<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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) December 6, 1999
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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)
(248) 643-1000
(Registrant's Telephone Number, Including Area Code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS
1 On December 6, 1999, Kmart Corporation entered into a $1.1 Billion
Three-Year Revolving Credit Agreement and a $600 Million 364-Day
Revolving Credit Agreement; attached hereto as Exhibits 99.1 and 99.2.
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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/ Nancie W. LaDuke
--------------------------------
Nancie W. LaDuke
Vice President and
Secretary
Date: December 15, 1999
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Exhibit Index
Exhibit Number Description
------------------------ --------------------------------
99.1 $1.1 Billion Three-Year
Revolving Credit Agreement
99.2 $600 Million 364-Day Revolving
Credit Agreement
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[CHASE LOGO] EXECUTION COPY
EXHIBIT 99.1
================================================================================
KMART CORPORATION
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$1,100,000,000
THREE YEAR CREDIT AGREEMENT
December 6, 1999
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CHASE SECURITIES INC.,
as Lead Arranger and Book Manager
THE CHASE MANHATTAN BANK,
as Administrative Agent
BANK OF AMERICA, NATIONAL ASSOCIATION,
as Syndication Agent
BANKBOSTON, N.A.,
as Co-Documentation Agent
BANK OF NEW YORK,
as Co-Documentation Agent
================================================================================
THREE YEAR REVOLVING CREDIT AND
COMPETITIVE ADVANCE FACILITY
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 1. DEFINITIONS............................................................. 1
1.1 Defined Terms......................................................... 1
1.2 Other Definitional Provisions.........................................20
SECTION 2. AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENTS........................20
2.1 Revolving Credit Commitments..........................................20
2.2 Procedure for Revolving Credit Borrowing..............................21
2.3 Commitment Fee........................................................21
2.4 Termination or Reduction of Commitments...............................21
2.5 Repayment of Revolving Credit Loans...................................22
2.6 L/C Commitment........................................................22
2.7 Procedure for Issuance of Letters of Credit...........................23
2.8 Letter of Credit Fees, Commissions and Other Charges..................23
2.9 L/C Participations....................................................24
2.10 Letter of Credit Reimbursement Obligations...........................25
2.11 Obligations Absolute.................................................25
2.12 Letter of Credit Payments............................................26
2.13 Letter of Credit Applications........................................26
2.14 CAF Advances.........................................................26
2.15 Procedure for CAF Advance Borrowing..................................26
2.16 CAF Advance Payments.................................................29
2.17 Certain Restrictions With Respect to CAF Advances....................29
2.18 Swing Line Commitment................................................29
2.19 Procedure for Swing Line Borrowing...................................29
2.20 Quarterly Swing Line Loans Clean-Down................................31
SECTION 3. GENERAL PROVISIONS APPLICABLE TO LOANS AND LETTERS OF CREDIT............31
3.1 Optional Prepayments..................................................31
3.2 Conversion and Continuation Options...................................31
3.3 Minimum Amounts and Maximum Number of Tranches........................32
3.4 Interest Rates and Payment Dates......................................32
3.5 Computation of Interest and Fees......................................32
3.6 Inability to Determine Interest Rate..................................33
3.7 Pro Rata Treatment and Payments.......................................33
3.8 Illegality............................................................34
3.9 Requirements of Law...................................................34
3.10 Indemnification for Taxes............................................35
3.11 Indemnity............................................................37
3.12 Change of Lending Office.............................................38
3.13 Evidence of Debt.....................................................38
SECTION 4. REPRESENTATIONS AND WARRANTIES..........................................39
4.1 Financial Condition...................................................39
4.2 No Change.............................................................40
4.3 Corporate Existence; Compliance with Law..............................40
</TABLE>
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<TABLE>
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4.4 Corporate Power; Authorization; Enforceable Obligations...............40
4.5 No Legal Bar..........................................................41
4.6 No Material Litigation................................................41
4.7 No Default............................................................41
4.8 No Burdensome Restrictions............................................41
4.9 Taxes.................................................................41
4.10 Federal Regulations..................................................41
4.11 ERISA................................................................41
4.12 Investment Company Act; Other Regulations............................42
4.13 Subsidiaries.........................................................42
4.14 Environmental Matters................................................42
4.15 Ownership of Property; Liens.........................................43
4.16 Intellectual Property................................................43
4.17 Continuing Letters of Credit.........................................43
4.18 Solvency.............................................................44
4.19 Purpose of Loans.....................................................44
4.20 Accuracy of Information..............................................44
4.21 Year 2000 Matters....................................................44
SECTION 5. CONDITIONS..............................................................44
5.1 Conditions to Effectiveness...........................................44
5.2 Conditions to Each Extension of Credit................................46
SECTION 6. AFFIRMATIVE COVENANTS...................................................46
6.1 Financial Statements..................................................46
6.2 Certificates; Other Information.......................................47
6.3 Payment of Obligations................................................47
6.4 Conduct of Business and Maintenance of Existence......................48
6.5 Maintenance of Property; Insurance....................................48
6.6 Inspection of Property; Books and Records; Discussions................48
6.7 Notices...............................................................48
6.8 Environmental Laws....................................................49
6.9 Additional Subsidiaries...............................................49
SECTION 7. NEGATIVE COVENANTS......................................................49
7.1 Financial Condition Covenants.........................................49
7.2 Limitation on Liens...................................................49
7.3 Limitation on Fundamental Changes.....................................51
7.4 Limitation on Sale of Assets..........................................51
7.5 Limitation on Dividends...............................................52
7.6 Limitation on Capital Expenditures and "Property held for Resale".....53
7.7 Limitation on Transactions with Affiliates............................53
7.8 Limitation on Sales and Leasebacks....................................53
7.9 Negative Pledge Clauses...............................................54
SECTION 8. EVENTS OF DEFAULT.......................................................54
SECTION 9. THE ADMINISTRATIVE AGENT................................................57
</TABLE>
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9.1 Appointment...........................................................57
9.2 Delegation of Duties..................................................57
9.3 Exculpatory Provisions................................................57
9.4 Reliance by Administrative Agent......................................57
9.5 Notice of Default.....................................................58
9.6 Non-Reliance on Administrative Agent and Other Lenders................58
9.7 Indemnification.......................................................58
9.8 Administrative Agent in Its Individual Capacity.......................59
9.9 Successor Administrative Agent........................................59
SECTION 10. MISCELLANEOUS..........................................................59
10.1 Amendments and Waivers...............................................59
10.2 Notices..............................................................60
10.3 No Waiver; Cumulative Remedies.......................................62
10.4 Survival of Representations and Warranties...........................62
10.5 Payment of Expenses and Taxes; Indemnity.............................62
10.6 Successors and Assigns; Participations and Assignments...............63
10.7 Replacement of Lenders under Certain Circumstances...................65
10.8 Adjustments; Set-off.................................................66
10.9 Counterparts.........................................................66
10.10 Severability........................................................67
10.11 Integration.........................................................67
10.12 Termination.........................................................67
10.13 GOVERNING LAW.......................................................67
10.14 Submission To Jurisdiction; Waivers.................................67
10.15 Acknowledgements....................................................67
10.16 WAIVERS OF JURY TRIAL...............................................68
10.17 Confidentiality.....................................................68
10.18 Judgment Currency...................................................68
10.19 Section Headings....................................................69
</TABLE>
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ANNEXES
Annex A Pricing Grid
SCHEDULES
Schedule 1.1(a) Revolving Credit Commitments
Schedule 4.1 Charges and Changes
Schedule 4.4 Consents
Schedule 4.13 Subsidiaries
Schedule 4.16 Intellectual Property Matters
Schedule 4.17 Continuing Letters of Credit
Schedule 7.2(f) Existing Liens
Schedule 7.4(f) Scheduled Asset Sales
Schedule 7.9 Transactions with Affiliates
Schedule 10.2 Addresses
EXHIBITS
Exhibit A Form of Addendum
Exhibit B Form of CAF Advance Confirmation
Exhibit C Form of CAF Advance Offer
Exhibit D Form of CAF Advance Request
Exhibit E Form of Subsidiaries Guarantee
Exhibit F Form of Revolving Credit Note
Exhibit G Form of CAF Advance Note
Exhibit H Form of Borrower Closing Certificate
Exhibit I-1 Form of Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
Exhibit I-2 Form of Opinion of General Counsel to Borrower
Exhibit I-3 Form of Opinion of Simpson Thacher & Bartlett
Exhibit J Form of Assignment and Acceptance
Exhibit K Form of Swing Line Participation Certificate
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CREDIT AGREEMENT, dated as of December 6, 1999, among KMART
CORPORATION, a Michigan corporation (the "Borrower"), the several banks,
financial institutions and other entities from time to time parties to this
Agreement (collectively, the "Lenders"; individually, a "Lender") and THE CHASE
MANHATTAN BANK, a New York banking corporation, as Administrative Agent (as
hereinafter defined) for the Lenders hereunder.
W I T N E S S E T H :
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
"ABR": for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greatest of (a) the
Prime Rate in effect on such day, (b) the Base CD Rate in effect on
such day plus 1% and (c) the Federal Funds Effective Rate in effect on
such day plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall mean
the rate of interest per annum publicly announced from time to time by
the Administrative Agent as its prime rate in effect at its principal
office in New York City (the Prime Rate not being intended to be the
lowest rate of interest charged by the Administrative Agent in
connection with extensions of credit to debtors); "Base CD Rate" shall
mean the sum of (a) the product of (i) the Three-Month Secondary CD
Rate and (ii) a fraction, the numerator of which is one and the
denominator of which is one minus the CD Reserve Percentage and (b)
the CD Assessment Rate; "Three-Month Secondary CD Rate" shall mean,
for any day, the secondary market rate for three-month certificates of
deposit reported as being in effect on such day (or, if such day shall
not be a Business Day, the next preceding Business Day) by the Board
of Governors through the public information telephone line of the
Federal Reserve Bank of New York (which rate will, under the current
practices of the Board of Governors, be published in Federal Reserve
Statistical Release H.15(519) during the week following such day), or,
if such rate shall not be so reported on such day or such next
preceding Business Day, the average of the secondary market quotations
for three-month certificates of deposit of major money center banks in
New York City received at approximately 10:00 A.M., New York City
time, on such day (or, if such day shall not be a Business Day, on the
next preceding Business Day) by the Administrative Agent from three
New York City negotiable certificate of deposit dealers of recognized
standing selected by it; "CD Assessment Rate" shall mean, for any day,
the annual assessment rate in effect on such day which is payable by a
member of the Bank Insurance Fund maintained by the FDIC classified as
well-capitalized and within supervisory subgroup "B" (or a comparable
successor assessment risk classification) within the meaning of 12
C.F.R. ss 327.4 (or any successor provision) to the FDIC for the
FDIC's insuring time deposits at offices of such institution in the
United States; "CD Reserve Percentage" shall mean, for any day, that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors, for determining the maximum
reserve requirement for a Depositary Institution (as defined in
Regulation D of the Board of Governors or any successor provisions) in
respect of new non-personal time deposits in Dollars having a maturity
of 30 days or more; and "Federal Funds Effective Rate" shall mean, for
any day, the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day which is a Business Day, the average of the
quotations for the day of such transactions received by the
Administrative Agent from three federal funds brokers of recognized
standing selected by it. Any change in the ABR due to a change in the
Prime Rate, the Three-
<PAGE> 7
2
Month Secondary CD Rate, the CD Assessment Rate, the CD Reserve
Percentage or the Federal Funds Effective Rate shall be effective as of
the opening of business on the effective day of such change in the
Prime Rate, the Three-Month Secondary CD Rate, the CD Assessment Rate,
the CD Reserve Percentage or the Federal Funds Effective Rate,
respectively.
"ABR Loans": Revolving Credit Loans the rate of interest
applicable to which is based upon the ABR.
"Acquisition": as to any Person, the acquisition by such
Person of (a) all the Capital Stock of any other Person, (b) all or
substantially all of the assets of any other Person or (c) assets
constituting one or more business units of any other Person.
"Addendum": an instrument, substantially in the form of
Exhibit A, by which a Lender becomes a party to this Agreement.
"Additional Permitted Capital Expenditure Amount": with
respect to any Fiscal Year, an amount equal to 50% of the amount (if
any) by which EBITDA for the immediately preceding Fiscal Year exceeds
$2,100,000,000.
"Adjustment Date": the second Business Day following receipt
by the Administrative Agent of both (i) the financial statements (other
than copies of the Form 10-K or Form 10-Q for the relevant fiscal
period) required to be delivered pursuant to subsection 6.1(a) or
6.1(b), as the case may be, for the most recently completed fiscal
period and (ii) the certificate required to be delivered pursuant to
subsection 6.2(b) with respect to such fiscal period.
"Administrative Agent": Chase, together with its affiliates,
as the arranger of the Revolving Credit Commitments and as the agent
for the Lenders under this Agreement and the other Loan Documents.
"Affiliate": 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. For purposes of this definition,
"control" of a Person means the power, directly or indirectly, either
to (a) vote 10% or more of the securities having ordinary voting power
for the election of directors of such Person or (b) direct or cause the
direction of the management and policies of such Person, whether by
contract or otherwise. For the purposes of this Agreement, the Borrower
and its Restricted Subsidiaries shall not be deemed to be Affiliates of
each other.
"Aggregate Revolving Credit Outstandings": at any time, an
amount equal to the sum of (a) the Committed Revolving Credit
Extensions of Credit of all the Lenders at such time and (b) the
aggregate outstanding principal amount of CAF Advances of all the
Lenders at such time.
"Agreement": this Credit Agreement, as amended, supplemented
or otherwise modified from time to time.
"Agreement Currency": as defined in subsection 10.18.
"Applicable Commitment Fee Rate": 0.25%, provided that the
Applicable Commitment Fee Rate will be adjusted, on each Adjustment
Date (commencing with the first Adjustment Date occurring after October
31, 2000), to the Commitment Fee Rate set forth on Annex A opposite the
Margin Level Status of the Borrower in effect on such Adjustment Date,
and, provided,
<PAGE> 8
3
further, that, in the event the financial statements (other than copies
of the Form 10-K or 10-Q for the relevant fiscal period) required to be
delivered pursuant to subsection 6.1(a) or 6.1(b), as applicable, and
the related certificate required pursuant to subsection 6.2(b) are not
delivered when due, then, during the period from the date on which such
financial statements were required to be delivered until two Business
Days following the date upon which they actually are delivered, the
Applicable Commitment Fee Rate shall be 0.30%.
"Applicable Margin": for each Type of Revolving Credit Loan,
the rate per annum set forth under the relevant column heading below:
<TABLE>
<CAPTION>
ABR Loans Eurodollar Loans
--------- ----------------
<S> <C>
0.00% 1.00%
</TABLE>
provided that the Applicable Margin for all Types of Revolving Credit
Loans will be adjusted, on each Adjustment Date (commencing with the
first Adjustment Date occurring after October 31, 2000), to the
Applicable Margin set forth on Annex A opposite the Margin Level Status
of the Borrower in effect on such Adjustment Date, and provided,
further, that, in the event that the financial statements (other than
the copies of the Form 10-K or 10-Q for the relevant fiscal period)
required to be delivered pursuant to subsection 6.1(a) or 6.1(b), as
applicable, and the related certificate required pursuant to subsection
6.2(b), are not delivered when due, then, during the period from the
date upon which such financial statements were required to be delivered
until two Business Days following the date upon which they actually are
delivered, the Applicable Margin for ABR Loans shall be .25% and the
Applicable Margin for Eurodollar Loans will be 1.25%.
"Applicant": with respect to any Letter of Credit, the
Borrower or any of its Subsidiaries.
"Application": an application or request, in such form as an
Issuing Bank may specify from time to time, requesting such Issuing
Bank to open a Letter of Credit.
"Asset Sale": any sale, transfer or other disposition
(including any sales, transfers or other dispositions in connection
with Sale-Leasebacks or Securitization Transactions) by the Borrower or
any of its Restricted Subsidiaries of any property of the Borrower or
any such Restricted Subsidiary.
"Assignee": as defined in subsection 10.6(c).
"Available Revolving Credit Commitment Available Revolving
Credit Commitment": as to any Lender, at any time, an amount equal to
the excess, if any, of (a) such Lender's Revolving Credit Commitment
over (b) such Lender's Committed Revolving Credit Extensions of Credit
at such time; collectively, as to all the Lenders, the "Available
Revolving Credit Commitments".
"Board of Governors": the Board of Governors of the Federal
Reserve System and any Governmental Authority which succeeds to the
powers and functions thereof.
"Borrowing Date": any Business Day specified in a notice
pursuant to subsection 2.2, 2.15(a) or 2.19 as a date on which the
Borrower requests the Lenders to make Loans hereunder.
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4
"Business": as defined in subsection 4.14(b).
"Business Day": a day other than a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or
required by law to close; provided, that when such term is used to
describe a day on which a borrowing, payment or interest rate
determination is to be made in respect of a Eurodollar Loan or a LIBO
Rate CAF Advance, such day shall also be a day on which dealings in
foreign currencies and exchange between banks may be carried on in
London, England.
"CAF Advance": as defined in subsection 2.14.
"CAF Advance Availability Period": the period from and
including the Effective Date to and including the date which is seven
days prior to the Revolving Credit Termination Date.
"CAF Advance Confirmation": each confirmation by the Borrower
of its acceptance of CAF Advance Offers, which confirmation shall be
substantially in the form of Exhibit B and shall be delivered to the
Administrative Agent by facsimile transmission.
"CAF Advance Interest Payment Date": as to each CAF Advance,
each interest payment date specified by the Borrower for such CAF
Advance in the related CAF Advance Request.
"CAF Advance Maturity Date": as to any CAF Advance, the date
specified by the Borrower in the related CAF Advance Request and
confirmed pursuant to subsection 2.15(d)(ii) in its acceptance of the
related CAF Advance Offer.
"CAF Advance Note": as defined in subsection 3.13(f).
"CAF Advance Offer": each offer by a Lender to make CAF
Advances pursuant to a CAF Advance Request, which offer shall contain
the information specified in Exhibit C and shall be delivered to the
Administrative Agent by telephone, immediately confirmed by facsimile
transmission.
"CAF Advance Request": each request by the Borrower for
Lenders to submit bids to make CAF Advances, which request shall
contain the information in respect of such requested CAF Advances
specified in Exhibit D and shall be delivered to the Administrative
Agent in writing, by facsimile transmission, or by telephone,
immediately confirmed by facsimile transmission.
"Capital Funds": of any Person, as of the date of
determination thereof, the sum of Consolidated Net Worth of such Person
at such date of determination and Consolidated Total Debt of such
Person at such date of determination.
"Capital Stock": any and all shares, interests, participations
or other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person
(other than a corporation) and any and all warrants or options to
purchase any of the foregoing, provided that the Convertible Debentures
shall not constitute Capital Stock of the Borrower.
"Cash Equivalents": (a) marketable direct obligations issued
by, or unconditionally guaranteed by, the United States Government or
issued by any agency thereof and backed by the
<PAGE> 10
5
full faith and credit of the United States, in each case maturing
within one year from the date of acquisition; (b) certificates of
deposit, time deposits, eurodollar time deposits or overnight bank
deposits having maturities of six months or less from the date of
acquisition issued by any Lender or by any commercial bank organized
under the laws of the United States or any state thereof having
combined capital and surplus of not less than $500,000,000; (c)
commercial paper of an issuer rated at least A-1 by S&P or P-1 by
Moody's, or carrying an equivalent rating by a nationally recognized
rating agency, if both of the two named rating agencies cease
publishing ratings of commercial paper issuers generally, and maturing
within six months from the date of acquisition; (d) repurchase
obligations of any Lender or of any commercial bank satisfying the
requirements of clause (b) of this definition, having a term of not
more than 30 days, with respect to securities issued or fully
guaranteed or insured by the United States government; (e) securities
with maturities of one year or less from the date of acquisition issued
or fully guaranteed by any state, commonwealth or territory of the
United States, by any political subdivision or taxing authority of any
such state, commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political
subdivision, taxing authority or foreign government (as the case may
be) are rated at least A by S&P or A by Moody's; (f) securities with
maturities of six months or less from the date of acquisition backed by
standby letters of credit issued by any Lender or any commercial bank
satisfying the requirements of clause (b) of this definition; or (g)
shares of money market mutual or similar funds which invest exclusively
in assets satisfying the requirements of clauses (a) through (f) of
this definition.
"Cash Interest Expense": of any Person for any period,
Consolidated Interest Expense of such Person for such period (a) minus,
in each case to the extent included in determining such Consolidated
Interest Expense for such period, the sum of the following: (i)
non-cash expenses for interest payable in kind and non-cash interest
expense related to closed stores and (ii) amortization of debt discount
and fees and (b) plus the sum of the following in each case to the
extent previously subtracted pursuant to clause (a) of this definition:
cash payments made by such Person or any Consolidated Subsidiary of
such Person during such period in respect of the items referred to in
such clause (a), provided that Cash Interest Expense shall in no event
include any fees or amortization of debt discount associated with the
transactions contemplated hereby or the Convertible Preferred
Securities.
"Chase": The Chase Manhattan Bank, a New York banking
corporation, and its successors.
"Code": the Internal Revenue Code of 1986, as amended from
time to time.
"Commercial L/C Fee Rate": at any time, the rate per annum
equal to 50% of the Applicable Margin then in effect for Eurodollar
Loans.
"Commercial Letter of Credit": as defined in subsection
2.6(b)(i).
"Committed Loan": any Revolving Credit Loan or Swing Line
Loan, as the case may be.
"Committed Revolving Credit Extensions of Credit": as to any
Lender at any time, an amount equal to the sum of (a) the aggregate
principal amount of all Revolving Credit Loans made by such Lender then
outstanding and (b) such Lender's Revolving Credit Commitment
Percentage of the sum of (i) the aggregate principal amount of Swing
Line Loans then outstanding and (ii) the L/C Obligations then
outstanding.
<PAGE> 11
6
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Borrower within
the meaning of Section 4001 of ERISA or is part of a group which
includes the Borrower and which is treated as a single employer under
Section 414 of the Code.
"Confidential Information": as defined in subsection 10.17.
"Consolidated": when used in connection with any defined term,
and not otherwise defined, means such term as it applies to any Person
and its Subsidiaries on a consolidated basis, after eliminating all
intercompany items.
"Continuing Directors": as defined in Section 8(j).
"Continuing Letter of Credit": each letter of credit
outstanding on the date hereof that was issued pursuant to the Existing
Credit Agreement by an Issuing Bank which is a Lender.
"Contractual Obligation": as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or
other undertaking to which such Person is a party or by which it or any
of its property is bound.
"Convertible Debentures": the Convertible Junior Subordinated
Debentures issued by the Borrower to the Convertible Trust pursuant to
the Convertible Debenture Indenture, including any Convertible Junior
Subordinated Debentures issued in connection with the exercise of the
underwriters' over-allotment option, and any debentures (with the same
terms) issued in exchange therefor pursuant to the Convertible
Debenture Indenture as in effect on June 17, 1996.
"Convertible Debenture Indenture": the Indenture, dated as of
June 6, 1996, between the Borrower and The Bank of New York, as
Trustee, as amended, supplemented or otherwise modified from time to
time in accordance with this Agreement.
"Convertible Preferred Securities": the Trust Convertible
Preferred Securities issued by the Convertible Trust on June 17, 1996
and any Trust Convertible Preferred Securities issued by the
Convertible Trust in connection with the exercise of the underwriters'
over-allotment option.
"Convertible Trust": Kmart Financing I, a Delaware statutory
business trust.
"Debt": as to any Person at the date of any determination
thereof, the sum of the following to the extent such items should be
reflected on the consolidated balance sheet of such Person (excluding
any such items which appear only in the notes to such consolidated
balance sheet) at such date (without duplication): (a) all indebtedness
for borrowed money or for the deferred purchase price of property or
services (other than current trade liabilities incurred in the ordinary
course of business and payable in accordance with customary practices),
(b) any other indebtedness which is evidenced by a note, bond,
debenture or similar instrument, (c) all obligations under Financing
Leases, (d) all obligations in respect of acceptances issued or created
for the account of such Person, and (e) all liabilities of a kind
described above secured by any Lien on any property owned by such
Person even though such Person has not assumed or otherwise become
liable for the payment thereof, provided that the item which in
conformity with GAAP would reflect the amount of Convertible Preferred
Securities and/or the Convertible Debentures (and the obligations of
such Person with respect thereto) on the consolidated balance
<PAGE> 12
7
sheet of such Person at such date of determination shall in no event
constitute Debt of such Person.
"Default": any of the events specified in Section 8, whether
or not any requirement for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
"Designated Lenders": as defined in subsection 5.1(a).
"Dollar Equivalent": at any date of determination thereof with
respect to the face amount of any Letter of Credit issued in any
currency other than Dollars or any Reimbursement Obligations in respect
of any such Letter of Credit, an amount in Dollars equivalent to such
face amount calculated at the rate of exchange quoted by the
Administrative Agent on such date of determination (at the hour on such
date of determination at which it customarily makes such determination)
to prime banks in the interbank market where its foreign currency
exchange operations in respect of the currency in which such Letter of
Credit is issued are then being conducted for the spot purchase of such
currency with Dollars.
"Dollars" and "$": dollars in lawful currency of the United
States of America.
"Domestic Subsidiary": any Subsidiary of the Borrower
organized under the laws of any jurisdiction (including territories)
within the United States of America, excluding the Convertible Trust,
Securitization Entities, Inactive Subsidiaries, Special Purpose
Subsidiaries and Foreign Holding Companies.
"EBITDA": with respect to any period, EBITDAR for such period
minus, to the extent included in EBITDAR for such period, the
Consolidated Rental Expense of the Borrower for such period.
"EBITDAR": with respect to any period, Consolidated Net Income
of the Borrower for such period (a) plus, in each case (other than
clause (vi) below) to the extent deducted in determining such
Consolidated Net Income for such period, the sum of the following: (i)
Consolidated Interest Expense of the Borrower, (ii) consolidated income
tax expense of the Borrower and its Consolidated Subsidiaries, (iii)
consolidated depreciation and amortization expense of the Borrower and
its Consolidated Subsidiaries, (iv) Consolidated Rental Expense of the
Borrower, (v) other consolidated non-recurring non-cash charges of the
Borrower and its Consolidated Subsidiaries and non-cash losses realized
by the Borrower and its Consolidated Subsidiaries upon the sale,
disposition or refinancing of real property owned by the Borrower or
its Consolidated Subsidiaries as of the Effective Date and (vi) cash
payments received by the Borrower or any Consolidated Subsidiary during
such period in respect of non-recurring non-cash gains of the Borrower
taken subsequent to October 28, 1999, and (b) minus the sum of the
following: (i) cash payments made by the Borrower or any Consolidated
Subsidiary during such period in respect of non-recurring non-cash
charges taken subsequent to October 28, 1999 and (ii) to the extent
included in determining such Consolidated Net Income for such period,
consolidated non-recurring non-cash gains of the Borrower and its
Consolidated Subsidiaries during such period.
"Effective Date": the date on which the conditions set forth
in subsection 5.1 are satisfied.
<PAGE> 13
8
"Environmental Laws": any and all foreign, federal, state,
local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, requirements of any Governmental Authority
or other Requirements of Law (including common law) regulating,
relating to or imposing liability or standards of conduct concerning
protection of human health or the environment, as are now or may at any
time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to
a Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal) of reserve requirements in effect on such day
(including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board of Governors or
other Governmental Authority having jurisdiction with respect thereto)
prescribed for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of the Board of Governors)
maintained by a member bank of the Federal Reserve System.
"Eurodollar Base Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate per annum
equal to the rate for deposits in Dollars for the period commencing on
the first day of such Interest Period and ending on the last day of
such Interest Period which appears on Telerate Page 3750 as of 10:00
A.M., New York City time, two Business Days prior to the beginning of
such Interest Period. If at least two rates appear on such Telerate
Page for such Interest Period, the "Eurodollar Base Rate" shall be the
arithmetic mean of such rates. If the "Eurodollar Base Rate" cannot be
determined in accordance with the immediately preceding sentences with
respect to any Interest Period, the "Eurodollar Base Rate" with respect
to each day during such Interest Period shall be the rate per annum
equal to the average (rounded upward to the nearest 1/100th of 1%) of
the respective rates notified to the Administrative Agent by each of
the Reference Lenders as the rate at which such Reference Lender is
offered Dollar deposits at or about 10:00 A.M., New York City time, two
Business Days prior to the beginning of such Interest Period in the
interbank eurodollar market where the eurodollar and foreign currency
and exchange operations in respect of its Eurodollar Loans are then
being conducted for delivery on the first day of such Interest Period
for the number of days comprised therein and in an amount comparable to
the amount of its Eurodollar Loan to be outstanding during such
Interest Period.
"Eurodollar Loans": Revolving Credit Loans the rate of
interest applicable to which is based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, a rate per annum
determined for such day in accordance with the following formula
(rounded upward to the nearest 1/100th of 1%):
Eurodollar Base Rate
----------------------------------
1.00 - Eurocurrency Reserve Requirements
"Event of Default": any of the events specified in Section 8,
provided that any requirement for the giving of notice, the lapse of
time, or both, or any other condition, has been satisfied.
<PAGE> 14
9
"Existing Credit Agreement": the Amended and Restated Credit
Agreement, dated as of May 6, 1997, among the Borrower, the several
banks, financial institutions and other entities from time to time
parties thereto and Chase, as administrative agent for the lenders
thereunder, as amended.
"Existing Issuing Bank": each Person that has issued one or
more Continuing Letters of Credit.
"Existing Receivables Transactions": collectively, the
transactions contemplated under various store programs pursuant to
which receivables generated in connection with the sale of inventory
are sold to various financing companies, in each case as such
agreements and programs may be amended, replaced, supplemented or
otherwise modified from time to time.
"Extension of Credit": with respect to any Lender, (a) the
making of a Loan by such Lender and (b) the issuance or extension of a
Letter of Credit; collectively, as to all the Lenders, the "Extensions
of Credit".
"FDIC": the Federal Deposit Insurance Corporation and any
Governmental Authority which succeeds to the powers and functions
thereof.
"Federal Funds Effective Rate": as defined in the definition
of "ABR" contained in this subsection 1.1.
"Financing Lease": any lease of property, real or personal,
the obligations of the lessee in respect of which are required in
accordance with GAAP to be capitalized on a balance sheet of such
lessee.
"Fiscal Year": each fiscal year of the Borrower. Fiscal Years
are referred to herein by reference to the calendar year in which the
first day of such Fiscal Year falls.
"Fixed Charge Coverage Ratio": as of the last day of any
fiscal quarter of the Borrower, the ratio of (A) EBITDAR for the period
of four fiscal quarters ending on the last day of such quarter to (B)
the sum of (i) Consolidated Cash Interest Expense of the Borrower plus
(ii) Consolidated Rental Expense of the Borrower, in each case for such
period.
"Fixed Rate CAF Advance": any CAF Advance made pursuant to a
Fixed Rate CAF Advance Request.
"Fixed Rate CAF Advance Request": any CAF Advance Request
requesting the Lenders to offer to make CAF Advances at an absolute
rate which is not determined by reference to an external source.
"Foreign Holding Company": any Subsidiary organized under the
laws of any jurisdiction (including territories) within the United
States of America whose sole assets (exclusive of assets with an
aggregate book value not exceeding $10,000,000 and assets consisting of
advances or loans to the Borrower or any of its Subsidiaries) consist
of the Capital Stock of one or more Foreign Subsidiaries or other
Foreign Holding Companies.
"Foreign L/C Commitment Sublimit": $200,000,000.
<PAGE> 15
10
"Foreign Subsidiary": any Subsidiary of the Borrower organized
under the laws of any jurisdiction outside the United States of
America, excluding Securitization Entities, Inactive Subsidiaries and
Special Purpose Subsidiaries, but including in any event Foreign
Holding Companies.
"GAAP": generally accepted accounting principles in the United
States of America in effect from time to time, provided that, solely
for purposes of determining compliance with subsection 7.1, "GAAP"
shall mean generally accepted accounting principles in the United
States of America as in effect on the date hereof.
"GNB Credit Agreement": the Credit Agreement among the
Borrower, the several banks, financial institutions and other entities
from time to time parties thereto, Gateway National Bank, as
Administrative Agent and First Independence National Bank of Detroit,
as Documentation Agent (such Credit Agreement shall only be treated as
the "AGNB Credit Agreement" for purposes of Section 7.9 so long as
loans and extensions of credit thereunder and commitments in respect
thereof do not, without duplication, exceed $125,000,000).
"Governmental Authority": any nation or government, any state
or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Granting Lender": as defined in subsection 10.6(c).
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another
Person (including, without limitation, any bank under any letter of
credit) to induce the creation of which the guaranteeing person has
issued a guarantee, reimbursement, counterindemnity or similar
obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness (collectively, the "primary obligations") of any other
third Person (the "primary obligor"), in any manner, whether directly
or indirectly, or which guarantee, reimbursement, counterindemnity or
similar obligation should be reflected in a consolidated balance sheet
of the guaranteeing person (or in the notes thereto); provided,
however, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary
course of business. The amount of any Guarantee Obligation of any
guaranteeing person shall be deemed to be the lower of (a) an amount
equal to the stated or determinable amount of the primary obligation in
respect of which such Guarantee Obligation is made and (b) the maximum
amount for which such guaranteeing person may be liable pursuant to the
terms of the instrument embodying such Guarantee Obligation, unless
such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable, in
which case the amount of such Guarantee Obligation shall be such
guaranteeing person's maximum reasonably anticipated liability in
respect thereof as determined by the Borrower in good faith.
"Inactive Subsidiary": any Subsidiary of the Borrower which
(and only for so long as such Subsidiary) (a) does not own assets with
an aggregate book value in excess of $10,000,000 and (b) is not then
engaged in any business.
"Indebtedness": of any Person at any date, (a) all
indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services (other than current trade
liabilities and current accounts payable incurred in the ordinary
course of business and payable in accordance with customary practices),
(b) any other indebtedness of such Person
<PAGE> 16
11
which is evidenced by a note, bond, debenture or similar instrument,
(c) all obligations (to the extent capitalized for accounting purposes)
of such Person under Financing Leases, (d) all obligations of such
Person in respect of acceptances issued or created for the account of
such Person, (e) all obligations of the types described in the other
clauses of this definition secured by any Lien on any property owned by
such Person even though such Person has not assumed or otherwise become
liable for the payment thereof and (f) all obligations of such Person
in respect of interest rate and currency hedging agreements. For
purposes of this Agreement, the amount of any Indebtedness referred to
in clause (f) of the preceding sentence shall be the net amounts,
including any net termination payments, required to be paid to a
counterparty rather than any notional amount with regard to which
payments may be calculated.
"Indemnified Liabilities": as defined in subsection 10.5.
"Insolvency": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section
4245 of ERISA.
"Intellectual Property": as defined in subsection 4.16.
"Interest Coverage Ratio": as of the last day of any fiscal
quarter of the Borrower, the ratio of (A) EBITDA for the period of four
fiscal quarters ending on the last day of such period to (B)
Consolidated Cash Interest Expense for such period.
"Interest Expense": of any Person for any period, (a) the
amount of interest expense, both expensed and capitalized, of such
Person and its Consolidated Subsidiaries determined on a consolidated
basis in accordance with GAAP for such period minus (b) the amount of
interest income of such Person and its Consolidated Subsidiaries
determined on a consolidated basis in accordance with GAAP for such
period provided that in no event shall Interest Expense include any
distributions in respect of the Convertible Preferred Securities or
interest payments on the Convertible Debentures or any fees or
amortization of debt discount associated with the transactions
contemplated hereby, by the Existing Credit Agreement or by the
Convertible Preferred Securities.
"Interest Payment Date": (a) as to any ABR Loan, the last day
of each April, July, October and January, (b) as to any Eurodollar Loan
having an Interest Period of three months or less, the last day of such
Interest Period, (c) as to any Eurodollar Loan having an Interest
Period longer than three months, each day which is three months, or a
whole multiple thereof, after the first day of such Interest Period and
the last day of such Interest Period and (d) as to any Swing Line Loan,
the fifth Business Day following the day on which such Swing Line Loan
is made.
"Interest Period": with respect to any Eurodollar Loan:
(a) initially, the period commencing on the borrowing
or conversion date, as the case may be, with respect to such
Eurodollar Loan and ending one week (if, at the time of the
relevant borrowing, all Lenders participating therein agree to
make an interest period of such duration available) or one,
two, three or six months thereafter, as selected by the
Borrower in its notice of borrowing or notice of conversion,
as the case may be, given with respect thereto; and
(b) thereafter, each period commencing on the last
day of the next preceding Interest Period applicable to such
Eurodollar Loan and ending one week (if, at the time
<PAGE> 17
12
of the relevant borrowing, all Lenders participating therein
agree to make an interest period of such duration available)
or one, two, three or six months thereafter, as selected by
the Borrower by irrevocable notice to the Administrative Agent
not less than three Business Days prior to the last day of the
then current Interest Period with respect thereto;
provided that, all of the foregoing provisions relating to
Interest Periods are subject to the following:
(1) if any Interest Period would otherwise
end on a day that is not a Business Day, such
Interest Period shall be extended to the next
succeeding Business Day unless 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;
(2) any Interest Period that would otherwise
extend beyond the Revolving Credit Termination Date
shall end on the Revolving Credit Termination Date;
and
(3) any Interest Period 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 a
calendar month.
"Issuing Banks": initially, (a) each Lender specified on
Schedule 1.1(a) as an Issuing Bank and (b) each Existing Issuing Bank
listed on Schedule 4.17, in each case in its capacity as issuer of a
Letter of Credit. Additional Lenders may from time to time be
designated as "Issuing Banks" by the Borrower (with the consent of such
Lender and with the consent (which shall not be unreasonably withheld)
of the Administrative Agent) by written notice to such effect from the
Borrower to the Administrative Agent.
"Judgment Currency": as defined in subsection 10.18.
"L/C Commitment": at any time, the lesser of (a)
$1,000,000,000, and (b) the Revolving Credit Commitments then in
effect.
"L/C Fee Payment Date": the last day of each April, July,
October and January and the Revolving Credit Termination Date.
"L/C Obligations": at any time, an amount equal to the sum of
(a) the aggregate then undrawn and unexpired amount of the then
outstanding Letters of Credit issued in Dollars, (b) the Dollar
Equivalent of the aggregate then undrawn and unexpired amount of the
then outstanding Letters of Credit issued in currencies other than
Dollars (such Dollar Equivalent to be calculated as of the date of
issuance of such Letters of Credit), (c) the aggregate amount of
Reimbursement Obligations in respect of Letters of Credit issued in
Dollars which have not then been paid pursuant to subsection 2.10(a)
and (d) the Dollar Equivalent of the aggregate amount of Reimbursement
Obligations in respect of Letters of Credit issued in currencies other
than Dollars which have not then been paid pursuant to subsection
2.10(a) (such Dollar Equivalent to be calculated as of the date such
Reimbursement Obligation becomes due and payable).
<PAGE> 18
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"L/C Participants": the collective reference to all the
Lenders.
"Lenders": as defined in the preamble to this Agreement.
"Letters of Credit": as defined in subsection 2.6(a).
"Leverage Ratio": as of any date of determination thereof, the
quotient of (a) Consolidated Total Debt of the Borrower as of such date
of determination divided by (b) Consolidated Capital Funds of the
Borrower as of such date of determination.
"LIBO Rate": in respect of any LIBO Rate CAF Advance, the
London interbank offered rate for deposits in Dollars for the period
commencing on the date of such CAF Advance and ending on the CAF
Advance Maturity Date with respect thereto which appears on Telerate
Page 3750 as of 11:00 A.M., London time, two Business Days prior to the
beginning of such period.
"LIBO Rate CAF Advance": any CAF Advance made pursuant to a
LIBO Rate CAF Advance Request.
"LIBO Rate CAF Advance Request": any CAF Advance Request
requesting the Lenders to offer to make CAF Advances at an interest
rate equal to the LIBO Rate plus (or minus) a margin.
"Lien": any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge or
other security interest or any preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title
retention agreement and any Financing Lease having substantially the
same economic effect as any of the foregoing).
"Loan": any Revolving Credit Loan, Swing Line Loan or CAF
Advance, as the case may be.
"Loan Documents": this Agreement, any Notes, the Subsidiaries
Guarantee and any Applications.
"Loan Parties": the collective reference to the Borrower, the
Subsidiary Guarantors and any other Subsidiary from time to time party
to any Loan Document.
"Majority Lenders": at any time, Lenders the Voting
Percentages of which aggregate more than 50%.
"Margin Level Status": as to the Borrower, the existence of
Margin Level I Status, Margin Level II Status, Margin Level III Status
or Margin Level IV Status, as the case may be.
"Margin Level I Status": as to the Borrower, shall exist on an
Adjustment Date if the Interest Coverage Ratio as of the last day of
the period covered by the financial statements relating to such
Adjustment Date is less than or equal to 7.00 to 1.00.
"Margin Level II Status": as to the Borrower, shall exist on
an Adjustment Date if the Interest Coverage Ratio as of the last day of
the period covered by the financial statements
<PAGE> 19
14
relating to such Adjustment Date is greater than 7.00 to 1.00 but less
than or equal to 8.00 to 1.00.
"Margin Level III Status": as to the Borrower, shall exist on
an Adjustment Date if the Interest Coverage Ratio as of the last day of
the period covered by the financial statements relating to such
Adjustment Date is greater than 8.00 to 1.00 but less than or equal to
9.50 to 1.00.
"Margin Level IV Status": as to the Borrower, shall exist on
an Adjustment Date if the Interest Coverage Ratio as of the last day of
the period covered by the financial statements relating to such
Adjustment Date is greater than 9.50 to 1.00.
"Material Adverse Effect": a material adverse effect on (a)
the business, operations, property, condition (financial or otherwise)
or prospects of the Borrower and its Subsidiaries taken as a whole or
(b) the validity or enforceability of this Agreement or any of the
other Loan Documents or the material rights or remedies of the
Administrative Agent or the Lenders hereunder or thereunder; it being
understood that any past or future reduction in the Borrower's or any
Subsidiary's credit rating or decline in the market price of the
Borrower's or any Subsidiary's equity securities shall not in and of
themselves be deemed to constitute a Material Adverse Effect.
"Materials of Environmental Concern": any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum
products or any hazardous or toxic substances, materials or wastes,
defined or regulated as such in or under any Environmental Law,
including, without limitation, asbestos, polychlorinated biphenyls and
urea-formaldehyde insulation.
"Moody's": Moody's Investors Service, Inc.
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Income": of any Person for any period, net income of such
Person and its Consolidated Subsidiaries, determined on a consolidated
basis in accordance with GAAP for such period.
"Net Revenue": of any Person for any period, net revenue of
such Person and its Consolidated Subsidiaries, determined on a
consolidated basis in accordance with GAAP for such period.
"Net Worth": of any Person, as of the date of determination
thereof, the sum of (without duplication) (a) Shareholders' Equity of
such Person as of such date of determination, and (b) the excess, if
any, of (i) the aggregate amount of net after-tax, non-recurring,
non-cash charges that have the effect of reducing the amount set forth
in clause (a) above, taken after the fiscal quarter ended October 27,
1999 over (ii) any reversal of any of the foregoing charges.
"Non-Excluded Taxes": as defined in subsection 3.10.
"Non-Executing Persons": as defined in subsection 5.1(a).
<PAGE> 20
15
"Notes": the collective reference to any Revolving Credit
Notes, any Swing Line Notes and any CAF Advance Notes.
"Participant": as defined in subsection 10.6(b).
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA, or any Governmental
Authority which succeeds to the powers and functions thereof.
"Permitted Sale-Leaseback": as defined in subsection 7.8.
"Person": an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture, limited liability company, Governmental Authority or other
entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which
is covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
"Reference Lenders": Chase, Bank of America, National
Association, The Bank of New York and BankBoston, N.A.
"Register": as defined in subsection 10.6(d).
"Regulation U": Regulation U of the Board of Governors as in
effect from time to time.
"Reimbursement Obligation": the obligation of the Borrower
pursuant to subsection 2.10(a) to reimburse each Issuing Bank for
amounts drawn under any Letter of Credit issued by such Issuing Bank.
"Rental Expense": of any Person for any period, the aggregate
amount of fixed and contingent rentals payable by such Person for such
period in accordance with GAAP with respect to leases of real property
minus the aggregate amount of rental income (including licensee related
income from licensees operating on the store premises of the Borrower
and its Subsidiaries) payable to such Person for such period in
accordance with GAAP with respect to leases of real and personal
property.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty day
notice period is waived under subsections .13, .14, .16, .18, .19 or
.20 of PBGC Reg. ss 2615.
"Required Lenders": at any time, Lenders the Voting
Percentages of which aggregate more than 50%.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing
documents of such Person, and any law, statute, ordinance,
<PAGE> 21
16
code, decree, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject (including, without
limitation, laws, ordinances and regulations pertaining to the zoning,
occupancy and subdivision of real property).
"Responsible Officer": the chief executive officer, the
president, any executive vice president, the chief financial officer or
the treasurer of the Borrower or, with respect to financial matters,
the chief executive officer, the president, the executive vice
president-finance, the chief financial officer or treasurer of the
Borrower, provided that, for purposes of Section 8(d) only, a
"Responsible Officer" shall also include any other senior executive
officer of the Borrower, as well as the general counsel, vice president
- real estate finance, vice president - real estate and any assistant
treasurer of the Borrower.
"Restricted Payments": as defined in subsection 7.5.
"Restricted Subsidiaries": collectively, the Domestic
Subsidiaries and Significant Foreign Subsidiaries.
"Revolving Credit Commitment": as to any Lender, the
obligation of such Lender to make Revolving Credit Loans to and/or
participate in Swing Line Loans to and/or issue or participate in
Letters of Credit issued on behalf of the Borrower hereunder in an
aggregate principal and/or face amount at any one time outstanding not
to exceed the amount set forth opposite such Lender's name on Schedule
1.1(a) under the heading "Revolving Credit Commitment", as such amount
may be reduced from time to time pursuant to this Agreement or as such
amount may be adjusted from time to time pursuant to subsection 10.6;
collectively, as to all such Lenders, the "Revolving Credit
Commitments".
"Revolving Credit Commitment Percentage": as to any Lender (a)
at any time prior to the termination of the Revolving Credit
Commitments, the percentage of the Revolving Credit Commitments then
constituted by such Lender's Revolving Credit Commitment and (b) at any
time after the termination of the Revolving Credit Commitments, the
percentage which (i) the sum of (x) such Lender's Revolving Credit
Loans then outstanding plus (y) the product of such Lender's Revolving
Credit Commitment Percentage immediately prior to the termination of
the Revolving Credit Commitments (after giving effect to any permitted
assignment pursuant to subsection 10.6) times the sum of (1) the
aggregate principal amount of Swing Line Loans then outstanding plus
(2) the L/C Obligations then outstanding then constitutes of (ii) the
sum of (x) the aggregate principal amount of Revolving Credit Loans of
all the Lenders then outstanding plus (y) the aggregate principal
amount of all Swing Line Loans then outstanding plus (z) the aggregate
L/C Obligations then outstanding.
"Revolving Credit Commitment Period": the period from and
including the Effective Date to but not including the Revolving Credit
Termination Date or such earlier date on which the Revolving Credit
Commitments shall terminate as provided herein.
"Revolving Credit Loans": as defined in subsection 2.1.
"Revolving Credit Note": as defined in subsection 3.13(d).
"Revolving Credit Termination Date": December 6, 2002.
<PAGE> 22
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"Sale-Leaseback": as defined in subsection 7.8.
"S&P": Standard & Poor's Ratings Services, a division of The
McGraw Hill Companies, Inc.
"Scheduled Asset Sales": as defined in subsection 7.4(f).
"SEC": the Securities and Exchange Commission and any
Governmental Authority which succeeds to the powers and functions
thereof.
"Securitization Entity": with respect to the Borrower or any
Subsidiary, a corporation, partnership, trust, limited liability
company or other entity that is formed by the Borrower or such
Subsidiary for the purpose of effecting or facilitating a
Securitization Transaction and which engages in no business and incurs
no Indebtedness or other liabilities other than those related to or
incidental to a Securitization Transaction.
"Securitization Transactions": a transaction or series of
related transactions pursuant to which a corporation, partnership,
trust, limited liability company or other entity incurs obligations or
issues interests, the proceeds of which are used to finance a discrete
pool (which may be fixed or revolving) of receivables, leases or other
financial assets, or a discrete portfolio of real property or
equipment.
"Shareholders' Equity": of any Person, as of the date of
determination thereof, the sum of (a) all items which in conformity
with GAAP would be included under shareholders' equity on a
consolidated balance sheet of such Person and its Consolidated
Subsidiaries at such date of determination and (b) the item which in
conformity with GAAP would reflect the amount of Convertible Preferred
Securities and/or the Convertible Debentures (and the obligations of
such Person with respect thereto) on the consolidated balance sheet of
such Person and its Consolidated Subsidiaries at such date of
determination.
"Significant Foreign Subsidiary": any Foreign Subsidiary which
is a Significant Subsidiary.
"Significant Subsidiary": any Subsidiary (a) the Total Assets
of which exceed 10% of the Total Assets of the Borrower and its
Consolidated Subsidiaries as of the end of the most recently completed
Fiscal Year or (b) the Net Revenue of which exceeds 10% of the Net
Revenue of the Borrower and its Consolidated Subsidiaries as of the end
of the most recently completed Fiscal Year.
"Single Employer Plan": any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"Solvent": when used with respect to any Person, means that,
as of any date of determination, (a) the amount of the "present fair
saleable value" of the assets of such Person and its Subsidiaries,
taken as a whole, will, as of such date, exceed the amount that will be
required to pay all "liabilities of such Person and its Subsidiaries,
taken as a whole, contingent or otherwise", as of such date (as such
quoted terms are determined in accordance with applicable federal and
state laws governing determinations of the insolvency of debtors) as
such debts become absolute and matured, (b) such Person and its
Subsidiaries, taken as a whole, will not have, as of such date, an
unreasonably small amount of capital with which to conduct their
<PAGE> 23
18
businesses, and (c) such Person and its Subsidiaries, taken as a whole,
will be able to pay their debts as they mature, taking into account the
timing of and amounts of cash to be received by such Person and its
Subsidiaries, taken as a whole, and the timing of and amounts of cash
to be payable on or in respect of indebtedness of such Person and its
Subsidiaries, taken as a whole; in each case after giving effect to (A)
as of the Effective Date the making of the extensions of credit to be
made on the Effective Date and to the application of the proceeds of
such extensions of credit and (B) on any date after the Effective Date,
the making of any extension of credit to be made on such date, and to
the application of the proceeds of such extension of credit. For
purposes of this definition, (i) "debt" means liability on a "claim",
and (ii) "claim" means any (x) right to payment, whether or not such a
right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal or
equitable, secured or unsecured or (y) right to an equitable remedy for
breach of performance if such breach gives rise to a right to payment,
whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured or unmatured, disputed,
undisputed, secured or unsecured. For purposes of representations and
warranties made pursuant to subsection 4.18 on any date after the
Effective Date on which an Extension of Credit is made hereunder, the
Borrower may, in making such representation, assume that the Aggregate
Revolving Credit Outstandings will be refinanced at the maturity
thereof.
"SPC": as defined in subsection 10.6(c).
"Special Purpose Subsidiary": any Subsidiary of the Borrower
organized solely for the purpose of (a) holding a license or permit
issued by any Governmental Authority and used in connection with the
business of the Borrower and/or its Subsidiaries or (b) providing
employee services for use in the foreign operations of the Borrower or
any of its Subsidiaries, provided that such Subsidiary shall only be a
"Special Purpose Subsidiary" for so long as such Subsidiary does not
own any assets (other than any such license or permit and other than
other assets with a book value not exceeding $10,000,000 in the
aggregate) and does not engage in any business (other than holding such
license or permit and activities directly related thereto).
"Standby L/C Fee Rate": at any time, the rate per annum equal
to the Applicable Margin then in effect for Eurodollar Loans.
"Standby Letter of Credit": as defined in subsection
2.6(b)(i).
"Subsidiaries Guarantee": the Guarantee, dated as of December
6, 1999, executed and delivered by each Subsidiary Guarantor,
substantially in the form of Exhibit E, as the same may be amended,
supplemented or otherwise modified from time to time.
"Subsidiary": as to any Person, a corporation, partnership or
other entity of which shares of stock or other ownership interests
having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other
managers of such corporation, partnership or other entity are at the
time owned, or the management of which is otherwise controlled,
directly or indirectly through one or more intermediaries, or both, by
such Person. Unless otherwise qualified, all references to a
"Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a
Subsidiary or Subsidiaries of the Borrower.
<PAGE> 24
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"Subsidiary Guarantor": each Subsidiary set forth on Schedule
4.13 under the heading "Initial Subsidiary Guarantors", together with
each other Subsidiary that becomes a party to the Subsidiaries
Guarantee in compliance with subsection 6.9.
"Swing Line Commitment": the lesser of (a) $100,000,000 and
(b) the Revolving Credit Commitments then in effect.
"Swing Line Lender": Chase, in its capacity as provider of the
Swing Line Loans.
"Swing Line Loans": as defined in subsection 2.18.
"Swing Line Loan Participation Certificate": a certificate,
substantially the form of Exhibit K.
"Swing Line Note": as defined in subsection 3.13(e).
"Swing Line Rate": with respect to any Swing Line Loan, an
interest rate equal to the sum of (a) the rate of interest determined
by the Swing Line Lender in respect thereof (which determination shall
be conclusive absent manifest error) to be the cost to the Swing Line
Lender of funding such Swing Line Loan, (b) the Applicable Margin then
in effect for Eurodollar Loans and (c) 0.75%.
"Telerate Page 3750": the display page currently so designated
on the Dow Jones Telerate Service (or such other page as may replace
that service for the purpose of displaying comparable rates or prices).
"364-Day Credit Facility": the 364-Day Credit Agreement, dated
as of December 6, 1999, among the Borrower, the several banks,
financial institutions and other entities from time to time parties
thereto and the Administrative Agent, as the same may be amended,
supplemented or otherwise modified from time to time.
"Total Assets": of any Person for any period, the total assets
of such Person and its Consolidated Subsidiaries, determined on a
consolidated basis in accordance with GAAP for such period.
"Total Debt": as to any Person at the date of any
determination thereof, all Debt of such Person; provided, however, that
for the purposes of any determination of the Leverage Ratio hereunder
the amount of Total Debt attributable to the Revolving Credit Loans,
the Swing Line Loans, the CAF Advances and Debt outstanding under the
Existing Credit Agreement, the 364-Day Credit Agreement and the GNB
Credit Agreement shall be the average daily outstanding amounts thereof
for the period of four fiscal quarters ending on or immediately
preceding such date of determination.
"Tranche": the collective reference to Eurodollar Loans the
then current Interest Periods with respect to all of which begin on the
same date and end on the same later date (whether or not such
Eurodollar Loans shall originally have been made on the same day).
"Transferee": as defined in subsection 10.6(f).
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"Type": as to any Revolving Credit Loan, its nature as an ABR
Loan or a Eurodollar Loan.
"UCC": the Uniform Commercial Code as in effect in the State
of New York from time to time.
"Uniform Customs": the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, as the same may be amended or revised from time to
time.
"Voting Percentage": as to any Lender (a) at any time prior to
the termination of the Revolving Credit Commitments, the percentage
which such Lender's Revolving Credit Commitment then constitutes of the
Revolving Credit Commitments of all the Lenders, and (b) at any time
after the termination of the Revolving Credit Commitments, the
percentage which (i) the sum of (x) the principal amount of such
Lender's Revolving Credit Loans then outstanding plus (y) the product
of such Lender's Revolving Credit Commitment Percentage times the sum
of (A) the aggregate principal amount of Swing Line Loans then
outstanding plus (B) the L/C Obligations then outstanding then
constitutes of (ii) the sum of (x) the aggregate principal amount of
Committed Loans of all the Lenders then outstanding plus (y) the
aggregate L/C Obligations of all the Lenders then outstanding.
1.2 Other Definitional Provisions.
(a) Unless otherwise specified therein, all terms defined in
this Agreement shall have the defined meanings when used in any Loan Document or
any certificate or other document made or delivered pursuant hereto or thereto.
(b) As used herein and in any other Loan Document, and any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms relating to the Borrower and its Subsidiaries not defined in
subsection 1.1 and accounting terms partly defined in subsection 1.1, to the
extent not defined, shall have the respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
subsection, Schedule and Exhibit references are to this Agreement unless
otherwise specified.
(d) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
(e) The definitions of "Debt" and "Indebtedness" in subsection
1.1 shall be independent in construction, interpretation and application.
SECTION 2. AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENTS
2.1 Revolving Credit Commitments. (a) Subject to the terms
and conditions hereof, each Lender severally agrees to make revolving credit
loans ("Revolving Credit Loans") to the Borrower from time to time during the
Revolving Credit Commitment Period in an aggregate principal amount at any one
time outstanding which, when added to such Lender's Revolving Credit Commitment
Percentage of an amount equal to the sum of (i) the aggregate principal amount
of Swing Line Loans then outstanding plus (ii) the then outstanding L/C
Obligations plus (iii) the aggregate principal amount of all
<PAGE> 26
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CAF Advances then outstanding (after giving effect to the use of proceeds of
such Revolving Credit Loans), does not exceed the amount of such Lender's
Revolving Credit Commitment. During the Revolving Credit Commitment Period, the
Borrower may use the Revolving Credit Commitments by borrowing, prepaying and
reborrowing the Revolving Credit Loans in whole or in part, all in accordance
with the terms and conditions hereof.
(b) The Revolving Credit Loans may from time to time be (i)
Eurodollar Loans, (ii) ABR Loans or (iii) a combination thereof, as determined
by the Borrower and notified to the Administrative Agent in accordance with
subsections 2.2 and 3.2, provided that no Revolving Credit Loan shall be made as
a Eurodollar Loan after the day that is one month prior to the Revolving Credit
Termination Date.
2.2 Procedure for Revolving Credit Borrowing. The Borrower may
borrow under the Revolving Credit Commitments during the Revolving Credit
Commitment Period on any Business Day, provided that the Borrower shall give the
Administrative Agent irrevocable notice (which notice must be received by the
Administrative Agent prior to 12:00 Noon, New York City time, (a) three Business
Days prior to the requested Borrowing Date, if all or any part of the requested
Revolving Credit Loans are to be initially Eurodollar Loans or (b) on the
requested Borrowing Date, otherwise), specifying (i) the amount to be borrowed,
(ii) the requested Borrowing Date, (iii) whether the borrowing is to be of
Eurodollar Loans, ABR Loans or a combination thereof and (iv) if the borrowing
is to be entirely or partly of Eurodollar Loans, the respective amounts of each
such Type of Loan and the respective lengths of the initial Interest Periods
therefor. Each borrowing under the Revolving Credit Commitments shall be in an
amount equal to (x) in the case of ABR Loans, $5,000,000 or a whole multiple of
$1,000,000 in excess thereof (or, if the excess of the then Available Revolving
Credit Commitments over the aggregate principal amount of all CAF Advances then
outstanding is less than $5,000,000, such lesser amount) and (y) in the case of
Eurodollar Loans, $10,000,000 or a whole multiple of $1,000,000 in excess
thereof. Upon receipt of any such notice from the Borrower, the Administrative
Agent shall promptly notify each Lender thereof. Each Lender will make the
amount of its pro rata share of each borrowing available to the Administrative
Agent for the account of the Borrower at the office of the Administrative Agent
specified in subsection 10.2 prior to 1:00 P.M., New York City time, on the
Borrowing Date requested by the Borrower in Dollars and in funds immediately
available to the Administrative Agent. Such borrowing will be made available to
the Borrower on or prior to 2:00 P.M., New York City time, by the Administrative
Agent crediting the account of the Borrower on the books of such office of the
Administrative Agent with the aggregate of the amounts made available to the
Administrative Agent by the Lenders and in like funds as received by the
Administrative Agent.
2.3 Commitment Fee. The Borrower agrees to pay to the
Administrative Agent for the account of each Lender a commitment fee for the
period from and including the first day of the Revolving Credit Commitment
Period to but not including the Revolving Credit Termination Date, computed at a
rate per annum equal to the Applicable Commitment Fee Rate then in effect on the
average daily amount of the Available Revolving Credit Commitment of such Lender
during the period (calculated as if no Swing Line Loans were outstanding during
such period) for which payment is made, payable quarterly in arrears on the last
day of each April, July, October and January and on the Revolving Credit
Termination Date or such earlier date as the Revolving Credit Commitments shall
terminate as provided herein, commencing on the first of such dates to occur
after the date hereof.
2.4 Termination or Reduction of Commitments. The Borrower
shall have the right, upon not less than two Business Days' notice to the
Administrative Agent, to terminate the Revolving Credit Commitments or, from
time to time, to reduce the amount of the Revolving Credit Commitments, provided
that no such termination or reduction shall be permitted if, after giving effect
thereto and to any
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22
prepayments of the Revolving Credit Loans made on the effective date thereof,
the aggregate principal amount of the Revolving Credit Loans then outstanding,
when added to the then outstanding L/C Obligations, Swing Line Loans and CAF
Advances, would exceed the Revolving Credit Commitments then in effect. Any such
reduction shall be in an amount equal to $10,000,000 or a whole multiple of
$1,000,000 in excess thereof and shall reduce permanently the Revolving Credit
Commitments then in effect. Upon receipt of any notice pursuant to this
subsection 2.4, the Administrative Agent shall promptly notify each Lender
thereof.
2.5 Repayment of Revolving Credit Loans. The Borrower hereby
unconditionally promises to pay to the Administrative Agent for the account of
each Lender the then unpaid principal amount of each Revolving Credit Loan of
such Lender on the Revolving Credit Termination Date (or such earlier date on
which the Revolving Credit Loans become due and payable pursuant to Section 8).
The Borrower hereby further agrees to pay interest on the unpaid principal
amount of the Revolving Credit Loans from time to time outstanding from the date
hereof until payment in full thereof at the rates per annum, and on the dates,
set forth in subsection 3.4.
2.6 L/C Commitment. (a) Subject to the terms and conditions
hereof, each Issuing Bank, in reliance on the agreements of the other Lenders
set forth in subsection 2.9(a), agrees to issue letters of credit ("Letters of
Credit") for the account of the Borrower on any Business Day during the
Revolving Credit Commitment Period in such form as may be approved from time to
time by such Issuing Bank; provided that no Issuing Bank shall have any
obligation to issue any Letter of Credit if, after giving effect to such
issuance, (i) the L/C Obligations at such time would exceed the L/C Commitment,
(ii) the Aggregate Revolving Credit Outstandings at such time would exceed the
aggregate amount of the Revolving Credit Commitments at such time or (iii) in
the case of Letters of Credit issued in currencies other than Dollars only, the
L/C Obligations in respect of Letters of Credit issued in currencies other than
Dollars would exceed the Foreign L/C Commitment Sublimit at such time. Each
Continuing Letter of Credit shall be deemed to be issued under this Agreement on
the Effective Date (to the extent such Continuing Letter of Credit has not been
fully drawn or has not expired or been terminated as of the Effective Date) and
shall be (x) a Letter of Credit for all purposes hereof (other than subsection
2.7) and the other Loan Documents and (y) a Commercial Letter of Credit or a
Standby Letter of Credit, as applicable, for purposes of subsections 2.8(b) and
2.8(c), respectively.
(b) Each Letter of Credit shall:
(i) be denominated in Dollars or such other currency that
as of the date of issuance thereof is in the reasonable judgment of the
relevant Issuing Bank (which shall be binding on the L/C Participants)
freely convertible or exchangeable into Dollars as the Borrower, the
relevant Issuing Bank and the Administrative Agent may from time to
time agree, and shall be either (A) a standby letter of credit issued
to support obligations of the Borrower or a Subsidiary, contingent or
otherwise (a "Standby Letter of Credit"), or (B) a commercial letter of
credit issued in respect of the purchase of inventory or other goods or
services by the Borrower and its Subsidiaries in the ordinary course of
business (a "Commercial Letter of Credit"), and
(ii) expire no later than the earlier of (A) five Business
Days prior to the Revolving Credit Termination Date and (B) one year
after the date of issuance thereof, provided that, subject to clause
(A) above, any Letter of Credit may, at the request of the Applicant as
set forth in the applicable Application, be automatically renewed on
each anniversary of the issuance thereof for an additional period of
one year unless the Issuing Bank which issued such Letter of Credit
shall have given prior written notice to the Borrower and the
beneficiary of such Letter of Credit that such Letter of Credit will
not be renewed.
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(c) Each Letter of Credit shall be subject to the Uniform
Customs (except to the extent that any Continuing Letter of Credit continues to
be subject to the Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication No. 500, in accordance
with its terms), and, to the extent not inconsistent therewith, the laws of the
State of New York.
(d) No Issuing Bank shall at any time be obligated to issue
any Letter of Credit hereunder if such issuance would conflict with, or cause
such Issuing Bank or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.
2.7 Procedure for Issuance of Letters of Credit. An Applicant
may from time to time request that an Issuing Bank issue a Letter of Credit by
delivering (a) to such Issuing Bank at its address for notices specified herein
in such manner as may be agreed by or be acceptable to such Issuing Bank
(including by electronic transmission) an Application therefor, completed to the
satisfaction of such Issuing Bank, and such other certificates, documents and
other papers and information as such Issuing Bank may request and (b) a notice
to the Administrative Agent that such Letter of Credit has been requested. Upon
receipt of any Application, each Issuing Bank agrees to process such Application
and the certificates, documents and other papers and information delivered to it
in connection therewith in accordance with its customary procedures and shall
promptly issue the Letter of Credit requested thereby (but in no event shall
such Issuing Bank be required to issue any Letter of Credit earlier than two
Business Days after its receipt of the Application therefor and all such other
certificates, documents and other papers and information relating thereto) by
issuing the original of such Letter of Credit to the beneficiary thereof or as
otherwise may be agreed by such Issuing Bank and the Borrower. Each Issuing Bank
shall furnish a copy of each Letter of Credit issued by such Issuing Bank to the
Borrower and the Administrative Agent promptly following the issuance thereof.
2.8 Letter of Credit Fees, Commissions and Other Charges. (a)
The Borrower shall pay to the relevant Issuing Bank with respect to each Letter
of Credit issued by such Issuing Bank under this Agreement, for the account of
such Issuing Bank, a fronting fee with respect to the period from the date of
issuance of such Letter of Credit to the expiration or termination date of such
Letter of Credit, computed at a rate per annum to be agreed upon by the Borrower
and such Issuing Bank on the average aggregate amount available to be drawn
under such Letter of Credit during the period for which such fee is calculated.
Such fronting fee shall be payable in arrears on each L/C Fee Payment Date to
occur after the issuance of such Letter of Credit and on the Revolving Credit
Termination Date (or on such earlier date as the Revolving Credit Commitments
shall terminate as provided herein) and shall be nonrefundable.
(b) The Borrower shall pay to the Administrative Agent, for
the account of the L/C Participants, a letter of credit commission with respect
to each Commercial Letter of Credit issued under this Agreement with respect to
the period from the date of issuance of such Commercial Letter of Credit to the
expiration or termination date of such Letter of Credit, computed at a rate per
annum equal to the Commercial L/C Fee Rate on the average aggregate amount
available to be drawn under such Commercial Letter of Credit during the period
for which such fee is calculated. Such commission shall be shared ratably among
the L/C Participants in accordance with their respective Revolving Credit
Commitment Percentages. Such commission shall be payable in arrears on each L/C
Fee Payment Date to occur after the issuance of such Letter of Credit and on the
Revolving Credit Termination Date (or on such earlier date as the Revolving
Credit Commitments shall terminate as provided herein) and shall be
nonrefundable.
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(c) The Borrower shall pay to the Administrative Agent, for
the account of the L/C Participants, a letter of credit commission with respect
to each Standby Letter of Credit with respect to the period from the date of
issuance of such Standby Letter of Credit to the expiration or termination date
of such Letter of Credit, computed at a rate per annum equal to the Standby L/C
Fee Rate of the average aggregate amount available to be drawn under such
Standby Letter of Credit during the period for which such fee is calculated.
Such commission shall be shared ratably among the L/C Participants in accordance
with their respective Revolving Credit Commitment Percentages. Such commission
shall be payable in arrears on each L/C Fee Payment Date to occur after the
issuance of such Letter of Credit and on the Revolving Credit Termination Date
(or on such earlier date as the Revolving Credit Commitments shall terminate as
provided herein) and shall be nonrefundable.
(d) In addition to the foregoing fees and commissions, the
Borrower shall pay or reimburse each Issuing Bank for such normal and customary
costs and expenses as may be agreed upon by the Borrower and such Issuing Bank
in connection with issuing, effecting payment under, amending or otherwise
administering any Letter of Credit issued by such Issuing Bank.
(e) The Administrative Agent shall, promptly following its
receipt thereof, distribute to each Issuing Bank and the L/C Participants all
fees and commissions received by the Administrative Agent for their respective
accounts pursuant to this subsection.
2.9 L/C Participations. (a) Each Issuing Bank irrevocably
agrees to grant and hereby grants to each L/C Participant (other than such
Issuing Bank), and, to induce such Issuing Bank to issue Letters of Credit
hereunder, each such L/C Participant irrevocably agrees to accept and purchase
and hereby accepts and purchases from such Issuing Bank, on the terms and
conditions hereinafter stated, for such L/C Participant's own account and risk
an undivided interest equal to such L/C Participant's Revolving Credit
Commitment Percentage in such Issuing Bank's obligations and rights under each
Letter of Credit issued by such Issuing Bank hereunder and the amount of each
draft paid by such Issuing Bank thereunder. Each such L/C Participant
unconditionally and irrevocably agrees with each Issuing Bank that, if a draft
is paid under any Letter of Credit issued by such Issuing Bank for which such
Issuing Bank is not reimbursed in full by the Borrower in accordance with the
terms of this Agreement, such L/C Participant shall pay to the Administrative
Agent for the account of such Issuing Bank upon demand an amount equal to such
L/C Participant's Revolving Credit Commitment Percentage of the amount of such
draft, or any part thereof, which is not so reimbursed.
(b) If any amount required to be paid by any L/C Participant
to any Issuing Bank pursuant to subsection 2.9(a) in respect of any unreimbursed
portion of any payment made by such Issuing Bank under any Letter of Credit
issued by such Issuing Bank is paid to such Issuing Bank within three Business
Days after the date such payment is due, such L/C Participant shall pay to such
Issuing Bank on demand an amount equal to the product of (i) such amount, times
(ii) the daily average Federal Funds Effective Rate, during the period from and
including the date such payment is required to the date on which such payment is
immediately available to such Issuing Bank, times (iii) a fraction the numerator
of which is the number of days that elapse during such period and the
denominator of which is 360. If any such amount required to be paid by any L/C
Participant pursuant to subsection 2.9(a) is not in fact made available to any
Issuing Bank by such L/C Participant within three Business Days after the date
such payment is due, such Issuing Bank shall be entitled to recover from such
L/C Participant, on demand, such amount with interest thereon calculated from
such due date at the rate per annum applicable to ABR Loans hereunder. A
certificate of any Issuing Bank submitted to any L/C Participant with respect to
any amounts owing under this subsection shall be conclusive in the absence of
manifest error.
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(c) Whenever, at any time after any Issuing Bank has made
payment under any Letter of Credit issued by such Issuing Bank and has received
from any L/C Participant its pro rata share of such payment in accordance with
subsection 2.9(a), such Issuing Bank receives any payment related to such Letter
of Credit (whether directly from the Borrower or otherwise, including proceeds
of collateral applied thereto by such Issuing Bank), or any payment of interest
on account thereof, such Issuing Bank will distribute to such L/C Participant
its pro rata share thereof.
(d) If any payment received by any Issuing Bank pursuant to
subsection 2.10 with respect to any Letter of Credit issued by it shall be
required to be returned by such Issuing Bank, each L/C Participant shall pay to
such Issuing Bank its pro rata share thereof.
2.10 Letter of Credit Reimbursement Obligations. (a) The
Borrower agrees to reimburse each Issuing Bank for the amount of (i) any draft
paid by such Issuing Bank under any Letter of Credit issued by such Issuing Bank
and (ii) any taxes, fees, charges or other costs or expenses incurred by such
Issuing Bank in connection with such payment. Each such payment shall be made to
the relevant Issuing Bank at its address for notices specified herein in the
currency in which the relevant Letter of Credit was issued and in immediately
available funds in such currency.
(b) If any draft shall be presented for payment under any
Letter of Credit issued by any Issuing Bank, such Issuing Bank shall promptly
notify the Borrower of the date and amount thereof. The Borrower shall reimburse
each Issuing Bank pursuant to subsection 2.10(a) with respect to any drawing
under any Letter of Credit issued by such Issuing Bank on the next Business Day
following the date of such drawing and interest shall be payable on the amount
of such drawing for such period at the rate then applicable to ABR Loans
hereunder. If any amount payable under this subsection is not paid when due,
interest shall be payable on such amount from the date such amount becomes
payable under this subsection until payment in full thereof at the rate which
would be payable on any outstanding ABR Loans which were then overdue.
2.11 Obligations Absolute. (a) The Borrower's obligations
under this Section 2 in respect of Letters of Credit shall be absolute and
unconditional under any and all circumstances and irrespective of any set-off,
counterclaim or defense to payment which the Borrower or any Applicant may have
or have had against any Issuing Bank or any beneficiary of any Letter of Credit.
(b) The Borrower also agrees with each Issuing Bank that such
Issuing Bank shall not be responsible for, and the Borrower's Reimbursement
Obligations shall not be affected by, among other things, (i) the validity or
genuineness of documents or of any endorsements thereon, even though such
documents shall in fact prove to be invalid, fraudulent or forged, or (ii) any
dispute between or among the Borrower, any Applicant and any beneficiary of any
Letter of Credit or any other party to which such Letter of Credit may be
transferred or (iii) any claims whatsoever of the Borrower or any Applicant
against any beneficiary of such Letter of Credit or any such transferee.
(c) No Issuing Bank shall be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Letter of Credit issued by
such Issuing Bank, except for errors or omissions caused by such Issuing Bank's
gross negligence or willful misconduct.
(d) The Borrower agrees that any action taken or omitted by
any Issuing Bank under or in connection with any Letter of Credit issued by such
Issuing Bank or the related drafts or documents, if done in the absence of gross
negligence or willful misconduct and in accordance with the standards of
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care specified in the UCC, shall be binding on the Borrower and shall not result
in any liability of such Issuing Bank to the Borrower.
2.12 Letter of Credit Payments. The responsibility of each
Issuing Bank to the Borrower in connection with any draft presented for payment
under any Letter of Credit issued by such Issuing Bank shall, in addition to any
payment obligation expressly provided for in such Letter of Credit, be limited
to determining that the documents (including each draft) delivered under such
Letter of Credit in connection with such presentment are in conformity with such
Letter of Credit.
2.13 Letter of Credit Applications. To the extent that any
provision of any Application related to any Letter of Credit is inconsistent
with the provisions of this Section 2 or any other terms of this Agreement or
any other Loan Document, the provisions of this Section 2 shall apply.
2.14 CAF Advances. Subject to the terms and conditions of this
Agreement, the Borrower may request advances ("CAF Advances") from time to time
on any Business Day during the CAF Advance Availability Period. CAF Advances may
be requested and made in amounts such that, after giving effect to the making of
such CAF Advance and the application of proceeds thereof, the Aggregate
Revolving Credit Outstandings at any time do not exceed the aggregate amount of
the Revolving Credit Commitments at such time. Within the limits and on the
conditions hereinafter set forth with respect to CAF Advances, the Borrower from
time to time may borrow, repay and reborrow CAF Advances.
2.15 Procedure for CAF Advance Borrowing. (a) The Borrower
shall request CAF Advances by delivering a CAF Advance Request to the
Administrative Agent, not later than 12:00 Noon (New York City time) four
Business Days prior to the proposed Borrowing Date (in the case of a LIBO Rate
CAF Advance Request), and not later than 11:00 A.M. (New York City time) one
Business Day prior to the proposed Borrowing Date (in the case of a Fixed Rate
CAF Advance Request). The Borrower shall pay to the Administrative Agent a fee
of $2,000 in connection with each CAF Advance Request delivered by the Borrower
to the Administrative Agent. Each CAF Advance Request in respect of any
Borrowing Date may solicit bids for CAF Advances on such Borrowing Date in an
aggregate principal amount of $10,000,000 or an integral multiple of $1,000,000
in excess thereof and having not more than three alternative CAF Advance
Maturity Dates. The CAF Advance Maturity Date for each CAF Advance shall be the
date set forth therefor in the relevant CAF Advance Request, which date shall be
(i) not less than seven days nor more than 180 days after the Borrowing Date
therefor, in the case of a Fixed Rate CAF Advance, (ii) one, two, three or six
months after the Borrowing Date therefor, in the case of a LIBO Rate CAF Advance
and (iii) not later than the Revolving Credit Termination Date, in the case of
any CAF Advance. The Administrative Agent shall notify each Lender promptly by
facsimile transmission of the contents of each CAF Advance Request received by
the Administrative Agent.
(b) In the case of a LIBO Rate CAF Advance Request, upon
receipt of notice from the Administrative Agent of the contents of such CAF
Advance Request, each Lender may elect, in its sole discretion, to offer
irrevocably to make one or more CAF Advances at the applicable LIBO Rate plus
(or minus) a margin determined by such Lender in its sole discretion for each
such CAF Advance. Any such irrevocable offer shall be made by delivering a CAF
Advance Offer to the Administrative Agent, before 10:30 A.M. (New York City
time) on the day that is three Business Days before the proposed Borrowing Date,
setting forth:
(i) the maximum amount of CAF Advances for each CAF
Advance Maturity Date and the aggregate maximum amount of CAF Advances
for all CAF Advance Maturity Dates
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which such Lender would be willing to make (which amounts may, subject
to subsection 3.14, exceed such Lender's Revolving Credit Commitments);
and
(ii) the margin above or below the applicable LIBO Rate at
which such Lender is willing to make each such CAF Advance.
The Administrative Agent shall advise the Borrower before 11:00 A.M. (New York
City time) on the date which is three Business Days before the proposed
Borrowing Date of the contents of each such CAF Advance Offer received by it. If
the Administrative Agent, in its capacity as a Lender, shall elect, in its sole
discretion, to make any such CAF Advance Offer, it shall advise the Borrower of
the contents of its CAF Advance Offer before 10:15 A.M. (New York City time) on
the date which is three Business Days before the proposed Borrowing Date.
(c) In the case of a Fixed Rate CAF Advance Request, upon
receipt of notice from the Administrative Agent of the contents of such CAF
Advance Request, each Lender may elect, in its sole discretion, to offer
irrevocably to make one or more CAF Advances at a rate of interest determined by
such Lender in its sole discretion for each such CAF Advance. Any such
irrevocable offer shall be made by delivering a CAF Advance Offer to the
Administrative Agent before 9:30 A.M. (New York City time) on the proposed
Borrowing Date, setting forth:
(i) the maximum amount of CAF Advances for each CAF
Advance Maturity Date, and the aggregate maximum amount for all CAF
Advance Maturity Dates, which such Lender would be willing to make
(which amounts may, subject to subsection 3.14, exceed such Lender's
Revolving Credit Commitments); and
(ii) the rate of interest at which such Lender is willing
to make each such CAF Advance.
The Administrative Agent shall advise the Borrower before 10:00 A.M. (New York
City time) on the proposed Borrowing Date of the contents of each such CAF
Advance Offer received by it. If the Administrative Agent, in its capacity as a
Lender, shall elect, in its sole discretion, to make any such CAF Advance Offer,
it shall advise the Borrower of the contents of its CAF Advance Offer before
9:15 A.M. (New York City time) on the proposed Borrowing Date.
(d) Before 11:30 A.M. (New York City time) three Business Days
before the proposed Borrowing Date (in the case of CAF Advances requested by a
LIBO Rate CAF Advance Request) and before 10:30 A.M. (New York City time) on the
proposed Borrowing Date (in the case of CAF Advances requested by a Fixed Rate
CAF Advance Request), the Borrower, in its absolute discretion, shall:
(i) cancel the relevant CAF Advance Request by giving the
Administrative Agent telephonic notice to that effect, or
(ii) by giving telephonic notice to the Administrative
Agent (immediately confirmed by delivery to the Administrative Agent of
a CAF Advance Confirmation by facsimile transmission) (A) subject to
the provisions of subsection 2.15(e), accept one or more of the offers
made by any Lender or Lenders pursuant to subsection 2.15(b) or
subsection 2.15(c), as the case may be, and (B) reject any remaining
offers made by Lenders pursuant to subsection 2.15(b) or subsection
2.15(c), as the case may be.
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(e) The Borrower's acceptance of CAF Advances in response to
any CAF Advance Offers shall be subject to the following limitations:
(i) the amount of CAF Advances accepted for each CAF
Advance Maturity Date specified by any Lender in its CAF Advance Offer
shall not exceed the maximum amount for such CAF Advance Maturity Date
specified in such CAF Advance Offer;
(ii) the aggregate amount of CAF Advances accepted for all
CAF Advance Maturity Dates specified by any Lender in its CAF Advance
Offer shall not exceed the aggregate maximum amount specified in such
CAF Advance Offer for all such CAF Advance Maturity Dates;
(iii) the Borrower may not accept offers for CAF Advances
for any CAF Advance Maturity Date in an aggregate principal amount in
excess of the maximum principal amount of CAF Advances requested for
such CAF Advance Maturity Date in the related CAF Advance Request; and
(iv) if the Borrower accepts any of such CAF Advance
Offers, it must accept offers based solely upon pricing for each
relevant CAF Advance Maturity Date and upon no other criteria
whatsoever, and if two or more Lenders submit CAF Advance Offers for
any CAF Advance Maturity Date at identical pricing and the Borrower
accepts any of such CAF Advance Offers but does not wish to (or, by
reason of the limitations set forth in subsection 2.14 or this
subsection 2.15, cannot) borrow the total amount offered by such
Lenders with such identical pricing, the Borrower shall accept CAF
Advance Offers from all of such Lenders in amounts allocated among them
pro rata according to the amounts offered by such Lenders (with
appropriate rounding, in the sole discretion of the Borrower, to assure
that each accepted CAF Advance is an integral multiple of $1,000,000);
provided that if the number of Lenders that submit CAF Advance Offers
for any CAF Advance Maturity Date with identical pricing is such that,
after the Borrower accepts such offers pro rata in accordance with the
foregoing provisions of this paragraph, the CAF Advance to be made by
any such Lender would be less than $5,000,000 principal amount, the
number of such Lenders shall be reduced by the Administrative Agent by
lot until the CAF Advances to be made by each such remaining Lender
would be in a principal amount of $5,000,000 or an integral multiple of
$1,000,000 in excess thereof.
(f) If the Borrower notifies the Administrative Agent that a
CAF Advance Request is cancelled pursuant to subsection 2.15(d)(i), the
Administrative Agent shall give prompt telephonic notice thereof to the Lenders.
(g) If the Borrower accepts pursuant to subsection 2.15(d)(ii)
one or more of the CAF Advance Offers made by any Lender or Lenders, the
Administrative Agent promptly shall notify each Lender which has made such a CAF
Advance Offer of (i) the aggregate amount of such CAF Advances to be made on the
relevant Borrowing Date and the CAF Advance Maturity Date for each such CAF
Advance and (ii) the acceptance or rejection of any CAF Advance Offers to make
such CAF Advances made by such Lender. Before 12:00 Noon (New York City time) on
the Borrowing Date specified in the applicable CAF Advance Request, each Lender
whose CAF Advance Offer has been accepted shall make available to the
Administrative Agent at its office set forth in subsection 10.2 the amount of
CAF Advances to be made by such Lender, in Dollars and in immediately available
funds. The Administrative Agent will make such funds available to the Borrower
as soon as practicable on such date at such office of the Administrative Agent
in like funds. As soon as practicable after each Borrowing Date, the
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Administrative Agent shall notify each Lender of the aggregate amount of CAF
Advances advanced on such Borrowing Date and the respective CAF Advance Maturity
Dates thereof.
2.16 CAF Advance Payments. (a) The Borrower shall pay to the
Administrative Agent, for the account of each Lender which has made a CAF
Advance, on the CAF Advance Maturity Date of such CAF Advance (or on such
earlier date on which such CAF Advance becomes due and payable pursuant to
Section 8) the principal amount of such CAF Advance. The Borrower shall not have
the right to prepay any principal amount of any CAF Advance without the consent
of the Lender to which such CAF Advance is owed.
(b) The Borrower shall pay to the Administrative Agent for the
account of each Lender which has made a CAF Advance interest on the unpaid
principal amount of such CAF Advance from the Borrowing Date with respect
thereto to the CAF Advance Maturity Date of such CAF Advance at the rate of
interest specified in the CAF Advance Offer accepted by the Borrower in
connection with such CAF Advance (calculated on the basis of a 360-day year for
actual days elapsed), payable on each applicable CAF Advance Interest Payment
Date.
(c) If any principal of, or interest on, any CAF Advance shall
not be paid when due (whether at the stated maturity, by acceleration or
otherwise), such CAF Advance shall, without limiting any rights of any Lender
under this Agreement, bear interest from the date on which such payment was due
at a rate per annum which is 2% above the rate which would otherwise be
applicable to such CAF Advance until the stated CAF Advance Maturity Date of
such CAF Advance, and for each day after such stated CAF Advance Maturity Date
at a rate per annum which is 2% above the ABR, in each case until paid in full
(as well after as before judgment). Interest accruing pursuant to this
subsection 2.16(c) shall be payable from time to time on demand.
2.17 Certain Restrictions With Respect to CAF Advances. A CAF
Advance Request may request CAF Advance Offers for CAF Advances to be made on
not more than one Borrowing Date and to mature on not more than three CAF
Advance Maturity Dates. No CAF Advance Request may be submitted earlier than
five Business Days after submission of any other CAF Advance Request.
2.18 Swing Line Commitment. Subject to the terms and
conditions hereof, the Swing Line Lender agrees to make swing line loans ("Swing
Line Loans") to the Borrower from time to time during the Revolving Credit
Commitment Period in an aggregate principal amount at any one time outstanding
not to exceed the Swing Line Commitment, provided that, after giving effect to
any such Swing Line Loans, the Aggregate Revolving Credit Outstandings at such
time would not exceed the Revolving Credit Commitments in effect at such time.
During the Revolving Credit Commitment Period, the Borrower may use the Swing
Line Commitment by borrowing, prepaying the Swing Line Loans in whole or in
part, and reborrowing, all in accordance with the terms and conditions hereof.
2.19 Procedure for Swing Line Borrowing. (a) The Borrower may
borrow under the Swing Line Commitment during the Revolving Credit Commitment
Period on any Business Day, provided that the Borrower shall give the Swing Line
Lender and the Administrative Agent irrevocable notice (which notice must be
received by the Swing Line Lender prior to 12:00 Noon, New York City time) on
the requested Borrowing Date specifying the amount of the requested Swing Line
Loan which shall be in an aggregate minimum amount of $5,000,000 or a whole
multiple of $1,000,000 in excess thereof. The proceeds of the Swing Line Loan
will be made available by the Swing Line Lender to the Borrower at the office of
the Swing Line Lender by 1:00 P.M., New York City time, on the Borrowing Date by
crediting the account of the Borrower at such office with such proceeds. The
Borrower may at any time and from time to time prepay the Swing Line Loans, in
whole or in part, without premium or
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penalty, by notifying the Swing Line Lender prior to 12:00 Noon, New York City
time, on any Business Day of the date and amount of prepayment. If any such
notice is given, the amount specified in such notice shall be due and payable on
the date specified therein. Partial prepayments shall be in an aggregate
principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess
thereof.
(b) The Swing Line Lender shall, on behalf of the Borrower
(which hereby irrevocably directs the Swing Line Lender to act on its behalf)
and on the earlier of (i) the fifth Business Day following the Borrowing Date
with respect to any Swing Line Loan or (ii) on the date on which the Revolving
Credit Commitments shall terminate pursuant to Section 8, request each Lender
(including the Swing Line Lender) to make a Revolving Credit Loan (which shall
be an ABR Loan, unless the Borrower notified the Administrative Agent pursuant
to subsection 2.2 that such Revolving Credit Loans shall be Eurodollar Loans) in
an amount equal to such Lender's Revolving Credit Commitment Percentage of the
principal amount of such Swing Line Loan. Unless any of the events described in
paragraph (f) of Section 8 shall have occurred with respect to the Borrower (in
which event the procedures of paragraph (d) of this subsection 2.19 shall apply)
each Lender shall make the proceeds of its Revolving Credit Loan available to
the Administrative Agent for the account of the Swing Line Lender at the
Administrative Agent's office specified in or pursuant to subsection 11.2 prior
to 11:00 A.M., New York City time, in funds immediately available in Dollars on
the Business Day next succeeding the date such notice is given. The proceeds of
such Revolving Credit Loans shall be immediately applied to repay the relevant
Swing Line Loan. Effective on the day such Revolving Credit Loans are made, the
relevant Swing Line Loan so paid shall no longer be outstanding as a Swing Line
Loan and shall no longer be due under the Swing Line Note. The Borrower
authorizes the Swing Line Lender to charge the Borrower's accounts with the
Swing Line Lender (up to the amount available in each such account) in order to
immediately pay the amount of its outstanding Swing Line Loans to the extent
amounts received from the Lenders are not sufficient to repay in full such
outstanding Swing Line Loans.
(c) Notwithstanding anything herein to the contrary, the Swing
Line Lender shall not make any Swing Line Loans if the Swing Line Lender has
received written notice that the conditions set forth in subsection 5.2 have not
been satisfied in connection with the making of such Swing Line Loans.
(d) If prior to the making of a Revolving Credit Loan pursuant
to paragraph (b) of subsection 2.19 one of the events described in paragraph (f)
of Section 8 shall have occurred and be continuing with respect to the Borrower,
each Lender will, on the date such Revolving Credit Loan was to have been made
pursuant to the notice in subsection 2.19, purchase an undivided participating
interest in the outstanding Swing Line Loans in an amount equal to (i) its
Revolving Credit Commitment Percentage times (ii) the aggregate principal amount
of Swing Line Loans then outstanding. Each Lender will immediately transfer to
the Swing Line Lender, in immediately available funds, the amount of its
participation, and upon receipt thereof the Swing Line Lender will deliver to
such Lender a Swing Line Loan Participation Certificate dated the date of
receipt of such funds and in such amount.
(e) Whenever, at any time after any Lender has purchased a
participating interest in a Swing Line Loan, the Swing Line Lender receives any
payment on account thereof, the Swing Line Lender will distribute to such Lender
its participating interest in such amount (appropriately adjusted, in the case
of interest payments, to reflect the period of time during which such Lender's
participating interest was outstanding and funded); provided, however, that in
the event that such payment received by the Swing Line Lender is required to be
returned, such Lender will return to the Swing Line Lender any portion thereof
previously distributed by the Swing Line Lender to it.
(f) Each Lender's obligation to make the Revolving Credit
Loans referred to in subsection 2.19(b) and to purchase participating interests
pursuant to subsection 2.19(d) shall be absolute
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and unconditional and shall not be affected by any circumstance, including,
without limitation, (i) any set-off, counterclaim, recoupment, defense or other
right which such Lender or the Borrower may have against the Swing Line Lender,
the Borrower or any other Person for any reason whatsoever, (ii) the occurrence
or continuance of a Default or an Event of Default, (iii) any adverse change in
the condition (financial or otherwise) of the Borrower, (iv) any breach of this
Agreement or any other Loan Document by the Borrower, any Subsidiary or any
other Lender, or (v) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing.
2.20 Quarterly Swing Line Loans Clean-Down. The Borrower shall
pay all outstanding Swing Line Loans on the last Business Day of each calendar
quarter.
SECTION 3. GENERAL PROVISIONS APPLICABLE TO LOANS AND LETTERS OF CREDIT
3.1 Optional Prepayments. The Borrower may, at any time and
from time to time, prepay the Revolving Credit Loans, in whole or in part,
without premium or penalty (except, with respect to Eurodollar Loans that are
prepaid on a date other than the last day of the Interest Period with respect
thereto, as provided under subsection 3.11), upon (in the case of prepayments of
Eurodollar Loans) at least two Business Days' irrevocable notice to the
Administrative Agent and upon (in the case of prepayments of ABR Loans)
irrevocable notice to the Administrative Agent prior to 11:00 A.M., New York
City time, on the date of such prepayment, specifying the date and amount of
prepayment and whether the prepayment is of Eurodollar Loans, ABR Loans or a
combination thereof, and, if of a combination thereof, the amount allocable to
each. Upon receipt of any such notice the Administrative Agent shall promptly
notify each affected Lender thereof. If any such notice is given, the amount
specified in such notice shall be due and payable on the date specified therein,
together with any amounts payable pursuant to subsection 3.11 in connection
therewith. Partial prepayments under this section 3.1 shall be in an aggregate
principal amount of $10,000,000 or a whole multiple of $1,000,000 in excess
thereof.
3.2 Conversion and Continuation Options. (a) The Borrower may,
subject to paragraph (b) below, elect from time to time to convert Eurodollar
Loans to ABR Loans by giving the Administrative Agent irrevocable notice of such
election prior to 12:00 Noon on the date of conversion, provided that any such
conversion of Eurodollar Loans may only be made on the last day of an Interest
Period with respect thereto. The Borrower may elect from time to time to convert
ABR Loans to Eurodollar Loans by giving the Administrative Agent at least three
Business Days' prior irrevocable notice of such election. Any such notice of
conversion to Eurodollar Loans shall specify the length of the initial Interest
Period or Interest Periods therefor. Upon receipt of any such notice the
Administrative Agent shall promptly notify each affected Lender thereof. All or
any part of outstanding Eurodollar Loans and ABR Loans may be converted as
provided herein, provided that (i) no ABR Loan may be converted into a
Eurodollar Loan when any Event of Default has occurred and is continuing and the
Administrative Agent has notified the Borrower that it has determined that such
a conversion is not appropriate and (ii) no ABR Loan may be converted into a
Eurodollar Loan after the date that is one month prior to the Revolving Credit
Termination Date.
(b) Any Eurodollar Loans may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Borrower giving notice to the Administrative Agent, in accordance with the
applicable provisions of the term "Interest Period" set forth in subsection 1.1,
of the length of the next Interest Period to be applicable to such Eurodollar
Loans, provided that no Eurodollar Loan may be continued as such (i) when any
Event of Default has occurred and is continuing and the Administrative Agent has
notified the Borrower that it has determined that such a continuation is not
appropriate or (ii) after the date that is one month prior to the Revolving
Credit Termination Date, and
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provided, further, that if the Borrower shall fail to give such notice or if
such continuation is not permitted such Eurodollar Loans shall be automatically
converted to ABR Loans on the last day of such then expiring Interest Period.
Upon receipt of any notice pursuant to this subsection 3.2(b), the
Administrative Agent shall notify each affected Lender thereof.
3.3 Minimum Amounts and Maximum Number of Tranches. All
borrowings, conversions and continuations of Revolving Credit Loans hereunder
and all selections of Interest Periods hereunder shall be in such amounts and be
made pursuant to such elections so that, after giving effect thereto, the
aggregate principal amount of Eurodollar Loans comprising each Tranche shall be
equal to $10,000,000 or a whole multiple of $1,000,000 in excess thereof. In no
event shall there be more than 30 Tranches outstanding at any time.
3.4 Interest Rates and Payment Dates. (a) Each Eurodollar Loan
shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined for such day
plus the Applicable Margin.
(b) Each ABR Loan shall bear interest at a rate per annum
equal to the ABR plus the Applicable Margin.
(c) Each Swing Line Loan shall bear interest at a rate per
annum equal to the Swing Line Rate.
(d) If all or a portion of (i) any principal of or interest
payable on any Loan, (ii) any commitment fee or (iii) any other amount payable
hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), any such overdue principal, interest, commitment fee
or other amount shall bear interest at a rate per annum which is the rate
described in paragraph (b) of this subsection (or, in the case of overdue
principal, the rate otherwise applicable thereto) plus 2%, in each case from the
date of such non-payment until such overdue interest, commitment fee or other
amount is paid in full (as well after as before judgment).
(e) Interest shall be payable in arrears on each Interest
Payment Date, provided that (i) interest accruing pursuant to subsection 3.4(d)
shall be payable from time to time on demand, and (ii) interest on the Revolving
Credit Loans shall also be due and payable on the Revolving Credit Termination
Date (or such earlier date on which the Revolving Credit Loans become due and
payable pursuant to Section 8).
3.5 Computation of Interest and Fees. (a) Whenever it is
calculated on the basis of the Prime Rate, interest shall be calculated on the
basis of a 365- (or 366-, as the case may be) day year for the actual days
elapsed; and, otherwise, interest, commitment fees and fees and commissions in
respect of Letters of Credit shall be calculated on the basis of a 360-day year
for the actual days elapsed. The Administrative Agent shall as soon as
practicable notify the Borrower and the affected Lenders of each determination
of a Eurodollar Rate. Any change in the interest rate on a Revolving Credit Loan
resulting from a change in the ABR or the Eurocurrency Reserve Requirements
shall become effective as of the opening of business on the day on which such
change becomes effective. The Administrative Agent shall as soon as practicable
notify the Borrower and the affected Lenders of the effective date and the
amount of each such change in interest rate.
(b) Each determination of an interest rate by the
Administrative Agent pursuant to any provision of this Agreement shall be
conclusive and binding on the Borrower and the affected Lenders in the absence
of manifest error.
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(c) If any Reference Lender shall for any reason no longer
have a Revolving Credit Commitment or any Loans, such Reference Lender shall
thereupon cease to be a Reference Lender, and if, as a result, there shall only
be one Reference Lender remaining, the Administrative Agent (after consultation
with the Lenders and with the consent of the Borrower (which shall not be
unreasonably withheld)) shall, by notice to the Borrower and the Lenders,
designate another Lender that is a commercial bank as a Reference Lender so that
there shall at all times be at least two Reference Lenders.
(d) Each Reference Lender shall use its best efforts to
furnish quotations of rates to the Administrative Agent as contemplated hereby.
If any of the Reference Lenders shall be unable or shall otherwise fail to
supply such rates to the Administrative Agent upon its request, the rate of
interest shall, subject to the provisions of this subsection 3.5, be determined
on the basis of the quotations of the remaining Reference Lenders or Reference
Lender.
3.6 Inability to Determine Interest Rate. If prior to the
first day of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that,
by reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for
such Interest Period, or
(b) the Administrative Agent shall have received notice from
the Majority Lenders that the Eurodollar Rate determined or to be
determined for such Interest Period will not adequately and fairly
reflect the cost to the Majority Lenders (as conclusively certified by
such Lenders) of making or maintaining their affected Revolving Credit
Loans during such Interest Period,
the Administrative Agent shall give facsimile or telephonic notice thereof to
the Borrower and the affected Lenders as soon as practicable thereafter. If such
notice is given (x) any Eurodollar Loans requested to be made on the first day
of such Interest Period shall be made as ABR Loans, (y) any ABR Loans that were
to have been converted on the first day of such Interest Period to Eurodollar
Loans shall be continued as ABR Loans and (z) any outstanding Eurodollar Loans
which the Borrower has requested to continue as such pursuant to subsection
3.2(b) shall be converted, on the first day of such Interest Period, to ABR
Loans. Until such notice has been withdrawn by the Administrative Agent, no
further Eurodollar Loans shall be made or continued as such, nor shall the
Borrower have the right to convert ABR Loans to Eurodollar Loans.
3.7 Pro Rata Treatment and Payments. (a) Except as otherwise
provided in subsections 2.14 through 2.19, all payments (including prepayments)
to be made by the Borrower hereunder, whether on account of principal, interest,
fees or otherwise, shall be made without set off or counterclaim and shall be
made prior to 12:00 Noon, New York City time, on the due date thereof to the
Administrative Agent, for the account of the Lenders at the Administrative
Agent's office specified in or pursuant to subsection 10.2 (except as otherwise
provided herein) in Dollars and in immediately available funds. The
Administrative Agent shall distribute such payments to the Lenders entitled to
receive the same promptly upon receipt in like funds as received. If any payment
hereunder (other than payments on Eurodollar Loans or LIBO Rate CAF Advances)
becomes due and payable on a day other than a Business Day, such payment shall
be extended to the next succeeding Business Day, and, with respect to payments
of principal, interest thereon shall be payable at the then applicable rate
during such extension. If any payment on a Eurodollar Loan or a LIBO Rate CAF
Advance becomes due and payable on a day other than a Business Day, the maturity
thereof shall be extended to the next succeeding Business Day (and, with respect
to payments of principal, interest thereon shall be payable at the then
applicable rate during
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such extension) unless the result of such extension would be to extend such
payment into another calendar month, in which event such payment shall be made
on the immediately preceding Business Day.
(b) Unless the Administrative Agent shall have been notified
in writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its portion of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such amount is not made available to the Administrative
Agent by the required time on the Borrowing Date therefor, such Lender shall pay
to the Administrative Agent, on demand, such amount with interest thereon at a
rate equal to the daily average Federal Funds Effective Rate for the period
until such Lender makes such amount immediately available to the Administrative
Agent. A certificate of the Administrative Agent submitted to any Lender with
respect to any amounts owing under this subsection shall be conclusive in the
absence of manifest error. If such Lender's portion of such borrowing is not
made available to the Administrative Agent by such Lender within three Business
Days of such Borrowing Date, the Administrative Agent shall also be entitled to
recover such amount with interest thereon at the rate per annum applicable to
ABR Loans hereunder, on demand, from the Borrower.
(c) Each borrowing by the Borrower of Revolving Credit Loans
shall be made ratably from the Lenders in accordance with their respective
Revolving Credit Commitment Percentages. Any reduction of the Revolving Credit
Commitments shall be made ratably among the Lenders, in accordance with their
respective Revolving Credit Commitment Percentages. Each payment (including each
prepayment) by the Borrower on account of principal of and interest on the
Revolving Credit Loans shall be made pro rata according to the respective
outstanding principal amounts of the Revolving Credit Loans then held by the
Lenders.
3.8 Illegality. Notwithstanding any other provision herein, if
the adoption of or any change in any Requirement of Law or in the interpretation
or application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans or LIBO Rate CAF Advances as contemplated by this Agreement,
(a) the commitment of such Lender hereunder to make Eurodollar Loans, continue
Eurodollar Loans as such and convert ABR Loans to Eurodollar Loans shall
forthwith be suspended during the period of illegality, (b) such Lender's Loans
then outstanding as Eurodollar Loans, if any, shall be converted automatically
to ABR Loans on the respective last days of the then current Interest Periods
with respect to such Loans or within such earlier period as required by law and
(c) the Borrower shall, with respect to any LIBO Rate CAF Advance of such
Lender, take such action as such Lender may reasonably request. If any such
conversion of a Eurodollar Loan occurs on a day which is not the last day of the
then current Interest Period with respect thereto, the Borrower shall pay to
such Lender such amounts, if any, as may be required pursuant to subsection
3.11.
3.9 Requirements of Law. (a) If the adoption of or any change
in any Requirement of Law or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof (or, in the case of LIBO Rate CAF Advances, made
subsequent to acceptance by the Borrower of the CAF Advance Offer relating to
such LIBO Rate CAF Advance):
(i) shall subject any Lender to any tax of any kind
whatsoever with respect to this Agreement, any Note, any Eurodollar
Loan, any Swing Line Loan or any LIBO Rate CAF Advance made by it, any
Letter of Credit issued or participated in by it or any Application, or
change the basis of taxation of payments to such Lender in respect
thereof (except for Non-
<PAGE> 40
35
Excluded Taxes covered by subsection 3.10 and changes in the rate of
tax on the overall net income of such Lender);
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of such Lender which is not
otherwise included in the determination of the Eurodollar Rate or the
Swing Line Rate hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans, Swing Line Loans or LIBO Rate CAF
Advances or issuing or participating in Letters of Credit or to reduce any
amount receivable hereunder in respect thereof, then, in any such case, within
15 days after demand therefor (accompanied by the certificate contemplated by
subsection 3.9(c) with respect thereto) the Borrower shall pay such Lender such
additional amount or amounts as will compensate such Lender for such increased
cost or reduced amount receivable.
(b) If any Lender shall have determined that the adoption of
or any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder or under or in respect of any Letter of
Credit to a level below that which such Lender or such corporation could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's or such corporation's policies with respect to capital adequacy)
by an amount deemed by such Lender to be material, then from time to time,
within 15 days after demand therefor (accompanied by the certificate
contemplated by subsection 3.9(c) with respect thereto), the Borrower shall pay
to such Lender such additional amount or amounts as will compensate such Lender
for such reduction.
(c) If any Lender becomes entitled to claim any additional
amounts pursuant to this subsection 3.9, it shall promptly notify the Borrower
(with a copy to the Administrative Agent) of the event by reason of which it has
become so entitled. A certificate as to any additional amounts payable pursuant
to this subsection 3.9 submitted by such Lender to the Borrower (with a copy to
the Administrative Agent) setting forth in reasonable detail the calculation of
such amounts and the basis therefor shall be conclusive in the absence of
manifest error. The agreements in this subsection shall survive the termination
of this Agreement and the payment of the Loans and all other amounts payable
hereunder.
3.10 Indemnification for Taxes. (a) All payments made by the
Borrower under this Agreement and any Notes shall be made free and clear of, and
without deduction or withholding for or on account of, any present or future
income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions
or withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any Governmental Authority, excluding net income taxes and franchise
and excise taxes (imposed in lieu of net income taxes) imposed on the
Administrative Agent or any Lender as a result of a present or former connection
between the Administrative Agent or such Lender and the jurisdiction of the
Governmental Authority imposing such tax or any political subdivision or taxing
authority thereof or therein (other than any such connection arising solely from
the Administrative Agent or such Lender having executed,
<PAGE> 41
36
delivered or performed its obligations or received a payment under, or enforced,
this Agreement or any Note). If any such non-excluded taxes, levies, imposts,
duties, charges, fees deductions or withholdings ("Non-Excluded Taxes") are
required to be withheld from any amounts payable to the Administrative Agent or
any Lender hereunder or under any Note, the amounts so payable to the
Administrative Agent or such Lender shall be increased to the extent necessary
to yield to the Administrative Agent or such Lender (after payment of all
Non-Excluded Taxes) interest or any such other amounts payable hereunder at the
rates or in the amounts specified in this Agreement, provided, however, that the
Borrower shall not be required to increase any such amounts payable to any
Lender that is not organized under the laws of the United States of America or a
state thereof if such Lender fails to comply with the requirements of paragraph
(b) of this subsection 3.10. Whenever any Non-Excluded Taxes are payable by the
Borrower, as promptly as possible thereafter the Borrower shall send to the
Administrative Agent for its own account or for the account of such Lender, as
the case may be, a certified copy of an original official receipt received by
the Borrower showing payment thereof. If the Borrower fails to pay any
Non-Excluded Taxes when due to the appropriate taxing authority or fails to
remit to the Administrative Agent the required receipts or other required
documentary evidence, the Borrower shall indemnify the Administrative Agent and
the Lenders for any incremental taxes, interest or penalties that may become
payable by the Administrative Agent or any Lender as a result of any such
failure. The agreements in this subsection shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.
(b) Each Lender that is not incorporated under the laws of the
United States of America or a state thereof shall:
(i) in the case of a Lender or a Transferee that is a
"bank" under Section 881(c)(3)(A) of the Code:
(A) on or before the date it becomes a party to this
Agreement (or, in the case of a Participant, on or before the
date such Participant becomes a Participant hereunder),
deliver to the Borrower and the Administrative Agent (I) two
duly completed copies of United States Internal Revenue
Service Form 1001 or 4224, or successor applicable form, as
the case may be, and (II) an Internal Revenue Service Form W-8
or W-9, or successor applicable form, as the case may be;
(B) deliver to the Borrower and the Administrative
Agent two further copies of any such form or certification on
or before the date that any such form or certification expires
or becomes obsolete and after the occurrence of any event
requiring a change in the most recent form previously
delivered by it to the Borrower; and
(C) obtain such extensions of time for filing and
complete such forms or certifications as may reasonably be
requested by the Borrower or the Administrative Agent; and
(ii) in the case of a Lender or a Transferee that is not a
"bank" under Section 881(c)(3)(A) of the Code:
(A) on or before the date it becomes a party to this
Agreement (or, in the case of a Participant, on or before the
date such Participant becomes a Participant hereunder),
deliver to the Borrower and the Administrative Agent (I) a
statement under penalties of perjury that such Lender or
Transferee (x) is not a "bank" under Section 881(c)(3)(A) of
the Code, is not subject to regulatory or other legal
requirements as a bank in any
<PAGE> 42
37
jurisdiction, and has not been treated as a bank for purposes
of any tax, securities law or other filing or submission made
to any Governmental Authority, any application made to a
rating agency or qualification for any exemption from tax,
securities law or other legal requirements, (y) is not a
10-percent shareholder within the meaning of Section
881(c)(3)(B) of the Code and (z) is not a controlled foreign
corporation receiving interest from a related person within
the meaning of Section 881(c)(3)(C) of the Code and (II) a
properly completed and duly executed Internal Revenue Service
Form W-8 or applicable successor form;
(B) deliver to the Borrower and the Administrative
Agent two further properly completed and duly executed copies
of such Form W-8, or any successor applicable form, on or
before the date that any such Form W-8 expires or becomes
obsolete or after the occurrence of any event requiring a
change in the most recent form previously delivered by it to
the Borrower or upon the request of the Borrower; and
(C) obtain such extensions of time for filing and
completing such forms or certifications as may be reasonably
requested by the Borrower or the Administrative Agent;
unless in any such case 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 Lender from duly completing and delivering any such
form with respect to it and such Lender so advises the Borrower and the
Administrative Agent. Each Lender that is not incorporated under the laws of the
United States of America or a state thereof shall certify (i) in the case of a
Form 1001 or 4224, that it is entitled to receive payments under this Agreement
without deduction or withholding of any United States federal income taxes and
(ii) in the case of a Form W-8 or W-9 provided pursuant to subsection
4.10(b)(i)(A)(II), that it is entitled to an exemption from United States backup
withholding tax. Each Person that shall become a Lender or a Participant
pursuant to subsection 10.6 shall, upon the effectiveness of the related
transfer, be required to provide all of the forms and statements required
pursuant to this subsection, provided that in the case of a Participant such
Participant shall furnish all such required forms and statements to the Lender
from which the related participation shall have been purchased.
3.11 Indemnity. The Borrower agrees to indemnify each Lender
and to hold each Lender harmless from any loss or reasonable expense which such
Lender may sustain or incur as a consequence of (a) default by the Borrower in
making a borrowing of, conversion into or continuation of Eurodollar Loans,
Swing Line Loans or CAF Advances after the Borrower has given a notice
requesting the same in accordance with the provisions of this Agreement, (b)
default by the Borrower in making any prepayment of a Eurodollar Loan, Swing
Line Loan or CAF Advance after the Borrower has given a notice thereof in
accordance with the provisions of this Agreement or (c) the making of a
prepayment or conversion of Eurodollar Loans, Swing Line Loans or CAF Advances
on a day which is not the last day of an Interest Period, the date such Swing
Line Loans are due (which, in the case of any Swing Line Loan, shall be the
fifth Business Day following the Borrowing Date with respect thereto) or the
applicable CAF Advance Maturity Date, as the case may be, with respect thereto,
which loss shall be equal to, in the case of Eurodollar Loans or CAF Advances,
the excess, if any, of (i) the amount of interest which would have accrued on
the amount so prepaid or converted, or not so borrowed, converted or continued,
for the period from the date of such prepayment or conversion or of such failure
to borrow, convert or continue to the last day of such Interest Period (or
proposed Interest Period) or, in the case of CAF Advances, the CAF Advance
Maturity Date (or proposed CAF Advance Maturity Date), respectively, in each
case at the applicable rate of interest for such Eurodollar Loans or CAF
Advances
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provided for herein (excluding, however, the Applicable Margin or any
positive margin applicable to CAF Advances included therein, if any) over (ii)
the amount of interest (as reasonably determined by such Lender) which would
have accrued to such Lender on such amount by placing such amount on deposit for
a comparable period with leading banks in the interbank eurodollar market. A
certificate as to any amounts payable pursuant to this subsection 3.11 submitted
by any Lender to the Borrower (with a copy to the Administrative Agent) shall be
conclusive in the absence of manifest error. This covenant shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
3.12 Change of Lending Office. Each Lender agrees that if it
makes any demand for payment under subsection 3.9 or 3.10(a), or if any adoption
or change of the type described in subsection 3.8 shall occur with respect to
it, it will use reasonable efforts (consistent with its internal policy and
legal and regulatory restrictions and so long as such efforts would not be
disadvantageous to it, as determined in its sole discretion) to designate a
different lending office if the making of such a designation would reduce or
obviate the need for the Borrower to make payments under subsection 3.9 or
3.10(a), or would eliminate or reduce the effect of any adoption or change
described in subsection 3.8.
3.13 Evidence of Debt. (a) Each Lender shall maintain in
accordance with its usual practice an account or accounts evidencing
indebtedness of the Borrower to such Lender resulting from the Loans of such
Lender, including the amounts of principal and interest payable and paid to such
Lender from time to time under this Agreement.
(b) The Administrative Agent shall maintain the Register
pursuant to subsection 10.6(d), and a subaccount therein for each Lender, in
which shall be recorded (i) in the case of Committed Loans, the amount of each
Committed Loan made hereunder, the Type thereof and each Interest Period (if
any) applicable thereto, (ii) in the case of CAF Advances, the amount of each
CAF Advance made hereunder, the CAF Advance Maturity Date thereof, the interest
rate applicable thereto and each CAF Advance Interest Payment Date applicable
thereto, (iii) the amount of any principal or interest due and payable or to
become due and payable from the Borrower to each Lender hereunder and (iv) both
the amount of any sum received by the Administrative Agent hereunder from the
Borrower and each Lender's share thereof.
(c) The entries made in the Register and the accounts of each
Lender maintained pursuant to subsection 3.13(a) shall, to the extent permitted
by applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrower therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to maintain the Register or
any such account, or any error therein, shall not in any manner affect the
obligation of the Borrower to repay (with applicable interest) the Loans in
accordance with the terms of this Agreement.
(d) The Borrower agrees that, upon the request to the
Administrative Agent by any Lender, the Borrower will execute and deliver to
such Lender a promissory note of the Borrower evidencing the Revolving Credit
Loans of such Lender, substantially in the form of Exhibit F (a "Revolving
Credit Note"), payable to the order of such Lender and in a principal amount
equal to the Revolving Credit Commitment of such Lender on the date of issuance
of such Revolving Credit Note. Each Lender is hereby authorized to record the
date, Type and amount of each Revolving Credit Loan of such Lender, the date and
amount of each payment or prepayment of principal thereof, each continuation of
all or a portion thereof as the same Type, each conversion of all or a portion
thereof to another Type and, in the case of Eurodollar Loans, the length of each
Interest Period and Eurodollar Rate with respect thereto, on the schedule (or
any continuation of the schedule) annexed to and constituting a part of its
Revolving Credit Note, as the case may be, and any such recordation shall, to
the extent permitted by applicable law, constitute prima facie evidence of the
accuracy of the information so recorded, provided
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39
that the failure to make any such recordation (or any error therein) shall not
affect the obligation of the Borrower to repay (with applicable interest) the
Revolving Credit Loans in accordance with the terms of this Agreement.
(e) The Borrower agrees that, upon the request to the
Administrative Agent by the Swing Line Lender, the Borrower will execute and
deliver to the Swing Line Lender a promissory note of the Borrower evidencing
the Swing Line Loans of the Swing Line Lender, in a form reasonably satisfactory
to the Borrower and the Swing Line Lender (a "Swing Line Note"), payable to the
order of the Swing Line Lender and in a principal amount equal to the Swing Line
Commitment. The Swing Line Lender is hereby authorized to record the date and
amount of each Swing Line Loan and the date and amount of each payment or
prepayment of principal thereof on the schedule (or any continuation of the
schedule) annexed to and constituting a part of its Swing Line Note, as the case
may be, and any such recordation shall, to the extent permitted by applicable
law, constitute prima facie evidence of the accuracy of the information so
recorded, provided that the failure to make any such recordation (or any error
therein) shall not affect the obligation of the Borrower to repay (with
applicable interest) the Swing Line Loans in accordance with the terms of this
Agreement.
(f) The Borrower agrees that, upon the request to the
Administrative Agent by any Lender, the Borrower will execute and deliver to
such Lender a promissory note of the Borrower evidencing the CAF Advances of
such Lender, substantially in the form of Exhibit G (a "CAF Advance Note"),
payable to the order of such Lender and representing the obligation of the
Borrower to pay the lesser of (a) the aggregate amount of the Revolving Credit
Commitments and (b) the unpaid principal amount of all CAF Advances made by such
Lender, with interest on the unpaid principal amount from time to time
outstanding of each CAF Advance evidenced thereby as prescribed in subsection
2.16(b). Each Lender is hereby authorized to record the date and amount of each
CAF Advance made by such Lender, the CAF Advance Maturity Date thereof, the date
and amount of each payment of principal thereof and the interest rate with
respect thereto on the schedule (or any continuation of the schedule) annexed to
and constituting a part of its CAF Advance Note and any such recordation shall,
to the extent permitted by applicable law, constitute prima facie evidence of
the accuracy of the information so recorded, provided that the failure to make
any such recordation (or any error therein) shall not affect the obligation of
the Borrower to repay (with applicable interest) the CAF Advances in accordance
with the terms of this Agreement. Each CAF Advance Note shall be dated the
Effective Date, and each CAF Advance evidenced thereby shall bear interest for
the period from and including the Borrowing Date of such CAF Advance on the
unpaid principal amount thereof from time to time outstanding at the applicable
rate per annum determined as provided in, and such interest shall be payable as
specified in, subsection 2.16(b).
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter
into this Agreement and to make the Extensions of Credit, the Borrower hereby
represents and warrants to the Administrative Agent and each Lender that:
4.1 Financial Condition. The consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as at January 27, 1999 and the
related consolidated statements of income and of cash flows for the Fiscal Year
ended on such date, reported on by PriceWaterhouseCoopers LLP, copies of which
have heretofore been furnished to each Lender, are complete and correct in all
material respects and present fairly the consolidated financial condition of the
Borrower and its Consolidated Subsidiaries as at such date, and the consolidated
results of their operations and their consolidated cash
<PAGE> 45
40
flows for the Fiscal Year then ended. All such financial statements, including
the related schedules and notes thereto, have been prepared in accordance with
GAAP applied consistently throughout the periods involved (except as approved by
such accountants or Responsible Officer, as the case may be, and as disclosed
therein). Except as set forth on Schedule 4.1 or as disclosed in the most recent
Form 10-K or subsequent Form 10-Q filed by the Borrower with the SEC prior to
the date hereof, neither the Borrower nor any of its Consolidated Subsidiaries
had, at the date of the most recent balance sheet referred to above, any
material Guarantee Obligation, material contingent liability or liability for
taxes, or any material long-term lease or unusual forward or long-term
commitment, including, without limitation, any interest rate or foreign currency
swap or exchange transaction, which is not reflected in the foregoing statements
or in the notes thereto. Except as set forth on Schedule 4.1 or as disclosed in
the most recent Form 10-K or subsequent Form 10-Q filed by the Borrower with the
SEC prior to the date hereof, during the period from January 27, 1999 to and
including the date hereof there has been no sale, transfer or other disposition
by the Borrower or any of its Consolidated Subsidiaries of any material part of
its business or property and no purchase or other acquisition of any business or
property (including any capital stock of any other Person) material in relation
to the consolidated financial condition of the Borrower and its Consolidated
Subsidiaries at January 27, 1999.
4.2 No Change. Since January 27, 1999, there has been no
development or event which has had or could reasonably be expected to have a
Material Adverse Effect.
4.3 Corporate Existence; Compliance with Law. Each of the
Borrower and its Restricted Subsidiaries (a) is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization, (b)
has the corporate power and authority, and the legal right, to own and operate
its property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification and (d) is in compliance with all Requirements of
Law except, in each case, where the failure to be so organized, existing, in
good standing or qualified, or the failure to have such power or authority or to
so comply, could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.
4.4 Corporate Power; Authorization; Enforceable Obligations.
Each of the Borrower and its Restricted Subsidiaries has the corporate power and
authority, and the legal right, to make, deliver and perform the Loan Documents
to which it is a party and (in the case of the Borrower) to borrow and obtain
the other Extensions of Credit hereunder and has taken all necessary corporate
action to authorize the Extensions of Credit on the terms and conditions of this
Agreement and any Notes and to authorize the execution, delivery and performance
of the Loan Documents to which it is a party. No consent or authorization of,
filing with, notice to, or other act by or in respect of, any Governmental
Authority or any other Person is required in connection with the Extensions of
Credit hereunder or with the execution, delivery, performance, validity or
enforceability of the Loan Documents to which the Borrower or any of its
Restricted Subsidiaries is a party except those described on Schedule 4.4, all
of which have been obtained, made or waived. This Agreement has been, and each
other Loan Document will be, duly executed and delivered on behalf of the
Borrower and each of its Restricted Subsidiaries that is a party thereto. This
Agreement constitutes, and each other Loan Document when executed and delivered
will constitute, a legal, valid and binding obligation of the Borrower and each
of its Restricted Subsidiaries that is a party thereto enforceable against the
Borrower and each such Restricted Subsidiary in accordance with its terms,
subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing.
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4.5 No Legal Bar. The execution, delivery and performance of
the Loan Documents to which the Borrower or any of its Restricted Subsidiaries
is a party, the Extensions of Credit hereunder and the use of the proceeds
thereof will not violate any Requirement of Law or Contractual Obligation of the
Borrower or of any of its Restricted Subsidiaries and will not result in, or
require, the creation or imposition of any Lien on any of its or their
respective properties or revenues pursuant to any such Requirement of Law or
Contractual Obligation (other than pursuant to the Loan Documents), except to
the extent that any such violations (individually or in the aggregate) could not
reasonably be expected to have a Material Adverse Effect.
4.6 No Material Litigation. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the knowledge of the Borrower, threatened by or against the Borrower or any
of its Restricted Subsidiaries or against any of its or their respective
properties or revenues (a) with respect to any of the Loan Documents or any of
the transactions contemplated hereby or thereby or (b) which could reasonably be
expected to have a Material Adverse Effect.
4.7 No Default. Neither the Borrower nor any of its Restricted
Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect which could reasonably be expected to have a Material
Adverse Effect. After giving effect to the initial Extensions of Credit and the
application of the proceeds thereof, no Default or Event of Default has occurred
and is continuing.
4.8 No Burdensome Restrictions. No Requirement of Law or
Contractual Obligation of the Borrower or any of its Restricted Subsidiaries
could reasonably be expected to have a Material Adverse Effect.
4.9 Taxes. Each of the Borrower and its Restricted
Subsidiaries has filed or caused to be filed all tax returns which, to the
knowledge of the Borrower, are required to be filed and has paid all taxes shown
to be due and payable on said returns or on any assessments made against it or
any of its property and all other taxes, fees or other charges imposed on it or
any of its property by any Governmental Authority (other than any such taxes,
fees or other charges (i) the amount or validity of which are then being
contested in good faith by appropriate proceedings and with respect to which
reserves in conformity with GAAP have been provided on the books of the Borrower
or its Subsidiaries, as the case may be, or (ii) which, if not paid, could
reasonably be expected to have a Material Adverse Effect); no tax Lien has been
filed, and, to the knowledge of the Borrower, no claim is being asserted, with
respect to any such tax, fee or other charge (other than with respect to any
such tax, fee or other charge the amount or validity of which is then being
contested in good faith by appropriate proceedings and with respect to which
reserves in conformity with GAAP have been provided on the books of the Borrower
or its Subsidiaries, as the case may be) which could reasonably be expected to
have a Material Adverse Effect.
4.10 Federal Regulations. No part of the proceeds of any
Extension of Credit will be used for "purchasing" or "carrying" any "margin
stock" within the respective meanings of each of the quoted terms under
Regulation U of the Board of Governors as now and from time to time hereafter in
effect. If requested by any Lender or the Administrative Agent, the Borrower
will furnish to the Administrative Agent and each Lender a statement to the
foregoing effect in conformity with the requirements of FR Form G-1 or FR Form
U-1 referred to in said Regulation U.
4.11 ERISA. Neither a Reportable Event nor an "accumulated
funding deficiency" (within the meaning of Section 412 of the Code or Section
302 of ERISA) which could reasonably be expected to have a Material Adverse
Effect has occurred during the five-year period prior to the date on
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which this representation is made or deemed made with respect to any Plan. Each
Plan has complied in all material respects with the applicable provisions of
ERISA and the Code, except where the failure to so comply could not reasonably
be expected to have a Material Adverse Effect. No termination of a Single
Employer Plan has occurred, except where such a termination could not reasonably
be expected to have a Material Adverse Effect, and no Lien in favor of the PBGC
or a Plan has arisen, during such five-year period. The present value of all
accrued benefits under each Single Employer Plan (based on those assumptions
used to fund such Plan) did not, as of the last annual valuation date prior to
the date on which this representation is made or deemed made, exceed the value
of the assets of such Plan allocable to such accrued benefits, except to the
extent any such excess (individually or in the aggregate) could not reasonably
be expected to have a Material Adverse Effect. Neither the Borrower nor any
Commonly Controlled Entity has had a complete or partial withdrawal from any
Multiemployer Plan, except where such withdrawal could not reasonably be
expected to have a Material Adverse Effect, and neither the Borrower nor any
Commonly Controlled Entity would become subject to any liability under ERISA if
the Borrower or any such Commonly Controlled Entity were to withdraw completely
from all Multiemployer Plans as of the valuation date most closely preceding the
date on which this representation is made or deemed made, except where such
liability could not reasonably be expected to have a Material Adverse Effect. No
such Multiemployer Plan is in a Reorganization or Insolvency which could
reasonably be expected to have a Material Adverse Effect.
4.12 Investment Company Act; Other Regulations. The Borrower
is not an "investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.
To the best knowledge of the Borrower, the Borrower is not subject to regulation
under any federal or state statute or regulation (other than Regulation X of the
Board of Governors) which limits its ability to incur Indebtedness.
4.13 Subsidiaries. Schedule 4.13 sets forth all the
Subsidiaries of the Borrower at the date hereof.
4.14 Environmental Matters. To the best knowledge of the
Borrower:
(a) The facilities and properties owned or operated by the
Borrower or any of its Restricted Subsidiaries (the "Properties") do
not contain, and have not previously contained, any Materials of
Environmental Concern in amounts or concentrations or under such
conditions which (i) constitute or constituted a violation of, or (ii)
could reasonably be expected to give rise to liability under, any
Environmental Law, except in either case insofar as such violation or
liability, or any aggregation thereof, could not reasonably be expected
to have a Material Adverse Effect.
(b) The Properties and all operations at the Properties are in
compliance, and have within the periods covered by the applicable
statute of limitations been in compliance, in all material respects
with all applicable Environmental Laws, and there is no contamination
at, under or about the Properties or violation of any Environmental Law
with respect to the Properties or the business operated by the Borrower
or any of its Restricted Subsidiaries (the "Business") which could
reasonably be expected to have a Material Adverse Effect.
(c) Neither the Borrower nor any of its Subsidiaries has
received any notice of violation, alleged violation, non-compliance,
liability or potential liability regarding environmental matters or
compliance with Environmental Laws with regard to any of the Properties
or the Business, nor does the Borrower have knowledge or reason to
believe that any such notice will be received or is being threatened,
except insofar as such notice or threatened notice, or any aggregation
<PAGE> 48
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thereof, does not involve a matter or matters that could reasonably be
expected to have a Material Adverse Effect.
(d) Materials of Environmental Concern have not been
transported or disposed of from the Properties in violation of, or in a
manner or to a location which could reasonably be expected to give rise
to liability under, any Environmental Law, nor have any Materials of
Environmental Concern been generated, treated, stored or disposed of
at, on or under any of the Properties in violation of, or in a manner
that could reasonably be expected to give rise to liability under, any
applicable Environmental Law except insofar as any such violation or
liability referred to in this paragraph, or any aggregation thereof,
could not reasonably be expected to have a Material Adverse Effect.
(e) No judicial proceeding or governmental or administrative
action is pending or threatened under any Environmental Law to which
the Borrower or any Restricted Subsidiary is or will be named as a
party with respect to the Properties or the Business, nor are there any
consent decrees or other decrees, consent orders, administrative orders
or other orders, or other administrative or judicial requirements
outstanding under any Environmental Law with respect to the Properties
or the Business except insofar as such proceeding, action, decree,
order or other requirement, or any aggregation thereof, could not
reasonably be expected to have a Material Adverse Effect.
(f) There has been no release or threat of release of
Materials of Environmental Concern at or from the Properties, or
arising from or related to the operations of the Borrower or any
Restricted Subsidiary in connection with the Properties or otherwise in
connection with the Business, in violation of or in amounts or in a
manner that could reasonably give rise to liability under Environmental
Laws except insofar as any such violation or liability referred to in
this paragraph, or any aggregation thereof, could not reasonably be
expected to have a Material Adverse Effect.
4.15 Ownership of Property; Liens. Each of the Borrower and
each Restricted Subsidiary has good title in fee simple to, or valid ground
leasehold interests in, their respective material real properties and has good
title in fee simple to their other owned real property that is material to the
operation of their respective businesses, subject to defects in title and
leasehold and other interests which would not have a Material Adverse Effect,
and none of such property is subject to any Lien other than Liens permitted
under subsection 7.4.
4.16 Intellectual Property. The Borrower and each of its
Restricted Subsidiaries owns, or is licensed to use, all trademarks, tradenames,
copyrights, technology, know-how and processes necessary for the conduct of its
business as currently conducted except for those the failure to own or license
which could not reasonably be expected to have a Material Adverse Effect (the
"Intellectual Property"). Except as set forth on Schedule 4.16, no claim has
been asserted and is pending by any Person challenging or questioning the use of
any such Intellectual Property or the validity or effectiveness of any such
Intellectual Property, which could reasonably be expected to have a Material
Adverse Effect, nor does the Borrower know of any valid basis for any such
claim. Except as set forth on Schedule 4.16, the use of such Intellectual
Property by the Borrower and its Restricted Subsidiaries does not infringe on
the rights of any Person, except for such claims and infringements that, in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
4.17 Continuing Letters of Credit. Schedule 4.17 is a true and
complete list, by reference to the aggregate face amounts of letters of credit
issued by the Persons listed thereon that are
<PAGE> 49
44
also Lenders (but which are not designated as Issuing Banks pursuant to clause
(a) or the last sentence of the definition of Issuing Bank) of letters of credit
issued by such Persons outstanding as of the dates set forth in such Schedule.
4.18 Solvency. As of the Effective Date and each date on which
an Extension of Credit is made hereunder, after giving effect to the
transactions contemplated to occur on the Effective Date or on such other date,
the Borrower is Solvent.
4.19 Purpose of Loans. The proceeds of the Revolving Credit
Loans, Swing Line Loans and CAF Advances, if any, shall be used to refinance
certain existing indebtedness of the Borrower and for general corporate
purposes.
4.20 Accuracy of Information. All statements and other
information (other than statements and information constituting projections)
contained in any written documents or other materials provided to the
Administrative Agent and the Lenders by the Borrower, including all such
statements and other information contained in the Preliminary Confidential
Information Memorandum dated October 1999 (as supplemented through the date
hereof, the "Information Memorandum"), are, when taken as a whole, correct in
all material respects and do not contain any untrue statements of a material
fact or omit to state a material fact necessary in order to make the statements
contained therein not materially misleading in light of the circumstances under
which such statements were made. All statements and other information
constituting projections which are contained in any written documents or other
materials provided to the Administrative Agent and the Lenders by the Borrower,
including the Information Memorandum, were prepared based on good faith
estimates and assumptions of the Borrower believed to be reasonable at the time
such projections were prepared.
4.21 Year 2000 Matters. Any material reprogramming required to
permit the proper functioning (but only to the extent that such proper
functioning would otherwise be impaired by the occurrence of the year 2000) with
the advent of the year 2000 of material computer systems and other material
equipment containing embedded microchips, in either case owned or operated by
the Borrower or any of its Subsidiaries (including any such systems and other
equipment supplied by others, but not including such systems or other equipment
used by others, with which the computer systems of the Borrower or any of its
Subsidiaries interface), and the testing of all such systems and other equipment
as so reprogrammed, could not reasonably be expected to have a Material Adverse
Effect. The costs to the Borrower and its Subsidiaries that have not been
incurred as of the date hereof for such reprogramming and testing could not
reasonably be expected to result in a Default or Event of Default or to have a
Material Adverse Effect.
SECTION 5. CONDITIONS
5.1 Conditions to Effectiveness. This agreement shall become
effective upon the satisfaction or waiver of the following conditions:
(a) Execution of Loan Documents and Addenda. The
Administrative Agent shall have received (i) this Agreement, executed
and delivered by a duly authorized officer of the Borrower, with a
counterpart for the Administrative Agent and each Lender, (ii) an
executed Addendum (or a copy thereof by facsimile transmission) from
each Person listed on Schedule 1.1(a), provided, that, notwithstanding
the foregoing, in the event that an Addendum has not been duly executed
and delivered by each Person listed on Schedule 1.1(a) on the date
(which shall be no earlier than the date hereof) on which this
Agreement shall have been executed and delivered by each of the
<PAGE> 50
45
Borrower and the Administrative Agent, the condition set forth in this
subsection 5.1(a)(ii) shall, subject to satisfaction of the other
conditions precedent set forth in this subsection 5.1, nevertheless be
satisfied on such date with respect to those Persons which have
executed and delivered an Addendum on or before such date if on such
date the Borrower and the Administrative Agent shall have designated
one or more banks, financial institutions or other entities
("Designated Lenders") to assume, in the aggregate, all of the
Revolving Credit Commitments which would have been held by the Persons
listed on Schedule 1.1(a) (the "Non-Executing Persons") which have not
so executed an Addendum (subject to each such Designated Lender's prior
written consent in its sole discretion and its execution of an
Addendum) (Schedule 1.1(a) shall automatically be deemed to be amended
to reflect the respective Revolving Credit Commitments of the
Designated Lenders and the omission of the Non-Executing Persons as
Lenders hereunder) and (iii) the Subsidiaries Guarantee, executed and
delivered by a duly authorized officer of each Subsidiary Guarantor.
(b) Closing Certificate. The Administrative Agent shall have
received, with a copy for each Lender, a certificate of the Borrower,
dated the Effective Date, substantially in the form of Exhibit H, with
appropriate insertions and attachments, satisfactory in form and
substance to the Administrative Agent, executed by the President or any
Vice President and the Secretary or any Assistant Secretary of the
Borrower.
(c) Borrower Incumbency Certificate. The Administrative Agent
shall have received, with a copy for each Lender, a certificate of the
Borrower, dated the Effective Date, as to the incumbency and signature
of the officers of the Borrower executing any Loan Document
satisfactory in form and substance to the Administrative Agent,
executed by the President or any Vice President and the Secretary or
any Assistant Secretary of the Borrower.
(d) Subsidiary Incumbency Certificates. The Administrative
Agent shall have received, with a copy for each Lender, a certificate
of each Restricted Subsidiary of the Borrower which is a party to a
Loan Document, dated the Effective Date, as to the incumbency and
signature of the officers of such Subsidiary acknowledging and
consenting to the execution and delivery of this Agreement by the
Borrower, satisfactory in form and substance to the Administrative
Agent, executed by the President or any Vice President and the
Secretary or any Assistant Secretary of such Subsidiary.
(e) Legal Opinions. The Administrative Agent shall have
received, with a copy for each Lender, the following executed legal
opinions:
(i) the executed legal opinion of Skadden,
Arps, Slate, Meagher & Flom LLP, counsel to the Borrower and
the other Loan Parties, substantially in the form of Exhibit
I-1; and
(ii) the executed legal opinion of Anthony N.
Palizzi, general counsel of the Borrower, substantially in the
form of Exhibit I-2; and
(iii) the executed legal opinion of Simpson
Thacher & Bartlett, counsel to the Administrative Agent and
the Lenders, substantially in the form of Exhibit I-3.
Each such legal opinion shall cover such matters incident to the
transactions contemplated by this Agreement as the Administrative Agent
may reasonably require.
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46
(f) Termination of Existing Credit Agreement. The
Administrative Agent shall have received evidence satisfactory to it
that the Existing Credit Agreement has been terminated and all loans
outstanding, interest thereon and other amounts due and payable
thereunder shall have been repaid in full.
(g) Additional Matters. All corporate and other proceedings,
and all documents, instruments and other legal matters in connection
with the transactions contemplated by this Agreement and the other Loan
Documents shall be reasonably satisfactory in form and substance to the
Administrative Agent, and the Administrative Agent shall have received
such other documents and legal opinions in respect of any aspect or
consequence of the transactions contemplated hereby or thereby as it
shall reasonably request.
5.2 Conditions to Each Extension of Credit. The agreement of
each Lender to make any Extension of Credit requested to be made by it on any
date (including, without limitation, its initial Extension of Credit) is subject
to the satisfaction of the following conditions precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by the Loan Parties in or pursuant
to the Loan Documents shall be true and correct in all material
respects on and as of such date as if made on and as of such date.
(b) No Default. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the
Extension of Credit requested to be made on such date.
Each Extension of Credit to the Borrower hereunder shall constitute a
representation and warranty by the Borrower as of the date thereof that the
conditions contained in this subsection have been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Revolving
Credit Commitments remain in effect or any Letter of Credit remains outstanding
or any amount is owing to any Lender or the Administrative Agent hereunder or
under any other Loan Document, the Borrower shall and (except in the case of
delivery of financial information, reports and notices) shall cause each of its
Restricted Subsidiaries to:
6.1 Financial Statements. Furnish to the Administrative Agent
with a copy for each Lender:
(a) as soon as available, but in any event within 95 days
after the end of each Fiscal Year of the Borrower, a copy of the
consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as at the end of such year and the related consolidated
statements of income and retained earnings and of cash flows for such
year, setting forth in each case in comparative form the figures as of
the end of and for the previous Fiscal Year, reported on without a
qualification arising out of the scope of the audit, by
PriceWaterhouseCoopers LLP or other independent certified public
accountants of nationally recognized standing, together with a copy of
the Borrower's Form 10-K filed with the SEC for such Fiscal Year; and
(b) as soon as available, but in any event not later than 50
days after the end of each of the first three quarterly periods of each
Fiscal Year of the Borrower, the unaudited consolidated balance sheet
of the Borrower and its Consolidated Subsidiaries as at the end of such
quarter and
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47
the related unaudited consolidated statements of income and retained
earnings and of cash flows of the Borrower and its Consolidated
Subsidiaries for such quarter and the portion of the Fiscal Year
through the end of such quarter, setting forth in each case in
comparative form the figures for the previous Fiscal Year as set forth
in the Borrower's Form 10-Q filed with the SEC for such quarterly
period, certified by a Responsible Officer as being fairly stated in
all material respects (subject to normal year-end audit adjustments).
All such financial statements shall be complete and correct in all material
respects (subject to, in the case of the financial statements referred to in
paragraph (b) above, normal year-end adjustments) and shall be prepared in
reasonable detail and in accordance with GAAP applied consistently throughout
the periods reflected therein and with prior periods (except as approved by such
accountants or officer, as the case may be, and disclosed therein).
6.2 Certificates; Other Information. Furnish to the
Administrative Agent with a copy for each Lender:
(a) concurrently with the delivery of the financial statements
referred to in subsection 6.1(a), a certificate of the independent
certified public accountants reporting on such financial statements
stating that in making the examination necessary therefor no knowledge
was obtained of any Default or Event of Default, except as specified in
such certificate;
(b) concurrently with the delivery of the financial statements
referred to in subsections 6.1(a) and (b), a certificate of a
Responsible Officer (i) stating that such Responsible Officer has
obtained no knowledge of any Default or Event of Default with respect
to the period covered by such financial statements except as specified
in such certificate and (ii) setting forth, in reasonable detail, a
calculation of the financial covenants set forth in subsection 7.1 for
the period corresponding to such financial statements;
(c) not later than 90 days after the beginning of each Fiscal
Year of the Borrower, a copy of the projections by the Borrower of the
operating budget and cash flow budget of the Borrower and its
Subsidiaries for such Fiscal Year, such projections to be accompanied
by a certificate of a Responsible Officer to the effect that such
projections have been prepared on the basis of assumptions believed to
have been reasonable when made;
(d) promptly after the same are sent, copies of all financial
statements and reports which the Borrower sends to its stockholders,
and promptly after the same are filed, copies of all reports on Form
8-K which the Borrower may make to, or file with, the SEC; and
(e) promptly, such additional financial and other information
as the Administrative Agent (on behalf of itself or any Lender) may
from time to time reasonably request.
6.3 Payment of Obligations. Pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all its obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves in conformity with GAAP with respect thereto have been provided on
the books of the Borrower or its Subsidiaries, as the case may be, and except
where the failure to so pay, discharge or otherwise satisfy such obligation
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
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6.4 Conduct of Business and Maintenance of Existence. Continue
to engage in business of the same general type as now conducted by the Borrower
and its Restricted Subsidiaries and preserve, renew and keep in full force and
effect its corporate existence and take all reasonable action to maintain all
rights, privileges and franchises necessary or desirable in the normal conduct
of its business except as otherwise permitted pursuant to subsection 7.5 and
except where the failure to maintain such rights, privileges and franchises
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect; comply with all Contractual Obligations and
Requirements of Law except to the extent that failure to comply therewith could
not, individually or in the aggregate, be reasonably expected to have a Material
Adverse Effect.
6.5 Maintenance of Property; Insurance. Keep its property
necessary in its business in good working order and condition, ordinary wear and
tear excepted, if the failure to do so could reasonably be expected to have a
Material Adverse Effect; maintain with financially sound and reputable insurance
companies insurance on all its property in at least such amounts and against at
least such risks as are usually insured against in the same general area by
similar companies of comparable size engaged in the same or a similar business
and owning or operating similar properties in localities where the Borrower and
its Restricted Subsidiaries operate and furnish upon the written request of the
Administrative Agent information as to the insurance carried.
6.6 Inspection of Property; Books and Records; Discussions.
Keep proper books of records and account in which full, true and correct entries
in conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities; and permit
representatives of the Administrative Agent, at the request of any Lender, to
visit and inspect any of its properties and examine and make abstracts from any
of its books and records at any reasonable time and as often as may reasonably
be desired and to discuss the business, operations, properties and financial and
other condition of the Borrower and its Restricted Subsidiaries with officers
and employees of the Borrower and its Restricted Subsidiaries and in the
presence of a Responsible Officer with its independent certified public
accountants.
6.7 Notices. Promptly give notice to the Administrative Agent
(which shall promptly give notice thereof to each Lender) of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Restricted Subsidiaries which
could reasonably be expected to have a Material Adverse Effect or (ii)
litigation, investigation or proceeding which may exist at any time
between the Borrower or any of its Subsidiaries and any Governmental
Authority, which (A) in the case of any such litigation, investigation
or proceeding in the ordinary course of business, could reasonably be
expected to have a Material Adverse Effect and (B) in the case of any
other litigation, investigation or proceeding, if adversely determined,
could reasonably be expected to have a Material Adverse Effect;
(c) any litigation or proceeding affecting the Borrower or any
of its Subsidiaries in which the amount involved is $50,000,000 or more
to the extent not covered by insurance or in which injunctive or
similar relief is sought which (A) in the case of any such litigation,
or proceeding in the ordinary course of business, could reasonably be
expected to have a Material Adverse Effect and (B) in the case of any
other litigation or proceeding, if adversely determined, could
reasonably be expected to have a Material Adverse Effect; and
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49
(d) the following events, as soon as possible and in any event
within 30 days after the Borrower knows or has reason to know thereof:
(i) the occurrence or expected occurrence of any Reportable Event with
respect to any Plan, a failure to make any required contribution to a
Plan, the creation of any Lien in favor of the PBGC or a Plan or any
withdrawal from, or the termination, Reorganization or Insolvency of,
any Multiemployer Plan which, in any case, could reasonably be expected
to have a Material Adverse Effect or (ii) the institution of
proceedings or the taking of any other action by the PBGC or the
Borrower or any Commonly Controlled Entity or any Multiemployer Plan
with respect to the withdrawal from, or the termination, Reorganization
or Insolvency of, any Plan which, in any case, could reasonably be
expected to have a Material Adverse Effect.
Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Borrower proposes to take with respect thereto.
6.8 Environmental Laws. (a) Comply with all applicable
Environmental Laws and obtain and comply in all material respects with and
maintain any and all licenses, approvals, notifications, registrations or
permits required by applicable Environmental Laws except in any such case to the
extent that failure to do so could not be reasonably expected to have a Material
Adverse Effect.
(b) Conduct and complete all investigations, studies, sampling
and testing, and all remedial, removal and other actions required under
Environmental Laws, except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect, and promptly comply in all material
respects with all lawful orders and directives of all Governmental Authorities
regarding Environmental Laws except to the extent that the same are being
contested in good faith by appropriate proceedings and the pendency of such
proceedings could not be reasonably expected to have a Material Adverse Effect.
6.9 Additional Subsidiaries. With respect to any Person that,
subsequent to the Effective Date, becomes a Domestic Subsidiary, promptly cause
such new Domestic Subsidiary to become a party to the Subsidiaries Guarantee
pursuant to documentation which is in form and substance satisfactory to the
Administrative Agent.
SECTION 7. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Revolving
Credit Commitments remain in effect or any Letter of Credit remains outstanding
or any amount is owing to any Lender or the Administrative Agent hereunder or
under any other Loan Document, the Borrower shall not, and (except in the case
of subsection 7.1) shall not permit any of its Restricted Subsidiaries to,
directly or indirectly:
7.1 Financial Condition Covenants.
(a) Fixed Charge Coverage Ratio. Permit the Fixed Charge
Coverage Ratio as of the last day of any fiscal quarter to be less than
2.00 to 1.00.
(b) Leverage Ratio. Permit at any time the Leverage Ratio to
exceed 0.45 to 1.00.
7.2 Limitation on Liens. Create, incur, assume or suffer to
exist any Lien upon any of its property, assets or revenues, whether now owned
or hereafter acquired, except for:
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(a) Liens for taxes not yet due or which are being contested
in good faith by appropriate proceedings, provided that adequate
reserves with respect thereto are maintained on the books of the
Borrower or its Subsidiaries, as the case may be, in conformity with
GAAP (or, in the case of Significant Foreign Subsidiaries, generally
accepted accounting principles in effect from time to time in their
respective jurisdictions of incorporation);
(b) carriers', warehousemen's, mechanics', landlord's,
materialmen's, repairmen's or other like Liens arising in the ordinary
course of business securing amounts which are not overdue for a period
of more than 60 days or which are being contested in good faith by
appropriate proceedings;
(c) (i) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security
legislation and deposits securing liability to insurance carriers under
insurance or self-insurance arrangements and (ii) Liens granted to
banks in the ordinary course of business in connection with deposit,
disbursement or concentration accounts (other than in connection with
borrowed money) maintained with such banks on funds and other items in
such accounts;
(d) Liens granted and deposits made to secure the performance
of bids, trade contracts and real estate related contracts entered into
in the ordinary course of business (in each case, other than for
borrowed money), utilities, leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(e) easements, rights-of-way, restrictions, subdivisions,
parcelizations and other similar encumbrances incurred in the ordinary
course of business which do not in any case materially detract from the
value of the property subject thereto or materially interfere with the
ordinary conduct of the business of the Borrower or such Restricted
Subsidiary;
(f) Liens in existence on the date hereof (or arising at any
time during the period from the date hereof through the Effective Date)
and (i) listed on Schedule 7.2(f) securing Indebtedness or other
obligations described on such Schedule or (ii) otherwise securing
Indebtedness or other obligations not exceeding $10,000,000 in the
aggregate;
(g) Liens securing Indebtedness of the Borrower and its
Restricted Subsidiaries, provided that (i) such Liens do not at any
time encumber any property other than the property financed by such
Indebtedness, it being understood that Indebtedness will be considered
to have financed property as long as such Indebtedness is incurred
within 360 days of the acquisition or completion of construction of
such property and does not exceed the purchase price thereof and (ii)
the amount of Indebtedness secured thereby is not increased;
(h) Liens on assets of any Significant Foreign Subsidiary
securing Indebtedness and other obligations of such Significant Foreign
Subsidiary;
(i) Liens on the property or assets of a corporation which
becomes a Restricted Subsidiary after the Effective Date and Liens
existing on assets acquired, constructed or completed by the Borrower
or a Restricted Subsidiary after the Effective Date, provided that (i)
such Liens existed at the time such corporation became a Restricted
Subsidiary or such asset was acquired, constructed or completed and
were not created in anticipation thereof, (ii) any such Lien cover only
the property or assets of such corporation or the assets being
acquired,
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51
constructed or completed, as the case may be, and, in any case, is not
spread to cover any property or assets of such corporation after the
time such corporation becomes a Restricted Subsidiary or such asset is
acquired, constructed or completed, and (iii) the amount of
Indebtedness secured thereby is not increased;
(j) Liens securing Indebtedness which refunds, replaces or
refinances Indebtedness secured by a Lien as of the date hereof or
permitted under subsection 7.2(g) or 7.2(i); provided that no such Lien
is spread to cover additional property;
(k) Liens (not otherwise permitted hereunder) which secure
obligations not exceeding (as to the Borrower and all its Restricted
Subsidiaries) $500,000,000 in aggregate principal or face amount at any
time outstanding;
(l) Liens created in favor of any Person who delivers goods
under a consignment to the Borrower or a Restricted Subsidiary; and
(m) Liens on accounts receivable or credit card receivables of
the Borrower and its Restricted Subsidiaries which secure Indebtedness
to finance the acquisition thereof.
7.3 Limitation on Fundamental Changes. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets except:
(a) any Restricted Subsidiary of the Borrower may be merged or
consolidated with or into the Borrower (provided that the Borrower
shall be the continuing or surviving corporation) or with or into any
one or more wholly owned Restricted Subsidiaries of the Borrower
(provided that the wholly owned Restricted Subsidiary or Restricted
Subsidiaries shall be the continuing or surviving corporation and
provided that if one of the parties to such transaction is a Subsidiary
Guarantor then the continuing or surviving corporation shall be a
Subsidiary Guarantor);
(b) any Restricted Subsidiary may convey, sell, lease,
transfer, assign or otherwise dispose of any or all of its assets (upon
voluntary liquidation or otherwise) to the Borrower or any other wholly
owned Restricted Subsidiary of the Borrower (provided that if such
selling Restricted Subsidiary is a Subsidiary Guarantor then the
acquiring Restricted Subsidiary shall be a Subsidiary Guarantor); and
(c) any Restricted Subsidiary may be merged or consolidated
with or into, or convey, sell, lease, transfer, assign or otherwise
dispose of any or all of its assets to, any Person to the extent that
the sale or other disposition of the assets of such Restricted
Subsidiary would be permitted under subsection 7.4.
7.4 Limitation on Sale of Assets. Convey, sell, lease, assign,
transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, receivables and leasehold interests), whether
now owned or hereafter acquired, or, in the case of any Restricted Subsidiary,
issue or sell any shares of such Restricted Subsidiary's Capital Stock to any
Person (other than the Borrower or any wholly owned Subsidiary Guarantor or, if
such Restricted Subsidiary is not a wholly-owned Restricted Subsidiary, pro rata
to the owners of the equity securities of such Restricted Subsidiary), except:
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(a) the sale or other disposition of obsolete, surplus or worn
out property in the ordinary course of business or in connection with
real estate development activities;
(b) the sale of inventory in the ordinary course of business
(including sales of inventory in connection with closed stores and
sales of discontinued inventory) and transfers of inventory and
equipment among the Borrower and the Subsidiary Guarantors pursuant to
reasonable business requirements;
(c) (i) the sale or discount of accounts receivable or credit
card receivables in connection with the compromise or collection
thereof or pursuant to the Existing Receivables Transactions or any
other Securitization Transactions and (ii) sales or other dispositions
of Cash Equivalents in the ordinary course of business;
(d) as permitted by subsection 7.3(b);
(e) sales and dispositions of real property and related assets
in connection with (i) Permitted Sale-Leasebacks or (ii) Securitization
Transactions; provided that, in the opinion of a Responsible Officer,
the purchase price with respect to each such sale or disposition
represents the fair value of the assets so sold;
(f) the transactions described on Schedule 7.4(f) or any sale
or other disposition of any asset received in exchange for any asset
described on such Schedule in connection with any transaction described
on such Schedule (the "Scheduled Asset Sales"), provided that, in the
opinion of a Responsible Officer the purchase price with respect to
each such sale represents the fair value of the assets so sold;
(g) the sale or other disposition of any property (other than
any sale or other disposition which is otherwise permitted under this
subsection 7.4), provided that (i) at the time of and after giving
effect to such sale or disposition, the aggregate book value of all
assets so sold or disposed of in any Fiscal Year shall not exceed an
amount equal to 10% of Shareholders' Equity at the beginning of such
Fiscal Year and (ii) in the opinion of a Responsible Officer the
purchase price with respect to such sale or other disposition (except
with respect to sales or other dispositions the aggregate purchase
price with respect to which does not exceed $10,000,000) represents the
fair value of the assets so sold or disposed of; and
(h) subject to the other terms and provisions hereof, leases
or subleases (or assignment of leases) of real property in the ordinary
course of business.
7.5 Limitation on Dividends. Declare or pay any dividend
(other than dividends payable solely in common stock of the Borrower) on, or
make any payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or other
acquisition of, any shares of any class of Capital Stock of the Borrower or any
warrants or options to purchase any such Capital Stock, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either directly
or indirectly, whether in cash or property or in obligations of the Borrower or
any Restricted Subsidiary or engage in any transaction that has a substantially
similar effect (such declarations, payments, setting apart, purchases,
redemptions, defeasances, retirements, acquisitions and distributions and
similar transactions being herein called "Restricted Payments"), except that:
(a) the Borrower may purchase options or exchange
then-existing employee stock options for options to acquire the same
from directors, officers and employees of the Borrower
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and its Restricted Subsidiaries and may purchase Capital Stock in
connection with any employment or severance arrangements;
(b) so long as after giving effect thereto no Default or Event
of Default has occurred and is continuing, the Borrower may make
Restricted Payments with respect to its Capital Stock, provided that no
Restricted Payment may be made pursuant to this paragraph if, after
giving effect thereto, the aggregate amount of all Restricted Payments
made pursuant to this paragraph would exceed 50% of the Consolidated
Net Income of the Borrower for the period (taken as one accounting
period) from the first day of the fiscal quarter in which the Effective
Date occurs through the last day of the most recent fiscal quarter
ended prior to the date such Restricted Payment is made;
(c) so long as after giving effect thereto no Default or Event
of Default has occurred and is continuing, the Borrower may repurchase
up to $1,500,000,000 of Capital Stock of the Borrower pursuant to stock
repurchase programs;
(d) so long as after giving effect thereto no Default or Event
of Default has occurred and is continuing, the Borrower may redeem the
Convertible Preferred Securities for cash or common stock of the
Borrower; and
(e) so long as after giving effect thereto no Default or Event
of Default has occurred and is continuing, the Borrower may purchase
the Capital Stock of the Borrower with proceeds from the sale or
issuance of its Capital Stock.
7.6 Limitation on Capital Expenditures and "Property held for
Resale". Make (by way of the acquisition of securities of a Person or otherwise)
any expenditure in respect of the purchase or other acquisition of fixed or
capital assets (excluding (i) any such asset acquired in connection with normal
replacement and maintenance programs properly charged to current operations but
including (ii) expenditures in respect of the construction or development of
"property held for resale") except for expenditures not exceeding
$1,800,000,000, in the aggregate for the Borrower and its Restricted
Subsidiaries during any Fiscal Year of the Borrower, provided that, (a) with
respect to any Fiscal Year, the Borrower and its Restricted Subsidiaries shall
be permitted to make additional capital expenditures in an amount not to exceed
the Additional Permitted Capital Expenditure Amount for such Fiscal Year and (b)
up to 100% of any amount permitted to be expended in any Fiscal Year (after
giving effect to this proviso) if not so expended in the Fiscal Year for which
it is permitted above, may be carried over for expenditure in the next following
Fiscal Year.
7.7 Limitation on Transactions with Affiliates. Except as set
forth on Schedule 7.7, enter into any transaction, including, without
limitation, any purchase, sale, lease or exchange of property or the rendering
of any service, with any Affiliate unless such transaction is (a) otherwise
permitted under this Agreement and (b) upon fair and reasonable terms no less
favorable to the Borrower or such Restricted Subsidiary, as the case may be,
than it would obtain in a comparable arm's length transaction with a Person
which is not an Affiliate.
7.8 Limitation on Sales and Leasebacks. Enter into any
arrangement with any Person providing for the leasing by the Borrower or any
Restricted Subsidiary of real or personal property which has been or is to be
sold or transferred by the Borrower or such Restricted Subsidiary to such Person
or to any other Person to whom funds have been or are to be advanced by such
Person on the security of such property or rental obligations of the Borrower or
such Restricted Subsidiary (such arrangement, a "Sale-Leaseback") except at
market rates ("Permitted Sale-Leasebacks"). For the avoidance of doubt, Sale-
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Leasebacks that result in a Financing Lease shall be treated as Indebtedness for
all purposes of this Agreement.
7.9 Negative Pledge Clauses. Enter into or suffer to exist or
become effective any agreement that prohibits or limits the ability of the
Borrower or any of its Restricted Subsidiaries to create, incur, assume or
suffer to exist as security for the obligations hereunder any Lien upon any of
its inventory, whether now owned or hereafter acquired, other than (a) this
Agreement and the other Loan Documents, (b) the 364-Day Credit Agreement, (c)
the GNB Credit Agreement (which shall permit the obligations hereunder to be
secured so long as the obligations thereunder are secured on an equal and
ratable basis to the extent such equal and ratable treatment is required by the
terms thereof) and (d) any agreements governing any purchase money Liens or
Liens permitted under Section 7.2(d) (in which case, any prohibition or
limitation shall only be effective against the assets financed thereby).
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan
when due in accordance with the terms hereof; or the Borrower shall
fail to pay any Reimbursement Obligation within two Business Days after
such Reimbursement Obligation becomes due in accordance with the terms
hereof; or the Borrower shall fail to pay any interest on any Loan, or
any other amount payable hereunder, within five days after any such
interest or other amount becomes due in accordance with the terms
hereof; or
(b) Any representation or warranty made or deemed made by the
Borrower or any other Loan Party herein or in any other Loan Document
or which is contained in any certificate, document or financial or
other statement furnished by it at any time under or in connection with
this Agreement or any such other Loan Document shall prove to have been
incorrect in any material respect on or as of the date made or deemed
made; or
(c) The Borrower shall default in the observance or
performance of any agreement contained in Section 7; or
(d) The Borrower or any other Loan Party shall default in the
observance or performance of any other agreement contained in this
Agreement or any other Loan Document (other than as provided in
paragraphs (a) through (c) of this Section), and such default shall
continue unremedied for a period of 30 days after the earlier of (i)
the date upon which written notice thereof is given to the Borrower by
the Administrative Agent or the Majority Lenders or (ii) the date upon
which a Responsible Officer becomes aware of such default; or
(e) The Borrower or any of its Restricted Subsidiaries shall
(i) default in any payment of principal of or interest on any
Indebtedness (other than the Loans) or in the payment of any Guarantee
Obligation, beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness or Guarantee
Obligation was created; or (ii) default in the observance or
performance of any other agreement or condition relating to any such
Indebtedness or Guarantee Obligation or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event
shall occur or condition exist, the effect of which default or other
event or condition is to cause, or to permit the holder or holders of
such Indebtedness or beneficiary or beneficiaries of such Guarantee
Obligation (or a trustee or agent on behalf of such holder or holders
or beneficiary or beneficiaries) to cause, with the giving of
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notice if required (but after the expiration of all grace periods
applicable thereto), such Indebtedness to become due prior to its
stated maturity or such Guarantee Obligation to become payable;
provided, however, that no Default or Event of Default shall exist
under this paragraph unless the aggregate amount of Indebtedness and/or
Guarantee Obligations in respect of which any default or other event or
condition referred to in this paragraph shall have occurred shall be
equal to at least $100,000,000; or
(f) (i) The Borrower or any of its Significant Subsidiaries
shall commence any case, proceeding or other action (A) under any
existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to
it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its
debts, or (B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any
substantial part of its assets, or the Borrower or any of its
Significant Subsidiaries shall make a general assignment for the
benefit of its creditors; or (ii) there shall be commenced against the
Borrower or any of its Significant Subsidiaries any case, proceeding or
other action of a nature referred to in clause (i) above which (A)
results in the entry of an order for relief or any such adjudication or
appointment or (B) remains undismissed, undischarged or unbonded for a
period of 60 days; or (iii) there shall be commenced against the
Borrower or any of its Significant Subsidiaries any case, proceeding or
other action seeking issuance of a warrant of attachment, execution,
distraint or similar process against all or any substantial part of its
assets which results in the entry of an order for any such relief which
shall not have been vacated, discharged, or stayed or bonded pending
appeal within 60 days from the entry thereof; or (iv) the Borrower or
any of its Significant Subsidiaries shall take any action in
furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), or
(iii) above; or (v) the Borrower or any of its Significant Subsidiaries
shall generally not, or shall be unable to, or shall admit in writing
its inability to, pay its debts as they become due; or
(g) (i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the
Code) involving any Plan, (ii) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, shall exist
with respect to any Plan or any Lien in favor of the PBGC or a Plan
shall arise on the assets of the Borrower or any Commonly Controlled
Entity, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee
shall be appointed, to administer or to terminate, any Single Employer
Plan, which Reportable Event or commencement of proceedings or
appointment of a trustee is, in the reasonable opinion of the Majority
Lenders, likely to result in the termination of such Plan for purposes
of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for
purposes of Title IV of ERISA, (v) the Borrower or any Commonly
Controlled Entity shall, or in the reasonable opinion of the Majority
Lenders is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan or (vi) any other event or condition shall occur or
exist with respect to a Plan; and in each case in clauses (i) through
(vi) above, such event or condition, together with all other such
events or conditions, if any, could reasonably be expected to have a
Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against
the Borrower or any of its Restricted Subsidiaries involving in the
aggregate a liability (to the extent not paid or covered by insurance)
of $100,000,000 or more, and such judgments or decrees shall not have
been vacated, discharged, stayed or bonded pending appeal within 60
days from the entry thereof; or
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(i) (i) For any reason (other than any act on the part of the
Administrative Agent or any Lender) the Subsidiaries Guarantee ceases
to be or is not in full force and effect in any material respect and
such default shall continue unremedied for 30 days after the earlier of
receipt by the Borrower of notice of such default from the
Administrative Agent or actual knowledge of such default by a
Responsible Officer or (ii) the Borrower or any of its Restricted
Subsidiaries shall assert in writing that the Subsidiaries Guarantee
has ceased to be or is not in full force and effect; or
(j) (i) Any Person or "group" (within the meaning of Section
13(d) or 14(d) of the Securities Exchange Act of 1934, as amended) (A)
shall have acquired beneficial ownership of 33% or more of any
outstanding class of Capital Stock having ordinary voting power in the
election of directors of the Borrower or (B) shall obtain the power
(whether or not exercised) to elect a majority of the Borrower's
directors or (ii) the Board of Directors of the Borrower shall not
consist of a majority of Continuing Directors; "Continuing Directors"
shall mean the directors of the Borrower on the Effective Date and each
other director, if such other director's nomination for election to the
Board of Directors of the Borrower is recommended by a majority of the
then Continuing Directors;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) of this Section with respect to the
Borrower, automatically the Revolving Credit Commitments shall immediately
terminate and the Loans hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement (including, without limitation, all amounts
of L/C Obligations, whether or not the beneficiaries of the then outstanding
Letters of Credit shall have presented the documents required thereunder) shall
immediately become due and payable, and (B) if such event is any other Event of
Default, either or both of the following actions may be taken: (i) with the
consent of the Majority Lenders, the Administrative Agent may, or upon the
request of the Majority Lenders, the Administrative Agent shall, by notice to
the Borrower declare the Revolving Credit Commitments to be terminated
forthwith, whereupon the Revolving Credit Commitments shall immediately
terminate; and (ii) with the consent of the Majority Lenders, the Administrative
Agent may, or upon the request of the Majority Lenders, the Administrative Agent
shall, by notice to the Borrower, declare the Loans hereunder (with accrued
interest thereon) and all other amounts owing under this Agreement (including,
without limitation, all amounts of L/C Obligations, whether or not the
beneficiaries of the then outstanding Letters of Credit shall have presented the
documents required thereunder) to be due and payable forthwith, whereupon the
same shall immediately become due and payable. Except as expressly provided
above in this Section, presentment, demand, protest and all other notices of any
kind are hereby expressly waived.
With respect to all Letters of Credit with respect to which
presentment for honor shall not have occurred at the time of an acceleration
pursuant to this paragraph, the Borrower shall at such time deposit in a cash
collateral account opened by the Administrative Agent an amount equal to the
aggregate then undrawn and unexpired amount of such Letters of Credit. The
Borrower hereby grants to the Administrative Agent, for the benefit of each
Issuing Bank and the L/C Participants, a security interest in such cash
collateral to secure all obligations of the Borrower under this Agreement and
the other Loan Documents. Amounts held in such cash collateral account shall be
applied by the Administrative Agent to the payment of drafts drawn under such
Letters of Credit, and the unused portion thereof after all such Letters of
Credit shall have expired or been fully drawn upon, if any, shall be applied to
repay other obligations of the Borrower hereunder and under the other Loan
Documents. After all such Letters of Credit shall have expired or been fully
drawn upon, all Reimbursement Obligations shall have been satisfied and all
other obligations of the Borrower hereunder and under the other Loan Documents
shall have been paid in full, the balance, if any, in such cash collateral
account
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shall be returned to the Borrower. The Borrower shall execute and deliver to the
Administrative Agent, for the account of each Issuing Bank and the L/C
Participants, such further documents and instruments as the Administrative Agent
may reasonably request to evidence the creation and perfection of the security
interest in such cash collateral account.
SECTION 9. THE ADMINISTRATIVE AGENT
9.1 Appointment. Each Lender hereby irrevocably designates and
appoints the Administrative Agent as the agent of such Lender under this
Agreement and the other Loan Documents, and each Lender irrevocably authorizes
the Administrative Agent, in such capacity, to take such action on its behalf
under the provisions of this Agreement and the other Loan Documents and to
exercise such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Administrative Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender, 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 Administrative Agent.
9.2 Delegation of Duties. The Administrative Agent may
execute any of its duties under this Agreement and the other Loan Documents by
or through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any agents or
attorneys in-fact selected by it with reasonable care.
9.3 Exculpatory Provisions. Neither the Administrative Agent
nor any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except for its or such Person's own gross negligence or
willful misconduct) or (ii) responsible in any manner to any of the Lenders for
any recitals, statements, representations or warranties made by the Borrower or
any officer thereof contained in this Agreement or any other Loan Document or in
any certificate, report, statement or other document referred to or provided for
in, or received by the Administrative Agent under or in connection with, this
Agreement or any other Loan Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document or for any failure of the Borrower to perform its obligations hereunder
or thereunder. The Administrative Agent shall not be under any obligation to any
Lender 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 Borrower.
9.4 Reliance by Administrative Agent. The Administrative Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
Note, writing, resolution, notice, consent, certificate, affidavit, letter,
facsimile, telex or teletype message, statement, order 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, without limitation, counsel to the Borrower),
independent accountants and other experts selected by the Administrative Agent.
The Administrative Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless a written notice of assignment, negotiation or
transfer thereof shall have been filed with the Administrative Agent. The
Administrative Agent shall be fully justified in failing or refusing to take
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any action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of Lenders entitled to so act in accordance
with the terms of this Agreement as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders 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 Administrative Agent shall in all cases be fully protected
in acting, or in refraining from acting, under this Agreement and the other Loan
Documents in accordance with a request of Lenders entitled to so act in
accordance with the terms of this Agreement, and such request and any action
taken or failure to act pursuant thereto shall be binding upon all the Lenders
and all future holders of the Loans.
9.5 Notice of Default. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless the Administrative Agent has received notice from a
Lender or the Borrower referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a "notice of default". In the
event that the Administrative Agent receives such a notice, the Administrative
Agent shall promptly give notice thereof to the Lenders. The Administrative
Agent shall take such action with respect to such Default or Event of Default as
shall be reasonably directed by Lenders entitled to so act in accordance with
the terms of this Agreement; provided that unless and until the Administrative
Agent shall have received such directions, the Administrative Agent may (but
shall not be obligated to) take such action, or refrain from taking such action,
with respect to such Default or Event of Default as it shall deem advisable in
the best interests of the Lenders.
9.6 Non-Reliance on Administrative Agent and Other Lenders.
Each Lender expressly acknowledges that neither the Administrative Agent nor any
of its officers, directors, employees, agents, attorneys-in-fact or Affiliates
has made any representations or warranties to it and that no act by the
Administrative Agent hereafter taken, including any review of the affairs of the
Borrower, shall be deemed to constitute any representation or warranty by the
Administrative Agent to any Lender. Each Lender represents to the Administrative
Agent that it has, independently and without reliance upon the Administrative
Agent or any other Lender, and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, operations, property, financial and other condition and
creditworthiness of the Borrower and made its own decision to make its Loans
hereunder and enter into this Agreement. Each Lender also represents that it
will, independently and without reliance upon the Administrative Agent or any
other Lender, 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 investigation as it deems necessary to inform
itself as to the business, operations, property, financial and other condition
and creditworthiness of the Borrower. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of the Borrower which may come into
the possession of the Administrative Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates.
9.7 Indemnification. The Lenders agree to indemnify the
Administrative Agent in its capacity as such (to the extent not reimbursed by
the Borrower and without limiting the obligation of the Borrower to do so),
ratably according to their respective Voting Percentages in effect on the date
on which indemnification is sought, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Loans)
be imposed on, incurred by or asserted against the Administrative Agent in any
way relating to or arising out of, the
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Revolving Credit Commitments, this Agreement, any of the other Loan Documents or
any documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby or any action taken or omitted by
the Administrative Agent under or in connection with any of the foregoing;
provided that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the Administrative Agent's gross
negligence or willful misconduct. The agreements in this subsection shall
survive the payment of the Loans and all other amounts payable hereunder.
9.8 Administrative Agent in Its Individual Capacity. The
Administrative Agent and its Affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Borrower as though the
Administrative Agent were not the Administrative Agent hereunder and under the
other Loan Documents. With respect to the Loans made by it or any Letter of
Credit issued or participated in by it, the Administrative Agent shall have the
same rights and powers under this Agreement and the other Loan Documents as any
Lender and may exercise the same as though it were not the Administrative Agent,
and the terms "Lender" and "Lenders" shall include the Administrative Agent in
its individual capacity.
9.9 Successor Administrative Agent. The Administrative Agent
may resign as Administrative Agent upon 10 days' notice to the Borrower and the
Lenders. If the Administrative Agent shall resign as Administrative Agent under
this Agreement and the other Loan Documents, then the Majority Lenders shall
appoint from among the Lenders a successor agent for the Lenders, which
successor agent (provided that it shall have been approved by the Borrower),
shall succeed to the rights, powers and duties of the Administrative Agent
hereunder, provided, however, that no Lender shall be so appointed without the
consent thereto of such Lender. Effective upon such appointment and approval,
the term "Administrative Agent" shall mean such successor agent, and the former
Administrative Agent's rights, powers and duties as Administrative Agent shall
be terminated, without any other or further act or deed on the part of such
former Administrative Agent or any of the parties to this Agreement or any
holders of the Loans. After any retiring Administrative Agent's resignation as
Administrative Agent, the provisions of this Section 9 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement and the other Loan Documents.
SECTION 10. MISCELLANEOUS
10.1 Amendments and Waivers. Neither this Agreement nor any
other Loan Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
subsection. The Majority Lenders may, or, with the written consent of the
Majority Lenders, the Administrative Agent may, from time to time, (a) enter
into with the applicable Loan Party or Parties written amendments, supplements
or modifications hereto and to the other Loan Documents for the purpose of
adding, deleting or revising any provisions to this Agreement or the other Loan
Documents or changing in any manner the rights of the Lenders or of the Borrower
hereunder or thereunder or (b) waive, on such terms and conditions as the
Majority Lenders or the Administrative Agent, as the case may be, may specify in
such instrument, any of the requirements of this Agreement or the other Loan
Documents or any Default or Event of Default and its consequences; provided,
however, that no such waiver and no such amendment, supplement or modification
shall (i) reduce the amount or extend the scheduled date of maturity of any Loan
or of any installment thereof, or reduce the stated rate of any interest or fee
payable hereunder or extend the scheduled date of any payment thereof or
increase the amount or extend the expiration date of any Lender's Revolving
Credit Commitments, in each case without the consent of each Lender adversely
affected thereby, (ii) (A) amend, modify or waive any provision of this
subsection, release all or substantially all of the Subsidiary Guarantors from
their
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obligations under the Subsidiaries Guarantee or consent to the assignment or
transfer by the Borrower of any of its rights and obligations under this
Agreement and the other Loan Documents without the written consent of all the
Lenders, or (B) reduce the percentage specified in the definition of Majority
Lenders or Required Lenders without the written consent of all the Lenders,
(iii) amend, modify or waive any provision of subsections 2.6 through 2.13
without the consent of each Issuing Bank adversely affected in any material
respect thereby, (iv) amend, modify or waive any provision of subsections 2.18
or 2.19 without the consent of the Swing Line Lender or (v) amend, modify or
waive any provision of Section 9 without the written consent of the then
Administrative Agent. Any such waiver and any such amendment, supplement or
modification shall apply equally to each of the Lenders and shall be binding
upon the Borrower, the Lenders, the Administrative Agent and all future holders
of the Loans. In the case of any waiver, the Borrower, the Lenders, and the
Administrative Agent shall be restored to their former positions and rights
hereunder and under the other Loan Documents, and any Default or Event of
Default waived shall be deemed to be cured and not continuing; no such waiver
shall extend to any subsequent or other Default or Event of Default or impair
any right consequent thereon.
10.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
facsimile transmission) and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made (a) in the case of delivery by hand
(including by overnight courier), when delivered, (b) in the case of delivery by
mail, three days after being deposited in the mails, postage prepaid, or (c) in
the case of delivery by facsimile transmission, when sent and receipt has been
confirmed, addressed as follows in the case of the Borrower and the
Administrative Agent, and as set forth in Schedule 10.2 in the case of the other
parties hereto, or to such other address as may be hereafter notified by the
respective parties hereto:
The Borrower: Kmart Corporation
3100 West Big Beaver Road
Troy, Michigan 48084
(a) For all notices:
Attention: Treasurer
Fax: (248) 643-5398
(b) For notices other than pursuant to Section 2
Attention: Chief Financial Officer
Fax: (248) 643-5787
and
Attention: General Counsel
Fax: (248) 643-1054
<PAGE> 66
61
The Administrative
Agent: The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Attention: Barry Bergman
Fax: (212) 270-5646
With a copy to:
<PAGE> 67
62
Chase Agent Bank Services
140 East 45th Street, 29th Floor
New York, New York 10017
Attention: Janet Belden
Fax: (212) 622-0854
provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders pursuant to subsection 2.2, 2.4, 2.6, 2.15, 2.19, 3.1, 3.2 or 3.7
shall not be effective until received. Whenever the Administrative Agent sends a
notice by mail, the Administrative Agent will use reasonable efforts to also
send such notice by one of the other means of notice permitted hereunder,
provided that the failure to do so shall not affect in any way the validity of
any delivery by mail pursuant to this subsection or otherwise result in any
liability to the Administrative Agent or the Lenders.
10.3 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Administrative Agent or any
Lender, any right, remedy, power or privilege hereunder or under the other Loan
Documents 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. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
10.4 Survival of Representations and Warranties. All
representations and warranties made hereunder, in the other Loan Documents and
in any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the making of the Loans hereunder.
10.5 Payment of Expenses and Taxes; Indemnity. The Borrower
agrees (a) to pay or reimburse the Administrative Agent for all its reasonable
out-of-pocket costs and expenses incurred in connection with the development,
preparation and execution of, and any amendment, supplement or modification to,
this Agreement and the other Loan Documents and any other documents prepared in
connection herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, including, without limitation, the
reasonable fees and disbursements of counsel to the Administrative Agent, (b)
(i) to pay or reimburse the Administrative Agent for all its reasonable
out-of-pocket costs and expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement, the other Loan Documents and
any such other documents, including, without limitation, the fees and
disbursements of counsel (including the allocated fees and expenses of in-house
counsel) to the Administrative Agent, and (ii) to pay or reimburse each Lender
for all its reasonable out-of-pocket costs and expenses incurred in connection
with the enforcement or preservation of any rights under this Agreement, the
other Loan Documents and any such other documents following the occurrence and
during the continuation of a Default or an Event of Default, including, without
limitation, the fees and disbursements of outside counsel or, in lieu thereof,
the allocated fees and expenses of, in-house counsel to each Lender, (c) to pay,
indemnify, and hold each Lender and the Administrative Agent (and their
respective directors, officers, employees and agents) harmless from, any and all
recording and filing fees and any and all liabilities with respect to, or
resulting from any delay in paying, stamp, excise (other than excise taxes
imposed in lieu of net income taxes) and other similar taxes, if any, which may
be payable or determined to be payable in connection with the execution and
delivery of, or consummation or administration of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, this Agreement, the other Loan Documents and
any such other documents, and (d) to pay, indemnify, and hold each Lender and
the Administrative Agent (and their respective directors, officers, employees
and
<PAGE> 68
63
agents) harmless from and against any and all other liabilities, obligations,
losses, damages, penalties, actions, judgments, suits and reasonable
out-of-pocket costs, expenses or disbursements of any kind or nature whatsoever
with respect to any claim, litigation, investigation or proceeding relating to
the execution, delivery, enforcement, performance and administration of this
Agreement and the other Loan Documents and any such other documents or any use
of any of the Extensions of Credit, including, without limitation, any of the
foregoing relating to the violation of, noncompliance with or liability under,
any Environmental Law applicable to the operations of the Borrower, any of its
Subsidiaries or any of the Properties (all the foregoing in this clause (d),
collectively, the "Indemnified Liabilities"), provided that the Borrower shall
have no obligation hereunder to the Administrative Agent or any Lender (or their
respective directors, officers, employees or agents) with respect to Indemnified
Liabilities arising from the gross negligence or willful misconduct of the
Administrative Agent or any such Lender (or their respective directors,
officers, employees or agents, as the case may be). The agreements in this
subsection shall survive the termination of this Agreement and the repayment of
the Loans and all other amounts payable hereunder.
10.6 Successors and Assigns; Participations and Assignments.
(a) This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Lenders, the Administrative Agent and their respective successors
and assigns, except that the Borrower may not assign or transfer any of its
rights or obligations under this Agreement without the prior written consent of
each Lender.
(b) Any Lender may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time sell to one
or more banks or other entities ("Participants") participating interests in any
Loan owing to such Lender, any interest of such Lender in any Letter of Credit,
the Revolving Credit Commitment of such Lender or any other interest of such
Lender hereunder and under the other Loan Documents. In the event of any such
sale by a Lender of a participating interest to a Participant, such Lender's
obligations under this Agreement to the other parties to this Agreement shall
remain unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such Loan for
all purposes under this Agreement and the other Loan Documents, and the Borrower
and the Administrative Agent shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and obligations under this
Agreement and the other Loan Documents. No Lender shall be entitled to create in
favor of any Participant, in the participation agreement pursuant to which such
Participant's participating interest shall be created or otherwise, any right to
vote on, consent to or approve any matter relating to this Agreement or any
other Loan Document except for those specified in clauses (i) and (ii) of the
proviso to subsection 10.1. The Borrower agrees that if amounts outstanding
under this Agreement are due or unpaid, or shall have been declared or shall
have become due and payable upon the occurrence of an Event of Default, each
Participant shall, to the maximum extent permitted by applicable law, be deemed
to have the right of setoff 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 Lender under this
Agreement, provided that, in purchasing such participating interest, such
Participant shall be deemed to have agreed to share with the Lenders the
proceeds thereof as provided in subsection 10.8(a) as fully as if it were a
Lender hereunder. The Borrower also agrees that each Participant shall be
entitled to the benefits of subsections 3.9, 3.10 and 3.11 with respect to its
participation in the Revolving Credit Commitments and the Loans outstanding from
time to time as if it were a Lender; provided that, in the case of subsection
3.10, such Participant shall have complied with the requirements of said
subsection and provided, further, that no Participant shall be entitled to
receive any greater amount pursuant to any such subsection than the transferor
Lender would have been entitled to receive in respect of the amount of the
participation transferred by such transferor Lender to such Participant had no
such transfer occurred.
<PAGE> 69
64
(c) (i) Any Lender may, in the ordinary course of its business
of making or investing in loans and in accordance with applicable law, at any
time and from time to time assign to any Lender or any affiliate thereof or,
with the consent of the Borrower and the Administrative Agent (which in each
case shall not be unreasonably withheld), to an additional bank, financial
institution or other entity that is then engaged in the business of lending
money on a revolving basis (an "Assignee") all or any part of its rights and
obligations under this Agreement and the other Loan Documents pursuant to an
Assignment and Acceptance, substantially in the form of Exhibit J, executed by
such Assignee and such assigning Lender (and, in the case of an Assignee that is
not then a Lender or an affiliate thereof, by the Borrower and the
Administrative Agent) and delivered to the Administrative Agent for its
acceptance and recording in the Register, with a copy thereof to the Borrower,
provided that (a) in the case of any such assignment to an additional bank or
financial institution, the sum of the aggregate principal amount of the
Committed Loans, the aggregate amount of the L/C Obligations and the aggregate
amount of the unused Revolving Credit Commitments being assigned and, if such
assignment is of less than all of the rights and obligations of the assigning
Lender, the sum of the aggregate principal amount of the Committed Loans, the
aggregate amount of the L/C Obligations and the aggregate amount of the unused
Revolving Credit Commitments remaining with the assigning Lender are each not
less than $10,000,000 (or such lesser amount as may be agreed to by the Borrower
and the Administrative Agent) and (b) assignments shall not be required to be
made on a ratable basis between the Revolving Credit Commitments and/or
Committed Loans held by any Lender. Upon such execution, delivery, acceptance
and recording, from and after the effective date determined pursuant to such
Assignment and Acceptance, (x) the Assignee thereunder shall be a party hereto
and, to the extent provided in such Assignment and Acceptance, have the rights
and obligations of a Lender hereunder with a Revolving Credit Commitment as set
forth therein, and (y) the assigning Lender thereunder shall, to the extent
provided in such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance covering
all or the remaining portion of an assigning Lender's rights and obligations
under this Agreement, such assigning Lender shall cease to be a party hereto).
Notwithstanding any provision of this paragraph (c) and paragraph (e) of this
subsection, the consent of the Borrower shall not be required, and, unless
requested by the Assignee and/or the assigning Lender, new Notes shall not be
required to be executed and delivered by the Borrower, for any assignment which
occurs at any time when any of the events described in Section 8(f) shall have
occurred and be continuing.
(ii) Notwithstanding anything to the contrary contained
herein, any Lender (a "Granting Lender") may grant to a special purpose
funding vehicle (a "SPC"), identified as such in writing from time to
time by the Granting Lender to the Administrative Agent and the
Borrower, the option to provide to the Borrower all or any part of any
Loan that such Granting Lender would otherwise be obligated to make to
the Borrower pursuant to this Agreement; provided that (i) nothing
herein shall constitute a commitment by any SPC to make any Loan, (ii)
if an SPC elects not to exercise such option or otherwise fails to
provide all or any part of such Loan, the Granting Lender shall be
obligated to make such Loan pursuant to the terms hereof. The making of
a Loan by an SPC hereunder shall utilize the Commitment of the Granting
Lender to the same extent, and as if, such Loan were made by such
Granting Lender. Each party hereto hereby agrees that no SPC shall be
liable for any indemnity or similar payment obligation under this
Agreement (all liability for which shall remain with the Granting
Lender). In furtherance of the foregoing, each party hereto hereby
agrees (which agreement shall survive the termination of the Agreement)
that, prior to the date that is one year and one day after the payment
in full of all outstanding commercial paper or other senior
indebtedness of any SPC, it will not institute against, or join any
other person or liquidation proceedings under the laws of the United
States or any State thereof. In addition, notwithstanding anything to
the contrary contained in this subsection 10.6(c), any SPC may (i) with
notice to, but without the prior written consent of, the Borrower and
the Administrative Agent and without paying any processing fee
therefor, assign
<PAGE> 70
65
all or a portion of its interests in any Loans to the Granting Lender
or to any financial institutions (consented to by the Borrower and
Administrative Agent) providing liquidity and/or credit support to or
for the account of such SPC to support the funding or maintenance of
Loans and (ii) disclose on a confidential basis any non-public
information relating to its Loans to any rating agency, commercial
paper dealer or provider of any surety, guarantee or credit or
liquidity enhancement to such SPC. This subsection 10.6(c)(ii) may not
be amended without the written consent of the SPC.
(d) The Administrative Agent, on behalf of the Borrower, shall
maintain at the address of the Administrative Agent referred to in subsection
10.2 a copy of each Assignment and Acceptance delivered to it and a register
(the "Register") for the recordation of the names and addresses of the Lenders
and the Revolving Credit Commitments of, and principal amounts of the Loans
owing to, each Lender from time to time. The entries in the Register shall be
conclusive, in the absence of manifest error, and the Borrower, the
Administrative Agent and the Lenders may (and, in the case of any Loan or other
obligation hereunder not evidenced by a Note, shall) treat each Person whose
name is recorded in the Register as the owner of a Loan or other obligation
hereunder as the owner thereof for all purposes of this Agreement and the other
Loan Documents, notwithstanding any notice to the contrary. Any assignment of
any Loan or other obligation hereunder shall be effective only upon appropriate
entries with respect thereto being made in the Register. The Register shall be
available for inspection by the Borrower or any Lender at any reasonable time
and from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and an Assignee (and, in the case of an Assignee that is
not then a Lender or an affiliate thereof, by the Borrower and the
Administrative Agent) together with payment to the Administrative Agent of a
registration and processing fee of $3,500, the Administrative Agent shall (i)
promptly accept such Assignment and Acceptance and (ii) on the effective date
determined pursuant thereto record the information contained therein in the
Register and give notice of such acceptance and recordation to the Lenders and
the Borrower.
(f) The Borrower authorizes each Lender to disclose to any
Participant or Assignee (each, a "Transferee") and any prospective Transferee,
subject to the provisions of subsection 10.17, any and all financial information
in such Lender's possession concerning the Borrower and its Affiliates which has
been delivered to such Lender by or on behalf of the Borrower pursuant to this
Agreement or which has been delivered to such Lender by or on behalf of the
Borrower in connection with such Lender's credit evaluation of the Borrower and
its Affiliates prior to becoming a party to this Agreement.
(g) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this subsection concerning assignments of
Loans and Notes relate only to absolute assignments and that such provisions do
not prohibit assignments creating security interests, including, without
limitation, any pledge or assignment by a Lender of any Loan or Note to any
Federal Reserve Bank in accordance with applicable law.
10.7 Replacement of Lenders under Certain Circumstances. The
Borrower shall be permitted to replace any Lender which (a) requests
reimbursement for amounts owing pursuant to subsection 3.9 or 3.10 (other than
with respect to LIBO Rate CAF Advances) or (b) is affected in the manner
described in subsection 3.8 (other than with respect to LIBO Rate CAF Advances)
and as a result thereof any of the actions described in said subsection are
required to be taken; provided that (i) such replacement does not conflict with
any Requirement of Law, (ii) no Event of Default shall have occurred and be
continuing at the time of such replacement, (iii) the Borrower shall repay (or
the replacement bank or institution shall purchase, at par) all Loans and other
amounts owing to such replaced Lender
<PAGE> 71
66
prior to the date of replacement, (iv) the Borrower shall be liable to such
replaced Lender under subsection 3.11 if any Eurodollar Loan owing to such
replaced Lender shall be prepaid (or purchased) other than on the last day of
the Interest Period relating thereto, or any CAF Advance owing to such replaced
Lender shall be paid other than on the relevant CAF Advance Maturity Date, (v)
the replacement bank or institution, if not already a Lender, and the terms and
conditions of such replacement, shall be reasonably satisfactory to the
Administrative Agent, (vi) the replaced Lender shall be obligated to make such
replacement in accordance with the provisions of subsection 10.6 (provided that
the Borrower shall be obligated to pay the registration and processing fee
referred to therein), (vii) until such time as such replacement shall be
consummated, the Borrower shall pay all additional amounts (if any) required
pursuant to subsection 3.9 or 3.10, as the case may be, and (viii) any such
replacement shall not be deemed to be a waiver of any rights which the Borrower,
the Administrative Agent or any other Lender shall have against the replaced
Lender.
10.8 Adjustments; Set-off. (a) If any Lender (a "benefitted
Lender") shall at any time receive any payment of all or part of its Loans or
the Reimbursement Obligations owing to it, or interest thereon, or receive any
collateral in respect thereof (whether voluntarily or involuntarily, by set-off,
pursuant to events or proceedings of the nature referred to in Section 8(f), or
otherwise), and, after giving effect to any such payment or the receipt of any
such collateral, such benefitted Lender shall have received a greater
proportionate payment (determined in accordance with subsection 3.7) or interest
in collateral than that received by any other Lender, if any, in respect of such
other Lender's Loans or the Reimbursement Obligations owing to it, or interest
thereon, such benefitted Lender shall purchase for cash from the other Lenders a
participating or other similar interest in such portion of each such other
Lender's Loans or the Reimbursement Obligations owing to it, or shall provide
such other Lenders with the benefits of any such collateral, or the proceeds
thereof, as shall be necessary to cause such benefitted Lender to share the
excess payment or benefits of such collateral or proceeds ratably with each of
the Lenders entitled to the same under this subsection; provided, however, that
if all or any portion of such excess payment or benefits is thereafter recovered
from such benefitted Lender, such purchase shall be rescinded, and the purchase
price and benefits returned, to the extent of such recovery, but without
interest.
(b) In addition to any rights and remedies of the Lenders
provided by law, if an Event of Default shall have occurred and be continuing,
each Lender shall have the right, without prior notice to the Borrower, any such
notice being expressly waived by the Borrower to the extent permitted by
applicable law, upon any amount becoming due and payable by the Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise) which
is not paid when due to set-off and appropriate and apply against such amount
any and all deposits (general or special, time or demand, provisional or final),
in any currency, and any other credits, indebtedness or claims, in any currency,
in each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Lender or any branch or agency
thereof to or for the credit or the account of the Borrower. Each Lender agrees
promptly to notify the Borrower and the Administrative 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.
10.9 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts
(including by facsimile transmission), and all of said counterparts taken
together shall be deemed to constitute one and the same instrument. A set of the
copies of this Agreement signed by all the parties shall be lodged with the
Borrower and the Administrative Agent.
<PAGE> 72
67
10.10 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.11 Integration. This Agreement and the other Loan Documents
represent the entire agreement of the Borrower, the Administrative Agent and the
Lenders with respect to the subject matter hereof and thereof, and there are no
promises, undertakings, representations or warranties by the Administrative
Agent or any Lender relative to subject matter hereof or thereof not expressly
set forth or referred to herein or in the other Loan Documents.
10.12 Termination. This Agreement shall terminate when the
Commitments have terminated or expired, no Letter of Credit is outstanding
(other than Letters of Credit which have been cash collateralized in the manner
contemplated pursuant to the last paragraph of Section 8) and all obligations of
the Borrower hereunder have been paid in full.
13 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
10.14 Submission To Jurisdiction; Waivers. The Borrower hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to
which it is a party, or for recognition and enforcement of any judgment
in respect thereof, to the non-exclusive general jurisdiction of the
Courts of the State of New York, the courts of the United States of
America for the Southern District of New York, and appellate courts
from any thereof;
(b) to the extent permitted by applicable law, consents that
any such action or proceeding may be brought in such courts and waives
any objection that it may now or hereafter have to the venue of any
such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead
or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to the Borrower at its address set forth in subsection 10.2 or
at such other address of which the Administrative Agent shall have been
notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall
limit the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding
referred to in this subsection any special, exemplary, punitive or
consequential damages.
10.15 Acknowledgements. The Borrower hereby acknowledges that:
<PAGE> 73
68
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents;
(b) neither the Administrative Agent nor any Lender has any
fiduciary relationship with or fiduciary duty to the Borrower arising
out of or in connection with this Agreement or any of the other Loan
Documents, and the relationship between the Administrative Agent and
the Lenders, on the one hand, and the Borrower, on the other hand, in
connection herewith or therewith is solely that of debtor and creditor;
and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Lenders or among the Borrower and the
Lenders or among the Borrower and the Administrative Agent.
10.16 WAIVERS OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE
AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY
IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
10.17 Confidentiality. Each Lender agrees to keep confidential
all information provided to it by the Borrower or the Administrative Agent
pursuant to or in connection with this Agreement that is designated by the
Borrower in writing as confidential (the "Confidential Information"); provided
that nothing herein shall prevent any Lender from disclosing any such
Confidential Information (i) to the Administrative Agent or any other Lender,
(ii) to any Transferee or prospective Transferee which receives such
Confidential Information having been made aware of the confidential nature
thereof and which has agreed in writing to be bound by the terms of this
subsection 10.17, (iii) to its directors, officers, employees, employees of
affiliates, examiners and professional advisers who have a need to know such
Confidential Information in accordance with customary banking practices and who
receive such Confidential Information having been made aware of the restrictions
of this subsection and, in the case of professional advisers, having agreed to
be bound thereby, (iv) upon the request or demand of any Governmental Authority
having jurisdiction over such Lender, (v) in response to any order of any court
or other Governmental Authority or as may otherwise be required pursuant to any
Requirement of Law, (vi) in connection with the exercise of any remedy
hereunder, (vii) which is now or hereafter becomes generally available to the
public other than as a result of a disclosure by such Lender or a disclosure
known to such Lender to have been made by any person or entity to which such
Lender has delivered such Confidential Information, (viii) which was available
to such Lender prior to its disclosure to such Lender by the Borrower, or (ix)
which becomes available to such Lender from a source other than the Borrower,
provided that such source is not (1) known to such Lender to be bound by a
confidentiality agreement with the Borrower or (2) known to such Lender to be
otherwise prohibited from transmitting the information to such Lender by a
contractual, legal or fiduciary obligation.
10.18 Judgment Currency. The obligation of the Borrower under
this Agreement to make payments in respect of each Reimbursement Obligation in
the currency in which it is outstanding (the "Agreement Currency") shall not be
discharged or satisfied by any tender or recovery pursuant to any judgment
expressed in or converted into any other currency (the "Judgment Currency")
except to the extent that such tender or recovery of the Judgment Currency
results in the effective receipt by the Lenders or the relevant Issuing Banks,
as the case may be, of the full amount of the Agreement Currency payable under
this Agreement and the Borrower agrees to indemnify the Lenders or the relevant
Issuing Banks, as the case may be (and the Lenders or the relevant Issuing
Banks, as the case may be, shall have an additional legal claim) for any
difference between such full amount and the amount effectively
<PAGE> 74
69
received by such Lenders or such Issuing Banks, as the case may be, pursuant to
any such tender or recovery. Each Lender's or Issuing Bank's determination of
amounts effectively received by such Lender or Issuing Bank shall be conclusive
absent manifest error. If a judgment in respect of the obligations of the
Borrower hereunder is rendered in a currency other than the Agreement Currency
and if, upon receipt of the full amount of such judgment in such currency and
the conversion into, and receipt of such amount in the Agreement Currency, such
amount of the Agreement Currency exceeds the obligations of the Borrower
hereunder, such excess amount shall be remitted to the Borrower by the Lenders
or the relevant Issuing Banks, as the case may be. The obligations of the
Borrower under this subsection shall survive the termination of this Agreement
and the repayment of the Loans and all other amounts payable hereunder.
10.19 Section Headings. The Section and subsection headings in
this Agreement are for convenience in reference only and shall not deemed to
alter or affect the interpretation of any provisions hereof.
<PAGE> 75
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: Michael J. Viola
------------------------------
Name: Michael J. Viola
Title: Vice President and Treasurer
THE CHASE MANHATTAN BANK, as
Administrative Agent
By: William P. Rindfuss
------------------------------
Name: William P. Rindfuss
Title: Vice President
<PAGE> 1
EXHIBIT 99.2
[CHASE LOGO] EXECUTION COPY
================================================================================
KMART CORPORATION
----------------------------
$600,000,000
364 DAY CREDIT AGREEMENT
December 6, 1999
----------------------------
CHASE SECURITIES INC.,
as Lead Arranger and Book Manager
THE CHASE MANHATTAN BANK,
as Administrative Agent
BANK OF AMERICA, NATIONAL ASSOCIATION,
as Syndication Agent
BANKBOSTON, N.A.,
as Co-Documentation Agent
BANK OF NEW YORK,
as Co-Documentation Agent
================================================================================
364 DAY REVOLVING CREDIT FACILITY
<PAGE> 2
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 1. DEFINITIONS...........................................................................................1
1.1 Defined Terms.......................................................................................1
1.2 Other Definitional Provisions......................................................................16
SECTION 2. AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENTS.....................................................16
2.1 Revolving Credit Commitments.......................................................................16
2.2 Procedure for Revolving Credit Borrowing...........................................................17
2.3 Commitment Fee.....................................................................................17
2.4 Termination or Reduction of Commitments............................................................17
2.5 Repayment of Revolving Credit Loans................................................................17
2.6 [INTENTIONALLY OMITTED]............................................................................18
2.7 [INTENTIONALLY OMITTED]............................................................................18
2.8 [INTENTIONALLY OMITTED]............................................................................18
2.9 [INTENTIONALLY OMITTED]............................................................................18
2.10 [INTENTIONALLY OMITTED]...........................................................................18
2.11 [INTENTIONALLY OMITTED]...........................................................................18
2.12 [INTENTIONALLY OMITTED]...........................................................................18
2.13 [INTENTIONALLY OMITTED]...........................................................................18
2.14 [INTENTIONALLY OMITTED]...........................................................................18
2.15 [INTENTIONALLY OMITTED]...........................................................................18
2.16 [INTENTIONALLY OMITTED]...........................................................................18
2.17 [INTENTIONALLY OMITTED]...........................................................................18
2.18 [INTENTIONALLY OMITTED]...........................................................................18
2.19 [INTENTIONALLY OMITTED]...........................................................................18
2.20 [INTENTIONALLY OMITTED]...........................................................................18
2.21 Extension of Revolving Credit Termination Date....................................................18
SECTION 3. GENERAL PROVISIONS APPLICABLE TO LOANS...............................................................20
3.1 Optional Prepayments...............................................................................20
3.2 Conversion and Continuation Options................................................................20
3.3 Minimum Amounts and Maximum Number of Tranches.....................................................21
3.4 Interest Rates and Payment Dates...................................................................21
3.5 Computation of Interest and Fees...................................................................21
3.6 Inability to Determine Interest Rate...............................................................22
3.7 Pro Rata Treatment and Payments....................................................................22
3.8 Illegality.........................................................................................23
3.9 Requirements of Law................................................................................23
3.10 Indemnification for Taxes.........................................................................24
3.11 Indemnity.........................................................................................26
3.12 Change of Lending Office..........................................................................26
3.13 Evidence of Debt..................................................................................26
SECTION 4. REPRESENTATIONS AND WARRANTIES.......................................................................27
4.1 Financial Condition................................................................................27
</TABLE>
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<PAGE> 3
<TABLE>
<CAPTION>
Page
<S> <C>
4.2 No Change..........................................................................................28
4.3 Corporate Existence; Compliance with Law...........................................................28
4.4 Corporate Power; Authorization; Enforceable Obligations............................................28
4.5 No Legal Bar.......................................................................................28
4.6 No Material Litigation.............................................................................29
4.7 No Default.........................................................................................29
4.8 No Burdensome Restrictions.........................................................................29
4.9 Taxes..............................................................................................29
4.10 Federal Regulations...............................................................................29
4.11 ERISA.............................................................................................29
4.12 Investment Company Act; Other Regulations.........................................................30
4.13 Subsidiaries......................................................................................30
4.14 Environmental Matters.............................................................................30
4.15 Ownership of Property; Liens......................................................................31
4.16 Intellectual Property.............................................................................31
4.17 [INTENTIONALLY OMITTED]...........................................................................31
4.18 Solvency..........................................................................................31
4.19 Purpose of Loans..................................................................................32
4.20 Accuracy of Information...........................................................................32
4.21 Year 2000 Matters.................................................................................32
SECTION 5. CONDITIONS...........................................................................................32
5.1 Conditions to Effectiveness........................................................................32
5.2 Conditions to Each Extension of Credit.............................................................34
SECTION 6. AFFIRMATIVE COVENANTS................................................................................34
6.1 Financial Statements...............................................................................34
6.2 Certificates; Other Information....................................................................35
6.3 Payment of Obligations.............................................................................35
6.4 Conduct of Business and Maintenance of Existence...................................................35
6.5 Maintenance of Property; Insurance.................................................................36
6.6 Inspection of Property; Books and Records; Discussions.............................................36
6.7 Notices............................................................................................36
6.8 Environmental Laws.................................................................................37
6.9 Additional Subsidiaries............................................................................37
SECTION 7. NEGATIVE COVENANTS...................................................................................37
7.1 Financial Condition Covenants......................................................................37
7.2 Limitation on Liens................................................................................37
7.3 Limitation on Fundamental Changes..................................................................39
7.4 Limitation on Sale of Assets.......................................................................39
7.5 Limitation on Dividends............................................................................40
7.6 Limitation on Capital Expenditures and "Property held for Resale"..................................41
7.7 Limitation on Transactions with Affiliates.........................................................41
7.8 Limitation on Sales and Leasebacks.................................................................41
7.9 Negative Pledge Clauses............................................................................41
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 8. EVENTS OF DEFAULT....................................................................................42
SECTION 9. THE ADMINISTRATIVE AGENT.............................................................................44
9.1 Appointment........................................................................................44
9.2 Delegation of Duties...............................................................................44
9.3 Exculpatory Provisions.............................................................................45
9.4 Reliance by Administrative Agent...................................................................45
9.5 Notice of Default..................................................................................45
9.6 Non-Reliance on Administrative Agent and Other Lenders.............................................45
9.7 Indemnification....................................................................................46
9.8 Administrative Agent in Its Individual Capacity....................................................46
9.9 Successor Administrative Agent.....................................................................46
SECTION 10. MISCELLANEOUS.......................................................................................47
10.1 Amendments and Waivers............................................................................47
10.2 Notices...........................................................................................47
10.3 No Waiver; Cumulative Remedies....................................................................48
10.4 Survival of Representations and Warranties........................................................48
10.5 Payment of Expenses and Taxes; Indemnity..........................................................49
10.6 Successors and Assigns; Participations and Assignments............................................49
10.7 Replacement of Lenders under Certain Circumstances................................................52
10.8 Adjustments; Set-off..............................................................................52
10.9 Counterparts......................................................................................53
10.10 Severability.....................................................................................53
10.11 Integration......................................................................................53
10.12 Termination......................................................................................53
10.13 GOVERNING LAW....................................................................................53
10.14 Submission To Jurisdiction; Waivers..............................................................53
10.15 Acknowledgements.................................................................................54
10.16 WAIVERS OF JURY TRIAL............................................................................54
10.17 Confidentiality..................................................................................54
10.18 Section Headings.................................................................................55
</TABLE>
-iii-
<PAGE> 5
SCHEDULES
Schedule 1.1(a) Commitments
Schedule 4.1 Charges and Changes
Schedule 4.4 Consents
Schedule 4.13 Subsidiaries
Schedule 4.16 Intellectual Property Matters
Schedule 7.2(f) Existing Liens
Schedule 7.4(f) Scheduled Asset Sales
Schedule 7.9 Transactions with Affiliates
Schedule 10.2 Addresses
EXHIBITS
Exhibit A Form of Addendum
Exhibit B [INTENTIONALLY OMITTED]
Exhibit C [INTENTIONALLY OMITTED]
Exhibit D [INTENTIONALLY OMITTED]
Exhibit E Form of Subsidiaries Guarantee
Exhibit F Form of Revolving Credit Note
Exhibit G [INTENTIONALLY OMITTED]
Exhibit H Form of Borrower Closing Certificate
Exhibit I-1 Form of Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
Exhibit I-2 Form of Opinion of General Counsel to Borrower
Exhibit I-3 Form of Opinion of Simpson Thacher & Bartlett
Exhibit J Form of Assignment and Acceptance
Exhibit K [INTENTIONALLY OMITTED]
-iv-
<PAGE> 6
CREDIT AGREEMENT, dated as of December 6, 1999, among KMART
CORPORATION, a Michigan corporation (the "Borrower"), the several banks,
financial institutions and other entities from time to time parties to this
Agreement (collectively, the "Lenders"; individually, a "Lender") and THE CHASE
MANHATTAN BANK, a New York banking corporation, as Administrative Agent (as
hereinafter defined) for the Lenders hereunder.
W I T N E S S E T H :
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following
terms shall have the following meanings:
"ABR": for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greatest of (a) the
Prime Rate in effect on such day, (b) the Base CD Rate in effect on
such day plus 1% and (c) the Federal Funds Effective Rate in effect on
such day plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall mean
the rate of interest per annum publicly announced from time to time by
the Administrative Agent as its prime rate in effect at its principal
office in New York City (the Prime Rate not being intended to be the
lowest rate of interest charged by the Administrative Agent in
connection with extensions of credit to debtors); "Base CD Rate" shall
mean the sum of (a) the product of (i) the Three-Month Secondary CD
Rate and (ii) a fraction, the numerator of which is one and the
denominator of which is one minus the CD Reserve Percentage and (b)
the CD Assessment Rate; "Three-Month Secondary CD Rate" shall mean,
for any day, the secondary market rate for three-month certificates of
deposit reported as being in effect on such day (or, if such day shall
not be a Business Day, the next preceding Business Day) by the Board
of Governors through the public information telephone line of the
Federal Reserve Bank of New York (which rate will, under the current
practices of the Board of Governors, be published in Federal Reserve
Statistical Release H.15(519) during the week following such day), or,
if such rate shall not be so reported on such day or such next
preceding Business Day, the average of the secondary market quotations
for three-month certificates of deposit of major money center banks in
New York City received at approximately 10:00 A.M., New York City
time, on such day (or, if such day shall not be a Business Day, on the
next preceding Business Day) by the Administrative Agent from three
New York City negotiable certificate of deposit dealers of recognized
standing selected by it; "CD Assessment Rate" shall mean, for any day,
the annual assessment rate in effect on such day which is payable by a
member of the Bank Insurance Fund maintained by the FDIC classified as
well-capitalized and within supervisory subgroup "B" (or a comparable
successor assessment risk classification) within the meaning of 12
C.F.R. Section 327.4 (or any successor provision) to the FDIC for the
FDIC's insuring time deposits at offices of such institution in the
United States; "CD Reserve Percentage" shall mean, for any day, that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors, for determining the maximum
reserve requirement for a Depositary Institution (as defined in
Regulation D of the Board of Governors or any successor provisions) in
respect of new non-personal time deposits in Dollars having a maturity
of 30 days or more; and "Federal Funds Effective Rate" shall mean, for
any day, the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day which is a Business Day, the average of the
quotations for the day of such transactions received by the
Administrative Agent from three federal funds brokers of recognized
standing selected by it. Any change in the ABR due to a change in the
Prime Rate, the Three-
<PAGE> 7
2
Month Secondary CD Rate, the CD Assessment Rate, the CD Reserve
Percentage or the Federal Funds Effective Rate shall be effective as of
the opening of business on the effective day of such change in the
Prime Rate, the Three-Month Secondary CD Rate, the CD Assessment Rate,
the CD Reserve Percentage or the Federal Funds Effective Rate,
respectively.
"ABR Loans": Revolving Credit Loans the rate of interest
applicable to which is based upon the ABR.
"Acquisition": as to any Person, the acquisition by such
Person of (a) all the Capital Stock of any other Person, (b) all or
substantially all of the assets of any other Person or (c) assets
constituting one or more business units of any other Person.
"Addendum": an instrument, substantially in the form of
Exhibit A, by which a Lender becomes a party to this Agreement.
"Additional Permitted Capital Expenditure Amount": with
respect to any Fiscal Year, an amount equal to 50% of the amount (if
any) by which EBITDA for the immediately preceding Fiscal Year exceeds
$2,100,000,000.
"Administrative Agent": Chase, together with its affiliates,
as the arranger of the Revolving Credit Commitments and as the agent
for the Lenders under this Agreement and the other Loan Documents.
"Affiliate": 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. For purposes of this definition,
"control" of a Person means the power, directly or indirectly, either
to (a) vote 10% or more of the securities having ordinary voting power
for the election of directors of such Person or (b) direct or cause the
direction of the management and policies of such Person, whether by
contract or otherwise. For the purposes of this Agreement, the Borrower
and its Restricted Subsidiaries shall not be deemed to be Affiliates of
each other.
"Aggregate Revolving Credit Outstandings": at any time, an
amount equal to the sum of the Committed Revolving Credit Extensions of
Credit of all the Lenders at such time.
"Agreement": this Credit Agreement, as amended, supplemented
or otherwise modified from time to time.
"Applicable Commitment Fee Rate": 0.20%.
"Applicable Margin": for each Type of Revolving Credit Loan,
the rate per annum set forth under the relevant column heading below:
<TABLE>
<CAPTION>
ABR Loans Eurodollar Loans
---------------- ----------------
<S> <C>
0.00% 1.00%
</TABLE>
"Asset Sale": any sale, transfer or other disposition
(including any sales, transfers or other dispositions in connection
with Sale-Leasebacks or Securitization Transactions) by the Borrower or
any of its Restricted Subsidiaries of any property of the Borrower or
any such Restricted Subsidiary.
<PAGE> 8
3
"Assignee": as defined in subsection 10.6(c).
"Available Revolving Credit Commitment": as to any Lender, at
any time, an amount equal to the excess, if any, of (a) such Lender's
Revolving Credit Commitment over (b) such Lender's Committed Revolving
Credit Extensions of Credit at such time; collectively, as to all the
Lenders, the "Available Revolving Credit Commitments".
"Board of Governors": the Board of Governors of the Federal
Reserve System and any Governmental Authority which succeeds to the
powers and functions thereof.
"Borrowing Date": any Business Day specified in a notice
pursuant to subsection 2.2 as a date on which the Borrower requests the
Lenders to make Loans hereunder.
"Business": as defined in subsection 4.14(b).
"Business Day": a day other than a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or
required by law to close provided, that when such term is used to
describe a day on which a borrowing, payment or interest rate
determination is to be made in respect of a Eurodollar Loan, such day
shall also be a day on which dealings in foreign currencies and
exchange between banks may be carried on in London, England.
"Capital Funds": of any Person, as of the date of
determination thereof, the sum of Consolidated Net Worth of such Person
at such date of determination and Consolidated Total Debt of such
Person at such date of determination.
"Capital Stock": any and all shares, interests, participations
or other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person
(other than a corporation) and any and all warrants or options to
purchase any of the foregoing, provided that the Convertible Debentures
shall not constitute Capital Stock of the Borrower.
"Cash Equivalents": (a) marketable direct obligations issued
by, or unconditionally guaranteed by, the United States Government or
issued by any agency thereof and backed by the full faith and credit of
the United States, in each case maturing within one year from the date
of acquisition; (b) certificates of deposit, time deposits, eurodollar
time deposits or overnight bank deposits having maturities of six
months or less from the date of acquisition issued by any Lender or by
any commercial bank organized under the laws of the United States or
any state thereof having combined capital and surplus of not less than
$500,000,000; (c) commercial paper of an issuer rated at least A-1 by
S&P or P-1 by Moody's, or carrying an equivalent rating by a nationally
recognized rating agency, if both of the two named rating agencies
cease publishing ratings of commercial paper issuers generally, and
maturing within six months from the date of acquisition; (d) repurchase
obligations of any Lender or of any commercial bank satisfying the
requirements of clause (b) of this definition, having a term of not
more than 30 days, with respect to securities issued or fully
guaranteed or insured by the United States government; (e) securities
with maturities of one year or less from the date of acquisition issued
or fully guaranteed by any state, commonwealth or territory of the
United States, by any political subdivision or taxing authority of any
such state, commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political
subdivision, taxing authority or foreign government (as the case may
be) are rated at least A by S&P or A by Moody's; (f) securities with
maturities of six months or less from the date of acquisition backed by
standby
<PAGE> 9
4
letters of credit issued by any Lender or any commercial bank
satisfying the requirements of clause (b) of this definition; or (g)
shares of money market mutual or similar funds which invest exclusively
in assets satisfying the requirements of clauses (a) through (f) of
this definition.
"Cash Interest Expense": of any Person for any period,
Consolidated Interest Expense of such Person for such period (a) minus,
in each case to the extent included in determining such Consolidated
Interest Expense for such period, the sum of the following: (i)
non-cash expenses for interest payable in kind and non-cash interest
expense related to closed stores and (ii) amortization of debt discount
and fees and (b) plus the sum of the following in each case to the
extent previously subtracted pursuant to clause (a) of this definition:
cash payments made by such Person or any Consolidated Subsidiary of
such Person during such period in respect of the items referred to in
such clause (a), provided that Cash Interest Expense shall in no event
include any fees or amortization of debt discount associated with the
transactions contemplated hereby or the Convertible Preferred
Securities.
"Chase": The Chase Manhattan Bank, a New York banking
corporation, and its successors.
"Code": the Internal Revenue Code of 1986, as amended from
time to time.
"Committed Loan": any Revolving Credit Loan.
"Committed Revolving Credit Extensions of Credit": as to any
Lender at any time, an amount equal to the sum of the aggregate
principal amount of all Revolving Credit Loans made by such Lender then
outstanding.
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Borrower within
the meaning of Section 4001 of ERISA or is part of a group which
includes the Borrower and which is treated as a single employer under
Section 414 of the Code.
"Confidential Information": as defined in subsection 10.17.
"Consolidated": when used in connection with any defined term,
and not otherwise defined, means such term as it applies to any Person
and its Subsidiaries on a consolidated basis, after eliminating all
intercompany items.
"Continuing Directors": as defined in Section 8(j).
"Contractual Obligation": as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or
other undertaking to which such Person is a party or by which it or any
of its property is bound.
"Convertible Debentures": the Convertible Junior Subordinated
Debentures issued by the Borrower to the Convertible Trust pursuant to
the Convertible Debenture Indenture, including any Convertible Junior
Subordinated Debentures issued in connection with the exercise of the
underwriters' over-allotment option, and any debentures (with the same
terms) issued in exchange therefor pursuant to the Convertible
Debenture Indenture as in effect on June 17, 1996.
<PAGE> 10
5
"Convertible Debenture Indenture": the Indenture, dated as of
June 6, 1996, between the Borrower and The Bank of New York, as
Trustee, as amended, supplemented or otherwise modified from time to
time in accordance with this Agreement.
"Convertible Preferred Securities": the Trust Convertible
Preferred Securities issued by the Convertible Trust on June 17, 1996
and any Trust Convertible Preferred Securities issued by the
Convertible Trust in connection with the exercise of the underwriters'
over-allotment option.
"Convertible Trust": Kmart Financing I, a Delaware statutory
business trust.
"Debt": as to any Person at the date of any determination
thereof, the sum of the following to the extent such items should be
reflected on the consolidated balance sheet of such Person (excluding
any such items which appear only in the notes to such consolidated
balance sheet) at such date (without duplication): (a) all indebtedness
for borrowed money or for the deferred purchase price of property or
services (other than current trade liabilities incurred in the ordinary
course of business and payable in accordance with customary practices),
(b) any other indebtedness which is evidenced by a note, bond,
debenture or similar instrument, (c) all obligations under Financing
Leases, (d) all obligations in respect of acceptances issued or created
for the account of such Person, and (e) all liabilities of a kind
described above secured by any Lien on any property owned by such
Person even though such Person has not assumed or otherwise become
liable for the payment thereof, provided that the item which in
conformity with GAAP would reflect the amount of Convertible Preferred
Securities and/or the Convertible Debentures (and the obligations of
such Person with respect thereto) on the consolidated balance sheet of
such Person at such date of determination shall in no event constitute
Debt of such Person.
"Default": any of the events specified in Section 8, whether
or not any requirement for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
"Designated Lenders": as defined in subsection 5.1(a).
"Dollars" and "$": dollars in lawful currency of the United
States of America.
"Domestic Subsidiary": any Subsidiary of the Borrower
organized under the laws of any jurisdiction (including territories)
within the United States of America, excluding the Convertible Trust,
Securitization Entities, Inactive Subsidiaries, Special Purpose
Subsidiaries and Foreign Holding Companies.
"EBITDA": with respect to any period, EBITDAR for such period
minus, to the extent included in EBITDAR for such period, the
Consolidated Rental Expense of the Borrower for such period.
"EBITDAR": with respect to any period, Consolidated Net Income
of the Borrower for such period (a) plus, in each case (other than
clause (vi) below) to the extent deducted in determining such
Consolidated Net Income for such period, the sum of the following: (i)
Consolidated Interest Expense of the Borrower, (ii) consolidated income
tax expense of the Borrower and its Consolidated Subsidiaries, (iii)
consolidated depreciation and amortization expense of the Borrower and
its Consolidated Subsidiaries, (iv) Consolidated Rental Expense of the
Borrower, (v) other consolidated non-recurring non-cash charges of the
Borrower and its Consolidated Subsidiaries and non-cash losses realized
by the Borrower and its Consolidated
<PAGE> 11
6
Subsidiaries and non-cash losses realized by the Borrower and its
Consolidated Subsidiaries upon the sale, disposition or refinancing of
real property owned by the Borrower or its Consolidated Subsidiaries as
of the Effective Date and (vi) cash payments received by the Borrower
or any Consolidated Subsidiary during such period in respect of
non-recurring non-cash gains of the Borrower taken subsequent to
October 28, 1999, and (b) minus the sum of the following: (i) cash
payments made by the Borrower or any Consolidated Subsidiary during
such period in respect of non-recurring non-cash charges taken
subsequent to October 28, 1999 and (ii) to the extent included in
determining such Consolidated Net Income for such period, consolidated
non-recurring non-cash gains of the Borrower and its Consolidated
Subsidiaries during such period.
"Effective Date": the date on which the conditions set forth
in subsection 5.1 are satisfied.
"Environmental Laws": any and all foreign, federal, state,
local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, requirements of any Governmental Authority
or other Requirements of Law (including common law) regulating,
relating to or imposing liability or standards of conduct concerning
protection of human health or the environment, as are now or may at any
time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to
a Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal) of reserve requirements in effect on such day
(including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board of Governors or
other Governmental Authority having jurisdiction with respect thereto)
prescribed for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of the Board of Governors)
maintained by a member bank of the Federal Reserve System.
"Eurodollar Base Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate per annum
equal to the rate for deposits in Dollars for the period commencing on
the first day of such Interest Period and ending on the last day of
such Interest Period which appears on Telerate Page 3750 as of 10:00
A.M., New York City time, two Business Days prior to the beginning of
such Interest Period. If at least two rates appear on such Telerate
Page for such Interest Period, the "Eurodollar Base Rate" shall be the
arithmetic mean of such rates. If the "Eurodollar Base Rate" cannot be
determined in accordance with the immediately preceding sentences with
respect to any Interest Period, the "Eurodollar Base Rate" with respect
to each day during such Interest Period shall be the rate per annum
equal to the average (rounded upward to the nearest 1/100th of 1%) of
the respective rates notified to the Administrative Agent by each of
the Reference Lenders as the rate at which such Reference Lender is
offered Dollar deposits at or about 10:00 A.M., New York City time, two
Business Days prior to the beginning of such Interest Period in the
interbank eurodollar market where the eurodollar and foreign currency
and exchange operations in respect of its Eurodollar Loans are then
being conducted for delivery on the first day of such Interest Period
for the number of days comprised therein and in an amount comparable to
the amount of its Eurodollar Loan to be outstanding during such
Interest Period.
"Eurodollar Loans": Revolving Credit Loans the rate of
interest applicable to which is based upon the Eurodollar Rate.
<PAGE> 12
7
"Eurodollar Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, a rate per annum
determined for such day in accordance with the following formula
(rounded upward to the nearest 1/100th of 1%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Event of Default": any of the events specified in Section 8,
provided that any requirement for the giving of notice, the lapse of
time, or both, or any other condition, has been satisfied.
"Existing Credit Agreement": the Amended and Restated Credit
Agreement, dated as of May 6, 1997, among the Borrower, the several
banks, financial institutions and other entities from time to time
parties thereto and Chase, as administrative agent for the lenders
thereunder, as amended.
"Existing Receivables Transactions": collectively, the
transactions contemplated under various store programs pursuant to
which receivables generated in connection with the sale of inventory
are sold to various financing companies, in each case as such
agreements and programs may be amended, replaced, supplemented or
otherwise modified from time to time.
"Extension of Credit": with respect to any Lender, the making
of a Loan by such Lender; as to all the Lenders, the "Extensions of
Credit".
"FDIC": the Federal Deposit Insurance Corporation and any
Governmental Authority which succeeds to the powers and functions
thereof.
"Federal Funds Effective Rate": as defined in the definition
of "ABR" contained in this subsection 1.1.
"Financing Lease": any lease of property, real or personal,
the obligations of the lessee in respect of which are required in
accordance with GAAP to be capitalized on a balance sheet of such
lessee.
"Fiscal Year": each fiscal year of the Borrower. Fiscal Years
are referred to herein by reference to the calendar year in which the
first day of such Fiscal Year falls.
"Fixed Charge Coverage Ratio": as of the last day of any
fiscal quarter of the Borrower, the ratio of (A) EBITDAR for the period
of four fiscal quarters ending on the last day of such quarter to (B)
the sum of (i) Consolidated Cash Interest Expense of the Borrower plus
(ii) Consolidated Rental Expense of the Borrower, in each case for such
period.
"Foreign Holding Company": any Subsidiary organized under the
laws of any jurisdiction (including territories) within the United
States of America whose sole assets (exclusive of assets with an
aggregate book value not exceeding $10,000,000 and assets consisting of
advances or loans to the Borrower or any of its Subsidiaries) consist
of the Capital Stock of one or more Foreign Subsidiaries or other
Foreign Holding Companies.
"Foreign Subsidiary": any Subsidiary of the Borrower organized
under the laws of any jurisdiction outside the United States of
America, excluding Securitization Entities, Inactive
<PAGE> 13
8
Subsidiaries and Special Purpose Subsidiaries, but including in any
event Foreign Holding Companies.
"GAAP": generally accepted accounting principles in the United
States of America in effect from time to time, provided that, solely
for purposes of determining compliance with subsection 7.1, "GAAP"
shall mean generally accepted accounting principles in the United
States of America as in effect on the date hereof.
"GNB Credit Agreement": the Credit Agreement among the
Borrower, the several banks, financial institutions and other entities
from time to time parties thereto, Gateway National Bank, as
Administrative Agent and First Independence National Bank of Detroit,
as Documentation Agent (such Credit Agreement shall only be treated as
the "GNB Credit Agreement" for purposes of Section 7.9 so long as loans
and extensions of credit thereunder and commitments in respect thereof
do not, without duplication, exceed $125,000,000.
"Governmental Authority": any nation or government, any state
or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Granting Lender": as defined in subsection 10.6(c).
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another
Person to induce the creation of which the guaranteeing person has
issued a guarantee, reimbursement, counterindemnity or similar
obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness (collectively, the "primary obligations") of any other
third Person (the "primary obligor"), in any manner, whether directly
or indirectly, or which guarantee, reimbursement, counterindemnity or
similar obligation should be reflected in a consolidated balance sheet
of the guaranteeing person (or in the notes thereto); provided,
however, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary
course of business. The amount of any Guarantee Obligation of any
guaranteeing person shall be deemed to be the lower of (a) an amount
equal to the stated or determinable amount of the primary obligation in
respect of which such Guarantee Obligation is made and (b) the maximum
amount for which such guaranteeing person may be liable pursuant to the
terms of the instrument embodying such Guarantee Obligation, unless
such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable, in
which case the amount of such Guarantee Obligation shall be such
guaranteeing person's maximum reasonably anticipated liability in
respect thereof as determined by the Borrower in good faith.
"Inactive Subsidiary": any Subsidiary of the Borrower which
(and only for so long as such Subsidiary) (a) does not own assets with
an aggregate book value in excess of $10,000,000 and (b) is not then
engaged in any business.
"Indebtedness": of any Person at any date, (a) all
indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services (other than current trade
liabilities and current accounts payable incurred in the ordinary
course of business and payable in accordance with customary practices),
(b) any other indebtedness of such Person which is evidenced by a note,
bond, debenture or similar instrument, (c) all obligations (to the
extent capitalized for accounting purposes) of such Person under
Financing Leases, (d) all obligations of such Person in respect of
acceptances issued or created for the account of such
<PAGE> 14
9
Person, (e) all obligations of the types described in the other clauses
of this definition secured by any Lien on any property owned by such
Person even though such Person has not assumed or otherwise become
liable for the payment thereof and (f) all obligations of such Person
in respect of interest rate and currency hedging agreements. For
purposes of this Agreement, the amount of any Indebtedness referred to
in clause (f) of the preceding sentence shall be the net amounts,
including any net termination payments, required to be paid to a
counterparty rather than any notional amount with regard to which
payments may be calculated.
"Indemnified Liabilities": as defined in subsection 10.5.
"Insolvency": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section
4245 of ERISA.
"Intellectual Property": as defined in subsection 4.16.
"Interest Coverage Ratio": as of the last day of any fiscal
quarter of the Borrower, the ratio of (A) EBITDA for the period of four
fiscal quarters ending on the last day of such period to (B)
Consolidated Cash Interest Expense for such period.
"Interest Expense": of any Person for any period, (a) the
amount of interest expense, both expensed and capitalized, of such
Person and its Consolidated Subsidiaries determined on a consolidated
basis in accordance with GAAP for such period minus (b) the amount of
interest income of such Person and its Consolidated Subsidiaries
determined on a consolidated basis in accordance with GAAP for such
period provided that in no event shall Interest Expense include any
distributions in respect of the Convertible Preferred Securities or
interest payments on the Convertible Debentures or any fees or
amortization of debt discount associated with the transactions
contemplated hereby, by the Existing Credit Agreement or by the
Convertible Preferred Securities.
"Interest Payment Date": (a) as to any ABR Loan, the last day
of each April, July, October and January, (b) as to any Eurodollar Loan
having an Interest Period of three months or less, the last day of such
Interest Period and (c) as to any Eurodollar Loan having an Interest
Period longer than three months, each day which is three months, or a
whole multiple thereof, after the first day of such Interest Period and
the last day of such Interest Period.
"Interest Period": with respect to any Eurodollar Loan:
(a) initially, the period commencing on the borrowing
or conversion date, as the case may be, with respect to such
Eurodollar Loan and ending one week (if, at the time of the
relevant borrowing, all Lenders participating therein agree to
make an interest period of such duration available) or one,
two, three or six months thereafter, as selected by the
Borrower in its notice of borrowing or notice of conversion,
as the case may be, given with respect thereto; and
(b) thereafter, each period commencing on the last
day of the next preceding Interest Period applicable to such
Eurodollar Loan and ending one week (if, at the time of the
relevant borrowing, all Lenders participating therein agree to
make an interest period of such duration available) or one,
two, three or six months thereafter, as selected by the
Borrower by irrevocable notice to the Administrative Agent not
less than three
<PAGE> 15
10
Business Days prior to the last day of the then current
Interest Period with respect thereto;
provided that, all of the foregoing provisions relating to
Interest Periods are subject to the following:
(1) if any Interest Period would otherwise
end on a day that is not a Business Day, such
Interest Period shall be extended to the next
succeeding Business Day unless 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;
(2) any Interest Period that would otherwise
extend beyond the Revolving Credit Termination Date
shall end on the Revolving Credit Termination Date;
and
(3) any Interest Period 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 a
calendar month.
"Lenders": as defined in the preamble to this Agreement.
"Leverage Ratio": as of any date of determination thereof, the
quotient of (a) Consolidated Total Debt of the Borrower as of such date
of determination divided by (b) Consolidated Capital Funds of the
Borrower as of such date of determination.
"Lien": any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge or
other security interest or any preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title
retention agreement and any Financing Lease having substantially the
same economic effect as any of the foregoing).
"Loan": any Revolving Credit Loan.
"Loan Documents": this Agreement, any Notes, and the
Subsidiaries Guarantee.
"Loan Parties": the collective reference to the Borrower, the
Subsidiary Guarantors and any other Subsidiary from time to time party
to any Loan Document.
"Majority Lenders": at any time, Lenders the Voting
Percentages of which aggregate more than 50%.
"Material Adverse Effect": a material adverse effect on (a)
the business, operations, property, condition (financial or otherwise)
or prospects of the Borrower and its Subsidiaries taken as a whole or
(b) the validity or enforceability of this Agreement or any of the
other Loan Documents or the material rights or remedies of the
Administrative Agent or the Lenders hereunder or thereunder; it being
understood that any past or future reduction in the Borrower's or any
<PAGE> 16
11
Subsidiary's credit rating or decline in the market price of the
Borrower's or any Subsidiary's equity securities shall not in and of
themselves be deemed to constitute a Material Adverse Effect.
"Materials of Environmental Concern": any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum
products or any hazardous or toxic substances, materials or wastes,
defined or regulated as such in or under any Environmental Law,
including, without limitation, asbestos, polychlorinated biphenyls and
urea-formaldehyde insulation.
"Moody's": Moody's Investors Service, Inc.
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Income": of any Person for any period, net income of such
Person and its Consolidated Subsidiaries, determined on a consolidated
basis in accordance with GAAP for such period.
"Net Revenue": of any Person for any period, net revenue of
such Person and its Consolidated Subsidiaries, determined on a
consolidated basis in accordance with GAAP for such period.
"Net Worth": of any Person, as of the date of determination
thereof, the sum of (without duplication) (a) Shareholders' Equity of
such Person as of such date of determination, and (b) the excess, if
any, of (i) the aggregate amount of net after-tax, non-recurring,
non-cash charges that have the effect of reducing the amount set forth
in clause (a) above, taken after the fiscal quarter ended October 27,
1999 over (ii) any reversal of any of the foregoing charges.
"Non-Excluded Taxes": as defined in subsection 3.10.
"Non-Executing Persons": as defined in subsection 5.1(a).
"Notes": the collective reference to any Revolving Credit
Notes.
"Participant": as defined in subsection 10.6(b).
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA, or any Governmental
Authority which succeeds to the powers and functions thereof.
"Permitted Sale-Leaseback": as defined in subsection 7.8.
"Person": an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture, limited liability company, Governmental Authority or other
entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which
is covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
<PAGE> 17
12
"Reference Lenders": Chase, Bank of America, National
Association, The Bank of New York and BankBoston, N.A.
"Register": as defined in subsection 10.6(d).
"Regulation U": Regulation U of the Board of Governors as in
effect from time to time.
"Rental Expense": of any Person for any period, the aggregate
amount of fixed and contingent rentals payable by such Person for such
period in accordance with GAAP with respect to leases of real property
minus the aggregate amount of rental income (including licensee related
income from licensees operating on the store premises of the Borrower
and its Subsidiaries) payable to such Person for such period in
accordance with GAAP with respect to leases of real and personal
property.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty day
notice period is waived under subsections .13, .14, .16, .18, .19 or
.20 of PBGC Reg. Section 2615.
"Required Lenders": at any time, Lenders the Voting
Percentages of which aggregate more than 50%.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing
documents of such Person, and any law, statute, ordinance, code,
decree, treaty, rule or regulation or determination of an arbitrator or
a court or other Governmental Authority, in each case applicable to or
binding upon such Person or any of its property or to which such Person
or any of its property is subject (including, without limitation, laws,
ordinances and regulations pertaining to the zoning, occupancy and
subdivision of real property).
"Responsible Officer": the chief executive officer, the
president, any executive vice president, the chief financial officer or
the treasurer of the Borrower or, with respect to financial matters,
the chief executive officer, the president, the executive vice
president-finance, the chief financial officer or treasurer of the
Borrower, provided that, for purposes of Section 8(d) only, a
"Responsible Officer" shall also include any other senior executive
officer of the Borrower, as well as the general counsel, vice president
- real estate finance, vice president - real estate and any assistant
treasurer of the Borrower.
"Restricted Payments": as defined in subsection 7.5.
"Restricted Subsidiaries": collectively, the Domestic
Subsidiaries and Significant Foreign Subsidiaries.
"Revolving Credit Commitment: as to any Lender, the obligation
of such Lender to make Revolving Credit Loans to the Borrower hereunder
in an aggregate principal and/or face amount at any one time
outstanding not to exceed the amount set forth opposite such Lender's
name on Schedule 1.1(a) under the heading "Revolving Credit
Commitment", as such amount may be reduced from time to time pursuant
to this Agreement or as such amount may be adjusted
<PAGE> 18
13
from time to time pursuant to subsection 10.6; collectively, as to all
such Lenders, the "Revolving Credit Commitments".
"Revolving Credit Commitment Percentage": as to any Lender (a)
at any time prior to the termination of the Revolving Credit
Commitments, the percentage of the Revolving Credit Commitments then
constituted by such Lender's Revolving Credit Commitment and (b) at any
time after the termination of the Revolving Credit Commitments, the
percentage which (i) the sum of such Lender's Revolving Credit Loans
then outstanding then constitutes of (ii) the sum of the aggregate
principal amount of Revolving Credit Loans of all the Lenders then
outstanding.
"Revolving Credit Commitment Period": the period from and
including the Effective Date to but not including the Revolving Credit
Termination Date or such earlier date on which the Revolving Credit
Commitments shall terminate as provided herein.
"Revolving Credit Loans": as defined in subsection 2.1.
"Revolving Credit Note": as defined in subsection 3.13(d).
"Revolving Credit Termination Date": December 4, 2000 or such
later date to which the Revolving Credit Termination Date may be
extended pursuant to Section 2.21 or such earlier date on which the
Revolving Credit Commitments may be terminated.
"Sale-Leaseback": as defined in subsection 7.8.
"S&P": Standard & Poor's Ratings Services, a division of The
McGraw Hill Companies, Inc.
"Scheduled Asset Sales": as defined in subsection 7.4(f).
"SEC": the Securities and Exchange Commission and any
Governmental Authority which succeeds to the powers and functions
thereof.
"Securitization Entity": with respect to the Borrower or any
Subsidiary, a corporation, partnership, trust, limited liability
company or other entity that is formed by the Borrower or such
Subsidiary for the purpose of effecting or facilitating a
Securitization Transaction and which engages in no business and incurs
no Indebtedness or other liabilities other than those related to or
incidental to a Securitization Transaction.
"Securitization Transactions": a transaction or series of
related transactions pursuant to which a corporation, partnership,
trust, limited liability company or other entity incurs obligations or
issues interests, the proceeds of which are used to finance a discrete
pool (which may be fixed or revolving) of receivables, leases or other
financial assets, or a discrete portfolio of real property or
equipment.
"Shareholders' Equity": of any Person, as of the date of
determination thereof, the sum of (a) all items which in conformity
with GAAP would be included under shareholders' equity on a
consolidated balance sheet of such Person and its Consolidated
Subsidiaries at such date of determination and (b) the item which in
conformity with GAAP would reflect the amount of Convertible Preferred
Securities and/or the Convertible Debentures (and the obligations of
such
<PAGE> 19
14
Person with respect thereto) on the consolidated balance sheet of such
Person and its Consolidated Subsidiaries at such date of determination.
"Significant Foreign Subsidiary": any Foreign Subsidiary which
is a Significant Subsidiary.
"Significant Subsidiary": any Subsidiary (a) the Total Assets
of which exceed 10% of the Total Assets of the Borrower and its
Consolidated Subsidiaries as of the end of the most recently completed
Fiscal Year or (b) the Net Revenue of which exceeds 10% of the Net
Revenue of the Borrower and its Consolidated Subsidiaries as of the end
of the most recently completed Fiscal Year.
"Single Employer Plan": any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan.
"Solvent": when used with respect to any Person, means that,
as of any date of determination, (a) the amount of the "present fair
saleable value" of the assets of such Person and its Subsidiaries,
taken as a whole, will, as of such date, exceed the amount that will be
required to pay all "liabilities of such Person and its Subsidiaries,
taken as a whole, contingent or otherwise", as of such date (as such
quoted terms are determined in accordance with applicable federal and
state laws governing determinations of the insolvency of debtors) as
such debts become absolute and matured, (b) such Person and its
Subsidiaries, taken as a whole, will not have, as of such date, an
unreasonably small amount of capital with which to conduct their
businesses, and (c) such Person and its Subsidiaries, taken as a whole,
will be able to pay their debts as they mature, taking into account the
timing of and amounts of cash to be received by such Person and its
Subsidiaries, taken as a whole, and the timing of and amounts of cash
to be payable on or in respect of indebtedness of such Person and its
Subsidiaries, taken as a whole; in each case after giving effect to (A)
as of the Effective Date the making of the extensions of credit to be
made on the Effective Date and to the application of the proceeds of
such extensions of credit and (B) on any date after the Effective Date,
the making of any extension of credit to be made on such date, and to
the application of the proceeds of such extension of credit. For
purposes of this definition, (i) "debt" means liability on a "claim",
and (ii) "claim" means any (x) right to payment, whether or not such a
right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal or
equitable, secured or unsecured or (y) right to an equitable remedy for
breach of performance if such breach gives rise to a right to payment,
whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured or unmatured, disputed,
undisputed, secured or unsecured. For purposes of representations and
warranties made pursuant to subsection 4.18 on any date after the
Effective Date on which an Extension of Credit is made hereunder, the
Borrower may, in making such representation, assume that the Aggregate
Revolving Credit Outstandings will be refinanced at the maturity
thereof.
"SPC": as defined in subsection 10.6(c).
"Special Purpose Subsidiary": any Subsidiary of the Borrower
organized solely for the purpose of (a) holding a license or permit
issued by any Governmental Authority and used in connection with the
business of the Borrower and/or its Subsidiaries or (b) providing
employee services for use in the foreign operations of the Borrower or
any of its Subsidiaries, provided that such Subsidiary shall only be a
"Special Purpose Subsidiary" for so long as such Subsidiary does not
own any assets (other than any such license or permit and other than
other assets with a book
<PAGE> 20
15
value not exceeding $10,000,000 in the aggregate) and does not engage
in any business (other than holding such license or permit and
activities directly related thereto).
"Subsidiaries Guarantee": the Guarantee, dated as of December
6, 1999, executed and delivered by each Subsidiary Guarantor,
substantially in the form of Exhibit E, as the same may be amended,
supplemented or otherwise modified from time to time.
"Subsidiary": as to any Person, a corporation, partnership or
other entity of which shares of stock or other ownership interests
having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other
managers of such corporation, partnership or other entity are at the
time owned, or the management of which is otherwise controlled,
directly or indirectly through one or more intermediaries, or both, by
such Person. Unless otherwise qualified, all references to a
"Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a
Subsidiary or Subsidiaries of the Borrower.
"Subsidiary Guarantor": each Subsidiary set forth on Schedule
4.13 under the heading "Initial Subsidiary Guarantors", together with
each other Subsidiary that becomes a party to the Subsidiaries
Guarantee in compliance with subsection 6.9.
"Telerate Page 3750": the display page currently so designated
on the Dow Jones Telerate Service (or such other page as may replace
that service for the purpose of displaying comparable rates or prices).
"Three Year Credit Facility": the Three Year Credit Agreement,
dated as of December 6, 1999, among the Borrower, the several banks,
financial institutions and other entities from time to time parties
thereto and the Administrative Agent, as the same may be amended,
supplemented or otherwise modified from time to time.
"Total Assets": of any Person for any period, the total assets
of such Person and its Consolidated Subsidiaries, determined on a
consolidated basis in accordance with GAAP for such period.
"Total Debt": as to any Person at the date of any
determination thereof, all Debt of such Person; provided, however, that
for the purposes of any determination of the Leverage Ratio hereunder
the amount of Total Debt attributable to the Revolving Credit Loans and
Debt outstanding under the Existing Credit Agreement, the Three Year
Credit Agreement and the GNB Credit Agreement shall be the average
daily outstanding amounts thereof for the period of four fiscal
quarters ending on or immediately preceding such date of determination.
"Tranche": the collective reference to Eurodollar Loans the
then current Interest Periods with respect to all of which begin on the
same date and end on the same later date (whether or not such
Eurodollar Loans shall originally have been made on the same day).
"Transferee": as defined in subsection 10.6(f).
"Type": as to any Revolving Credit Loan, its nature as an ABR
Loan or a Eurodollar Loan.
<PAGE> 21
16
"UCC": the Uniform Commercial Code as in effect in the State
of New York from time to time.
"Uniform Customs": the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, as the same may be amended or revised from time to
time.
"Voting Percentage": as to any Lender (a) at any time prior to
the termination of the Revolving Credit Commitments, the percentage
which such Lender's Revolving Credit Commitment then constitutes of the
Revolving Credit Commitments of all the Lenders, and (b) at any time
after the termination of the Revolving Credit Commitments, the
percentage which (i) the sum of the principal amount of such Lender's
Revolving Credit Loans then outstanding constitutes of (ii) the sum of
the aggregate principal amount of Committed Loans of all the Lenders
then outstanding.
1.2 Other Definitional Provisions. (a) Unless otherwise
specified therein, all terms defined in this Agreement shall have the defined
meanings when used in any Loan Document or any certificate or other document
made or delivered pursuant hereto or thereto.
(b) As used herein and in any other Loan Document, and any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms relating to the Borrower and its Subsidiaries not defined in
subsection 1.1 and accounting terms partly defined in subsection 1.1, to the
extent not defined, shall have the respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
subsection, Schedule and Exhibit references are to this Agreement unless
otherwise specified.
(d) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
(e) The definitions of "Debt" and "Indebtedness" in subsection
1.1 shall be independent in construction, interpretation and application.
SECTION 2. AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENTS
2.1 Revolving Credit Commitments. (a) Subject to the terms and
conditions hereof, each Lender severally agrees to make revolving credit loans
("Revolving Credit Loans") to the Borrower from time to time during the
Revolving Credit Commitment Period in an aggregate principal amount at any one
time outstanding which does not exceed the amount of such Lender's Revolving
Credit Commitment. During the Revolving Credit Commitment Period, the Borrower
may use the Revolving Credit Commitments by borrowing, prepaying and reborrowing
the Revolving Credit Loans in whole or in part, all in accordance with the terms
and conditions hereof.
(b) The Revolving Credit Loans may from time to time be (i)
Eurodollar Loans, (ii) ABR Loans or (iii) a combination thereof, as determined
by the Borrower and notified to the Administrative Agent in accordance with
subsections 2.2 and 3.2, provided that no Revolving Credit
<PAGE> 22
17
Loan shall be made as a Eurodollar Loan after the day that is one month prior to
the Revolving Credit Termination Date.
2.2 Procedure for Revolving Credit Borrowing. The Borrower may
borrow under the Revolving Credit Commitments during the Revolving Credit
Commitment Period on any Business Day, provided that the Borrower shall give the
Administrative Agent irrevocable notice (which notice must be received by the
Administrative Agent prior to 12:00 Noon, New York City time, (a) three Business
Days prior to the requested Borrowing Date, if all or any part of the requested
Revolving Credit Loans are to be initially Eurodollar Loans or (b) on the
requested Borrowing Date, otherwise), specifying (i) the amount to be borrowed,
(ii) the requested Borrowing Date, (iii) whether the borrowing is to be of
Eurodollar Loans, ABR Loans or a combination thereof and (iv) if the borrowing
is to be entirely or partly of Eurodollar Loans, the respective amounts of each
such Type of Loan and the respective lengths of the initial Interest Periods
therefor. Each borrowing under the Revolving Credit Commitments shall be in an
amount equal to (x) in the case of ABR Loans, $5,000,000 or a whole multiple of
$1,000,000 in excess thereof and (y) in the case of Eurodollar Loans,
$10,000,000 or a whole multiple of $1,000,000 in excess thereof. Upon receipt of
any such notice from the Borrower, the Administrative Agent shall promptly
notify each Lender thereof. Each Lender will make the amount of its pro rata
share of each borrowing available to the Administrative Agent for the account of
the Borrower at the office of the Administrative Agent specified in subsection
10.2 prior to 1:00 P.M., New York City time, on the Borrowing Date requested by
the Borrower in Dollars and in funds immediately available to the Administrative
Agent. Such borrowing will be made available to the Borrower on or prior to 2:00
P.M., New York City time, by the Administrative Agent crediting the account of
the Borrower on the books of such office of the Administrative Agent with the
aggregate of the amounts made available to the Administrative Agent by the
Lenders and in like funds as received by the Administrative Agent.
2.3 Commitment Fee. The Borrower agrees to pay to the
Administrative Agent for the account of each Lender a commitment fee for the
period from and including the first day of the Revolving Credit Commitment
Period to but not including the Revolving Credit Termination Date, computed at a
rate per annum equal to the Applicable Commitment Fee Rate then in effect on the
average daily amount of the Available Revolving Credit Commitment of such Lender
during the period for which payment is made, payable quarterly in arrears on the
last day of each April, July, October and January and on the Revolving Credit
Termination Date or such earlier date as the Revolving Credit Commitments shall
terminate as provided herein, commencing on the first of such dates to occur
after the date hereof.
2.4 Termination or Reduction of Commitments. The Borrower
shall have the right, upon not less than two Business Days' notice to the
Administrative Agent, to terminate the Revolving Credit Commitments or, from
time to time, to reduce the amount of the Revolving Credit Commitments, provided
that no such termination or reduction shall be permitted if, after giving effect
thereto and to any prepayments of the Revolving Credit Loans made on the
effective date thereof, the aggregate principal amount of the Revolving Credit
Loans then outstanding would exceed the Revolving Credit Commitments then in
effect. Any such reduction shall be in an amount equal to $10,000,000 or a whole
multiple of $1,000,000 in excess thereof and shall reduce permanently the
Revolving Credit Commitments then in effect. Upon receipt of any notice pursuant
to this subsection 2.4, the Administrative Agent shall promptly notify each
Lender thereof.
2.5 Repayment of Revolving Credit Loans. The Borrower hereby
unconditionally promises to pay to the Administrative Agent for the account of
each Lender the then unpaid principal amount of each Revolving Credit Loan of
such Lender on the Revolving Credit Termination Date (or such earlier date on
which the Revolving Credit Loans become due and payable pursuant to Section 8).
The Borrower hereby further agrees to pay interest on the unpaid principal
amount of the Revolving
<PAGE> 23
18
Credit Loans from time to time outstanding from the date hereof until payment in
full thereof at the rates per annum, and on the dates, set forth in subsection
3.4.
2.6 [INTENTIONALLY OMITTED]
2.7 [INTENTIONALLY OMITTED]
2.8 [INTENTIONALLY OMITTED]
2.9 [INTENTIONALLY OMITTED]
2.10 [INTENTIONALLY OMITTED]
2.11 [INTENTIONALLY OMITTED]
2.12 [INTENTIONALLY OMITTED]
2.13 [INTENTIONALLY OMITTED]
2.14 [INTENTIONALLY OMITTED]
2.15 [INTENTIONALLY OMITTED]
2.16 [INTENTIONALLY OMITTED]
2.17 [INTENTIONALLY OMITTED]
2.18 [INTENTIONALLY OMITTED]
2.19 [INTENTIONALLY OMITTED]
2.20 [INTENTIONALLY OMITTED]
2.21 Extension of Revolving Credit Termination Date. (a) The
Borrower may request, in a written notice given as herein provided to the
Administrative Agent and each of the Lenders, that the Revolving Credit
Termination Date be extended for 364 days, which notice shall specify the new
Revolving Credit Termination Date to be in effect following such extension (the
"Requested Revolving Credit Termination Date") provided that the Requested
Revolving Credit Termination Date shall not be more than 364 days from the date
on which such request is to become effective (the "Extension Effective Date").
The Borrower's request shall be delivered to the Administrative Agent at least
40 but no more than 60 days prior to the proposed Extension Effective Date. Each
Lender shall, on or before 20 days after such request is made, notify the
Borrower and the Administrative Agent in writing of its election to extend or
not to extend the Revolving Credit Termination Date with respect to its pro rata
share of the Revolving Credit Commitment (based on such Lender's Revolving
Credit Commitment as a percentage of the aggregate Revolving Credit Commitments
of all the Lenders immediately prior to the Extension Effective Date). The
Borrower may at any time revoke its request to extend the Revolving Credit
Termination Date. If on the date 20 days prior to the Extension Effective Date
the Required Lenders elect to extend the Revolving Credit Termination Date with
respect to their pro rata share of the Revolving Credit Commitment and the
Borrower has not revoked its request to extend the Revolving Credit Termination
Date, then, subject to the provisions of this Section 2.21, the Revolving Credit
<PAGE> 24
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Termination Date shall be extended to the Requested Revolving Credit Termination
Date. Any Lender which shall not notify the Borrower and the Administrative
Agent of its election to extend the Revolving Credit Termination Date on or
prior to the date 20 days prior to the Extension Effective Date shall be deemed
to have elected not to extend the Revolving Credit Termination Date with respect
to its pro rata share of the Revolving Credit Commitment.
(b) So long as the Required Lenders shall have elected to
extend their pro rata shares of the Revolving Credit Commitment as provided in
Section 2.21(a), if any Lender shall timely notify the Borrower and the
Administrative Agent pursuant to Section 2.21(a) of its election not to extend
its pro rata share of the Revolving Credit Commitment, or shall be deemed to
have elected not to extend its pro rata share of the Revolving Credit Commitment
(any such Lender being called a "Terminating Lender"), then the remaining
Lenders (the "Continuing Lenders") or any of them shall have the right (but not
the obligation), upon notice to the Borrower and the Administrative Agent not
later than 15 days preceding the Extension Effective Date to increase their pro
rata share of the Revolving Credit Commitments, by an amount up to in the
aggregate the pro rata share of the Revolving Credit Commitment of any
Terminating Lenders. If Continuing Lenders have elected to increase their pro
rata share of the Revolving Credit Commitment pursuant to the preceding sentence
by an aggregate amount which exceeds the aggregate pro rata share of the
Revolving Credit Commitment of the Terminating Lenders, then the proposed
increase in the Revolving Credit Commitment of each such Continuing Lender (as
specified in the notice referred to in the preceding sentence) shall be
decreased pro rata so that the aggregate increase in the Revolving Credit
Commitments of such Continuing Lenders is equal to the aggregate pro rata share
of the Revolving Credit Commitment of the Terminating Lenders. Each increase in
the Revolving Credit Commitment of a Continuing Lender shall be evidenced by a
written instrument executed by such Continuing Lender, the Borrower and the
Administrative Agent, and shall take effect on the Extension Effective Date.
(c) In the event the aggregate pro rata share of the Revolving
Credit Commitment amount of the Terminating Lenders shall exceed the aggregate
amount by which the Continuing Lenders have agreed to increase their Revolving
Credit Commitments pursuant to Section 2.21(b), the Borrower shall have the
right to, designate, at its option, one or more other lending institutions
willing to extend Revolving Credit Commitments until the Requested Termination
Date in an aggregate amount not greater than such excess. Any such lending
institution (an "Additional Lender") shall, on or prior to the Extension
Effective Date, execute and deliver to the Borrower and the Administrative Agent
an Assignment and Acceptance Agreement or Addendum, as the case may be, in
either case reasonably satisfactory to the Borrower and the Administrative
Agent, setting forth the amount of such Additional Lender's Revolving Credit
Commitment and containing its agreement to become, and to perform all the
obligations of, a Lender hereunder, and the Revolving Credit Commitment of such
Additional Lender shall become effective on the Extension Effective Date.
(d) If the Required Lenders shall have elected to extend their
pro rata shares of the Revolving Credit Commitment as provided in Section
2.21(a) and the Borrower has not revoked its request to extend the Termination
Date as provided in Section 2.21(a), then (i) effective on the Extension
Effective Date the Revolving Credit Commitments of the Continuing Lenders
(including any increase pursuant to Section 2.21(b)) and any Additional Lenders
equal to their pro rata share of the Revolving Credit Commitments as provided in
this Section 2.21 shall continue until the Requested Revolving Credit
Termination Date specified in the notice from the Borrower, and as to such
Lenders the term "Revolving Credit Termination Date", as used herein, shall mean
such Requested Revolving Credit Termination Date; (ii) the Revolving Credit
Commitments of any Terminating Lender shall continue until the Extension
Effective Date, and shall then terminate (as to any Terminating Lender, the term
"Revolving Credit Termination Date", as used herein, shall mean the Extension
Effective Date) and the Borrower
<PAGE> 25
20
shall pay in full the outstanding principal amount, together with interest
accrued to such date and all other amounts owed by the Borrower to such
Terminating Lender pursuant to this Agreement, of the Loans of such Terminating
Lender; and (iii) from and after the Extension Effective Date, the term
"Lenders" shall be deemed to include the Additional Lenders and exclude the
Terminating Lenders. On the Extension Effective Date the Borrower shall make
payments of Revolving Loans and request new Revolving Loans to the extent
necessary so that the aggregate principal amount of outstanding Revolving Loans
of each Lender is equal to its Revolving Credit Commitment Percentage of the
aggregate outstanding principal amounts of all Revolving Loans.
SECTION 3. GENERAL PROVISIONS APPLICABLE TO LOANS
3.1 Optional Prepayments. The Borrower may, at any time and
from time to time, prepay the Revolving Credit Loans, in whole or in part,
without premium or penalty (except, with respect to Eurodollar Loans that are
prepaid on a date other than the last day of the Interest Period with respect
thereto, as provided under subsection 3.11), upon (in the case of prepayments of
Eurodollar Loans) at least two Business Days' irrevocable notice to the
Administrative Agent and upon (in the case of prepayments of ABR Loans)
irrevocable notice to the Administrative Agent prior to 11:00 A.M., New York
City time, on the date of such prepayment, specifying the date and amount of
prepayment and whether the prepayment is of Eurodollar Loans, ABR Loans or a
combination thereof, and, if of a combination thereof, the amount allocable to
each. Upon receipt of any such notice the Administrative Agent shall promptly
notify each affected Lender thereof. If any such notice is given, the amount
specified in such notice shall be due and payable on the date specified therein,
together with any amounts payable pursuant to subsection 3.11 in connection
therewith. Partial prepayments under this section 3.1 shall be in an aggregate
principal amount of $10,000,000 or a whole multiple of $1,000,000 in excess
thereof.
3.2 Conversion and Continuation Options. (a) The Borrower may,
subject to paragraph (b) below, elect from time to time to convert Eurodollar
Loans to ABR Loans by giving the Administrative Agent irrevocable notice of such
election prior to 12:00 Noon on the date of conversion, provided that any such
conversion of Eurodollar Loans may only be made on the last day of an Interest
Period with respect thereto. The Borrower may elect from time to time to convert
ABR Loans to Eurodollar Loans by giving the Administrative Agent at least three
Business Days' prior irrevocable notice of such election. Any such notice of
conversion to Eurodollar Loans shall specify the length of the initial Interest
Period or Interest Periods therefor. Upon receipt of any such notice the
Administrative Agent shall promptly notify each affected Lender thereof. All or
any part of outstanding Eurodollar Loans and ABR Loans may be converted as
provided herein, provided that (i) no ABR Loan may be converted into a
Eurodollar Loan when any Event of Default has occurred and is continuing and the
Administrative Agent has notified the Borrower that it has determined that such
a conversion is not appropriate and (ii) no ABR Loan may be converted into a
Eurodollar Loan after the date that is one month prior to the Revolving Credit
Termination Date.
(b) Any Eurodollar Loans may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Borrower giving notice to the Administrative Agent, in accordance with the
applicable provisions of the term "Interest Period" set forth in subsection 1.1,
of the length of the next Interest Period to be applicable to such Eurodollar
Loans, provided that no Eurodollar Loan may be continued as such (i) when any
Event of Default has occurred and is continuing and the Administrative Agent has
notified the Borrower that it has determined that such a continuation is not
appropriate or (ii) after the date that is one month prior to the Revolving
Credit Termination Date, and provided, further, that if the Borrower shall fail
to give such notice or if such continuation is not permitted such Eurodollar
Loans shall be automatically converted to ABR Loans on the last day of such
<PAGE> 26
21
then expiring Interest Period. Upon receipt of any notice pursuant to this
subsection 3.2(b), the Administrative Agent shall notify each affected Lender
thereof.
3.3 Minimum Amounts and Maximum Number of Tranches. All
borrowings, conversions and continuations of Revolving Credit Loans hereunder
and all selections of Interest Periods hereunder shall be in such amounts and be
made pursuant to such elections so that, after giving effect thereto, the
aggregate principal amount of Eurodollar Loans comprising each Tranche shall be
equal to $10,000,000 or a whole multiple of $1,000,000 in excess thereof. In no
event shall there be more than 30 Tranches outstanding at any time.
3.4 Interest Rates and Payment Dates. (a) Each Eurodollar Loan
shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined for such day
plus the Applicable Margin.
(b) Each ABR Loan shall bear interest at a rate per annum
equal to the ABR plus the Applicable Margin.
(c) If all or a portion of (i) any principal of or interest
payable on any Loan, (ii) any commitment fee or (iii) any other amount payable
hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), any such overdue principal, interest, commitment fee
or other amount shall bear interest at a rate per annum which is the rate
described in paragraph (b) of this subsection (or, in the case of overdue
principal, the rate otherwise applicable thereto) plus 2%, in each case from the
date of such non-payment until such overdue interest, commitment fee or other
amount is paid in full (as well after as before judgment).
(d) Interest shall be payable in arrears on each Interest
Payment Date, provided that (i) interest accruing pursuant to subsection 3.4(c)
shall be payable from time to time on demand, and (ii) interest on the Revolving
Credit Loans shall also be due and payable on the Revolving Credit Termination
Date (or such earlier date on which the Revolving Credit Loans become due and
payable pursuant to Section 8).
3.5 Computation of Interest and Fees. (a) Whenever it is
calculated on the basis of the Prime Rate, interest shall be calculated on the
basis of a 365- (or 366-, as the case may be) day year for the actual days
elapsed; and, otherwise, interest and commitment fees shall be calculated on the
basis of a 360-day year for the actual days elapsed. The Administrative Agent
shall as soon as practicable notify the Borrower and the affected Lenders of
each determination of a Eurodollar Rate. Any change in the interest rate on a
Revolving Credit Loan resulting from a change in the ABR or the Eurocurrency
Reserve Requirements shall become effective as of the opening of business on the
day on which such change becomes effective. The Administrative Agent shall as
soon as practicable notify the Borrower and the affected Lenders of the
effective date and the amount of each such change in interest rate.
(b) Each determination of an interest rate by the
Administrative Agent pursuant to any provision of this Agreement shall be
conclusive and binding on the Borrower and the affected Lenders in the absence
of manifest error.
(c) If any Reference Lender shall for any reason no longer
have a Revolving Credit Commitment or any Loans, such Reference Lender shall
thereupon cease to be a Reference Lender, and if, as a result, there shall only
be one Reference Lender remaining, the Administrative Agent (after consultation
with the Lenders and with the consent of the Borrower (which shall not be
unreasonably
<PAGE> 27
22
withheld)) shall, by notice to the Borrower and the Lenders, designate another
Lender that is a commercial bank as a Reference Lender so that there shall at
all times be at least two Reference Lenders.
(d) Each Reference Lender shall use its best efforts to
furnish quotations of rates to the Administrative Agent as contemplated hereby.
If any of the Reference Lenders shall be unable or shall otherwise fail to
supply such rates to the Administrative Agent upon its request, the rate of
interest shall, subject to the provisions of this subsection 3.5, be determined
on the basis of the quotations of the remaining Reference Lenders or Reference
Lender.
3.6 Inability to Determine Interest Rate. If prior to the
first day of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that,
by reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for
such Interest Period, or
(b) the Administrative Agent shall have received notice from
the Majority Lenders that the Eurodollar Rate determined or to be
determined for such Interest Period will not adequately and fairly
reflect the cost to the Majority Lenders (as conclusively certified by
such Lenders) of making or maintaining their affected Revolving Credit
Loans during such Interest Period,
the Administrative Agent shall give facsimile or telephonic notice thereof to
the Borrower and the affected Lenders as soon as practicable thereafter. If such
notice is given (x) any Eurodollar Loans requested to be made on the first day
of such Interest Period shall be made as ABR Loans, (y) any ABR Loans that were
to have been converted on the first day of such Interest Period to Eurodollar
Loans shall be continued as ABR Loans and (z) any outstanding Eurodollar Loans
which the Borrower has requested to continue as such pursuant to subsection
3.2(b) shall be converted, on the first day of such Interest Period, to ABR
Loans. Until such notice has been withdrawn by the Administrative Agent, no
further Eurodollar Loans shall be made or continued as such, nor shall the
Borrower have the right to convert ABR Loans to Eurodollar Loans.
3.7 Pro Rata Treatment and Payments. (a) All payments
(including prepayments) to be made by the Borrower hereunder, whether on account
of principal, interest, fees or otherwise, shall be made without set off or
counterclaim and shall be made prior to 12:00 Noon, New York City time, on the
due date thereof to the Administrative Agent, for the account of the Lenders at
the Administrative Agent's office specified in or pursuant to subsection 10.2
(except as otherwise provided herein) in Dollars and in immediately available
funds. The Administrative Agent shall distribute such payments to the Lenders
entitled to receive the same promptly upon receipt in like funds as received. If
any payment hereunder (other than payments on Eurodollar Loans) becomes due and
payable on a day other than a Business Day, such payment shall be extended to
the next succeeding Business Day, and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during such
extension. If any payment on a Eurodollar Loan becomes due and payable on a day
other than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day (and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension)
unless the result of such extension would be to extend such payment into another
calendar month, in which event such payment shall be made on the immediately
preceding Business Day.
(b) Unless the Administrative Agent shall have been notified
in writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its portion of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender
<PAGE> 28
23
is making such amount available to the Administrative Agent, and the
Administrative Agent may, in reliance upon such assumption, make available to
the Borrower a corresponding amount. If such amount is not made available to the
Administrative Agent by the required time on the Borrowing Date therefor, such
Lender shall pay to the Administrative Agent, on demand, such amount with
interest thereon at a rate equal to the daily average Federal Funds Effective
Rate for the period until such Lender makes such amount immediately available to
the Administrative Agent. A certificate of the Administrative Agent submitted to
any Lender with respect to any amounts owing under this subsection shall be
conclusive in the absence of manifest error. If such Lender's portion of such
borrowing is not made available to the Administrative Agent by such Lender
within three Business Days of such Borrowing Date, the Administrative Agent
shall also be entitled to recover such amount with interest thereon at the rate
per annum applicable to ABR Loans hereunder, on demand, from the Borrower.
(c) Each borrowing by the Borrower of Revolving Credit Loans
shall be made ratably from the Lenders in accordance with their respective
Revolving Credit Commitment Percentages. Any reduction of the Revolving Credit
Commitments shall be made ratably among the Lenders, in accordance with their
respective Revolving Credit Commitment Percentages. Each payment (including each
prepayment) by the Borrower on account of principal of and interest on the
Revolving Credit Loans shall be made pro rata according to the respective
outstanding principal amounts of the Revolving Credit Loans then held by the
Lenders.
3.8 Illegality. Notwithstanding any other provision herein, if
the adoption of or any change in any Requirement of Law or in the interpretation
or application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such
Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert ABR Loans to Eurodollar Loans shall forthwith be suspended during the
period of illegality and (b) such Lender's Loans then outstanding as Eurodollar
Loans, if any, shall be converted automatically to ABR Loans on the respective
last days of the then current Interest Periods with respect to such Loans or
within such earlier period as required by law. If any such conversion of a
Eurodollar Loan occurs on a day which is not the last day of the then current
Interest Period with respect thereto, the Borrower shall pay to such Lender such
amounts, if any, as may be required pursuant to subsection 3.11.
3.9 Requirements of Law. (a) If the adoption of or any change
in any Requirement of Law or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind
whatsoever with respect to this Agreement, any Note or any Eurodollar
Loan or change the basis of taxation of payments to such Lender in
respect thereof (except for Non-Excluded Taxes covered by subsection
3.10 and changes in the rate of tax on the overall net income of such
Lender);
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of such Lender which is not
otherwise included in the determination of the Eurodollar Rate
hereunder; or
(iii) shall impose on such Lender any other condition;
<PAGE> 29
24
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, within 15 days after
demand therefor (accompanied by the certificate contemplated by subsection
3.9(c) with respect thereto) the Borrower shall pay such Lender such additional
amount or amounts as will compensate such Lender for such increased cost or
reduced amount receivable.
(b) If any Lender shall have determined that the adoption of
or any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which such Lender
or such corporation could have achieved but for such adoption, change or
compliance (taking into consideration such Lender's or such corporation's
policies with respect to capital adequacy) by an amount deemed by such Lender to
be material, then from time to time, within 15 days after demand therefor
(accompanied by the certificate contemplated by subsection 3.9(c) with respect
thereto), the Borrower shall pay to such Lender such additional amount or
amounts as will compensate such Lender for such reduction.
(c) If any Lender becomes entitled to claim any additional
amounts pursuant to this subsection 3.9, it shall promptly notify the Borrower
(with a copy to the Administrative Agent) of the event by reason of which it has
become so entitled. A certificate as to any additional amounts payable pursuant
to this subsection 3.9 submitted by such Lender to the Borrower (with a copy to
the Administrative Agent) setting forth in reasonable detail the calculation of
such amounts and the basis therefor shall be conclusive in the absence of
manifest error. The agreements in this subsection shall survive the termination
of this Agreement and the payment of the Loans and all other amounts payable
hereunder.
3.10 Indemnification for Taxes. (a) All payments made by the
Borrower under this Agreement and any Notes shall be made free and clear of, and
without deduction or withholding for or on account of, any present or future
income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions
or withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any Governmental Authority, excluding net income taxes and franchise
and excise taxes (imposed in lieu of net income taxes) imposed on the
Administrative Agent or any Lender as a result of a present or former connection
between the Administrative Agent or such Lender and the jurisdiction of the
Governmental Authority imposing such tax or any political subdivision or taxing
authority thereof or therein (other than any such connection arising solely from
the Administrative Agent or such Lender having executed, delivered or performed
its obligations or received a payment under, or enforced, this Agreement or any
Note). If any such non-excluded taxes, levies, imposts, duties, charges, fees
deductions or withholdings ("Non-Excluded Taxes") are required to be withheld
from any amounts payable to the Administrative Agent or any Lender hereunder or
under any Note, the amounts so payable to the Administrative Agent or such
Lender shall be increased to the extent necessary to yield to the Administrative
Agent or such Lender (after payment of all Non-Excluded Taxes) interest or any
such other amounts payable hereunder at the rates or in the amounts specified in
this Agreement, provided, however, that the Borrower shall not be required to
increase any such amounts payable to any Lender that is not organized under the
laws of the United States of America or a state thereof if such Lender fails to
comply with the requirements of paragraph (b) of this subsection 3.10. Whenever
any Non-Excluded Taxes are payable by the Borrower, as promptly as possible
thereafter the Borrower shall send to the Administrative Agent for its own
account or for the account of such Lender, as the case may be, a certified copy
of an original official
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receipt received by the Borrower showing payment thereof. If the Borrower fails
to pay any Non-Excluded Taxes when due to the appropriate taxing authority or
fails to remit to the Administrative Agent the required receipts or other
required documentary evidence, the Borrower shall indemnify the Administrative
Agent and the Lenders for any incremental taxes, interest or penalties that may
become payable by the Administrative Agent or any Lender as a result of any such
failure. The agreements in this subsection shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.
(b) Each Lender that is not incorporated under the laws of the
United States of America or a state thereof shall:
(i) in the case of a Lender or a Transferee that is a
"bank" under Section 881(c)(3)(A) of the Code:
(A) on or before the date it becomes a party to
this Agreement (or, in the case of a Participant, on or before
the date such Participant becomes a Participant hereunder),
deliver to the Borrower and the Administrative Agent (I) two
duly completed copies of United States Internal Revenue
Service Form 1001 or 4224, or successor applicable form, as
the case may be, and (II) an Internal Revenue Service Form W-8
or W-9, or successor applicable form, as the case may be;
(B) deliver to the Borrower and the Administrative
Agent two further copies of any such form or certification on
or before the date that any such form or certification expires
or becomes obsolete and after the occurrence of any event
requiring a change in the most recent form previously
delivered by it to the Borrower; and
(C) obtain such extensions of time for filing and
complete such forms or certifications as may reasonably be
requested by the Borrower or the Administrative Agent; and
(ii) in the case of a Lender or a Transferee that is not a
"bank" under Section 881(c)(3)(A) of the Code:
(A) on or before the date it becomes a party to this
Agreement (or, in the case of a Participant, on or before the
date such Participant becomes a Participant hereunder),
deliver to the Borrower and the Administrative Agent (I) a
statement under penalties of perjury that such Lender or
Transferee (x) is not a "bank" under Section 881(c)(3)(A) of
the Code, is not subject to regulatory or other legal
requirements as a bank in any jurisdiction, and has not been
treated as a bank for purposes of any tax, securities law or
other filing or submission made to any Governmental Authority,
any application made to a rating agency or qualification for
any exemption from tax, securities law or other legal
requirements, (y) is not a 10-percent shareholder within the
meaning of Section 881(c)(3)(B) of the Code and (z) is not a
controlled foreign corporation receiving interest from a
related person within the meaning of Section 881(c)(3)(C) of
the Code and (II) a properly completed and duly executed
Internal Revenue Service Form W-8 or applicable successor
form;
(B) deliver to the Borrower and the Administrative
Agent two further properly completed and duly executed copies
of such Form W-8, or any successor applicable form, on or
before the date that any such Form W-8 expires or becomes
obsolete or after
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the occurrence of any event requiring a change in the most
recent form previously delivered by it to the Borrower or upon
the request of the Borrower; and
(C) obtain such extensions of time for filing and
completing such forms or certifications as may be reasonably
requested by the Borrower or the Administrative Agent;
unless in any such case 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 Lender from duly completing and delivering any such
form with respect to it and such Lender so advises the Borrower and the
Administrative Agent. Each Lender that is not incorporated under the laws of the
United States of America or a state thereof shall certify (i) in the case of a
Form 1001 or 4224, that it is entitled to receive payments under this Agreement
without deduction or withholding of any United States federal income taxes and
(ii) in the case of a Form W-8 or W-9 provided pursuant to subsection
4.10(b)(i)(A)(II), that it is entitled to an exemption from United States backup
withholding tax. Each Person that shall become a Lender or a Participant
pursuant to subsection 10.6 shall, upon the effectiveness of the related
transfer, be required to provide all of the forms and statements required
pursuant to this subsection, provided that in the case of a Participant such
Participant shall furnish all such required forms and statements to the Lender
from which the related participation shall have been purchased.
3.11 Indemnity. The Borrower agrees to indemnify each Lender
and to hold each Lender harmless from any loss or reasonable expense which such
Lender may sustain or incur as a consequence of (a) default by the Borrower in
making a borrowing of, conversion into or continuation of Eurodollar Loans after
the Borrower has given a notice requesting the same in accordance with the
provisions of this Agreement, (b) default by the Borrower in making any
prepayment of a Eurodollar Loan after the Borrower has given a notice thereof in
accordance with the provisions of this Agreement or (c) the making of a
prepayment or conversion of Eurodollar Loans on a day which is not the last day
of an Interest Period with respect thereto, which loss shall be equal to the
excess, if any, of (i) the amount of interest which would have accrued on the
amount so prepaid or converted, or not so borrowed, converted or continued, for
the period from the date of such prepayment or conversion or of such failure to
borrow, convert or continue to the last day of such Interest Period (or proposed
Interest Period) over (ii) the amount of interest (as reasonably determined by
such Lender) which would have accrued to such Lender on such amount by placing
such amount on deposit for a comparable period with leading banks in the
interbank eurodollar market. A certificate as to any amounts payable pursuant to
this subsection 3.11 submitted by any Lender to the Borrower (with a copy to the
Administrative Agent) shall be conclusive in the absence of manifest error. This
covenant shall survive the termination of this Agreement and the payment of the
Loans and all other amounts payable hereunder.
3.12 Change of Lending Office. Each Lender agrees that if it
makes any demand for payment under subsection 3.9 or 3.10(a), or if any adoption
or change of the type described in subsection 3.8 shall occur with respect to
it, it will use reasonable efforts (consistent with its internal policy and
legal and regulatory restrictions and so long as such efforts would not be
disadvantageous to it, as determined in its sole discretion) to designate a
different lending office if the making of such a designation would reduce or
obviate the need for the Borrower to make payments under subsection 3.9 or
3.10(a), or would eliminate or reduce the effect of any adoption or change
described in subsection 3.8.
3.13 Evidence of Debt. (a) Each Lender shall maintain in
accordance with its usual practice an account or accounts evidencing
indebtedness of the Borrower to such Lender resulting from
<PAGE> 32
27
the Loans of such Lender, including the amounts of principal and interest
payable and paid to such Lender from time to time under this Agreement.
(b) The Administrative Agent shall maintain the Register
pursuant to subsection 10.6(d), and a subaccount therein for each Lender, in
which shall be recorded (i) in the case of Committed Loans, the amount of each
Committed Loan made hereunder, the Type thereof and each Interest Period (if
any) applicable thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each Lender hereunder
and (iii) both the amount of any sum received by the Administrative Agent
hereunder from the Borrower and each Lender's share thereof.
(c) The entries made in the Register and the accounts of each
Lender maintained pursuant to subsection 3.13(a) shall, to the extent permitted
by applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrower therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to maintain the Register or
any such account, or any error therein, shall not in any manner affect the
obligation of the Borrower to repay (with applicable interest) the Loans in
accordance with the terms of this Agreement.
(d) The Borrower agrees that, upon the request to the
Administrative Agent by any Lender, the Borrower will execute and deliver to
such Lender a promissory note of the Borrower evidencing the Revolving Credit
Loans of such Lender, substantially in the form of Exhibit F (a "Revolving
Credit Note"), payable to the order of such Lender and in a principal amount
equal to the Revolving Credit Commitment of such Lender on the date of issuance
of such Revolving Credit Note. Each Lender is hereby authorized to record the
date, Type and amount of each Revolving Credit Loan of such Lender, the date and
amount of each payment or prepayment of principal thereof, each continuation of
all or a portion thereof as the same Type, each conversion of all or a portion
thereof to another Type and, in the case of Eurodollar Loans, the length of each
Interest Period and Eurodollar Rate with respect thereto, on the schedule (or
any continuation of the schedule) annexed to and constituting a part of its
Revolving Credit Note, as the case may be, and any such recordation shall, to
the extent permitted by applicable law, constitute prima facie evidence of the
accuracy of the information so recorded, provided that the failure to make any
such recordation (or any error therein) shall not affect the obligation of the
Borrower to repay (with applicable interest) the Revolving Credit Loans in
accordance with the terms of this Agreement.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter
into this Agreement and to make the Extensions of Credit, the Borrower hereby
represents and warrants to the Administrative Agent and each Lender that:
4.1 Financial Condition. The consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as at January 27, 1999 and the
related consolidated statements of income and of cash flows for the Fiscal Year
ended on such date, reported on by PriceWaterhouseCoopers LLP, copies of which
have heretofore been furnished to each Lender, are complete and correct in all
material respects and present fairly the consolidated financial condition of the
Borrower and its Consolidated Subsidiaries as at such date, and the consolidated
results of their operations and their consolidated cash flows for the Fiscal
Year then ended. All such financial statements, including the related schedules
and notes thereto, have been prepared in accordance with GAAP applied
consistently throughout the periods involved (except as approved by such
accountants or Responsible Officer, as the case may be, and as disclosed
therein). Except as set forth on Schedule 4.1 or as disclosed in the most recent
Form 10-K or
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28
subsequent Form 10-Q filed by the Borrower with the SEC prior to the date
hereof, neither the Borrower nor any of its Consolidated Subsidiaries had, at
the date of the most recent balance sheet referred to above, any material
Guarantee Obligation, material contingent liability or liability for taxes, or
any material long-term lease or unusual forward or long-term commitment,
including, without limitation, any interest rate or foreign currency swap or
exchange transaction, which is not reflected in the foregoing statements or in
the notes thereto. Except as set forth on Schedule 4.1 or as disclosed in the
most recent Form 10-K or subsequent Form 10-Q filed by the Borrower with the SEC
prior to the date hereof, during the period from January 27, 1999 to and
including the date hereof there has been no sale, transfer or other disposition
by the Borrower or any of its Consolidated Subsidiaries of any material part of
its business or property and no purchase or other acquisition of any business or
property (including any capital stock of any other Person) material in relation
to the consolidated financial condition of the Borrower and its Consolidated
Subsidiaries at January 27, 1999.
4.2 No Change. Since January 27, 1999, there has been no
development or event which has had or could reasonably be expected to have a
Material Adverse Effect.
4.3 Corporate Existence; Compliance with Law. Each of the
Borrower and its Restricted Subsidiaries (a) is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization, (b)
has the corporate power and authority, and the legal right, to own and operate
its property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification and (d) is in compliance with all Requirements of
Law except, in each case, where the failure to be so organized, existing, in
good standing or qualified, or the failure to have such power or authority or to
so comply, could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.
4.4 Corporate Power; Authorization; Enforceable Obligations.
Each of the Borrower and its Restricted Subsidiaries has the corporate power and
authority, and the legal right, to make, deliver and perform the Loan Documents
to which it is a party and (in the case of the Borrower) to borrow and obtain
the other Extensions of Credit hereunder and has taken all necessary corporate
action to authorize the Extensions of Credit on the terms and conditions of this
Agreement and any Notes and to authorize the execution, delivery and performance
of the Loan Documents to which it is a party. No consent or authorization of,
filing with, notice to, or other act by or in respect of, any Governmental
Authority or any other Person is required in connection with the Extensions of
Credit hereunder or with the execution, delivery, performance, validity or
enforceability of the Loan Documents to which the Borrower or any of its
Restricted Subsidiaries is a party except those described on Schedule 4.4, all
of which have been obtained, made or waived. This Agreement has been, and each
other Loan Document will be, duly executed and delivered on behalf of the
Borrower and each of its Restricted Subsidiaries that is a party thereto. This
Agreement constitutes, and each other Loan Document when executed and delivered
will constitute, a legal, valid and binding obligation of the Borrower and each
of its Restricted Subsidiaries that is a party thereto enforceable against the
Borrower and each such Restricted Subsidiary in accordance with its terms,
subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing.
4.5 No Legal Bar. The execution, delivery and performance of
the Loan Documents to which the Borrower or any of its Restricted Subsidiaries
is a party, the Extensions of Credit hereunder and the use of the proceeds
thereof will not violate any Requirement of Law or Contractual Obligation of
<PAGE> 34
29
the Borrower or of any of its Restricted Subsidiaries and will not result in, or
require, the creation or imposition of any Lien on any of its or their
respective properties or revenues pursuant to any such Requirement of Law or
Contractual Obligation (other than pursuant to the Loan Documents), except to
the extent that any such violations (individually or in the aggregate) could not
reasonably be expected to have a Material Adverse Effect.
4.6 No Material Litigation. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the knowledge of the Borrower, threatened by or against the Borrower or any
of its Restricted Subsidiaries or against any of its or their respective
properties or revenues (a) with respect to any of the Loan Documents or any of
the transactions contemplated hereby or thereby or (b) which could reasonably be
expected to have a Material Adverse Effect.
4.7 No Default. Neither the Borrower nor any of its Restricted
Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect which could reasonably be expected to have a Material
Adverse Effect. After giving effect to the initial Extensions of Credit and the
application of the proceeds thereof, no Default or Event of Default has occurred
and is continuing.
4.8 No Burdensome Restrictions. No Requirement of Law or
Contractual Obligation of the Borrower or any of its Restricted Subsidiaries
could reasonably be expected to have a Material Adverse Effect.
4.9 Taxes. Each of the Borrower and its Restricted
Subsidiaries has filed or caused to be filed all tax returns which, to the
knowledge of the Borrower, are required to be filed and has paid all taxes shown
to be due and payable on said returns or on any assessments made against it or
any of its property and all other taxes, fees or other charges imposed on it or
any of its property by any Governmental Authority (other than any such taxes,
fees or other charges (i) the amount or validity of which are then being
contested in good faith by appropriate proceedings and with respect to which
reserves in conformity with GAAP have been provided on the books of the Borrower
or its Subsidiaries, as the case may be, or (ii) which, if not paid, could
reasonably be expected to have a Material Adverse Effect); no tax Lien has been
filed, and, to the knowledge of the Borrower, no claim is being asserted, with
respect to any such tax, fee or other charge (other than with respect to any
such tax, fee or other charge the amount or validity of which is then being
contested in good faith by appropriate proceedings and with respect to which
reserves in conformity with GAAP have been provided on the books of the Borrower
or its Subsidiaries, as the case may be) which could reasonably be expected to
have a Material Adverse Effect.
4.10 Federal Regulations. No part of the proceeds of any
Extension of Credit will be used for "purchasing" or "carrying" any "margin
stock" within the respective meanings of each of the quoted terms under
Regulation U of the Board of Governors as now and from time to time hereafter in
effect. If requested by any Lender or the Administrative Agent, the Borrower
will furnish to the Administrative Agent and each Lender a statement to the
foregoing effect in conformity with the requirements of FR Form G-1 or FR Form
U-1 referred to in said Regulation U.
4.11 ERISA. Neither a Reportable Event nor an "accumulated
funding deficiency" (within the meaning of Section 412 of the Code or Section
302 of ERISA) which could reasonably be expected to have a Material Adverse
Effect has occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan. Each Plan has
complied in all material respects with the applicable provisions of ERISA and
the Code, except where the failure to so comply could not reasonably be expected
to have a Material Adverse Effect. No termination of a
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30
Single Employer Plan has occurred, except where such a termination could not
reasonably be expected to have a Material Adverse Effect, and no Lien in favor
of the PBGC or a Plan has arisen, during such five-year period. The present
value of all accrued benefits under each Single Employer Plan (based on those
assumptions used to fund such Plan) did not, as of the last annual valuation
date prior to the date on which this representation is made or deemed made,
exceed the value of the assets of such Plan allocable to such accrued benefits,
except to the extent any such excess (individually or in the aggregate) could
not reasonably be expected to have a Material Adverse Effect. Neither the
Borrower nor any Commonly Controlled Entity has had a complete or partial
withdrawal from any Multiemployer Plan, except where such withdrawal could not
reasonably be expected to have a Material Adverse Effect, and neither the
Borrower nor any Commonly Controlled Entity would become subject to any
liability under ERISA if the Borrower or any such Commonly Controlled Entity
were to withdraw completely from all Multiemployer Plans as of the valuation
date most closely preceding the date on which this representation is made or
deemed made, except where such liability could not reasonably be expected to
have a Material Adverse Effect. No such Multiemployer Plan is in a
Reorganization or Insolvency which could reasonably be expected to have a
Material Adverse Effect.
4.12 Investment Company Act; Other Regulations. The Borrower
is not an "investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.
To the best knowledge of the Borrower, the Borrower is not subject to regulation
under any federal or state statute or regulation (other than Regulation X of the
Board of Governors) which limits its ability to incur Indebtedness.
4.13 Subsidiaries. Schedule 4.13 sets forth all the
Subsidiaries of the Borrower at the date hereof.
4.14 Environmental Matters. To the best knowledge of the
Borrower:
(a) The facilities and properties owned or operated by the
Borrower or any of its Restricted Subsidiaries (the "Properties") do
not contain, and have not previously contained, any Materials of
Environmental Concern in amounts or concentrations or under such
conditions which (i) constitute or constituted a violation of, or (ii)
could reasonably be expected to give rise to liability under, any
Environmental Law, except in either case insofar as such violation or
liability, or any aggregation thereof, could not reasonably be expected
to have a Material Adverse Effect.
(b) The Properties and all operations at the Properties are in
compliance, and have within the periods covered by the applicable
statute of limitations been in compliance, in all material respects
with all applicable Environmental Laws, and there is no contamination
at, under or about the Properties or violation of any Environmental Law
with respect to the Properties or the business operated by the Borrower
or any of its Restricted Subsidiaries (the "Business") which could
reasonably be expected to have a Material Adverse Effect.
(c) Neither the Borrower nor any of its Subsidiaries has
received any notice of violation, alleged violation, non-compliance,
liability or potential liability regarding environmental matters or
compliance with Environmental Laws with regard to any of the Properties
or the Business, nor does the Borrower have knowledge or reason to
believe that any such notice will be received or is being threatened,
except insofar as such notice or threatened notice, or any aggregation
thereof, does not involve a matter or matters that could reasonably be
expected to have a Material Adverse Effect.
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31
(d) Materials of Environmental Concern have not been
transported or disposed of from the Properties in violation of, or in a
manner or to a location which could reasonably be expected to give rise
to liability under, any Environmental Law, nor have any Materials of
Environmental Concern been generated, treated, stored or disposed of
at, on or under any of the Properties in violation of, or in a manner
that could reasonably be expected to give rise to liability under, any
applicable Environmental Law except insofar as any such violation or
liability referred to in this paragraph, or any aggregation thereof,
could not reasonably be expected to have a Material Adverse Effect.
(e) No judicial proceeding or governmental or administrative
action is pending or threatened under any Environmental Law to which
the Borrower or any Restricted Subsidiary is or will be named as a
party with respect to the Properties or the Business, nor are there any
consent decrees or other decrees, consent orders, administrative orders
or other orders, or other administrative or judicial requirements
outstanding under any Environmental Law with respect to the Properties
or the Business except insofar as such proceeding, action, decree,
order or other requirement, or any aggregation thereof, could not
reasonably be expected to have a Material Adverse Effect.
(f) There has been no release or threat of release of
Materials of Environmental Concern at or from the Properties, or
arising from or related to the operations of the Borrower or any
Restricted Subsidiary in connection with the Properties or otherwise in
connection with the Business, in violation of or in amounts or in a
manner that could reasonably give rise to liability under Environmental
Laws except insofar as any such violation or liability referred to in
this paragraph, or any aggregation thereof, could not reasonably be
expected to have a Material Adverse Effect.
4.15 Ownership of Property; Liens. Each of the Borrower and
each Restricted Subsidiary has good title in fee simple to, or valid ground
leasehold interests in, their respective material real properties and has good
title in fee simple to their other owned real property that is material to the
operation of their respective businesses, subject to defects in title and
leasehold and other interests which would not have a Material Adverse Effect,
and none of such property is subject to any Lien other than Liens permitted
under subsection 7.4.
4.16 Intellectual Property. The Borrower and each of its
Restricted Subsidiaries owns, or is licensed to use, all trademarks, tradenames,
copyrights, technology, know-how and processes necessary for the conduct of its
business as currently conducted except for those the failure to own or license
which could not reasonably be expected to have a Material Adverse Effect (the
"Intellectual Property"). Except as set forth on Schedule 4.16, no claim has
been asserted and is pending by any Person challenging or questioning the use of
any such Intellectual Property or the validity or effectiveness of any such
Intellectual Property, which could reasonably be expected to have a Material
Adverse Effect, nor does the Borrower know of any valid basis for any such
claim. Except as set forth on Schedule 4.16, the use of such Intellectual
Property by the Borrower and its Restricted Subsidiaries does not infringe on
the rights of any Person, except for such claims and infringements that, in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
4.17 [INTENTIONALLY OMITTED]
4.18 Solvency. As of the Effective Date and each date on which
an Extension of Credit is made hereunder, after giving effect to the
transactions contemplated to occur on the Effective Date or on such other date,
the Borrower is Solvent.
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4.19 Purpose of Loans. The proceeds of the Revolving Credit
Loans shall be used to refinance certain existing indebtedness of the Borrower
and for general corporate purposes.
4.20 Accuracy of Information. All statements and other
information (other than statements and information constituting projections)
contained in any written documents or other materials provided to the
Administrative Agent and the Lenders by the Borrower, including all such
statements and other information contained in the Preliminary Confidential
Information Memorandum dated October 1999 (as supplemented through the date
hereof, the "Information Memorandum"), are, when taken as a whole, correct in
all material respects and do not contain any untrue statements of a material
fact or omit to state a material fact necessary in order to make the statements
contained therein not materially misleading in light of the circumstances under
which such statements were made. All statements and other information
constituting projections which are contained in any written documents or other
materials provided to the Administrative Agent and the Lenders by the Borrower,
including the Information Memorandum, were prepared based on good faith
estimates and assumptions of the Borrower believed to be reasonable at the time
such projections were prepared.
4.21 Year 2000 Matters. Any material reprogramming required to
permit the proper functioning (but only to the extent that such proper
functioning would otherwise be impaired by the occurrence of the year 2000) with
the advent of the year 2000 of material computer systems and other material
equipment containing embedded microchips, in either case owned or operated by
the Borrower or any of its Subsidiaries (including any such systems and other
equipment supplied by others, but not including such systems or other equipment
used by others, with which the computer systems of the Borrower or any of its
Subsidiaries interface), and the testing of all such systems and other equipment
as so reprogrammed, could not reasonably be expected to have a Material Adverse
Effect. The costs to the Borrower and its Subsidiaries that have not been
incurred as of the date hereof for such reprogramming and testing could not
reasonably be expected to result in a Default or Event of Default or to have a
Material Adverse Effect.
SECTION 5. CONDITIONS
5.1 Conditions to Effectiveness Effectiveness. This agreement
shall become effective upon the satisfaction or waiver of the following
conditions:
(a) Execution of Loan Documents and Addenda. The
Administrative Agent shall have received (i) this Agreement, executed
and delivered by a duly authorized officer of the Borrower, with a
counterpart for the Administrative Agent and each Lender, (ii) an
executed Addendum (or a copy thereof by facsimile transmission) from
each Person listed on Schedule 1.1(a), provided, that, notwithstanding
the foregoing, in the event that an Addendum has not been duly executed
and delivered by each Person listed on Schedule 1.1(a) on the date
(which shall be no earlier than the date hereof) on which this
Agreement shall have been executed and delivered by each of the
Borrower and the Administrative Agent, the condition set forth in this
subsection 5.1(a)(ii) shall, subject to satisfaction of the other
conditions precedent set forth in this subsection 5.1, nevertheless be
satisfied on such date with respect to those Persons which have
executed and delivered an Addendum on or before such date if on such
date the Borrower and the Administrative Agent shall have designated
one or more banks, financial institutions or other entities
("Designated Lenders") to assume, in the aggregate, all of the
Revolving Credit Commitments which would have been held by the Persons
listed on Schedule 1.1(a) (the "Non-Executing Persons") which have not
so executed an Addendum (subject to each such Designated
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33
Lender's prior written consent in its sole discretion and its execution
of an Addendum) (Schedule 1.1(a) shall automatically be deemed to be
amended to reflect the respective Revolving Credit Commitments of the
Designated Lenders and the omission of the Non-Executing Persons as
Lenders hereunder) and (iii) the Subsidiaries Guarantee, executed and
delivered by a duly authorized officer of each Subsidiary Guarantor.
(b) Closing Certificate. The Administrative Agent shall have
received, with a copy for each Lender, a certificate of the Borrower,
dated the Effective Date, substantially in the form of Exhibit H, with
appropriate insertions and attachments, satisfactory in form and
substance to the Administrative Agent, executed by the President or any
Vice President and the Secretary or any Assistant Secretary of the
Borrower.
(c) Borrower Incumbency Certificate. The Administrative Agent
shall have received, with a copy for each Lender, a certificate of the
Borrower, dated the Effective Date, as to the incumbency and signature
of the officers of the Borrower executing any Loan Document
satisfactory in form and substance to the Administrative Agent,
executed by the President or any Vice President and the Secretary or
any Assistant Secretary of the Borrower.
(d) Subsidiary Incumbency Certificates. The Administrative
Agent shall have received, with a copy for each Lender, a certificate
of each Restricted Subsidiary of the Borrower which is a party to a
Loan Document, dated the Effective Date, as to the incumbency and
signature of the officers of such Subsidiary acknowledging and
consenting to the execution and delivery of this Agreement by the
Borrower, satisfactory in form and substance to the Administrative
Agent, executed by the President or any Vice President and the
Secretary or any Assistant Secretary of such Subsidiary.
(e) Legal Opinions. The Administrative Agent shall have
received, with a copy for each Lender, the following executed legal
opinions:
(i) the executed legal opinion of Skadden,
Arps, Slate, Meagher & Flom LLP, counsel to the Borrower and
the other Loan Parties, substantially in the form of Exhibit
I-1; and
(ii) the executed legal opinion of Anthony N.
Palizzi, general counsel of the Borrower, substantially in the
form of Exhibit I-2; and
(iii) the executed legal opinion of Simpson
Thacher & Bartlett, counsel to the Administrative Agent and
the Lenders, substantially in the form of Exhibit I-3.
Each such legal opinion shall cover such matters incident to the
transactions contemplated by this Agreement as the Administrative Agent
may reasonably require.
(f) Termination of Existing Credit Agreement. The
Administrative Agent shall have received evidence satisfactory to it
that the Existing Credit Agreement has been terminated and all loans
outstanding, interest thereon and other amounts due and payable
thereunder shall have been repaid in full.
(g) Additional Matters. All corporate and other proceedings,
and all documents, instruments and other legal matters in connection
with the transactions contemplated by this Agreement and the other Loan
Documents shall be reasonably satisfactory in form and substance
<PAGE> 39
34
to the Administrative Agent, and the Administrative Agent shall have
received such other documents and legal opinions in respect of any
aspect or consequence of the transactions contemplated hereby or
thereby as it shall reasonably request.
5.2 Conditions to Each Extension of Credit. The agreement of
each Lender to make any Extension of Credit requested to be made by it on any
date (including, without limitation, its initial Extension of Credit) is subject
to the satisfaction of the following conditions precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by the Loan Parties in or pursuant
to the Loan Documents shall be true and correct in all material
respects on and as of such date as if made on and as of such date.
(b) No Default. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the
Extension of Credit requested to be made on such date.
Each Extension of Credit to the Borrower hereunder shall constitute a
representation and warranty by the Borrower as of the date thereof that the
conditions contained in this subsection have been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Revolving
Credit Commitments remain in effect or any amount is owing to any Lender or the
Administrative Agent hereunder or under any other Loan Document, the Borrower
shall and (except in the case of delivery of financial information, reports and
notices) shall cause each of its Restricted Subsidiaries to:
6.1 Financial Statements. Furnish to the Administrative Agent
with a copy for each Lender:
(a) as soon as available, but in any event within 95 days
after the end of each Fiscal Year of the Borrower, a copy of the
consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as at the end of such year and the related consolidated
statements of income and retained earnings and of cash flows for such
year, setting forth in each case in comparative form the figures as of
the end of and for the previous Fiscal Year, reported on without a
qualification arising out of the scope of the audit, by
PriceWaterhouseCoopers LLP or other independent certified public
accountants of nationally recognized standing, together with a copy of
the Borrower's Form 10-K filed with the SEC for such Fiscal Year; and
(b) as soon as available, but in any event not later than 50
days after the end of each of the first three quarterly periods of each
Fiscal Year of the Borrower, the unaudited consolidated balance sheet
of the Borrower and its Consolidated Subsidiaries as at the end of such
quarter and the related unaudited consolidated statements of income and
retained earnings and of cash flows of the Borrower and its
Consolidated Subsidiaries for such quarter and the portion of the
Fiscal Year through the end of such quarter, setting forth in each case
in comparative form the figures for the previous Fiscal Year as set
forth in the Borrower's Form 10-Q filed with the SEC for such quarterly
period, certified by a Responsible Officer as being fairly stated in
all material respects (subject to normal year-end audit adjustments).
All such financial statements shall be complete and correct in all material
respects (subject to, in the case of the financial statements referred to in
paragraph (b) above, normal year-end adjustments) and shall be
<PAGE> 40
35
prepared in reasonable detail and in accordance with GAAP applied consistently
throughout the periods reflected therein and with prior periods (except as
approved by such accountants or officer, as the case may be, and disclosed
therein).
6.2 Certificates; Other Information. Furnish to the
Administrative Agent with a copy for each Lender:
(a) concurrently with the delivery of the financial statements
referred to in subsection 6.1(a), a certificate of the independent
certified public accountants reporting on such financial statements
stating that in making the examination necessary therefor no knowledge
was obtained of any Default or Event of Default, except as specified in
such certificate;
(b) concurrently with the delivery of the financial statements
referred to in subsections 6.1(a) and (b), a certificate of a
Responsible Officer (i) stating that such Responsible Officer has
obtained no knowledge of any Default or Event of Default with respect
to the period covered by such financial statements except as specified
in such certificate and (ii) setting forth, in reasonable detail, a
calculation of the financial covenants set forth in subsection 7.1 for
the period corresponding to such financial statements;
(c) not later than 90 days after the beginning of each Fiscal
Year of the Borrower, a copy of the projections by the Borrower of the
operating budget and cash flow budget of the Borrower and its
Subsidiaries for such Fiscal Year, such projections to be accompanied
by a certificate of a Responsible Officer to the effect that such
projections have been prepared on the basis of assumptions believed to
have been reasonable when made;
(d) promptly after the same are sent, copies of all financial
statements and reports which the Borrower sends to its stockholders,
and promptly after the same are filed, copies of all reports on Form
8-K which the Borrower may make to, or file with, the SEC; and
(e) promptly, such additional financial and other information
as the Administrative Agent (on behalf of itself or any Lender) may
from time to time reasonably request.
6.3 Payment of Obligations. Pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all its obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves in conformity with GAAP with respect thereto have been provided on
the books of the Borrower or its Subsidiaries, as the case may be, and except
where the failure to so pay, discharge or otherwise satisfy such obligation
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
6.4 Conduct of Business and Maintenance of Existence. Continue
to engage in business of the same general type as now conducted by the Borrower
and its Restricted Subsidiaries and preserve, renew and keep in full force and
effect its corporate existence and take all reasonable action to maintain all
rights, privileges and franchises necessary or desirable in the normal conduct
of its business except as otherwise permitted pursuant to subsection 7.5 and
except where the failure to maintain such rights, privileges and franchises
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect; comply with all Contractual Obligations and
Requirements of Law except to the extent that failure to comply therewith could
not, individually or in the aggregate, be reasonably expected to have a Material
Adverse Effect.
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6.5 Maintenance of Property; Insurance. Keep its property
necessary in its business in good working order and condition, ordinary wear and
tear excepted, if the failure to do so could reasonably be expected to have a
Material Adverse Effect; maintain with financially sound and reputable insurance
companies insurance on all its property in at least such amounts and against at
least such risks as are usually insured against in the same general area by
similar companies of comparable size engaged in the same or a similar business
and owning or operating similar properties in localities where the Borrower and
its Restricted Subsidiaries operate and furnish upon the written request of the
Administrative Agent information as to the insurance carried.
6.6 Inspection of Property; Books and Records; Discussions.
Keep proper books of records and account in which full, true and correct entries
in conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities; and permit
representatives of the Administrative Agent, at the request of any Lender, to
visit and inspect any of its properties and examine and make abstracts from any
of its books and records at any reasonable time and as often as may reasonably
be desired and to discuss the business, operations, properties and financial and
other condition of the Borrower and its Restricted Subsidiaries with officers
and employees of the Borrower and its Restricted Subsidiaries and in the
presence of a Responsible Officer with its independent certified public
accountants.
6.7 Notices. Promptly give notice to the Administrative Agent
(which shall promptly give notice thereof to each Lender) of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Restricted Subsidiaries which
could reasonably be expected to have a Material Adverse Effect or (ii)
litigation, investigation or proceeding which may exist at any time
between the Borrower or any of its Subsidiaries and any Governmental
Authority, which (A) in the case of any such litigation, investigation
or proceeding in the ordinary course of business, could reasonably be
expected to have a Material Adverse Effect and (B) in the case of any
other litigation, investigation or proceeding, if adversely determined,
could reasonably be expected to have a Material Adverse Effect;
(c) any litigation or proceeding affecting the Borrower or any
of its Subsidiaries in which the amount involved is $50,000,000 or more
to the extent not covered by insurance or in which injunctive or
similar relief is sought which (A) in the case of any such litigation,
or proceeding in the ordinary course of business, could reasonably be
expected to have a Material Adverse Effect and (B) in the case of any
other litigation or proceeding, if adversely determined, could
reasonably be expected to have a Material Adverse Effect; and
(d) the following events, as soon as possible and in any event
within 30 days after the Borrower knows or has reason to know thereof:
(i) the occurrence or expected occurrence of any Reportable Event with
respect to any Plan, a failure to make any required contribution to a
Plan, the creation of any Lien in favor of the PBGC or a Plan or any
withdrawal from, or the termination, Reorganization or Insolvency of,
any Multiemployer Plan which, in any case, could reasonably be expected
to have a Material Adverse Effect or (ii) the institution of
proceedings or the taking of any other action by the PBGC or the
Borrower or any Commonly Controlled Entity or any Multiemployer Plan
with respect to the withdrawal from, or the termination, Reorganization
or Insolvency of, any Plan which, in any case, could reasonably be
expected to have a Material Adverse Effect.
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37
Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Borrower proposes to take with respect thereto.
6.8 Environmental Laws. (a) Comply with all applicable
Environmental Laws and obtain and comply in all material respects with and
maintain any and all licenses, approvals, notifications, registrations or
permits required by applicable Environmental Laws except in any such case to the
extent that failure to do so could not be reasonably expected to have a Material
Adverse Effect.
(b) Conduct and complete all investigations, studies, sampling
and testing, and all remedial, removal and other actions required under
Environmental Laws, except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect, and promptly comply in all material
respects with all lawful orders and directives of all Governmental Authorities
regarding Environmental Laws except to the extent that the same are being
contested in good faith by appropriate proceedings and the pendency of such
proceedings could not be reasonably expected to have a Material Adverse Effect.
6.9 Additional Subsidiaries. With respect to any Person that,
subsequent to the Effective Date, becomes a Domestic Subsidiary, promptly cause
such new Domestic Subsidiary to become a party to the Subsidiaries Guarantee
pursuant to documentation which is in form and substance satisfactory to the
Administrative Agent.
SECTION 7. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Revolving
Credit Commitments remain in effect or any amount is owing to any Lender or the
Administrative Agent hereunder or under any other Loan Document, the Borrower
shall not, and (except in the case of subsection 7.1) shall not permit any of
its Restricted Subsidiaries to, directly or indirectly:
7.1 Financial Condition Covenants.
(a) Fixed Charge Coverage Ratio. Permit the Fixed Charge
Coverage Ratio as of the last day of any fiscal quarter to be less than
2.00 to 1.00.
(b) Leverage Ratio. Permit at any time the Leverage Ratio to
exceed 0.45 to 1.00.
7.2 Limitation on Liens. Create, incur, assume or suffer to
exist any Lien upon any of its property, assets or revenues, whether now owned
or hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being contested
in good faith by appropriate proceedings, provided that adequate
reserves with respect thereto are maintained on the books of the
Borrower or its Subsidiaries, as the case may be, in conformity with
GAAP (or, in the case of Significant Foreign Subsidiaries, generally
accepted accounting principles in effect from time to time in their
respective jurisdictions of incorporation);
(b) carriers', warehousemen's, mechanics', landlord's,
materialmen's, repairmen's or other like Liens arising in the ordinary
course of business securing amounts which are not overdue for a period
of more than 60 days or which are being contested in good faith by
appropriate proceedings;
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(c) (i) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security
legislation and deposits securing liability to insurance carriers under
insurance or self-insurance arrangements and (ii) Liens granted to
banks in the ordinary course of business in connection with deposit,
disbursement or concentration accounts (other than in connection with
borrowed money) maintained with such banks on funds and other items in
such accounts;
(d) Liens granted and deposits made to secure the performance
of bids, trade contracts and real estate related contracts entered into
in the ordinary course of business (in each case, other than for
borrowed money), utilities, leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(e) easements, rights-of-way, restrictions, subdivisions,
parcelizations and other similar encumbrances incurred in the ordinary
course of business which do not in any case materially detract from the
value of the property subject thereto or materially interfere with the
ordinary conduct of the business of the Borrower or such Restricted
Subsidiary;
(f) Liens in existence on the date hereof (or arising at any
time during the period from the date hereof through the Effective Date)
and (i) listed on Schedule 7.2(f) securing Indebtedness or other
obligations described on such Schedule or (ii) otherwise securing
Indebtedness or other obligations not exceeding $10,000,000 in the
aggregate;
(g) Liens securing Indebtedness of the Borrower and its
Restricted Subsidiaries, provided that (i) such Liens do not at any
time encumber any property other than the property financed by such
Indebtedness, it being understood that Indebtedness will be considered
to have financed property as long as such Indebtedness is incurred
within 360 days of the acquisition or completion of construction of
such property and does not exceed the purchase price thereof and (ii)
the amount of Indebtedness secured thereby is not increased;
(h) Liens on assets of any Significant Foreign Subsidiary
securing Indebtedness and other obligations of such Significant Foreign
Subsidiary;
(i) Liens on the property or assets of a corporation which
becomes a Restricted Subsidiary after the Effective Date and Liens
existing on assets acquired, constructed or completed by the Borrower
or a Restricted Subsidiary after the Effective Date, provided that (i)
such Liens existed at the time such corporation became a Restricted
Subsidiary or such asset was acquired, constructed or completed and
were not created in anticipation thereof, (ii) any such Lien cover only
the property or assets of such corporation or the assets being
acquired, constructed or completed, as the case may be, and, in any
case, is not spread to cover any property or assets of such corporation
after the time such corporation becomes a Restricted Subsidiary or such
asset is acquired, constructed or completed, and (iii) the amount of
Indebtedness secured thereby is not increased;
(j) Liens securing Indebtedness which refunds, replaces or
refinances Indebtedness secured by a Lien as of the date hereof or
permitted under subsection 7.2(g) or 7.2(i); provided that no such Lien
is spread to cover additional property;
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39
(k) Liens (not otherwise permitted hereunder) which secure
obligations not exceeding (as to the Borrower and all its Restricted
Subsidiaries) $500,000,000 in aggregate principal or face amount at any
time outstanding;
(l) Liens created in favor of any Person who delivers goods
under a consignment to the Borrower or a Restricted Subsidiary; and
(m) Liens on accounts receivable or credit card receivables of
the Borrower and its Restricted Subsidiaries which secure Indebtedness
to finance the acquisition thereof.
7.3 Limitation on Fundamental Changes. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets except:
(a) any Restricted Subsidiary of the Borrower may be merged or
consolidated with or into the Borrower (provided that the Borrower
shall be the continuing or surviving corporation) or with or into any
one or more wholly owned Restricted Subsidiaries of the Borrower
(provided that the wholly owned Restricted Subsidiary or Restricted
Subsidiaries shall be the continuing or surviving corporation and
provided that if one of the parties to such transaction is a Subsidiary
Guarantor then the continuing or surviving corporation shall be a
Subsidiary Guarantor);
(b) any Restricted Subsidiary may convey, sell, lease,
transfer, assign or otherwise dispose of any or all of its assets (upon
voluntary liquidation or otherwise) to the Borrower or any other wholly
owned Restricted Subsidiary of the Borrower (provided that if such
selling Restricted Subsidiary is a Subsidiary Guarantor then the
acquiring Restricted Subsidiary shall be a Subsidiary Guarantor); and
(c) any Restricted Subsidiary may be merged or consolidated
with or into, or convey, sell, lease, transfer, assign or otherwise
dispose of any or all of its assets to, any Person to the extent that
the sale or other disposition of the assets of such Restricted
Subsidiary would be permitted under subsection 7.4.
7.4 Limitation on Sale of Assets. Convey, sell, lease, assign,
transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, receivables and leasehold interests), whether
now owned or hereafter acquired, or, in the case of any Restricted Subsidiary,
issue or sell any shares of such Restricted Subsidiary's Capital Stock to any
Person (other than the Borrower or any wholly owned Subsidiary Guarantor or, if
such Restricted Subsidiary is not a wholly-owned Restricted Subsidiary, pro rata
to the owners of the equity securities of such Restricted Subsidiary), except:
(a) the sale or other disposition of obsolete, surplus or worn
out property in the ordinary course of business or in connection with
real estate development activities;
(b) the sale of inventory in the ordinary course of business
(including sales of inventory in connection with closed stores and
sales of discontinued inventory) and transfers of inventory and
equipment among the Borrower and the Subsidiary Guarantors pursuant to
reasonable business requirements;
<PAGE> 45
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(c) (i) the sale or discount of accounts receivable or credit
card receivables in connection with the compromise or collection
thereof or pursuant to the Existing Receivables Transactions or any
other Securitization Transactions and (ii) sales or other dispositions
of Cash Equivalents in the ordinary course of business;
(d) as permitted by subsection 7.3(b);
(e) sales and dispositions of real property and related assets
in connection with (i) Permitted Sale-Leasebacks or (ii) Securitization
Transactions; provided that, in the opinion of a Responsible Officer,
the purchase price with respect to each such sale or disposition
represents the fair value of the assets so sold;
(f) the transactions described on Schedule 7.4(f) or any sale
or other disposition of any asset received in exchange for any asset
described on such Schedule in connection with any transaction described
on such Schedule (the "Scheduled Asset Sales"), provided that, in the
opinion of a Responsible Officer the purchase price with respect to
each such sale represents the fair value of the assets so sold;
(g) the sale or other disposition of any property (other than
any sale or other disposition which is otherwise permitted under this
subsection 7.4), provided that (i) at the time of and after giving
effect to such sale or disposition, the aggregate book value of all
assets so sold or disposed of in any Fiscal Year shall not exceed an
amount equal to 10% of Shareholders' Equity at the beginning of such
Fiscal Year and (ii) in the opinion of a Responsible Officer the
purchase price with respect to such sale or other disposition (except
with respect to sales or other dispositions the aggregate purchase
price with respect to which does not exceed $10,000,000) represents the
fair value of the assets so sold or disposed of; and
(h) subject to the other terms and provisions hereof, leases
or subleases (or assignment of leases) of real property in the ordinary
course of business.
7.5 Limitation on Dividends. Declare or pay any dividend
(other than dividends payable solely in common stock of the Borrower) on, or
make any payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or other
acquisition of, any shares of any class of Capital Stock of the Borrower or any
warrants or options to purchase any such Capital Stock, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either directly
or indirectly, whether in cash or property or in obligations of the Borrower or
any Restricted Subsidiary or engage in any transaction that has a substantially
similar effect (such declarations, payments, setting apart, purchases,
redemptions, defeasances, retirements, acquisitions and distributions and
similar transactions being herein called "Restricted Payments"), except that:
(a) the Borrower may purchase options or exchange
then-existing employee stock options for options to acquire the same
from directors, officers and employees of the Borrower and its
Restricted Subsidiaries and may purchase Capital Stock in connection
with any employment or severance arrangements;
(b) so long as after giving effect thereto no Default or Event
of Default has occurred and is continuing, the Borrower may make
Restricted Payments with respect to its Capital Stock, provided that no
Restricted Payment may be made pursuant to this paragraph if, after
giving effect thereto, the aggregate amount of all Restricted Payments
made pursuant to this paragraph would exceed 50% of the Consolidated
Net Income of the Borrower for the period (taken as one
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41
accounting period) from the first day of the fiscal quarter in which
the Effective Date occurs through the last day of the most recent
fiscal quarter ended prior to the date such Restricted Payment is made;
(c) so long as after giving effect thereto no Default or Event
of Default has occurred and is continuing, the Borrower may repurchase
up to $1,500,000,000 of Capital Stock of the Borrower pursuant to stock
repurchase programs;
(d) so long as after giving effect thereto no Default or Event
of Default has occurred and is continuing, the Borrower may redeem the
Convertible Preferred Securities for cash or common stock of the
Borrower; and
(e) so long as after giving effect thereto no Default or Event
of Default has occurred and is continuing, the Borrower may purchase
the Capital Stock of the Borrower with proceeds from the sale or
issuance of its Capital Stock.
7.6 Limitation on Capital Expenditures and "Property held for
Resale". Make (by way of the acquisition of securities of a Person or otherwise)
any expenditure in respect of the purchase or other acquisition of fixed or
capital assets (excluding (i) any such asset acquired in connection with normal
replacement and maintenance programs properly charged to current operations but
including (ii) expenditures in respect of the construction or development of
"property held for resale") except for expenditures not exceeding
$1,800,000,000, in the aggregate for the Borrower and its Restricted
Subsidiaries during any Fiscal Year of the Borrower, provided that, (a) with
respect to any Fiscal Year, the Borrower and its Restricted Subsidiaries shall
be permitted to make additional capital expenditures in an amount not to exceed
the Additional Permitted Capital Expenditure Amount for such Fiscal Year and (b)
up to 100% of any amount permitted to be expended in any Fiscal Year (after
giving effect to this proviso) if not so expended in the Fiscal Year for which
it is permitted above, may be carried over for expenditure in the next following
Fiscal Year.
7.7 Limitation on Transactions with Affiliates. Except as set
forth on Schedule 7.7, enter into any transaction, including, without
limitation, any purchase, sale, lease or exchange of property or the rendering
of any service, with any Affiliate unless such transaction is (a) otherwise
permitted under this Agreement and (b) upon fair and reasonable terms no less
favorable to the Borrower or such Restricted Subsidiary, as the case may be,
than it would obtain in a comparable arm's length transaction with a Person
which is not an Affiliate.
7.8 Limitation on Sales and Leasebacks. Enter into any
arrangement with any Person providing for the leasing by the Borrower or any
Restricted Subsidiary of real or personal property which has been or is to be
sold or transferred by the Borrower or such Restricted Subsidiary to such Person
or to any other Person to whom funds have been or are to be advanced by such
Person on the security of such property or rental obligations of the Borrower or
such Restricted Subsidiary (such arrangement, a "Sale-Leaseback") except at
market rates ("Permitted Sale-Leasebacks"). For the avoidance of doubt,
Sale-Leasebacks that result in a Financing Lease shall be treated as
Indebtedness for all purposes of this Agreement.
7.9 Negative Pledge Clauses. Enter into or suffer to exist or
become effective any agreement that prohibits or limits the ability of the
Borrower or any of its Restricted Subsidiaries to create, incur, assume or
suffer to exist as security for the obligations hereunder any Lien upon any of
its inventory, whether now owned or hereafter acquired, other than (a) this
Agreement and the other Loan Documents, (b) the Three Year Credit Agreement, (c)
the GNB Credit Agreement (which shall permit the
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42
obligations hereunder to be secured so long as the obligations thereunder are
secured on an equal and ratable basis to the extent such equal and ratable
treatment is required by the terms thereof) and (d) any agreements governing any
purchase money Liens or Liens permitted under Section 7.2(d) (in which case, any
prohibition or limitation shall only be effective against the assets financed
thereby).
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan
when due in accordance with the terms hereof; or the Borrower shall
fail to pay any Reimbursement Obligation within two Business Days after
such Reimbursement Obligation becomes due in accordance with the terms
hereof; or the Borrower shall fail to pay any interest on any Loan, or
any other amount payable hereunder, within five days after any such
interest or other amount becomes due in accordance with the terms
hereof; or
(b) Any representation or warranty made or deemed made by the
Borrower or any other Loan Party herein or in any other Loan Document
or which is contained in any certificate, document or financial or
other statement furnished by it at any time under or in connection with
this Agreement or any such other Loan Document shall prove to have been
incorrect in any material respect on or as of the date made or deemed
made; or
(c) The Borrower shall default in the observance or
performance of any agreement contained in Section 7; or
(d) The Borrower or any other Loan Party shall default in the
observance or performance of any other agreement contained in this
Agreement or any other Loan Document (other than as provided in
paragraphs (a) through (c) of this Section), and such default shall
continue unremedied for a period of 30 days after the earlier of (i)
the date upon which written notice thereof is given to the Borrower by
the Administrative Agent or the Majority Lenders or (ii) the date upon
which a Responsible Officer becomes aware of such default; or
(e) The Borrower or any of its Restricted Subsidiaries shall
(i) default in any payment of principal of or interest on any
Indebtedness (other than the Loans) or in the payment of any Guarantee
Obligation, beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness or Guarantee
Obligation was created; or (ii) default in the observance or
performance of any other agreement or condition relating to any such
Indebtedness or Guarantee Obligation or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event
shall occur or condition exist, the effect of which default or other
event or condition is to cause, or to permit the holder or holders of
such Indebtedness or beneficiary or beneficiaries of such Guarantee
Obligation (or a trustee or agent on behalf of such holder or holders
or beneficiary or beneficiaries) to cause, with the giving of notice if
required (but after the expiration of all grace periods applicable
thereto), such Indebtedness to become due prior to its stated maturity
or such Guarantee Obligation to become payable; provided, however, that
no Default or Event of Default shall exist under this paragraph unless
the aggregate amount of Indebtedness and/or Guarantee Obligations in
respect of which any default or other event or condition referred to in
this paragraph shall have occurred shall be equal to at least
$100,000,000; or
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(f) (i) The Borrower or any of its Significant Subsidiaries
shall commence any case, proceeding or other action (A) under any
existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to
it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its
debts, or (B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any
substantial part of its assets, or the Borrower or any of its
Significant Subsidiaries shall make a general assignment for the
benefit of its creditors; or (ii) there shall be commenced against the
Borrower or any of its Significant Subsidiaries any case, proceeding or
other action of a nature referred to in clause (i) above which (A)
results in the entry of an order for relief or any such adjudication or
appointment or (B) remains undismissed, undischarged or unbonded for a
period of 60 days; or (iii) there shall be commenced against the
Borrower or any of its Significant Subsidiaries any case, proceeding or
other action seeking issuance of a warrant of attachment, execution,
distraint or similar process against all or any substantial part of its
assets which results in the entry of an order for any such relief which
shall not have been vacated, discharged, or stayed or bonded pending
appeal within 60 days from the entry thereof; or (iv) the Borrower or
any of its Significant Subsidiaries shall take any action in
furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), or
(iii) above; or (v) the Borrower or any of its Significant Subsidiaries
shall generally not, or shall be unable to, or shall admit in writing
its inability to, pay its debts as they become due; or
(g) (i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the
Code) involving any Plan, (ii) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, shall exist
with respect to any Plan or any Lien in favor of the PBGC or a Plan
shall arise on the assets of the Borrower or any Commonly Controlled
Entity, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee
shall be appointed, to administer or to terminate, any Single Employer
Plan, which Reportable Event or commencement of proceedings or
appointment of a trustee is, in the reasonable opinion of the Majority
Lenders, likely to result in the termination of such Plan for purposes
of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for
purposes of Title IV of ERISA, (v) the Borrower or any Commonly
Controlled Entity shall, or in the reasonable opinion of the Majority
Lenders is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan or (vi) any other event or condition shall occur or
exist with respect to a Plan; and in each case in clauses (i) through
(vi) above, such event or condition, together with all other such
events or conditions, if any, could reasonably be expected to have a
Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against
the Borrower or any of its Restricted Subsidiaries involving in the
aggregate a liability (to the extent not paid or covered by insurance)
of $100,000,000 or more, and such judgments or decrees shall not have
been vacated, discharged, stayed or bonded pending appeal within 60
days from the entry thereof; or
(i) (i) For any reason (other than any act on the part of the
Administrative Agent or any Lender) the Subsidiaries Guarantee ceases
to be or is not in full force and effect in any material respect and
such default shall continue unremedied for 30 days after the earlier of
receipt by the Borrower of notice of such default from the
Administrative Agent or actual knowledge of such default by a
Responsible Officer or (ii) the Borrower or any of its Restricted
Subsidiaries shall
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assert in writing that the Subsidiaries Guarantee has ceased to be or
is not in full force and effect; or
(j) (i) Any Person or "group" (within the meaning of Section
13(d) or 14(d) of the Securities Exchange Act of 1934, as amended) (A)
shall have acquired beneficial ownership of 33% or more of any
outstanding class of Capital Stock having ordinary voting power in the
election of directors of the Borrower or (B) shall obtain the power
(whether or not exercised) to elect a majority of the Borrower's
directors or (ii) the Board of Directors of the Borrower shall not
consist of a majority of Continuing Directors; "Continuing Directors"
shall mean the directors of the Borrower on the Effective Date and each
other director, if such other director's nomination for election to the
Board of Directors of the Borrower is recommended by a majority of the
then Continuing Directors;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) of this Section with respect to the
Borrower, automatically the Revolving Credit Commitments shall immediately
terminate and the Loans hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement shall immediately become due and payable, and
(B) if such event is any other Event of Default, either or both of the following
actions may be taken: (i) with the consent of the Majority Lenders, the
Administrative Agent may, or upon the request of the Majority Lenders, the
Administrative Agent shall, by notice to the Borrower declare the Revolving
Credit Commitments to be terminated forthwith, whereupon the Revolving Credit
Commitments shall immediately terminate; and (ii) with the consent of the
Majority Lenders, the Administrative Agent may, or upon the request of the
Majority Lenders, the Administrative Agent shall, by notice to the Borrower,
declare the Loans hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement to be due and payable forthwith, whereupon
the same shall immediately become due and payable. Except as expressly provided
above in this Section, presentment, demand, protest and all other notices of any
kind are hereby expressly waived.
SECTION 9. THE ADMINISTRATIVE AGENT
9.1 Appointment. Each Lender hereby irrevocably designates and
appoints the Administrative Agent as the agent of such Lender under this
Agreement and the other Loan Documents, and each Lender irrevocably authorizes
the Administrative Agent, in such capacity, to take such action on its behalf
under the provisions of this Agreement and the other Loan Documents and to
exercise such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Administrative Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender, 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 Administrative Agent.
9.2 Delegation of Duties. The Administrative Agent may execute
any of its duties under this Agreement and the other Loan Documents by or
through agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agents or attorneys
in-fact selected by it with reasonable care.
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45
9.3 Exculpatory Provisions. Neither the Administrative Agent
nor any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except for its or such Person's own gross negligence or
willful misconduct) or (ii) responsible in any manner to any of the Lenders for
any recitals, statements, representations or warranties made by the Borrower or
any officer thereof contained in this Agreement or any other Loan Document or in
any certificate, report, statement or other document referred to or provided for
in, or received by the Administrative Agent under or in connection with, this
Agreement or any other Loan Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document or for any failure of the Borrower to perform its obligations hereunder
or thereunder. The Administrative Agent shall not be under any obligation to any
Lender 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 Borrower.
9.4 Reliance by Administrative Agent. The Administrative Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
Note, writing, resolution, notice, consent, certificate, affidavit, letter,
facsimile, telex or teletype message, statement, order 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, without limitation, counsel to the Borrower),
independent accountants and other experts selected by the Administrative Agent.
The Administrative Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless a written notice of assignment, negotiation or
transfer thereof shall have been filed with the Administrative Agent. The
Administrative 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 Lenders entitled to so act in accordance
with the terms of this Agreement as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders 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 Administrative Agent shall in all cases be fully protected
in acting, or in refraining from acting, under this Agreement and the other Loan
Documents in accordance with a request of Lenders entitled to so act in
accordance with the terms of this Agreement, and such request and any action
taken or failure to act pursuant thereto shall be binding upon all the Lenders
and all future holders of the Loans.
9.5 Notice of Default. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless the Administrative Agent has received notice from a
Lender or the Borrower referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a "notice of default". In the
event that the Administrative Agent receives such a notice, the Administrative
Agent shall promptly give notice thereof to the Lenders. The Administrative
Agent shall take such action with respect to such Default or Event of Default as
shall be reasonably directed by Lenders entitled to so act in accordance with
the terms of this Agreement; provided that unless and until the Administrative
Agent shall have received such directions, the Administrative Agent may (but
shall not be obligated to) take such action, or refrain from taking such action,
with respect to such Default or Event of Default as it shall deem advisable in
the best interests of the Lenders.
9.6 Non-Reliance on Administrative Agent and Other Lenders.
Each Lender expressly acknowledges that neither the Administrative Agent nor any
of its officers, directors, employees, agents, attorneys-in-fact or Affiliates
has made any representations or warranties to it and that no act by the
Administrative Agent hereafter taken, including any review of the affairs of the
Borrower, shall be deemed to constitute any representation or warranty by the
Administrative Agent to any Lender. Each
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46
Lender represents to the Administrative Agent that it has, independently and
without reliance upon the Administrative Agent or any other Lender, and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Borrower and made its
own decision to make its Loans hereunder and enter into this Agreement. Each
Lender also represents that it will, independently and without reliance upon the
Administrative Agent or any other Lender, 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 investigation as
it deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of the Borrower. Except for
notices, reports and other documents expressly required to be furnished to the
Lenders by the Administrative Agent hereunder, the Administrative Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the business, operations, property, condition
(financial or otherwise), prospects or creditworthiness of the Borrower which
may come into the possession of the Administrative Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates.
9.7 Indemnification. The Lenders agree to indemnify the
Administrative Agent in its capacity as such (to the extent not reimbursed by
the Borrower and without limiting the obligation of the Borrower to do so),
ratably according to their respective Voting Percentages in effect on the date
on which indemnification is sought, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Loans)
be imposed on, incurred by or asserted against the Administrative Agent in any
way relating to or arising out of, the Revolving Credit Commitments, this
Agreement, any of the other Loan Documents or any documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or thereby
or any action taken or omitted by the Administrative Agent under or in
connection with any of the foregoing; provided that no Lender shall be liable
for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Administrative Agent's gross negligence or willful
misconduct. The agreements in this subsection shall survive the payment of the
Loans and all other amounts payable hereunder.
9.8 Administrative Agent in Its Individual Capacity. The
Administrative Agent and its Affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Borrower as though the
Administrative Agent were not the Administrative Agent hereunder and under the
other Loan Documents. With respect to the Loans made by it, the Administrative
Agent shall have the same rights and powers under this Agreement and the other
Loan Documents as any Lender and may exercise the same as though it were not the
Administrative Agent, and the terms "Lender" and "Lenders" shall include the
Administrative Agent in its individual capacity.
9.9 Successor Administrative Agent. The Administrative Agent
may resign as Administrative Agent upon 10 days' notice to the Borrower and the
Lenders. If the Administrative Agent shall resign as Administrative Agent under
this Agreement and the other Loan Documents, then the Majority Lenders shall
appoint from among the Lenders a successor agent for the Lenders, which
successor agent (provided that it shall have been approved by the Borrower),
shall succeed to the rights, powers and duties of the Administrative Agent
hereunder, provided, however, that no Lender shall be so appointed without the
consent thereto of such Lender. Effective upon such appointment and approval,
the term "Administrative Agent" shall mean such successor agent, and the former
Administrative Agent's rights, powers and duties as Administrative Agent shall
be terminated, without any other or further act or deed on the part of such
former Administrative Agent or any of the parties to this Agreement or any
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holders of the Loans. After any retiring Administrative Agent's resignation as
Administrative Agent, the provisions of this Section 9 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement and the other Loan Documents.
SECTION 10. MISCELLANEOUS
10.1 Amendments and Waivers. Neither this Agreement nor any
other Loan Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
subsection. The Majority Lenders may, or, with the written consent of the
Majority Lenders, the Administrative Agent may, from time to time, (a) enter
into with the applicable Loan Party or Parties written amendments, supplements
or modifications hereto and to the other Loan Documents for the purpose of
adding, deleting or revising any provisions to this Agreement or the other Loan
Documents or changing in any manner the rights of the Lenders or of the Borrower
hereunder or thereunder or (b) waive, on such terms and conditions as the
Majority Lenders or the Administrative Agent, as the case may be, may specify in
such instrument, any of the requirements of this Agreement or the other Loan
Documents or any Default or Event of Default and its consequences; provided,
however, that no such waiver and no such amendment, supplement or modification
shall (i) reduce the amount or extend the scheduled date of maturity of any Loan
or of any installment thereof, or reduce the stated rate of any interest or fee
payable hereunder or extend the scheduled date of any payment thereof or
increase the amount or extend the expiration date of any Lender's Revolving
Credit Commitments, in each case without the consent of each Lender adversely
affected thereby, (ii) (A) amend, modify or waive any provision of this
subsection, release all or substantially all of the Subsidiary Guarantors from
their obligations under the Subsidiaries Guarantee or consent to the assignment
or transfer by the Borrower of any of its rights and obligations under this
Agreement and the other Loan Documents without the written consent of all the
Lenders, or (B) reduce the percentage specified in the definition of Majority
Lenders or Required Lenders without the written consent of all the Lenders or
(iii) amend, modify or waive any provision of Section 9 without the written
consent of the then Administrative Agent. Any such waiver and any such
amendment, supplement or modification shall apply equally to each of the Lenders
and shall be binding upon the Borrower, the Lenders, the Administrative Agent
and all future holders of the Loans. In the case of any waiver, the Borrower,
the Lenders, and the Administrative Agent shall be restored to their former
positions and rights hereunder and under the other Loan Documents, and any
Default or Event of Default waived shall be deemed to be cured and not
continuing; no such waiver shall extend to any subsequent or other Default or
Event of Default or impair any right consequent thereon.
10.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
facsimile transmission) and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made (a) in the case of delivery by hand
(including by overnight courier), when delivered, (b) in the case of delivery by
mail, three days after being deposited in the mails, postage prepaid, or (c) in
the case of delivery by facsimile transmission, when sent and receipt has been
confirmed, addressed as follows in the case of the Borrower and the
Administrative Agent, and as set forth in Schedule 10.2 in the case of the other
parties hereto, or to such other address as may be hereafter notified by the
respective parties hereto:
The Borrower: Kmart Corporation
3100 West Big Beaver Road
Troy, Michigan 48084
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(a) For all notices:
Attention: Treasurer
Fax: (248) 643-5398
(b) For notices other than pursuant to Section 2
Attention: Chief Financial Officer
Fax: (248) 643-5787
and
Attention: General Counsel
Fax: (248) 643-1054
The Administrative
Agent: The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Attention: Barry Bergman
Fax: (212) 270-5646
With a copy to:
Chase Agent Bank Services
140 East 45th Street, 29th Floor
New York, New York 10017
Attention: Janet Belden
Fax: (212) 622-0854
provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders pursuant to subsection 2.2, 2.4, 2.21, 3.1, 3.2 or 3.7 shall not
be effective until received. Whenever the Administrative Agent sends a notice by
mail, the Administrative Agent will use reasonable efforts to also send such
notice by one of the other means of notice permitted hereunder, provided that
the failure to do so shall not affect in any way the validity of any delivery by
mail pursuant to this subsection or otherwise result in any liability to the
Administrative Agent or the Lenders.
10.3 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Administrative Agent or any
Lender, any right, remedy, power or privilege hereunder or under the other Loan
Documents 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. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
10.4 Survival of Representations and Warranties. All
representations and warranties made hereunder, in the other Loan Documents and
in any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the making of the Loans hereunder.
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10.5 Payment of Expenses and Taxes; Indemnity. The Borrower
agrees (a) to pay or reimburse the Administrative Agent for all its reasonable
out-of-pocket costs and expenses incurred in connection with the development,
preparation and execution of, and any amendment, supplement or modification to,
this Agreement and the other Loan Documents and any other documents prepared in
connection herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, including, without limitation, the
reasonable fees and disbursements of counsel to the Administrative Agent, (b)
(i) to pay or reimburse the Administrative Agent for all its reasonable
out-of-pocket costs and expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement, the other Loan Documents and
any such other documents, including, without limitation, the fees and
disbursements of counsel (including the allocated fees and expenses of in-house
counsel) to the Administrative Agent, and (ii) to pay or reimburse each Lender
for all its reasonable out-of-pocket costs and expenses incurred in connection
with the enforcement or preservation of any rights under this Agreement, the
other Loan Documents and any such other documents following the occurrence and
during the continuation of a Default or an Event of Default, including, without
limitation, the fees and disbursements of outside counsel or, in lieu thereof,
the allocated fees and expenses of, in-house counsel to each Lender, (c) to pay,
indemnify, and hold each Lender and the Administrative Agent (and their
respective directors, officers, employees and agents) harmless from, any and all
recording and filing fees and any and all liabilities with respect to, or
resulting from any delay in paying, stamp, excise (other than excise taxes
imposed in lieu of net income taxes) and other similar taxes, if any, which may
be payable or determined to be payable in connection with the execution and
delivery of, or consummation or administration of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, this Agreement, the other Loan Documents and
any such other documents, and (d) to pay, indemnify, and hold each Lender and
the Administrative Agent (and their respective directors, officers, employees
and agents) harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits and
reasonable out-of-pocket costs, expenses or disbursements of any kind or nature
whatsoever with respect to any claim, litigation, investigation or proceeding
relating to the execution, delivery, enforcement, performance and administration
of this Agreement and the other Loan Documents and any such other documents or
any use of any of the Extensions of Credit, including, without limitation, any
of the foregoing relating to the violation of, noncompliance with or liability
under, any Environmental Law applicable to the operations of the Borrower, any
of its Subsidiaries or any of the Properties (all the foregoing in this clause
(d), collectively, the "Indemnified Liabilities"), provided that the Borrower
shall have no obligation hereunder to the Administrative Agent or any Lender (or
their respective directors, officers, employees or agents) with respect to
Indemnified Liabilities arising from the gross negligence or willful misconduct
of the Administrative Agent or any such Lender (or their respective directors,
officers, employees or agents, as the case may be). The agreements in this
subsection shall survive the termination of this Agreement and the repayment of
the Loans and all other amounts payable hereunder.
10.6 Successors and Assigns; Participations and Assignments.
(a) This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Lenders, the Administrative Agent and their respective successors
and assigns, except that the Borrower may not assign or transfer any of its
rights or obligations under this Agreement without the prior written consent of
each Lender.
(b) Any Lender may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time sell to one
or more banks or other entities ("Participants") participating interests in any
Loan owing to such Lender, the Revolving Credit Commitment of such Lender or any
other interest of such Lender hereunder and under the other Loan Documents. In
the event of any such sale by a Lender of a participating interest to a
Participant, such Lender's obligations under this Agreement to the other parties
to this Agreement shall remain unchanged, such Lender shall remain
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50
solely responsible for the performance thereof, such Lender shall remain the
holder of any such Loan for all purposes under this Agreement and the other Loan
Documents, and the Borrower and the Administrative Agent shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents. No Lender shall
be entitled to create in favor of any Participant, in the participation
agreement pursuant to which such Participant's participating interest shall be
created or otherwise, any right to vote on, consent to or approve any matter
relating to this Agreement or any other Loan Document except for those specified
in clauses (i) and (ii) of the proviso to subsection 10.1. The Borrower agrees
that if amounts outstanding under this Agreement are due or unpaid, or shall
have been declared or shall have become due and payable upon the occurrence of
an Event of Default, each Participant shall, to the maximum extent permitted by
applicable law, be deemed to have the right of setoff 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
Lender under this Agreement, provided that, in purchasing such participating
interest, such Participant shall be deemed to have agreed to share with the
Lenders the proceeds thereof as provided in subsection 10.8(a) as fully as if it
were a Lender hereunder. The Borrower also agrees that each Participant shall be
entitled to the benefits of subsections 3.9, 3.10 and 3.11 with respect to its
participation in the Revolving Credit Commitments and the Loans outstanding from
time to time as if it were a Lender; provided that, in the case of subsection
3.10, such Participant shall have complied with the requirements of said
subsection and provided, further, that no Participant shall be entitled to
receive any greater amount pursuant to any such subsection than the transferor
Lender would have been entitled to receive in respect of the amount of the
participation transferred by such transferor Lender to such Participant had no
such transfer occurred.
(c) (i) Any Lender may, in the ordinary course of its business
of making or investing in loans and in accordance with applicable law, at any
time and from time to time assign to any Lender or any affiliate thereof or,
with the consent of the Borrower and the Administrative Agent (which in each
case shall not be unreasonably withheld), to an additional bank, financial
institution or other entity that is then engaged in the business of lending
money on a revolving basis (an "Assignee") all or any part of its rights and
obligations under this Agreement and the other Loan Documents pursuant to an
Assignment and Acceptance, substantially in the form of Exhibit J, executed by
such Assignee and such assigning Lender (and, in the case of an Assignee that is
not then a Lender or an affiliate thereof, by the Borrower and the
Administrative Agent) and delivered to the Administrative Agent for its
acceptance and recording in the Register, with a copy thereof to the Borrower,
provided that (a) in the case of any such assignment to an additional bank or
financial institution, the sum of the aggregate principal amount of the
Committed Loans and the aggregate amount of the unused Revolving Credit
Commitments being assigned and, if such assignment is of less than all of the
rights and obligations of the assigning Lender, the sum of the aggregate
principal amount of the Committed Loans and the aggregate amount of the unused
Revolving Credit Commitments remaining with the assigning Lender are each not
less than $10,000,000 (or such lesser amount as may be agreed to by the Borrower
and the Administrative Agent) and (b) assignments shall not be required to be
made on a ratable basis between the Revolving Credit Commitments and/or
Committed Loans held by any Lender. Upon such execution, delivery, acceptance
and recording, from and after the effective date determined pursuant to such
Assignment and Acceptance, (x) the Assignee thereunder shall be a party hereto
and, to the extent provided in such Assignment and Acceptance, have the rights
and obligations of a Lender hereunder with a Revolving Credit Commitment as set
forth therein, and (y) the assigning Lender thereunder shall, to the extent
provided in such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance covering
all or the remaining portion of an assigning Lender's rights and obligations
under this Agreement, such assigning Lender shall cease to be a party hereto).
Notwithstanding any provision of this paragraph (c) and paragraph (e) of this
subsection, the consent of the Borrower shall not be required, and, unless
requested by the Assignee and/or the assigning Lender, new Notes shall not be
<PAGE> 56
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required to be executed and delivered by the Borrower, for any assignment which
occurs at any time when any of the events described in Section 8(f) shall have
occurred and be continuing.
(ii) Notwithstanding anything to the contrary contained herein, any
Lender (a "Granting Lender") may grant to a special purpose funding vehicle (a
"SPC"), identified as such in writing from time to time by the Granting Lender
to the Administrative Agent and the Borrower, the option to provide to the
Borrower all or any part of any Loan that such Granting Lender would otherwise
be obligated to make to the Borrower pursuant to this Agreement; provided that
(i) nothing herein shall constitute a commitment by any SPC to make any Loan,
(ii) if an SPC elects not to exercise such option or otherwise fails to provide
all or any part of such Loan, the Granting Lender shall be obligated to make
such Loan pursuant to the terms hereof. The making of a Loan by an SPC hereunder
shall utilize the Commitment of the Granting Lender to the same extent, and as
if, such Loan were made by such Granting Lender. Each party hereto hereby agrees
that no SPC shall be liable for any indemnity or similar payment obligation
under this Agreement (all liability for which shall remain with the Granting
Lender). In furtherance of the foregoing, each party hereto hereby agrees (which
agreement shall survive the termination of the Agreement) that, prior to the
date that is one year and one day after the payment in full of all outstanding
commercial paper or other senior indebtedness of any SPC, it will not institute
against, or join any other person or liquidation proceedings under the laws of
the United States or any State thereof. In addition, notwithstanding anything to
the contrary contained in this subsection 10.6(c), any SPC may (i) with notice
to, but without the prior written consent of, the Borrower and the
Administrative Agent and without paying any processing fee therefor, assign all
or a portion of its interests in any Loans to the Granting Lender or to any
financial institutions (consented to by the Borrower and Administrative Agent)
providing liquidity and/or credit support to or for the account of such SPC to
support the funding or maintenance of Loans and (ii) disclose on a confidential
basis any non-public information relating to its Loans to any rating agency,
commercial paper dealer or provider of any surety, guarantee or credit or
liquidity enhancement to such SPC. This subsection 10.6(c)(ii) may not be
amended without the written consent of the SPC.
(d) The Administrative Agent, on behalf of the Borrower, shall
maintain at the address of the Administrative Agent referred to in subsection
10.2 a copy of each Assignment and Acceptance delivered to it and a register
(the "Register") for the recordation of the names and addresses of the Lenders
and the Revolving Credit Commitments of, and principal amounts of the Loans
owing to, each Lender from time to time. The entries in the Register shall be
conclusive, in the absence of manifest error, and the Borrower, the
Administrative Agent and the Lenders may (and, in the case of any Loan or other
obligation hereunder not evidenced by a Note, shall) treat each Person whose
name is recorded in the Register as the owner of a Loan or other obligation
hereunder as the owner thereof for all purposes of this Agreement and the other
Loan Documents, notwithstanding any notice to the contrary. Any assignment of
any Loan or other obligation hereunder shall be effective only upon appropriate
entries with respect thereto being made in the Register. The Register shall be
available for inspection by the Borrower or any Lender at any reasonable time
and from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and an Assignee (and, in the case of an Assignee that is
not then a Lender or an affiliate thereof, by the Borrower and the
Administrative Agent) together with payment to the Administrative Agent of a
registration and processing fee of $3,500, the Administrative Agent shall (i)
promptly accept such Assignment and Acceptance and (ii) on the effective date
determined pursuant thereto record the information contained therein in the
Register and give notice of such acceptance and recordation to the Lenders and
the Borrower.
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(f) The Borrower authorizes each Lender to disclose to any
Participant or Assignee (each, a "Transferee") and any prospective Transferee,
subject to the provisions of subsection 10.17, any and all financial information
in such Lender's possession concerning the Borrower and its Affiliates which has
been delivered to such Lender by or on behalf of the Borrower pursuant to this
Agreement or which has been delivered to such Lender by or on behalf of the
Borrower in connection with such Lender's credit evaluation of the Borrower and
its Affiliates prior to becoming a party to this Agreement.
(g) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this subsection concerning assignments of
Loans and Notes relate only to absolute assignments and that such provisions do
not prohibit assignments creating security interests, including, without
limitation, any pledge or assignment by a Lender of any Loan or Note to any
Federal Reserve Bank in accordance with applicable law.
10.7 Replacement of Lenders under Certain Circumstances. The
Borrower shall be permitted to replace any Lender which (a) requests
reimbursement for amounts owing pursuant to subsection 3.9 or 3.10 or (b) is
affected in the manner described in subsection 3.8 and as a result thereof any
of the actions described in said subsection are required to be taken; provided
that (i) such replacement does not conflict with any Requirement of Law, (ii) no
Event of Default shall have occurred and be continuing at the time of such
replacement, (iii) the Borrower shall repay (or the replacement bank or
institution shall purchase, at par) all Loans and other amounts owing to such
replaced Lender prior to the date of replacement, (iv) the Borrower shall be
liable to such replaced Lender under subsection 3.11 if any Eurodollar Loan
owing to such replaced Lender shall be prepaid (or purchased) other than on the
last day of the Interest Period relating thereto, (v) the replacement bank or
institution, if not already a Lender, and the terms and conditions of such
replacement, shall be reasonably satisfactory to the Administrative Agent, (vi)
the replaced Lender shall be obligated to make such replacement in accordance
with the provisions of subsection 10.6 (provided that the Borrower shall be
obligated to pay the registration and processing fee referred to therein), (vii)
until such time as such replacement shall be consummated, the Borrower shall pay
all additional amounts (if any) required pursuant to subsection 3.9 or 3.10, as
the case may be, and (viii) any such replacement shall not be deemed to be a
waiver of any rights which the Borrower, the Administrative Agent or any other
Lender shall have against the replaced Lender.
10.8 Adjustments; Set-off. (a) If any Lender (a "benefitted
Lender") shall at any time receive any payment of all or part of its Loans or
the Reimbursement Obligations owing to it, or interest thereon, or receive any
collateral in respect thereof (whether voluntarily or involuntarily, by set-off,
pursuant to events or proceedings of the nature referred to in Section 8(f), or
otherwise), and, after giving effect to any such payment or the receipt of any
such collateral, such benefitted Lender shall have received a greater
proportionate payment (determined in accordance with subsection 3.7) or interest
in collateral than that received by any other Lender, if any, in respect of such
other Lender's Loans or the Reimbursement Obligations owing to it, or interest
thereon, such benefitted Lender shall purchase for cash from the other Lenders a
participating or other similar interest in such portion of each such other
Lender's Loans or the Reimbursement Obligations owing to it, or shall provide
such other Lenders with the benefits of any such collateral, or the proceeds
thereof, as shall be necessary to cause such benefitted Lender to share the
excess payment or benefits of such collateral or proceeds ratably with each of
the Lenders entitled to the same under this subsection; provided, however, that
if all or any portion of such excess payment or benefits is thereafter recovered
from such benefitted Lender, such purchase shall be rescinded, and the purchase
price and benefits returned, to the extent of such recovery, but without
interest.
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(b) In addition to any rights and remedies of the Lenders
provided by law, if an Event of Default shall have occurred and be continuing,
each Lender shall have the right, without prior notice to the Borrower, any such
notice being expressly waived by the Borrower to the extent permitted by
applicable law, upon any amount becoming due and payable by the Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise) which
is not paid when due to set-off and appropriate and apply against such amount
any and all deposits (general or special, time or demand, provisional or final),
in any currency, and any other credits, indebtedness or claims, in any currency,
in each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Lender or any branch or agency
thereof to or for the credit or the account of the Borrower. Each Lender agrees
promptly to notify the Borrower and the Administrative 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.
10.9 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts
(including by facsimile transmission), and all of said counterparts taken
together shall be deemed to constitute one and the same instrument. A set of the
copies of this Agreement signed by all the parties shall be lodged with the
Borrower and the Administrative Agent.
10.10 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.11 Integration. This Agreement and the other Loan Documents
represent the entire agreement of the Borrower, the Administrative Agent and the
Lenders with respect to the subject matter hereof and thereof, and there are no
promises, undertakings, representations or warranties by the Administrative
Agent or any Lender relative to subject matter hereof or thereof not expressly
set forth or referred to herein or in the other Loan Documents.
10.12 Termination. This Agreement shall terminate when the
Revolving Credit Commitments have terminated or expired and all obligations of
the Borrower hereunder have been paid in full.
10.13 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
10.14 Submission To Jurisdiction; Waivers. The Borrower hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to
which it is a party, or for recognition and enforcement of any judgment
in respect thereof, to the non-exclusive general jurisdiction of the
Courts of the State of New York, the courts of the United States of
America for the Southern District of New York, and appellate courts
from any thereof;
<PAGE> 59
54
(b) to the extent permitted by applicable law, consents that
any such action or proceeding may be brought in such courts and waives
any objection that it may now or hereafter have to the venue of any
such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead
or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to the Borrower at its address set forth in subsection 10.2 or
at such other address of which the Administrative Agent shall have been
notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall
limit the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding
referred to in this subsection any special, exemplary, punitive or
consequential damages.
10.15 Acknowledgements. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents;
(b) neither the Administrative Agent nor any Lender has any
fiduciary relationship with or fiduciary duty to the Borrower arising
out of or in connection with this Agreement or any of the other Loan
Documents, and the relationship between the Administrative Agent and
the Lenders, on the one hand, and the Borrower, on the other hand, in
connection herewith or therewith is solely that of debtor and creditor;
and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Lenders or among the Borrower and the
Lenders or among the Borrower and the Administrative Agent.
10.16 WAIVERS OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE
AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY
IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
10.17 Confidentiality. Each Lender agrees to keep confidential
all information provided to it by the Borrower or the Administrative Agent
pursuant to or in connection with this Agreement that is designated by the
Borrower in writing as confidential (the "Confidential Information"); provided
that nothing herein shall prevent any Lender from disclosing any such
Confidential Information (i) to the Administrative Agent or any other Lender,
(ii) to any Transferee or prospective Transferee which receives such
Confidential Information having been made aware of the confidential nature
thereof and which has agreed in writing to be bound by the terms of this
subsection 10.17, (iii) to its directors, officers, employees, employees of
affiliates, examiners and professional advisers who have a need to know such
Confidential Information in accordance with customary banking practices and who
receive such Confidential Information having been made aware of the restrictions
of this subsection and, in the case of professional advisers, having agreed to
be bound thereby, (iv) upon the request or demand of any Governmental Authority
having jurisdiction over such Lender, (v) in response to any order of any court
<PAGE> 60
55
or other Governmental Authority or as may otherwise be required pursuant to any
Requirement of Law, (vi) in connection with the exercise of any remedy
hereunder, (vii) which is now or hereafter becomes generally available to the
public other than as a result of a disclosure by such Lender or a disclosure
known to such Lender to have been made by any person or entity to which such
Lender has delivered such Confidential Information, (viii) which was available
to such Lender prior to its disclosure to such Lender by the Borrower, or (ix)
which becomes available to such Lender from a source other than the Borrower,
provided that such source is not (1) known to such Lender to be bound by a
confidentiality agreement with the Borrower or (2) known to such Lender to be
otherwise prohibited from transmitting the information to such Lender by a
contractual, legal or fiduciary obligation.
10.18 Section Headings. The Section and subsection headings in
this Agreement are for convenience in reference only and shall not deemed to
alter or affect the interpretation of any provisions hereof.
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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: Michael J. Viola
-------------------------------
Name: Michael J. Viola
Title: Vice President and Treasurer
THE CHASE MANHATTAN BANK, as
Administrative Agent
By: William P. Rindfuss
-------------------------------
Name: William P. Rindfuss
Title: Vice President
