuracy of, such certificates and other
statements, documents, records and papers with respect to the factual matters
set forth therein and we have assumed the genuineness of all of the signatures
(other than the signatures of Kmart) and the authenticity of all documents
submitted to us as originals and the conformity to original documents of all
documents submitted to us as certified or photostatic copies. We have further
assumed that negotiations with respect to the transactions contemplated by the
Transaction Documents took place in the State of New York and that the Notes
have been delivered by Kmart for value to the Documentation Agent in New York.
With your permission, we have further assumed the due authorization,
execution and delivery of the Credit Agreement by all of the parties thereto
other than Kmart, and that all parties thereto other than Kmart have complied
or will comply with all applicable laws and regulations in connection with the
consummation of the transactions contemplated thereby. We have also assumed
that each of the Transaction Documents and the other Notes is legal, valid,
binding and enforceable under the laws of the State of New York, by which each
such Transaction Document and other Note is stated to be governed.
Based on the foregoing and subject to the qualifications stated herein,
we are of the opinion that:
1. Kmart has duly executed and delivered the Transaction Documents, and
each such Transaction Document constitutes and each other Note when issued will
constitute the valid and binding obligation of Kmart, enforceable against it in
accordance with its respective terms.
2. The state of the law in Michigan makes it impossible to set forth
with assurance a single conflict of laws rule applicable to contract cases. In
general, Michigan courts historically have followed the approach of the
Restatement of Conflict of Laws, Section 332 (1934), by holding that the local
law of the place of formation of a contract governs the nature, validity,
effect, and obligation thereof. Bissell v. Lewis, 4 Mich. 450 (1857); Palmer
National Bank v. Van Doren, 260 Mich. 310 (1932); Rubin v. Gallagher, 294 Mich.
124 (1940); Waldorf v. KMS Industries, Inc., 25 Mich. App. 20 (1970);
Vanderveen's Importing Co. v. Keramische Industrie M.de Wit, 199 Mich. App.
359, 364 (1993). In determining the place of formation of a contract, Michigan
courts apply the local law of Michigan, the lex fori. House v. Lefebvre, 303
Mich. 207 (1942). Michigan law indicates
D/2-2
<PAGE> 87
that a contract is formed at the place where the last act necessary to make it
a binding agreement took place. Ohio v. Eubank, 295 Mich. 230 (1940).
Another line of Michigan authority recognizes an exception to the
foregoing general rule. These cases state that a contract, formed in one state
but to be performed in another, is governed by the local law of the place of
performance. Douglas v. Paine, 141 Mich. 485 (1905); George Realty Co. v. Gulf
Refining Co., 275 Mich. 442 (1936); Podlaha v. MRI, Inc., 71 Mich. App. 1
(1988). These cases are variants of the rule of the Restatement, Section 358.
Since 1962, the general conflict of laws fule applicable to matters
governed by the Uniform Commercial Code of Michigan ("UCC") has presumably been
stated by Section 1-105 of the UCC, M.C.L. Section 440.1105, which currently
provides in pertinent part that "when a transaction bears a reasonable relation
to this state and also to another state or nation the parties may agree that
the law either of this state or of such other state or nation shall govern
their rights and duties." The Michigan Court of Appeals has recently applied
this section, for the first time in a reported decision of which we are aware,
to validate the parties' choice of another State's law as the law applicable to
a contract governed by the Uniform Commercial Code. Zantop International
Airlines, Inc. v. Eastern Airlines, 200 Mich. App. 344, 351-352 (1993). Federal
courts applying Michigan law have expressed the view that Section 1-105 may be
regarded as a validation of party autonomy in choice of law matters (applicable
even beyond the precise scope of the UCC itself). See, e.g., Homac, Inc. v. DSA
Financial Corp., 661 F. Supp. 776, 784 (E.D. Mich. 1987). Even prior to
adoption of Section 1-105, however, Michigan conflict of laws decisions would
sometimes respect the choice of law made by the parties provided that the
transaction bore a reasonable relationship to the jurisdiction selected and
that the parties were acting in good faith. Millar v. Hilton, 189 Mich. 635,
641 (1915) (dictum); Rubin V. Gallagher, 294 Mich. 124 (1940); Russell v.
Pierce, 121 Mich. 208 (1899); Home Savings v. Mason, 127 Mich. 676 (1901). See
also, Mott v. Rowland, 85 Mich. 561, 566-68 (1891).
The Michigan Supreme Court recently has suggested, however, that
Michigan courts henceforth will no longer be bound to apply the bright-line
rules of the First Restatement in determining choice of law issues in contract
cases. In Chrysler Corporation v. Skyline Industrial Services, Inc., 448 Mich.
113 (1995), the Supreme Court characterized the rigid "law of the place of
contracting" approach as "formalism", 448 Mich. at 124, which "may prove
unworkable under certain factual situations . . . ." 448 Mich. at 124 n.28.
Instead, the Court looked to the Restatement of
D/2-3
<PAGE> 88
Conflicts of Laws, Second, Sections 187-188 (1971, 1988),(1) as providing
"a sound basis" for moving to a more modern approach emphasizing an
examination of relevant contacts and policies of the interested states (in this
case, Illinois and Michigan). 448 Mich. at 124. At the same time, the Court
recognized the existence of significant criticisms of the Second Restatement
approach, 448 Mich. at 124 n.28, and expressly declined to abandom the "law of
the place of contracting" as a basis for decision. Ibid. Rather, the Court
emphasized its concern to balance parties' expectations and the interests of
the affected States in resolving specific choice of law problems. In the
event, the Court applied the principles of Sections 187 and 188 of the Second
Restatement, reversed the Court of Appeals' decision and validated the parties'
express choice of Michigan law, notwithstanding the Illinois Supreme Court's
characterization of the competing Illinois statute involved as a "fundamental
policy" of Illinois. 448 Mich. at 130-131, notes 44 & 45. See, Restatement
Second Section 187(2)(b); Section 187 comment g.
In this transaction, the Transaction Documents and the other Notes
provide that they are to be governed by and construed in accordance with New
York law. As noted above, with your permission we have assumed that the
Transaction Documents were negotiated in significant part in New York and the
Notes were delivered for value by Kmart to the Documentation Agent in New York.
Moreover, it appears that the selection of New York law as the governing law of
the Transaction Documents and the other Notes was the product of negotiation by
the parties, undertaken in good faith. In addition, the sophistication of the
parties (each advised by counsel) and the commercial nature and significant
principal amount of the Credit Agreement all suggest that the correct result as
a matter of sound public policy. The foregoing facts suggest the existence of
a reasonable basis for the parties' choice of New York law and, subject to the
opinions, limitations and qualifications set forth below, we are aware of no
- ---------------------
(1) Under Sections 187 and 188 of the Second Restatement, the court will
apply the law of the state expressly chosen by the parties to govern their
contractual rights and duties if the particular issue could have been resolved
by the parties by an explicit agreement provision directed to that issue, and
also with respect to other issues unless either (a) the chosen state has no
substantial relation to the parties or the transaction and there is no other
reasonable basis for the parties' choice, or (b) application of the chosen
state's law would be contrary to a fundamental policy of a state which has a
materially greater interest than the chosen state in the determination of the
particular issue and which other state would be, in the absence of an effective
choice by the parties, the state of the applicable law (because with respect to
that issue it had the most significant relationship to the transaction and the
parties).
D/2-4
<PAGE> 89
fundamental policy of Michigan which would be contravened by the application of
New York law to the Transaction Documents. In light of the foregoing, and
notwithstanding the fact that the Credit Agreement provides for disbursement
and repayment of the Loans at the Payment Office of the Documentation Agent in
California, while the question is not free from doubt, we are of the opinion
that the choice of New York law set forth in the Transaction Documents and the
other Notes should be recognized and given effect in any action or proceeding
by any party to the Transaction Documents in the State of Michigan arising out
of or relating to any of the Transaction Documents or any other Notes. If
nevertheless a court were to apply Michigan law as the governing law of the
Transaction Documents and the other Notes, each of the Transaction Documents
and each other Note when issued would be legal, valid, binding and enforceable
under the laws of the State of Michigan.
3. The rates of interest applicable to the obligations of Kmart under
the Credit Agreement do not violate any law, rule or regulation of the State of
Michigan prescribing a maximum rate of interest. We call to your attention,
however, that the Michigan criminal usury statute makes it unlawful to
knowingly charge, take or receive interest on a loan at a rate exceeding 25%
per annum.
The opinions herein expressed are subject to the following limitations
and qualifications:
(a) The enforceability of the rights and remedies of the Documentation
Agent and the Banks under each of the Transaction Documents and any other Notes
is subject to the effect of any applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws of general
application affecting creditors' rights generally.
(b) Enforceability of each of the Transaction Documents and any other
Notes is subject to general principles of equity (regardless of whether such
enforceability is considered in proceeding in equity or at law), including
requirements of reasonableness and good faith in the exercise of rights and
remedies under any loan documents, and no opinion is expressed as to any
specific remedy that may be granted, imposed or rendered, including equitable
remedies such as those of specific performance, receivership and injunction.
Without limitation of the foregoing, we express no opinion: (i) as to
any provision for acceleration of indebtedness or imposition of penalties in
the event of, or remedies available for, breaches of the Transaction Documents
or any other Notes which might be determined by a court to be non-material
(including material breaches of non-material provisions), or where the
enforcement of such provisions or remedies might be found not to have been
taken in good faith and in a reasonable manner; (ii) as to remedies available
in respect of breaches of the Transaction
D/2-5
<PAGE> 90
Documents or any other Notes or provisions for indemnification
against liabilities or losses thereunder which breaches,
liabilities or losses might be found to be the proximate result
of actions or omissions by the Documentation Agent or the Banks;
(iii) as to any provision of the Transaction Documents to the
extent such provisions would constitute waivers of rights that
may be found to constitute waivers that are against public
policy; (iv) as to any provision of the Transaction Documents or
any other Notes to the extent that it purports to waive the
requirements of good faith, notice and commercial reasonableness
under the U.C.C. which requirements cannot be waived by consent;
(v) as to provisions in the Transaction Documents or any other
Notes which provide for the imposition of penalties, the payment
or reimbursement of costs and expenses or the indemnification of
claims, losses or liabilities that may be found to be unrelated
to the damage suffered by the Documentation Agent or the Banks or
in excess of a reasonable amount; (vi) as to any provisions of
the Transaction Documents or any other Notes which constitute
rights that may be found to be against public policy; (vii) as to
the validity of any provision of any Transaction Document or any
other Notes which provides for the compounding of interest or
payment or accrual of interest on interest; (viii) as to
provisions in the Transaction Documents or any other Notes which
waive objection to jurisdiction, the manner of service of
process, notice or the effects of delay or failure to exercise
rights and remedies; (ix) as to the enforceability of Sections
2.11, 2.13, 3.01 and 10.09 of the Credit Agreement pursuant to
which payments are to be made without set-off, defenses or
counterclaims and free and clear of Taxes; and (x) as to any
exhibits to the Credit Agreement not mentioned in this letter.
(c) We are qualified to practice law in the State of
Michigan and we do not purport to express any opinion herein
concerning any laws other than the laws of the State of Michigan
and applicable federal law. In this regard, we have noted that
the Transaction Documents and the other Notes expressly provide
that they are to be governed by the laws of the State of New
York.
(d) This opinion is predicated solely upon laws and
regulations in existence as of the present date and as they
presently apply, and to the facts as they presently exist. We
assume no obligation to revise or supplement this opinion should
the present laws be changed by legislative action, judicial
decision or otherwise.
Whenever in this opinion we have used the phrase "to the
best of our knowledge" (or similar terms), this means the
conscious awareness of those attorneys in the Firm who have
active involvement in the preparation of this opinion or who are
primarily responsible for providing the response concerning a
particular opinion issue or information regarding factual
matters.
D/2-6
<PAGE> 91
This opinion is rendered to you solely for your benefit in
connection with the above transactions and may not be relied upon
by you for any other purpose or by any other persons without
prior written consent. This opinion is limited to the matters set
forth herein and no opinion is intended to be implied or inferred
beyond those expressly stated herein.
Very truly yours,
D/2-7
<PAGE> 92
SCHEDULE I
Financial Institutions
[to come]
D/2-8
<PAGE> 93
EXHIBIT E
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
This ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement") dated as of
_________________, 19___ is made between ______________________________________
_____________________ (the "Assignor") and ____________________________________
___________________ (the "Assignee").
RECITALS
WHEREAS, the Assignor is party to that certain 364 Day Credit Agreement
dated as of October 5, 1995 among KMART CORPORATION, a Michigan corporation
(the "Company"), the banks named therein (including the Assignor, the "Banks")
and Bank of America National Trust and Savings Association, as Documentation
Agent (as from time to time amended, restated, supplemented or otherwise
modified, the "Credit Agreement"). Terms defined in the Credit Agreement are
used herein with the same meanings;
[WHEREAS, as provided under the Credit Agreement, the Assignor has
committed to make Loans (the "Loans") to the Company in an aggregate principal
amount at any one time outstanding not to exceed ____________________________
($__________) (the "Aggregate Commitment");]
WHEREAS, [the Assignor has made Loans in the aggregate outstanding
principal amount of $___________ to the Company] [no Loans are outstanding
under the Credit Agreement]; and
WHEREAS, the Assignor wishes to assign to the Assignee [all] [part of]
the rights and obligations of the Assignor under the Credit Agreement in
respect of [its Aggregate Commitment] [together with a corresponding portion of
each of its oustanding Loans,] in an amount equal to $___________ (the
"Assigned Amount") on the terms listed on Schedule I hereto and subject to the
conditions set forth herein, and the Assignee wishes to accept assignment of
such rights and to assume such obligations from the Assignor on such terms and
subject to such conditions;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
1. Assignment and Assumption.
(a) With effect on and after the Effective Date (as defined in Section
5 hereof), the Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, the Assigned Amount,
which shall be equal to _____ percent (_____%) (the "Assignee's Percentage
Share") of all of the Assignor's rights and obligations under the Credit
Agreement, including, without limitation, the Assignee's Percentage Share of
[the Aggregate Commitment] [and any outstanding Loans]. The Sale,
<PAGE> 94
assignment, purchase and assumption set forth in this Section 1(a) shall be
without recourse to, or representation or warranty (except as expressly
provided in this Agreement) by, the Assignor.
(b) With effect on and after the Effective Date, the Assignee shall be
a party to the Credit Agreement and succeed to all of the rights and be
obligated to perform all of the obligations of a Bank under the Credit
Agreement, including the requirements concerning confidentiality[, with a
Commitment in an amount equal to the Assigned Amount]. The Assignee agrees that
it will perform in accordance with their terms all of the obligations which by
the terms of the Credit Agreement are required to be performed by it as a Bank.
It is the intent of the parties hereto that the Commitment of the Assignor
shall, as of the Effective Date, be reduced by an amount equal to the Assigned
Amount and the Assignor shall relinquish its rights and be released from its
obligations under the Credit Agreement to the extent such obligations have been
assumed by the Assignee.
[(c) After giving effect to the assignment and assumption, on the
Effective Date the Assignee's Commitment will be $__________. After giving
effect to the assignment and assumption, on the Effective Date the Assignor's
Commitment will be $__________.]
2. Payments.
(a) As consideration for the sale and assignment contemplated in
Section 1 hereof, the Assignee shall pay to the Assignor on the Effective Date
in immediately available funds an amount equal to $___________, representing
the Assignee's Percentage Share of the principal amount of all Loans previously
made, and currently owned, by the Assignor to the Company under the Credit
Agreement and outstanding on the Effective Date.
(b) The Documentation Agent has received a processing fee in the amount
of $3,000.
(c) To the extent payment to be made by the Assignee pursuant to
Section 2(a) hereof is not made when due, the Assignor shall be entitled to
recover from the Assignee such amount together with interest thereon at the
Federal Funds Rate per annum accruing from the date such amounts were due.
3. Reallocation of Payments.
Any interest, commissions, fees and other payments accrued to but
excluding the Effective Date with respect to the Loans [and the Assignor's
Commitment], shall be for the account of the Assignor. Any interest, fees and
other payments accrued on and after the Effective Date with respect to the
Assigned Amount shall be for the account of the Assignee. Each of the Assignor
and the Assignee agrees that it will hold in trust for the other party any
interest,
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<PAGE> 95
commissions, fees and other amounts which it may receive to which the other
party is entitled pursuant to the preceding two sentences and pay to the other
party any such amounts which it may receive promptly upon receipt. The
Assignor's and the Assignee's obligations to make the payments referred to in
this Section 3 are non-assignable.
4. Independent Credit Decision.
The Assignee (a) acknowledges that it has received a copy of the Credit
Agreement and the Schedules and Exhibits thereto, together with copies of the
financial statements referred to in Section 6.01 thereof, and such other
documents and information as it has deemed appropriate to make its own credit
and legal analysis and decision to enter into this Agreement; and (b) agrees
that it will, independently and without reliance upon the Assignor, the
Administrative Agent or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit and legal decisions in taking or not taking action under the Credit
Agreement.
5. Effective Date; Notices.
(a) The effective date for this Agreement is _______________ (the
"Effective Date"); provided, that the following conditions precedent have been
satisfied on or before the Effective Date:
(i) this Agreement shall be executed and delivered by the
Assignor and the Assignee;
[(ii) the consent of the Company and the Documentation Agent
required for an effective assignment of the Assigned Amount by the
Assignor to the Assignee shall have been duly obtained and shall be in
full force and effect as of the Effective Date;]
(iii) the Assignee shall pay to the Assignor all amounts due to
the Assignor under this Agreement; and
(iv) the processing fee referred to in Section 2(b) of this
Agreement and in Section 10.08(a) of the Credit Agreement shall have
been paid by the [Assignor] [Assignee] to the Documentation Agent.
(b) Promptly following the execution of this Agreement, the Assignor
shall deliver to the Documentation Agent for acceptance and recording by the
Documentation Agent, such notices, agreements or other documents as may be
required under the Credit Agreement.
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<PAGE> 96
6. Agent.
The Assignee hereby appoints and authorizes the Documentation Agent to
take such action as Documentation Agent on its behalf and to exercise such
powers under the Credit Agreement as are delegated to the Documentation Agent
by the Banks pursuant to the terms of the Credit Agreement.
7. Withholding Tax.
If the Assignee is a foreign person within the meaning of the Code, the
Assignee agrees to comply with Section 9.10 of the Credit Agreement as if the
Effective Date were the Closing Date of the Credit Agreement and, if such
Assignee fails to comply with Section 9.10 of the Credit Agreement, then this
Agreement shall not become effective.
8. Representations and Warranties.
(a) The Assignor represents and warrants that (i) it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any lien, security interest or other adverse
claim; (ii) it is duly organized and existing and it has the full power and
authority to take, and has taken, all action necessary to execute and deliver
this Agreement and any other documents required or permitted to be executed or
delivered by it in connection with this Agreement and to fulfill its
obligations hereunder; (iii) no notices to, or consents, authorizations or
approvals of, any Person are required (other than any already given or
obtained) for its due execution, delivery and performance of this Agreement,
and apart from any agreements or undertaking or filings required by the Credit
Agreement, no further action by, or notice to, or filing with, any Person is
required of it for such execution, delivery or performance; and (iv) this
Agreement has been duly executed and delivered by it and constitutes the legal,
valid and binding obligation of the Assignor, enforceable against the Assignor
in accordance with the terms hereof, subject, as to enforcement, to bankruptcy,
insolvency, moratorium, reorganization and other laws of general application
relating to or affecting creditors' rights and to general equitable
principles.
(b) The Assignor makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement or any other instrument or document furnished pursuant thereto. The
Assignor makes no representation or warranty in connection with, and assumes no
responsibility with respect to, the solvency, financial condition or statements
of the Company or any Subsidiary or the performance or observance by the
Company of any
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<PAGE> 97
of its obligations under the Credit Agreement or any other instrument or
document furnished in connection therewith.
(c) The Assignee represents and warrants that (i) it is duly organized
and existing and it has full power and authority to take, and has taken, all
action necessary to execute and deliver this Agreement and any other documents
required or permitted to be executed or delivered by it in connection with this
Agreement, and to fulfill its obligations hereunder; (ii) no notices to, or
consents, authorizations or approvals of, any Person are required (other than
any already given or obtained) for its due execution, delivery and performance
of this Agreement; and apart from any agreements or undertaking or filings
required by the Credit Agreement, no further action by, or notice to, or filing
with, any Person is required of it for such execution, delivery or performance;
(iii) this Agreement has been duly executed and delivered by it and constitutes
the legal, valid and binding obligation of the Assignee, enforceable against
the Assignee in accordance with the terms hereof, except subject, as to
enforcement, to bankruptcy, insolvency, moratorium, reorganization and other
laws of general application relating to or affecting creditors' rights and to
general equitable principles; and (iv) it is an Eligible Assignee under the
Credit Agreement.
9. Further Assurances.
The Assignor and the Assignee each hereby agrees to execute and deliver
such other instruments, and take such other action, as either party may
reasonably request in connection with the transactions contemplated by this
Agreement, including, without limitation, the delivery of any notices or other
documents or instruments to the Company or the Documentation Agent which may be
required in connection with the assignment and assumption contemplated hereby.
10. Indemnity.
The Assignee agrees to indemnify and hold harmless the Assignor against
any and all losses, costs, expenses (including, without limitation, Attorney
Costs) and liabilities incurred by the Assignor in connection with or arising
in any manner from the non-performance by the Assignee of any obligation
assumed by the Assignee under this Agreement.
11. Miscellaneous.
(a) Any amendment or waiver of any provision of this Agreement shall be
in writing signed by the parties hereto, and consented to in writing by the
Documentation Agent. No failure or delay by either party hereto in exercising
any right, power or privilege hereunder shall operate as a waiver thereof and
any waiver of any breach of the provisions of this Agreement shall be
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<PAGE> 98
without prejudice to any rights with respect to any other or further breach
hereof.
(b) All payments made hereunder shall be made without any set-off or
counterclaim.
(c) All communications among the parties or notices in connection
herewith shall be in writing (including facsimile transmission or telex) and
delivered, telexed or telecopied, addressed as follows: (i) if to the Assignor
or the Assignee, at their respective addresses set forth on the signature pages
hereof and (ii) if to the Company or the Documentation Agent, at their
respective addresses set forth in the Credit Agreement or any other documents
or instruments delivered pursuant thereto. All such communications and notices
shall be effective upon receipt. The Assignee specifies as its Lending Office
the office set forth beneath its name on the signature pages hereof.
(d) The Assignor and the Assignee shall each pay its own costs and
expenses incurred in connection with the negotiation, preparation, execution
and performance of this Agreement.
(e) The representations and warranties made herein shall survive the
consummation of the transactions contemplated hereby.
(f) This Agreement shall be binding upon and inure to the benefit of the
Assignor and the Assignee and their respective successors and assigns;
provided, however, that no party shall assign its rights hereunder without the
prior written consent of the other party and any purported assignment, absent
such consent, shall be void. The preceding sentence shall not limit the right
of the Assignee to assign or participate all or part of the Assignee's
Percentage Share and the Assigned Amount and any outstanding Loans attributable
thereto in accordance with and subject to the Credit Agreement.
(g) The Assignor may at any time or from time to time grant to others
assignments or participations in Assignor's Aggregate Commitment or the Loans
but not in the portions thereof assigned to the Assignee pursuant to this
Agreement.
(h) This Agreement may be executed in any number of counterparts and all
of such counterparts taken together shall be deemed to constitute one and the
same instrument.
(i) This Agreement shall be governed by and construed in accordance with
the laws of the State of New York. The Assignor and the Assignee each
irrevocably submits to the non-exclusive jurisdiction of any New York State or
Federal court sitting in The City of New York over any suit, action or
proceeding arising out of or relating to this Agreement and irrevocably agrees
that all claims in respect of such action or proceeding may be heard and
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<PAGE> 99
determined in such New York State or Federal court. Each party to this
Agreement hereby irrevocably waives, to the fullest extent it may effectively
do so, the defense of an inconvenient forum to the maintenance of such action
or proceeding.
(j) This Agreement and any agreement, document or instrument attached
hereto or referred to herein integrate all the terms and conditions mentioned
herein or incidental hereto, constitute the entire agreement and understanding
between the parties hereto and supersede any and all prior agreements and
understandings related to the subject matter hereof. In the event of any
conflict between the terms, conditions and provisions of this Agreement and any
such agreement, document or instrument, the terms, conditions and provisions of
this Agreement shall prevail.
(k) In the event of any inconsistency between the provisions of this
Agreement and Schedule I hereto, this Agreement shall control. Headings are
for reference only and are to be ignored in interpreting this Agreement.
(l) The illegality or unenforceability of any provision of this
Agreement or any instrument or agreement required hereunder shall not in any
way affect or impair the legality or enforceability of the remaining provisions
of this Agreement or any instrument or agreement required hereunder.
(m) The Assignor and the Assignee each hereby knowingly, voluntarily and
intentionally waive any rights they may have to a trial by jury in respect of
any litigation based hereon, or arising out of, under, or in connection with
this Agreement, the Credit Agreement, any related documents and agreements or
any related course of conduct, course of dealing or statements (whether oral or
written).
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
agreement to be executed and delivered by their duly authorized officers as of
the date first above written.
___________________________
Assignor
By:________________________
Title:_____________________
Address for Notices:
Lending Office:
Address for Payments
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<PAGE> 100
[Address]
Assignee
By:
Title:
Address for Notices:
Lending Office:
Address for Payments
[Address]
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<PAGE> 101
SCHEDULE I
TO
ASSIGNMENT AND ASSUMPTION AGREEMENT
1. Company:
2. Date of Credit Agreement:
3. Assignor:
4. Assignee:
5. Date of Assignment Agreement:
6. Effective Date:
7. Assignee's Share
(a) Assignee's Percentage Share
(b) Assigned Amount
8. Fees: Payment by Company
to Assignee
Facility Fee
Payment by Company
9. Interest: to Assignee
(i) Reference Rate Loan(s)
(ii) LIBOR Loan(s)
(iii) CD Rate Loan(s)
10. Payment Instructions:
Assignor:
Assignee:
11. Other Information:
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<PAGE> 102
SCHEDULE II
FORM OF NOTICE OF ASSIGNMENT AND ACCEPTANCE
______________, 19__
Bank of America National Trust
and Savings Association,
as Documentation Agent
1455 Market Street, 12th Floor
San Francisco, California 94103
Attention: Agency Management Services
Kmart Corporation
3100 West Big Beaver Road
Troy, Michigan 48084
Attention: Treasurer
Ladies and Gentlemen:
We refer to the 364 Day Credit Agreement dated as of October 5, 1995
(as amended, supplemented or modified from time to time, the "Credit
Agreement") among Kmart Corporation (the "Company"), the Banks referred to
therein and Bank of America National Trust and Savings Association, as
Documentation Agent. Terms defined in the Credit Agreement are used herein as
therein defined.
1. We hereby give you notice of [, and request the consent of the
Company and the Administrative Agent to,] the assignment by __________________
(the "Assignor") to _________________________ (the "Assignee") of ___% of the
right, title and interest of the Assignor in and to the Credit Agreement
(including, without limitation, the right, title and interest of the Assignor
in and to [the Commitment of the Assignor and] all outstanding Loans made by
the Assignor) (the "Assigned Amount") pursuant to that certain Assignment and
Assumption Agreement, dated as of ______________, 19__ (the "Assignment and
Assumption Agreement"), by and between Assignor and Assignee. Before giving
effect to such assignment [the Assignor's Commitment is $___________, and] the
aggregate principal amount of its outstanding Loans is $___________.
2. The Assignee agrees that [, upon receiving the consent of the
Company and the Administrative Agent to such assignment and] from and after the
Effective Date (as such term is defined in Section 5 of the Assignment and
Assumption Agreement), the Assignee will be bound by the terms of the Credit
Agreement, with respsect to the interest in the Credit Agreement assigned to it
as specified above, as fully and to the same extent as if the Assignee were the
Bank originally holding such interest in the Credit Agreement. The
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<PAGE> 103
Assignor and the Assignee agree that any interest, fees and other payments
accrued to but excluding the Effective Date with respect to the Assigned Amount
shall be for the account of the Assignee.
3. The following administrative details apply to the Assignee:
(A) Lending Office:
Assignee name: ________________
Address: ______________________
______________________
Attention: ____________________
Telephone: ( ) ______________
Telecopier: ( ) _____________
(B) Notice Address:
Assignee name: ________________
Address: ______________________
______________________
Attention: ____________________
Telephone: ( ) ______________
Telecopier: ( ) _____________
(C) Payment Instructions:
Account No.: __________________
At: __________________
__________________
__________________
Reference: ____________________
Attention: ____________________
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<PAGE> 104
IN WITNESS WHEREOF, the Assignor and the Assignor have caused this
Notice of Assignment and Acceptance to be executed by their respective duly
authorized officials, officers or agents as of the date first above mentioned.
Very truly yours,
[Name of Assignor]
By:_______________________________
Title:____________________________
[Name of Assignee]
By:_______________________________
Title:____________________________
[Agreed and Consented to this
_____ day of ___________, 19___.
KMART CORPORATION
By:_____________________________
Title:__________________________
Agreed and Consented to this
_____ day of ___________, 19___.
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Documentation Agent
By:_____________________________
Title:__________________________]
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<PAGE> 1
EXHIBIT 99.5
=============================================================================
SEASONAL CREDIT AGREEMENT
DATED AS OF OCTOBER 5, 1995
among
KMART CORPORATION,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
As Documentation Agent,
and
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
=============================================================================
$300,000,000
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1.01 Defined Terms.................................................... 1
1.02 Other Definitional Provisions.................................... 12
(a) Defined Terms............................................... 12
(b) The Agreement............................................... 12
(c) Certain Common Terms........................................ 13
(d) Performance; Time........................................... 13
(e) Contracts................................................... 13
(f) Laws........................................................ 13
(g) Captions.................................................... 13
1.03 Accounting Principles............................................ 13
ARTICLE II
THE CREDITS
2.01 Amounts and Terms of Commitments................................. 14
2.02 Loan Accounts; Notes............................................. 14
2.03 Procedure for Borrowings......................................... 15
2.04 Conversion and Continuation Elections for Borrowings............. 16
2.05 Voluntary Termination or Reduction of Commitments................ 17
2.06 Optional Prepayments of Loans.................................... 18
2.07 Repayment........................................................ 18
2.08 Interest......................................................... 18
2.09 Fees............................................................. 19
(a) Syndication Fees............................................ 19
(b) Transaction Fees............................................ 19
(c) Closing Fee................................................. 19
2.10 Computation of Fees and Interest................................. 19
2.11 Payments by the Company.......................................... 20
2.12 Payments by the Banks to the Documentation Agent................. 21
2.13 Sharing of Payments, Etc......................................... 22
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 Taxes............................................................ 23
3.02 Inability to Determine Rates..................................... 26
3.03 Increased Costs; Capital Adequacy................................ 26
3.04 Illegality....................................................... 28
3.05 Funding Losses................................................... 28
3.06 Survival......................................................... 29
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE IV
CONDITIONS PRECEDENT
4.01 Conditions to Occurrence of the Closing Date and
Effectiveness of this Agreement.................................. 29
(a) Credit Agreement............................................ 29
(b) By-laws; Resolutions; Incumbency............................ 29
(c) Articles of Incorporation................................... 29
(d) Legal Opinions.............................................. 30
(e) Payment of Transaction Fees and Expenses.................... 30
(f) Certificate................................................. 30
(g) Financial Statements........................................ 30
(h) 364 Day Facility............................................ 30
(i) Other Documents............................................. 30
4.02 Conditions to All Borrowings..................................... 31
(a) Notice of Borrowing......................................... 31
(b) Continuation of Representations and Warranties.............. 31
(c) No Existing Default......................................... 31
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 Organization and Good Standing................................... 31
5.02 Authorization; No Contravention.................................. 31
5.03 Consents and Approvals........................................... 32
5.04 Binding Effect................................................... 32
5.05 Litigation....................................................... 32
5.06 Financial Statements............................................. 32
5.07 Use of Proceeds; Margin Regulations.............................. 32
5.08 No Default....................................................... 33
5.09 Taxes............................................................ 33
5.10 Insurance........................................................ 33
5.11 Compliance With Laws............................................. 33
ARTICLE VI
AFFIRMATIVE COVENANTS
6.01 Payment of Taxes................................................. 33
6.02 Insurance........................................................ 33
6.03 Preservation of Corporate Existence, Etc......................... 34
6.04 Maintenance of Property.......................................... 34
6.05 Compliance With Laws............................................. 34
6.06 Books and Records; Other Information............................. 34
6.07 Financial Information............................................ 34
6.08 Notices.......................................................... 35
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE VII
NEGATIVE COVENANTS
7.01 Consolidations and Mergers....................................... 36
7.02 Disposition of Assets............................................ 36
7.03 Limitation on Liens.............................................. 37
7.04 EBITDAR Coverage Ratio........................................... 38
7.05 Consolidated Net Worth........................................... 38
ARTICLE VIII
EVENTS OF DEFAULT
8.01 Event of Default................................................. 38
(a) Non-Payment of Principal.................................... 38
(b) Non-Payment of Interest or Fees............................. 38
(c) Specific Defaults........................................... 38
(d) Other Defaults.............................................. 38
(e) Representation or Warranty.................................. 39
(f) Cross Default; Cross-Acceleration........................... 39
(g) ERISA....................................................... 39
(h) Monetary Judgments.......................................... 39
(i) Insolvency; Voluntary Proceedings........................... 40
(j) Involuntary Proceedings..................................... 40
8.02 Remedies......................................................... 40
8.03 Rights Not Exclusive............................................. 41
ARTICLE IX
THE DOCUMENTATION AGENT
9.01 Authorization; "Documentation Agent"............................. 41
9.02 Delegation of Duties............................................. 41
9.03 Liability of Agent-Related Persons............................... 41
9.04 Reliance by Documentation Agent.................................. 42
9.05 Notice of Default................................................ 43
9.06 Credit Decision.................................................. 43
9.07 Indemnification.................................................. 43
9.08 Documentation Agent in Individual Capacity....................... 44
9.09 Successor Documentation Agent.................................... 45
9.10 Withholding Tax.................................................. 45
ARTICLE X
MISCELLANEOUS
10.01 Amendments and Waivers........................................... 47
10.02 Notices.......................................................... 48
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C> <C>
10.03 No Waiver........................................................ 48
10.04 Costs and Expenses............................................... 48
10.05 Indemnity........................................................ 49
10.06 Marshalling; Payments Set Aside.................................. 50
10.07 Successors and Assigns........................................... 50
10.08 Assignments, Participations, Etc................................. 50
10.09 Set-off.......................................................... 53
10.10 Notification of Addresses, Lending Offices, Etc.................. 53
10.11 Counterparts..................................................... 53
10.12 Severability..................................................... 53
10.13 No Third Parties Benefited....................................... 54
10.14 Governing Law and Jurisdiction................................... 54
10.15 Waiver of Jury Trial............................................. 54
10.16 Entire Agreement................................................. 55
</TABLE>
<TABLE>
<S> <C>
SCHEDULES
Schedule 2.01 Commitments; Lending Offices
Schedule 5.03 Consents and Approvals
Schedule 7.03 Liens
EXHIBITS
Exhibit A Form of Notice of Borrowing
Exhibit B Form of Notice of Conversion/Continuation
Exhibit C Form of Note
Exhibit D-1 Form of Opinion of Counsel to the Company
Exhibit D-2 Form of Opinion of Special Counsel to the Company
Exhibit E Form of Assignment and Assumption Agreement
</TABLE>
iv
<PAGE> 6
SEASONAL CREDIT AGREEMENT
This SEASONAL CREDIT AGREEMENT is entered into as of October 5, 1995,
among KMART CORPORATION, a Michigan corporation (the "Company"), the several
financial institutions party to this Agreement (collectively, the "Banks";
individually, a "Bank") and BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as Documentation Agent.
WHEREAS, the Banks have agreed to make available to the Company a
revolving credit facility upon the terms and conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.01 Defined Terms. In addition to the terms defined elsewhere in
this Agreement, the following terms have the following meanings:
"Affiliate" means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, by contract or otherwise. In no
event shall any Bank be deemed an "Affiliate" of the Company or any Subsidiary
of the Company.
"Agent-Related Persons" means BofA and any successor agent under
Section 9.09, together with their respective Affiliates (including, in the case
of BofA, BA Securities, Inc.) and the officers, directors, employees, agents
and attorneys-in-fact of such Persons and Affiliates.
"Aggregate Commitment" means the sum of the Commitments of the Banks,
in the initial amount of Three Hundred Million Dollars ($300,000,000), as such
amount may be reduced from time to time pursuant to this Agreement.
"Agreement" means this Seasonal Credit Agreement, as amended,
restated, supplemented or modified form time to time.
"Arrangers" means Bankers Trust Company and BA Securities, Inc.
"Assignee" has the meaning specified in Section 10.08(a).
<PAGE> 7
"Assignment and Acceptance" has the meaning specified in Section
10.08(a).
"Attorney Costs" means and includes all reasonable fees and
disbursements of any law firm or other external counsel, the reasonable
allocated cost of internal legal services and all reasonable disbursements of
internal counsel.
"Bank" and "Banks" means any or all, as the case may be, of the banks
listed in Schedule 2.01 hereof and any entity which becomes a Bank pursuant to
Section 10.08.
"Bank Affiliate" means a Person engaged primarily in the business of
commercial banking that is an Affiliate of a Bank and (i) is organized under
the laws of the United States, or any state thereof, or (ii) is organized under
the laws of any other country which is a member of the Organization for
Economic Cooperation and Development, or a political subdivision of any such
country, and is acting through a branch or agency located in the United States.
"BofA" means Bank of America National Trust and Savings Association,
a national banking association.
"Borrowing" means a borrowing consisting of Loans of the same Type made
to the Company on the same day by the Banks ratably according to their
respective Commitment Percentages and, in the case of LIBOR Loans or CD Loans,
having the same Interest Period.
"Borrowing Date" means a date on which a Borrowing is made hereunder.
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks in New York City or San Francisco are authorized
or required by law to close and, if the applicable Business Day relates to any
LIBOR Loan, means such a day on which dealings in Dollars are carried on in the
London interbank market.
"Capital Adequacy Regulation" means any guideline, request or
directive of any central bank or other Governmental Authority, or any other
law, rule or regulation, whether or not having the force of law, in each case,
regarding capital adequacy of any Bank.
"CD Rate" means the arithmetic average (rounded upward to the nearest
1/100th of 1%) of the sum of (x) the consensus bid rates determined by each
Reference Bank as the bid rates per annum, at 10:00 a.m. (New York City time)
on the first day of the Interest Period to be applicable, of two or more New
York or Chicago, as the case may be, certificate of deposit dealers of
recognized standing selected by such Reference Bank in New York or Chicago, as
the case may be, for certificates of deposit of such Reference Bank in an
amount approximately comparable to the principal amount of the CD
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<PAGE> 8
Rate Loan for such Reference Bank and with a maturity equal to the Interest
Period applicable to such CD Rate Loan, provided, that if any Reference Bank
fails to provide the Documentation Agent with its aforesaid rate then the CD
Rate shall equal the arithmetic average of the rates provided to the
Documentation Agent by the other Reference Bank or Banks, such average rate to
be grossed up for the maximum cost of reserves applicable to certificates of
deposit under Regulation D of the Federal Reserve Board by dividing the same by
a percentage equal to 100% minus the maximum rate of all reserve requirements
(expressed as a percentage) as specified in Regulation D (including any
marginal, emergency, supplemental, special or other reserves) that for the date
the CD Rate is being determined would be applicable during the Interest Period
to a negotiable certificate of deposit of such Reference Bank in excess of
$100,000 and with a maturity period equal to such Interest period, plus (y) the
then daily net annual assessment payable to the Federal Deposit Insurance
Corporation for insuring such Certificate of Deposit by a member of the Bank
Insurance Fund that is classified as adequately capitalized and within
supervisory sub-group "A" (or a comparable successor assessment risk
classification within the meaning of 12 C.F.R. Section 327.3(d)).
"CD Rate Loan" means any Loan that bears interest at a rate determined
with reference to the CD Rate.
"Closing Date" means the date on which all conditions precedent set
forth in Section 4.01 are satisfied or waived by all Banks.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any regulations promulgated thereunder.
"Commitment" has the meaning specified in Section 2.01 with respect to
each Bank.
"Commitment Percentage" means, as to any Bank, the percentage
equivalent of such Bank's Commitment divided by the Aggregate Commitment.
"Consolidated Net Worth" means as of the date of any determination
thereof, the consolidated net worth of the Company, determined in accordance
with GAAP; provided, however, that any gains or losses from the disposition of
any Specialty Retail Subsidiary and any changes after October 7, 1994 in the
foreign currency translation adjustment account as presented in the Company's
financial statements (and in accordance with GAAP) shall be excluded from the
determination of Consolidated Net Worth.
"Continuation Date" has the meaning set forth in Section 2.04(a).
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<PAGE> 9
"Contract Documents" has the meaning specified in Section 10.05.
"Controlled Group" means the Company and all Persons (whether or not
incorporated) under common control or treated as a single employer with the
Company pursuant to Sections 414(b), (c), (m) or (o) of the Code.
"Conversion Date" means any date on which the Company elects to convert
one Type of Loan to another Type of Loan.
"Dollars", "dollars" and "$" each mean lawful money of the United
States.
"Document Agent" means BofA in its capacity as documentation agent for
the Banks hereunder, and any successor agent in such capacity.
"EBITDAR" means, for any applicable period, for the Company the
aggregate of the following, without duplication: (a) consolidated net income
for such period, plus (b) consolidated interest expense (net of any interest
income) for such period, plus (c) consolidated provision for taxes for such
period, plus (d) consolidated depreciation expense for such period, plus
(e) consolidated amortization expense for such period, plus (f) consolidated
Rent Expenses for such period, minus (or plus, as applicable) (g) on a
consolidated basis, any extraordinary gains (or plus extraordinary losses) for
such period, minus (or plus, as applicable) (h) any gains (or plus any losses)
attributable to the Specialty Retail Subsidiaries for such period other than
results of operations in the ordinary course of business.
"Eligible Assignee" means (i) a commercial bank or other financial
institution organized under the laws of the United States, or any state
thereof, and having a combined capital and surplus of at least One Hundred
Million Dollars ($100,000,000); (ii) a commercial bank organized under the laws
of any other country which is a member of the Organization for Economic
Cooperation and Development, or a political subdivision of any such country,
and having a combined capital and surplus of at least One Hundred Million
Dollars ($100,000,000), provided that such bank is acting through a branch or
agency located in the United States; and (iii) any Bank Affiliate.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any regulations promulgated thereunder.
"Event of Default" means any of the events or circumstances specified
in Section 8.01.
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"Existing Facility" means the revolving credit facility evidenced by
that certain 364 Day Credit Agreement dated as of October 7, 1995 among the
Company, BofA, as documentation agent thereunder, and the financial
institutions signatory thereto.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day
(or, if such day is not a Business Day, for the preceding Business Day) in the
weekly statistical release designated as H.15 (519), or any successor
publication, by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day that is a Business Day, the average of the quotations
for such day on such transactions received by the Documentation Agent from
three (3) Federal funds brokers of recognized standing selected by the
Documentation Agent.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any successor thereof.
"Form 1001" has the meaning specified in Section 9.10(a)(i).
"Form 4224" has the meaning specified in Section 9.10(a)(ii).
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be in general use by significant segments of the U.S.
accounting profession, which are applicable to the circumstances as of the date
of determination.
"Governmental Authority" means any nation or government, any state or
other politicial subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, or any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to
government.
"Guaranty Obligation" means, as applied to any Person, any obligation,
direct or indirect, of that Person guaranteeing any Indebtedness of any other
Person, and, without limiting the generality of the foregoing, any obligation,
direct or indirect, contingent or otherwise, of such Person:
(i) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Indebtedness (whether arising by agreement to
keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise);
or
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<PAGE> 11
(ii) entered into for the purpose of assuring in any other manner the
obligee of such Indebtedness of the payment thereof or to protect such
obligee against loss in respect thereof (in whole or in part);
provided, that the term Guaranty Obligation shall not include:
(a) endorsements for collection or deposit in the ordinary course of
business;
(b) obligations that are not required in accordance with GAAP to be
included in the financial statements of such Person or the footnotes
thereto; or
(c) "unconditional purchase obligations" (including take-or-pay
contracts) as defined in and as required to be disclosed pursuant to
Statement of Financial Accounting Standards No. 47 and the related
interpretations, as the same may be amended from time to time.
"Indebtedness" of any Person means at any date without duplication,
(a) all obligations of such Person for borrowed money;
(b) all obligations of such Person evidenced by bonds, debentures,
notes or similar instruments;
(c) all obligations of such Person to pay the deferred purchase
price of property or services, except trade accounts payable and other
expenses and accounts payable arising in the ordinary course of business;
(d) all reimbursement obligations with respect to letters of credit
(other than the "Letters of Credit" and the "LC Obligations" under the
credit agreement described in clause (a) of the definition of Other Credit
Facilities) and bankers' acceptances except ordinary trade credits;
(e) all Indebtedness of others secured by a Lien on any asset of
such Person whether or not such Indebtedness is assumed by such Person;
(f) all obligations (to the extent capitalized for accounting
purposes) of such Person as lessee under any lease of any property by that
Person as lessee which, in conformity with GAAP, is accounted for as a
capital lease on the balance sheet of that Person.
(g) all Guaranty Obligations of such Person.
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"Indemnified Person" has the meaning specified in Section 10.05.
"Insolvency Proceeding" means (a) any case, action or proceeding before
any court or other Governmental Authority relating to bankruptcy,
reorganization, involvency, liquidation, receivership, dissolution, winding-up
or relief of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshalling of assets for creditors or other, similar
arrangement in respect of its creditors generally or any substantial portion of
its creditors; in each case (a) and (b) undertaken under U.S. Federal, State or
foreign law.
"Interest Payment Date" means, with respect to any LIBOR Loan or CD
Rate Loan, the last day of each Interest Period applicable to such Loan, and,
with respect to any Reference Rate Loan, the last Business Day of each calendar
quarter and the Termination Date; provided, that if any Interest Period for a
LIBOR Loan exceeds three months, the date which falls three months after the
beginning of such Interest Period shall also be an Interest Payment Date.
"Interest Period" means: (a) with respect to any LIBOR Loan, the period
commencing on the Business Day the LIBOR Loan is disbursed or continued (or on
the Conversion Date on which any Loan is converted to a LIBOR Loan) and ending
on the date one, two, three or six months thereafter, as selected by the
Company in its Notice of Borrowing or Notice of Conversion/Continuation; and
(b) with respect to any CD Rate Loan, the period commencing on the Business Day
the CD Rate Loan is disbursed or continued (or on the Conversion Date on which
any Loan is converted to a CD Rate Loan) and ending 30, 60, or 90 days
thereafter, as selected by the Company in its Notice of Borrowing or Notice of
Conversion/Continuation;
provided, that:
(i) if any Interest Period would otherwise end on a day which is
not a Business Day, that Interest Period shall be extended to the next
succeeding Business Day unless, in the case of a LIBOR Loan, the result of
such extension would be to carry such Interest Period into another
calendar month, in which event such Interest Period shall end on the
immediately preceding Business Day;
(ii) any Interest Period pertaining to a LIBOR Loan that begins on
the last Business Day of a calendar month (or on a day for which there is
not numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of the calendar month
which is one, two, three or six months, as the case may be, after the
calendar month in which such Interest Period began; and
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(iii) no Interest Period for any Loan shall extend beyond the
Termination Date.
"IRS" means the Internal Revenue Service, or any successor thereto.
"Lending Office" means, with respect to each Bank, the office of that
Bank designated as such on Schedule 2.01 hereto or such other office of the
Bank as it may from time to time specify to the Company and the Documentation
Agent in accordance with this Agreement.
"LIBOR" means, with respect to any Interest Period, the rate of
interest per annum determined by the Documentation Agent to be equal to:
(a) the rate of interest per annum for deposits in U.S. Dollars
for a period equal to the relevant Interest Period quoted on Telerate,
page 3750 (or its successor if such page number changes) at or about
11:00 a.m. (London time) on the second Business Day before the
commencement of such Interest Period,
divided (and rounded upward to the nearest 1/16 of 1%) by
(b) a percentage equal to 100% minus the then stated maximum
rate of all reserve requirements (including any marginal, emergency,
supplemental, special or other reserves required by applicable law)
applicable to any member bank of the Federal Reserve System in respect
of eurocurrency funding or liabilities as defined in Regulation D of
the Federal Reserve Board.
If no quotation is available on Telerate, the rate of interest under
clause (a) above for any Interest Period shall be determined by the
Documentation Agent to be the arithmetic mean (rounded upward to the nearest
1/16 or 1%) of the rates of interest per annum notified to the Documentation
Agent by each Reference Bank as the rate of interest (rounded upward to the
nearest 1/16 of 1%) at which deposits in an amount approximately equal to the
aggregate amount of the LIBOR Loans requested to be borrowed, and having a
maturity equal to such Interest Period, are offered to major banks in the
London interbank market at or about 11:00 a.m. (London time) on the second
Business Day before the commencement of such Interest Period.
"LIBOR Loan" means any Loan that bears interest at a rate determined
with reference to LIBOR.
"Lien" means any mortgage, deed of trust, pledge, charge, encumbrance,
lien (statutory or other) or security interest of any nature whatsoever
(including those created by, arising under or
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<PAGE> 14
evidenced by any conditional sale or other title retention agreement), and any
assignment or deposit arrangement intended as or having the effect of security.
"Loan" means an extension of credit by a Bank to the Company under
Section 2.01 and may be a LIBOR Loan, a CD Rate Loan or a Reference Rate Loan,
and "Loans" means Loans made by all of the Banks.
"Loan Documents" means this Agreement, each Note and any other
agreement, instrument, certificate or other document evidencing, guaranteeing
or securing the Loans.
"Loss" has the meaning specified in Section 3.05.
"Materially Adverse Effect" means a material adverse change in, or a
material adverse effect upon, the assets, liabilities, business, operations or
condition of the Company and its Subsidiaries taken as a whole.
"Moody's" means Moody's Investors Service, Inc. or any successor to the
rating agency business thereof.
"Notes" means those promissory notes of the Company to the order of
each of the Banks, substantially in the form of Exhibit C, as the same may be
amended, restated, supplemented, or modified and in effect from time to time.
"Notice of Borrowing" means a notice given by the Company to the
Documentation Agent pursuant to Section 2.03 in substantially the form of
Exhibit A.
"Notice of Conversion/Continuation" means a notice given by the Company
to the Documentation Agent pursuant to Section 2.04 in substantially the form
of Exhibit B.
"Obligations" means all Loans and all other Indebtedness, advances,
debts, liabilities, obligations, covenants and duties owing by the Company to
any Bank, the Documentation Agent, or to any other Person required to be
indemnified under any Loan Document, of any kind or nature, present or future,
whether or not evidenced by any note, guaranty or other instrument, arising
under this Agreement or under any other Loan Document, whether direct or
indirect (including those acquired by assignment), absolute or contingent, due
or to become due, now existing or hereafter arising and however acquired.
"Other Credit Facilities" means, collectively: (a) the revolving
credit facility evidenced by that certain Three Year Credit Agreement dated as
of October 7, 1994 among the Company, BofA, as documentation agent thereunder,
and the financial institutions signatory thereto, as amended, restated,
supplemented
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or modified from time to time; (b) the 364 Day Credit Facility; and (c) the
credit facilities evidenced by that certain Warehouse Facility Credit Agreement
dated as of October 7, 1994 among the Company, the other borrowers named
therein, Bankers Trust Company, as documentation agent thereunder, and the
financial institutions signatory thereto, as amended, restated, supplemented or
modified from time to time.
"Other Taxes" means any present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies which arise from
any payment made hereunder or from the execution, delivery or registration of,
or otherwise with respect to, this Agreement or any other Loan Document.
"Participant" has the meaning specified in Section 10.08(d).
"Payment Office" means the address for payments set forth on the
signature page hereto in relation to the Documentation Agent, or such other
address as the Documentation Agent may from time to time specify in accordance
with Section 10.02.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"Person" means an individual, partnership, corporation, limited
liability company, business trust, estate, joint stock company, trust,
unincorporated association, joint venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which the Company or any member of the Controlled Group sponsors or
maintains or to which the Company or any member of the Controlled Group makes,
is making or is obligated to make contributions.
"Potential Default" means any event or circumstance which, with the
giving of notice, the lapse of time, or both, would (if not cured or otherwise
remedied) constitute an Event of Default.
"Reference Banks" means Bankers Trust Company and BofA.
"Reference Rate" means, for any day, the higher of:
(a) 0.5% per annum above the latest Federal Funds Rate for such
day; and
(b) the rate of interest publicly announced from time to time
by BofA in San Francisco, California, as its "reference rate" for such
day.
The "reference rate" is a rate set by BofA based upon various factors including
BofA's costs and desired return, general economic
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<PAGE> 16
conditions and other factors, and is used as a reference point for pricing some
loans, which may be priced at, above or below such announced rate. Any change
in the Reference Rate announced by BofA shall take effect at the opening of
business on the day specified in the public announcement of such change.
"Reference Rate Loan" means a Loan that bears interest based on the
Reference Rate.
"Rent Expenses" means, for any period, consolidated rent expense of the
Company for such period determined in accordance with GAAP, less consolidated
rental income for such period.
"Reportable Event" means, as to any Plan, (a) any of the events set
forth in Section 4043(b) of ERISA or the regulations thereunder, other than any
such event for which the 30-day notice requirement under ERISA has been waived
in regulations issued by the PBGC, (b) a withdrawal from a Plan described in
Section 4063 of ERISA, or (c) a cessation of operations described in Section
4062(e) of ERISA.
"Required Banks" means at any time Banks holding at least 51% of the
aggregate of (a) the then Aggregate Commitment (or, if the Commitments shall
have then been terminated in full, the then aggregate unpaid principal amount
of the Loans) plus (b) the then aggregate commitments under the Other Credit
Facilities (or, if the commitments under any of such facilities shall have then
been terminated in full, then with respect to such terminated facilities the
then aggregate unpaid principal amount of all loans and letter of credit
obligations outstanding under such terminated facilities).
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of a court or of a
Governmental Authority, in each case applicable to or binding upon the Person
or any of its property or to which the Person or any of its property is
subject.
"Responsible Officer" means the Company's chief executive officer,
chief financial officer or treasurer.
"S&P" means Standard & Poor's Ratings Group or any successor to the
rating agency business thereof.
"Specialty Retail Subsidiary" means any of the following Subsidiaries
of the Company (or the continuing investment of the Company in any such
entity): Builders Square, Inc.; Borders, Inc.; Coles Myer, Ltd.; OfficeMax,
Inc.; PACE Membership Warehouse, Inc.; PayLess Drug Stores Northwest, Inc.; The
Sports Authority, Inc.; and Walden Book Company, Inc.
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"Subsidiary" means any corporation of which stock having by the terms
thereof ordinary voting power to elect at least a majority of the board of
directors of said corporation is at the time directly or indirectly owned by
the Company or by the Company and one or more Subsidiaries or by one or more
Subsidiaries.
"Taxes" means any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Bank and the Documentation Agent, such taxes
(including income taxes and franchise taxes) as are imposed on or measured by
such Bank's or the Documentation Agent's net income.
"Termination Date" means the earlier to occur of
(a) December 29, 1995; and
(b) the date on which the Commitments shall terminate in accordance
with the provisions of this Agreement.
"364 Day Credit Facility" means the revolving credit facility evidenced
by that certain 364 Day Credit Agreement dated as of October 5, 1995 among the
Company, BofA, as documentation agent thereunder, and the financial
institutions signatory thereto, as amended, restated, supplemented or modified
from time to time.
"Transferee" has the meaning specified in Section 10.08(e).
"Type" means, with respect to any Loan, its nature as a Reference Rate
Loan, a CD Rate Loan or a LIBOR Loan.
"United States" and "U.S." each means the United States of America.
1.02 Other Definitional Provisions.
(a) Defined Terms. Unless otherwise specified herein or
therein, all terms defined in this Agreement shall have such defined
meanings when used in any certificate or other document made or
delivered pursuant hereto. The meaning of defined terms shall be
equally applicable to the singular and plural forms of the defined
terms.
(b) The Agreement. The words "hereof", "herein", "hereunder"
and words of similar import when used in this Agreement shall refer to
this Agreement as a whole and not to any particular provision of this
Agreement; and section, schedule and exhibit references are to this
Agreement unless otherwise specified.
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<PAGE> 18
(c) Certain Common Terms.
(i) The term "documents" includes any and all
instruments, documents, agreements, certificates, indentures,
notices and other writings, however evidenced.
(ii) The term "including" is not limiting and means
"including without limitation."
(d) Performance; Time. Subject to the definition of "Interest
Period" in Section 1.01, whenever any performance obligation hereunder
(other than a payment obligation) shall be stated to be due or required
to be satisfied on a day other than a Business Day, such performance
shall be made or satisfied on the next succeeding Business Day. In the
computation of periods of time from a specified date to a later
specified date, the word "from" means "from and including"; the words
"to" and "until" each mean "to but excluding", and the word "through"
means "to and including". If any provision of this Agreement refers to
any action taken or to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be interpreted to
encompass any and all means, direct or indirect, of taking, or not
taking, such action.
(e) Contracts. Unless otherwise expressly provided herein,
references to agreements and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications
thereto, but only to the extent such amendments and other
modifications are not prohibited by the terms of any Loan Document.
(f) Laws. References to any statute or regulation are to be
construed as including all statutory and regulatory provisions
consolidating, amending or replacing the statute or regulation.
(g) Captions. The captions and headings of this Agreement are
for convenience of reference only and shall not affect the construction
of this Agreement.
1.03 Accounting Principles.
(a) Unless the context otherwise clearly requires, all
accounting terms not expressly defined herein shall be construed, and
all financial computations required under this Agreement shall be made,
in accordance with GAAP, consistently applied.
(b) References herein to "fiscal year" and "fiscal quarter"
refer to such fiscal periods of the Company.
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ARTICLE II
THE CREDITS
2.01 Amounts and Terms of Commitments. Each Bank severally agrees, on
the terms and conditions hereinafter set forth, and upon request by the
Company, to make Loans in Dollars to the Company from time to time on any
Business Day during the period from the Closing Date to the Termination Date,
in an aggregate principal amount not to exceed at any time outstanding the
amount set forth opposite the Bank's name in Schedule 2.01, (such amount as the
same may be reduced pursuant to Section 2.05 or reduced or increased as a
result of one or more assignments pursuant to Section 10.08, being herein
referred to as a Bank's "Commitment"); provided, that, after giving effect to
any Borrowing, the aggregate principal amount of all outstanding Loans shall
not exceed the Aggregate Commitment. Within the limits of each Bank's
Commitment, and subject to the other terms and conditions hereof, the Company
may borrow under this Section 2.01, prepay pursuant to Section 2.06 and
reborrow pursuant to this Section 2.01.
2.02 Loan Accounts; Notes. (a) The Loans made by each Bank shall be
evidenced by one or more loan accounts maintained by such Bank in the ordinary
course of business. The loan accounts maintained by the Documentation Agent and
each Bank shall be prima facie evidence of the amount of the Loans made by the
Banks to the Company and the interest and payments thereon. Any failure so to
record or any error in doing so shall not, however, limit or otherwise affect
the Obligations of the Company hereunder to pay any amount owing with respect
to the Loans. In case of a discrepancy between the entries in the Documentation
Agent's books and any Bank's books relating to such loan accounts, the Bank's
books shall be considered correct in the absence of manifest error.
(b) If any Bank shall so request, for purposes of Section 10.08(f), the
obligation to repay the Loans may also be evidenced by a Note. Each such Bank
shall endorse on the schedules annexed to its Note the date, amount, applicable
interest rate and maturity of each Loan made by it and the amount of each
payment of principal and interest made by the Company with respect thereto.
Each Bank is irrevocably authorized by the Company to so endorse its Note and
each Bank's record shall constitute prima facie evidence of the accuracy of the
information so recorded; provided, however, that the failure of a Bank to make,
or an error in making, a notation thereon with respect to any Loan shall not
limit or otherwise affect the obligations of the Company hereunder or under
such Note to pay any amount with respect to the Loans made by such Bank. Any
such request shall be made by such Bank to the Documentation Agent, which will
prepare (or cause to be prepared) such Note and send the same to the Company
for execution by the Company. Upon such execution, the Company will promptly
deliver such Note to the Bank which requested the same.
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2.03 Procedure for Borrowings.
(a) Each Borrowing shall be made upon the irrevocable request of the
Company by a facsimile to the Documentation Agent (which shall be confirmed
promptly by a telephone call) in the form of a Notice of Borrowing which
facsimile must be received by the Documentation Agent prior to 11:00 a.m. (New
York City time) (i) three (3) Business Days prior to the requested borrowing
date, in the case of LIBOR Loans, (ii) two Business Days prior to the requested
borrowing date, in the case of CD Rate Loans and (iii) on the requested
borrowing date, in the case of Reference Rate Loans, specifying:
(A) the amount of the Borrowing, which shall be in an aggregate
minimum principal amount of Ten Million Dollars ($10,000,000) or any
multiple of Five Million Dollars ($5,000,000) in excess thereof;
(B) the requested borrowing date, which shall be a Business
Day;
(C) whether the Borrowing is to be comprised of LIBOR Loans, CD
Rate Loans or Reference Rate Loans; and
(D) if the Borrowing is to be comprised of LIBOR Loans or CD
Rate Loans, the duration of the initial Interest Period applicable to
such Loans. If the Notice of Borrowing shall fail to specify the
duration of the initial Interest Period for any LIBOR Loans or CD Rate
Loans, the Company shall be deemed to have elected an Interest Period
of one months or 30 days, respectively;
provided, however, that with respect to any Borrowing to be made on the Closing
Date, a Notice of Borrowing shall be delivered to the Documentation Agent not
later than 11:00 a.m. (New York City time) on the Closing Date (such Borrowing
will consist of Reference Rate Loans only).
(b) Upon receipt of the Notice of Borrowing, the Documentation Agent
shall promptly notify each Bank thereof and of the amount of such Bank's share
of the requested Borrowing based on such Bank's Commitment Percentage.
(c) Each Bank will make its Commitment Percentage of each Borrowing
available to the Documentation Agent for the account of the Company at the
Documentation Agent's Payment Office by 2:00 p.m. (New York City time) on the
borrowing date requested by the Company by payment in Dollars and in funds
immeduately available to the Documentation Agent. Unless any applicable
condition specified in Article IV has not been satisfied, the proceeds of all
such Loans will then be made available to the Company by the Documentation
Agent at such office by crediting the account of the
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Company with the aggregate of the amounts made available to the Documentation
Agent by the Banks and in like funds as received by the Documentation Agent.
(d) After giving effect to any Borrowing, unless consented to by the
Documentation Agent in its sole discretion, there shall not be more than ten
(10) different Interest Periods in effect in respect of all Loans then
outstanding.
2.04 Conversion and Continuation Elections for Borrowings.
(a) The Company way upon notice to the Documentation Agent in
accordance with Section 2.04(b):
(i) elect to convert, as of any Business Day, any
Reference Rate Loans (or any part thereof in an aggregate amount not
less than Ten Million Dollars ($10,000,000), or that is in an integral
multiple of Five Million Dollars ($5,000,000) in excess thereof) into
LIBOR Loans or CD Rate Loans; or
(ii) elect to convert, as of the last day of any Interest
Period, any LIBOR Loans maturing on such day (or any part thereof in
an aggregate amount not less than Ten Million Dollars ($10,000,000),
or that is in an integral multiple of Five Million Dollars
($5,000,000) in excess thereof) into Reference Rate Loans or CD Rate
Loans; or
(iii) elect to convert, as of the last day of any Interest
Period, any CD Rate Loans maturing on such day (or any part thereof in
an aggregate amount not less than Ten Million Dollars ($10,000,000),
or that is in an integral multiple of Five Million Dollars
($5,000,000) in excess thereof) into Reference Rate Loans or LIBOR
Loans; or
(iv) elect to continue as of the last day of any Interest
Period (a "Continuation Date") any LIBOR Loans or CD Rate Loans
maturing on such day (or any part thereof in an aggregate amount not
less than Ten Million Dollars ($10,000,000), or that is in an integral
multiple of Five Million Dollars ($5,000,000) in excess thereof);
provided, that if the aggregate amount of all LIBOR Loans or CD Rate Loans
comprised in any Borrowing shall have been or would be reduced, by payment,
prepayment, or conversion of part thereof to an amount less than Ten Million
Dollars ($10,000,000), such LIBOR Loans or CD Rate Loans shall automatically
convert into Reference Rate Loans, on and as of the end of the applicable
Interest Period.
(b) If the Company desires to convert or continue any Loan
pursuant to Section 2.04 (a) , it shall irrevocably request a conversion or
continuation by a facsimile (confirmed promptly by
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<PAGE> 22
telephone) of a Notice of Conversion/Continuation to be received by the
Documentation Agent not later than 11:00 a.m. (New York time) at least (i)
three (3) Business Days in advance of the Conversion Date or Continuation Date,
if the Loans are to be converted into or continued as LIBOR Loans, (ii) two (2)
Business Days in advance of the Conversion Date or Continuation Date, if the
Loans are to be converted into or continued as CD Rate Loans and (iii) on the
same Business Day as the Conversion Date, if the Loans are to be converted into
Reference Rate Loans, specifying:
(A) the proposed Conversion Date or Continuation Date;
(B) the aggregate amount of Loans to be converted or continued;
(C) the nature of the proposed conversion or continuation; and
(D) the duration of the requested Interest Period, if the
Loans are to be converted into or continued as LIBOR Loans or CD Rate
Loans.
(c) If prior to the time set forth in Section 2.04(b), (i) the Company
has failed to give a timely Notice of Conversion/Continuation with respect to
such LIBOR Loans or CD Rate Loans or (ii) the Company has failed to select a
new Interest Period to be applicable to such LIBOR Loans or CD Rate Loans, the
Company shall be deemed to have elected to convert such Loans into Reference
Rate Loans effective as of the expiration of the applicable Interest Period.
(d) During the existence of a Potential Default or Event of Default,
unless the Required Banks otherwise agree, the Company may not elect to have a
Loan be converted into or continued as a LIBOR Loan or a CD Rate Loan pursuant
to Section 2.04.
(e) Upon receipt of a Notice of Conversion/Continuation, the
Documentation Agent will promptly notify each Bank thereof, or, if no timely
notice is provided, the Documentation Agent will promptly notify each Bank of
the details of any automatic conversion or continuation. All conversions and
continuations pursuant to this Section 2.04 shall be made pro rata according to
the respective outstanding principal amounts of the Loans being converted or
continued held by each Bank.
2.04 Voluntary Termination or Reduction of Commitments. The Company
may, upon not less than five (5) Business Days' prior notice to the
Documentation Agent, terminate the Aggregate Commitment or permanently reduce
the Aggregate Commitment by a minimum amount of Ten Million Dollars
($10,000,000) or in multiples of Five Million Dollars ($5,000,000) in excess
thereof; provided, that no such reduction or termination of the Aggregate
Commitment
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shall be permitted if, after giving effect thereto and to any prepayments of
the Loans made on the effective date thereof, the then outstanding aggregate
principal amount of all Loans would exceed the amount of the Aggregate
Commitment; provided, further, that once reduced in accordance with this
Section 2.05, the Aggregate Commitment may not thereafter be increased. Any
reduction of the Aggregate Commitment shall be applied to each Bank's
Commitment pro rata in accordance with such Bank's relevant Commitment
Percentage. If the Aggregate Commitment is terminated in its entirety, all
accrued unpaid interest and all fees with respect thereto accrued to the
effective date of such termination shall be payable on the effective date of
such termination without any premium or penalty.
2.06 Optional Prepayments of Loans. Subject to Section 3.05, the
Company may, at any time or from time to time, upon at least five (5) Business
Days' notice to the Documentation Agent prepay LIBOR Loans or CD Rate Loans or
upon at least one Business Day's notice to the Documentation Agent prepay
Reference Rate Loans, in whole or in part, in minimum amounts of Ten Million
Dollars ($10,000,000) or in multiples of Five Million Dollars ($5,000,000) in
excess thereof. Such notice of prepayment shall specify the date and amount of
such prepayment and whether such prepayment is of Reference Rate Loans, LIBOR
Loans or CD Rate Loans. Such notice shall not thereafter be revocable by the
Company, and the Documentation Agent will promptly notify each Bank thereof and
of such Bank's Commitment Percentage of such prepayment. If such notice is
given, the Company shall make such prepayment and the payment amount specified
in such notice shall be due and payable on the date specified therein, together
with accrued interest to each such date on the amount prepaid and the amounts
required pursuant to Section 3.05.
2.07 Repayment. The Company shall repay the aggregate outstanding
principal amount of the Loans on the Termination Date.
2.08 Interest.
(a) Subject to Sections 2.08(c) and 2.08(d), each Loan shall bear
interest on the outstanding principal amount thereof from the date when made
until paid in full, at the option of the Company as set forth in its Notice of
Borrowing or Notice of Conversion/Continuation,
(i) if such Loan is a Reference Rate Loan, at a rate per annum
equal to the Reference Rate;
(ii) if such Loan is a LIBOR Loan, at a rate per annum equal to
the sum of LIBOR plus .3000%; and
(iii) if such Loan is a CD Rate Loan, at a rate per annum equal
to the sum of the CD Rate plus .4250%.
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(b) Interest on each Loan shall be payable in arrears on each
applicable Interest Payment Date. Interest shall also be payable on the date of
any prepayment of Loans for the portion of the Loans so prepaid and, in the
case of conversion of any Reference Rate Loan, on the date of conversion
thereof into a LIBOR Loan or a CD Rate Loan.
(c) During the continuation of any Event of Default or after
acceleration, the Company shall pay, on demand, interest (after as well as
before judgment) on the principal amount of all Loans then outstanding, at a
rate per annum which is determined by increasing the rate of interest then in
effect by 2% per annum; provided, however, that, on and after the expiration of
the Interest Period applicable to any LIBOR Loan or CD Rate Loan on the date of
occurrence of such Event of Default or acceleration, the principal amount of
such Loan shall, during the continuation of such Event of Default or
acceleration, bear interest at a rate per annum equal to the Reference Rate
plus 2%.
(d) Anything herein to the contrary notwithstanding, the obligations of
the Company hereunder shall be subject to the limitation that payments of
interest shall be subject to the limitation that payments of interest shall not
be required, for any period for which interest is computed hereunder, to the
extent (but only to the extent) that contracting for or receiving such payment
by any Bank would be contrary to the provisions of any law applicable to such
Bank limiting the highest rate of interest which may be lawfully contracted
for, charged or received by such Bank, and in such event the Company shall pay
such Bank interest at the highest rate permitted by applicable law.
2.09 Fees.
(a) Syndication Fees. The Company shall pay in Dollars to the Arrangers
on the Closing Date fees in the amount set forth in a letter agreement between
the Company and BofA and Bankers Trust Company dated July 7, 1995.
(b) Transaction Fees. The Company shall pay to the Documentation Agent
transaction fees in Dollars in the amounts and at the time set forth in a
letter agreement between the Company and BofA and Bankers Trust Company dated
July 7, 1995.
(c) Closing Fee. The Company shall pay to the Documentation Agent on
the Closing Date for the account of each Bank a closing fee equal to .05% of
such Bank's Commitment.
2.10 Computation of Fees and Interest.
(a) All computations of fees and interest under this Agreement shall be
made on the basis of a 360-day year and actual days elapsed. Interest and fees
shall accrue during each period during which interest or such fees are
computed from and including
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the first day thereof to but excluding the last day thereof. Any interest or
fees not paid when due after any applicable grace period, shall bear interest
at a rate equal to the Reference Rate plus 2% per annum.
(b) The Documentation Agent will, with reasonable promptness, notify
the Company and the Banks of each determination of LIBOR, the CD Rate and the
Reference Rate; provided, that any failure to do so shall not relieve the
Company of any liability hereunder. The Documentation Agent will, with
reasonable promptness, notify the Company and the Banks of the effective date
and the amount of any change in the Debt Rating resulting in a change in the
applicable rate of interest or fees; provided, that any failure to do so shall
not relieve the Company of any liability hereunder.
(c) Each determination of an interest rate by the Documentation Agent
pursuant to any provision of this Agreement shall be conclusive and binding on
the Company and the Banks in the absence of manifest error. The Documentation
Agent, at the request of the Company or any Bank, will deliver to the Company
or such Bank, as the case may be, a statement showing the quotations used by
the Documentation Agent in determining any interest rate.
(d) If either Reference Bank's Commitment shall terminate (otherwise
than on termination of the Aggregate Commitment), or for any reason whatsoever
either Reference Bank shall cease to be a Bank hereunder, then such Reference
Bank shall thereupon cease to be a Reference Bank, and, when necessary (until
such Reference Bank shall have been replaced pursuant to Section 2.10(e)),
LIBOR and the CD Rate shall be determined on the basis of the rates as notified
by the remaining Reference Bank.
(e) Each Reference Bank shall use its best efforts to furnish
quotations of rates to the Documentation Agent as contemplated hereby. If
either Reference Bank shall be unable or otherwise fail to supply such rates to
the Documentation Agent upon its request, the rate of interest shall be
determined on the basis of the quotations of the remaining Reference Bank. The
Company and the Documentation Agent may select a new Reference Bank to replace
any Reference Bank that shall cease to be a Bank hereunder or that fails to
supply rates as required hereunder.
2.11 Payments by the Company.
(a) All payments (including prepayments) to be made by the Comopany on
account of principal, interest, fees and other amounts required hereunder shall
be made without set-off or counterclaim and shall, except as otherwise
expressly provided herein, be made to the Documentation Agent at its Payment
Office for the ratable account of the Banks in Dollars and in immediately
available funds, no later than 2:00 p.m. (New York City time) on the date
specified herein. The Documentation Agent will promptly distributed to each
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Bank its Commitment Percentage (or other applicable share as expressly provided
herein) of such principal, interest, fees or other amounts, in like funds as
received. Unless otherwise waived by the Documentation Agent with respect to a
payment, any payment which is received by the Documentation Agent later than
2:00 p.m. (New York City time) shall be deemed to have been received on the
immediately succeeding Business Day and any applicable interest or fee shall
continue to accrue until such payment is deemed to have been received.
(b) Except as otherwise set forth in the definition of Interest Period,
whenever any payment hereunder shall be stated to be due on a day other than a
Business Day, such payment shall be made on the next succeeding Business Day,
and such extension of time shall in such case be included in the computation of
interest or fees, as the case may be.
(c) Unless the Documentation Agent shall have received notice from the Company
prior to the date on which any payment is due to the Banks hereunder that the
Company will not make such payment in full, the Documentation Agent may assume
that the Company has made such payment in full to the Documentation Agent as
required hereunder on such date and the Documentation Agent may (but shall not
be so required), in reliance upon such assumption, cause to be distributed to
each Bank on such due date an amount equal to the amount then due such Bank. If
and to the extent the Company shall not have made such payment in full to the
Documentation Agent, each Bank shall repay to the Documentation Agent on demand
such amount distributed to such Bank, together with interest thereon for each
day from the date such amount was distributed to such Bank until the date such
Bank repays such amount to the Documentation Agent at the Federal Funds Rate.
2.12 Payments by the Banks to the Documentation Agent.
(a) Unless the Documentation Agent shall have received notice from a
Bank on the Closing Date or, with respect to each Borrowing after the Closing
Date, at least one (1) Business Day prior to the date of any proposed Borrowing
of LIBOR Loans or CD Rate Loans or prior to 11:00 a.m. (New York City time) on
the date of the proposed Borrowing of any Reference Rate Loans, that such Bank
will not make available to the Documentation Agent for the account of the
Company the amount of that Bank's share of Loans included in the Borrowing, the
Documentation Agent may assume that each Bank has made such amount available to
the Documentation Agent as required hereunder on the Borrowing Date and the
Documentation Agent may (but shall not be so required), in reliance upon such
assumption, make available to the Company on such date a corresponding amount.
If and to the extent any Bank shall not have made its full amount available to
the Documentation Agent and the Documentation Agent in such circumstances has
made available to the Company such amount, that Bank shall on the next Business
Day
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following the date of such Borrowing make such amount available to the
Documentation Agent, together with interest at the Federal Funds Rate, in each
case as in effect for each such day. A notice of the Documentation Agent
submitted to any Bank with respect to amounts owing under this Section 2.12(a)
shall be conslusive, absent manifest error. If such amount is so made
available, such payment to the Documentation Agent shall constitute such Bank's
Loan on the date of Borrowing for all purposes of this Agreement. If such
amount is not made available to the Documentation Agent on the next Business
Day following the date of such Borrowing, the Documentation Agent shall notify
the Company of such failure to fund and, upon demand by the Documentation
Agent, the Company shall pay such amount to the Documentation Agent for the
Documentation Agent's account, together with interest thereon for each day
elapsed since the date of such Borrowing, at a rate per annum equal to the
interest rate applicable at the time to the Loans comprising such Borrowing
without making or being responsible for any payment under Section 3.05.
(b) The failure of any Bank to make any Loan on any date of Borrowing
shall not relieve any other Bank of any obligation hereunder to make a Loan on
the date of such Borrowing, but no Bank shall be responsible for the failure of
any other Bank to make the Loan to be made by such other Bank on the date of
any Borrowing.
2.13 Sharing of Payments, Etc.
(a) If, other than as expressly set forth elsewhere herein, any Bank
shall obtain on account of the Loans made by it any payment (whether voluntary,
involuntary, through the exercise of any right of set-off, or otherwise) in
excess of its Commitment Percentage of ayments on account of the Loans obtained
by all the Banks, such Bank shall forthwith (x) notify the Documentation Agent
of such fact, and (y) purchase from the other Banks such participations in the
Loans made by them as shall be necessary to cause such purchasing Bank to share
the excess payment ratably with each of them; provided, however, that if all or
any portion of such excess payment is thereafter recovered from the purchasing
Bank, such purchase shall to that extent be rescinded and each other Bank shall
repay to the purchasing Bank the purchase price paid thereto together with an
amount equal to such paying Bank's Commitment Percentage (according to the
proportion of (i) the amount of such paying Bank's required repayment to (ii)
the total amount so recovered from the purchasing Bank) of any interest or
other amount paid or payable by the purchasing Bank in respect of the total
amount so recovered. The Documentation Agent will keep records (which shall be
conclusive and binding in the absence of a manifest error), of participations
purchased pursuant to this Section 2.13(a) and will in each case notify the
Banks and the Company following any such purchases.
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(b) The Company agrees that any Bank so purchasing a participation from
another Bank pursuant to this Section 2.13 may, to the fullest extent permitted
by law, exercise all its rights of payment (including the right of set-off, but
subject to Section 10.09) with respect to such participation as fully as if
such Bank were the direct creditor of the Company in the amount of such
participation.
(c) Nothing herein shall require any Bank to exercise any right of
set-off or similar rights or shall affect the right of any Bank to exercise,
and retain the benefits of exercising any such right with respect to any other
indebtedness or obligation of the Company.
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 Taxes.
(a) All payments of principal of and interest on the Loans (other than
Reference Rate Loans) shall be made by the Company without set-off or
counterclaim for or on account of, and free and clear of, and without deduction
or withholding for, or on account of, any Taxes. In addition, the Company shall
pay all Other Taxes.
(b) The Company agrees to indemnify and hold harmless each Bank and the
Documentation Agent for the full amount of Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section 3.01 paid by such Bank or
the Documentation Agent and any liability (including penalties, interest,
additions to tax and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted.
Payment under this indemnification shall be made within thirty (30) days after
the date any Bank or the Documentation Agent makes written demand therefor.
(c) If the Company shall be required by law to deduct or withhold any
Taxes or Other Taxes from or in respect of any sum payable hereunder to any
Bank or the Documentation Agent, then:
(i) the sum payable shall be increased as necessary so that
after making all required deductions and withholdings (including
deductions and withholdings applicable to additional sums payable under
this Section 3.01) such Bank or the Documentation Agent, as the case
may be, receives an amount equal to the sum it would have received had
no such deductions or withholdings been made;
(ii) the Company shall make such deductions and withholdings;
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(iii) the Company shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in
accordance with applicable law; and
(iv) the Company shall also pay to each Bank or the
Documentation Agent for the account of such Bank, at the time interest
is paid, all additional amounts which the respective Bank specifies as
necessary to preserve the after-tax yield such Bank would have received
if such Taxes or Other Taxes had not been imposed.
(d) Within thirty (30) days after its receipt thereof, the Company
shall furnish the Documentation Agent the original or a certified copy of a
receipt evidencing payment of such Taxes or Other Taxes, or other evidence of
payment satisfactory to the Documentation Agent.
(e) Each Bank which is a foreign person (i.e., a person other than a
United States person for United States Federal income tax purposes) agrees that
it will comply with the requirements of Section 9.10 hereof and further agrees
that if such Bank claims or is entitled to claim exemption from withholding tax
under a United States tax treaty by providing a Form 1001 and such Bank sells
or grants a participation of all or part of its rights under this Agreement,
such Bank shall notify the Documentation Agent of the percentage amount in
which it is no longer the beneficial owner under this Agreement. To the extent
of this percentage amount, the Company or the Documentation Agent shall treat
such Bank's Form 1001 as no longer in compliance with this Section 3.01(e). In
the event a Bank claiming exemption from United States withholding tax by
filing Form 4224 with the Company or the Documentation Agent sells or grants a
participation in its rights under this Agreement, such Bank agrees to undertake
sole responsibility for complying with the withholding tax requirements imposed
by Sections 1441 and 1442 of the Code.
(f) Notwithstanding anything herein to the contrary, the Company will
not be required to pay any additional amounts in respect of Taxes described
below:
(i) if such Bank shall have delivered to the Company and the
Documentation Agent a Form 4224 or a Form 1001 in respect of its
Lending Office and such Bank shall not at any time be entitled to
exemption from deduction or withholding of United States Federal income
tax in respect of payments by the Company hereunder for the account of
such Lending Office for any reason other than a change in United States
law or regulations or in the official interpretation of such law or
regulations by any governmental authority charged with the
interpretation or administration thereof (whether or not having the
force of law) after the date of delivery of such Form 4224 or Form
1001, as applicable;
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(ii) taxes that are imposed as a result of any sale,
assignment, transfer or other disposition (whether voluntary or
involuntary) by such Bank of any interest in such Bank's Commitment,
Loans or the Loan Documents, unless such sale, assignment, transfer or
disposition by such Bank takes place while an Event of Default has
occurred and is continuing or pursuant to Section 3.03(c);
(iii) taxes to the extent resulting from (A) the gross
negligence, fraud or willful misconduct of a Bank or the Documentation
Agent, (B) any act or omission of a Bank or the Documentation Agent
that is in violation of any of the terms of the Loan Documents, or (C)
the inaccuracy or breach of any representation, warranty or covenant by
a Bank or the Documentation Agent in any document required to be
furnished thereby.
(g) If the Company is required to pay additional amounts to any Bank
pursuant to this Section 3.01, then such Bank shall use its reasonable best
efforts (consistent with legal and regulatory restrictions) to change the
jurisdiction of its Lending Office so as to eliminate any such additional
payment by the Company which may thereafter accrue if such change in the
judgment of such Bank is not otherwise materially disadvantageous to such Bank.
(h) If any Bank or the Documentation Agent receives a written
notification from a taxing authority of proposed taxes for which an amount may
be payable by the Company in accordance with this Section 3.01, such Bank or
the Documentation Agent shall notify the Company promptly after receipt of such
notification and shall furnish the Company with such related information as the
Company may reasonably request. If requested by the Company in writing, such
Bank or the Documentation Agent shall in good faith diligently contest
(including pursuing all judicial appeals as of right, if any) the validity,
applicability and amount of such Taxes or Other Taxes; provided, that (x) prior
to taking such action the Company shall have agreed to indemnify such Bank or
the Documentation Agent for all reasonable out of pocket costs and expenses
that such indemnitee may incur in connection with contest such claim and (y)
the amount of such claim, when aggregated with all amounts owing to such Bank
under comparable provisions of the Other Credit Facilities to which such Bank
is a party, shall exceed $5,000.
(i) Each Bank receiving a receipt or other evidence of payment
pursuant to Section 3.01(d) shall reimburse the Company for the amount of any
credit or other economic benefit available to such Bank by reason or on account
of such payment by the Company or such Bank's possession of such receipt or
other evidence of payment under any tax, levy, impost, duty, fee, assessment or
other charge of any nature imposed by any Governmental Authority applicable to
such Bank. The amount of such reimbursement calculated by such
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Bank shall be conclusive and binding absent manifest error in computation.
3.02 Inability to Determine Rates. If and to the extent that market or
other conditions existing in the domestic money market relevant to CD Rate
Loans or in the London inter-bank market relevant to LIBOR Loans make it
impossible or impracticable for the Banks to make such Loans, then the
obligations of the Banks to make CD Rate Loans or LIBOR Loans, as applicable,
and the right of the Company to originate, continue or convert any Loan as or
to a CD Rate Loan or a LIBOR Loan shall be suspended until the circumstances
giving rise to such suspension shall no longer exist.
Upon receipt from the Documentation Agent of a notice of the Banks'
inability to make, convert or continue the requested Loan due to any of the
reasons referred to above, notwithstanding anything in this Agreement to the
contrary, the Company may revoke any Notice of Borrowing or Notice of
Conversion/Continuation then submitted by it. If the Company does not revoke
such notice relating to a LIBOR Loan or CD Rate Loan, the Banks shall, with
respect to such LIBOR Loan or CD Rate Loan only, make or convert such Loan in
the amount specified in the applicable notice submitted by the Company, but
such Loan shall be made as or converted into a Reference Rate Loan instead of a
LIBOR Loan or a CD Rate Loan. Except as provided in the immediately preceding
sentence, if, notwithstanding the provisions of this Section 3.02, any Bank has
made available to the Company its Commitment Percentage of any such proposed
Loan, then the Company shall immediately repay the amount so made available to
it by such Bank, together with accrued interest thereon, if any.
3.03 Increased Costs; Capital Adequacy.
(a) If, after the Closing Date, a Bank shall reasonably determine that
any change in applicable laws, rules or regulations or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force of
law):
(i) shall change the basis of taxation to such Bank of any
amounts payable by the Company under this Agreement (other than taxes
imposed on or measured by the overall income of such Bank in the
jurisdiction in which such Bank has its principal office), or
(ii) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement against assets of, deposits with
or for the account of, or credit extended by, such Bank with respect to
this Agreement or any Note, or
(iii) shall impose any other condition with respect to this
Agreement or any Note,
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and the result of any of the foregoing is to increase the cost to such Bank or
to reduce the amount of any sum receivable by such Bank with respect to making
or maintaining any CD Rate Loan or LIBOR Loan by an amount reasonably deemed by
such Bank to be material, then the Company shall from time to time, upon
written demand by such Bank, pay to such Bank additional amounts sufficient to
compensate such Bank for any such increased cost or reduced sum receivable to
the extent resulting from outstanding CD Rate Loans or LIBOR Loans and not
compensated in connection with the computation of the CD Rate or LIBOR (as
applicable).
(b) If any Bank shall have determined that (i) the introduction of any
Capital Adequacy Regulation, (ii) any change in any Capital Adequacy
Regulation, (iii) any change in the interpretation or administration of any
Capital Adequacy Regulation by any central bank or other Governmental Authority
charged with the interpretation or administration thereof, or (iv) compliance
by such Bank (or its Lending Office) with any such change in Capital Adequacy
Regulations, affects or would affect the amount of capital required or expected
to be maintained by such Bank and (taking into consideration such Bank's
policies with respect to capital adequacy and such Bank's desired return on
capital) determines that the amount of such capital is increased by an amount
deemed material by such Bank as a consequence of its Commitment, Loans (other
than Reference Rate Loans) or other obligations under this Agreement, then,
upon demand of such Bank to the Company through the Agent, the Company shall
pay to such Bank, from time to time as specified by such Bank, additional
amounts sufficient to compensate for such increase.
(c) Upon receipt of notice from any Bank of a claim for compensation
under this Section 3.03, the Company shall be afforded ninety (90) days to find
a replacement financial institution reasonably acceptable to the Documentation
Agent and, if an acceptable replacement financial institution is available such
replacement institution will purchase such Bank's Loans and Commitment and
other interests under the Loan Documents in accordance with Section 10.08 or
such Bank will withdraw such request for payment.
(d) A detailed statement as to the amount of such increased cost or
reduced sum receivable, along with documentation supporting the payment of such
amount under this subsection, shall be prepared by such Bank and submitted to
the Company (with a copy to the Documentation Agent) with such Bank's written
demand. Such Bank's statement of such increased cost or reduced sum receivable
shall be prima facie evidence of such increased cost or reduced sum absent
manifest error.
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<PAGE> 33
3.04 Illegality.
(a) If any Bank shall determine that, after the date hereof, (i) the
introduction of any Requirement of Law or any change in or in the
interpretation or administration thereof has made it unlawful, or (ii) any
central bank or other Governmental Authority has asserted that it is unlawful,
for such Bank or its Lending Office to make any Loan of the Type requested by
the Company, then, on notice thereof by such Bank to the Company through the
Documentation Agent, the obligation of such Bank to make any such Loans shall
be suspended until such Bank shall have notified the Documentation Agent and
the Company that the circumstances giving rise to such determination no longer
exists.
(b) If a Bank shall determine that it is unlawful to maintain any Loan
then outstanding, then, on notice thereof by such Bank to the Company through
the Documentation Agent, the Company shall prepay in full all such Loans of
such Bank then outstanding, together with interest accrued thereon, either on
the last day of the Interest Period thereof if such Bank may lawfully continue
to maintain such Loans to such day, or immediately, if such Bank may not
lawfully continue to maintain such Loans.
(c) If the Company is required to prepay any LIBOR Loan or CD Rate
Loan as provided in Section 3.04(b), then concurrently with such prepayment,
the Company shall borrow from the affected Bank, in the amount of such
repayment, a Reference Rate Loan.
3.05 Funding Losses. The Company agrees to reimburse each Bank and to
hold each Bank harmless from any loss, cost or expense which such Bank may
sustain or incur as a consequence of:
(a) any failure by the Company to borrow, or to continue or convert a
Loan (other than a Reference Rate Loan) after it has given (or is deemed to
have given) a Notice of Borrowing or a Notice of Conversion/Continuation, as
the case may be;
(b) any payment by it of a LIBOR Loan or a CD Rate Loan or on a day
which is not the last day of the Interest Period with respect thereto; or
(c) the conversion of a LIBOR Loan or a CD Rate Loan to a Reference
Rate Loan on a day that is not the last day of the respective Interest Period
pursuant to Section 2.04;
by paying to each Bank, on demand by such Bank, an additional amount equal to
the amount of any interest which such Bank would have earned for the remainder
of the Interest Period in question reduced by the amount of income earned by
such Bank during such Interest Period with respect to the amount prepaid or not
borrowed (the "Loss"). A detailed statement as to the amount of such Loss,
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prepared by the Bank incurring the same, shall be prima facie evidence of such
Loss absent manifest error.
3.06 Survival. The agreements and obligations of the Company in this
Article III shall survive the payment of all other Obligations.
ARTICLE IV
CONDITIONS PRECEDENT
4.01 Conditions to Occurrence of the Closing Date and Effectiveness of
this Agreement. The occurrence of the Closing Date and the binding effect of
this Agreement on each Bank are subject to the condition that the Documentation
Agent shall have received on or before the Closing Date all of the following,
in form and substance satisfactory to the Documentation Agent and each Bank, in
sufficient copies for each Bank:
(a) Credit Agreement. This Agreement executed by the Company, the
Documentation Agent and each of the Banks;
(b) By-laws; Resolutions; Incumbency.
(i) Copies of the by-laws of the Company and of the
resolutions of the board of directors of the Company approving and
authorizing the execution, delivery and performance by the Company of
this Agreement and the other Loan Documents to be delivered hereunder,
and authorizing the borrowing of the Loans, each certified as of the
Closing Date by the Secretary or an Assistant Secretary of the Company;
and
(ii) A certificate of the Secretary or Assistant Secretary of
the Company certifying the names and true signatures of its respective
officers authorized to execute and deliver and perform, as applicable,
this Agreement and all other Loan Documents and notices to be delivered
by it hereunder;
(c) Articles of Incorporation. (i) A copy of the Company's Articles
of Incorporation as in effect on the Closing Date, including any amendments
thereto, certified by the Michigan Department of Commerce, and (ii) good
standing certificates for the Company from the Michigan Department of Commerce
and from the Secretaries of State of California and New York, each dated not
more than seven (7) days prior to the Closing Date;
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(d) Legal Opinions.
(i) an opinion of A.N. Palizzi, counsel to the Company, and
addressed to the the Documentation Agent and the Banks, substantially
in the form of Exhibit D-1; and
(ii) an opinion of Dickinson, Wright, Moon, Van Dusen &
Freeman, special counsel to the Company and addressed to the
Documentation Agent and the Banks in substanially the form of Exhibit
D-2;
(e) Payment of Transaction Fees and Expenses. Evidence of payment
of all costs, accrued and unpaid fees and expenses (including Attorney Costs)
to the extent then due and payable on the Closing Date;
(f) Certificate. A certificate signed by a Responsible Officer of
the Company, dated as of the Closing Date, stating that:
(i) the representations and warranties of the Company
contained in Article V are true and correct on and as of such date, as
though made on and as of such date;
(ii) no Potential Default or Event of Default exists as of
the date of such certificate;
(iii) no material adverse change in the assets, liabilities,
business, operations or condition of the Company and its Subsidaries
has occurred since January 25,1995;
(iv) no default has occurred and is continuing in respect of
any Indebtedness of the Company and its Subsidaries with an aggregate
principal amount in excess of $100,000,000; and
(v) all consents and approvals required to consumate the
transaction contemplated by this Agreement have been obtained or
wavied;
(g) Financial Statements. The financial statements of the Company
referred to in Section 5.06;
(h) 364 Day Facility. The Borrower shall have entered into the 364
Day Facility and the conditions to closing thereunder shall have been
satisfied; and
(i) Other Documents. Such other approvals, opinions or documents
as the Documentation Agent may reasonably request.
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4.02 Conditions to All Borrowings. The obligation of each Bank to
make any Loan to be made by it hereunder is subject to the satisfaction of the
following conditions precedent on the relevant Borrowing Date:
(a) Notice of Borrowing. In the case of any Loan, the
Documentation Agent shall have received a Notice of Borrowing and
executed Notes evidencing the requested Loans to the extent required
hereby;
(b) Continutation of Representations and Warranties. The
representations and warranties made by the Company contained in Article V
shall be true and correct on and as of such Borrowing Date with the same
effect as if made on and as of such Borrowing Date (except to
the extent such representations and warranties expressly refer to an
earlier date, in which case they shall be true and correct as of such
earlier date); and
(c) No Existing Default. No Potential Default or Event of Default
shall exist or shall result from such Borrowing.
Each Notice of Borrowing submitted by the Company hereunder shall constitute a
representation and warranty by the Company, as of the date of each such notice
and as of the Borrowing Date relating thereto, that the conditions in Section
4.02 are satisfied.
ARTICLE V
REPRESENTATION AND WARRANTIES
The Company represents and warrants to the Documentation Agent and each
Bank that:
5.10 Organization and Good Standing. The Company and is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, and is duly qualified to do
business and is in good standing in each additional jurisdiction where failure
to so qualify would have an effect which, when taken together with the
simultaneous effect of failure to qualify in any other jurisdictions, would in
the aggregate have a Material Adverse Effect.
5.02 Authorization; No Contravention. The execution, delivery and
performance of this Agreement and the issuance of the Notes by the Company are
within its corporate powers, have been duly authorized by all necessary
corporate action, and are not in contravention of any Requirement of Law or of
the terms of the Company's Articles of Incoporation or by-laws, or of any
agreement, undertaking, contract or other obligation to which the Company is a
party or by which it is bound.
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5.03 Consents and Approvals. No consent, waiver, approval,
notification of, or registration or filing with, any Governmental Authority or
any non-governmental Person is required in connection with the execution and
delivery by the Company of this Agreement or any Notes or the borrowing by the
Company hereunder or in connection with the consummation of any transaction
contemplated hereby, except those disclosed in Schedule 5.03 and which the
Company has obtained or made.
5.04 Binding Effect. This Agreement is, and each Note when issued
will be, valid, binding and enforceable against the Company in accordance with
the terms thereof (subject, as to enforcement of remedies, to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws relating to
or affecting the enforcement of creditors' rights and general equitable
principles which may limit the right to obtain the remedy of specific
performance of executory covenants and other equitable remedies).
5.05 Litigation. No litigation or governmental proceeding is
pending or, to the knowledge of the Company, threatened, against the Company
for which sufficient provision has not been made in the financial statements of
the Company and which could have a material adverse effect on the Company's
condition or business, financial or otherwise, or which purport to affect or
pertain to this Agreement or any of the transactions contemplated hereby.
5.06 Financial Statements. The balance sheet dated as of January
25, 1995 and the related statements of income and stockholders' equity and cash
flows of the Company and its Subsidiaries contained in the annual report of the
Company to its stockholders have been audited and certified by Price
Waterhourse, independent certified public accountants, and are complete and
accurate in all material respects and present fairly the financial condition of
the Company and its Subsidiaries as of the date of such statements and the
results of their operations for the periods covered thereby, in accordance with
GAAP, consistently applied. The balance sheet dated as of July 26, 1995 and
the related statements of income, stockholders' equity and cash flows of the
Company and its Subsidiaries contained in the quarterly report of the Company
filed with the U.S. Securities and Exchange Commission (the "SEC") on Form 10-Q
are complate and accurate in all material respects and present fairly the
financial condition of the Company and its Subsidiaries as of the dates of such
statements and the results of their operations for the periods covered thereby,
in accordance with GAAP, consistently applied.
5.07 Use of Proceeds; Margin Regulations. The proceeds of the Loans
will be used for general corporate and working capital purposes, including
commercial paper backup. After applying the proceeds of any borrowings
hereunder, not more than 25% of the value of the assets of the Company and its
Subsidiaries will consist of "margin stock" as such term is defined in
Regulation G,
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T, U, or X of the Federal Reserve Board. The Company is not generally engaged
in the business of purchasing or selling margin stock or extending credit for
the purpose of purchasing or carrying margin stock.
5.08 No Default. No Potential Default or Event of Default exists or
would result from the incurring of any Obligations by it.
5.09 Taxes. The Company has filed all Federal and other material
tax returns and reports required to be filed, and has paid all Federal and
other material taxes, assessments, fees and other governmental charges levied
or imposed upon it or its properties, income or assets otherwise due and
payable, except those which are being contested in good faith by appropriate
proceedings and for which adequate reserves have been provided in accordance
with GAAP. There is no proposed tax assessment against the Company that could,
if made, have a Material Adverse Effect.
5.10 Insurance. The properties and business of the Company are
insured in such amounts, with such deductibles and covering such risks as are
customarily carried by similar companies of comparable size engaged in similar
businesses and owning or operating similar properties in localities where the
Company operates.
5.11 Compliance With Laws. The Company is in compliance with all
applicable laws, rules and regulation (including environmental laws, rules and
regulations and the Employee Retirement Income Security Act of 1976, as
amended, and all regulations thereunder) except where the failure to be in such
compliance could not reasonably be expected to have a Material Adverse Effect.
ARTICLE VI
AFFIRMATIVE COVENANTS
The Company covenants and agrees that, so long as any Bank shall have
any Commitment hereunder, or any Loan or other Obligation shall remain unpaid
or unsatisfied:
6.01 Payment of Taxes. The Company will pay, when due, all taxes
assessed against the Company or its property and all other claims which may
become a Lien upon any of its property, except to the extent that (a) the same
are being contested in good faith by appropriate proceedings, and (b) adequate
reserves for payment thereof have been established in accordance with GAAP.
6.02 Insurance. The Company shall maintain insurance with respect
to its properties and business in such amounts, with such deductibles and
covering such risks as are customarily carried by similar companies of
comparable size engaged in similar businesses
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and owning or operating similar properties in localities where the Company
operates.
6.03 Preservation of Corporate Existence, Etc. The Company shall:
(a) preserve and maintain in full force and effect its corporate
existence and good standing under the laws of its state or jurisdiction
of incorporation; and
(b) preserve and maintain in full force and effect all governmental
rights, privileges, qualifications, permits, licenses and franchises
necessary or desirable in the noraml conduct of its business except in
connection with transactions permitted by Section 7.01 and dispositions
of assets permitted by Section 7.02.
6.04 Maintenance of Property. The Company shall maintain and
preserve all its property which is used or useful in its business in good
working order and condition, ordinary wear and tear excepted, and make all
necessary repairs thereto and renewals and replacements thereof except where
the failure to do so could not reasonably be expected to have a Material
Adverse Effect, and except as permitted by Section 7.02.
6.05 Compliance with Laws. The Company shall comply in all material
respects with all Requirements of Law of any Governmental Authority having
jurisdiction over it or its business, except such as may be contested in good
faith or as to which a bona fide dispute may exist.
6.06 Books and Records; Other Information. The Company shall
maintain proper books of record and account in which full, true and correct
entries in conformity with GAAP consistently applied shall be made of all
financial transactions and matters involving the assets and business of the
Company, and will provide to the Documentation Agent and the Banks such other
information as they may reasonably request and which is reasonably available to
the Company or can be reasonably computed from the Company's books and records.
6.07 Financial Information. The Company shall deliver to the
Documentation Agent for distribution to the Banks (and, if requested, with
sufficient copies for each Bank):
(a) within sixty (60) days after the end of each of the
first three (3) fiscal quarters of the Company, copies of (i) the
consolidated balance sheet of the Company and its Subsidiaries as of
the end of such quarter, (ii) the consoldiated statement of income of
the Company and its Subsidiaries for such quarter and for the period
from the end of the most recent fiscal year of the Company through the
end
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of such quarter, (iii) the consolidated statement of cash flows of the Company
and its Subsidiaries for the period from the end of the most recent fiscal year
of the Company through the end of such quarter, all prepared in accordance with
GAAP and certified by a Responsible Officer as being a fair statement of
results for the periods covered thereby, subject to ordinary year-end audit
adjustments;
(b) concurrently with the delivery of the financial statements referred
to in Sections 6.07(a) and (c) a certificate duly completed and executed by a
Responsible Officer, as to compliance by the Company with the covenants
contained in Sections 7.04 and 7.05 hereof, and stating that no Potential
Default or Event of Default then exists (or, if any should then exist,
identifying the same and stating any actions being taken by the Company with
respect thereto);
(c) within one hundred twenty (120) days after the end of each fiscal
year of the Company, copies of (i) the consolidated balance sheet of the
Company and its Subsidiaries as at the end of such fiscal year, (ii) the
consolidated statement of income of the Company and its Subsidiaries for such
fiscal year, and (iii) the consolidated statement of cash flows of the Company
and its Subsidiaries for such fiscal year, setting forth in each case in
comparative form the corresponding figures for the previous fiscal year, all in
reasonable detail and prepared in accordance with GAAP and certified by a
nationally recognized independent public accounting firm; and
(d) promptly, copies of all financial statements and reports that the
Company sends to its shareholders and copies of all Forms 10K, 10Q and 8K that
the Company files with the SEC.
6.08 Notices.
(a) The Company shall notify each Bank promptly, but not later than
three (3) Business Days after the Company becomes aware thereof, of the
occurrence of any Event of Default.
(b) The Company shall notify the Documentation Agent for distribution
to the Banks promptly, but not later than three (3) Business Days after the
Company becomes aware thereof, of the occurrence of:
(i) any Potential Default;
(ii) any Material Adverse Effect or any event or other
development which could have a Material Adverse Effect;
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(iii) any change in the Debt Rating by Moody's or S&P; or
(iv) any Reportable Event.
ARTICLE VII
NEGATIVE COVENANTS
The Company hereby covenants and agrees that, so long as any Bank shall
have any Commitment hereunder, or any Loan or other Obligation shall remain
unpaid or unsatisfied:
7.01 Consolidating and Mergers. The Company shall not merge or
consolidate with any other Person, unless:
(a) the successor formed by or resulting from such
consolidation or merger is the Company or a Subsidiary of the Company
(and, if the survivor is a Subsidiary of the Company, such Subsidiary
shall affirm the Company's Obligations under the Loan Documents in
writing), and
(b) no Event of Default or Potential Default shall have
occurred and then be continuing or would arise after giving effect
thereto.
7.02 Disposition of Assets. The Company shall not, directly or
indirectly, sell, assign, lease, convey, transfer or otherwise dispose
of (whether in one or a series of transactions) any property (including
accounts and notes receivable, with or without recourse) or enter into any
agreement to do any of the foregoing except:
(a) dispositions of inventory, or used, worn-out or surplus
equipment, all in the ordinary course of business;
(b) the sale of equipment to the extent that such equipment is
exchanged for credit against the purchase price of similar replacement
equipment, or the proceeds of such sale are reasonably promptly
applied to the purchase price of such replacement equipment;
(c) dispositions of inventory or equipment by the Company to any
Subsidiary pursuant to reasonable business requirements; and
(d) other dispositions of assets having, in any fiscal year of the
Company, an aggregate book value not exceeding 10% of the Company's
consolidated total assets as of the end of the most recently ended
fiscal year of the Company, as reflected
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in the Company's balance sheet contained in its audited financial
statements for such fiscal year;
provided, however, that this Section 7.02 shall not be deemed to prohibit the
sale of all, substantially all, or a part Of the capital stock or of all,
substantially all, or a part of the assets of any Specialty Retail Subsidiary
of the Company, even it such an entity is no longer a Subsidiary of the
Company, if (x) consideration received is fair market value (as determined by
the Company) , or (y) the Company's board of directors deems such transaction
to be necessary by reason of applicable laws, regulations or governmental
policies applicable to the Company.
7.03 Limitation on Liens. The Company shall not incur any
Indebtedness which is secured by a Lien on any assets of the Company, whether
now owned or hereafter acquired, unless, concurrently with creation of any such
Lien securing Indebtedness in an aggregate amount of $50,000,000 or more, the
Company shall cause the Obligations and its obligations under the Other Credit
Facilities to be equally and ratably secured by the same assets, provided,
however, that such restriction shall not apply with respect to any of the
following types of Liens:
(a) Liens for taxes not delinquent or being contested in
good faith;
(b) Liens created in connection with workers'
compensation, unemployment insurance and other social security
legislation, or to secure the performance of bids, tenders, contracts
(other than for the repayment of borrowed money), statutory
obligations, surety and appeal bonds and other similar obligations
incurred in the ordinary course;
(c) purchase money mortgages (including vendors, rights
under purchase or land contracts or under other agreements whereby
title or other interest is retained by the vendor for the purpose of
securing the purchase price thereof) on property acquired or
constructed after the Closing Date, or the acquisition after the
Closing Date of property subject to such a Lien which is limited to
such property and was not created in anticipation of such acquisition;
(d) mortgages on real property which is the sole security
for Indebtedness the amount of which does not exceed the greater of
the cost of such property and improvements or the fair market value
thereof;
(e) mortgages, security interests and Liens on assets of
the Company existing on the Closing Date and set forth on Schedule
7.03, or any refundings or extensions for an amount not exceeding the
principal amount of such Indebtedness and applying only to the same
property or assets; and
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(f) mortgages, security interests and Liens in connection
with indebtedness under industrial revenue bond financings or similar
government agency supported financings.
7.04 EBITDAR Coverage Ratio. The Company shall not permit its ratio of
(a) EBITDAR (measured as of the end of any fiscal quarter
ending after the Closing Date for the four fiscal quarters then ended)
to
(b) the sum of (i) consolidated net interest expense for
such four fiscal quarter period plus (ii) consolidated Rent Expense
for such four fiscal quarter period
to be less than 1.50 to 1.00.
7.05 Consolidated Net Worth. The Company shall not permit its
Consolidated Net Worth at any time to be less than Four Billion Five Hundred
Million Dollars ($4,500,000,000).
ARTICLE VIII
EVENTS OF DEFAULT
8.01 Event of Default. Any of the following shall constitute an
"Event of Default":
(a) Non-Payment of Principal. The Company fails to pay,
when and as required to be paid herein, any amount of principal of any
Loan and such default shall continue unremedied for a period of two
(2) Business Days after the date upon which notice thereof is received
by the Company from the Documentation Agent; or
(b) Non-Payment of Interest or Fees. The Company fails
to pay, when and as required to be paid herein, any interest or any
fees payable hereunder and such default shall continue unremedied for
a period of five (5) Business Days after the date upon which notice
thereof is received by the Company from the Documentation Agent; or
(c) Specific Defaults. The Company fails to perform or
observe any term, covenant or agreement contained in Sections 6.02,
6.03, 6.08(a), 7.01, 7.02 and 7.03; or
(d) Other Defaults. The Company fails to perform or
observe any other term or covenant contained in this Agreement and
such default shall continue unremedied for a period of thirty (30)
days after the date upon which written notice
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thereof is given to the Company by the Documentation Agent or any
Bank; or
(e) Representation or Warranty. Any representation or
warranty by the Company made or deemed made herein proves to have been
inaccurate or untrue in any material respect on or as of the date made
or deemed made; or
(f) Cross Default; Cross-Acceleration. (i) The Company
fails to make any payment of principal or interest or fees under any of
the Other Credit Facilities when due after taking into account any
applicable grace periods, or (ii) by reason of any action taken by the
Company with the intent and capacity promptly to satisfy any obligation
of the Company resulting therefrom, including, without limitation, the
calling for payment by the Company of any of its Indebtedness or the
termination by the Company of any of its guaranty obligations, any
Indebtedness shall mature or be declared due and payable prior to its
stated maturity and such Indebtedness shall remain unpaid for a period
of two (2) Business Days thereafter, or (iii) the Company fails to
perform or observe any condition or covenant or any other event shall
occur or condition exist (other than with respect to matters described
under clause (ii) immediately preceding) relating to Indebtedness
(other than Indebtedness under the Other Credit Facilities) having an
aggregate principal amount (including undrawn committed or available
amounts) of more than Hundred Million Dollars ($100,000,000) if the
effect of such failure, event or condition is to cause such
Indebtedness to be declared to be due and payable or otherwise become
due and payable prior to its stated maturity, or (iv) the Company
fails to pay any such other Indebtedness in full at its stated
maturity; or
(g) ERISA. The occurrence of a Reportable Event which
the PBGC deems grounds to terminate any employee pension benefit plan
or for the appointment of a trustee to administer such plan and such
Reportable Event is not corrected and such determination by the PBGC
is not revoked within thirty (30) days after notice thereof; or the
institution of proceedings by the PBGC to terminate any such plan; or
the appointment of a trustee to administer any such plan; or
(h) Monetary Judgments. A final judgment or judgments in
excess of One Hundred Million Dollars ($100,000,000) shall be entered
against the Company by a court of record and not discharged in
accordance with its terms or, within sixty (60) days from the date of
entry thereof, stayed from execution (within said period of sixty
(60) days or such longer period during which execution of such
judgments) shall have been stayed) appeal taken therefrom and
execution thereof stayed during such appeal; or
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(i) Insolvency: Voluntary Proceedings. The Company (i)
generally fails to pay, or admits in writing its inability to pay, its
debts as they become due, subject to applicable grace periods, if any,
whether at stated maturity or otherwise; (ii) voluntarily ceases to
conduct its business in the ordinary course; (iii) commences any
Insolvency Proceeding with respect to itself; or (iv) takes any action
to effectuate or authorize any of the foregoing; or
(j) Involuntary Proceedings. (i) Any involuntary
Insolvency Proceeding is commenced or filed against the Company, or
any writ, judgment, warrant of attachment, execution or similar
process, is issued or levied against a substantial part of the
Company's properties, and any such proceeding or petition is not
dismissed, or such writ, judgment, warrant of attachment, execution or
similar process is not released, vacated or fully bonded within 60
days after commencement, filing or levy; (ii) the Company admits the
material allegations of a petition against it in any Insolvency
Proceeding, or an order for relief is entered in any Insolvency
Proceeding; or (iii) the Company acquiesces in the appointment of a
receiver, trustee, custodian, conservator, liquidator, mortgagee in
possession (or agent therefor), or other similar Person for itself or
a substantial portion of its business.
8.02 Remedies. If any Event of Default occurs, the Documentation
Agent shall, at the request of, or may, with the consent of, the Required
Banks,
(a) declare the Commitment of each Bank to make Loans to
be terminated, whereupon such Commitments shall forthwith be
terminated;
(b) declare the unpaid principal amount of all
outstanding Loans, all interest accrued and unpaid thereon, and all
other amounts owing or payable hereunder or under any other Loan
Document to be immediately due and payable; without presentment,
demand, protest or other notice of any kind, all of which are hereby
expressly waived by the Company; and
(c) exercise on behalf of itself and the Banks all rights
and remedies available to it and the Banks under the Loan Documents or
applicable law;
provided, that upon the occurrence of any event specified in Section 8.01(i) or
8.01(j) above (upon the expiration of the 60-day period mentioned therein, if
applicable), the Commitment of each Bank shall automatically terminate and the
unpaid principal amount of all outstanding Loans and all interest and other
amounts as aforesaid shall automatically become due and payable without further
act of the Documentation Agent or any Bank. Any payments
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received after the Banks have taken action pursuant to Section 8.02(b) shall be
allocated ratably among the Loans.
8.03 Rights Not Exclusive. The rights provided for in this
Agreement and the other Loan Documents are cumulative and are not exclusive of
any other rights, powers, privileges or remedies provided by law or in equity,
or under any other instrument, document or agreement now existing or hereafter
arising.
ARTICLE IX
THE DOCUMENTATION AGENT
9.01 Authorization; "Documentation Agent". Each Bank hereby
irrevocably (except as otherwise set forth in Section 9.09) appoints,
designates and authorizes the Documentation Agent to take such action on its
behalf under the provisions of this Agreement and each other Loan Document and
to exercise such powers and perform such duties as are expressly delegated to
it by the terms of this Agreement or any other Loan Document, together with
such powers as are reasonably incidental thereto. Notwithstanding any
provision to the contrary contained elsewhere in this Agreement or in any other
Loan Document, the Documentation Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall the
Documentation Agent have or be deemed to have any fiduciary relationship with
any Bank, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against the Documentation Agent. Without limiting
the generality of the foregoing sentence, the use of the term "agent" in this
Agreement with reference to the Documentation Agent is not intended to connote
any fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable law. Instead, such term is used merely as a matter
of market custom and is intended to create or reflect only an administrative
relationship between independent contracting parties.
9.02 Delegation of Duties. The Documentation Agent may execute any
of its duties under this Agreement or any other Loan Document by or through
agents, employees or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Documentation
Agent shall not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects with reasonable care.
9.03 Liability of Agent-Related Persons. No Agent-Related Persons
shall (i) be liable for any action taken or omitted to be taken by any of them
under or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own negligence under or breach
or default of its
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obligations under this Agreement) , or (ii) be responsible in any manner to any
of the Banks for any recital, statement, representation or warranty made by the
Company or any Subsidiary or Affiliate of the Company, or any officer thereof,
contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for
in, or received by the Documentation Agent under or in connection with, this
Agreement or any other Loan Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of the Company or any other party to any Loan
Document to perform its obligations hereunder or thereunder. No Agent-Related
Person shall be under any obligation to any Bank to ascertain or to inquire as
to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
Properties, books or records of the Company or any the Company's Subsidiaries
or Affiliates.
9.04 Reliance by Documentation Agent.
(a) The Documentation Agent shall be entitled to rely, and shall
be fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons, and upon advice and statements of legal counsel (including counsel
to the Company), independent accountants and other experts selected by the
Documentation Agent. The Documentation Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the
Required Banks as it deems appropriate and, if it so requests, it shall first
be indemnified to its satisfaction by the Banks against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Documentation Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement or any
other Loan Document in accordance with a request or consent of all of the Banks
or the Required Banks, as applicable and such request and any action taken or
failure to act pursuant thereto shall be binding upon all of the Banks.
(b) For purposes of determining compliance with the conditions
specified in Section 4.01, each Bank that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with each
document or other matter either sent by the Documentation Agent to such Bank
for consent, approval, acceptance or satisfaction or required thereunder to be
consented to or approved by or acceptable or satisfactory to the Bank.
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9.05 Notice of Default. The Documentation Agent shall not be
deemed to have knowledge or notice of the occurrence of any Potential Default
or Event of Default, except with respect to defaults in the payment of
principal, interest and fees required to be paid to the Documentation Agent for
the account of the Banks, unless the Documentation Agent shall have received
written notice from a Bank or the Company referring to this Agreement,
describing such Potential Default or Event of Default and stating that such
notice is a "notice of default". The Documentation Agent will notify the Banks
of its receipt of any such notice. The Documentation Agent shall take such
action with respect to such Potential Default or Event of Default as shall be
requested by the Required Banks in accordance with Article VIII; provided,
however, that unless and until the Documentation Agent has received any such
request, the Documentation Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Potential
Default or Event of Default as it shall deem advisable or in the best interest
of the Banks.
9.06 Credit Decision. Each Bank expressly acknowledges that none
of the Agent-Related Persons has made any representation or warranty to it and
that no act by the Documentation Agent hereinafter taken, including any review
of the affairs of the Company and its Subsidiaries shall be deemed to
constitute any representation or warranty by any Agent-Related Person to any
Bank. Each Bank represents to the Documentation Agent that it has,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Company and
its Subsidiaries, and all applicable bank regulatory laws relating to the
transactions contemplated hereby and made its own decision to enter into this
Agreement and extend credit to the Company hereunder. Each Bank also
represents that it will, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement
and the other Loan Documents, and to make such investigations as it deems
necessary to inform itself as to the business, prospects, operations, property,
financial and other condition and creditworthiness of the Company. Except for
notices, reports and other documents expressly herein required to be furnished
to the Banks by the Documentation Agent, the Documentation Agent shall not have
any duty or responsibility to provide any Bank with any credit or other
information concerning the business, prospects, operations, property, financial
and other condition or creditworthiness of the Company which may come into the
possession of any of the Agent-Related Persons.
9.07 Indemnification. Whether or not the transactions contemplated
hereby are consummated, the Banks shall indemnify upon
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demand the Agent-Related Persons (to the extent not reimbursed by or on behalf
of the Company and without limiting the obligation of the Company to do so),
pro rata (as determined in accordance with their respective Commitment
Percentages) from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses and
disbursements of any kind whatsoever which may at any time (including at any
time following the repayment of the Loans) be imposed on, incurred by or
asserted against any such Person any way relating to or arising out of this
Agreement or any document contemplated by or referred to herein or therein or
the transactions contemplated hereby or thereby or any action taken or omitted
by any such Person under or in connection with any of the foregoing; provided,
however, that no Bank shall be liable for the payment to the Agent-Related
Persons of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from such Person's gross negligence or willful misconduct.
Without limitation of the foregoing, each Bank shall reimburse the
Documentation Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including Attorney Costs) incurred by the Documentation
Agent in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any
document contemplated by or referred to herein to the extent that the
Documentation Agent is not reimbursed for such expenses by or on behalf of the
Company. The obligation of the Banks in this Section 9.07 shall survive the
payment of all Obligations hereunder and the resignation or replacement of the
Documentation Agent.
9.08 Documentation Agent in Individual Capacity. BofA and its
Affiliates may make loans to, issue letters of credit for the account of,
accept deposits from, acquire equity interests in and generally engage in any
kind of banking, trust, financial advisory, underwriting or other business with
the Company and its Affiliates as though BofA were not the Documentation Agent
hereunder and without notice to or consent of the Banks. The Banks acknowledge
that, pursuant to such activities, BofA or its Affiliates may receive
information regarding the Company or its Subsidiaries and Affiliates (including
information that may be subject to confidentiality obligations in favor of the
Company or such Subsidiary or Affiliate) and acknowledge that the Documentation
Agent shall be under no obligation to provide such information to them. With
respect to its Loans, the Documentation Agent shall have the same rights and
powers under this Agreement as any other Bank and may exercise the same as
though it were not the Documentation Agent and the terms "Bank" and "Banks'
shall include BofA in its individual capacity. The Banks further acknowledge
that BofA acts as documentation agent under the credit facilities described in
clauses (a) and (b) of the definition of "Other Credit Facilities".
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9.09 Successor Documentation Agent. The Documentation Agent may,
and at the request of the Required Banks shall, resign as Documentation Agent,
upon thirty days' notice to the Banks and the Company. If the Documentation
Agent resigns under this Agreement, the Required Banks shall appoint from among
the Banks a successor Documentation Agent which successor Documentation Agent
shall be subject to the reasonable approval of the Company, provided no Event
of Default then exists. If no successor Documentation Agent is appointed prior
to the effective date of the resignation of the resigning Documentation Agent,
the Documentation Agent may appoint, after consulting with the Banks and
subject to the approval of the Company, a successor Documentation Agent from
among the Banks. Upon the acceptance of its appointment as successor
Documentation Agent hereunder, such successor Documentation Agent shall succeed
to all the rights, powers and duties of the retiring Documentation Agent and
the term "Documentation Agent" shall mean such successor Documentation Agent
and the retiring Documentation Agent's appointment, rights, powers and duties
in such capacity shall be terminated. After any retiring Documentation Agent's
resignation hereunder as Documentation Agent, the provisions of this Article IX
and Sections 10.04 and 10.05 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was the Documentation Agent under this
Agreement. If no successor Documentation Agent has accepted appointment as
Documentation Agent by the date which is thirty days following a retiring
Documentation Agent's notice of resignation, the retiring Documentation Agent's
notice of resignation shall nevertheless thereupon become effective and the
Banks shall perform all of the duties of the Documentation Agent until such
time, if any, as the Required Banks appoint a successor Documentation Agent as
provided for above.
9.10 Withholding Tax.
(a) If any Bank is a "foreign corporation, partnership or trust"
within the meaning of the Code and such Bank claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the Code,
such Bank agrees with and in favor of the Documentation Agent, to deliver to
the Documentation Agent:
(i) if such Bank claims an exemption from, or a reduction
of, withholding tax under a United States tax treaty, two (2) properly
completed and executed originals of IRS Form 1001 ("Form 1001") before
the payment of any interest in the first calendar year and before the
payment of any interest in each third succeeding calendar year during
which interest may be paid under this Agreement;
(ii) if such Bank claims that interest paid under this
Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such
Bank, two (2) properly completed and executed
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originals of IRS Form 4224 ("Form 4224") before the payment of any
interest is due in the first taxable year of such Bank and in each
succeeding taxable year of such Bank during which interest may be paid
under this Agreement; and
(iii) such other form or forms as may be required under the
Code or other laws of the United States as a condition to exemption
from, or reduction of, United States withholding tax.
Such Bank agrees to promptly notify the Documentation Agent of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Bank claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form 1001 and
such Bank sells, assigns, grants a participation in, or otherwise transfers all
or part of the Obligations of the Company to such Bank, such Bank agrees to
notify the Documentation Agent of the percentage amount in which it is no
longer the beneficial owner of Obligations of the Company to such Bank. To the
extent of such percentage amount, the Documentation Agent will treat such
Bank's IRS Form 1001 as no longer valid.
(c) If any Bank claiming exemption from United States withholding
tax by filing IRS Form 4224 with the Documentation Agent sells, assigns, grants
a participation in, or otherwise transfers all or part of the Obligations of
the Company to such Bank, such Bank agrees to undertake sole responsibility
for complying with the withholding tax requirements imposed by Sections 1441
and 1442 of the Code.
(d) If any Bank is entitled to a reduction in the applicable
withholding tax, the Documentation Agent may withhold from any interest payment
to such Bank an amount equivalent to the applicable withholding tax after
taking into account such reduction. If the forms or other documentation
required by subsection (a) of this Section are not delivered to the
Documentation Agent, then the Documentation Agent may withhold from any
interest payment to such Bank not providing such forms or other documentation
an amount equivalent to the applicable withholding tax.
(e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that the Documentation Agent did
not properly withhold tax from amounts paid to or for the account of any Bank
(because the appropriate form was not delivered or properly executed, because
such Bank failed to notify the Documentation Agent of a change in circumstances
which rendered the exemption from, or reduction of, withholding tax
ineffective, or for any other reason) such Bank shall indemnify the
Documentation Agent fully for all amounts paid, directly or
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indirectly, by the Documentation Agent as tax or otherwise, including penalties
and interest, and including any taxes imposed by any jurisdiction on the amounts
payable to the Documentation Agent under this Section, together with all costs
and expense (including Attorney Costs). The obligation of the Banks under this
subsection shall survive the payment of all Obligations and the resignation or
replacement of the Documentation Agent.
ARTICLE X
MISCELLANEOUS
10.01 Amendments and Waivers. No amendment or waiver of any
provision of this Agreement or any other Loan Document, and no consent with
respect to any departure by the Company therefrom, shall be effective unless
the same shall be in writing and signed by the Required Banks and acknowledged
in writing by the Documentation Agent, and then such waiver shall be effective
only in the specific instance and for the specific purpose for which given;
provided, however, that no such waiver, amendment, or consent shall, unless in
writing and signed by all the Banks, do any of the following:
(a) increase the Commitment of any Bank;
(b) postpone or delay any date fixed for any payment of
principal, interest, fees or other amounts due hereunder or under any
Loan Document;
(c) reduce the principal of, or the rate of interest
specified herein on any Loan, or of any fees or other amounts payable
herunder or under any Loan Document;
(d) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans which shall be required
for the Banks or any of them to take any action hereunder;
(e) amend this Section 10.01 or Section 2.10;
(f) extend the Termination Date; or
(g) amend the definition of "Required Banks";
provided, further, that no amendment, waiver or consent shall, unless in writing
and consented to and signed by the Documentation Agent, in addition to the
Required Banks or all the Banks, as case may be, affect the rights or duties of
the Documentation Agent under this Agreement or any other Loan Document.
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10.02 Notices.
(a) All notices, requests and other communications provided for
hereunder shall be in writing (including, unless the context expressly
otherwise provides, by facsimile transmission) and mailed, faxed or delivered,
(i) if to the Company, to its address specified on the signature pages hereof,
(ii) if to any Bank, to its Lending Office, and (iii) if to the Documentation
Agent, to its address specified on the signature pages hereof; or (iv) as to
any party to such other address as shall be designated by such party in a
written notice to the other parties.
(b) All such notices and communications shall, when transmitted by
overnight delivery or by facsimile, be effective when delivered for overnight
delivery or transmitted by facsimile (to be promptly confirmed by sender by
telephone), respectively, or if delivered, upon delivery, except that notices
pursuant to Article II or VIII shall not be effective until actually received by
the Documentation Agent.
(c) The Company acknowledges and agrees that any agreement of the
Documentation Agent and the Banks in Article II herein to receive certain
notices by telephone and facsimile is solely for the convenience and at the
request of the Company. The Documentation Agent and the Banks shall be
entitled to rely in good faith on the authority of any Person purporting to be
a Person authorized by the Company to give such notice and the Documentation
Agent and the Banks shall not have any liability to the Company or other Person
on account of any action taken or not taken by the Documentation Agent and the
Banks in good faith reliance upon such telephonic or facsimile notice. The
obligation of the Company to repay the Loans or any other Obligations shall not
be affected in any way or to any extent by any failure by the Documentation
Agent and the Banks to receive written confirmation of any telephonic or
facsimile notice or the receipt by the Documentation Agent and the Banks of a
confirmation which is at variance with the terms conveyed to the Documentation
Agent and the Banks in the telephonic or facsimile notice.
10.03 No Waiver. No failure to exercise and no delay in
exercising, on the part of the Documentation Agent or any Bank, any right,
remedy, power or privilege hereunder, shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege.
10.04 Costs and Expenses. The Company shall, whether or not the
transactions contemplated hereby shall be consummated:
(a) pay or reimburse the Documentation Agent on demand for all
costs and expenses incurred by the Documentation Agent
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in connection with the development, preparation, delivery,
administration and execution of, and any amendment, supplement, waiver
or modification to, this Agreement, any Loan Document and any other
documents prepared in connection herewith or therewith, and the
consummation of the transactions contemplated hereby and thereby,
including the Attorney Costs incurred by it with respect thereto;
provided that the allocated cost of internal legal services and the
disbursements of internal counsel incurred in connection with the
development, preparation, delivery and execution of this Agreement and
the other Loan Documents shall not be reimbursed by the Company;
(b) pay or reimburse each Bank and the Documentation Agent
on demand for all reasonable costs and expenses incurred by them in
connection with the enforcement, attempted enforcement, or preservation
of any rights or remedies (including in connection with any "workout"
or restructuring regarding the Loans or any Event of Default or
Potential Default) under this Agreement, any other Loan Document, and
any such other documents, including Attorney Costs incurred by the
Documentation Agent and any Bank; and
(c) pay or reimburse the Documentation Agent on demand for
all reasonable appraisal (including the allocated cost of internal
appraisal services), audit, environmental inspection and review
(including the allocated cost of such internal services), search and
filing costs, fees and expenses incurred or sustained by the
Documentation Agent in connection with the matters referred to under
clause (b) of this Section 10.04.
10.05 Indemnity. The Company agrees to indemnify and hold harmless
the Banks, the Documentation Agent, the Arrangers and each director, officer
and employee of each of them (each, an "Indemnified Person") from and against
any and all actions, suits, proceedings, damages, liabilities or expenses of
any kind or nature whatsoever which may be incurred by or asserted against any
such Indemnified Person: (a) as a result of the Company's making any untrue
statement of a material fact or omitting to state a material fact under or
pursuant to the Contract Documents, or the Company's negligence under, or
breach or default of, the Contract Documents; or (b) by any third party who has
a relationship with the Company and asserts in connection therewith that an
Indemnified Person is liable to such third party by reason of the Contract
Documents between the Company and the Banks, the Documentation Agent and/or the
Arrangers; provided, that no Indemnified Person shall be indemnified with
respect to such party's breach, default negligence or bad faith in performing
its duties and obligations under any of the Contract Documents. For purposes
hereof, the term "Contract Documents" means the Loan Documents and any further
agreements or instruments entered into pursuant to this Agreement.
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Any Indemnified Person seeking indemnification pursuant hereto with respect to
a third party claim must give the Company timely notice of any such claim and
cooperate in the defense thereof, and the Company shall have the right to
control the defense thereof and, if the same shall not involve any payment or
performance by the Indemnified Person, settlement of such claim.
10.06 Marshalling; Payments Set Aside. Neither the Documentation
Agent nor any Bank shall be under any obligation to marshall any assets in
favor of the Company or any other Person or against or in payment of any or all
of the Obligations. To the extent that the Company makes a payment or payments
to the Documentation Agent or the Banks, or the Documentation Agent or the
Banks enforce their Liens or exercise their rights of set-off, and such payment
or payments or the proceeds of such enforcement or set-off or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside or required to be repaid to a trustee, receiver or any other party in
connection with any Insolvency Proceeding, or otherwise, then to the extent of
such recovery the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or set-off had not occurred.
10.07 Successors and Assigns. Subject to Section 10.08 hereof,
the provisions of this Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns, except that
the Company may not assign or transfer any of its rights or obligations under
this Agreement without the prior written consent of the Documentation Agent and
each Bank.
10.08 Assignments, Participations, Etc,
(a) Any Bank may, with the written consent of the Company and the
Documentation Agent, which consents shall not be unreasonably withheld, at any
time assign and delegate to one or more Eligible Assignees (provided that no
written consent of the Company or the Documentation Agent shall be required in
connection with any assignment and delegation by a Bank to a Bank Affiliate of
such Bank or to any other Bank) (each an "Assignee") all, or any part of all,
of its Loans, its Commitment and the other rights and obligations of such Bank
hereunder, in a minimum amount (except with respect to assignments to other
Banks or Bank Affiliates) of Ten Million Dollars ($10,000,000); provided,
however, that the Company and the Documentation Agent may continue to deal
solely and directly with such Bank in connection with the interest so assigned
to an Assignee until (A) written notice of such assignment in form and
substance satisfactory to the Company and the Documentation Agent, together
with payment instructions, addresses and related information with respect to
the Assignee, shall have been given to the Company and the Documentation Agent
by such Bank and the
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Assignee; (B) such Bank and its Assignee shall have delivered to the Company
and the Documentation Agent an Assignment and Acceptance in the form of Exhibit
E ("Assignment and Acceptance"); (C) such Bank or its Assignee shall have paid
the processing fee of $3,000 to the Documentation Agent (with only one such fee
to be payable in respect of all concurrent assignments made by such Bank to
such Assignee regarding this Agreement and such of the Other Credit Facilities
as to which BofA acts as documentation agent); and (D) the assigning Bank shall
have delivered any Note payable to such Bank to the Documentation Agent.
(b) From and after the date that the Documentation Agent notifies
the assignor Bank that the requirements of Section 10.08(a) are satisfied (i)
the Assignee thereunder shall be a party hereto and, to the extent that rights
and obligations hereunder have been assigned to it pursuant to such Assignment
and Acceptance, shall have the rights and obligations of a Bank under the Loan
Documents, and (ii) the assignor Bank shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its additional
obligations under the Loan Documents.
(c) Immediately upon each Assignee's making its payment under the
Assignment and Acceptance, this Agreement shall be deemed to be amended to the
extent, but only to the extent, necessary to reflect the addition of the
Assignee and the resulting adjustment of the Commitments arising therefrom.
The Commitment allocated to each Assignee shall reduce the Commitment of the
assigning Bank pro tanto.
(d) Any Bank may at any time sell to one or more commercial banks
(a "Participant") participating interests in any Loans, the Commitment of that
Bank and the other interests of that Bank (the "Originating Bank") hereunder
and under the other Loan Documents; provided, however, that (i) the Originating
Bank's obligations under this Agreement shall remain unchanged, (ii) the
Originating Bank shall remain solely responsible for the performance of such
obligations, (iii) the Company and the Documentation Agent shall continue to
deal solely and directly with the Originating Bank in connection with the
Originating Bank's rights and obligations under this Agreement and the other
Loan Documents, and (iv) no Bank shall transfer or grant any participating
interest under which the Participant shall have rights to approve any amendment
to, or any consent or waiver with respect to, this Agreement or any other Loan
Document, except to the extent such amendment, consent or waiver would require
unanimous consent as described in clause (b), (c) or (f) of the first proviso
to Section 10.01. In the case of any such participation, the Participant shall
be entitled to the benefits of Sections 3.01, 3.03 and 3.05 but only to the
extent it would be entitled to the same if it were also a Bank which is an
Eligible Assignee, but shall not have any other rights under this Agreement,
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or any of the other Loan Documents, and all amounts payable by the Company
hereunder shall be determined as if such Bank had not sold such participation;
except that, if amounts outstanding under this Agreement are due and unpaid, or
shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be deemed to have the
right of set-off in respect of its participating interest in amounts owing
under this Agreement and the obligation under Section 2.13 to share any excess
payment received by such Participant, all to the same extent as if the amount
of its participating interest were owing directly to it as a Bank under this
Agreement.
(e) Each Bank and the Documentation Agent agrees to take normal
and reasonable precautions and exercise due care to maintain the
confidentiality of all information identified as "confidential" by the Company
provided to it by the Company or by the Documentation Agent on the Company's
behalf, in connection with this Agreement or any other Loan Document, and
neither it nor any of its Affiliates shall use or disclose any such information
for any purpose or in any manner other than pursuant to the terms contemplated
by this Agreement, except to the extent such information (i) was or becomes
generally available to the public other than as a result of a disclosure by a
party to this Agreement, or (ii) was or becomes available on a non-confidential
basis from a source other than the Company, provided that such source is not
bound by a confidentiality agreement with the Company known to the Bank;
provided, however, that the Documentation Agent or any Bank may disclose such
information (A) at the request or pursuant to any requirement of any
Governmental Authority to which the Documentation Agent or such Bank is
subject or in connection with an examination of the Documentation Agent or such
Bank by any such authority; (B) pursuant to subpoena or other court process;
(C) when required to do so in accordance with the provisions of any applicable
Requirement of Law; and (D) to the Documentation Agent's or such Bank's
independent auditors and other professional advisors in the ordinary course of
and within the scope of such advisors' engagements. Notwithstanding the
foregoing, the Company authorizes each Bank to disclose to any Participant or
Assignee (each, a "Transferee") and to any prospective Transferee, such
financial and other information in such Bank's possession concerning the
Company or its Subsidiaries which has been delivered to the Documentation Agent
or the Banks pursuant to this Agreement or which has been delivered to the
Documentation Agent or the Banks by the Company in connection with the Banks'
credit evaluation of the Company prior to entering into this Agreement;
provided, that unless otherwise agreed by the Company, such Transferee or
prospective Transferee agrees in writing to such Bank to keep such information
confidential to the same extent required of the Banks hereunder. Each Bank
agrees that its obligations under this Section 10.08 shall survive any sale or
assignment of its interests to a Transferee.
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(f) Notwithstanding any other provision contained in this
Agreement or any other Loan Document to the contrary, any Bank may assign all or
any portion of the Loans held by it to any Federal Reserve Bank or the United
States Treasury as collateral security pursuant to Regulation A of the Federal
Reserve Board and any Operating Circular issued by such Federal Reserve Bank,
provided that any payment in respect of such assigned Loans or Notes made by the
Company to or for the account of the assigning Bank accordance with the terms
of this Agreement shall satisfy the Company's obligations hereunder in respect
to such assigned Loan or Notes to the extent of such payment. No such
assignment shall release the assigning Bank from its obligations hereunder.
Each Bank agrees to give the Company prompt written notice prior to a
disclosure or release of any confidential material pursuant to the first
proviso of Section 10.08(e).
10.09 Set-off. In addition to any rights and remedies of the Banks
provided by law, if the Obligations shall have become due a payable in full,
each Bank is authorized at any time and from time to time, without prior notice
to the Company, any such notice being waived by the Company to the fullest
extent permitted by law to set off and apply any and all deposits (general or
special, time demand, provisional or final) at any time held by, and other
indebtedness at any time owing to, such Bank to or for the credit or the
account of the Company against any and all Obligations owing to such Bank, now
or hereafter existing, irrespective of whether not the Documentation Agent or
such Bank shall have made demand under this Agreement or any Loan Document.
Each Bank agrees promptly to notify the Company and the Documentation Agent
after any such set-off and application made by such Bank; provided, that the
failure to give such notice shall not affect the validity such set-off and
application. The rights of each Bank under this Section 10.09 are in addition
to the other rights and remedies (including other rights of set-off) which such
Bank may have.
10.10 Notification of Addresses, Lending Offices, Etc. Each Bank
shall notify the Documentation Agent and the Company in writing of any changes
in the address to which notices to the Bank should be directed, of the
addresses of any of its Lending Offices of payment instructions in respect of
all payments to be made to hereunder and of such other administrative
information as Documentation Agent or the Company shall reasonably request.
10.11 Counterparts. This Agreement may be executed by one more of
the parties to this Agreement in any number of separate counterparts, each of
which, when so executed, shall be deemed original, and all of said counterparts
taken together shall be deemed to constitute but one and the same instrument.
A set of the copies of this Agreement signed by all the parties shall be lodged
with the Company and the Documentation Agent.
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10.12 Severability. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder.
10.13 No Third Parties Benefited. This Agreement is made and
entered into for the sole protection and legal benefit of the Company, the
Banks and the Documentation Agent and their permitted successors and assigns,
and no other Person shall be a direct or indirect legal beneficiary of, or have
any direct or indirect cause of action or claim in connection with, this
Agreement or any of the other Loan Documents. Neither the Documentation Agent
nor any Bank shall have any obligation to any Person not a party to this
Agreement or other Loan Documents.
10.14 Governing Law and Jurisdiction.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK (WITHOUT REGARD TO CONFLICTS
OF LAW PROVISIONS THEREOF); PROVIDED THAT THE COMPANY, THE DOCUMENTATION AGENT
AND THE BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW
YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANY, THE
DOCUMENTATION AGENT AND THE BANKS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, TO THE JURISDICTION OF THOSE COURTS. EACH OF THE COMPANY, THE
DOCUMENTATION AGENT AND THE BANKS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT
RELATED HERETO. THE COMPANY, THE DOCUMENTATION AGENT AND THE BANKS EACH WAIVE
PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE
BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.
10.15 Waiver of Jury Trial. THE COMPANY, THE BANKS AND THE
DOCUMENTATION AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY
ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE COMPANY, THE BANKS AND THE
DOCUMENTATION AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE
TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE
PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED
BY OPERATION OF THIS
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SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEED SEEKS, IN WHOLE OR IN
PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE
OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
1O.16 Entire Agreement. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the Company,
the Banks and the Documentation Agent, and supersedes all prior or
contemporaneous agreements and understandings of such Persons, verbal or
written, relating to the subject matter hereof and thereof,, except for the
fee letters referenced in and Sections 2.09(b), and any prior arrangements
made with respect to the payment by the Company of (or any indemnification for)
any fees, costs or expenses payable to or incurred (or to be incurred) by or on
behalf of the Documentation Agent or the Banks.
[BALANCE OF PAGE LEFT INTENTIONALLY BLANK; SIGNATURE PAGES FOLLOW.)
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly authorized officers as of the day and year first above written.
KMART CORPORATION
By James P. Churillo
Title: Vice President and Treasurer
Address for Notices:
3100 West Big Beaver Road
Troy, MI 48084
Attn: Treasurer
Facsimile: (810) 643-5398
Telephone: (810) 643-1000
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Documentation Agent
By:
Title:
Address for Notices:
1455 Market Street, 12th Floor
San Francisco, CA 94103
Attn: Agency Management Services
Facsimile: (415) 622-4894
Telephone: (415) 953-8501
-56-
<PAGE> 62
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
KMART CORPORATION
By:
-----------------------------------
Title:
--------------------------------
Address for Notices:
3100 West Big Beaver Road
Troy, MI 48084
Attn: Treasurer
Facsimile: (810) 643-5398
Telephone: (810) 643-1000
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Documentation Agent
By: Dietmar Schiel
-----------------------------------
DIETMAR SCHIEL
Title: Vice President
--------------------------------
Address for Notices:
1455 Market Street, 12th Floor
San Francisco, CA 94103
Attn: Agency Management Service
Facsimile: (415) 622-4894
Telephone: (415) 953-8501
-56-
<PAGE> 63
Banks Signatory to Credit Agreement
Bankers Trust Company
Bank of America National Trust and
Savings Association
The Bank of New York
Canadian Imperial Bank of Commerce
Credit Lyonnais Chicago Branch
Credit Lyonnais Cayman Island Branch
The Dai-Ichi Kangyo Bank, Ltd., Chicago
Branch
First Interstate Bank of California
The Fuji Bank, Limited
The Long-Term Credit Bank of Japan, Ltd.
Chicago Branch
NationsBank, N.A. (Carolinas)
NBD Bank
Royal Bank of Canada
The Sumitomo Bank, Limited, Chicago
Branch
The Tokai Bank, Ltd., Chicago Branch
Union Bank
Union Bank of Switzerland - Chicago
Branch
<PAGE> 64
SCHEDULE 5.03
CONSENTS AND APPROVALS
None.
<PAGE> 65
SCHEDULE 7.03
EXISTING MORTGAGES, SECURITY INTERESTS AND
LIENS ON ASSETS OF THE COMPANY
Liens/Security Interests/Mortgages on PACE properties
Current Mortgages existing on Kmart corporation's properties as of
August 23, 1995 was $312 million
Kmart Corporation has guaranteed indebtedness related to certain of its
properties financed by industrial revenue bonds. At January 25, 1995, the
total amount of such guaranteed indebtedness was $238 million, of which $92
million was included in capital lease obligations.
<PAGE> 66
EXHIBIT A
Form of Notice of Borrowing
____________________, 19____
Bank of America National Trust
and Savings Association,
individually and as Documentation Agent
under the Seasonal Credit Agreement referred
to below (the "Documentation Agent")
1455 Market Street, 12th Floor
San Francisco, California 94103
Attn: Agency Management Services
Re: Seasonal Credit Agreement dated as of October 5, 1995 (as
from time to time amended, restated, supplemented or otherwise
modified, the "Credit Agreement") among KMART CORPORATION (the
"Company"), the Banks named therein and BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION, as Documentation Agent
Ladies and Gentlemen:
The undersigned refers to the Credit Agreement, the terms defined therein
being used herein as therein defined, and hereby gives you notice irrevocably,
pursuant to Section 2.03 of the Credit Agreement, of the Borrowing specified
herein:
(1) The Business Day of the proposed Borrowing is __________________,
19___.
(2) The aggregate amount of the proposed Borrowing is $______________.
(3) The proposed Borrowing is to be comprised of [LIBOR] [CD Rate]
[Reference Rate] Loans.
[(4) The duration of the initial Interest Period for the (LIBOR Loans]
[CD Rate Loans] included in the proposed Borrowing shall be __________
(months) (days].]
(5) Payment for this Borrowing is to be made to account number _____
at the Documentation Agent.
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date of the proposed Borrowing,
before and after giving effect thereto and to the application of the proceeds
therefrom:
<PAGE> 67
(a) the representations and warranties of the undersigned contained
in Article V of the Credit Agreement are true and correct on and as of each
such date as if made on and as of each such date (except to the extent such
representations and warranties expressly, refer to an earlier date, in which
case they shall be true and correct as of such earlier date); and
(b) no Potential Default or Event of Default exists or shall
result from such proposed Borrowing.
KMART CORPORATION
By: ____________________________
Title: _________________________
A-2
<PAGE> 68
EXHIBIT B
FORM OF NOTICE OF CONVERSION/CONTINUATION
____________________, 19___
Bank of America National Trust
and Savings Association,
individually and as Documentation Agent
under the Seasonal Credit Agreement referred
to below (the "Documentation Agent")
1455 Market Street, 12th Floor
San Francisco, California 94103
Attn: Agency Management Services
Re: Seasonal Credit Agreement dated as of October 5, 1995 (as
from time to time amended, restated, supplemented or otherwise
modified, the "Credit Agreement") among KMART CORPORATION (the
"Company"), the Banks named therein and BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION, as Documentation Agent
Ladies and Gentlemen:
The undersigned refers to the Credit Agreement, the terms defined therein
being used herein as therein defined, and hereby gives you notice irrevocably,
pursuant to Section 2.04 of the Credit Agreement, of the [conversion)
(continuation] of the Loans specified herein:
(1) The (Conversion Date] [Continuation Date] is ___________________,
19__.
(2) The aggregate amount of the Loans to be [converted]
[continued] is $_____________________.
(3) The Loans are to be [converted into] [continued as]
[LIBOR] [CD Rate] (Reference Rate] Loans.
(4) Unless the Loans are to be converted into Reference Rate
Loans, the duration of the Interest Period for the Loans
included in the [conversion] [continuation] shall be
_______________ [months] [days].
The undersigned hereby certifies that no Potential Default or
Event of Default exists as of the date hereof.
KMART CORPORATION
By: __________________________
Title: _______________________
<PAGE> 69
EXHIBIT C
FORM OF NOTE
$________________ _______________, 19___
FOR VALUE RECEIVED, the undersigned, KMART CORPORATION, a Michigan
corporation (the "Company") , hereby promises to pay to the order of
________________________ (the "Bank") the principal sum of__________________
Dollars ($________) or, if less, the aggregate unpaid principal amount of the
Loans made by the Bank to the Company pursuant to the Seasonal Credit Agreement
dated as of October 5, 1995 (as from time to time amended, restated,
supplemented or otherwise modified, the "Credit Agreement") , among the
Company, the Bank, the other banks parties thereto and BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION, as Documentation Agent, on the
Termination Date.
The Company also promises to pay interest on the unpaid principal amount
hereof from the date hereof until paid at the rates and at the times which
shall be determined in accordance with the provisions of the Credit Agreement.
This promissory note (this "Note") is one of the Company's Notes issued
pursuant to and entitled to the benefits of the Credit Agreement to which
reference is hereby made for a more complete statement of the terms and
conditions under which the Loans evidenced hereby are made and are to be
repaid. Capitalized terms used herein without definition shall have the
meanings set forth in the Credit Agreement.
All payments of principal and interest in respect of this Note shall be
made in lawful money of the United States of America in immediately available
funds at the office of the Administrative Agent at San Francisco, California or
at such other place as shall be designated in writing for such purpose in
accordance with the terms of the Credit Agreement. Each of the Bank and any
subsequent holder of this Note agrees that before disposing of this Note or any
part hereof it will make a notation hereon of all principal payments previously
made hereunder and of the date to which interest hereon has been paid;
provided, that the failure to make a notation of any payment made on this Note
shall not limit or otherwise affect the obligation of the Company hereunder
with respect to payments of principal or interest on this Note.
This Note is subject to prepayment as provided in the Credit Agreement.
Upon the occurrence of an Event of Default, the unpaid balance of the principal
amount of this Note may become, or may be declared to be, due and payable in
the manner, upon the conditions and with the effect provided in the Credit
Agreement.
The Company promises to pay all actual and reasonable costs and expenses,
including Attorney Costs, incurred in the collection and enforcement of this
Note. The Company and endorsers of this
<PAGE> 70
Note hereby consent to renewals and extensions of time at or after the maturity
hereof, without notice, and hereby waive diligence, presentment, protest, demand
and notice of every kind and, to the full extent permitted by law, the right to
plead any statute of limitations as a defense to any demand hereunder.
THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK (WITHOUT REGARD TO CONFLICTS
OF LAW PROVISIONS THEREOF).
IN WITNESS WHEREOF, the Company has caused this Note to be executed and
delivered by its duly authorized officer, as of the day and year first above
written.
KMART CORPORATION
By: __________________________
Title:________________________
C-2
<PAGE> 71
TRANSACTIONS ON NOTE
(REFERENCE RATE)
<TABLE>
<CAPTION>
AMOUNT
INTEREST AMOUNT OF PRINCIPAL OR OUTSTANDING
RATE LOAN MADE PAID BALANCE PRINCIPAL NOTATION
DATE ON LOAN THIS DATE THIS DATE IS DATE MADE BY
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
</TABLE>
C-3
<PAGE> 72
TRANSACTIONS ON NOTE
(LIBOR)
<TABLE>
<CAPTION>
AMOUNT
APPLICABLE AMOUNT OF PRINCIPAL OR OUTSTANDING
MARGIN LOAN MADE INTEREST PAID BALANCE PRINCIPAL NOTATION
DATE LIBOR THIS DATE PERIOD THIS DATE THIS DATE MADE BY
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
C-4
<PAGE> 73
TRANSACTIONS ON NOTE
(CD RATE)
<TABLE>
<CAPTION>
AMOUNT
APPLICABLE AMOUNT OF PRINCIPAL OR OUTSTANDING
MARGIN LOAN MADE INTEREST PAID BALANCE PRINCIPAL NOTATION
DATE CD RATE THIS DATE PERIOD THIS DATE THIS DATE MADE BY
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
C-5
<PAGE> 74
Exhibit D-1
[Letterhead of A. N. Palizzi, Esq.]
October 5, 1995
Bank of America National Trust
and Savings Association,
individually and as Documentation Agent
under the Seasonal Credit Agreement referred
to below (the "Documentation Agent")
335 Madison Avenue
New York, New York 10017
and
The Financial Institutions
listed on Schedule I hereto
Ladies and Gentlemen:
I am General Counsel to Kmart Corporation, a Michigan corporation
("Kmart"). In my capacity as General Counsel, I am authorized to furnish
opinions on behalf of Kmart that may be required in connection with various
matters, including that certain Seasonal Credit Agreement dated as of October
5, 1995 (the "Credit Agreement") among Kmart, the financial institutions
signatory thereto (the "Banks") and Bank of America National Trust and Savings
Association, as Documentation Agent ("Documentation Agent").
The Credit Agreement and certain Notes dated as of October 5, 1995
payable to certain of the Banks executed and delivered by Kmart thereunder (the
"Notes") are hereinafter collectively referred to as the "Transaction
Documents." Notes evidencing the obligations of Kmart to repay the Loans under
the Credit Agreement that may be issued from time to time by Kmart pursuant to
Section 2.02(b) of the Credit Agreement are hereinafter collectively referred
to as "other Notes". Capitalized terms appearing herein but not otherwise
defined herein shall have the meanings ascribed thereto in the Credit
Agreement.
In rendering the opinions set forth herein, I have examined originals
of the Transaction Documents executed by Kmart and originals or copies,
certified to my satisfaction, of such (i) certificates of public officials;
(ii) certificates of officers and representatives of Kmart; and (iii) other
documents, records and papers, and I have made such inquiries of officers and
representatives of Kmart as I have deemed relevant or necessary as
<PAGE> 75
the basis for such opinions. I have relied upon, and assume the accuracy of,
such certificates and other statements, documents, records, and papers with
respect to the factual matters set forth therein and I have assumed the
genuineness of all of the signatures (other than the signatures of Kmart) and
the authenticity of all documents submitted to me as originals and the
conformity to original documents of all documents submitted to me as certified
or photostatic copies.
With your permission, I have further assumed the due authorization,
execution and delivery of the Credit Agreement by all of the parties thereto
other than Kmart, and that all parties thereto other than Kmart have complied
or will comply with all applicable laws and regulations in connection with the
consummation of the transactions contemplated thereby. I have also assumed
that each of the Transaction Documents and the other Notes is legal, valid,
binding and enforceable under the laws of the State of New York, by which each
such Transaction Document and other Note is stated to be governed.
Based on the foregoing and subject to the qualifications stated
herein, I am of the opinion that:
1. Kmart (i) is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of organization; (ii) is
duly authorized to do business in each jurisdiction in which it owns or leases
property and where failure to do so would have a material adverse effect on its
condition (financial or otherwise), properties, business, assets or results of
operations; and (iii) has all requisite corporate power and authority to enter
into and perform its obligations under the Transaction Documents to which it
is a party and under any other Notes which it may issue from time to time.
2. The execution, delivery and performance by Kmart of each
Transaction Document, and the consummation of each of the transactions and
performance of each of the obligations on its part contemplated thereby:
(i) have been duly authorized by all necessary corporate
proceedings;
(ii) are not in contravention of its articles of
incorporation, bylaws or other organizational documents;
(iii) will not violate any provisions of any law, rule,
regulation (including any order, writ, judgment, decree, determination or
award of any court or governmental instrumentality) presently in effect having
applicability to it;
(iv) will not conflict with or result in a breach of or
constitute a default under or tortious interference with any
D/1-2
<PAGE> 76
indenture or loan or credit agreement, or any other agreement or instrument of
which I have knowledge, to which it is a party or by which it or any of its
properties may be bound (which conflict, breach, default or tortious
interference would have a material adverse effect on its condition (financial
or otherwise), properties, business, assets or results of operations);
(v) will not result in or require the creation or
imposition of any Lien of any nature upon or with respect to any of the
properties now owned or hereafter acquired by it; and
(vi) except as already applied for or received as of the
date hereof, do not require any authorization, consent, certificate,
inspection, franchise, approval, license, qualification or formal exemption
from, or any filing, declaration or registration with, any court, governmental
agency or regulatory authority or any other Person.
3. Kmart has duly executed and delivered the Transaction
Documents, and each such Transaction Document constitutes and each other Note
when issued will constitute its valid and binding obligation, enforceable
against it in accordance with its respective terms.
4. There are no actions, suits, proceedings, investigations or
judgments before any court, governmental agency or regulatory authority
(foreign, Federal, state or local) outstanding, pending, or, to the best of my
knowledge and belief, threatened against or in any other way involving or
affecting Kmart or its properties, which, if determined adversely to it (i)
would enjoin or otherwise materially interfere with the completion of any of
the transactions contemplated by the Transaction Documents or any other Note,
or (ii) would materially impair its ability to perform its obligations under
the Transaction Documents or any other Note.
5. To the best of my knowledge after due inquiry, Kmart is not
in default with respect to any order of any court, arbitrator or governmental
body where such default would have a material adverse effect on its condition
(financial or otherwise), properties, business, assets or results of
operations, and it is not subject to or party to any order of any court or
governmental authority arising out of any action, suit or proceeding against it
under any statute or other law respecting antitrust, monopoly, restraint of
trade, unfair competition or similar matters the effect of which could be
reasonably expected to have a material adverse effect on its condition
(financial or otherwise), properties, business, assets or results of
operations.
6. To the best of my knowledge after due inquiry, Kmart is not in
violation of any statute, rule or regulation of any governmental authority
where such violation would have a material
D/1-3
<PAGE> 77
adverse effect on its condition (financial or otherwise), properties, business,
assets or results of operations.
7. To the best of my knowledge after due inquiry, there is no
existing material default by Kmart under any written contract, lease agreement,
or other material agreement to which it is a party or by which any of its
assets is bound which has, or could be reasonably expected to have, a material
adverse effect upon its condition (financial or otherwise), properties,
business, assets or results of operations.
8. Kmart is not an "investment company" registered or required to
be registered under the Investment Company Act of 1940, as amended, nor is it
controlled by such a company.
9 . Kmart is not a "holding company" or a "subsidiary company" of a
"holding company" or an "affiliate" of a "holding company" within the meaning
of the Public Utility Holding company Act of 1935, as amended.
The opinions herein expressed are subject to the following limitations
and qualifications:
(a) The enforceability of the rights and remedies of the
Documentation Agent and the Banks under each of the Transaction Documents and
any other Notes is subject to the effect of any applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws of general application affecting creditors' rights generally.
(b) Enforceability of each of the Transaction Documents and any
other Notes is subject to general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law),
including requirements of reasonableness and good faith in the exercise of
rights and remedies under any loan documents, and no opinion is expressed as to
any specific remedy that may be granted, imposed or rendered, including
equitable remedies such as those of specific performance, receivership and
injunction.
(c) The enforceability of particular rights and remedies
provided in the Transaction Documents may be limited by applicable laws,
provided, however, that sufficient rights and remedies are available to afford
the Documentation Agent and the Banks the practical realization of the benefits
afforded by the Transaction Documents and any other Notes.
Without limitation of the foregoing, I express no opinion: (i) as to
any provisions for acceleration of indebtedness or imposition of penalties in
the event of, or remedies available for, breaches of the Transaction Documents
or any other Notes which might be determined by a court to be non-material
(including
D/1-4
<PAGE> 78
material breaches of non-material provisions) , or where the enforcement of
such provisions or remedies might be found not to have been taken in good faith
and in a reasonable manner; (ii) as to remedies available in respect of
breaches of the Transaction Documents or any other Notes or provisions for
indemnification against liabilities or losses thereunder which breaches,
liabilities or losses might be found to be the proximate result of actions or
omissions by the Documentation Agent or the Banks; (iii) as to any provisions
of the Transaction Documents or any other Notes to the extent such provisions
would constitute waivers of rights that may be found to constitute waivers that
are against public policy; (iv) as to any provision of the Transaction
Documents or any other Notes to the extent that it purports to waive the
requirements of good faith, notice and commercial reasonableness under the
U.C.C. which requirements cannot be waived by consent; (v) as to provisions in
the Transaction Documents or any other Notes which provide for the imposition
of penalties, the payment or reimbursement of costs and expenses or the
indemnification of claims, losses or liabilities that may be found to be
unrelated to the damage suffered by the Documentation Agent or the Banks or in
excess of a reasonable amount; (vi) as to any provisions of the Transaction
Documents or any other Notes which constitute rights that may be found to be
against public policy; (vii) as to the validity of any provision of any
Transaction Document or any other Notes which provides for the compounding of
interest or payment or accrual of interest on interest; (viii) as to provisions
in the Transaction Documents or any other Notes which waive objection to
jurisdiction, the manner of service of process, notice or the effects of delay
or failure to exercise rights and remedies; (ix) as to the enforceability of
Sections 2.11, 2.13, 3.01 and 10.09 of the Credit Agreement pursuant to which
payments are to be made without set-off, defenses or counterclaims and free and
clear of Taxes; (x) as to any exhibits to the Credit Agreement not mentioned in
this letter; and (xi) as to Section 10.14 of the Credit Agreement and any
similar provision of any other Transaction Document or any other Note providing
for the application of New York law thereto.
(d) I am qualified to practice law in the State of Michigan and I
do not purport to express any opinion herein concerning any laws other than the
laws of the State of Michigan and applicable federal law. In this regard I
call to your attention that the Transaction Documents and the other Notes
expressly provide that they are to be governed by the laws of the State of New
York.
(e) This opinion is predicated solely upon laws and regulations in
existence as of the present date and as they presently apply, and to the facts
as they presently exist. I assume no obligation to revise or supplement this
opinion should the present laws be changed by legislative action, judicial
decision or otherwise.
D/1-5
<PAGE> 79
Whenever in this opinion I have used the phrase "to the best of our
knowledge" (or similar terms), this means the conscious awareness of those
attorneys in my department who have active involvement in the preparation of
this opinion or who are primarily responsible for providing the response
concerning a particular opinion issue or information regarding factual matters.
This opinion is rendered to you solely for your benefit in connection
with the above transactions and may not be relied upon by you for any other
purpose or by any other persons without my prior written consent. This opinion
is limited to the matters set forth herein and no opinion is intended to be
implied or inferred beyond those expressly stated herein.
Very Truly yours,
D/1-6
<PAGE> 80
Schedule I
Financial Institutions
[to come]
D/1-7
<PAGE> 81
EXHIBIT D-2
(letterhead of Dickinson, Wright, Moon, Van Dusen & Freeman]
October 5, 1995
Bank of America National Trust
and Savings Association,
individually and as Documentation Agent
under the Seasonal Credit Agreement referred
to below (the "Documentation Agent")
335 Madison Avenue
New York, New York 10017
and
The Financial Institutions
listed on Schedule I hereto
Ladies and Gentlemen:
We have acted as special counsel to Kmart Corporation, a Michigan
corporation ("Kmart") , in connection with the following agreements and
documents and the transactions contemplated thereby:
(i) that certain Seasonal Credit Agreement dated as of October 5,
1995 by and among Kmart, the financial institutions signatory thereto (the
"Banks") and the Documentation Agent (the "Credit Agreement"); and
(ii) those certain Notes dated as of October 5, 1995 payable to
certain of the Banks, executed and delivered by Kmart thereunder (the "Notes").
The Credit Agreement and the Notes are hereinafter collectively
referred to as the "Transaction Documents." Notes evidencing the obligation of
Kmart to repay the Loans under the Credit Agreement that may be issued from
time to time by Kmart pursuant to Section 2.02(b) of the Credit Agreement are
hereinafter collectively referred to as "other Notes". Capitalized terms
appearing herein but not otherwise defined herein shall have the meanings
ascribed thereto in the Credit Agreement. Pursuant to Section 4.01(d) of the
Credit Agreement, this opinion is delivered to you upon the instruction of
Kmart.
In rendering the opinions set forth herein, we have examined originals
of the Transaction Documents executed by Kmart
<PAGE> 82
and originals or copies, certified to our satisfaction, of Such (i)
certificates of public officials; (ii) certificates of officers and
representatives of Kmart; and (iii) other documents records and papers, and we
have made such inquiries of officers and representatives of such entity, as we
have deemed relevant or necessary as the basis for such opinions. We have
relied upon, and assume the accuracy of, such certificates and other
statements, documents, records and papers with respect to the factual matters,
set forth therein and we have assumed the genuineness of all the signatures
(other than the signatures of Kmart) and the authenticity of all documents
submitted to us as originals and the conformity to original documents of all
documents submitted to us as certified or photostatic copies. We have further
assumed that negotiations with respect to the transactions contemplated by the
Transaction Documents took place in the State of New York and that the Notes
have been delivered by Kmart for value to the Documentation Agent in New York.
With your permission, we have further assumed the due authorization,
execution and delivery of the Credit Agreement by all of the parties thereto
other than Kmart, and that all parties thereto other than Kmart have complied
or will comply with all applicable laws and regulations in connection with the
consummation of the transactions contemplated thereby. We have also assumed
that each of the Transaction Documents and the other Notes is legal, valid,
binding and enforceable under the laws of the State of New York, by which each
such Transaction Document and other Note is stated to be governed.
Based on the foregoing and subject to the qualifications stated herein
we are of the opinion that:
1. Kmart has duly executed and delivered the Transaction
Documents, and each such Transaction Document constitutes and each other Note
when issued will constitute the valid and binding obligation of Kmart,
enforceable against it in accordance with its respective terms.
2. The state of the law in Michigan makes it impossible to set
forth with assurance a single conflict of laws rule applicable to contract
cases. In general, Michigan courts historically have followed the approach of
the Restatement of Conflict of Laws, Section 332 (1934), by holding that the
local law of the place of formation of a contract governs the nature, validity,
effect, and obligation thereof. Bissell v. Lewis, 4 Mich. 450 (1857); Palmer
National Bank v. Van Doren, 260 Mich. 310 (1932); Rubin v. Gallagher, 294 Mich.
124 (1940); Waldorf v. KMS Industries, Inc., 25 Mich. App. 20 (1970);
Vanderveen's Importing Co. v. Keramische Industrie M. de Wit, 199 Mich. App.
359, 364 (1993). In determining the place of formation of a contract, Michigan
courts apply the local law of Michigan, the lex fori House v. Lefebvre, 303
Mich. 207 (1942). Michigan law indicates
D/2-2
<PAGE> 83
that a contract is formed at the place where the last act necessary to make it
a binding agreement took place. Ohio v. Eubank, 295 Mich. 230 (1940).
Another line of Michigan authority recognizes an exception to the
foregoing general rule. These cases state that a contract, formed in one state
but to be performed in another, is governed by the local law of the place of
performance. Douglas v. Paine, 141 Mich. 485 (1905); George Realty Co. v. Gulf
Refining Co., 275 Mich. 442 (1936); Podlaha v. MRI, Inc., 71 Mich. App. 1
(1988). These cases are variants of the rule of the Restatement, Section 358.
Since 1962, the general conflict of laws rule applicable to matters
governed by the Uniform Commercial Code of Michigan ("UCC") has presumably been
stated by Section 1-105 of the UCC, M.C.L. Section 440.1105, which currently
provides in pertinent part that "when a transaction bears a reasonable relation
to this state and also to another state or nation the parties may agree that
the law either of this state or of such other state or nation shall govern
their rights and duties." The Michigan Court of Appeals has recently applied
this section, for the first time in a reported decision of which we are aware,
to validate the parties' choice of another State's law as the law applicable to
a contract governed by the Uniform Commercial Code. Zantop International
Airlines, Inc, v. Eastern Airlines, 200 Mich. App. 344, 351-352 (1993).
Federal courts applying Michigan law have expressed the view that Section 1-105
may be regarded as a validation of party autonomy in choice of law matters
(applicable even beyond the precise scope of the UCC itself). See, e.g.,
Homac, Inc, v. DSA Financial Corp., 661 F. Supp. 776, 784 (E.D. Mich. 1987).
Even prior to adoption of Section 1-105, however, Michigan conflict of laws
decisions would sometimes respect the choice of law made by the parties
provided that the transaction bore a reasonable relationship to the
jurisdiction selected and that the parties were acting in good faith. Millar
v. Hilton, 189 Mich. 635, 641 (1915) (dictum); Rubin v. Gallagher, 294 Mich.
124 (1940); Russell v. Pierce, 121 Mich. 208 (1899); Home Savinqs v. Mason, 127
Mich. 676 (1901). also, Mott v. Rowland, 85 Mich. 561, 566-68 (1891).
The Michigan Supreme Court recently has suggested, however, that
Michigan courts henceforth will no longer be bound to apply the bright-line
rules of the First Restatement in determining choice of law issues in contract
cases. In Chrysler Corporation v. Skyline Industrial Services, Inc., 448 Mich.
113 (1995), the Supreme Court characterized the rigid "law of the place of
contracting" approach as "formalism", 448 Mich. at 124, which "may prove
unworkable under certain factual situations . . . ." 448 Mich. at 124 n.28.
Instead, the Court looked to the Restatement of
D/2-3
<PAGE> 84
Conflicts of Laws, Second, Sections 187-188 (1971, 1988), 1/ as providing "a
sound basis" for moving to a more modern approach emphasizing an examination of
relevant contacts and policies of the interested states (in this case, Illinois
and Michigan). 448 Mich. at 124. At the same time, the Court recognized the
existence of significant criticisms of the Second Restatement approach, 448
Mich. at 124 n.28, and expressly declined to abandon the "law of the place of
contracting" as a basis for decision. Ibid. Rather, the Court emphasized its
concern to balance parties' expectations and the interests of the affected
States in resolving specific choice law problems. In the event, the Court
applied the principles Sections 187 and 188 of the Second Restatement, reversed
the Court of Appeals' decision and validated the parties, express choice of
Michigan law, notwithstanding the Illinois Supreme Court, characterization of
the competing Illinois statute involved as a "fundamental policy" of Illinois.
448 Mich. at 130-131, notes 44 & 45. See, Restatement Second Section 187(2)(b);
Section 187 comment g.
In this transaction, the Transaction Documents and the other Notes
provide that they are to be governed by and construed in accordance with New
York law. As noted above, with your permission we have assumed that the
Transaction Documents were negotiated in significant part in New York and the
Notes were delivered for value by Kmart to the Documentation Agent in New York.
Moreover, it appears that the selection of New York law as the governing law of
the Transaction Documents and the other Notes was the product of negotiation by
the parties, undertaken in good faith. In addition, the sophistication of the
parties (each advised by counsel) and the commercial nature and significant
principal amount of the Credit Agreement all suggest that validating the
parties' reasonable choice of governing law would the correct result as a
matter of sound public policy. The foregoing facts suggest the existence of a
reasonable basis for the parties' choice of New York law and, subject to the
opinions, limitations and qualifications set forth below, we are aware of no
- ---------------
1/ Under Sections 187 and 188 of the Second Restatement, the court will apply
the law of the state expressly chosen by the parties to govern their
contractual rights and duties if particular issue could have been resolved by
the parties by an explicit agreement provision directed to that issue, and also
with respect to other issues unless either (a) the chosen state has no
substantial relation to the parties or the transaction and there is no other
reasonable basis for the parties' choice, or (b) application of the chosen
states law would be contrary to a fundamental policy of a state which has a
materially greater interest than the chosen state in the determination of
particular issue and which other state would be, in the absence an effective
choice by the parties, the state of the applicable Law (because with respect
to that issue it had the most significant
D/2-4
<PAGE> 85
fundamental policy of Michigan which would be contravened by the application of
New York law to the Transaction Documents. In light of the foregoing, and
notwithstanding the fact that the Credit Agreement provides for disbursement
and repayment of the Loans at the Payment Office of the Documentation Agent in
California, while the question is not free from doubt, we are of the opinion
that the choice of New York law set forth in the Transaction Documents and the
other Notes should be recognized and given effect in any action or proceeding
by any party to the Transaction Documents in the State of Michigan arising out
of or relating to any of the Transaction Documents or any other Notes. If
nevertheless a court were to apply Michigan law as the governing law of the
Transaction Documents and the other Notes, each of the Transaction Documents
and each other Note when issued would be legal, valid, binding and enforceable
under the laws of the State of Michigan.
3. The rates of interest applicable to the obligations of Kmart under
the Credit Agreement do not violate any law, rule or regulation of the State of
Michigan prescribing a maximum rate of interest. We call to your attention,
however, that the Michigan criminal usury statute makes it unlawful to
knowingly charge, take or receive interest on a loan at a rate exceeding 25%
per annum.
The opinions herein expressed are subject to the following limitations
and qualifications:
(a) The enforceability of the rights and remedies of the Documentation
Agent and the Banks under each of the Transaction Documents and any other Notes
is subject to the effect of any applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws of general
application affecting creditors' rights generally.
(b) Enforceability of each of the Transaction Documents and any other
Notes is subject to general principles of equity (regardless of whether such
enforceability is considered in proceeding in equity or at law), including
requirements of reasonableness and good faith in the exercise of rights and
remedies under any loan documents, and no opinion is expressed as to any
specific remedy that may be granted, imposed or rendered, including equitable
remedies such as those of specific performance, receivership and injunction.
Without limitation of the foregoing, we express no opinion: (i)
as to any provisions for acceleration of indebtedness or imposition of
penalties in the event of, or remedies available for, breaches of the
Transaction Documents or any other Notes which might be determined by a court
to be non-material (including material breaches of non-material provisions), or
where the enforcement of such provisions or remedies might be found not to have
been taken in good faith and in a reasonable manner; (ii) as to remedies
available in respect of breaches of the Transaction
D/2-5
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Documents or any other Notes or provisions for indemnification against
liabilities or losses thereunder which breaches, liabilities or losses might be
found to be the proximate result of actions or omissions by the Documentation
Agent or the Banks; (iii) as to any provisions of the Transaction Documents to
the extent such provisions would constitute waivers of rights that may be found
to constitute waivers that are against public policy; (iv) as to any provision
of the Transaction Documents or any other Notes to the extent that it purports
to waive the requirements of good faith, notice and commercial reasonableness
under the U.C.C. which requirements cannot be waived by consent; (v) as to
provisions in the Transaction Documents or any other Notes which provide for the
imposition of penalties, the payment or reimbursement of costs and expenses or
the indemnification of claims, losses or liabilities that may be found to be
unrelated to the damage suffered by the Documentation Agent or the Banks or in
excess of a reasonable amount; (vi) as to any provisions of the Transaction
Documents or any other Notes which constitute rights that may be found to be
against public policy; (vii) as to the validity of any provision of any
Transaction Document or any other Notes which provides for the compounding of
interest or payment or accrual of interest on interest; (viii) as to provisions
in the Transaction Documents or any other Notes which waive objection to
jurisdiction, the manner of service of process, notice or the effects of delay
or failure to exercise rights and remedies; (ix) as to the enforceability of
Sections 2.11, 2.13, 3.01 and 10.09 of the Credit Agreement pursuant to which
payments are to be made without set-off, defense or counterclaims and free and
clear of Taxes; and (x) as to any exhibits to the Credit Agreement not
mentioned in this letter.
(c) We are qualified to practice law in the State of Michigan and
we do not purport to express any opinion herein concerning any laws other than
the laws of the State of Michigan and applicable federal law. In this regard,
we have noted that the Transaction Documents and the other Notes expressly
provide that they are to be governed by the laws of the State of New York.
(d) This opinion is predicated solely upon laws and regulations in
existence as of the present date and as they presently apply, and to the facts
as they presently exist. We assume no obligation to revise or supplement this
opinion should the present laws be changed by legislative action, judicial
decision or otherwise.
Whenever in this opinion we have used the phrase "to the best of our
knowledge" (or similar terms), this means the conscious awareness of those
attorneys in the Firm who have active involvement in the preparation of this
opinion or who are primarily responsible for providing the response concerning
a particular opinion issue or information regarding factual matters.
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This opinion is rendered to you solely for your benefit in connection
with the above transactions and may not be relied upon by you for any other
purpose or by any other persons without our prior written consent. This
opinion is limited to the matters set forth herein and no opinion is intended
to be implied or inferred beyond those expressly stated herein.
Very truly yours,
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<PAGE> 88
Schedule I
Financial Institutions
[to come]
D/2-8
<PAGE> 89
EXHIBIT E
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
This ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement") dated as
of_____________, 19__ is made between ______________________________________
(the "Assignor") and ___________________________________ (the "Assignee).
RECITALS
WHEREAS, the Assignor is party to that certain Seasonal Credit
Agreement dated as of October 5, 1995 among KMART CORPORATION, a Michigan
corporation (the "Company") , the banks named therein (including the Assignor,
the "Banks") and Bank of America National Trust and Savings Association, as
Documentation Agent (as from time to time amended, restated, supplemented or
otherwise modified, the "Credit Agreement"). Terms defined in the Credit
Agreement are used herein with the same meanings;
[WHEREAS, as provided under the Credit Agreement, the Assignor has
committed to make Loans (the "Loans") to the Company in an aggregate principal
amount at any one time outstanding not to exceed _____________________________
($_________) (the "Aggregate Commitment");]
WHEREAS, [the Assignor has made Loans in the aggregate outstanding
principal amount of $__________________________ to the Company] [no Loans are
outstanding under the Credit Agreement]; and
WHEREAS, the Assignor wishes to assign to the Assignee part of the
rights and obligations of the Assignor under the Credit Agreement in respect of
its Aggregate Commitment [together with a corresponding portion of each of its
outstanding Loans,] in an amount equal to $_________________________ (the
"Assigned Amount") on the terms listed on Schedule I hereto and subject to the
conditions set forth herein, and the Assignee wishes to accept assignment of
such rights and to assume such obligations from the Assignor on such terms and
subject to such conditions;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
1. Assignment and Assumption.
(a) With effect on and after the Effective Date (as defined in
Section 5 hereof), the Assignor hereby sells and assigns to the Assignee, and
the Assignee hereby purchases and assumes from the Assignor, the Assigned
Amount, which shall be equal to _____ percent (_________%) (the "Assignee's
Percentage Share") of all of the Assignor's rights and obligations under the
Credit Agreement, including, without limitation, the Assignee's Percentage
Share of the Aggregate Commitment (and any outstanding Loans]. The sale,
<PAGE> 90
assignment, purchase and assumption set forth in this Section 1(a) shall be
without recourse to, or representation or warranty except as expressly
provided in this Agreement) by, the Assignor.
(b) With effect on and after the Effective Date, the Assignee shall
be a party to the Credit Agreement and succeed to all of the rights and be
obligated to perform all of the obligations of a Bank under the Credit
Agreement, including the requirements concerning confidentiality, with a
Commitment in an amount equal to the Assigned Amount. The Assignee agrees that
it will perform in accordance with their terms all of the obligations which by
the terms of the Credit Agreement are required to be performed by it as a Bank.
It is the intent of the parties hereto that the Commitment of the Assignor
shall, as of the Effective Date, be reduced by an amount equal to the Assigned
Amount and the Assignor shall relinquish its rights and be released from its
obligations under the Credit Agreement to the extent such obligations have been
assumed by the Assignee.
(c) After giving effect to the assignment and assumption, on the
Effective Date the Assignee's Commitment will be $ _________________________.
After giving effect to the assignment and assumption, on the Effective Date the
Assignor's Commitment will be $_______________________.
2. Payments
(a) As consideration for the sale and assignment contemplated in
Section 1 hereof, the Assignee shall pay to the Assignor on the Effective Date
in immediately available funds an amount equal to $_____________________
representing the Assignee's Percentage Share of the principal amount of all
Loans previously made, and currently owned, by the Assignor to the Company
under the Credit Agreement and outstanding on the Effective Date.
(b) The Documentation Agent has received a processing fee in the
amount of $3,000.
(c) To the extent payment to be made by the Assignee pursuant to
Section 2(a) hereof is not made when due, the Assignor shall be entitled to
recover from the Assignee such amount together with interest thereon at the
Federal Funds Rate per annum accruing from the date such amounts were due.
3. Reallocation of Payments.
Any interest, commissions, fees and other payments accrued to but
excluding the Effective Date with respect to the Loans and the Assignor's
Commitment, shall be for the account of the Assignor. Any interest, fees and
other payments accrued on and after the Effective Date with respect to the
Assigned Amount shall be for the account of the Assignee. Each of the Assignor
and the Assignee agrees that it will hold in trust for the other party any
interest,
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<PAGE> 91
commissions, fees and other amounts which it may receive to which the other
party is entitled pursuant to the preceding two sentences and pay to the other
party any such amounts which it may receive promptly upon receipt. The
Assignor's and the Assignee's obligations to make the payments referred to in
this Section 3 are non-assignable.
4. Independent Credit Decision.
The Assignee (a) acknowledges that it has received a copy of the
Credit Agreement and the Schedules and Exhibits thereto, together with copies
of the financial statements referred to in Section 6.01 thereof, and such other
documents and information as it has deemed appropriate to make its own credit
and legal analysis and decision to enter into this Agreement; and (b) agrees
that it will, independently and without reliance upon the Assignor, the
Administrative Agent or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit and legal decisions in taking or not taking action under the Credit
Agreement.
5. Effective Date; Notices.
(a) The effective date for this Agreement is ___________ (the
"Effective Date"); provided, that the following conditions precedent have
been satisfied on or before the Effective Date:
(i) this Agreement shall be executed and delivered by the
Assignor and the Assignee;
[(ii) the consent of the Company and the Documentation Agent
required for an effective assignment of the Assigned Amount by the
Assignor to the Assignee shall have been duly obtained and shall be in
full force and effect as of the Effective Date;]
(iii) the Assignee shall pay to the Assignor all amounts due
to the Assignor under this Agreement; and
(iv) the processing fee referred to in Section 2(b) of
this Agreement, and in Section 10.08(a) of the Credit Agreement shall
have been paid by the [Assignor] [Assignee] to the Documentation Agent.
(b) Promptly following the execution of this Agreement, the
Assignor shall deliver to the Documentation Agent for acceptance and recording
by the Documentation Agent, such notices, agreements or other documents as may
be required under the Credit Agreement.
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6. Agent.
The Assignee hereby appoints and authorizes the Documentation Agent to
take such action as Documentation Agent on its behalf and to exercise such
powers under the Credit Agreement as are delegated to the Documentation Agent by
the Banks pursuant to the terms of the Credit Agreement.
7. Withholding Tax.
If the Assignee is a foreign person within the meaning of the Code,
the Assignee agrees to comply with Section 9.10 of the Credit Agreement as if
the Effective Date were the Closing Date of the Credit Agreement and, if such
Assignee fails to comply with Section 9.10 of the Credit Agreement, then this
Agreement shall not become effective.
8. Representations and Warranties.
(a) The Assignor represents and warrants that (i) it is the legal
and beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any lien security interest or other adverse
claim; (ii) it is duly organized and existing and it has the full power and
authority to take, and has taken, all action necessary to execute and deliver
this Agreement and any other documents required or permitted to be executed or
delivered by it in connection with this Agreement and to fulfill its
obligations hereunder; (iii) no notices to, or consents, authorizations or
approvals of, any Person are required (other than any already given or
obtained) for its due execution, delivery and performance of this Agreement,
and apart from any agreements or undertaking or filings required by the Credit
Agreement, no further action by, or notice to, or filing with, any Person is
required of it for such execution, delivery or performance; and (iv) this
Agreement has been duly executed and delivered by it and constitutes the legal,
valid and binding obligation of the Assignor, enforceable against the Assignor
in accordance with the terms hereof, subject, as to enforcement, to bankruptcy,
insolvency, moratorium, reorganization and other laws of general application
relating to or affecting creditors' rights and to general equitable principles.
(b) The Assignor makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement or any other instrument or document furnished pursuant thereto. The
Assignor makes no representation or warranty in connection with, and assumes no
responsibility with respect to, the solvency, financial condition or statements
of the Company or any Subsidiary or the performance or observance by the
Company of any
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<PAGE> 93
of its obligations under the Credit Agreement or any other instrument or
document furnished in connection therewith.
(c) The Assignee represents and warrants that (i) it is duly
organized and existing and it has full power and authority to take, and has
taken, all action necessary to execute and deliver this Agreement and any other
documents required or permitted to be executed or delivered by it in connection
with this Agreement, and to fulfill its obligations hereunder; (ii) no notices
to, or consents, authorizations or approvals of, any Person are required (other
than any already given or obtained) for its due execution, delivery and
performance of this Agreement; and apart from any agreements or undertaking or
filings required by the Credit Agreement, no further action by, or notice to,
or filing with, any Person is required of it for such execution, delivery or
performance; (iii) this Agreement has been duly executed and delivered by it
and constitutes the legal, valid and binding obligation of the Assignee,
enforceable against the Assignee in accordance with the terms hereof, except
subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or affecting
creditors' rights and to general equitable principles; and (iv) it is an
Eligible Assignee under the Credit Agreement.
9. Further Assurances.
The Assignor and the Assignee each hereby agrees to execute and
deliver such other instruments, and take such other action, as either party may
reasonably request in connection with the transactions contemplated by this
Agreement, including, without limitation, the delivery of any notices or other
documents or instruments to the Company or the Documentation Agent which may be
required in connection with the assignment and assumption contemplated hereby.
10. Indemnity.
The Assignee agrees to indemnify and hold harmless the Assignor against
any and all losses, costs, expenses (including, without limitation, Attorney
Costs) and liabilities incurred by the Assignor in connection with or arising
in any manner from the non-performance by the Assignee of any obligation
assumed by the Assignee under this Agreement.
11. Miscellaneous.
(a) Any amendment or waiver of any provision of this Agreement
shall be in writing signed by the parties hereto, and consented to in writing
by the Documentation Agent. No failure or delay by either party hereto in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof and any waiver of any breach of the provisions of this Agreement shall
be
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without prejudice to any rights with respect to any other or further breach
hereof.
(b) All payments made hereunder shall be made without any set-off
or counterclaim.
(c) All communications among the parties or notices in connection
herewith shall be in writing (including facsimile transmission or telex) and
delivered, telexed or telecopied, addressed as follows: (i) if to the Assignor
or the Assignee, at their respective addresses set forth on the signature pages
hereof and (ii) if to the Company or the Documentation Agent, at their
respective addresses set forth in the Credit Agreement or any other documents
or instruments delivered pursuant thereto. All such communications and notices
shall be effective upon receipt. The Assignee specifies as its Lending Office
the office set forth beneath its name on the signature pages hereof.
(d) The Assignor and the Assignee shall each pay its own costs and
expenses incurred in connection with the negotiation, preparation, execution
and performance of this Agreement.
(e) The representations and warranties made herein shall survive
the consummation of the transactions contemplated hereby.
(f) This Agreement shall be binding upon and inure to the benefit
of the Assignor and the Assignee and their respective successors and assigns;
provided, however, that no party shall assign its rights hereunder without the
prior written consent of the other party and any purported assignment, absent
such consent, shall be void. The preceding sentence shall not limit the right
of the Assignee to assign or participate all or part of the Assignee's
Percentage Share and the Assigned Amount and any outstanding Loans attributable
thereto in accordance with and subject to the Credit Agreement.
(g) The Assignor may at any time or from time to time grant to
others assignments or participations in Assignor's Aggregate Commitment or the
Loans but not in the portions thereof assigned to the Assignee pursuant to this
Agreement.
(h) This Agreement may be executed in any number of counterparts
and all of such counterparts taken together shall be deemed to constitute one
and the same instrument.
(i) This Agreement shall be governed by and construed in accordance
with the laws of the State of New York. The Assignor and the Assignee each
irrevocably submits to the non-exclusive jurisdiction of any New York State or
Federal court sitting in The City of New York over any suit, action or
proceeding arising out of or relating to this Agreement and irrevocably agrees
that all claims in respect of such action or proceeding may be heard and
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determined in such New York State or Federal court. Each party to this
Agreement hereby irrevocably waives, to the fullest extent may effectively do
so, the defense of an inconvenient forum to the maintenance of such action or
proceeding.
(j) This Agreement and any agreement, document or instrument
attached hereto or referred to herein integrate all the terms and conditions
mentioned herein or incidental hereto, constitute the entire agreement and
understanding between the parties hereto and supersede any and all prior
agreements and understandings related to the subject matter hereof. In the
event of any conflict between the terms, conditions and provisions of this
Agreement and any such agreement, document or instrument, the terms, conditions
and provisions of this Agreement shall prevail.
(k) In the event of any inconsistency between the provisions of
this Agreement and Schedule I hereto, this Agreement shall control. Headings
are for reference only and are to be ignored in interpreting this Agreement.
(l) The illegality or unenforceability of any provision of this
Agreement or any instrument or agreement required hereunder shall not in any
way affect or impair the legality or enforceability of the remaining provisions
of this Agreement or any instrument or agreement required hereunder.
(m) The Assignor and the Assignee each hereby knowingly,
voluntarily and intentionally waive any rights they may have to a trial by jury
in respect of any litigation based hereon, or arising out of, under, or in
connection with this Agreement, the Credit Agreement, any related documents and
agreements or any related course of conduct, course of dealing or statements
(whether oral or written).
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Agreement to be executed and delivered by their duly authorized officers as of
the date first above written.
__________________________________
Assignor
By:_______________________________
Title:____________________________
Address for Notices:
Lending Office:
Address for Payments
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[Address]
__________________________________
Assignor
By:_______________________________
Title:____________________________
Address for Notices:
Lending Office:
Address for Payments
[Address]
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<PAGE> 97
SCHEDULE I
TO
ASSIGNMENT AND ASSUMPTION AGREEMENT
1. Company:
2. Date of Credit Agreement:
3. Assignor:
4. Assignee:
5. Date of Assignment Agreement:
6. Effective Date:
7. Assignee's Share
(a) Assignee's Percentage Share
(b) Assigned Amount
8. Fees: Payment by Company
to Assignee
Facility Fee
9. Interest: Payment by Company
to Assignee
(i) Reference Rate Loan(s)
(ii) LIBOR Loan(s)
(iii) CD Rate Loan(s)
10. Payment Instructions:
Assignor:
Assignee:
11. Other Information:
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SCHEDULE II
FORM OF NOTICE OF ASSIGNMENT AND ACCEPTANCE
___________, 19___
Bank of America National Trust
and Savings Association,
as Documentation Agent
1455 Market Street, 12th Floor
San Francisco, California 94103
Attention: Agency Management Services
Kmart Corporation
3100 West Big Beaver Road
Troy , Michigan 48084
Attention: Treasurer
Ladies and Gentlemen:
We refer to the Seasonal Credit Agreement dated as of October 5, 1995
(as amended, supplemented or modified from time to time the "Credit Agreement")
among Kmart Corporation (the "Company" the Banks referred to therein and Bank
of America National Trust and Savings Association, as Documentation Agent.
Terms defined in the Credit Agreement are used herein as therein defined.
1. We hereby give you notice of [, and request the consent of the
Company and the Administrative Agent to,] the assignment by
____________________(the "Assignor") to ________________________________(the
"Assignee") of ___% of the right, title and interest of the Assignor in and to
the Credit Agreement (including, without limitation, the right, title and
interest of the Assignor in and to the Commitment of the Assignor and all
outstanding Loans made by the Assignor) (the "Assigned Amount") pursuant to
that certain Assignment and Assumption Agreement, dated as of ____________,
19___ (the "Assignment and Assumption Agreement"), by and between Assignor and
Assignee. Before giving effect to such assignment the Assignor's Commitment is
$_________ and the aggregate principal amount of its outstanding Loans is
$___________________.
2. The Assignee agrees that [, upon receiving the consent the
Company and the Administrative Agent to such assignment and from and after the
Effective Date (as such term is defined in Section 5 of the Assignment and
Assumption Agreement), the Assignee will be bound by the terms of the Credit
Agreement, with respect to the interest in the Credit Agreement assigned to it
as specified above, as fully and to the same extent as if the Assignee were the
Bank originally holding such interest in the Credit Agreement. The
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<PAGE> 99
Assignor and the Assignee agree that any interest, fees and other payments
accrued to but excluding the Effective Date with respect to the Assigned Amount
shall be for the account of the Assignee.
3. The following administrative details apply to the Assignee:
(A) Lending Office:
Assignee name:__________________________
Address:________________________________
________________________________
Attention:______________________________
Telephone: ( )_________________________
Telecopier: ( )________________________
(B) Notice Address:
Assignee name:__________________________
Address:________________________________
________________________________
Attention:______________________________
Telephone: ( )_________________________
Telecopier: ( )________________________
(C) Payment Instructions:
Account No.:____________________________
At:_________________________________
_________________________________
_________________________________
Reference:______________________________
Attention:______________________________
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<PAGE> 100
IN WITNESS WHEREOF, the Assignor and the Assignor have caused this
Notice of Assignment and Acceptance to be executed by their respective duly
authorized officials, officers or agents as of the date first above mentioned.
Very truly yours,
(Name of Assignor]
By:_______________________
Title:____________________
(Name of Assignee]
By:_______________________
Title:____________________
[Agreed and Consented to this
_______ day of ___________, 19___.
KMART CORPORATION
By:_____________________
Title:__________________
Agreed and Consented to this
_____ day of ______________, 19___.
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Documentation Agent
By:_____________________
Title:__________________]
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