SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Fiscal Quarter Ended 1-8668
September 30, 1994 Commission File Number
___________________________
FINGERHUT COMPANIES, INC.
(Exact name of registrant as specified in its charter)
Minnesota 41-1396490
(State of Incorporation) (I.R.S. Employer Identification No.)
4400 Baker Road, Minnetonka, Minnesota 55343
(Address of principal executive offices)
(612) 932-3100
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No _____
As of November 14, 1994, 46,174,255 shares of the Registrant's Common Stock,
$.01 par value, were outstanding.
FINGERHUT COMPANIES, INC.
FORM 10-Q
September 30, 1994
TABLE OF CONTENTS
Part I - Financial Information Page
Item 1. Financial Statements
Consolidated Statements of Earnings (Unaudited) -
thirteen weeks and thirty-nine weeks ended
September 30, 1994 and September 24, 1993 ............ 3
Consolidated Statements of Financial Position
(Unaudited) - September 30, 1994, September 24, 1993 and
December 31, 1993 .................................... 4
Consolidated Statements of Cash Flows (Unaudited) -
thirty-nine weeks ended September 30, 1994 and
September 24, 1993.....................................5
Condensed Notes to Consolidated Financial
Statements (Unaudited)................................ 6
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition..................... 9
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K ..................... 15
Signatures..................................................... 16
FINGERHUT COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands of dollars, except share and per share data)
(Unaudited)
Thirteen Weeks Ended Thirty-Nine Weeks
Ended
September 30, September 24, September 30, September 24,
1994 1993 1994 1993
Revenues:
Net sales $ 381,526 $ 339,308 $1,094,974 $1,060,563
Finance income, net 47,919 40,005 142,646 111,392
429,445 379,313 1,237,620 1,171,955
Costs and expenses:
Product cost 187,831 176,364 545,500 540,979
Administrative and
selling expenses 158,952 131,572 443,608 406,915
Provision for
uncollectible accounts 53,958 39,292 144,715 132,082
Discount on sale of
accounts receivable 12,357 6,147 33,310 15,663
Interest expense, net 5,401 7,423 19,132 26,863
418,499 360,798 1,186,265 1,122,502
Earnings before taxes 10,946 18,515 51,355 49,453
Provision for income
taxes 3,859 4,756 18,103 14,954
Net earnings $ 7,087 $ 13,759 $ 33,252 $ 34,499
Earnings per share $ .14 $ .27 $ .66 $ .69
Dividends $ .04 $ .04 $ .12 $ .12
Weighted average 50,384,859 50,254,733 50,597,745 49,897,175
shares
See accompanying Condensed Notes to Consolidated Financial Statements.
FINGERHUT COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(In thousands of dollars)
(Unaudited)
September 30, September 24, December 31,
1994 1993 1993
ASSETS
Current assets:
Cash and cash equivalents $ 41,961 $ 10,382 $ 66,571
Customer accounts receivable, net 315,598 298,643 333,543
Inventories, net 176,561 204,767 149,389
Promotional material 84,710 81,356 56,083
Deferred income taxes 64,804 65,519 68,404
Other 12,334 8,522 8,218
Total current assets 695,968 669,189 682,208
Property and equipment, net 201,202 187,832 182,510
Excess of cost over fair value of
net assets acquired, net 43,571 46,245 43,977
Customer lists, net 9,742 14,854 10,067
Other assets 62,779 11,500 53,215
$1,013,262 $ 929,620 $ 971,977
LIABILITIES
Current liabilities:
Accounts payable $ 161,524 $ 147,969 $ 120,307
Accrued payroll and employee benefits 31,263 28,779 36,545
Other accrued liabilities 44,340 51,471 49,639
Current portion of long-term debt 344 363 305
Current income taxes payable 13,167 4,942 26,179
Total current liabilities 250,638 233,524 232,975
Long-term debt, less current portion 246,589 247,001 246,820
Deferred income taxes 9,188 11,882 15,459
Other non-current liabilities 5,086 4,301 4,334
511,501 496,708 499,588
STOCKHOLDERS' EQUITY
Preferred stock - - -
Common stock 463 461 461
Additional paid-in capital 257,703 254,491 254,984
Earnings reinvested 243,595 177,960 216,944
Total stockholders' equity 501,761 432,912 472,389
$1,013,262 $ 929,620 $ 971,977
See accompanying Condensed Notes to Consolidated Financial Statements.
FINGERHUT COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of dollars)
(Unaudited)
Thirty-Nine Weeks Ended
September 30 September 24,
1994 1993
Cash flows from operating activities:
Net earnings $ 33,252 $ 34,499
Adjustments to reconcile net earnings to
net cash provided (used) by operating activities:
Depreciation and amortization 25,419 21,829
Change in assets and liabilities, excluding
the effects of business divestitures:
Customer accounts receivable, net 5,906 22,049
Inventories, net (27,172) (57,352)
Promotional material and other current assets (32,743) (31,921)
Accounts payable 41,217 (3,450)
Accrued payroll and employee benefits (5,282) (7,319)
Other accrued liabilities (5,299) (9,075)
Current income taxes payable (11,507) (13,774)
Deferred income taxes (2,671) 9,791
Other (9,315) 1,314
Net cash provided (used) by operating activities 11,805 (33,409)
Cash flows from investing activities:
Additions to property and equipment (42,877) (39,553)
Proceeds from business divestitures 12,039 -
Net cash used by investing activities (30,838) (39,553)
Cash flows from financing activities:
Proceeds from long-term debt - 45,000
Repayments of long-term debt (192) (45,159)
Issuance of common stock 1,523 2,340
Stock repurchase/redemption (1,353) -
Cash dividends paid (5,555) (5,519)
Net cash used by financing activities (5,577) (3,338)
Net decrease in cash and cash equivalents (24,610) (76,300)
Cash and cash equivalents at beginning of period 66,571 86,682
Cash and cash equivalents at end of period $ 41,961 $ 10,382
Supplemental noncash investing and financing activities:
Tax benefit from exercise of non-qualified
stock options $ 1,505 $ 2,001
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 17,180 $ 33,896
Cash paid during the period for income taxes $ 32,517 $ 20,043
Included in cash and cash equivalents were liquid investments with original
maturities of fifteen days or less.
See accompanying Condensed Notes to Consolidated Financial Statements.
FINGERHUT COMPANIES, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Unaudited
1. Consolidated financial statements
The consolidated financial statements of Fingerhut Companies, Inc.
("Company") reflect the financial position and results of operations of
the Company and its wholly owned subsidiaries. The Company's principal
subsidiaries are Fingerhut Corporation ("Fingerhut"), USA Direct
Incorporated ("USA Direct") and S The Shopping Network ("S"). COMB
Corporation was sold as of September 3, 1993, FDC, Inc., a subsidiary of
Figi's Inc. ("Figi's"), was sold as of December 31, 1993 and the Company
has signed a letter of intent to sell the remaining assets of Figi's
("Sold Subsidiaries").
The consolidated financial statements as of September 30, 1994 and
September 24, 1993, and for the thirteen and thirty-nine weeks ended
September 30, 1994 and September 24, 1993, included herein are unaudited
and have been prepared by the Company pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are
adequate to make the information presented not misleading. The interim
financial statements reflect all adjustments (consisting of normal
recurring accruals) that are, in the opinion of management, necessary for
a fair statement of the results for the interim periods. These
consolidated financial statements should be read in conjunction with the
consolidated financial statements and the notes thereto included in the
Company's 1993 Annual Report to Shareholders and incorporated by
reference in the Company's annual report on Form 10-K filed with the
Securities and Exchange Commission. The results of operations for the
interim period should not be considered indicative of the results to be
expected for the entire year.
Reclassifications have been made to prior years' consolidated financial
statements whenever necessary to conform to the current year's
presentation.
2. Summary of significant accounting policies adopted in 1994
During the first quarter of 1994, the Company completed their study of
Statement of Financial Accounting Standards No. 112, "Employers'
Accounting for Postemployment Benefits" and determined there were no
significant adjustments required for the implementation of this
pronouncement.
3. Earnings per share of common stock and common stock equivalents
Earnings per share was computed by dividing net earnings by the weighted
average shares of common stock and common stock equivalents outstanding
during the periods. The dilutive effect of the potential exercise of
outstanding options to purchase shares of common stock was calculated
using the treasury stock method.
4. Sale of accounts receivable
The Receivables Transfer Agreement was replaced with the Fingerhut Master
Trust in June 1994. Under the Fingerhut Master Trust, Fingerhut sold a
greater percentage of its receivables, which had the effect of increasing
the proceeds received by the Company as of September 30, 1994. The
proceeds from the sale of accounts receivable were $899.8 million, $637.0
million and $829.0 million as of September 30, 1994, September 24, 1993
and December 31, 1993, respectively. The Company's interest in the
Fingerhut Master Trust was approximately $122.7 million as of September
30, 1994. The holdback under the Receivables Transfer Agreement, which
represented the Company's interest under that agreement, was
approximately $132.0 million and $227.0 million as of September 24, 1993
and December 31, 1993, respectively.
5. Customer accounts receivable, net
Customer accounts receivable, net consisted of the following:
(In thousands of dollars) September 30, September 24, December 31,
1994 1993 1993
Due from customers $ 426,528 $ 423,592 $ 466,390
Reserve for uncollectible
accounts, net of anticipated
recoveries (71,933) (74,887) (70,011)
Reserve for returns
and exchanges (11,621) (13,924) (18,988)
Other reserves (13,379) (16,164) (19,135)
Net collectible amount 329,595 318,617 358,256
Unearned finance income (13,997) (19,974) (24,713)
Customer accounts
receivable, net $ 315,598 $ 298,643 $ 333,543
6. Revolving credit facility
Interest expense related to the revolving credit facility for the thirty-
nine week periods ended September 30, 1994 and September 24, 1993 was $28
thousand and $23 thousand, respectively. The average outstanding
balances during such periods were $586 thousand and $516 thousand,
respectively, and the average annual interest rate for the 1994 and 1993
periods were 6.8% and 6.0%, respectively.
7. Stockholders' equity
During the thirty-nine week period ended September 30, 1994, 210,225
shares of common stock were issued related to the exercise of employee
stock options, bringing the total shares of common stock outstanding as
of September 30, 1994 to 46,303,673.
In July 1994, the Company repurchased 55,000 shares of its common stock
at prevailing market prices under its previously announced stock
repurchase program.
8. Subsequent event
On October 19, 1994, the Company signed a term sheet with an investor
group under which they would acquire a majority interest in S and USA
Direct. The term sheet contemplates a closing by the end of November,
subject to due diligence and customary closing conditions.
On October 20, 1994, the Company declared a cash dividend in the amount
of $.04 per share, aggregating approximately $1.8 million, payable on
November 24, 1994, to the shareholders of record as of the close of
business on November 3, 1994.
In October 1994, the Company repurchased 150,000 shares of its common
stock at prevailing market prices under its previously announced stock
repurchase program. A total of 205,000 shares have been repurchased and
retired to date.
In October 1994, the Company amended the Revolving Credit Facility to
increase the aggregate commitments to $400.0 million, which includes the
issuance of up to $200.0 million in letters of credit, and extend the
commitment expiration date to October 1999.
In November 1994, the Company issued 20,582 shares of common stock under
the Fingerhut Companies, Inc. 1994 Employee Stock Purchase Plan.
FINGERHUT COMPANIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
THIRTEEN AND THIRTY-NINE WEEKS ENDED
SEPTEMBER 30, 1994 AND SEPTEMBER 24, 1993
Results of Operations
On August 31, the Company announced that third quarter earnings would be
impacted by investments associated with the start-up of S The Shopping
Network, USA Direct product testing and the MTV Networks television shopping
test and stated its intent to attract partners to financially support the
launch of S in December of this year.
Since that time, discussions have proceeded with a number of financial and
strategic investors resulting in a term sheet executed on October 19, 1994.
The term sheet contemplates a closing by the end of November, subject to due
diligence and customary closing conditions.
Costs for S and the introduction of several unsuccessful new products at USA
Direct will continue to impact fourth quarter earnings. In addition, softer
response from Fingerhut's existing customer list, higher seasonal labor costs,
and rising interest rates may negatively impact fourth quarter and full year
earnings. Due to these factors, the Company does not expect a record year in
earnings.
THIRD QUARTER
Net sales for the current thirteen week period were $381.5 million compared to
net sales of $339.3 million for the related period in 1993. Net sales for the
current period increased 20% from $318.4 million, when excluding the Sold
Subsidiaries. Fingerhut Corporation ("Fingerhut"), the Company's core
business, had third quarter net sales of $366.1 million compared to $310.9
million in the same period in 1993, an increase of 18%. Net sales from
Fingerhut's existing customer list increased 19% to $307.1 million due to
increased mailings. Compared to the first half of the year, response rates
trended up in the third quarter but have not yet reached the third quarter 1993
level. Net sales from Fingerhut's new customer acquisition programs increased
13% to $59.0 million primarily due to increased mailings. Net sales from USA
Direct were $11.6 million compared to $6.2 million for the same period in 1993.
Although sales were ahead of third quarter 1993, profitability was
significantly impacted by unsuccessful product launches as well as higher media
costs. Montgomery Ward Direct, the Company's joint venture with Montgomery
Ward, had net sales of $44.4 million compared to $28.4 million in the related
1993 period, an increase of 56%. This joint venture is reported under the
equity method of accounting and, as such, these sales are not included as
revenues in the Company's consolidated financial statements.
Net finance income for the current thirteen week period increased to $47.9
million from $40.0 million in the related 1993 period due to increased sales
from Fingerhut's existing customers.
Product cost for the current thirteen week period improved to 49.2% of net
sales, or $187.8 million, compared to 52.0% of net sales, or $176.4 million,
during the comparable prior year period. The reduction as a percent of net
sales was due to an overall improvement in product margins.
Administrative and selling expenses for the current thirteen week period
increased to $159.0 million, or 41.7% of net sales, from $131.6 million, or
38.8% of net sales, in the comparable prior year period due primarily to media
and production costs in USA Direct, costs associated with S The Shopping
Network, the MTV Networks shopping test and, to a lesser degree, planned
depreciation costs.
The provision for uncollectible accounts for the third quarter of 1994 was
$54.0 million, or 14.1% of net sales, compared to $39.3 million, or 11.6% of
net sales, for the same period in the prior year. The increase as a percent
of net sales was due to an anticipated higher provision for uncollectible
accounts on Fingerhut's existing customers. The deeper mailings to existing
customers, which were planned for the third quarter, resulted in higher
customer response, as well as an increase in provisions for uncollectible
accounts. The overall increase was also due to the Sold Subsidiaries, which
had lower provision levels as a percent of net sales, partially offset by
lower provision levels for Fingerhut's new customer acquisition programs.
Discount on sale of accounts receivable for the thirteen week period ended
September 30, 1994 was $12.4 million compared to $6.1 million for the
comparable period in 1993. The increase resulted primarily from higher short-
term interest rates, as well as an increase in sales from Fingerhut's existing
customers and the replacement of the Receivables Transfer Agreement with the
Fingerhut Master Trust.
Net interest expense for the current thirteen week period was $5.4 million
compared to $7.4 million in the third quarter of 1993. The decrease was
primarily attributable to the expiration of the final $100 million of interest
rate swap agreements on June 30, 1994.
The effective tax rate for the third quarter of 1994 was 35.3% compared with
25.7% in the comparable prior year period. The Company recognized a one-time
benefit of $2.0 million on its deferred tax asset in the third quarter of 1993
as a result of the Omnibus Budget Reconciliation Act of 1993.
As a result of the items discussed above, net earnings for the thirteen week
period ended September 30, 1994 were $7.1 million or $.14 per share, compared
to third quarter 1993 net earnings of $13.8 million or $.27 per share.
THIRTY-NINE WEEK PERIOD
Consolidated net sales for the thirty-nine week period ended September 30,
1994 were $1.095 billion compared to $1.061 billion for the corresponding
period in 1993. Excluding the Sold Subsidiaries, net sales for the thirty-
nine week period increased 13% from $973.0 million. Fingerhut had year-to-
date net sales of $1.041 billion compared to $916.9 million in 1993, an
increase of 13%. Net sales from Fingerhut's existing customer list increased
15% to $855.2 million primarily as a result of additional mailings, partially
offset by lower response rates. Net sales from Fingerhut's new customer
acquisition programs increased 6% to $185.5 million primarily due to increased
sales per mailing. Net sales from USA Direct were $47.1 million compared to
$51.9 million for the same period in 1993, the result of less successful
product promotions. Montgomery Ward Direct had net sales of $114.2 million
compared to $63.7 million for the related period in 1993, an increase of 79%.
Montgomery Ward Direct's sales are not included as revenues in the Company's
consolidated financial statements.
Net finance income year-to-date was $142.6 million compared to $111.4 million
for the same period in 1993. The increase was due to increased sales from
Fingerhut's existing customers and a higher percent of accounts receivable
sold under the Fingerhut Master Trust.
Product cost for the thirty-nine week period ended September 30, 1994 was
$545.5 million or 49.8% of net sales compared to $541.0 million or 51.0% of
net sales during the comparable prior year period. The decrease as a percent
of net sales was due to the Sold Subsidiaries, which had a higher product cost
as a percent of net sales.
Administrative and selling expenses for the first three quarters of 1994 were
$443.6 million, or 40.5% of net sales, compared to $406.9 million, or 38.4% of
net sales, in the comparable prior year period. The increase as a percent of
net sales was due to the media, production and other product development and
testing costs in USA Direct, costs associated with S, the MTV Networks
shopping test, lower sales per advertising dollar from Fingerhut's existing
and new customers and planned depreciation costs.
The provision for uncollectible accounts was $144.7 million or 13.2% of net
sales compared with $132.1 million or 12.5% of net sales for the same period
in the prior year. The increase as a percent of net sales was primarily due
to the Sold Subsidiaries which had a lower provision for uncollectible
accounts as a percent of net sales.
Discount on sale of accounts receivable for the thirty-nine week period ended
September 30, 1994 was $33.3 million compared to $15.7 million for the
comparable period in 1993. The increase resulted from higher short-term
interest rates, an increase in sales from Fingerhut's existing customers, and
a higher percent of accounts receivable sold under the Fingerhut Master Trust.
Net interest expense for the first three quarters of 1994 was $19.1 million
compared to $26.9 million in the comparable prior year period. The decrease
was primarily attributable to the expiration of the interest rate swap
agreements on June 30, 1993 and June 30, 1994.
The effective tax rate for the first thirty-nine weeks of 1994 was 35.3%
compared with 30.2% in the same period of the prior year. The Company
recognized a one-time benefit of $2.0 million on its deferred tax asset due to
the retroactive adjustment booked in the third quarter of 1993 as a result of
the Omnibus Budget Reconciliation Act of 1993.
As a result of the items discussed above, net earnings for the thirty-nine
week period ended September 30, 1994 were $33.3 million or $.66 per share,
compared to 1993 net earnings for the comparable period of $34.5 million or
$.69 per share.
Liquidity and Capital Resources
The Company funds its operations through internally generated funds, the sale
of accounts receivable pursuant to the Fingerhut Master Trust, borrowings
under the Revolving Credit Facility and issuance of long-term debt and common
stock.
The Receivables Transfer Agreement was replaced with the Fingerhut Master
Trust in June 1994 (See note 4 of the Condensed Notes to Consolidated
Financial Statements). Under the Fingerhut Master Trust, Fingerhut sold a
greater percentage of its receivables, which had the effect of increasing the
proceeds received by the Company as of September 30, 1994. The proceeds
received as of September 30, 1994 and December 31, 1993 were $899.8 million
and $829.0 million, respectively, compared with $637.0 million as of September
24, 1993 and $653.0 million as of December 25, 1992.
The Revolving Credit Facility was amended in October 1994 to increase the
aggregate commitments to $400.0 million, which includes the issuance of up to
$200.0 million in letters of credit, and extend the commitment expiration date
to October 1999. As of September 30, 1994 and September 24, 1993, the Company
had no borrowings under the Revolving Credit Facility but had outstanding
letters of credit of $8.8 million and $41.7 million, respectively. Additional
outstanding open letters of credit under a separate agreement aggregated $43.5
million at September 30, 1994.
The Company had an aggregate amount of fixed rate notes outstanding of $245.0
million as of September 30, 1994 and September 24, 1993.
The Company generated $11.8 million of cash from operations during the thirty-
nine week period ended September 30, 1994, compared with a use of $33.4
million for the related period in 1993. This net $45.2 million increase in
cash provided from operations resulted from decreased working capital
requirements. The most significant items affecting working capital were
changes in accounts receivable, inventory and accounts payable. The decrease
in cash provided by accounts receivable was primarily a result of the 1993
activity of the Sold Subsidiaries. The decrease in cash used by inventory was
primarily due to Fingerhut's inventory levels increasing at a lesser rate in
1994 compared to that of the comparable period in 1993, as well as the 1993
activities of the Sold Subsidiaries. The change in accounts payable from a
$3.5 million use of cash in 1993 to a $41.2 million source of cash in 1994
resulted from the additional week of activity in the fiscal 1993 period and
the timing of purchases and disbursements.
The $8.7 million decrease in net cash used by investing activities was the
result of proceeds received from businesses divested at the end of 1993.
Three separate facility additions have been approved by the Company's Board of
Directors. The $20.0 million 547,000 square-foot warehouse and distribution
facility expansion in St. Cloud, Minnesota is planned to be fully operational
during the fourth quarter of 1994. Spending through September 30, 1994 on the
St. Cloud expansion was $13.1 million. Construction on a western distribution
center in Spanish Fork, Utah began in the third quarter. Spending through
September 30, 1994 was $4.1 million. This one million square-foot facility is
projected to cost approximately $60.0 million and to be fully operational in
early to mid 1996. The Company also broke ground in the third quarter for a
$23.0 million data and technology center in Plymouth, Minnesota, which is
anticipated to be open in the second quarter of 1995.
The Company leases certain office and warehouse facilities that, during the
remainder of 1994, the lessor has the right to require the Company to
purchase. If the lessor exercises this right, the Company will purchase the
facilities for approximately $15 million in the first half of 1995.
In 1994, the Company has obligations to provide up to an additional $5.0
million of capital to Montgomery Ward Direct. At September 30, 1994, the
Company's aggregate capital investment in Montgomery Ward Direct was $5.0
million.
During the first quarter of 1994, the Company signed long-term cable
agreements with Time Warner Cable and Continental Cablevision relating to S.
These agreements require payments to be made to Time Warner and Continental in
exchange for cable carriage and other services. The Company has continued to
fund the startup of S operations. On October 19, 1994, the Company signed a
term sheet with an investor group under which they would acquire a majority
interest in S and USA Direct. The term sheet contemplates a closing by the
end of November, subject to due diligence and customary closing conditions.
Failure to complete the transaction may cause the Company to discontinue funding
operations of S, which would affect the launch of S.
On May 12, 1994, the Company announced that its Board of Directors authorized
the repurchase of up to 500,000 shares of the Company's common stock that may
be made from time to time at prevailing prices in the open market or by block
purchase and may be discontinued at any time. The purchases will be made
within certain restrictions relating to volume, price and timing in order to
minimize the impact of the purchase on the market for the Company's stock. In
July 1994 and October 1994, the Company repurchased 55,000 shares and 150,000
shares, respectively, of its common stock at prevailing market prices.
On June 30, 1994, the final $100.0 million of interest rate swap agreements
expired. These agreements carried a fixed interest rate of 9.5% and thus,
will favorably impact interest expense in future periods.
On October 20, 1994, the Company declared a cash dividend of $.04 per share,
or an aggregate of $1.8 million, payable on November 24, 1994, to the
shareholders of record as of the close of business on November 3, 1994.
The Company believes it will have sufficient funds available to meet current
and anticipated commitments.
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
10.n. Amended and Restated Revolving Credit and
Letter of Credit Facility dated as of October 17,
1994 among Fingerhut Companies, Inc., the
Guarantor party thereto, the Lenders party
thereto, the issuing Banks party thereto, Chemical
Bank as Agent and Nations Bank of North Carolina,
N.A. as Co-Agent.
11 Computation of Earnings per Share
27 Financial Data Schedule
(b) Reports on Form 8-K:
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FINGERHUT COMPANIES, INC.
Date: November 14, 1994 By:
/s/ Daniel J. McAthie
Daniel J. McAthie
Senior Vice President
Chief Financial Officer
(Principal Financial Officer)
Date: November 14, 1994 By:
/s/ Thomas C. Vogt
Thomas C. Vogt
Corporate Controller
(Principal Accounting Officer)
AMENDED AND RESTATED REVOLVING CREDIT
AND LETTER OF CREDIT FACILITY AGREEMENT dated
as of October 29, 1990, as amended and
restated through October 17, 1994, among
FINGERHUT COMPANIES, INC., a Minnesota
corporation (the "Borrower"), FINGERHUT
CORPORATION, a Minnesota corporation (the
"Guarantor", and together with any Subsidiary
which shall become a Guarantor pursuant to
Section 5.08, the "Guarantors"), the lenders
listed in Schedule 2.01 hereto (the
"Lenders"), NATIONSBANK OF NORTH CAROLINA,
N.A., as co-agent for the Lenders (in such
capacity, the "Co-Agent"), BANK OF AMERICA
ILLINOIS, as an issuing bank, NORWEST BANK
MINNESOTA, N.A., as an issuing bank, FIRST
BANK NATIONAL ASSOCIATION, as an issuing bank
and CHEMICAL BANK as agent for the Lenders
(in such capacity, the "Agent") and as an
issuing bank.
The Borrower has requested the Lenders to extend
credit to the Borrower in an aggregate principal amount of
up to $400,000,000, of which (i) the full amount minus the
LC Exposure (as defined herein) shall be available in the
form of revolving credit loans and competitive advances
(pursuant to a procedure under which the Borrower may invite
the Lenders to bid on an uncommitted basis on borrowings by
the Borrower) and (ii) up to $200,000,000 shall be available
in the form of letters of credit. Such credit will mature
five years after the Restatement Closing Date (as
hereinafter defined). The proceeds of all such borrowings
and such letters of credit are to be used by the Borrower
and its subsidiaries to provide working capital and for
other general corporate purposes. The Lenders are willing
to extend such credit to the Borrower on the terms and
subject to the conditions herein set forth.
Accordingly, the Borrower, the Guarantor, the
Lenders and the Agent agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this
Agreement, the following terms shall have the meanings
specified below:
"ABR Borrowing" shall mean a Borrowing comprised
of ABR Standby Loans.
"ABR Standby Loan" shall mean any Standby Loan
bearing interest at a rate determined by reference to the
Alternate Base Rate.
"Accounts" shall mean all accounts, accounts
receivable, other receivables, contract rights, chattel
paper, and related instruments and documents, insurance
claims and proceeds, and notes, whether now owned or here-
after acquired by the Borrower or any Subsidiary.
"Administrative Questionnaire" shall mean an
Administrative Questionnaire in the form of Exhibit C
hereto.
"Affiliate" shall mean, when used with respect to
a specified person, another person that directly, or
indirectly through one or more intermediaries, Controls or
is Controlled by or is under common Control with the person
specified.
"Agent Fees" shall have the meaning assigned to
such term in Section 2.06(b).
"Alternate Base Rate" shall mean, for any day, a
rate per annum (rounded upwards, if necessary, to the next
1/16 of 1%) equal to the greatest of (a) the Prime Rate in
effect on such day, (b) the Base CD Rate in effect on such
day plus 1% and (c) the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1%. For purposes hereof,
"Prime Rate" shall mean the rate of interest per annum
publicly announced from time to time by the Agent as its
prime rate in effect at its principal office in New York
City; each change in the Prime Rate shall be effective on
the date such change is publicly announced as effective.
"Base CD Rate" shall mean the sum of (a) the product of
(i) the Three-Month Secondary CD Rate and (ii) Statutory
Reserves and (b) the Assessment Rate. "Three-Month
Secondary CD Rate" shall mean, for any day, the secondary
market rate for three-month certificates of deposit reported
as being in effect on such day (or, if such day shall not be
a Business Day, the next preceding Business Day) by the
Board through the public information telephone line of the
Federal Reserve Bank of New York (which rate will, under the
current practices of the Board, be published in Federal
Reserve Statistical Release H.15(519) during the week
following such day), or, if such rate shall not be so
reported on such day or such next preceding Business Day,
the average of the secondary market quotations for
three-month certificates of deposit of major money center
banks in New York City received at approximately 10:00 a.m.,
New York City time, on such day (or, if such day shall not
be a Business Day, on the next preceding Business Day) by
the Agent from three New York City negotiable certificate of
deposit dealers of recognized standing selected by it.
"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 Agent from three
Federal funds brokers of recognized standing selected by it.
If for any reason the Agent shall have determined (which
determination shall be presumed conclusive absent manifest
error but subject to rebuttal by the Borrower) that it is
unable to ascertain the Base CD Rate or the Federal Funds
Effective Rate or both for any reason, including the
inability or failure of the Agent to obtain sufficient
quotations in accordance with the terms thereof, the
Alternate Base Rate shall be determined without regard to
clause (b) or (c), or both, of the first sentence of this
definition, as appropriate, until the circumstances giving
rise to such inability no longer exist. Any change in the
Alternate Base Rate due to a change in the Prime Rate, the
Three-Month Secondary CD Rate or the Federal Funds Effective
Rate shall be effective on the effective date of such change
in the Prime Rate, the Three-Month Secondary CD Rate or the
Federal Funds Effective Rate, respectively.
"Amendment Agreement" shall mean the Amendment
Agreement dated as of October 17, 1994, among the Borrower,
the Guarantor, the Lenders, the Departing Lenders (as
defined therein), Chemical Bank, as agent and an issuing
bank, and others.
"Assessment Rate" shall mean for any date the
annual rate (rounded upwards, if necessary, to the next
1/100 of 1%) most recently estimated by the Agent as the
then current net annual assessment rate that will be
employed in determining amounts payable by the Agent to the
Federal Deposit Insurance Corporation (or any successor) for
insurance by such Corporation (or such successor) of time
deposits made in dollars at the Agent's domestic offices.
"Assignment and Acceptance" shall mean an assign-
ment and acceptance entered into by a Lender and an
assignee, and accepted by the Agent, in the form of
Exhibit D.
"Big Six Accounting Firm" shall mean any of Price
Waterhouse & Co., Arthur Andersen & Co., Ernst & Young, KPMG
Peat Marwick LLP, Deloitte & Touche and Coopers & Lybrand or
their respective successors.
"Board" shall mean the Board of Governors of the
Federal Reserve System of the United States.
"Borrowing" shall mean a group of Loans of a
single Type made by the Lenders (or, in the case of a
Competitive Borrowing, by the Lender or Lenders whose
Competitive Bids have been accepted pursuant to
Section 2.03) on a single date and as to which a single
Interest Period is in effect.
"Business Day" shall mean any day (other than a
day which is a Saturday, Sunday or legal holiday in the
State of New York) on which banks are permitted to open for
business in New York City; provided, however, that, when
used in connection with a Eurodollar Loan, the term "Busi-
ness Day" shall also exclude any day on which banks are not
open for dealings in dollar deposits in the London interbank
market.
"Capital Lease" shall have the meaning given such
term in the definition of Capital Lease Obligation.
"Capital Lease Obligations" of any person shall
mean the obligations of such person to pay rent or other
amounts under any lease (a "Capital Lease") of (or other
arrangement conveying the right to use) real or personal
property, or a combination thereof, which obligations are
required to be classified and accounted for as capital
leases on a balance sheet of such person under GAAP consis-
tently applied and, for the purposes of this Agreement, the
amount of such obligations at any time shall be the capital-
ized amount thereof at such time determined in accordance
with GAAP consistently applied.
A "Change in Control" shall be deemed to have
occurred if (a) any person (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) shall
beneficially own (within the meaning of Rule 13d-3 under the
Exchange Act) shares representing more than 50% of the
aggregate ordinary voting power represented by the issued
and outstanding capital stock of the Borrower or any person
directly or indirectly Controlling the Borrower or (b) at
any time, individuals who on the Restatement Closing Date
were directors of the Borrower (together with any
replacement or additional directors nominated or appointed
by the majority of directors then in office) cease to
constitute a majority of the Board of Directors of the
Borrower.
"Change in Control Date" shall mean the date on
which the Required Lenders shall have requested the
termination of the Commitments following the earlier of
(x) the filing with the Securities and Exchange Commission
of a Schedule 13D (or any similar or successor report or
schedule) or any amendment thereto pursuant to
Regulation 13D or any similar or successor regulation
promulgated under the Exchange Act with respect to the
Borrower or any person directly or indirectly Controlling
the Borrower indicating that an event which constitutes a
Change in Control has occurred, or (y) the date that the
Borrower becomes aware that an event which constitutes a
Change in Control has occurred.
"Code" shall mean the Internal Revenue Code of
1986, as the same may be amended from time to time.
"Collateral Agent" shall have the meaning assigned
to such term in the Intercreditor Collateral Agency
Agreement and the Pledge Agreement.
"Collateral Documents" shall mean the Pledge
Agreement and the executed stock powers referred to therein.
"Commitment" shall mean, with respect to each
Lender, the Commitment of such Lender to make Loans
hereunder in an amount not in excess of the amount set forth
opposite such Lender's name in Schedule 2.01 hereto as such
Lender's Commitment may be permanently terminated or reduced
from time to time pursuant to Section 2.11 or adjusted from
time to time pursuant to Section 11.04.
"Competitive Bid" shall mean an offer by a Lender
to make a Competitive Loan pursuant to Section 2.03.
"Competitive Bid Accept/ Reject Letter" shall mean
a notification made by the Borrower pursuant to
Section 2.03(d) in the form of Exhibit A-4 hereto.
"Competitive Bid Rate" shall mean, as to any
Competitive Bid made by a Lender pursuant to
Section 2.03(b), (i) in the case of a Eurodollar Competitive
Loan, the Margin, and (ii) in the case of a Fixed Rate Loan,
the fixed rate of interest offered by the Lender making such
Competitive Bid.
"Competitive Bid Request" shall mean a request
made pursuant to Section 2.03 in the form of Exhibit A-1
hereto.
"Competitive Borrowing" shall mean a borrowing
consisting of a Competitive Loan or concurrent Competitive
Loans from the Lender or Lenders whose Competitive Bids for
such Borrowing have been accepted by the Borrower under the
bidding procedure described in Section 2.03.
"Competitive Loan" shall mean a Loan pursuant to
the bidding procedure described in Section 2.03. Each
Competitive Loan shall be a Eurodollar Competitive Loan or a
Fixed Rate Loan.
"Competitive Note" shall mean a promissory note of
the Borrower in the form of Exhibit B-1 hereto, executed and
delivered as provided in Section 2.07.
"Consolidated Interest Expense" shall mean, for
any period, gross total expenses of the Borrower and its
consolidated Subsidiaries accounted for as interest expense
for such period, including the portion of rental payments
under Capital Lease Obligations deemed to represent interest
in accordance with GAAP consistently applied and all fees
owed with respect to Letters of Credit (exclusive of
commissions, discounts and other amounts payable solely at
the time of issuance or amendment of such Letters of Credit)
and excluding discounts at which Accounts are sold under the
Receivables Transfer Program, all as determined on a
consolidated basis in conformity with GAAP consistently
applied and adjusted to avoid the double counting of any
items.
"Consolidated Net Income" shall mean, for any
period, the net income (or loss), before consideration of
any gains or charges resulting from extraordinary items, of
the Borrower and its consolidated Subsidiaries for such
period, as determined on a consolidated basis in conformity
with GAAP consistently applied.
"Consolidated Net Worth" shall mean, as at any
date of determination, the consolidated stockholders' equity
of the Borrower and its consolidated Subsidiaries, as
determined on a consolidated basis in conformity with GAAP
consistently applied.
"Control" shall have the meaning given such term
in Rule 12b-2 under the Exchange Act and "Controlling" and
"Controlled" shall have meanings correlative thereto.
"Credit Card Bank" shall mean Direct Merchants
Credit Card Bank, National Association, and any other
limited purpose credit card national bank to be formed or
acquired by the Borrower or one of the Subsidiaries.
"Credit Event" shall mean each Borrowing, each
issuance of a Letter of Credit and each amendment of a
Letter of Credit that increases the principal amount
thereof.
"Default" shall mean any event or condition which
upon notice, lapse of time or both would constitute an Event
of Default.
"Designated Debt" shall mean, as at any date, all
obligations of the Borrower and its consolidated
Subsidiaries which are (or, as of such date, should be)
accounted for as indebtedness on a consolidated balance
sheet of the Borrower in conformity with GAAP consistently
applied whether such obligations are classified as long-term
or short-term under GAAP consistently applied.
"dollars" or "$" shall mean lawful money of the
United States of America.
"Earnings Before Interest and Taxes" shall mean,
with respect to the Borrower and its Subsidiaries for any
period, the sum for such period of (i) Consolidated Net
Income, (ii) Consolidated Interest Expense and (iii) the
provision for income taxes on a consolidated basis, in each
case for such period, computed and calculated in accordance
with GAAP consistently applied.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as the same may be amended from time
to time.
"ERISA Affiliate" shall mean any trade or business
(whether or not incorporated) that is a member of a group of
which the Borrower is a member and that is treated as a
single employer under Section 414 of the Code.
"Eurodollar Borrowing" shall mean a Borrowing
comprised of Eurodollar Loans.
"Eurodollar Competitive Borrowing" shall mean a
Borrowing comprised of Eurodollar Competitive Loans.
"Eurodollar Competitive Loan" shall mean any
Competitive Loan bearing interest at a rate determined by
reference to the LIBO Rate in accordance with the provisions
of Article II.
"Eurodollar Loan" shall mean any Eurodollar
Competitive Loan or Eurodollar Standby Loan.
"Eurodollar Standby Borrowing" shall mean a
Borrowing composed of Eurodollar Standby Loans.
"Eurodollar Standby Loan" shall mean any Standby
Loan bearing interest at a rate determined by reference to
the LIBO Rate in accordance with the provisions of Arti-
cle II.
"Event of Default" shall have the meaning assigned
to such term in Article VII.
"Exchange Act" shall mean the Securities Exchange
Act of 1934.
"Facility Fee" shall have the meaning assigned to
such term in Section 2.06(a).
"Facility Fee Percentage" shall mean, (a) on any
date prior to the Ratings Commencement Date, .1500% per
annum and (b) on the Ratings Commencement Date and on any
date thereafter, the applicable percentage per annum set
forth below based upon the ratings by S&P and Moody's,
respectively, applicable on such date to the Index Debt:
Rating Percentage
Category 1
A+/A1 .1000%
or above
Category 2
A, A-/A2, A3 .1250%
Category 3
BBB+/Baa1 .1500%
Category 4
BBB/Baa2 .1875%
Category 5
BBB- or below/ .2250%
Baa3 or below
For purposes of the foregoing, (i) if at any time
after the Ratings Commencement Date (A) during a Private
Rating Period the Borrower shall not have delivered Ratings
Review Letters from both S&P and Moody's to the Agent by the
most recent Ratings Review Deadline or (B) during a Public
Rating Period either S&P or Moody's shall not have in effect
a rating for Index Debt (other than by reason of the
circumstances referred to in the last sentence of this
definition), then the Facility Fee Percentage shall be
deemed to be .2250% per annum; (ii) if the ratings
established or deemed to have been established by S&P or
Moody's for the Index Debt shall fall within different
Categories, the Facility Fee Percentage shall be based on
the numerically higher Category; and (iii) if any rating
established or deemed to have been established by S&P or
Moody's shall be changed (other than as a result of a change
in the rating system of S&P or Moody's), such change shall
be effective as of the date on which such change is first
announced or delivered to the Borrower in a Ratings Review
Letter or other written communication by the applicable
rating agency. Each change in the Facility Fee Percentage
shall apply during the period commencing on the effective
date of such change and ending on the date immediately
preceding the effective date of the next such change. If
the rating system of S&P or Moody's shall change, or if any
such rating agency shall cease to be in the business of
rating corporate debt obligations, the Borrower and the
Lenders shall negotiate in good faith to amend this
definition to reflect such changed rating system or the non-
availability of ratings from such rating agency (and pending
the effectiveness of such amendment, the Facility Fee
Percentage will be determined by reference to the rating
most recently in effect from such rating agency).
"Fees" shall mean the Facility Fee, the LC Fee,
the Issuance and Amendment Fees, and other fees referred to
in paragraph (d) of Section 2.06 and the Agent Fees.
"Financial Officer" of any corporation shall mean
the chief financial officer, principal accounting officer,
treasurer, assistant treasurer or controller of such corpo-
ration.
"Fingerhut Master Trust" shall mean (i) the
Fingerhut Master Trust formed pursuant to that certain
Pooling and Servicing Agreement dated as of June 29, 1994,
among Fingerhut Corporation, as servicer, FRI as transferor,
and Bank of New York (Delaware), as trustee, as amended or
supplemented from time to time, (ii) the Fingerhut Owner
Trust formed pursuant to that certain Owner Trust Agreement
to be entered into between FRI, as depositor, and Wilmington
Trust Company, as owner trustee and (iii) any other
independent trust formed for the purpose of acquiring
interests in the Borrower's customer accounts receivable and
issuing certificates of beneficial interest in such
receivables or commercial paper pursuant to a Receivables
Transfer Program.
"Fixed Rate Borrowing" shall mean a Borrowing
comprised of Fixed Rate Loans.
"Fixed Rate Loan" shall mean any Competitive Loan
bearing interest at a fixed percentage rate per annum
(expressed in the form of a decimal to no more than four
decimal places) specified by the Lender making such Loan in
its related Competitive Bid.
"FRI" shall mean (i) Fingerhut Receivables, Inc.,
a Subsidiary which is a Delaware special purpose corporation
formed for the purpose of purchasing customer accounts
receivable from Fingerhut Corporation or other Subsidiaries
and transferring such receivables to an independent trust
pursuant to a Receivables Transfer Program and (ii) any
other special purpose Subsidiary formed pursuant to a
Receivables Transfer Program.
"GAAP" shall mean generally accepted accounting
principles in the United States.
"Governmental Authority" shall mean any Federal,
state, local or foreign court or governmental agency,
authority, instrumentality or regulatory body with
jurisdiction over the Borrower, any Subsidiary or any
Lender, as the case may be.
"Guarantee" of or by any person shall mean,
without duplication, any obligation, contingent or other-
wise, of such person guaranteeing or having the economic
effect of guaranteeing any Indebtedness of any other person
(the "primary obligor") (or any other obligation of a
primary obligor if the anticipated liability of such guaran-
tor shall have been reserved against in the financial
statements of such guarantor or quantified in the notes
thereto), including third party mortgages or third party
security interests, in any manner, whether directly or
indirectly, and including any obligation of such person,
direct or indirect, (a) to purchase or pay (or advance or
supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to
advance or supply funds for the purchase of) any security
for the payment of such Indebtedness or other obligation,
(b) to purchase property, securities or services for the
purpose of assuring the owner of such Indebtedness or other
obligation of the payment of such Indebtedness or other
obligation or (c) to maintain working capital, equity capi-
tal or other financial statement condition or liquidity of
the primary obligor for purposes of enabling the primary
obligor to pay such Indebtedness or other obligation;
provided, however, that the term Guarantee shall not include
endorsements for collection or deposit, in either case, in
the ordinary course of business. For purposes of determin-
ing compliance with any covenant contained herein, the
"amount" of any Guarantee shall be deemed to equal (i) the
lesser of the amount of the Indebtedness guaranteed or
otherwise benefited by such Guarantee or the maximum amount
of the Borrower's or the applicable Subsidiary's liability
with respect to such Guarantee or (ii) if such Guarantee
shall not be a guarantee of Indebtedness, the amount of the
anticipated liability reserved against in connection with
such Guarantee in the most recent balance sheet of the
guarantor or any anticipated liability of the guarantor
thereunder quantified in the notes accompanying such balance
sheet.
"Indebtedness" of any person shall mean, without
duplication, (a) all obligations of such person for borrowed
money or with respect to deposits or advances of any kind,
(b) all obligations of such person evidenced by bonds,
debentures, notes or similar instruments, (c) all obliga-
tions of such person upon which interest charges are cus-
tomarily paid, (d) all obligations of such person under
conditional sale or other title retention agreements relat-
ing to property or assets purchased by such person, (e) all
obligations of such person issued or assumed as the deferred
purchase price of property or services (other than trade
payables and payroll expenses, so long as such trade pay-
ables and payroll expenses are incurred in the ordinary
course of business), (f) Indebtedness of others secured by
(or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by)
any Lien on property owned or acquired by such person,
whether or not the obligations secured thereby have been
assumed to the extent of the amount of such Indebtedness or,
if such Indebtedness is nonrecourse, to the extent of the
lesser of the amount of such Indebtedness and the value of
the property securing such Indebtedness, (g) all Guarantees
by such person of Indebtedness of others, (h) all Capital
Lease Obligations of such person, and (i) all obligations of
such person, actual or contingent, as an account party in
respect of letters of credit other than trade letters of
credit and bankers' acceptances. Notwithstanding the fore-
going, Indebtedness shall exclude sales of Accounts
accounted for as sales under GAAP and obligations in respect
of Rate Protection Agreements. The Indebtedness of any
person shall include the Indebtedness of any partnership
(other than the Fingerhut Master Trust) in which such person
is a general partner.
"Index Debt" shall mean, as designated at any time
in a notice delivered by the Borrower to the Agent, (i) the
Private Placement Indebtedness or any non-credit enhanced
senior indebtedness of the Borrower, in either case with
respect to which the Borrower has delivered Ratings Review
Letters or (ii) any senior unsecured, non-credit enhanced
long-term debt of the Borrower that has received a public
rating by both S&P and Moody's.
"Intercreditor Collateral Agency Agreement" shall
mean the Amended and Restated Intercreditor Collateral
Agency Agreement dated as of December 31, 1990, as amended
and restated as of January 14, 1991, among the Lenders, the
purchasers under the Note Purchase Agreement and the
Collateral Agent, as the same may be amended, supplemented,
modified or restated from time to time as permitted thereby
or replaced by a comparable agreement.
"Interest Payment Date" shall mean, with respect
to any Loan, the last day of the Interest Period applicable
thereto and, in the case of a Eurodollar Loan with an
Interest Period of more than three months' duration or a
Fixed Rate Loan with an Interest Period of more than
90 days' duration, each day that would have been an Interest
Payment Date for such Loan had successive Interest Periods
of three months' duration or 90 days' duration, as the case
may be, been applicable to such Loan and, in addition, the
date of any refinancing or conversion of such Loan with or
to a Loan of a different Type.
"Interest Period" shall mean (a) as to any
Eurodollar Borrowing, the period commencing on the date of
such Borrowing or on the last day of the immediately
preceding Interest Period applicable to such Borrowing, as
the case may be, and ending on the numerically corresponding
day (or, if there is no numerically corresponding day, on
the last day) in the calendar month that is 1, 2, 3 or
6 months thereafter, as the Borrower may elect, (b) as to
any ABR Borrowing, the period commencing on the date of such
Borrowing and ending on the earliest of (i) the next
succeeding March 31, June 30, September 30 and December 31,
(ii) the Maturity Date and (iii) the date of prepayment of
such Borrowing and (c) as to any Fixed Rate Borrowing, the
period commencing on the date of such Borrowing and ending
on the date specified in the Competitive Bids in which the
offer to make the Fixed Rate Loans comprising such Borrowing
was extended, which shall not be earlier than seven days
after the date of such Borrowing or later than 360 days
after the date of such Borrowing; provided, however, that,
if any Interest Period would end on a day other than a
Business Day, such Interest Period shall be extended to the
next succeeding Business Day unless, in the case of Euro-
dollar Loans only, such next succeeding Business Day would
fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day.
Interest shall accrue from and including the first day of an
Interest Period to but excluding the last day of such
Interest Period.
"Issuing Banks" shall mean Chemical Bank, Bank of
America Illinois, Norwest Bank Minnesota, N.A., First Bank
National Association and one or more other Lenders which
shall be designated in writing from time to time by the
Borrower with the consent of such Lender and the Agent,
which consent shall not be unreasonably withheld.
"LC Commitment" shall mean, with respect to each
Lender, the commitment of such Lender to acquire participa-
tions in Letters of Credit hereunder as set forth in
Section 2.15, in an amount not in excess of the amount set
forth opposite such Lender's name as its LC Commitment in
Schedule 2.01, as the same may be permanently reduced from
time to time pursuant to Section 2.11.
"LC Disbursement" shall mean any payment or dis-
bursement made by the Issuing Bank under or pursuant to a
Letter of Credit.
"LC Exposure" shall mean, at any time, the sum of
(a) the aggregate undrawn amount of all Letters of Credit
outstanding at such time and (b) the aggregate amount of all
LC Disbursements for which the Lenders have not been
reimbursed pursuant to Section 2.15 (and, when used with
respect to a particular Lender, shall mean such Lender's pro
rata share, based upon its LC Commitment, of such aggregate
LC Exposure).
"LC Fee" shall have the meaning set forth in
Section 2.06(c).
"Letter of Credit" shall mean any letter of credit
issued pursuant to the terms of Section 2.15(a).
"Leverage Ratio" shall mean, at any time, the
ratio of (a) Designated Debt of the Borrower at such time to
(b) the sum of Consolidated Net Worth at such time and
Designated Debt of the Borrower at such time; provided that,
for purposes of calculating the Leverage Ratio, Consolidated
Net Worth shall not include the equity interest of the
Borrower or any Subsidiary in the undistributed earnings of
Montgomery Ward Direct.
"LIBO Rate" shall mean, with respect to any Euro-
dollar Borrowing for any Interest Period, an interest rate
per annum (rounded upwards, if necessary, to the next 1/16
of 1%) equal to the rate at which dollar deposits approxi-
mately equal in principal amount to (i) in the case of a
Standby Borrowing, the Agent's portion of such Eurodollar
Borrowing and (ii) in the case of a Competitive Borrowing, a
principal amount that would have been the Agent's portion of
such Competitive Borrowing had such Competitive Borrowing
been a Standby Borrowing, and for a maturity comparable to
such Interest Period are offered to the principal London
office of the Agent in immediately available funds in the
London interbank market at approximately 11:00 a.m., London
time, two Business Days prior to the commencement of such
Interest Period.
"LIBOR Spread" shall mean, with respect to the LC
Fee or the Loans comprising any Eurodollar Standby Borrowing
(a) on any date prior to the Ratings Commencement Date,
.300% per annum and (b) on the Ratings Commencement Date and
on any date thereafter, the applicable percentage per annum
set forth below based upon the ratings by S&P and Moody's,
respectively, applicable on such date to the Index Debt:
Rating Percentage
Category 1
A+/A1
or above .200%
Category 2
A, A-/A2, A3 .250%
Category 3
BBB+/Baa1 .300%
Category 4
BBB/Baa2 .3125%
Category 5
BBB- or below/ .400%
Baa3 or below
For purposes of the foregoing, (i) if at any time
after the Ratings Commencement Date (A) during a Private
Rating Period the Borrower shall not have delivered Ratings
Review Letters from both S&P and Moody's to the Agent by the
most recent Ratings Review Deadline or (B) during a Public
Rating Period either S&P or Moody's shall not have in effect
a rating for the Index Debt (other than by reason of the
circumstances referred to in the last sentence of this
definition), then the LIBOR Spread shall be deemed to be
.400%; (ii) if the ratings established or deemed to have
been established by S&P or Moody's for the Index Debt shall
fall within different Categories, the LIBOR Spread shall be
based on the numerically higher Category; and (iii) if any
rating established or deemed to have been established by S&P
or Moody's shall be changed (other than as a result of a
change in the rating system of S&P or Moody's), such change
shall be effective as of the date on which such change is
first announced or delivered to the Borrower in a Ratings
Review Letter or other communication by the applicable
rating agency. Each change in the LIBOR Spread shall apply
during the period commencing on the effective date of such
change and ending on the date immediately preceding the
effective date of the next such change. If the rating
system of S&P or Moody's shall change, or if any such rating
agency shall cease to be in the business of rating corporate
debt obligations, the Borrower and the Lenders shall
negotiate in good faith to amend this definition to reflect
such changed rating system or the nonavailability of ratings
from such rating agency (and pending the effectiveness of
such amendment, the LIBOR Spread will be determined by
reference to the rating most recently in effect from such
rating agency).
"Lien" shall mean, with respect to any asset,
(a) any mortgage, deed of trust, lien, pledge, encumbrance,
charge or security interest in or on such asset, (b) the
interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement relat-
ing to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with
respect to such securities.
"Loan" shall mean a Competitive Loan or a Standby
Loan, whether made as a Eurodollar Loan, an ABR Standby Loan
or a Fixed Rate Loan, as permitted hereby.
Loan Documents" shall mean this Agreement, the
Amendment Agreement, the Notes and the Collateral Documents.
"Margin" shall mean, as to any Eurodollar Competi-
tive Loan, the margin (expressed as a percentage rate per
annum in the form of a decimal to no more than four decimal
places) to be added to or subtracted from the LIBO Rate in
order to determine the interest rate applicable to such
Loan, as specified in the Competitive Bid relating to such
Loan.
"Margin Stock" shall have the meaning given such
term under Regulation U.
"Material Adverse Effect" shall mean (a) a mate-
rially adverse effect on the business, assets, operations or
financial condition of the Borrower and the Subsidiaries
taken as a whole, (b) material impairment of the ability of
the Borrower or any Significant Subsidiary to perform any
material obligation under any Loan Document to which it now
is or hereafter becomes a party or (c) material impairment
of any of the material rights of or benefits available to
the Lenders under the Loan Documents.
"Maturity Date" shall mean October 15, 1999.
"Montgomery Ward Direct" shall mean Montgomery
Ward Direct L.P., a Delaware limited partnership, and an
Affiliate of the Borrower, of which Fingerhut MWD General
Corporation (a Minnesota corporation and a wholly owned
Subsidiary) and MW Direct General, Inc. (a Delaware
corporation and a subsidiary of Montgomery Ward & Co.,
Incorporated ("Montgomery Ward")) each own 50% of the
general partnership interests and Fingerhut MWD Limited
Corporation (a Minnesota corporation and a wholly owned
Subsidiary) and MW Direct Limited, Inc. (a Delaware
corporation and a subsidiary of Montgomery Ward) each own
50% of the limited partnership interests.
"Moody's" shall mean Moody's Investors Service,
Inc., and its successors.
"Multiemployer Plan" shall mean a multiemployer
plan as defined in Section 4001(a)(3) of ERISA to which the
Borrower or any ERISA Affiliate (other than one considered
an ERISA Affiliate only pursuant to subsection (m) or (o) of
Section 414 of the Code) is making or accruing an obligation
to make contributions, or has within any of the preceding
five plan years made or accrued an obligation to make
contributions.
"MWD Subsidiaries" shall mean and include
Fingerhut MWD General Corporation, a Minnesota corporation
and a general partner in Montgomery Ward Direct, and
Fingerhut MWD Limited Corporation, a Minnesota corporation
and a limited partner in Montgomery Ward Direct.
"Note" shall mean a Competitive Note or a Standby
Note, in each case, of the Borrower executed and delivered
as provided in Section 2.07.
"Note Purchase Agreement" shall mean,
collectively, (a) the Purchase Agreements dated January 14,
1991, between the Borrower and each of the purchasers listed
in Schedule 1 thereto, (b) the Purchase Agreement dated as
of February 15, 1991, between the Borrower and Principal
Mutual Life Insurance Company, (c) the Purchase Agreement
dated as of January 15, 1992, between the Borrower and
Principal Mutual Life Insurance Company and (d) the Purchase
Agreement dated as of June 15, 1992, between the Borrower
and each of the purchasers listed in Schedule 1 thereto, in
each case, as the same may be amended, supplemented,
modified or restated from time to time as permitted thereby.
"Obligations" shall mean (a) the Borrower's
obligations in respect of the due and punctual payment of
principal of and interest on the Loans when and as due,
whether at maturity or upon any Interest Payment Date, by
acceleration, upon one or more dates set for prepayment or
otherwise, (b) all amounts required to be paid by the
Borrower under Section 2.15 or otherwise in respect of any
LC Disbursement, (c) all Fees, expenses, indemnities,
reimbursements and other obligations, monetary or otherwise,
of the Borrower under this Agreement or any other Loan
Document and (d) all obligations, monetary or otherwise, of
each Subsidiary under each Loan Document to which it is a
party.
"PBGC" shall mean the Pension Benefit Guaranty
Corporation referred to and defined in ERISA.
"Person" shall mean any natural person, corpora-
tion, business trust, joint venture, association, company,
partnership or government, or any agency or political sub-
division thereof.
"Plan" shall mean any pension plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of
ERISA or Section 412 of the Code which is maintained for
employees of the Borrower or any ERISA Affiliate.
"Pledge Agreement" shall mean the Pledge Agreement
dated as of March 20, 1992, among the Borrower, certain
other pledgors and the Collateral Agent, as such agreement
may be amended, supplemented, modified or restated from time
to time as permitted thereby or replaced by a comparable
agreement.
"Private Placement Indebtedness" shall mean the
indebtedness of the Borrower issued pursuant to the Note
Purchase Agreement.
"Private Rating Period" shall mean any period that
is not a Public Rating Period.
"Public Rating Period" shall mean any period
commencing on a date on which the Borrower designates the
Indebtedness referred to in clause (ii) of the definition of
the term "Index Debt" as the Index Debt, and ending on the
date on which the Borrower designates the Indebtedness
referred to in clause (i) of the definition of the term
"Index Debt" as the Index Debt.
"Purchasers" shall mean each of the purchasers of
notes issued pursuant to the Note Purchase Agreement.
"Rate Protection Agreements" shall mean interest
rate protection or exchange rate hedging agreements, foreign
currency exchange agreements or other interest or exchange
rate hedging, cap or collar arrangements.
"Ratings Commencement Date" shall mean the earlier
of (i) the date that is 150 days after the end of the
Borrower's 1994 fiscal year, (ii) the date on which the
Borrower shall have delivered the initial Ratings Review
Letters to the Agent and (iii) the date on which the Index
Debt shall have received a public rating from S&P and
Moody's.
"Ratings Review Deadline" shall mean, with respect
to any fiscal year of the Borrower, the date on which the
Borrower shall have delivered the Ratings Review Letters to
the Agent, but in any event not later than 150 days after
the end of such fiscal year.
"Ratings Review Letters" shall mean, on any date,
the letters of each of S&P and Moody's that set forth the
ratings of the Index Debt by such rating agencies, which
letters shall be dated after the Restatement Closing Date
and shall not be dated earlier than 10 days prior to the
date of delivery thereof to the Agent.
"Receivables Financing Amount" shall mean, at any
time, the sum of (i) the aggregate original amount paid to
the Borrower and/or its Subsidiaries with respect to the
purchase of interests in Accounts sold under a Receivables
Transfer Program (other than that conducted through the
Fingerhut Master Trust), as reduced from time to time by the
aggregate amount of collections of cash or negotiable
instruments and other proceeds of the sold Accounts that
have been distributed to the purchasers of such interests in
the Accounts and (ii) in the case of the Receivables
Transfer Program conducted through the Fingerhut Master
Trust, the outstanding amount, without duplication, of
investor certificates issued by the Fingerhut Master Trust
at any given time, but not including any investor
certificates owned by FRI or the exchangeable transferor
certificate representing the retained interest in Fingerhut
Master Trust not represented by any other investor
certificates.
"Receivables Transfer Program" shall mean (i) the
structured receivables program conducted pursuant to that
certain Purchase Agreement dated as of June 29, 1994,
between Fingerhut Corporation and FRI and that certain
Pooling and Servicing Agreement dated as of June 29, 1994,
among FRI, Fingerhut Corporation and Bank of New York
(Delaware), each as amended and supplemented from time to
time or replaced by a similar agreement and related
agreements; (ii) the owner trust commercial paper program
conducted pursuant to an owner trust agreement between FRI,
as depositor, and Wilmington Trust Company, as owner
trustee, a liquidity agreement among the Fingerhut Owner
Trust, Chemical Bank, as agent, and the lenders party
thereto, and related agreements under which the Owner Trust
would issue commercial paper and (iii) any other program
under which the Borrower and/or any of its Subsidiaries sell
interests in its Accounts to one or more purchasers on a
non-recourse basis as determined in accordance with GAAP,
but excluding any sales of Accounts made in conjunction with
any sale of other assets of the Borrower or any of the
Subsidiaries. Interests in Accounts sold by the Borrower
and/or any of its Subsidiaries under clause (i) above will
for all purposes be deemed sold pursuant to a Receivables
Transfer Program as of the date the Accounts are initially
transferred to FRI.
"Register" shall have the meaning given such term
in Section 11.04(d).
"Regulation D" shall mean Regulation D of the
Board as from time to time in effect and all official
rulings and interpretations thereunder or thereof.
"Regulation G" shall mean Regulation G of the
Board as from time to time in effect and all official
rulings and interpretations thereunder or thereof.
"Regulation U" shall mean Regulation U of the
Board as from time to time in effect and all official
rulings and interpretations thereunder or thereof.
"Regulation X" shall mean Regulation X of the
Board as from time to time in effect and all official
rulings and interpretations thereunder or thereof.
"Replacement Letter of Credit" shall mean a letter
of credit issued by a bank with a rating of at least A by
both Moody's and S&P, for the benefit of the Agent to secure
the repayment of any future drawings under any outstanding
Letters of Credit issued hereunder.
"Reportable Event" shall mean any reportable event
as defined in Section 4043(b) of ERISA or the regulations
issued thereunder with respect to a Plan (other than a Plan
maintained by an ERISA Affiliate that is considered an ERISA
Affiliate only pursuant to subsection (m) or (o) of
Section 414 of the Code).
"Required Lenders" shall mean, (i) at any time,
Lenders having Commitments representing at least a majority
of the Total Commitment or (ii) for purposes of Article VII,
Lenders holding Loans and having LC Exposures representing a
majority of the aggregate principal amount of the Loans and
the aggregate LC Exposure then outstanding.
"Responsible Officer" of any corporation shall
mean any executive officer or Financial Officer of such
corporation and any other officer or similar official
thereof responsible for the administration of the obliga-
tions of such corporation in respect of this Agreement.
"Restatement Closing Date" shall mean October 17,
1994.
"Sale-Leaseback Transaction" shall have the
meaning given such term in Section 6.02.
"S&P" shall mean Standard & Poor's Ratings Group
and its successors.
"Secured Parties" shall have the meaning given
such term in the Pledge Agreement.
"Significant Subsidiary" shall mean at any time
(a) for purposes of Section 5.08, any guarantor of the
Private Placement Indebtedness and (b) for all other
purposes, (i) Fingerhut Corporation, (ii) any Subsidiary of
the Borrower with revenues during the fiscal year of the
Borrower most recently ended greater than or equal to 10% of
the total revenues of the Borrower and its Subsidiaries
during such year, computed and consolidated in accordance
with GAAP consistently applied ("Consolidated Revenues"),
(iii) any Subsidiary of the Borrower with assets as of the
last day of the Borrower's most recently ended fiscal year
greater than or equal to 10% of the total assets of the
Borrower and its Subsidiaries at such date, computed in
accordance with GAAP consistently applied ("Consolidated
Assets"), (iv) any Subsidiary with stockholders' equity as
of the last day of the Borrower's most recently ended fiscal
year (limited, with respect to any Subsidiary that is not
wholly owned by the Borrower or any combination of one or
more wholly owned Subsidiaries, to the portion of
stockholders' equity attributable to the Borrower's or such
Subsidiary's ownership interest) greater than or equal to
10% of the stockholders' equity of the Borrower and its
Subsidiaries at such date, computed and consolidated in
accordance with GAAP consistently applied ("Net Stock-
holders' Equity"), (v) any Subsidiary designated in writing
by the Borrower as a Significant Subsidiary; (vi) any
Subsidiary created or acquired by the Borrower after the
date hereof that falls within one of clauses (i) through (v)
or (vii) any Subsidiary in existence on the date hereof
which comes to meet one of (i) through (v) after the date
hereof; provided that if at any time (x) the aggregate
revenues of all Subsidiaries that are not Significant
Subsidiaries during any fiscal year of the Borrower shall
exceed 25% of Consolidated Revenues for such fiscal year,
(y) the aggregate assets of all Subsidiaries that are not
Significant Subsidiaries as of the last day of any fiscal
year of the Borrower shall exceed 25% of Consolidated Assets
at such date or (z) the aggregate stockholders' equity of
all Subsidiaries that are not Significant Subsidiaries as of
the last day of any fiscal year of the Borrower shall exceed
25% of Net Stockholders' Equity at such date, then, in
either case, the term Significant Subsidiary shall be deemed
to include such Subsidiaries (as determined pursuant to the
next following sentence) of the Borrower as may be required
so that none of clause (x), (y) or (z) above shall continue
to be true. For purposes of the proviso to the next preced-
ing sentence, the Subsidiaries which shall be deemed to be
Significant Subsidiaries shall be determined based on the
percentage that the assets of each such Subsidiary are of
Consolidated Assets, with the Subsidiary with the highest
such percentage being selected first, and each other Subsid-
iary required to satisfy the requirements set forth in such
proviso being selected in descending order of such percent-
age.
"Standby Borrowing" shall mean a borrowing con-
sisting of simultaneous Standby Loans from each of the
Lenders.
"Standby Borrowing Request" shall mean a request
made pursuant to Section 2.04 in the form of Exhibit A-5
hereto.
"Standby Commitment" shall mean, with respect to
each Lender, the commitment of such Lender to make Standby
Loans hereunder as set forth in Schedule 2.01, as such
commitment may be permanently terminated or reduced from
time to time pursuant to Section 2.11.
"Standby Loans" shall mean the revolving loans
made by the Lenders to the Borrower pursuant to Sec-
tion 2.01. Each Standby Loan shall be a Eurodollar Standby
Loan or an ABR Standby Loan.
"Standby Note" shall mean a promissory note of the
Borrower in the form of Exhibit B-2 hereto, executed and
delivered as provided in Section 2.07.
"Statutory Reserves" shall mean a fraction
(expressed as a decimal), the numerator of which is the
number one and the denominator of which is the number one
minus the aggregate of the maximum reserve percentages
(including any marginal, special, emergency or supplemental
reserves) expressed as a decimal established by the Board
and any other banking authority to which the Agent is
subject for new negotiable nonpersonal time deposits in
dollars of over $100,000 with maturities approximately equal
to three months. Statutory Reserves shall be adjusted
automatically on and as of the effective date of any change
in any reserve percentage.
"subsidiary" shall mean, with respect to any
person (herein referred to as the "parent"), any corpora-
tion, partnership, association or other business entity of
which securities or other ownership interests representing
more than 50% of the ordinary voting power or more than 50%
of the general partnership interests are, at the time any
determination is being made, owned, controlled or held by
the parent and/or one or more subsidiaries of the parent.
"Subsidiary" shall mean any subsidiary of the
Borrower including any subsidiary of the Borrower created or
acquired by the Borrower after the date hereof other than
Fingerhut Master Trust.
"Total Commitment" shall mean, at any time, the
aggregate amount of Commitments of all the Lenders, as in
effect at such time.
"Total LC Commitment" shall mean, at any time, the
aggregate amount of the Lenders' LC Commitments, as in
effect at such time.
"Total Liabilities" of the Borrower shall mean,
without duplication, all Indebtedness of the Borrower and
obligations of the Borrower and the consolidated
Subsidiaries which are accounted for as liabilities on a
consolidated balance sheet of the Borrower in conformity
with GAAP as in effect on the Restatement Closing Date.
"Transactions" shall have the meaning assigned to
such term in Section 3.02.
"TV Shopping Companies" shall mean S The Shopping
Network, Inc., USA Direct Incorporated, Fingerhut Shopping,
Inc. and their respective Subsidiaries.
"Type", when used in respect of any Loan or
Borrowing, shall refer to the Rate by reference to which
interest on such Loan or on the Loans comprising such
Borrowing is determined. For purposes hereof, "Rate" shall
include the LIBO Rate, the Alternate Base Rate and any
Competitive Bid Rate.
"Withdrawal Liability" shall mean liability to a
Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan, as such terms are
defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Terms Generally. The definitions
in Section 1.01 shall apply equally to both the singular and
plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding mascu-
line, feminine and neuter forms. The words "include",
"includes" and "including" shall be deemed to be followed by
the phrase "without limitation". All references herein to
Articles, Sections, Exhibits and Schedules shall be deemed
references to Articles and Sections of, and Exhibits and
Schedules to, this Agreement unless the context shall
otherwise require. Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP, as in effect from time
to time; provided, however, that, for purposes of determin-
ing compliance with any covenant set forth in Article VI,
such terms shall be construed in accordance with GAAP as in
effect on the date of this Agreement applied on a basis
consistent with the application used in preparing the
Borrower's audited financial statements referred to in
Section 3.05.
ARTICLE II
The Credits
SECTION 2.01. Commitments. (a) Subject to the
terms and conditions and relying upon the representations
and warranties herein set forth, each Lender agrees,
severally and not jointly, to make Standby Loans to the
Borrower, at any time and from time to time on and after the
Restatement Closing Date and until the earlier of the
Maturity Date and the termination of the Commitment of such
Lender, in an aggregate principal amount at any time out-
standing not to exceed such Lender's Commitment minus the
amount by which the Competitive Loans outstanding at such
time and the LC Exposure at such time shall be deemed to
have used such Lender's Commitment pursuant to Section 2.17,
subject, however, to the conditions that (i) at no time
shall (A) the sum of (I) the outstanding aggregate principal
amount of all Standby Loans made by all Lenders, (II) the
outstanding aggregate principal amount of all Competitive
Loans made by all Lenders and (III) the LC Exposure exceed
(B) the Total Commitment and (ii) at all times the
outstanding aggregate principal amount of all Standby Loans
made by each Lender shall equal the product of (A) the
percentage which its Commitment represents of the Total
Commitment times (B) the outstanding aggregate principal
amount of all Standby Loans made pursuant to Section 2.04
(except as a result of a default by any Lender in its
obligation to make any Standby Loan). Each Lender's
Commitment is set forth opposite its respective name in
Schedule 2.01. Such Commitments may be terminated or
reduced from time to time pursuant to Section 2.11.
(b) Within the foregoing limits, the Borrower may
borrow, pay or prepay and reborrow hereunder, on and after
the Restatement Closing Date and prior to the Maturity Date,
subject to the terms, conditions and limitations set forth
herein.
SECTION 2.02. Loans. (a) Each Standby Loan
shall be made as part of a Borrowing consisting of Loans
made by the Lenders ratably in accordance with their
Commitments; provided, however, that the failure of any
Lender to make any Standby Loan shall not in itself relieve
any other Lender of its obligation to lend hereunder (it
being understood, however, that no Lender shall be
responsible for the failure of any other Lender to make any
Loan required to be made by such other Lender). Each
Competitive Loan shall be made in accordance with the
procedures set forth in Section 2.03. The Standby Loans or
Competitive Loans comprising any Borrowing shall be (i) in
the case of Competitive Loans, in an aggregate principal
amount which is an integral multiple of $1,000,000 and not
less than $5,000,000 and (ii) in the case of Standby Loans,
in an aggregate principal amount which is an integral
multiple of $1,000,000 and not less than $5,000,000 (or an
aggregate principal amount equal to the remaining balance of
the available Commitments).
(b) Each Standby Borrowing shall be comprised
entirely of Eurodollar Standby Loans or ABR Standby Loans
and each Competitive Borrowing shall be comprised entirely
of Eurodollar Competitive Loans or Fixed Rate Loans as the
Borrower may request pursuant to Section 2.03 or 2.04, as
applicable. Each Lender may at its option make any
Eurodollar Loan by causing any domestic or foreign branch or
Affiliate of such Lender to make such Loan; provided that
any exercise of such option shall not affect the obligation
of the Borrower to repay such Loan in accordance with the
terms of this Agreement and the applicable Note. Borrowings
of more than one Type may be outstanding at the same time;
provided, however, that the Borrower shall not be entitled
to request any Borrowing which, if made, would result in an
aggregate of more than ten separate Standby Loans of any
Lender being outstanding at any one time. For purposes of
the foregoing, Loans having different Interest Periods,
regardless of whether they commence on the same date, shall
be considered separate Loans.
(c) Each Lender shall make each Loan to be made
by it hereunder on the proposed date thereof by wire trans-
fer of immediately available funds to the Agent in New York,
New York, not later than 2:00 p.m., New York City time, and
the Agent shall by 3:00 p.m., New York City time, credit the
amounts so received to the general deposit account of the
Borrower with the Agent or, if a Borrowing shall not occur
on such date because any condition precedent herein speci-
fied shall not have been met, return the amounts so received
to the respective Lenders. Competitive Loans shall be made
by the Lender or Lenders whose Competitive Bids therefor are
accepted pursuant to Section 2.03 in the amounts so accepted
and Standby Loans shall be made by the Lenders pro rata in
accordance with Section 2.17. Unless the Agent shall have
received notice from a Lender prior to the date of any Bor-
rowing that such Lender will not make available to the Agent
such Lender's portion of such Borrowing, the Agent may
assume that such Lender has made such portion available to
the Agent on the date of such Borrowing in accordance with
this paragraph (c) and the Agent may, in reliance upon such
assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Lender
shall not have made such portion available to the Agent,
such Lender and the Borrower severally agree to repay to the
Agent forthwith on demand such corresponding amount together
with interest thereon, for each day from the date such
amount is made available to the Borrower until the date such
amount is repaid to the Agent at (i) in the case of the
Borrower, the interest rate applicable at the time to the
Loans comprising such Borrowing and (ii) in the case of such
Lender, the Federal Funds Effective Rate. If such Lender
shall repay to the Agent such corresponding amount, such
amount shall constitute such Lender's Loan as part of such
Borrowing for purposes of this Agreement but without inter-
est being payable to such Lender prior to the date such
amounts shall have been repaid by it.
(d) Notwithstanding any other provision of this
Agreement, the Borrower shall not be entitled to request any
Borrowing if the Interest Period requested with respect
thereto would end after the Maturity Date.
SECTION 2.03. Competitive Bid Procedure. (a) In
order to request Competitive Bids, the Borrower shall hand-
deliver or telecopy to the Agent a duly completed
Competitive Bid Request in the form of Exhibit A-1 hereto,
to be received by the Agent (i) in the case of a Eurodollar
Competitive Borrowing, not later than 10:00 a.m., New York
City time, four Business Days before a proposed Competitive
Borrowing and (ii) in the case of a Fixed Rate Borrowing,
not later than 10:00 a.m., New York City time, one Business
Day before a proposed Competitive Borrowing. No ABR Standby
Loan shall be requested in, or made pursuant to, a Competi-
tive Bid Request. A Competitive Bid Request that does not
conform substantially to the format of Exhibit A-1 may be
rejected in the Agent's sole discretion, and the Agent shall
promptly notify the Borrower of such rejection by
telecopier. Such request shall in each case refer to this
Agreement and specify (x) whether such Borrowing is to be a
Eurodollar Borrowing or a Fixed Rate Borrowing, (y) the date
of such Borrowing (which shall be a Business Day) and the
aggregate principal amount thereof which shall be in a
minimum principal amount of $5,000,000 and in an integral
multiple of $1,000,000, and (z) the Interest Period with
respect thereto (which may not end after the Maturity Date).
Promptly after its receipt of a Competitive Bid Request that
is not rejected as aforesaid, the Agent shall invite by
telecopier (in the form set forth in Exhibit A-2) the
Lenders to bid, on the terms and conditions of this Agree-
ment, to make Competitive Loans pursuant to the Competitive
Bid Request.
(b) Each Lender may, in its sole discretion, make
one or more Competitive Bids to the Borrower responsive to a
Competitive Bid Request. Each Competitive Bid by a Lender
must be received by the Agent via telecopier, in the form of
Exhibit A-3, (i) in the case of a Eurodollar Competitive
Borrowing, not later than 10:00 a.m., New York City time,
three Business Days before a proposed Competitive Borrowing
and (ii) in the case of a Fixed Rate Borrowing, not later
than 10:00 a.m., New York City time, on the day of a
proposed Competitive Borrowing. Multiple bids will be
accepted by the Agent. Competitive Bids that do not conform
substantially to the format of Exhibit A-3 may be rejected
by the Agent after conferring with, and upon the instruction
of, the Borrower, and the Agent shall notify the Lender
making such nonconforming bid of such rejection as soon as
practicable. Each Competitive Bid shall refer to this
Agreement and specify (x) the principal amount (which shall
be in a minimum principal amount of $5,000,000 and in an
integral multiple of $1,000,000 and which may equal the
entire principal amount of the Competitive Borrowing
requested by the Borrower) of the Competitive Loan or Loans
that the Lender is willing to make to the Borrower, (y) the
Competitive Bid Rate or Rates at which the Lender is pre-
pared to make the Competitive Loan or Loans and (z) the
Interest Period (which shall be the Interest Period set
forth in the applicable Competitive Bid Request) and the
last day thereof. If any Lender shall elect not to make a
Competitive Bid, such Lender shall so notify the Agent via
telecopier (I) in the case of Eurodollar Competitive Loans,
not later than 10:00 a.m., New York City time, three
Business Days before a proposed Competitive Borrowing, and
(II) in the case of Fixed Rate Loans, not later than
10:00 a.m., New York City time, on the day of a proposed
Competitive Borrowing; provided, however, that failure by
any Lender to give such notice shall not cause such Lender
to be obligated to make any Competitive Loan as part of such
Competitive Borrowing. A Competitive Bid submitted by a
Lender pursuant to this paragraph (b) shall be irrevocable.
(c) The Agent shall promptly notify the Borrower
by telecopier of all the Competitive Bids made, the
Competitive Bid Rate and the principal amount of each Com-
petitive Loan in respect of which a Competitive Bid was made
and the identity of the Lender that made each bid. The
Agent shall send a copy of all Competitive Bids to the
Borrower for its records as soon as practicable after com-
pletion of the bidding process set forth in this Sec-
tion 2.03.
(d) The Borrower may in its sole and absolute
discretion, subject only to the provisions of this para-
graph (d), accept or reject any Competitive Bid referred to
in paragraph (c) above. The Borrower shall notify the Agent
by telephone, confirmed by telecopier in the form of a
Competitive Bid Accept/ Reject Letter in the form of
Exhibit A-4, whether and to what extent it has decided to
accept or reject any of or all the bids referred to in
paragraph (c) above, (x) in the case of a Eurodollar
Competitive Borrowing, not later than 11:00 a.m., New York
City time, three Business Days before a proposed Competitive
Borrowing, and (y) in the case of a Fixed Rate Borrowing,
not later than 11:00 a.m., New York City time, on the day of
a proposed Competitive Borrowing; provided, however, that
(i) the failure by the Borrower to give such notice shall be
deemed to be a rejection of all the bids referred to in
paragraph (c) above, (ii) the Borrower shall not accept a
bid made at a particular Competitive Bid Rate if the
Borrower has decided to reject a bid made at a lower
Competitive Bid Rate, (iii) the aggregate amount of the
Competitive Bids accepted by the Borrower shall not exceed
the principal amount specified in the Competitive Bid
Request, (iv) if the Borrower shall accept a bid or bids
made at a particular Competitive Bid Rate but the amount of
such bid or bids shall cause the total amount of bids to be
accepted by the Borrower to exceed the amount specified in
the Competitive Bid Request, then the Borrower shall accept
a portion of such bid or bids in an amount equal to the
amount specified in the Competitive Bid Request less the
amount of all other Competitive Bids accepted with respect
to such Competitive Bid Request, which acceptance, in the
case of multiple bids at such Competitive Bid Rate, shall be
made pro rata in accordance with the amount of each such bid
at such Competitive Bid Rate, and (v) except pursuant to
clause (iv) above, no bid shall be accepted for a Compet-
itive Loan unless such Competitive Loan is in a minimum
principal amount of $5,000,000 and an integral multiple of
$1,000,000; provided further, however, that if a Competitive
Loan must be in an amount less than $5,000,000 because of
the provisions of clause (iv) above, such Competitive Loan
may be for a minimum of $1,000,000 or any integral multiple
thereof, and in calculating the pro rata allocation of
acceptances of portions of multiple bids at a particular
Competitive Bid Rate pursuant to clause (iv) the amounts
shall be rounded to integral multiples of $1,000,000 in a
manner which shall be in the discretion of the Borrower. A
notice given by the Borrower pursuant to this paragraph (d)
shall be irrevocable.
(e) The Agent shall promptly notify each bidding
Lender whether or not its Competitive Bid has been accepted
(and if so, in what amount and at what Competitive Bid Rate)
by telecopier sent by the Agent, and each successful bidder
will thereupon become bound, subject to the other applicable
conditions hereof, to make the Competitive Loan in respect
of which its bid has been accepted.
(f) A Competitive Bid Request shall not be made
within five Business Days after the date of any previous
Competitive Bid Request.
(g) If the Agent shall elect to submit a Competi-
tive Bid in its capacity as a Lender, it shall submit such
bid directly to the Borrower one quarter of an hour earlier
than the latest time at which the other Lenders are required
to submit their bids to the Agent pursuant to paragraph (b)
above.
(h) All Notices required by this Section 2.03
shall be given in accordance with Section 11.01.
SECTION 2.04. Standby Borrowing Procedure. In
order to request a Standby Borrowing, the Borrower shall
hand deliver or telecopy to the Agent a borrowing request in
the form of Exhibit A-5 hereto (a) in the case of a
Eurodollar Borrowing, not later than 12:00 noon, New York
City time, three Business Days before any such proposed
Borrowing and (b) in the case of an ABR Borrowing, not later
than 12:00 noon, New York City time (except that the
Borrower shall use its best efforts to make such request by
11:00 a.m., New York City time), on the day of such proposed
Standby Borrowing. No Fixed Rate Loan shall be requested or
made pursuant to a Standby Borrowing Request. Such notice
shall be irrevocable and shall in each case specify
(i) whether such Borrowing is to be a Eurodollar Borrowing
or an ABR Borrowing, (ii) the date of such Borrowing (which
shall be a Business Day) and the amount thereof and (iii) if
such Borrowing is to be a Eurodollar Borrowing, the Interest
Period with respect thereto. If no election as to the Type
of Borrowing is specified in any such notice, then the
requested Borrowing shall be an ABR Borrowing. If no
Interest Period with respect to any Eurodollar Borrowing is
specified in any such notice, then the Borrower shall be
deemed to have selected an Interest Period of one month's
duration. If the Borrower shall not have given notice in
accordance with this Section 2.04 of its election to
refinance, continue or convert a Standby Borrowing prior to
the end of the Interest Period in effect for such Borrowing,
then the Borrower shall (unless such Borrowing is repaid at
the end of such Interest Period) be deemed to have given
notice of an election to convert or continue such Borrowing
with an ABR Borrowing. The Agent shall promptly advise the
Lenders of any notice given pursuant to this Section 2.04
and of each Lender's portion of the requested Borrowing.
SECTION 2.05. Refinancings, Continuances and
Conversions of Loans. (a) The Borrower may refinance all or
any part of any Competitive Borrowing at the end of the
Interest Period thereof with a Borrowing of the same or a
different Type made pursuant to Section 2.03 or
Section 2.04, and the Borrower may refinance all or any part
of a Standby Borrowing with a Competitive Borrowing of the
same or a different Type made pursuant to Section 2.04, in
each case subject to the conditions and limitations set
forth herein and elsewhere in this Agreement. Any Borrowing
or part thereof so refinanced shall be deemed to be repaid
in accordance with Section 2.07 with the proceeds of a new
Borrowing hereunder and the proceeds of the new Borrowing,
to the extent they do not exceed the principal amount of the
Borrowing being refinanced, shall not be paid by the Lenders
to the Agent or by the Agent to the Borrower pursuant to
Section 2.02(c); provided, however, that (i) if the
principal amount extended by a Lender in a refinancing is
greater than the principal amount extended by such Lender in
the Borrowing being refinanced, then such Lender shall pay
such difference to the Agent for distribution to the Lenders
described in (ii) below, (ii) if the principal amount
extended by a Lender in the Borrowing being refinanced is
greater than the principal amount being extended by such
Lender in the refinancing, the Agent shall return the
difference to such Lender out of amounts received pursuant
to (i) above, and (iii) to the extent any Lender fails to
pay the Agent amounts due from it pursuant to (i) above, any
Loan or portion thereof being refinanced shall not be deemed
repaid in accordance with Section 2.07 and shall be payable
by the Borrower.
(b) The Borrower shall have the right at any time
upon prior irrevocable notice to the Agent (i) not later
than 12:00 (noon), New York City time, one Business Day
prior to conversion, to convert any Eurodollar Standby
Borrowing into an ABR Borrowing, (ii) not later than 10:00
a.m., New York City time, three Business Days prior to
conversion or continuation, to convert any ABR Borrowing
into a Eurodollar Standby Borrowing or to continue any
Eurodollar Standby Borrowing as a Eurodollar Standby Borrow-
ing for an additional Interest Period, (iii) not later than
10:00 a.m., New York City time, three Business Days prior to
conversion, to convert the Interest Period with respect to
any Eurodollar Standby Borrowing to another permissible
Interest Period and (iv) not later than 10:00 a.m. New York
City time, on the date of such proposed Borrowing, to
continue any ABR Borrowing for an additional Interest
Period, subject in each case to the following:
(i) each conversion or continuation shall be made
pro rata among the Lenders in accordance with the
respective principal amounts of the Loans comprising
the converted or continued Standby Borrowing, as the
case may be;
(ii) if less than all the outstanding principal
amount of any Standby Borrowing shall be converted or
continued, the aggregate principal amount of such
Standby Borrowing converted or continued shall be an
integral multiple of $1,000,000 and not less than
$5,000,000;
(iii) if any Eurodollar Standby Borrowing is
converted at a time other than the end of the Interest
Period applicable thereto, the Borrower shall pay, upon
demand, any amounts due to the Banks pursuant to
Section 2.16;
(iv) any portion of a Standby Borrowing maturing or
required to be repaid in less than one month may not be
converted into or continued as a Eurodollar Standby
Borrowing;
(v) any portion of a Eurodollar Standby Borrowing
which cannot be converted into or continued as a
Eurodollar Standby Borrowing by reason of clause (iv)
above shall be automatically converted at the end of
the Interest Period in effect for such Borrowing into
an ABR Borrowing; and
(vi) no Interest Period may be selected for any
Eurodollar Standby Borrowing that would end later than
the Maturity Date.
Each notice pursuant to this Section 2.05(b) shall
be irrevocable and shall refer to this Agreement and specify
(i) the identity and amount of the Standby Borrowing that
the Borrower requests be converted or continued,
(ii) whether such Standby Borrowing is to be converted to or
continued as a Eurodollar Standby Borrowing or an ABR
Borrowing, (iii) if such notice requests a conversion, the
date of such conversion (which shall be a Business Day) and
(iv) if such Standby Borrowing is to be converted to or
continued as a Eurodollar Standby Borrowing, the Interest
Period with respect thereto. If no Interest Period is
specified in any such notice with respect to any conversion
to or continuation as a Eurodollar Standby Borrowing, the
Borrower shall be deemed to have selected an Interest Period
of one month's duration. The Agent shall promptly advise
the other Lenders of any notice given pursuant to this
Section 2.05(b) and of each Lender's portion of any con-
verted or continued Standby Borrowing. If the Borrower
shall not have given notice in accordance with this
Section 2.05(b) to continue any Standby Borrowing into a
subsequent Interest Period (and shall not otherwise have
given notice in accordance with this Section 2.05(b) to
convert such Standby Borrowing), such Standby Borrowing
shall, at the end of the Interest Period applicable thereto
(unless repaid pursuant to the terms hereof), automatically
be continued into a new Interest Period as an ABR Borrowing.
SECTION 2.06. Fees. (a) The Borrower agrees to
pay to each Lender, through the Agent, on each March 31,
June 30, September 30 and December 31, and on the date on
which the Commitment of such Lender shall be terminated as
provided herein, a facility fee (the "Facility Fee") equal
to the Facility Fee Percentage in effect from time to time
on the amount of the Commitment of such Lender, whether used
or unused, during the quarter then ended (or shorter period
commencing with the Restatement Closing Date or ending with
the Maturity Date or any date on which the Commitment of
such Lender shall be terminated). The Facility Fee shall be
computed on the basis of the actual number of days elapsed
in a year of 365 or 366 days, as the case may be. The
Facility Fee due to each Lender shall commence to accrue on
the Restatement Closing Date and shall cease to accrue on
the earlier of (I) the Maturity Date and (II) the
termination of the Commitment of such Lender as provided
herein.
(b) The Borrower agrees to pay to the Agent on
the Restatement Closing Date, the fees (the "Agent Fees") at
the times and in the amounts agreed upon in the letter
agreement dated as of September 27, 1994, between the
Borrower and Chemical Bank.
(c) The Borrower agrees to pay each Lender,
through the Agent, on each March 31, June 30, September 30
and December 31, and on the date on which the Commitment of
such Lender shall be terminated as provided herein, a fee
(the "LC Fee") equal to a percentage per annum equal to the
LIBOR Spread in effect on such date on such Lender's pro
rata share, based upon its Commitment, of the average daily
amount of all Letters of Credit outstanding during the
preceding quarter (or shorter period commencing with the
Restatement Closing Date or ending with the earlier of the
Maturity Date and any date on which the Commitment of such
Lender shall be terminated). The LC Fee shall be computed
on the basis of the actual number of days elapsed in a year
of 365 or 366 days, as the case may be. The LC Fee due to
each Lender shall commence to accrue on the Restatement
Closing Date and shall cease to accrue on the date on which
the Commitment of such Lender shall have terminated as
provided herein.
(d) The Borrower agrees to pay to each Issuing
Bank its issuance and amendment fees (the "Issuance and
Amendment Fees") as agreed upon from time to time in
connection with the issuance of and amendment of the Letters
of Credit. Each Issuing Bank has furnished or will furnish
to the Borrower a schedule of the Issuance and Amendment
Fees in effect on the Restatement Closing Date. The
Borrower agrees to pay each Issuing Bank such other fees as
may be agreed upon by the Borrower and such Issuing Bank.
(e) All Fees shall be paid on the dates due, in
immediately available funds, to the Agent for distribution,
if and as appropriate, among the Lenders. Once paid, none
of the Fees shall be refundable under any circumstances.
SECTION 2.07. Notes; Repayment of Loans. The
Competitive Loans made by each Lender shall be evidenced by
a single Competitive Note duly executed on behalf of the
Borrower, dated the Restatement Closing Date, in
substantially the form attached as Exhibit B-1 hereto, with
the blanks appropriately filled, payable to the order of
such Lender in a principal amount equal to the Total
Commitment. The Standby Loans made by each Lender shall be
evidenced by a single Standby Note duly executed on behalf
of the Borrower, dated the Restatement Closing Date, in
substantially the form attached as Exhibit B-2 hereto, with
the blanks appropriately filled, payable to the order of
such Lender in a principal amount equal to the Commitment of
such Lender. The outstanding principal balance of each
Competitive Loan and Standby Loan, as evidenced by the
relevant Note, shall be payable (i) in the case of a
Competitive Loan, on the earlier of the last day of the
Interest Period applicable to such Loan and on the Maturity
Date and (ii) in the case of a Standby Loan, on the Maturity
Date. Each Competitive Note and each Standby Note shall
bear interest from the date thereof on the outstanding
principal balance thereof as set forth in Section 2.08.
Each Lender shall, and is hereby authorized by the Borrower
to, endorse on the schedule attached to the relevant Note
held by such Lender (or on a continuation of such schedule
attached to each such Note and made a part thereof), or
otherwise to record in such Lender's internal records, an
appropriate notation evidencing the date and amount of each
Competitive Loan or Standby Loan, as applicable, of such
Lender, each payment or prepayment of principal of any
Competitive Loan or Standby Loan, as applicable, and the
other information provided for on such schedule; provided,
however, that the failure of any Lender to make such a
notation or any error therein shall not in any manner affect
the obligation of the Borrower to repay the Competitive
Loans or Standby Loans, as applicable, made by such Lender
in accordance with the terms of the relevant Note.
SECTION 2.08. Interest on Loans. (a) Subject to
the provisions of Sections 2.09 and 2.10, the Loans compris-
ing each Eurodollar Borrowing shall bear interest (computed
on the basis of the actual number of days elapsed over a
year of 360 days) at a rate per annum equal to (i) in the
case of each Eurodollar Competitive Loan, the LIBO Rate for
the Interest Period in effect for such Borrowing plus the
Margin offered by the Lender making such Loan and accepted
by the Borrower pursuant to Section 2.03 and (ii) in the
case of each Eurodollar Standby Loan, the LIBO Rate for the
Interest Period in effect for such Borrowing plus the LIBOR
Spread. Interest on each Eurodollar Borrowing shall be
payable on each applicable Interest Payment Date. The LIBO
Rate for each Interest Period shall be determined by the
Agent, and such determination shall be conclusive absent
manifest error. The Agent shall promptly advise the Bor-
rower and each Lender, of such determination.
(b) Subject to the provisions of Section 2.09,
the Loans comprising each ABR Borrowing shall bear interest
(computed on the basis of the actual number of days elapsed
over a year of (i) 365 or 366 days, as the case may be,
during any period in which the Alternate Base Rate is based
on the Prime Rate, and (ii) 360 days, during any period in
which the Alternate Base Rate is based on the Base CD Rate
or the Federal Funds Effective Rate) at a rate per annum
equal to the Alternate Base Rate. Interest on each ABR
Borrowing shall be payable on each applicable Interest
Payment Date. The Alternate Base Rate shall be determined
by the Agent, and such determination shall be conclusive
absent manifest error. The Agent shall promptly advise the
Borrower and each Lender of such determination.
(c) Subject to the provisions of Section 2.09,
each Fixed Rate Loan shall bear interest at a rate per annum
(computed on the basis of the actual number of days elapsed
over a year of 360 days) equal to the fixed rate of interest
offered by the Lender making such Loan and accepted by the
Borrower pursuant to Section 2.03. Interest on each Fixed
Rate Loan shall be payable on the Interest Payment Dates
applicable to such Loan except as otherwise provided in this
Agreement.
SECTION 2.09. Default Interest. If the Borrower
shall default in the payment of the principal of or interest
on any Loan, or any reimbursement obligation in respect of
an LC Disbursement, becoming due hereunder, whether by
scheduled maturity, notice of prepayment, acceleration or
otherwise, the Borrower shall on demand from time to time
from the Agent or the Required Lenders pay interest, to the
extent permitted by applicable law, on such defaulted amount
up to (but not including) the date of actual payment (after
as well as before judgment) at a rate per annum (computed on
the basis of the actual number of days elapsed over a year
of 360 days) equal to the Alternate Base Rate plus 2%.
SECTION 2.10. Alternate Rate of Interest. In the
event, and on each occasion, that on the day two Business
Days prior to the commencement of any Interest Period for a
Eurodollar Borrowing the Agent shall have determined that
dollar deposits in the principal amounts of the Eurodollar
Loans comprising such Borrowing are not generally available
in the London interbank market, or that the rates at which
such dollar deposits are being offered will not adequately
and fairly reflect the cost to the Lenders of making or
maintaining Eurodollar Loans during such Interest Period, or
that reasonable means do not exist for ascertaining the LIBO
Rate, the Agent shall, as soon as practicable thereafter,
give written notice of such determination to the Borrower
and the Lenders. In the event of any such determination,
until the Agent shall have advised the Borrower and the
Lenders that the circumstances giving rise to such notice no
longer exist, (i) any request by the Borrower for a
Eurodollar Competitive Borrowing pursuant to Section 2.03
shall be of no force and effect and shall be rejected by the
Agent and (ii) any request by the Borrower for a Eurodollar
Standby Borrowing pursuant to Section 2.04 shall be deemed
to be a request for an ABR Borrowing. The Agent agrees to
give written notice to the Borrower promptly after it
determines that the conditions giving rise to any notice
under the first sentence of this paragraph shall no longer
be in effect. Each determination by the Agent hereunder
shall be presumed conclusive absent manifest error but
subject to rebuttal by the Borrower.
SECTION 2.11. Termination and Reduction of
Commitments. (a) The Commitments and the LC Commitments
shall be automatically terminated on the earlier of (i) the
Maturity Date and (ii) the Change in Control Date.
(b) Upon at least three Business Days' prior
irrevocable written notice to the Agent, the Borrower may at
any time in whole permanently terminate, or from time to
time in part permanently reduce, the Total Commitment or the
Total LC Commitment; provided, however, that (i) each
partial reduction of the Total Commitment or the Total LC
Commitment, as the case may be, shall be in an integral
multiple of $1,000,000 and in a minimum principal amount of
$5,000,000; (ii) no such termination or reduction shall be
made which would reduce the Total Commitment to an amount
less than the sum of the aggregate outstanding principal
amount of the Loans and the LC Exposure, (iii) no such
termination or reduction shall be made which would reduce
the Total Commitment below the Total LC Commitment and
(iv) no such termination or reduction shall be made which
would reduce the Total LC Commitment below the LC Exposure.
(c) Each reduction in the Total Commitment or the
Total LC Commitment hereunder shall be made ratably among
the Lenders in accordance with their respective Commitments
or LC Commitments, as applicable. The Borrower shall pay to
the Agent for the account of the Lenders, on the date of
each termination or reduction hereunder, the Facility Fee on
the amount of the Commitments so terminated or reduced
accrued through the date of such termination or reduction.
SECTION 2.12. Prepayment. (a) The Borrower
shall have the right at any time and from time to time to
prepay any Standby Borrowing, in whole or in part, upon
giving written notice (or telephone notice promptly
confirmed by written notice) to the Agent: (i) before
12:00 noon, New York City time, three Business Days prior to
prepayment, in the case of Eurodollar Loans and before
12:00 noon, New York City time, one Business Day prior to
prepayment, in the case of ABR Standby Loans; provided,
however, that each partial prepayment shall be in an amount
which is an integral multiple of $1,000,000 and not less
than $5,000,000. The Borrower shall not have the right to
prepay any Competitive Borrowing.
(b) On the date of any termination or reduction
of the Commitments pursuant to Section 2.11, the Borrower
shall pay or prepay so much of the Standby Borrowings as
shall be necessary in order that the sum of the aggregate
principal amount of the Competitive Loans and Standby Loans
outstanding and the LC Exposure will not exceed the Total
Commitment, after giving effect to such termination or
reduction.
(c) Each notice of prepayment shall specify the
prepayment date and the principal amount of each Borrowing
(or portion thereof) to be prepaid, shall be irrevocable and
shall commit the Borrower to prepay such Borrowing (or
portion thereof) by the amount stated therein on the date
stated therein. All prepayments under this Section 2.12
shall be subject to Section 2.16 but otherwise without
premium or penalty. All prepayments under this Section 2.12
shall be accompanied by accrued interest on the principal
amount being prepaid to the date of payment.
SECTION 2.13. Reserve Requirements; Change in
Circumstances. (a) Notwithstanding any other provision
herein, if after the Restatement Closing Date, any change in
applicable law or regulation or in the interpretation or
administration thereof by any Governmental Authority charged
with the interpretation or administration thereof (whether
or not having the force of law) shall change the basis of
taxation of payments to any Lender or such Issuing Bank of
the principal of or interest on any Eurodollar Loan or Fixed
Rate Loan made by such Lender or any Fees or other amounts
payable hereunder, including reimbursement of drawings under
the Letters of Credit (other than changes in respect of
taxes imposed on the overall net income of such Lender by
any Governmental Authority as a result of a present or
former connection between the jurisdiction of the
Governmental Authority imposing such tax on such Lender
(except a connection arising solely from such Lender having
executed, delivered or performed its obligations or received
a payment under, or enforced, this Agreement or the Notes)),
or shall impose, modify or deem applicable any reserve,
special deposit or similar requirement against assets of,
deposits with or for the account of or credit extended by
such Lender, or shall impose on such Lender or the London
interbank market any other condition affecting this Agree-
ment or any Eurodollar Loan or Fixed Rate Loan made by such
Lender, and the result of any of the foregoing shall be to
increase the cost to such Lender of making or maintaining
any Eurodollar Loan or Fixed Rate Loan or to reduce the
amount of any sum received or receivable by such Lender
hereunder or under the Notes (whether of principal, interest
or otherwise) in respect thereof by an amount deemed by such
Lender to be material, then the Borrower will pay to such
Lender upon demand such additional amount or amounts as will
compensate such Lender for such additional costs incurred or
reduction suffered. Notwithstanding the foregoing, no
Lender shall be entitled to request compensation under this
paragraph with respect to any Competitive Loan if it shall
have been aware of the change giving rise to such request
and of the impact of such change on the cost of making such
Competitive Loans at the time of submission of the
Competitive Bid pursuant to which such Competitive Loan
shall have been made.
(b) If any Lender shall have determined that the
adoption after the Restatement Closing Date of any other
law, rule, regulation or guideline regarding capital
adequacy, or any change in any of the foregoing or in the
interpretation or administration of any of the foregoing by
any Governmental Authority, central bank or comparable
agency charged with the interpretation or administration
thereof, or compliance by any Lender (or any lending office
of such Lender) or any Lender's holding company with any
request or directive regarding capital adequacy (whether or
not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of
reducing the rate of return on such Lender's capital or on
the capital of such Lender's holding company, if any, as a
consequence of this Agreement or the Loans made by such
Lender pursuant hereto to a level below that which such
Lender or such Lender's holding company could have achieved
but for such adoption, change or compliance (taking into
consideration such Lender's policies and the policies of
such Lender's holding company with respect to capital
adequacy) by an amount deemed by such Lender to be material,
then from time to time the Borrower shall pay to such Lender
such additional amount or amounts as will compensate such
Lender or such Lender's holding company for any such
reduction suffered after the date hereof.
(c) A certificate of a Lender setting forth such
amount or amounts, along with the Lender's method of compu-
tation of such amounts, as shall be necessary to compensate
such Lender (or participating banks or other entities
pursuant to Section 11.04) as specified in paragraph (a) or
(b) above, as the case may be, shall be delivered to the
Borrower and shall be presumed conclusive absent manifest
error but subject to rebuttal by the Borrower. The Borrower
shall pay each Lender the amount shown as due on any such
certificate delivered by it within 10 days of its receipt of
the same. In the event any Lender delivers such a
certificate, the Borrower may, at its own expense, require
such Lender to transfer and assign in whole or in part,
without recourse (in accordance with Section 11.04) all or
part of its interests, rights and obligations under this
Agreement to an assignee which shall assume such assigned
obligations (which assignee may be another Lender, if a
Lender accepts such assignment); provided that (i) such
assignment shall not conflict with any law, rule or regula-
tion or order of any court or other Governmental Authority,
(ii) the Borrower shall have received a written consent of
the Agent in the case of an entity that is not a Lender,
which consent shall not unreasonably be withheld, and (iii)
the Borrower or such assignee shall have paid to the assign-
ing Lender in immediately available funds the principal of
and interest accrued to the date of such payment on the
Loans made by it hereunder and all other amounts owed to it
hereunder as of such date. Any Lender claiming any
additional amounts payable pursuant to this Section 2.13
shall use reasonable efforts (consistent with legal and
regulatory restrictions) to file any certificate or document
requested by the Borrower or to change the jurisdiction of
its applicable lending office if the making of such a filing
or change would avoid the need for or reduce the amount of
any additional amount which may thereafter accrue and would
not, in the sole determination of such Lender, be otherwise
disadvantageous to such Lender.
(d) Failure on the part of any Lender to demand
compensation for any increased costs or reduction in amounts
received or receivable or reduction in return on capital
with respect to any period shall not constitute a waiver of
such Lender's right to demand compensation with respect to
such period or any other period; provided, however, that no
Lender shall be entitled to compensation for any such
increased costs or reductions unless it shall have submitted
a certificate under paragraph (c) above with respect thereto
not more than 90 days after the date that such Lender knows
that such increased costs have been incurred or such
reduction suffered. Notwithstanding any other provision of
this Section 2.13, no Lender shall demand compensation for
any increased cost or reduction referred to above if it
shall not at the time be the general policy of such Lender
to demand such compensation in similar circumstances under
comparable provisions of other credit agreements, and each
Lender shall in good faith endeavor to allocate increased
costs or reductions fairly among all of its affected
commitments and credit extensions (whether or not it seeks
compensation from all affected borrowers). The protection
of this Section 2.13 shall be available to each Lender
regardless of any possible contention of the invalidity or
inapplicability of the law, rule, regulation, guideline or
other change or condition which shall have occurred or been
imposed.
SECTION 2.14. Change in Legality. (a) Notwith-
standing any other provision herein contained, if any change
in any law or regulation or in the interpretation thereof by
any Governmental Authority charged with the administration
or interpretation thereof shall make it unlawful for any
Lender to make or maintain any Eurodollar Loan or to give
effect to its obligations as contemplated hereby with
respect to any Eurodollar Loan, then, by written notice to
the Borrower and to the Agent, such Lender may:
(i) declare that Eurodollar Loans will not there-
after be made by such Lender hereunder, whereupon such
Lender shall not submit a Competitive Bid in response
to a request for Eurodollar Competitive Loans and any
request by the Borrower for a Eurodollar Standby Bor-
rowing shall, as to such Lender only, be deemed a
request for an ABR Standby Loan unless such declaration
shall be subsequently withdrawn; and
(ii) require that all outstanding Eurodollar Loans
made by it be converted to ABR Standby Loans, in which
event all such Eurodollar Loans shall be automatically
converted to ABR Standby Loans as of the effective date
of such notice as provided in paragraph (b) below.
In the event any Lender shall exercise its rights under (i)
or (ii) above, all payments and prepayments of principal
which would otherwise have been applied to repay the Euro-
dollar Loans that would have been made by such Lender or the
converted Eurodollar Loans of such Lender shall instead be
applied to repay the ABR Standby Loans made by such Lender
in lieu of, or resulting from the conversion of, such Euro-
dollar Loans.
(b) For purposes of this Section 2.14, a notice
to the Borrower by any Lender shall be effective as to each
Eurodollar Loan, if lawful, on the last day of the Interest
Period currently applicable to such Eurodollar Loan; in all
other cases such notice shall be effective on the date of
receipt by the Borrower. The Agent agrees to give written
notice to the Borrower promptly after it determines that the
conditions giving rise to any notice under paragraph (a)
above shall no longer be in effect.
(c) Each Lender agrees to use reasonable efforts
(consistent with legal and regulatory restrictions) to file
any certificate or document requested by the Borrower or to
change the jurisdiction of its applicable lending office if
the making of such filing or change would enable such Lender
to legally make or maintain any Eurodollar Loan referred to
in paragraph (a) of this Section 2.14; provided, however,
that (i) such Lender shall not be required to make such
filing or change if, in the sole determination of such
Lender, such action would be otherwise disadvantageous to
such Lender and (ii) until such time as such Lender shall
have determined that it can make or maintain such Eurodollar
Loan, the Lender may take the actions referred to in
Section 2.14(a).
SECTION 2.15. Letters of Credit. (a) Subject to
the terms and conditions and relying upon the representa-
tions and warranties herein set forth, each Issuing Bank
shall issue and deliver to the Borrower at any time and from
time to time on or after the Restatement Closing Date and
prior to the fifth Business Day before the Maturity Date,
Letters of Credit for the account of the Borrower or any
Subsidiary in an aggregate undrawn amount at any one time
outstanding not to exceed $200,000,000; provided, however,
that such Issuing Bank shall not issue any Letter of Credit
if, immediately after giving effect to such issuance, the
LC Exposure at such time would exceed the Total LC Commit-
ment or if the sum of the LC Exposure and the aggregate
principal amount of the outstanding Loans would exceed the
Total Commitment. Each Letter of Credit (x) shall be in
form as shall have been agreed upon in writing by the
Borrower, the Agent and such Issuing Bank, (y) shall be in a
minimum principal amount of $2,000 and (z) shall permit
drawings upon the presentation of one or more sight drafts
and such other documents as shall be specified by the
Borrower in the applicable notice delivered pursuant to
paragraph (b) below and shall expire on a date not later
than the fifth Business Day prior to the Maturity Date,
except that Letters of Credit may expire on a date later
than the Maturity Date, subject to the conditions set forth
in Section 2.15(g).
(b) The Borrower shall give such Issuing Bank
written or telecopy notice or notice via computer modem not
later than 10:00 a.m., New York City time, one Business Day
(or such shorter period as shall be acceptable to such
Issuing Bank and the Agent) prior to any proposed issuance
of a Letter of Credit. Each such notice shall refer to this
Agreement and shall specify (i) the date on which such
Letter of Credit is to be issued (which shall be a Business
Day), the account party on the Letter of Credit and the face
amount thereof (which shall be an amount in dollars),
(ii) the name and address of the beneficiary, (iii) whether
such Letter of Credit shall permit a single drawing or
multiple drawings, (iv) the form of the sight draft and any
other documents required to be presented at the time of any
drawing (together with the exact wording of such documents
or copies thereof) and (v) the expiry date of such Letter of
Credit. Such Issuing Bank shall give the Agent, which shall
in turn give to each Lender, prompt written or telecopy
advice of any notice received from the Borrower pursuant to
this Section 2.15.
(c) By the issuance of a Letter of Credit and
without any further action on the part of such Issuing Bank
or the Lenders in respect thereof, such Issuing Bank hereby
grants to each Lender, and each Lender hereby acquires from
such Issuing Bank, a participation in such Letter of Credit
equal to such Lender's pro rata percentage, based upon its
LC Commitment, of the face amount of such Letter of Credit,
effective upon the issuance of such Letter of Credit;
provided, however, that no Lender shall be required to
acquire participations in Letters of Credit that would
result in its pro rata percentage, based upon its LC Commit-
ment, of the LC Exposure exceeding its LC Commitment, as the
same may be reduced from time to time in accordance with
Section 2.11. In consideration and in furtherance of the
foregoing, each Lender hereby absolutely and unconditionally
agrees severally and not jointly to pay to the Agent, on
behalf of such Issuing Bank, in accordance with
paragraph (e) below, such Lender's pro rata percentage,
based upon its LC Commitment, of each unreimbursed
LC Disbursement made by such Issuing Bank; provided,
however, that the Lenders shall not be obligated to make any
such payment with respect to any payment or disbursement
made under any Letter of Credit as a result of the gross
negligence or wilful misconduct of such Issuing Bank.
Notwithstanding the foregoing, if, as permitted by
Section 2.15(f), an Issuing Bank has separately agreed with
the Borrower that the Issuing Bank will be held to a higher
standard of care, such standard shall govern as between the
Issuing Bank and the Lenders.
(d) Each Lender acknowledges and agrees that its
acquisition of participations pursuant to paragraph (c)
above in respect of Letters of Credit is absolute and
unconditional and shall not be affected by any circumstance
whatsoever, including the occurrence and continuance of any
Default or Event of Default hereunder, and that each such
payment shall be made without any offset, abatement, with-
holding or reduction whatsoever.
(e) Promptly after it shall have ascertained that
any draft and any accompanying documents presented under a
Letter of Credit appear to be in conformity with the terms
and conditions of such Letter of Credit, such Issuing Bank
shall give written or telecopy notice to the Borrower and
the Agent of the receipt and amount of such draft and the
date on which payment thereon will be made. If the Agent
shall not have received from the Borrower the payment
required pursuant to paragraph (f) below by 12:00 noon, New
York City time, on the date on which payment of a draft
presented under any Letter of Credit has been made, the
Agent shall promptly notify such Issuing Bank and each
Lender of the LC Disbursement and, in the case of each
Lender, its pro rata percentage, based upon its LC Commit-
ment of such LC Disbursement. Each Lender shall pay to the
Agent, not later than 2:00 p.m., New York City time, on such
date, such Lender's percentage of such LC Disbursement,
which the Agent shall promptly pay to such Issuing Bank.
The Agent will promptly remit to each Lender such Lender's
percentage of any amounts subsequently received by the Agent
from the Borrower in respect of such LC Disbursement;
provided that amounts so received for the account of any
Lender prior to payment by such Lender of amounts required
to be paid by it hereunder in respect of any LC Disbursement
shall be remitted to such Issuing Bank.
(f) If such Issuing Bank shall pay any draft pre-
sented under a Letter of Credit, the Borrower shall pay to
such Issuing Bank or to the Agent for the account of such
Issuing Bank or, if the Agent shall have received the pay-
ments provided in paragraph (e) above with respect to such
drawing, for the accounts of the Lenders, an amount equal to
the amount of such draft before 12:00 noon, New York City
time, on the date of payment of such draft. The obligations
of the Borrower under this paragraph (f) shall be absolute,
unconditional and irrevocable and shall be satisfied
strictly in accordance with their terms irrespective of:
(i) any lack of validity or enforceability of any
Letter of Credit;
(ii) the existence of any claim, setoff, defense or
other right which the Borrower or any other person may
at any time have against the beneficiary under any
Letter of Credit, the Agent, such Issuing Bank or any
other Lender (other than the defense of payment in
accordance with the terms of this Agreement or a
defense based on the gross negligence or wilful miscon-
duct of the Agent or such Issuing Bank) or any other
person in connection with this Agreement or any other
transaction;
(iii) any draft or other document presented under a
Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect;
provided that payment by such Issuing Bank under such
Letter of Credit against presentation of such draft or
document shall not have constituted gross negligence,
wilful misconduct or breached any other standard agreed
to in writing by the applicable Issuing Bank;
(iv) payment by such Issuing Bank under a Letter of
Credit against presentation of a draft or other docu-
ment which does not comply in any immaterial respect
with the terms of such Letter of Credit; provided that
such payment shall not have constituted gross negli-
gence or wilful misconduct; or
(v) any other circumstance or event whatsoever,
whether or not similar to any of the foregoing; pro-
vided that such other circumstance or event shall not
have been the result of gross negligence or wilful
misconduct of such Issuing Bank.
It is understood that in making any payment under
a Letter of Credit (x) such Issuing Bank's exclusive reli-
ance on the documents presented to it under such Letter of
Credit as to any and all matters set forth therein, includ-
ing reliance on the amount of any draft presented under such
Letter of Credit, whether or not the amount due to the
beneficiary equals the amount of such draft and whether or
not any document presented pursuant to such Letter of Credit
proves to be insufficient in any respect, if such document
on its face appears to be in order, and whether or not any
other statement or any other document presented pursuant to
such Letter of Credit proves to be forged or invalid or any
statement therein proves to be inaccurate or untrue in any
respect whatsoever, and (y) any noncompliance in any
immaterial respect of the documents presented under a Letter
of Credit with the terms thereof shall, in either case, not
be deemed wilful misconduct or gross negligence of such
Issuing Bank. Notwithstanding the foregoing, to the extent
such Issuing Bank has separately agreed with the Borrower to
a standard of care which varies from that set forth above,
such standard shall govern as between the Borrower and such
Issuing Bank.
(g) In the event any Letters of Credit shall have
an expiry date after the Maturity Date, the Borrower shall,
prior to the Business Day before the Maturity Date, forth-
with deposit cash with the Agent, in an amount equal to the
aggregate LC Exposure, or deliver to the Agent a Replacement
Letter of Credit drawable without condition and in a face
amount equal to the aggregate LC Exposure and otherwise
satisfactory in all respects to the Agent, which cash
deposit or Replacement Letter of Credit shall serve as
collateral security for the repayment of any future drawings
under such Letters of Credit.
(h) Each Issuing Bank hereby agrees to share, pro
rata in accordance with its LC Exposure, with all Secured
Parties, its security interest in all documents and goods in
which it will have a security interest in connection with
the issuance of any Letter of Credit and to share on the
same basis all amounts recovered by such Issuing Bank in
connection with any such security interest.
SECTION 2.16. Indemnity. The Borrower shall
indemnify each Lender against any loss or reasonable expense
which such Lender may sustain or incur as a consequence of
(a) any failure by the Borrower to fulfill on the date of
any Borrowing hereunder the applicable conditions set forth
in Article IV, (b) any failure by the Borrower to borrow or
to refinance, convert or continue any Loan hereunder after
irrevocable notice of such Borrowing, refinancing,
conversion or continuation has been given pursuant to
Section 2.03, 2.04 or 2.05, (c) any payment, prepayment or
conversion of a Eurodollar Loan required by any other
provision of this Agreement or otherwise made or deemed made
on a date other than the last day of the Interest Period
applicable thereto or (d) the occurrence of any Event of
Default, including, in each such case, any loss or
reasonable expense sustained or incurred or to be sustained
or incurred in liquidating or employing deposits from third
parties acquired to effect or maintain such Loan or any part
thereof as a Eurodollar Loan. Such loss or reasonable
expense shall include an amount equal to the excess, if any,
as reasonably determined by such Lender, of (i) its cost of
obtaining the funds for the Loan being paid, prepaid,
converted, continued or not borrowed (based on the LIBO Rate
or, in the case of a Fixed Rate Loan, the fixed rate of
interest applicable thereto) for the period from the date of
such payment, prepayment or failure to borrow to the last
day of the Interest Period for such Loan (or, in the case of
a failure to borrow, the Interest Period for such Loan which
would have commenced on the date of such failure) over
(ii) the amount of interest (as reasonably determined by
such Lender) that would be realized by such Lender in
reemploying the funds so paid, prepaid or not borrowed for
such period or Interest Period, as the case may be. A
certificate of any Lender setting forth any amount or
amounts which such Lender is entitled to receive pursuant to
this Section 2.16 and the method of calculation employed by
such Lender shall be delivered to the Borrower and shall be
presumed conclusive absent manifest error but subject to
rebuttal by the Borrower.
SECTION 2.17. Pro Rata Treatment. Except as
required under Section 2.14, each Standby Borrowing, each
payment or prepayment of principal of any Standby Borrowing,
each payment of interest on the Standby Loans, each payment
of the Facility Fee, each payment of the LC Fees, each
reduction of the Commitments and each refinancing of any
Borrowing with a Standby Borrowing of any Type, shall be
allocated pro rata among the Lenders in accordance with
their respective Commitments (or, if such Commitments shall
have expired or been terminated, in accordance with the
respective principal amounts of their outstanding Standby
Loans). Each payment of principal of any Competitive
Borrowing shall be allocated pro rata among the Lenders
participating in such Borrowing in accordance with the
respective principal amounts of their outstanding Competi-
tive Loans comprising such Borrowing. Each payment of
interest on any Competitive Borrowing shall be allocated pro
rata among the Lenders participating in such Borrowing in
accordance with the respective amounts of accrued and unpaid
interest on their outstanding Competitive Loans comprising
such Borrowing. For purposes of determining the available
Commitments of the Lenders at any time, each outstanding
Competitive Borrowing shall be deemed to have utilized the
Commitments of the Lenders (including those Lenders which
shall not have made Loans as part of such Competitive
Borrowing) pro rata in accordance with such respective
Commitments. Each Lender agrees that in computing such
Lender's portion of any Borrowing to be made hereunder, the
Agent may, in its discretion, round each Lender's percentage
of such Borrowing to the next higher or lower whole dollar
amount.
SECTION 2.18. Sharing of Setoffs. Each Lender
agrees that if it shall, through the exercise of a right of
banker's lien, setoff or counterclaim against the Borrower,
or pursuant to a secured claim under Section 506 of Title 11
of the United States Code or other security or interest
arising from, or in lieu of, such secured claim, received by
such Lender under any applicable bankruptcy, insolvency or
other similar law or otherwise, or by any other means,
obtain payment (voluntary or involuntary) in respect of any
Standby Loan or Loans as a result of which the unpaid
principal portion of the Standby Loans made by it shall be
proportionately less than the unpaid principal portion of
the Standby Loans of any other Lender, it shall be deemed
simultaneously to have purchased from such other Lender at
face value, and shall promptly pay to such other Lender the
purchase price for, a participation in the Standby Loans of
such other Lender, so that the aggregate unpaid principal
amount of the Standby Loans and participations in Standby
Loans held by each Lender shall be in the same proportion to
the aggregate unpaid principal amount of all Standby Loans
then outstanding as the principal amount of its Standby
Loans, prior to such exercise of banker's lien, setoff or
counterclaim or other event was to the principal amount of
all Standby Loans outstanding prior to such exercise of
banker's lien, setoff or counterclaim or other event;
provided, however, that, if any such purchase or purchases
or adjustments shall be made pursuant to this Section 2.18
and the payment giving rise thereto shall thereafter be
recovered, such purchase or purchases or adjustments shall
be rescinded to the extent of such recovery and the purchase
price or prices or adjustment restored without interest.
The Borrower expressly consents to the foregoing arrange-
ments and agrees that any Lender holding a participation in
a Standby Loan deemed to have been so purchased may exercise
any and all rights of banker's lien, setoff or counterclaim
with respect to any and all moneys owing by the Borrower to
such Lender by reason thereof as fully as if such Lender had
made a Standby Loan directly to the Borrower in the amount
of such participation.
SECTION 2.19. Payments. (a) The Borrower shall
make each payment (including principal of or interest on any
Borrowing or any Fees (other than the fees referred to in
paragraph (d) of Section 2.06) or other amounts) hereunder
and under any other Loan Document not later than 12:00 noon,
New York City time, on the date when due in dollars to the
Agent at its offices at 270 Park Avenue, New York, New York,
in immediately available funds.
(b) Whenever any payment (including principal of
or interest on any Borrowing or any Fees or other amounts)
hereunder or under any other Loan Document shall become due,
or otherwise would occur, on a day that is not a Business
Day, such payment may be made on the next succeeding Busi-
ness Day, and such extension of time shall in such case be
included in the computation of interest, if applicable.
SECTION 2.20. Taxes. (a) Any and all payments
by the Borrower hereunder shall be made, in accordance with
Section 2.19, free and clear of and without deduction for
any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities
with respect thereto, excluding taxes imposed on or measured
by the net income or earnings of the Agent or any Lender (or
any transferee or assignee thereof, including a
participation holder (any such entity being called a
"Transferee")) and franchise taxes imposed by any
Governmental Authority on the Agent or any Lender (or
Transferee) as a result of a present or former connection
between the jurisdiction of the Governmental Authority
imposing such tax on the Agent or such Lender (except a
connection arising solely from the Agent or such Lender
having executed, delivered or performed its obligations or
received a payment under, or enforced, this Agreement or the
Notes) (all such nonexcluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If the Borrower shall
be required by law to deduct any Taxes from or in respect of
any sum payable hereunder to the Lenders (or any Transferee)
or the Agent, (i) the sum payable shall be increased by the
amount necessary so that after making all required deduc-
tions (including deductions applicable to additional sums
payable under this Section 2.20) such Lender (or Transferee)
or the Agent (as the case may be) shall receive an amount
equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such
deductions and (iii) the Borrower shall pay the full amount
deducted to the relevant taxing authority or other
Governmental Authority in accordance with applicable law;
provided, however, that no Transferee of any Lender shall be
entitled to receive any greater payment under this
paragraph (a) than such Lender would have been entitled to
receive with respect to the rights assigned, participated or
otherwise transferred unless such assignment, participation
or transfer shall have been made at a time when the
circumstances giving rise to such greater payment did not
exist.
(b) In addition, the Borrower agrees to pay any
present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies which
arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to,
this Agreement or any other Loan Document (hereinafter
referred to as "Other Taxes").
(c) The Borrower will indemnify each Lender (or
Transferee) and the Agent for the full amount of Taxes and
Other Taxes paid by such Lender (or Transferee) or the
Agent, as the case may be, and any liability (including
penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes
were correctly or legally asserted by the relevant taxing
authority or other Governmental Authority. Such indemnifi-
cation shall be made within 30 days after the date any
Lender (or Transferee) or the Agent, as the case may be,
makes written demand therefor. If a Lender (or Transferee)
or the Agent shall become aware that it is entitled to
receive a refund in respect of Taxes or Other Taxes as to
which it has been indemnified by the Borrower pursuant to
this Section 2.20, it shall promptly notify the Borrower of
the availability of such refund and shall, within 30 days
after receipt of a request by the Borrower, apply for such
refund at the Borrower's expense. If any Lender (or Trans-
feree) or the Agent receives a refund in respect of any
Taxes or Other Taxes as to which it has been indemnified by
the Borrower pursuant to this Section 2.20, it shall
promptly notify the Borrower of such refund and shall,
within 30 days after receipt of a request by the Borrower
(or promptly upon receipt, if the Borrower has requested
application for such refund pursuant hereto), repay such
refund to the Borrower (to the extent of amounts that have
been paid by the Borrower under this Section 2.20 with
respect to such refund), net of all out-of-pocket expenses
of such Lender and without interest (except to the extent
such refund includes any interest); provided that the
Borrower, upon the request of such Lender (or Transferee) or
the Agent, agrees to return such refund (plus penalties,
interest or other charges) to such Lender (or Transferee) or
the Agent in the event such Lender (or Transferee) or the
Agent is required to repay such refund. Nothing contained
in this paragraph (c) shall require any Lender (or Trans-
feree) or the Agent to make available any of its tax returns
(or any other information relating to its taxes which it
deems to be confidential).
(d) Within 30 days after the date of any payment
of Taxes or Other Taxes withheld by the Borrower in respect
of any payment to any Lender (or Transferee) or the Agent,
the Borrower will furnish to the Agent, at its address
referred to in Section 11.01, the original or a certified
copy of a receipt evidencing payment thereof.
(e) Without prejudice to the survival of any
other agreement contained herein, the agreements and obliga-
tions contained in this Section 2.20 shall survive the
payment in full of the principal of and interest on all
Loans made hereunder.
(f) Upon the written request of the Borrower,
each Lender (or Transferee) that is organized under the laws
of a jurisdiction outside the United States shall, if
legally able to do so, prior to the immediately following
due date of any payment by the Borrower hereunder, deliver
to the Borrower such certificates, documents or other
evidence, as required by the Code or Treasury Regulations
issued pursuant thereto, including Internal Revenue Service
Form 1001 or Form 4224 and any other certificate or state-
ment of exemption required by Treasury Regulation Sec-
tion 1.1441-1, 1.1441-4 or 1.1441-6(c) or any subsequent
version thereof or successors thereto, properly completed
and duly executed by such Lender (or Transferee) establish-
ing that such payment is (i) not subject to United States
Federal withholding tax under the Code because such payment
is effectively connected with the conduct by such Lender (or
Transferee) of a trade or business in the United States or
(ii) totally exempt from United States Federal withholding
tax, or subject to a reduced rate of such tax under a
provision of an applicable tax treaty. Unless the Borrower
and the Agent have received forms or other documents satis-
factory to them indicating that such payments hereunder or
under the Notes are not subject to United States Federal
withholding tax or are subject to such tax at a rate reduced
by an applicable tax treaty, the Borrower or the Agent shall
withhold taxes from such payments at the applicable statu-
tory rate.
(g) The Borrower shall not be required to pay any
additional amounts to any Lender (or Transferee) in respect
of United States Federal withholding tax pursuant to para-
graph (a) above if the obligation to pay such additional
amounts would not have arisen but for a failure by such
Lender (or Transferee) to comply with the provisions of
paragraph (f) above; provided, however, the Borrower shall
be required to pay those amounts to any Lender (or Trans-
feree) it was required to pay hereunder prior to the failure
of such Lender (or Transferee) to comply with the provisions
of paragraph (f).
(h) Any Lender (or Transferee) claiming any addi-
tional amounts payable pursuant to this Section 2.20 shall
use reasonable efforts (consistent with legal and regulatory
restrictions) to file any certificate or document requested
by the Borrower or to change the jurisdiction of its appli-
cable lending office if the making of such a filing or
change would avoid the need for or reduce the amount of any
such additional amounts which may thereafter accrue and
would not, in the sole determination of such Lender, be
otherwise disadvantageous to such Lender (or Transferee).
ARTICLE III
Representations and Warranties
The Borrower represents and warrants to each of
the Lenders that:
SECTION 3.01. Organization; Powers. Each of the
Borrower and the Significant Subsidiaries (a) is a
corporation duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its
organization, (b) has all requisite power and authority to
own its property and assets and to carry on its business as
now conducted and as proposed to be conducted, (c) is
qualified to do business in every jurisdiction where such
qualification is required, except where the failure so to
qualify is not materially likely to result in a Material
Adverse Effect, and (d) has the corporate power and
authority to execute, deliver and perform its obligations
under each of the Loan Documents and each other agreement or
instrument contemplated thereby to which it is or will be a
party and to borrow hereunder.
SECTION 3.02. Authorization. The execution,
delivery and performance by the Borrower and the Guarantor
of each of the Loan Documents to which it is a party, the
Borrowings and issuances of Letters of Credit (collectively,
the "Transactions") (a) have been duly authorized by all
requisite corporate and, if required, stockholder action and
(b) will not (i) violate (A) any provision of law, statute,
rule or regulation, or of the certificate or articles of
incorporation or other constitutive documents or by-laws of
the Borrower or any Significant Subsidiary, (B) any order of
any Governmental Authority or (C) any provision of any
material indenture, agreement or other instrument to which
the Borrower or any Significant Subsidiary is a party or by
which any of them or any of their property is or may be
bound, (ii) result in a breach of or constitute (alone or
with notice or lapse of time or both) a default under any
such indenture, agreement or other instrument or
(iii) result in the creation or imposition of any Lien upon
or with respect to any property or assets now owned or
hereafter acquired by the Borrower or any Subsidiary other
than pursuant to the Collateral Documents.
SECTION 3.03. Enforceability. This Agreement has
been duly executed and delivered by the Borrower and the
Guarantor and constitutes, and each other Loan Document when
executed and delivered by the Borrower or Guarantor party
thereto will constitute, a legal, valid and binding
obligation of the Borrower or the Guarantor party thereto
enforceable against the Borrower or the Guarantor in
accordance with its terms (subject, as to the enforcement of
remedies, to applicable bankruptcy, reorganization,
insolvency, moratorium and similar laws affecting creditors'
rights generally and to general principles of equity).
SECTION 3.04. Governmental Approvals. No action,
consent or approval of, registration or filing with or any
other action by any Governmental Authority is or will be
required by the Borrower or any of the Subsidiaries in con-
nection with the Transactions, except such as have been made
or obtained and are in full force and effect.
SECTION 3.05. Financial Statements. The Borrower
has heretofore furnished to the Lenders (a) its consolidated
balance sheets and statements of earnings and statements of
cash flows (i) as of and for the fiscal year ended
December 31, 1993, audited by and accompanied by the opinion
of KPMG Peat Marwick, independent public accountants, and
(ii) as of and for the 26-week period ended July 1, 1994,
and (b) its consolidating balance sheets and statements of
earnings and cash flows (limited, in the case of such
statements of cash flows, to the Borrower, the Significant
Subsidiaries and such other Subsidiaries as the Borrower may
elect) as of and for the fiscal year and the 26-week period
ended on the respective dates set forth in (a) above. Such
financial statements present fairly the financial condition
and results of operations of the Borrower and its consoli-
dated Subsidiaries as of such dates and for such periods.
Such financial statements and the notes thereto were pre-
pared in accordance with GAAP applied on a consistent basis,
except as disclosed in such statements and notes.
SECTION 3.06. No Material Adverse Change. There
has been no material adverse change in the business, assets,
operations or financial condition of the Borrower and the
Subsidiaries, taken as a whole, since December 31, 1993.
SECTION 3.07. Title to Properties; Possession
Under Leases. (a) Each of the Borrower and the Significant
Subsidiaries has good and marketable title to, or valid,
subsisting and enforceable leasehold interests in, all its
material properties and assets, except for minor defects in
title that do not interfere with its ability to conduct its
business as currently conducted or to utilize such proper-
ties and assets for their intended purposes. All such
material properties and assets are free and clear of Liens,
other than Liens expressly permitted by Section 6.01.
(b) Each of the Borrower and the Significant
Subsidiaries has complied with all material obligations
under all material leases to which it is a party and all
such leases are in full force and effect. Each of the
Borrower and the Subsidiaries enjoys peaceful and
undisturbed possession under all such material leases.
SECTION 3.08. Subsidiaries. Schedule 3.08 sets
forth as of the Restatement Closing Date a list of all
Subsidiaries of the Borrower and the number and percentage
of the shares of each class of capital stock owned
beneficially or of record by the Borrower therein.
SECTION 3.09. Litigation; Compliance with Laws.
(a) Except as set forth in Schedule 3.09, there are not any
actions, suits or proceedings at law or in equity or by or
before any Governmental Authority pending or, to the knowl-
edge of the Borrower, threatened against or affecting the
Borrower or any Significant Subsidiary or any business,
property or rights of any such person (i) which involve any
Loan Document or the Transactions or (ii) which would be
materially likely to result in a Material Adverse Effect.
(b) Neither the Borrower nor any of the Signifi-
cant Subsidiaries is in violation of any law, rule or
regulation, or in default with respect to any judgment,
writ, injunction or decree of any Governmental Authority,
where such violation or default would be materially likely
to result in a Material Adverse Effect.
SECTION 3.10. Agreements. (a) Neither the
Borrower nor any of the Significant Subsidiaries is a party
to any agreement or instrument or subject to any corporate
restriction that would be materially likely to result in a
Material Adverse Effect.
(b) Neither the Borrower nor any of its
Significant Subsidiaries is in default in any manner under
any provision of any indenture or other agreement or
instrument evidencing Indebtedness, or any other material
agreement or instrument to which it is a party or by which
it or any of its properties or assets are or may be bound,
where such default would be materially likely to result in a
Material Adverse Effect.
SECTION 3.11. Federal Reserve Regulations.
(a) Neither the Borrower nor any of the Significant
Subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit
for the purpose of purchasing or carrying Margin Stock.
(b) No part of the proceeds of any Loan will be
used, whether directly or indirectly, and whether immedi-
ately, incidentally or ultimately, (i) to purchase or carry
Margin Stock or to extend credit to others for the purpose
of purchasing or carrying Margin Stock or to refund indebt-
edness originally incurred for such purpose, or (ii) for any
purpose which entails a violation of, or which is inconsis-
tent with, the provisions of the regulations of the Board,
including Regulation G, U or X.
SECTION 3.12. Investment Company Act; Public
Utility Holding Company Act. Neither the Borrower nor any
Significant Subsidiary is (a) an "investment company" as
defined in, or subject to regulation under, the Investment
Company Act of 1940 or (b) a "holding company" as defined
in, or subject to regulation under, the Public Utility
Holding Company Act of 1935.
SECTION 3.13. Use of Proceeds. The Borrower will
use the proceeds of the Loans and the Letters of Credit only
for working capital, the purchase of goods and services by
the Borrower and the Subsidiaries and other general
corporate purposes.
SECTION 3.14. Tax Returns. Except as described
in Schedule 3.14, each of the Borrower and the Significant
Subsidiaries has filed or caused to be filed all Federal,
state and material local tax returns required to have been
filed by it and has paid or caused to be paid all taxes
shown to be due and payable on such returns or on any
assessments received by it, except taxes or assessments that
are being contested in good faith by appropriate proceedings
and for which the Borrower shall have set aside on its books
whatever reserves are required in accordance with GAAP
consistently applied.
SECTION 3.15. No Material Misstatements. (a) No
report, financial statement, schedule or other information
relating to historical events or conditions furnished to the
Lenders or the Agent by the Borrower, in connection with
this Agreement contains any material misstatement of fact or
omitted or omits to state any material fact necessary to
make the statements therein, when taken as a whole, not mis-
leading.
(b) Based upon all information currently avail-
able to the Borrower, any report, projection, schedule or
other information relating to forecast of future events or
conditions furnished to the Lenders or the Agent by the
Borrower in connection with this Agreement has been prepared
on a reasonable basis based upon reasonable assumptions.
SECTION 3.16. Employee Benefit Plans. The
Borrower and each of its ERISA Affiliates is in compliance
in all material respects with the applicable provisions of
ERISA and the Code and the regulations and published inter-
pretations thereunder with respect to the employee benefit
plans (as defined in Section 3(3) of ERISA) of the Borrower
and its ERISA Affiliates. No Reportable Event has occurred
in respect of any Plan of the Borrower or any ERISA
Affiliate. The present value of all benefit liabilities
under each Plan (based on those assumptions used to fund
such Plan) did not, as of the last annual valuation date
applicable thereto, exceed by more than $5,000,000 the value
of the assets of such Plan, and the present value of all
benefit liabilities of all underfunded Plans (based on those
assumptions used to fund each such Plan) did not, as of the
last annual valuation dates applicable thereto, exceed
$20,000,000. Neither the Borrower nor any ERISA Affiliate
has incurred any Withdrawal Liability that would be
materially likely to have a Material Adverse Effect.
Neither the Borrower nor any ERISA Affiliate has received
any notification that any Multiemployer Plan is in
reorganization or has been terminated, within the meaning of
Title IV of ERISA, and no Multiemployer Plan is reasonably
expected to be in reorganization or to be terminated, where
such reorganization or termination would be materially
likely to result, through increases in the contributions
required to be made to such Plan or otherwise, in a Material
Adverse Effect.
SECTION 3.17. Environmental Matters. Each of the
Borrower and the Subsidiaries has complied in all material
respects with all material Federal, state, local and other
statutes, ordinances, orders, judgments, rulings and regula-
tions relating to environmental pollution or to environmen-
tal regulation or control. Neither the Borrower nor any
Subsidiary has received notice of any failure so to comply
which alone or together with any other such failure is
materially likely to result in a Material Adverse Effect.
The Borrower's and the Subsidiaries' plants do not manage
any hazardous wastes, hazardous substances, hazardous
materials, toxic substances or toxic pollutants, as those
terms are used in the Resource Conservation and Recovery
Act, the Comprehensive Environmental Response Compensation
and Liability Act, the Hazardous Materials Transportation
Act, the Toxic Substance Control Act, the Clean Air Act, the
Clean Water Act or any other applicable law, in violation of
any such law or any regulations promulgated pursuant thereto
or in any other applicable law where such violation is
materially likely to result, individually or together with
other violations, in a Material Adverse Effect.
SECTION 3.18. Security Interests. As of the
Restatement Closing Date, the Collateral Agent has, and at
all times thereafter, will have (until terminated pursuant
to Section 8.02), a valid, first priority, perfected
security interest in the Pledged Stock (as defined in the
Pledge Agreement), subject to no other Liens.
ARTICLE IV
Conditions of Lending
The obligations of the Lenders to make Loans here-
under and of the Issuing Banks to issue Letters of Credit
hereunder are subject to the satisfaction of the conditions
that, on the date of each Credit Event, including each
Borrowing in which Loans are refinanced as contemplated by
Section 2.05(a), but excluding each Borrowing in which Loans
are continued or converted as contemplated in
Section 2.05(b):
(a) In the case of a Borrowing, the Agent shall
have received a notice of such Borrowing as required by
Section 2.03 or Section 2.04, as applicable, or, in the
case of an issuance of a Letter of Credit, the Issuing
Bank shall have received a notice in accordance with
Section 2.15(b).
(b) The representations and warranties set forth
in Article III hereof (except, in the case of a refi-
nancing of a Standby Borrowing with a new Standby
Borrowing that does not increase the aggregate princi-
pal amount of the Loans of any Lender outstanding or in
the case of an issuance of a Letter of Credit that does
not increase the aggregate LC Exposure, the
representations set forth in Sections 3.06 and 3.09(a))
shall be true and correct in all material respects on
and as of the date of such Credit Event with the same
effect as though made on and as of such date, except to
the extent such representations and warranties
expressly relate to an earlier date.
(c) The Borrower shall be in compliance with all
the terms and provisions set forth herein and in each
other Loan Document on its part to be observed or
performed, and at the time of and immediately after
such Credit Event no Event of Default or Default shall
have occurred and be continuing.
(d) Each Lender that shall not have previously
received an appropriate Note shall have received a duly
executed Competitive Note or Standby Note, as applica-
ble, payable to its order and otherwise complying with
the provisions of Section 2.07.
Each Credit Event, excluding each Borrowing in which Loans
are continued or converted as contemplated in
Section 2.05(b), shall be deemed to constitute a representa-
tion and warranty by the Borrower on the date of such Bor-
rowing as to the matters specified in paragraphs (b) and (c)
of this Article IV (and, without limiting the foregoing, a
representation and warranty that such Borrowing, or the
incurrence of reimbursement obligations in respect of such
Letter of Credit, is permitted under the Note Purchase
Agreement).
ARTICLE V
Affirmative Covenants
The Borrower covenants and agrees with each Lender
and the Agent that, so long as this Agreement shall remain
in effect, the principal of or interest on any Loan, any
Fees or any other expenses or amounts payable under any Loan
Document shall be unpaid or any Letter of Credit shall
remain outstanding, unless the Required Lenders shall
otherwise consent in writing, the Borrower will, and will
cause each of the Subsidiaries to:
SECTION 5.01. Existence; Businesses and Prop-
erties. (a) Do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its legal
existence, except as otherwise expressly permitted under
Section 6.03 and with regard to any Subsidiary which has no
significant assets and no significant liabilities.
(b) Do or cause to be done all things necessary
to obtain, preserve, renew, extend and keep in full force
and effect the rights, licenses, permits, franchises,
authorizations, patents, copyrights, trademarks and trade
names material to the conduct of its business; maintain and
operate such business in substantially the manner in which
it is presently conducted and operated (except as permitted
pursuant to Section 6.03); comply in all material respects
with all applicable laws, rules, regulations and orders of
any Governmental Authority, whether now in effect or here-
after enacted, the failure to comply with which would be
materially likely to result in a Material Adverse Effect;
and at all times maintain and preserve all property material
to the conduct of such business and keep such property in
good repair, working order and condition and from time to
time make, or cause to be made, all needful and proper
repairs, renewals, additions, improvements and replacements
thereto necessary in order that the business carried on in
connection therewith may be properly conducted at all times.
SECTION 5.02. Insurance. Keep its insurable
properties adequately insured at all times by financially
sound and reputable insurers; maintain such other insurance,
to such extent and against such risks, including fire and
other risks insured against by extended coverage, as is
customary with companies in the same or similar businesses,
including public liability insurance against claims for per-
sonal injury or death or property damage occurring upon, in,
about or in connection with the use of any properties owned,
occupied or controlled by it; and maintain such other
insurance as may be required by law.
SECTION 5.03. Obligations and Taxes. Pay its
Indebtedness and other obligations promptly and in accor-
dance with their terms and pay and discharge promptly when
due all taxes, assessments and governmental charges or
levies imposed upon it or upon its income or profits or in
respect of its property, before the same shall become
delinquent or in default, as well as all lawful claims for
labor, materials and supplies or otherwise which, if unpaid,
might give rise to a Lien upon such properties or any part
thereof; provided, however, that such payment and discharge
shall not be required with respect to any such tax, assess-
ment, charge, levy or claim so long as the validity or
amount thereof shall be contested in good faith by appropri-
ate proceedings and the Borrower shall have set aside on its
books whatever reserves are required in accordance with
GAAP.
SECTION 5.04. Financial Statements, Reports, etc.
In the case of the Borrower, furnish to the Agent and each
Lender (by delivery of a regular or periodic report filed
under the Exchange Act containing such items or otherwise):
(a) within 100 days after the end of each fiscal
year, its consolidated and consolidating balance sheets
and related statements of earnings and cash flows
(limited, in the case of such consolidating statements
of cash flows, to the Borrower, the Significant
Subsidiaries, and any other Subsidiaries as the
Borrower may elect) showing the financial condition of
the Borrower and its consolidated Subsidiaries as of
the close of such fiscal year and the results of its
operations and the operations of such Subsidiaries
during such year, (i) in the case of such consolidated
statements, audited by KPMG Peat Marwick or any other
Big Six Accounting Firm and accompanied by an opinion
of such accountants (which shall not be qualified in
any material respect) to the effect that such
consolidated financial statements fairly present the
financial condition and results of operations of the
Borrower and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently
applied (except for changes concurred in by the
Borrower's independent public accountants and disclosed
in such statements or the notes thereto) and (ii) in
the case of such consolidating statements, certified by
one of its Financial Officers as accurately reflecting
the assets and liabilities of the Borrower and the
consolidated Subsidiaries and the cash flows of the
Borrower and the Subsidiaries listed therein;
(b) within 50 days after the end of each of the
first three fiscal quarters of each fiscal year, its
consolidated and consolidating balance sheets and
related statements of earnings and cash flow (limited,
in the case of such consolidating statements of cash
flows, to the Borrower, the Significant Subsidiaries
and any other Subsidiaries as the Borrower may elect)
showing the financial condition of the Borrower and its
consolidated subsidiaries as of the close of such
fiscal quarter and the results of its operations and
the operations of such Subsidiaries during such fiscal
quarter and the then elapsed portion of the fiscal
year, all certified by one of its Financial Officers in
the case of such consolidated statements, as fairly
presenting the financial condition and results of
operations of the Borrower on a consolidated basis in
accordance with GAAP consistently applied (except for
changes concurred in by the Borrower's independent
public accountants and disclosed in such statements or
the notes thereto, subject to normal year-end audit
adjustments;
(c) concurrently with any delivery of financial
statements under (a) or (b) above, (x) a certificate of
the accounting firm, in the case of (a), or Financial
Officer, in the case of (b), referred to in the appli-
cable paragraph certifying that no Event of Default or
Default has occurred or, if such an Event of Default or
Default has occurred, specifying the nature and extent
thereof and any corrective action taken or proposed to
be taken with respect thereto and (y) a certificate of
a Financial Officer stating (i) that the activities
between the Borrower and the Subsidiaries, on the one
hand, and Montgomery Ward Direct, on the other hand,
during such quarter have been reviewed and that the
Borrower and the Subsidiaries are in compliance with
the covenants contained in Section 5.11 and (ii) set-
ting forth computations in reasonable detail satis-
factory to the Agent demonstrating compliance with the
covenants contained in Sections 6.05, 6.06, 6.07 and
6.08;
(d) promptly after the same become publicly avail-
able, copies of all periodic and other reports, proxy
statements and other materials filed by it with the
Securities and Exchange Commission, or any Governmental
Authority succeeding to any of or all the functions of
said Commission, or with any national securities
exchange, or distributed to its shareholders, as the
case may be;
(e) as soon as reasonably practicable, from time
to time, such other information regarding the opera-
tions, business affairs and financial condition of the
Borrower or any Subsidiary, or compliance with the
terms of any Loan Document, as the Agent or any Lender
may reasonably request; and
(f) concurrently with the delivery of financial
statements under (b) above, a report of a Financial
Officer giving quarterly financial information satis-
factory to the Agent and the Borrower with respect to
Montgomery Ward Direct and, within 125 days after the
close of Montgomery Ward Direct's fiscal year, a copy
of the audited annual financial reports.
SECTION 5.05. Litigation and Other Notices.
Furnish to the Agent and each Lender prompt written notice
of the following promptly after a Responsible Officer of the
Borrower or any Subsidiary becomes aware of the same:
(a) any Event of Default or Default, specifying
the nature and extent thereof and the corrective action
(if any) proposed to be taken with respect thereto;
(b) the filing or commencement of, or receipt of
notice of intention of any person to file or commence,
any action, suit or proceeding, whether at law or in
equity or by or before any Governmental Authority,
against the Borrower or any Affiliate thereof which
would be materially likely to result in a Material
Adverse Effect;
(c) any development affecting or relating to the
Borrower or any Subsidiary or Montgomery Ward Direct
that in the reasonable judgment of the Borrower has
resulted in, or is materially likely to result in, a
Material Adverse Effect referred to in clause (a) of
the definition of such term;
(d) (i) any filing with the Securities and
Exchange Commission of a Schedule 13D (or any similar
or successor report or schedule) or any amendment
thereto pursuant to Regulation 13D or any similar or
successor regulation promulgated under the Exchange Act
with respect to the Borrower or any person Controlling
the Borrower and indicating that an event which consti-
tutes a Change in Control has occurred, but in any
event no later than three Business Days after the date
of any such filing with the Securities and Exchange
Commission and (ii) the occurrence of any event which
constitutes a Change in Control; and
(e) the issuance by any Governmental Authority of
any injunction, order, decision or other restraint
prohibiting, or having the effect of prohibiting, the
Loans or the initiation of any litigation or similar
proceeding seeking any such injunction, order or other
restraint.
SECTION 5.06. Employee Benefits. (a) Comply in
all material respects with the applicable provisions of
ERISA and the Code with respect to the employee benefit
plans (as defined in Section 3(3) of ERISA) of the Borrower
and the ERISA Affiliates and (b) furnish to the Agent (i) as
soon as possible after, and in any event within 30 days
after any Responsible Officer of the Borrower or any ERISA
Affiliate knows or has reason to know that any Reportable
Event has occurred that alone or together with any other
Reportable Event could reasonably be expected to result in
liability of the Borrower or any ERISA Affiliate to the PBGC
in an aggregate amount exceeding $5,000,000, a statement of
a Financial Officer setting forth details as to such
Reportable Event and the action that the Borrower or such
ERISA Affiliate proposes to take with respect thereto,
together with a copy of the notice, if any, of such
Reportable Event to the PBGC, (ii) promptly after receipt
thereof, a copy of any notice that the Borrower or any ERISA
Affiliate may receive from the PBGC relating to the
intention of the PBGC to terminate any Plan or Plans (other
than a Plan maintained by an ERISA Affiliate that is
considered an ERISA Affiliate only pursuant to sub-
section (m) or (o) of Section 414 of the Code) or to appoint
a trustee to administer any such Plan, (iii) within 10 days
after the due date for filing with the PBGC pursuant to
Section 412(n) of the Code a notice of failure to make a
required installment or other payment with respect to a
Plan, a statement of a Financial Officer setting forth
details as to such failure and the action that the Borrower
proposes to take with respect thereto, together with a copy
of any such notice given to the PBGC and (iv) promptly and
in any event within 30 days after receipt thereof by the
Borrower or any ERISA Affiliate from the sponsor of a
Multiemployer Plan, a copy of each notice received by the
Borrower or any ERISA Affiliate concerning (A) the
imposition of Withdrawal Liability or (B) a determination
that a Multiemployer Plan is, or is expected to be,
terminated or in reorganization, both within the meaning of
Title IV of ERISA.
SECTION 5.07. Maintaining Records; Access to
Properties and Inspections. Maintain or cause to be main-
tained at all times true and complete books and records of
its financial operations and permit the Agent or any Lender
and their designated representatives reasonable access after
reasonable notice to all such books and records and to any
of the properties or assets of the Borrower and the
Subsidiaries during regular business hours in order that the
Agent and the Lenders may make such examinations and make
abstracts from such books and records and may discuss the
affairs, finances and accounts with, and be advised as to
the same by, Financial Officers and, after consultation with
the Borrower, the independent accountants of the Borrower or
any Subsidiary, all as the Agent or any Lender may
reasonably deem appropriate for the purpose of verifying the
accuracy of the various reports delivered by the Borrower or
any Subsidiary thereof to the Agent and/or the Lenders
pursuant to this Agreement or for otherwise ascertaining
compliance with this Agreement. Except during the
continuance of any Event of Default, all requests by Lenders
under this Section shall be made through and coordinated by
the Agent with a view to minimizing inconvenience to the
Borrower and its Subsidiaries.
SECTION 5.08. Additional Guarantors. (a) Unless
the Guarantors have been released or their obligations have
been terminated pursuant to the last two paragraphs of
Article X, on or prior to (i) the direct or indirect
acquisition by the Borrower of any Subsidiary which at the
time of such acquisition shall be a Significant Subsidiary
or (ii) the thirtieth Business Day after the availability of
financial statements revealing that any Subsidiary other
than a Guarantor, either of the MWD Subsidiaries, FRI, any
of the TV Shopping Companies or the Credit Card Bank shall
have become a Significant Subsidiary, cause such Subsidiary
to execute and deliver to the Agent one or more instruments
as the Agent shall request satisfactory to the Agent in form
and substance undertaking the obligations of a Guarantor
hereunder.
(b) Unless the Liens created under the Pledge
Agreement have been released pursuant to Section 8.02, as
promptly as practicable, and in any event within thirty
Business Days after any person shall become a Subsidiary,
execute and deliver, or cause to be executed and delivered,
to the Agent such agreements and instruments as the Agent
shall request to subject the issued and outstanding shares
of capital stock of such Subsidiary to the Pledge Agreement,
together with the certificates representing such shares and
stock powers, executed in blank, with respect thereto;
provided, however, that the foregoing provisions of this
Section 5.08(b) shall not be applicable with respect to the
issued and outstanding shares of capital stock of the MWD
Subsidiaries. Notwithstanding the foregoing or any other
provision hereof to the contrary, (i) neither the Borrower
nor any Subsidiary shall be obligated to pledge under the
Pledge Agreement any capital stock of FRI, any of the TV
Shopping Companies, either of the MWD Subsidiaries, any
Subsidiary that is also a subsidiary of FRI, any of the TV
Shopping Companies or either of the MWD Subsidiaries and
that, in each case, is at all times engaged only in the
business in which such parent corporation is expressly
permitted to be engaged hereunder and owns only such assets
as are incidental to such business, or any Subsidiary owning
less than 1% of the Borrower's consolidated assets and not
generating revenues; and no capital stock of FRI, any of the
TV Shopping Companies, either of the MWD Subsidiaries, any
Subsidiary that is also a subsidiary of FRI, any of the TV
Shopping Companies or either of the MWD Subsidiaries and
that, in each case, is at all times engaged only in the
business in which such parent corporation is expressly
permitted to be engaged hereunder and owns only such assets
as are incidental to such business, or any Subsidiary owning
less than 1% of the Borrower's consolidated assets and not
generating revenues, shall be subject to the security
interest created under the Pledge Agreement, and (ii) the
obligations of each Subsidiary under the Pledge Agreement
and the security interest in the stock of such Subsidiary
under the Pledge Agreement shall automatically terminate
upon (x) the sale, contribution or other disposition, in
compliance with Section 6.03, of all of the Borrower's
direct and indirect ownership of the capital stock and
Indebtedness of such Subsidiary or (y) any sale,
contribution or other disposition, in compliance with
Section 6.03, of all or substantially all of the assets of
such Subsidiary that results in such Subsidiary owning less
than 1% of the Borrower's consolidated assets and not
generating revenues.
SECTION 5.09. Further Assurances. Until such
time as the Liens created under the Collateral Documents
have been released pursuant to Section 8.02, promptly
perform or cause to be performed any and all such acts and
execute or cause to be executed, at the cost and expense of
the Borrower, any and all documents under the provisions of
any applicable law, rule or regulation of any Governmental
Authority, which are necessary from time to time, in order
to grant, maintain, preserve and protect in favor of the
Collateral Agent, for the benefit of the Secured Parties,
the security interest in and pledge of the collateral under
the Pledge Agreement, including the perfection and priority
thereof, all as provided in the Pledge Agreement.
SECTION 5.10. Note Purchase Agreement. At the
request of the Agent or the Required Lenders, amend or
modify the terms or conditions of this Agreement to the same
extent that the Note Purchase Agreement is so amended or
modified if such amendment or modification of the terms or
conditions of the Note Purchase Agreement makes such terms
or conditions more restrictive to the Borrower than the
terms or conditions under this Credit Agreement, which
determination shall be made in the sole judgment of the
Agent reasonably exercised; provided, however, that the
Borrower shall not be required to amend or modify the terms
and conditions of this Agreement if any of the terms or
conditions set forth in Sections 8.6, 8.7, 8.9, 8.10, 8.12
or 8.15 of the Note Purchase Agreement as in effect on the
Restatement Closing Date are amended or modified to be more
restrictive.
SECTION 5.11. Relationship with Montgomery Ward
Direct. Conduct the relationship taken as a whole between
the Borrower and the Subsidiaries, on the one hand, and
Montgomery Ward Direct, on the other hand, upon fair and
reasonable terms no less favorable to the Borrower and the
Subsidiaries than the terms the Borrower and the
Subsidiaries could obtain or become entitled to in an arm's-
length transaction with a person other than Montgomery Ward
Direct.
ARTICLE VI
Negative Covenants
The Borrower covenants and agrees with each Lender
and the Agent that, so long as this Agreement shall remain
in effect, the principal of or interest on any Loan, any
Fees or any other expenses or amounts payable under any Loan
Document shall be unpaid or any Letter of Credit shall
remain outstanding, unless the Required Lenders shall other-
wise consent in writing, the Borrower will not, and will not
cause or permit any of the Subsidiaries to:
SECTION 6.01. Liens. Create, incur, assume or
permit to exist any Lien on any property or assets, includ-
ing stock or other securities of any person (other than
assets sold pursuant to the Receivables Transfer Program)
now owned or hereafter acquired or assign or convey any
rights to or security interests in any future revenue,
except:
(a) Liens on property or assets of the Borrower
and its Subsidiaries existing on the Restatement
Closing Date which (with the exception of existing
Liens consisting of the interests of lessors under
Capital Leases) are set forth in Schedule 6.01;
provided that such Liens shall secure only those
obligations which they secure on the Restatement
Closing Date;
(b) any Lien existing on any property or asset
prior to the acquisition thereof by the Borrower or any
Subsidiary; provided that (i) such Lien is not created
in contemplation of or in connection with such acquisi-
tion and (ii) such Lien does not apply to any other
property or assets of the Borrower or any Subsidiary;
(c) Liens for taxes not yet due or which are being
contested in compliance with Section 5.03 and judgment
liens securing judgments which have not given rise to
Events of Default;
(d) carriers', warehousemen's, mechanics', mate-
rialmen's, repairmen's or other like Liens arising in
the ordinary course of business and securing obliga-
tions that are not due or that are being contested in
compliance with Section 5.03;
(e) pledges and deposits made in the ordinary
course of business in compliance with workmen's compen-
sation, unemployment insurance and other social secur-
ity laws or regulations;
(f) deposits to secure the performance of bids,
trade contracts (other than for Indebtedness), leases
(other than Capital Lease Obligations), statutory
obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature incurred in the
ordinary course of business;
(g) zoning restrictions, easements, rights-of-way,
restrictions on use of real property and other similar
encumbrances incurred in the ordinary course of busi-
ness which, in the aggregate, are not substantial in
amount and do not materially detract from the value of
the property subject thereto or interfere with the
ordinary conduct of the business of the Borrower or any
of its Subsidiaries;
(h) other Liens to secure Indebtedness of the
Borrower and/or any Subsidiary, so long as after giving
effect thereto, the sum of (A) the aggregate
outstanding principal amount of Indebtedness secured by
Liens under this Section 6.01(h) and (B) the aggregate
outstanding capitalized amount of the obligations of
the Borrower and the Subsidiaries to pay rent or other
amounts as a result of all Sale-Leaseback Transactions
permitted under Section 6.02 does not exceed 25% of
Consolidated Net Worth at such time;
(i) the interest of any lessor under any Capital
Lease and purchase money security interests in real
property, improvements thereto or equipment hereafter
acquired (or, in the case of improvements, constructed)
by the Borrower or any Subsidiary and financed with
Indebtedness; provided that (i) such lessor's interests
or security interests secure only Indebtedness,
(ii) such security interests are incurred, and the
Indebtedness secured thereby is created, within 90 days
after such acquisition (or construction) and (iii) such
security interests do not apply to any other property
or assets;
(j) Liens created by the Collateral Documents; and
(k) Liens on property or assets of the MWD
Subsidiaries to secure Indebtedness of Montgomery Ward
Direct.
SECTION 6.02. Sale and Lease-Back Transactions.
Enter into any arrangement, directly or indirectly, with any
person whereby it shall sell or transfer any property, real
or personal, used or useful in its business, whether now
owned or hereafter acquired, and thereafter rent or lease
such property or other property which it intends to use for
substantially the same purpose or purposes as the property
being sold or transferred (a "Sale-Leaseback Transaction"),
except that the Borrower and the Subsidiaries at any time
may enter into any Sale-Leaseback Transaction so long as
after giving effect thereto, the sum of (a) the aggregate
outstanding capitalized amount of the obligations of the
Borrower and the Subsidiaries to pay rent or other amounts
as a result of such all Sale-Leaseback Transactions and
(b) the aggregate outstanding principal amount of
Indebtedness referred to in Section 6.01(h) does not exceed
25% of Consolidated Net Worth at such time.
SECTION 6.03. Mergers, Consolidations, Sales of
Assets and Acquisitions. Merge into or consolidate with any
other person, or permit any other person to merge into or
consolidate with it, or, except for sales of accounts
receivable pursuant to the Receivables Transfer Program,
sell, transfer, lease or otherwise dispose of (in one trans-
action or in a series of transactions) all or any sub-
stantial part of its assets (whether now owned or hereafter
acquired) or sell, transfer, lease or otherwise dispose of
any capital stock of any Subsidiary, or purchase, lease or
otherwise acquire (in one transaction or a series of trans-
actions) all or any substantial part of the assets of any
other person, except that:
(a) the Borrower and any Subsidiary may purchase
and sell inventory in the ordinary course of business;
(b) the Borrower may sell all or part of the
outstanding capital stock or assets of Figi's Inc.
and/or any of the subsidiaries of Figi's Inc. for
consideration at least equal to the fair market value
of the capital stock or assets being sold;
(c) if immediately after giving effect thereto no
Event of Default or Default shall have occurred and be
continuing (i) any wholly owned Subsidiary may
(A) merge or consolidate into the Borrower in a
transaction in which the Borrower is the surviving
corporation or (B) transfer assets to the Borrower and
(ii) any wholly owned Subsidiary may merge into or
consolidate with or transfer assets to or acquire
assets from any other wholly owned Subsidiary in a
transaction in which the surviving entity is a wholly
owned Subsidiary and no person other than the Borrower
or a wholly owned Subsidiary receives any consider-
ation;
(d) if at the time thereof and immediately after
giving effect thereto no Event of Default or Default
shall have occurred and be continuing, the Borrower or
any Subsidiary at any time may sell, transfer or
otherwise dispose of all or any part of the assets of
any Subsidiary (including the outstanding capital stock
of such Subsidiary) to any Person, provided that
(i) the consideration in respect of such sale is at
least equal to the fair market value of such assets and
(ii) the book value of such assets (or capital stock)
does not exceed 25% of Consolidated Net Worth at such
time;
(e) at any time when either of the MWD
Subsidiaries is a Significant Subsidiary, the Borrower
or any Subsidiary may sell, transfer or otherwise
dispose of all or substantially all of the assets of
such MWD Subsidiary (including the outstanding capital
stock of such MWD Subsidiary) to any Person for
consideration at least equal to the fair market value
of such assets so long as the portion of the proceeds
of such sale, transfer or disposition equal to the
aggregate amount of all outstanding advances, loans or
capital contributions (including the ownership of
Preferred Stock) (valued at net book value in the case
of contributions made in the form of assets) by the
Borrower or the Subsidiaries to the MWD Subsidiaries
shall be either (i) reinvested within one year after
the consummation of such sale, transfer or disposition
in other direct marketing businesses or (ii) applied,
within 180 days thereafter, to the prepayment of senior
Indebtedness of the Borrower;
(f) if at the time thereof and immediately after
giving effect thereto no Default or Event of Default
shall have occurred and be continuing and subject to
the further conditions set forth below, the Borrower or
any Subsidiary may acquire all or any part of the
assets or capital stock or equity interest of any other
person or may merge or consolidate with such person in
a transaction in which the Borrower or such Subsidiary
is the surviving corporation; provided, however, that
prior to the consummation of such transaction, the
Borrower shall have provided to the Agent a certificate
in reasonable detail demonstrating that such merger,
acquisition, or consolidation will not, on a pro forma
basis, cause a breach of the covenants contained in any
of Sections 6.05, 6.06, 6.07 or 6.08 hereof and will
not otherwise cause a breach of any other covenant
required to be performed or observed by the Borrower or
any Subsidiary hereunder; and
(g) if at the time thereof and immediately after
giving effect thereto no Event of Default or Default
shall have occurred and be continuing, the Borrower may
sell, contribute or otherwise dispose of all or a
portion of the outstanding capital stock of any of the
TV Shopping Companies or their joint ventures.
SECTION 6.04. Limitations on the MWD
Subsidiaries. Permit the MWD Subsidiaries to engage in any
business or business activity other than the ownership of
and activities directly related to their partnership
interests in Montgomery Ward Direct.
SECTION 6.05. EBIT Ratio. In the case of the
Borrower, permit the ratio of (a) Earnings before Interest
and Taxes for any period of 12 consecutive months to
(b) Consolidated Interest Expense for any period of 12
consecutive months to be less than the greater of (a) 3.0 to
1 or, if Section 8.8 (or any analogous provision) of the
Note Purchase Agreement is amended, any less restrictive
ratio that corresponds to the percentage set forth in such
Section 8.8 (it being understood that, for example, 3.0 to 1
corresponds to 300%) and (b) 2.5 to 1.
SECTION 6.06. Leverage Ratio. In the case of the
Borrower, permit the Leverage Ratio to exceed the lesser of
(a) 0.5 to 1 or, if Section 8.1(d) (or any analogous
provision) of the Note Purchase Agreement is amended, any
less restrictive ratio that corresponds to the percentage
set forth in such Section 8.1(d) (it being understood that,
for example, 0.5 to 1 corresponds to 50%) and (b) 0.6 to
1.0.
SECTION 6.07. Minimum Consolidated Net Worth. In
the case of the Borrower, permit Consolidated Net Worth at
any time to be less than $325,000,000.
SECTION 6.08. Funding Ratio. In the case of the
Borrower, permit the ratio of (a) the sum of Total
Liabilities and the Receivables Financing Amount to
(b) Consolidated Net Worth to be greater than 5.0 to 1.0.
SECTION 6.09. [INTENTIONALLY OMITTED].
SECTION 6.10. Limitations on Dividends. Permit
or place, or permit any Subsidiary to permit or place, any
restriction, directly or indirectly on (i) the payment of
dividends or other distributions by any Subsidiary to the
Borrower or (ii) the making of advances or other cash
payments by any Subsidiary to the Borrower, except, in
either case, as specifically set forth in (a) the Note
Purchase Agreement, (b) this Agreement and (c) as may be
required under a Receivables Transfer Program with respect
to the frequency of dividends from FRI.
SECTION 6.11. Limitations on Fingerhut
Receivables, Inc. Permit FRI to engage in any business or
business activity other than the purchasing, holding, owning
and selling of the Accounts of the Borrower and its
subsidiaries and any activities incidental to and necessary
or convenient for the accomplishment of such purposes.
ARTICLE VII
Events of Default
In case of the happening of any of the following
events ("Events of Default"):
(a) any representation or warranty made or deemed
made in or in connection with any Loan Document or the
borrowings hereunder, or any representation, warranty,
statement or information contained in any report,
certificate, financial statement or other instrument
furnished in connection with or pursuant to any Loan
Document, shall prove to have been false or misleading
in any respect material to the interests of the Lenders
when so made, deemed made or furnished;
(b) default shall be made in the payment of any
principal of any Loan when and as the same shall become
due and payable, whether at the due date thereof or at
a date fixed for prepayment thereof or by acceleration
thereof or otherwise, or default shall be made in the
payment of any reimbursement obligation in respect of
any Letter of Credit when and as the same shall become
due and payable;
(c) default shall be made in the payment of any
interest on any Loan or any Fee (other than an amount
referred to in (b) above) due under any Loan Document,
when and as the same shall become due and payable, and
such default shall continue unremedied for a period of
three Business Days;
(d) default shall be made in the due observance or
performance of any covenant, condition or agreement
contained in Section 5.01(a) (but only with respect to
the Borrower, any Guarantor or any Significant
Subsidiary), Section 5.05(a) or Article VI (other than
Section 6.01);
(e) default shall be made in the due observance or
performance of any covenant, condition or agreement
contained in Section 5.05(b), (c), (d) or (e) or Sec-
tion 6.01 and such default shall continue unremedied
for a period of 10 Business Days;
(f) default shall be made in the due observance or
performance of any covenant, condition or agreement
contained in any Loan Document (other than those
specified in clause (b), (c), (d) or (e) above) and
such default shall continue unremedied for a period of
30 Business Days after notice thereof from the Agent or
the Required Lenders to the Borrower;
(g) the Borrower or any Subsidiary shall (i) fail
to pay any principal or interest, regardless of amount,
due in respect of any Indebtedness in a principal
amount in excess of $10,000,000 or fail to pay any
amount in excess of $10,000,000 due in respect of any
Rate Protection Agreement, in each case when and as the
same shall become due and payable (after giving effect
to any applicable period of grace specified in the
instrument evidencing or governing such Indebtedness or
Rate Protection Agreement), or (ii) fail to observe or
perform any other term, covenant, condition or
agreement contained in any agreement or instrument evi-
dencing or governing any such Indebtedness in a
principal amount in excess of $10,000,000 after giving
effect to any applicable period of grace specified in
the instrument evidencing or governing such
Indebtedness, if the effect of any failure referred to
in this clause (ii) is to cause such Indebtedness to
become due prior to its stated maturity;
(h) (i) an event of default, termination event or
similar event shall occur which results in the
suspension or termination of the Borrower's ability to
sell receivables for cash pursuant to the Receivables
Transfer Program or (ii) the Borrower shall fail to
maintain the existence of the Receivables Transfer
Program for a period of 30 consecutive days other than
as a result of an event or condition described in
clause (i) of this paragraph (h).
(i) an involuntary proceeding shall be commenced
or an involuntary petition shall be filed in a court of
competent jurisdiction seeking (i) relief in respect of
the Borrower or any Subsidiary, or of a substantial
part of the property or assets of the Borrower or a
Subsidiary, under Title 11 of the United States Code,
as now constituted or hereafter amended, or any other
Federal or state bankruptcy, insolvency, receivership
or similar law, (ii) the appointment of a receiver,
trustee, custodian, sequestrator, conservator or
similar official for the Borrower or any Subsidiary or
for a substantial part of the property or assets of the
Borrower or a Subsidiary or (iii) the winding-up or
liquidation of the Borrower or any Subsidiary; and such
proceeding or petition shall continue undismissed for
60 days or an order or decree approving or ordering any
of the foregoing shall be entered;
(j) the Borrower or any Subsidiary shall (i) vol-
untarily commence any proceeding or file any petition
seeking relief under Title 11 of the United States
Code, as now constituted or hereafter amended, or any
other Federal or state bankruptcy, insolvency, receiv-
ership or similar law, (ii) consent to the institution
of, or fail to contest in a timely and appropriate
manner, any proceeding or the filing of any petition
described in paragraph (i) above, (iii) apply for or
consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar offi-
cial for the Borrower or any Subsidiary or for a sub-
stantial part of the property or assets of the Borrower
or any Subsidiary, (iv) file an answer admitting the
material allegations of a petition filed against it in
any such proceeding, (v) make a general assignment for
the benefit of creditors, (vi) become unable, admit in
writing its inability or fail generally to pay its
debts as they become due or (vii) take any action for
the purpose of effecting any of the foregoing;
(k) one or more judgments for the payment of money
in an aggregate amount in excess of $10,000,000 shall
be rendered against the Borrower, any Subsidiary or any
combination thereof (unless such judgment is covered by
insurance and the insurer has offered to defend such
judgment or acknowledged, in writing, its liability
with respect thereto) and the same shall remain undis-
charged for a period of 30 consecutive days during
which execution shall not be effectively stayed, or any
action shall be legally taken by a judgment creditor to
levy upon assets or properties of the Borrower or any
Subsidiary to enforce any such judgment (unless the
Borrower or Subsidiary, as applicable, has previously
established reserves under GAAP consistently applied
for the full amount of such judgment);
(l) a Reportable Event or Reportable Events, or a
failure to make a required installment or other payment
(within the meaning of Section 412(n)(1) of the Code)
shall have occurred with respect to any Plan or Plans
that reasonably could be expected to result in
liability of the Borrower to the PBGC or to a Plan in
an aggregate amount exceeding $10,000,000 and, within
30 days after the reporting of any such Reportable
Event to the Agent or after the receipt by the Agent of
the statement required pursuant to Section 5.05(b)(iii)
hereof, the Agent shall have notified the Borrower in
writing that (i) the Required Lenders have made a
determination that, on the basis of such Reportable
Event or Reportable Events or the failure to make a
required payment, there are reasonable grounds (A) for
the termination of such Plan or Plans by the PBGC,
(B) for the appointment by the appropriate United
States district court of a trustee to administer such
Plan or Plans or (C) for the imposition of a lien in
favor of a Plan and (ii) as a result thereof an Event
of Default exists hereunder; or a trustee shall be
appointed by a United States district court to
administer any such Plan or Plans; or the PBGC shall
institute proceedings (including giving notice of
intent thereof) to terminate any such Plan or Plans;
(m)(i) the Borrower or any ERISA Affiliate shall
have been notified by the sponsor of a Multiemployer
Plan that it has incurred Withdrawal Liability to such
Multiemployer Plan, (ii) the Borrower or such ERISA
Affiliate does not have reasonable grounds for
contesting such Withdrawal Liability or is not
contesting such Withdrawal Liability in a timely and
appropriate manner and (iii) the amount of such
Withdrawal Liability specified in such notice, when
aggregated with all other amounts required to be paid
to Multiemployer Plans in connection with Withdrawal
Liabilities (determined as of the date or dates of such
notification) either (A) exceeds $10,000,000 or
requires payments exceeding $5,000,000 in any year or
(B) is less than $10,000,000 but any Withdrawal
Liability payment remains unpaid 30 days after such
payment is due; or
(n) the Borrower or any ERISA Affiliate shall have
been notified by the sponsor of a Multiemployer Plan
that such Multiemployer Plan is in reorganization or is
being terminated, within the meaning of Title IV of
ERISA, if solely as a result of such reorganization or
termination the aggregate annual contributions of the
Borrower and its ERISA Affiliates to all Multiemployer
Plans that are then in reorganization or have been or
are being terminated have been or will be increased
over the amounts required to be contributed to such
Multiemployer Plans for their most recently completed
plan years by an amount exceeding $5,000,000; or
(o) unless such agreement has been terminated as
provided in Section 8.02, the Pledge Agreement, shall
not be in full force and effect, enforceable in
accordance with its terms, or the security interest
purported to be created by the Pledge Agreement shall
not be a valid and enforceable perfected first priority
security interest in any collateral subject thereto;
then, and in every such event (other than an event with
respect to the Borrower described in paragraph (i) or (j)
above), and at any time thereafter during the continuance of
such event, the Agent, at the request of the Required
Lenders, shall, by notice to the Borrower, take any of the
following actions, at the same or different times: (i) ter-
minate forthwith the Commitments; (ii) declare the Loans
then outstanding to be forthwith due and payable in whole or
in part, whereupon the principal of the Loans so declared to
be due and payable, together with accrued interest thereon
and any unpaid accrued Fees and all other liabilities of the
Borrower accrued hereunder and under any other Loan Docu-
ment, shall become forthwith due and payable, without
presentment, demand, protest or any other notice of any
kind, all of which are hereby expressly waived by the
Borrower, anything contained herein or in any other Loan
Document to the contrary notwithstanding and (iii) require
that the Borrower deposit cash with the Agent, in an amount
equal to the aggregate LC Exposure, as collateral security
for the repayment of any future drawings under the Letters
of Credit; and in any event with respect to the Borrower
described in paragraph (i) or (j) above, the Commitments
shall automatically terminate and the principal of the Loans
then outstanding, together with accrued interest thereon and
any unpaid accrued Fees and all other liabilities of the
Borrower accrued hereunder and under any other Loan Docu-
ment, shall automatically become due and payable, without
presentment, demand, protest or any other notice of any
kind, all of which are hereby expressly waived by the
Borrower, anything contained herein or in any other Loan
Document to the contrary notwithstanding, and the Borrower
shall forthwith be required to deposit cash with the Agent
in an amount equal to the aggregate LC Exposure or shall
deliver to the Agent a Replacement Letter of Credit drawable
without condition and in a face amount equal to the aggre-
gate LC Exposure and otherwise satisfactory in all respects
to the Agent, which Letter of Credit or cash deposit shall
serve as collateral security for the repayment of any
further drawings under the Letters of Credit.
ARTICLE VIII
Security Matters
SECTION 8.01. [INTENTIONALLY OMITTED].
SECTION 8.02. Termination of Security Interests.
If at any time the Purchasers shall authorize the Collateral
Agent to release any of the collateral securing the
Borrower's obligations under the Note Purchase Agreement,
the Collateral Agent shall, and is hereby authorized by the
Lenders to, release such collateral granted for the benefit
of the Lenders, whereupon the Collateral Agent shall take,
at the expense of the Borrower, any actions reasonably
requested by the Borrower in order to release such
collateral from the Liens created under the Collateral
Documents. The authorizations set forth in this
Section 8.02 shall be effective upon the satisfaction of the
conditions set forth herein and shall not require any
additional action by the Lenders or any other person at any
time.
ARTICLE IX
The Agent
In order to expedite the transactions contemplated
by this Agreement, Chemical Bank is hereby appointed to act
as Agent on behalf of the Lenders. Each of the Lenders, and
each subsequent holder of any Note by its acceptance
thereof, hereby irrevocably authorizes the Agent to take
such actions on behalf of such Lender or holder and to
exercise such powers as are specifically delegated to the
Agent by the terms and provisions hereof, together with such
actions and powers as are reasonably incidental thereto.
The Agent is hereby expressly authorized by the Lenders,
without hereby limiting any implied authority, (a) to
receive on behalf of the Lenders all payments of principal
of and interest on the Loans and all other amounts due to
the Lenders hereunder, and promptly to distribute to each
Lender its proper share of each payment so received; (b) to
give notice on behalf of each of the Lenders to the Borrower
of any Event of Default specified in this Agreement of which
the Agent has actual knowledge acquired in connection with
its agency hereunder; (c) to act as Collateral Agent on
behalf of the Lenders under the Collateral Documents and to
exercise all rights granted to the Collateral Agent under
the Collateral Documents; (d) to distribute to each Lender
copies of all notices, financial statements and other
materials delivered by the Borrower pursuant to this Agree-
ment as received by the Agent; and (e) take the actions it
is authorized to take pursuant to Section 8.02.
Neither the Agent nor any of its directors,
officers, employees or agents shall be liable as such for
any action taken or omitted by any of them except for its or
his own gross negligence or wilful misconduct, or be respon-
sible for any statement, warranty or representation herein
or the contents of any document delivered in connection
herewith, or be required to ascertain or to make any inquiry
concerning the performance or observance by the Borrower or
any Subsidiary of any of the terms, conditions, covenants or
agreements contained in any Loan Document. The Agent shall
not be responsible to the Lenders or the holders of the
Notes for the due execution, genuineness, validity, enforce-
ability or effectiveness of this Agreement, the Notes or any
other Loan Documents or other instruments or agreements.
The Agent may deem and treat the payee of any Note as the
owner thereof for all purposes hereof until it shall have
received from the payee of such Note notice, given as
provided herein, of the transfer thereof in compliance with
Section 11.04. The Agent shall in all cases be fully
protected in acting, or refraining from acting, in accor-
dance with written instructions signed by the Required
Lenders and, except as otherwise specifically provided
herein, such instructions and any action or inaction pursu-
ant thereto shall be binding on all the Lenders and each
subsequent holder of any Note. The Agent shall, in the
absence of knowledge to the contrary, be entitled to rely on
any instrument or document believed by it in good faith to
be genuine and correct and to have been signed or sent by
the proper person or persons. Neither the Agent nor any of
its directors, officers, employees or agents shall have any
responsibility to the Borrower on account of the failure of
or delay in performance or breach by any Lender of any of
its obligations hereunder or to any Lender on account of the
failure of or delay in performance or breach by any other
Lender or the Borrower of any of their respective obliga-
tions hereunder or under any other Loan Document or in
connection herewith or therewith. The Agent may execute any
and all duties hereunder by or through agents or employees
and shall be entitled to rely upon the advice of legal
counsel selected by it with respect to all matters arising
hereunder and shall not be liable for any action taken or
suffered in good faith by it in accordance with the advice
of such counsel.
The Lenders hereby acknowledge that the Agent
shall be under no duty to take any discretionary action
permitted to be taken by it pursuant to the provisions of
this Agreement unless it shall be requested in writing to do
so by the Required Lenders.
Subject to the appointment and acceptance of a
successor Agent as provided below, (i) the Agent may resign
at any time by notifying the Lenders, the Issuing Banks and
the Borrower and (ii) the Agent, at the request of the
Borrower and with the consent of the Required Lenders (which
consent shall not be unreasonably withheld) shall resign.
Upon any such resignation, the Borrower shall have the right
to appoint a successor, subject to the approval of the
Required Lenders (which approval shall not be unreasonably
withheld). If no successor shall have been so appointed by
the Borrower and approved by the Required Lenders and shall
have accepted such appointment within 30 days after the
retiring Agent gives notice of its resignation or the
Required Lenders consent to the resignation of the Agent,
then (i) the retiring Agent may, on behalf of the Lenders,
appoint a successor Agent, if the Agent shall have resigned
by notifying the Lenders or (ii) otherwise, the Required
Lenders may appoint a successor Agent to replace the
terminated Agent, in each case which successor shall be a
bank with an office in New York, New York, having a combined
capital and surplus of at least $500,000,000 or an Affiliate
of any such bank. Upon the acceptance of any appointment as
Agent hereunder by a successor bank, such successor shall
succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent and the retiring
Agent shall be discharged from its duties and obligations
hereunder. After the Agent's resignation hereunder, the
provisions of this Article and Section 11.05 shall continue
in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as Agent.
With respect to the Loans made by it, the Notes
issued to it and the Letter of Credit participations
acquired by it hereunder, the Agent in its individual
capacity and not as Agent shall have the same rights and
powers as any other Lender and may exercise the same as
though it were not the Agent, and the Agent and its Affili-
ates may accept deposits from, lend money to and generally
engage in any kind of business with the Borrower or any
Subsidiary or other Affiliate thereof as if it were not the
Agent.
Each Lender agrees (i) to reimburse the Agent, on
demand, in the amount of its pro rata share (based on its
Commitment hereunder) of any expenses incurred for the
benefit of the Lenders by the Agent, including counsel fees
and compensation of agents and employees paid for services
rendered on behalf of the Lenders, which shall not have been
reimbursed by the Borrower and (ii) to indemnify and hold
harmless the Agent and any of its directors, officers,
employees or agents, on demand, in the amount of such pro
rata share, from and against any and all liabilities, taxes,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or
asserted against it in its capacity as the Agent or any of
them in any way relating to or arising out of this Agreement
or any other Loan Document or any action taken or omitted by
it or any of them under this Agreement or any other Loan
Document, to the extent the same shall not have been reim-
bursed by the Borrower; provided that no Lender shall be
liable to the Agent for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the
gross negligence or wilful misconduct of the Agent or any of
its directors, officers, employees or agents.
Each Lender acknowledges that it has, indepen-
dently and without reliance upon the Agent or any other
Lender and based on such documents and information as it has
deemed appropriate, made its own credit analysis and deci-
sion to enter into this Agreement. Each Lender also acknow-
ledges that it will, independently and without reliance upon
the Agent or any other Lender and based on such documents
and information as it shall from time to time deem appropri-
ate, continue to make its own decisions in taking or not
taking action under or based upon this Agreement or any
other Loan Document, any related agreement or any document
furnished hereunder or thereunder.
The provisions of this Article IX and Sec-
tion 11.05 applicable to the Agent shall also apply, mutatis
mutandis, to the Collateral Agent. Each Lender acknowledges
that it has authorized, without qualification, the Colla-
teral Agent to enter into the Pledge Agreement and hereby
appoints and authorizes the Collateral Agent to act as
Collateral Agent on their behalf and to deliver and perform
the Pledge Agreement.
ARTICLE X
Guarantee
To induce the Lenders to make the Loans, the Issu-
ing Banks to issue the Letters of Credit for the account of
the Borrower and the Subsidiaries and the Lenders to acquire
participations in the Letters of Credit, the Guarantor
hereby unconditionally and irrevocably guarantees, as a
primary obligor and not merely as a surety, the due and
punctual payment and performance of all Obligations. The
Guarantor hereby agrees that its guarantee of the
Obligations shall be joint and several with the guarantee of
any Subsidiary which becomes a Guarantor pursuant to
Section 5.08. All payments by the Guarantor shall be in
lawful money of the United States of America. Each and
every default in payment of the principal of and premium, if
any, or interest on any Obligations shall give rise to a
separate cause of action hereunder, and separate suits may
be brought hereunder as each cause of action arises.
The Guarantor waives presentation to, demand of
payment from and protest to the Borrower of any of the
Obligations, and also waives notice of acceptance of this
Guarantee and notice of protest for nonpayment and all other
formalities. The obligations of the Guarantor hereunder
shall not be discharged or impaired or otherwise affected by
(a) the failure or delay of any Lender, the Agent or the
Collateral Agent to assert any claim or demand or to enforce
any right or remedy against the Borrower, the Guarantor or
any other person under the provisions of any Loan Document
or otherwise; (b) any extension or renewal of any of the
Obligations; (c) any rescission, waiver, amendment or
modification of any of the terms or provisions of any Loan
Document, any guarantee or any other agreement or instru-
ment; (d) the release of (or the failure to perfect a
security interest in) any security held by the Agent, the
Collateral Agent or any Lender for the performance of any of
the Obligations; (e) the failure or delay of any Lender, the
Agent or the Collateral Agent to exercise any right or
remedy against any other Guarantor or any other guarantor of
the Obligations; (f) the release of any other Guarantor;
(g) the failure of any Lender to assert any claim or demand
or to enforce any remedy under any Loan Document, any
guarantee or any other agreement or instrument; (h) any
default, failure or delay, wilful or otherwise, in the
performance of the Obligations; or (i) any other act,
omission or delay to do any other act which may or might in
any manner or to any extent vary the risk of the Guarantor
or otherwise operate as a discharge of the Guarantor as a
matter of law or equity or which would impair or eliminate
any right of the Guarantor to subrogation.
The Guarantor further agrees that this Guarantee
constitutes a guarantee of payment when due and not of
collection, and waives any right to require that any resort
be had by any Lender to any security held for payment of the
Obligations or to any balance of any deposit account or
credit on the books of such Lender in favor of the Borrower
or any other person. The Lenders, in their sole discretion,
shall have the right to proceed first and directly against
the Guarantor.
The obligations of the Guarantor hereunder shall
not be subject to any reduction, limitation, impairment or
termination for any reason, including any claim of waiver,
release, surrender, alteration or compromise, and shall not
be subject to any defense or setoff, counterclaim,
recoupment or termination whatsoever by reason of the
invalidity, illegality or unenforceability of the
Obligations or otherwise.
The Guarantor further agrees that this Guarantee
shall continue to be effective or be reinstated, as the case
may be, if at any time any payment, or any part thereof, on
any Obligation is rescinded or must otherwise be restored by
any Lender upon the bankruptcy or reorganization of the
Borrower or otherwise.
In furtherance of the foregoing and not in limita-
tion of any other right which the Agent or any Lender may
have at law or in equity against the Guarantor by virtue
hereof, upon the failure of the Borrower to pay any Obliga-
tion when and as the same shall become due, whether at
maturity, by acceleration, prepayment or otherwise, the
Guarantor hereby promises to and will, upon receipt of
written demand by any Lender, forthwith pay, or cause to be
paid, to the Agent for distribution to the Lenders in cash
an amount equal to the sum of (i) the unpaid principal
amount of such Obligations then due, (ii) accrued and unpaid
interest on such Obligations and (iii) all other monetary
Obligations then due, and thereupon the Lenders shall,
unless such assignment would result in the Guarantor being a
"creditor" of the Borrower within the meaning of Section 547
of Title 11 of the United States Code as now in effect or
hereafter amended or any comparable provision of any
successor statute, assign (without recourse or warranty of
any kind) such Obligations owed to it and paid by the
Guarantor, together with their rights in respect of all
security interests in the property and assets of the Bor-
rower, if any, then held by them in respect of such Obliga-
tions, to the Guarantor, such assignment to be pro tanto to
the extent to which the Obligations in question were dis-
charged by the Guarantor, or make such other disposition
thereof as the Guarantor shall direct (all without recourse
to any Lender and without any representation or warranty by
such Lender).
Upon payment by the Guarantor of any sums to the
Lenders hereunder, all rights of the Guarantor against the
Borrower arising as a result thereof shall in all respects
be subordinate and junior in right of payment to the prior
indefeasible payment in full of all the Obligations and, if
any payment shall be made to the Guarantor on account of
such rights prior to the indefeasible payment in full of all
the Obligations, such payment shall forthwith be paid to the
Lenders to be credited and applied against the Obligations
to the extent necessary to discharge such Obligations.
The Guarantor waives notice of and hereby consents
to any agreements or arrangements whatsoever by the Lenders
with any other person pertaining to the Obligations,
including agreements and arrangements for payment, exten-
sion, subordination, composition, arrangement, discharge or
release of the whole or any part of the Obligations, or for
the discharge or surrender of any or all security, or for
compromise, whether by way of acceptance of part payment or
otherwise, and the same shall in no way impair the Guaran-
tor's liability hereunder. Nothing shall discharge or
satisfy the liability of the Guarantor hereunder except the
full performance and payment of the Obligations.
Each reference herein to the Lenders or a Lender
shall be deemed to include their or its successors and
assigns, in whose favor the provisions of this Guarantee
shall also inure.
If at any time the Purchasers shall release any of
the guarantors guaranteeing the obligations of the Borrower
under the Note Purchase Agreement, and such guarantor is a
Guarantor hereunder at such time, such Guarantor shall be,
and is hereby without further action by the Lenders or any
other person, released from the guarantee provided in this
Article X (or in any other document, in the case of a
Subsidiary that becomes a Guarantor after the Restatement
Closing Date).
The obligations of each Guarantor under this
Article X shall automatically terminate upon (a) any
disposition, in compliance with the terms of Section 6.03,
by the Borrower, directly or indirectly, of capital stock of
such Guarantor following which disposition such Guarantor is
no longer a Subsidiary or (b) any sale, in compliance with
the terms of Section 6.03, of all or substantially all of
the assets of such Guarantor that results in such Guarantor
no longer being a Significant Subsidiary.
ARTICLE XI
Miscellaneous
SECTION 11.01. Notices. Notices and other com-
munications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service,
mailed or sent by telecopier, as follows:
(a) if to the Borrower, to it at 4400 Baker Road,
Minnetonka, Minnesota 55343, Attention of Chief Finan-
cial Officer (Telecopy No. 612-932-3750);
(b) if to the Agent, to it at Chemical Bank Agency
Services Corporation, Grand Central Tower, 140 East
45th Street, New York, NY 10017, Attention: Christopher
Moriarty and, in the case of Competitive Bid matters,
Terri Reilly (Telecopy No. 212-622-0002 and, in the
case of Competitive Bid matters, 212-622-0003), with a
copy to Chemical Securities Inc., Ten South LaSalle
Street, Suite 2300, Chicago, Illinois 60603-1097,
Attention of Steven J. Faliski (Telecopy No. (312)
443-1964); and
(c) if to a Lender, to it at its address (or tele-
copy number) set forth in Schedule 2.01 or in the
Assignment and Acceptance pursuant to which such Lender
became a party hereto.
All notices and other communications given to any party
hereto in accordance with the provisions of this Agreement
shall be deemed to have been given on the date of receipt if
delivered by hand or overnight courier service or sent by
telecopy or other telegraphic communications equipment of
the sender, or on the date five Business Days after dispatch
by certified or registered mail if mailed, in each case
delivered, sent or mailed (properly addressed) to such party
as provided in this Section 11.01 or in accordance with the
latest unrevoked direction from such party given in
accordance with this Section 11.01.
SECTION 11.02. Survival of Agreement. All cove-
nants, agreements, representations and warranties made by
the Borrower herein and in the certificates or other instru-
ments prepared or delivered in connection with or pursuant
to this Agreement or any other Loan Document shall be
considered to have been relied upon by the Lenders and shall
survive the making by the Lenders of the Loans, and the
execution and delivery to the Lenders of the Notes evidenc-
ing such Loans, regardless of any investigation made by the
Lenders or on their behalf, and shall continue in full force
and effect as long as the principal of or any accrued
interest on any Loan or any Fee or any other amount payable
under this Agreement or any other Loan Document is outstand-
ing and unpaid and so long as the Commitments have not been
terminated.
SECTION 11.03. Binding Effect. This Agreement
shall become effective when it shall have been executed by
the Borrower, the Agent and each Lender and thereafter shall
be binding upon and inure to the benefit of the Borrower,
the Agent and each Lender and their respective successors
and assigns, except that the Borrower shall not have the
right to assign its rights hereunder or any interest herein
without the prior consent of all the Lenders.
SECTION 11.04. Successors and Assigns.
(a) Whenever in this Agreement any of the parties hereto is
referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the Borrower, the
Agent or the Lenders that are contained in this Agreement
shall bind and inure to the benefit of their respective
successors and assigns.
(b) Each Lender may assign to one or more assign-
ees all or a portion of its interests, rights and obliga-
tions under this Agreement (including all or a portion of
its Commitment and the Loans at the time owing to it and the
Notes held by it); provided, however, that (i) except in the
case of an assignment to a Lender or an Affiliate of such
Lender, the Borrower, the Issuing Banks and the Agent must
give their prior written consent to such assignment (which
consent, in each case, shall not be unreasonably withheld),
(ii) the amount of the Commitment of the assigning Lender
subject to each such assignment (determined as of the date
the Assignment and Acceptance with respect to such
assignment is delivered to the Agent) shall not be less than
$5,000,000 (or, if less, the then-remaining Commitment of
the assigning Lender) and the amount of the Commitment of
such Lender remaining after such assignment shall not be
less than $10,000,000 or shall be zero, (iii) the parties to
each such assignment shall execute and deliver to the Agent
an Assignment and Acceptance, together with the Note or
Notes subject to such assignment and a processing and
recordation fee of $3,000 (to be paid by the assignee or the
assignor) and (iv) the assignee, if it shall not be a
Lender, shall deliver to the Agent an Administrative
Questionnaire. Upon acceptance and recording pursuant to
paragraph (e) of this Section 11.04, from and after the
effective date specified in each Assignment and Acceptance,
which effective date shall be at least five Business Days
after the execution thereof, (A) the assignee thereunder
shall be a party hereto and, to the extent of the interest
assigned by such Assignment and Acceptance, have the rights
and obligations of a Lender under this Agreement and (B) the
assigning Lender thereunder shall, to the extent of the
interest assigned by 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 Lender shall cease to
be a party hereto (but shall continue to be entitled to the
benefits of Sections 2.13, 2.16, 2.20 and 11.05, as well as
to any Fees accrued for its account hereunder and not yet
paid)). Notwithstanding the foregoing, any Lender assigning
its rights and obligations under this Agreement may retain
any Competitive Loans made by it outstanding at such time,
and in such case shall retain its rights hereunder in
respect of any Loans so retained until such Loans have been
repaid in full in accordance with this Agreement.
(c) By executing and delivering an Assignment and
Acceptance, the assigning Lender thereunder and the assignee
thereunder shall be deemed to confirm to and agree with each
other and the other parties hereto as follows: (i) such
assigning Lender warrants that it is the legal and benefi-
cial owner of the interest being assigned thereby free and
clear of any adverse claim and that its Commitment, and the
outstanding balances of its Standby Loans and Competitive
Loans, in each case without giving effect to assignments
thereof which have not become effective, are as set forth in
such Assignment and Acceptance, (ii) except as set forth in
(i) above, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in
connection with this Agreement, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value
of this Agreement, any other Loan Document or any other
instrument or document furnished pursuant hereto or the
financial condition of the Borrower or any Subsidiary or the
performance or observance by the Borrower or any Subsidiary
of any of its obligations under this Agreement, any other
Loan Document or any other instrument or document furnished
pursuant hereto; (iii) such assignee represents and warrants
that it is legally authorized to enter into such Assignment
and Acceptance; (iv) such assignee confirms that it has
received a copy of this Agreement, together with copies of
the most recent financial statements delivered pursuant to
Section 5.04 and such other documents and information as it
has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance;
(v) such assignee will independently and without reliance
upon the Agent, such assigning Lender 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
decisions in taking or not taking action under this Agree-
ment; (vi) such assignee appoints and authorizes the Agent
to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the
Agent by the terms hereof, together with such powers as are
reasonably incidental thereto; and (vii) such assignee
agrees that it will perform in accordance with their terms
all the obligations which by the terms of this Agreement are
required to be performed by it as a Lender.
(d) The Agent shall maintain at one of its
offices in the City of New York a copy of each Assignment
and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and
the Commitment of, and principal amount of the Loans owing
to, each Lender pursuant to the terms hereof from time to
time (the "Register"). The entries in the Register shall be
conclusive in the absence of manifest error and the Bor-
rower, the Agent and the Lenders may treat each person whose
name is recorded in the Register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agree-
ment. The Register shall be available for inspection by the
Borrower and any Lender, at any reasonable time and from
time to time upon reasonable prior notice.
(e) Upon its receipt of a duly completed Assign-
ment and Acceptance executed by an assigning Lender and an
assignee together with the Note or Notes subject to such
assignment, an Administrative Questionnaire completed in
respect of the assignee (unless the assignee shall already
be a Lender hereunder), the processing and recordation fee
referred to in paragraph (b) above and, if required, the
written consent of the Borrower and the Agent to such
assignment, the Agent shall (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in
the Register and (iii) give prompt notice thereof to the
Lender and the Issuing Banks. Within five Business Days
after receipt of notice, the Borrower, at its own expense,
shall execute and deliver to the Agent, in exchange for the
surrendered Standby Notes, (x) new Competitive Notes to the
order of such assignee in an amount equal to the Total
Commitment and new Standby Notes to the order of such
assignee in an amount equal to the portion of the Commitment
assumed by it pursuant to such Assignment and Acceptance
and, (y) if the assigning Lender has retained Commitment,
Standby Notes to the order of such assigning Lender in a
principal amount equal to the applicable Commitment retained
by it. Such new Standby Notes shall be in an aggregate
principal amount equal to the aggregate principal amount of
such surrendered Standby Notes; such new Notes shall be
dated the date of the surrendered Notes which they replace
and shall otherwise be in substantially the form of
Exhibits B-1 and B-2 hereto, as appropriate. Canceled
Standby Notes shall be returned to the Borrower.
(f) Each Lender may without the consent of the
Borrower or the Agent sell participations to one or more
banks or other entities in all or a portion of its rights
and obligations under this Agreement (including all or a
portion of its Commitment and the Loans owing to it and the
Notes held by it); provided, however, that (i) such Lender's
obligations under this Agreement shall remain unchanged,
(ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obliga-
tions, (iii) the participating banks or other entities shall
be entitled to the benefit of the cost protection provisions
contained in Sections 2.13 and 2.16 limited, as to each
participant, to the amount the selling Lender could claim
and (iv) the Borrower, the Agent and the other Lenders shall
continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under
this Agreement, and such Lender shall retain the sole right
to enforce the obligations of the Borrower relating to the
Loans and to approve any amendment, modification or waiver
of any provision of this Agreement (other than amendments,
modifications or waivers decreasing any fees payable hereun-
der or the amount of principal of or the rate at which
interest is payable on the Loans, or extending any scheduled
principal payment date or date fixed for the payment of
principal of or interest on the Loans).
(g) Any Lender or participant may, in connection
with any assignment or participation or proposed assignment
or participation pursuant to this Section 11.04, disclose to
the assignee or participant or proposed assignee or partici-
pant any information relating to the Borrower furnished to
such Lender by or on behalf of the Borrower; provided that,
prior to any such disclosure of information designated by
the Borrower as confidential, each such assignee or partici-
pant or proposed assignee or participant shall execute an
agreement whereby such assignee or participant shall agree
(subject to customary exceptions) to preserve the confiden-
tiality of such confidential information. It is understood
that confidential information relating to the Borrower would
not ordinarily be provided in connection with assignments or
participations of Competitive Loans.
(h) Any Lender may at any time assign all or any
portion of its rights under this Agreement and the Notes
issued to it to a Federal Reserve Bank; provided, however,
that no such assignment shall release a Lender from any of
its obligations hereunder.
(i) The Borrower shall not assign or delegate any
of its respective rights and duties hereunder.
SECTION 11.05. Expenses; Indemnity. (a) The
Borrower agrees to pay all reasonable out-of-pocket expenses
incurred by the Agent in connection with the preparation of
this Agreement and the other Loan Documents or in connection
with any amendments, modifications or waivers of the provi-
sions hereof or thereof (whether or not the transactions
hereby contemplated shall be consummated) or incurred by the
Agent, Issuing Banks or any Lender in connection with the
enforcement or protection of their rights in connection with
this Agreement and the other Loan Documents or in connection
with the Loans made or the Notes issued hereunder, including
the reasonable fees and disbursements of Cravath, Swaine &
Moore, counsel for the Agent, and, in connection with any
such amendment, modification or waiver, the fees and dis-
bursements of any common counsel, and, in connection with
any such enforcement or protection, the fees and
disbursements of any counsel for the Agent or any Lender.
The Borrower further agrees that it shall indemnify the
Agent, the Issuing Bank and the Lenders from and hold them
harmless against any documentary taxes, assessments or
charges made by any Governmental Authority by reason of the
execution and delivery of this Agreement or any of the other
Loan Documents.
(b) The Borrower agrees to indemnify the Agent,
the Issuing Banks, each Lender and their directors,
officers, employees and agents (each such person being
called an "Indemnitee") against, and to hold each Indemnitee
harmless from, any and all losses, claims, damages,
liabilities and related expenses, including reasonable
counsel fees and expenses, incurred by or asserted against
any Indemnitee arising out of, in any way connected with, or
as a result of (i) the execution or delivery of this
Agreement or any other Loan Document or any agreement or
instrument contemplated thereby, the performance by the
parties thereto of their respective obligations thereunder
or the consummation of the Transactions and the other
transactions contemplated thereby, (ii) the use of the
proceeds of the Loans or (iii) any claim, litigation,
investigation or proceeding relating to any of the fore-
going, whether or not any Indemnitee is a party thereto;
provided, however, that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses,
claims, damages, liabilities or related expenses are deter-
mined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the gross
negligence or wilful misconduct of such Indemnitee; provided
further, however, that the Borrower will only be liable for
the fees of a single firm which shall act as common counsel
for the Lenders, except in the case where (i) a Lender
reasonably determines based upon the written advice of legal
counsel, a copy of which shall be provided to the Borrower,
in its judgment that having common counsel would present
such counsel with a conflict of interest, (ii) a Lender
reasonably concludes that there may be legal defenses
available to it that are different from or in addition to
those available to other Lenders or (iii) defense of any
action or proceeding is not assumed by the Lenders.
(c) The provisions of this Section 11.05 shall
remain operative and in full force and effect regardless of
the expiration of the term of this Agreement, the consumma-
tion of the transactions contemplated hereby, the repayment
of any of the Loans, the invalidity or unenforceability of
any term or provision of this Agreement or any other Loan
Document, or any investigation made by or on behalf of the
Agent or any Lender. All amounts due under this Sec-
tion 11.05 shall be payable on written demand therefor
accompanied by evidence in reasonable detail sufficient to
identify the nature and amount of the expense so incurred.
SECTION 11.06. Right of Setoff. If an Event of
Default shall have occurred and be continuing, each Lender
is hereby authorized at any time and from time to time, to
the fullest extent permitted by law, to set off and apply
any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebted-
ness at any time owing by such Lender to or for the credit
or the account of the Borrower against any of and all the
obligations of the Borrower now or hereafter existing under
this Agreement and other Loan Documents held by such Lender,
irrespective of whether or not such Lender shall have made
any demand under this Agreement or such other Loan Document
and although such obligations may be unmatured. The rights
of each Lender under this Section are in addition to other
rights and remedies (including other rights of setoff) which
such Lender may have. Each Lender agrees promptly to notify
the Borrower of any such setoff and the application thereof
made by such Lender.
SECTION 11.07. Applicable Law. THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS SHALL BE CONSTRUED IN ACCOR-
DANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK.
SECTION 11.08. Waivers; Amendment. (a) No
failure or delay of the Agent, the Issuing Bank or any
Lender in exercising any power or right hereunder shall
operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and
remedies of the Agent, the Issuing Bank and the Lenders
hereunder and under the other Loan Documents are cumulative
and are not exclusive of any rights or remedies which they
would otherwise have. No waiver of any provision of this
Agreement or any other Loan Document or consent to any
departure by the Borrower therefrom shall in any event be
effective unless the same shall be permitted by para-
graph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose
for which given. No notice or demand on the Borrower in any
case shall entitle the Borrower to any other or further
notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision
hereof may be waived, amended or modified except pursuant to
an agreement or agreements in writing entered into by the
Borrower and the Required Lenders; provided, however, that
no such agreement shall (i) decrease the principal amount
of, or extend the maturity of or any scheduled principal
payment date or date for the payment of any interest on any
Loan, or waive or excuse any such payment or any part
thereof, or decrease the rate of interest on any Loan,
without the prior written consent of each Lender affected
thereby, (ii) change the Commitment or decrease the Facility
Fee of any Lender without the prior written consent of such
Lender, (iii) amend or modify the provisions of Sec-
tion 2.17, the provisions of this Section or the definition
of the "Required Lenders", without the prior written consent
of each Lender, (iv) release or otherwise limit or modify
the obligations of any Guarantor (except as provided in
Article X) or (v) release any of the collateral securing the
Obligations (except as provided in Section 8.02) without the
written consent of each Lender; provided further that no
such agreement shall amend, modify or otherwise affect the
rights or duties of the Agent hereunder without the prior
written consent of the Agent. Each Lender and each holder
of a Note shall be bound by any waiver, amendment or
modification authorized by this Section regardless of
whether its Note shall have been marked to make reference
thereto, and any consent by any Lender or holder of a Note
pursuant to this Section shall bind any person subsequently
acquiring a Note from it, whether or not such Note shall
have been so marked.
SECTION 11.09. Interest Rate Limitation. Not-
withstanding anything herein or in the Notes to the con-
trary, if at any time the applicable interest rate, together
with all fees and charges which are treated as interest
under applicable law (collectively, the "Charges"), as
provided for herein or in any other document executed in
connection herewith, or otherwise contracted for, charged,
received, taken or reserved by any Lender, shall exceed the
maximum lawful rate (the "Maximum Rate") which may be
contracted for, charged, taken, received or reserved by such
Lender in accordance with applicable law, the rate of
interest payable under the Note held by such Lender, toge-
ther with all Charges payable to such Lender, shall be
limited to the Maximum Rate.
SECTION 11.10. Entire Agreement. This Agreement
and the other Loan Documents and the letter agreement
referred to in Section 2.06 constitute the entire contract
between the parties relative to the subject matter hereof.
Any previous agreement among the parties with respect to the
subject matter hereof is superseded by this Agreement and
the other Loan Documents. Nothing in this Agreement or in
the other Loan Documents, expressed or implied, is intended
to confer upon any party other than the parties hereto and
thereto any rights, remedies, obligations or liabilities
under or by reason of this Agreement or the other Loan
Documents.
SECTION 11.11. Waiver of Jury Trial. Each party
hereto hereby waives, to the fullest extent permitted by
applicable law, any right it may have to a trial by jury in
respect of any litigation directly or indirectly arising out
of, under or in connection with this Agreement or any of the
other Loan Documents. Each party hereto (a) certifies that
no representative, agent or attorney of any other party has
represented, expressly or otherwise, that such other party
would not, in the event of litigation, seek to enforce the
foregoing waiver and (b) acknowledges that it and the other
parties hereto have been induced to enter into this Agree-
ment and the other Loan Documents, as applicable, by, among
other things, the mutual waivers and certifications in this
Section 11.11.
SECTION 11.12. Severability. In the event any
one or more of the provisions contained in this Agreement or
in any other Loan Document should be held invalid, illegal
or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein
and therein shall not in any way be affected or impaired
thereby. The parties shall endeavor in good-faith negotia-
tions to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 11.13. Counterparts. This Agreement may
be executed in two or more counterparts, each of which shall
constitute an original but all of which when taken together
shall constitute but one contract, and shall become effec-
tive as provided in Section 11.03.
SECTION 11.14. Headings. The cover page, the
Article and Section headings and the Table of Contents used
herein are for convenience of reference only, are not part
of this Agreement and are not to affect the construction of,
or to be taken into consideration in interpreting, this
Agreement.
SECTION 11.15. Jurisdiction; Consent to Service
of Process. (a) Each of the parties hereto agrees that a
final judgment in any New York State court or any Federal
court of the United States of America sitting in New York
City shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any
right that any party hereto may have to bring any action or
proceeding relating to this Agreement or the other Loan
Documents in the courts of any jurisdiction.
(b) The Borrower and each Guarantor hereby
irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection
which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to
this agreement or the other Loan Documents in any New York
State or Federal court. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law,
the defense of an inconvenient forum to the maintenance of
such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably con-
sents to service of process in the manner provided for
notices in Section 11.01. Nothing in this Agreement will
affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
SECTION 11.16. Confidentiality. Unless otherwise
agreed to in writing by the Borrower, the Agent and each
Lender hereby agree to keep all Proprietary Information (as
defined below) confidential and not to disclose or reveal
any Proprietary Information to any person other than the
Agent's or such Lender's directors, officers, employees,
Affiliates and agents and to actual or potential assignees
and participants, and then only on a confidential basis;
provided, however, that the Agent or any Lender may disclose
Proprietary Information (a) as required by law, rule,
regulation or judicial process, (b) to its attorneys and
accountants or (c) as requested or required by any state or
Federal or foreign authority or examiner regulating banks or
banking. For purposes of this Agreement, the term "Proprie-
tary Information" shall include all information about the
Borrower or any of its Affiliates which has been furnished
by the Borrower or any of its Affiliates, whether furnished
before or after the date hereof, and regardless of the
manner in which it is furnished; provided, however, that
Proprietary Information does not include information which
(x) is or becomes generally available to the public other
than as a result of a disclosure by the Agent or any Lender
not permitted by this Agreement, (y) was available to the
Agent or any Lender on a nonconfidential basis prior to its
disclosure to the Agent or such Lender by the Borrower or
any of its Affiliates from a person who, to the best
knowledge of the Agent or such Lender, as the case may be,
is not otherwise bound by a confidentiality agreement with
the Company or any of its Affiliates or is not otherwise
prohibited from transmitting the information to the Agent or
such Lender or (z) becomes available to the Agent or any
Lender on a nonconfidential basis from a person other than
the Borrower or its Affiliates who is not otherwise bound by
a confidentiality agreement with the Company or any of its
Affiliates, or is not otherwise prohibited from transmitting the
information to the Agent or such Lender.
IN WITNESS WHEREOF, the Borrower, the Agent, the
Guarantors and the Lenders have caused this Agreement to be
duly executed by their respective authorized officers as of
the day and year first above written.
FINGERHUT COMPANIES, INC., as
Borrower,
by
Name:
Title:
by
Name:
Title:
FINGERHUT CORPORATION, as a
Guarantor,
by
Name:
Title:
CHEMICAL BANK, individually and as
Agent and an Issuing Bank,
by
Name:
Title:
BANCA COMMERCIALE ITALIANA-CHICAGO
BRANCH,
by
Name:
Title:
Name:
Title:
BANK OF AMERICA ILLINOIS, as
successor through acquisition of
and merger with Continental Bank,
individually and as an Issuing
Bank,
by
Name:
Title:
THE BANK OF NEW YORK,
by
Name:
Title:
THE BANK OF NOVA SCOTIA,
by
Name:
Title:
THE BANK OF TOKYO TRUST COMPANY,
by
Name:
Title:
COMMERZBANK AKTIENGESELLSCHAFT,
Grand Cayman Branch,
by
Name:
Title:
by
Name:
Title:
DEUTSCHE GENOSSENSCHAFTSBANK-CAYMAN
ISLAND BRANCH,
by
Name:
Title:
by
Name:
Title:
THE FIRST NATIONAL BANK OF BOSTON,
by
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
by
Name:
Title:
FIRST BANK NATIONAL ASSOCIATION,
individually and as an Issuing
Bank,
by
Name:
Title:
THE FUJI BANK, LIMITED,
CHICAGO BRANCH,
by
Name:
Title:
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, CHICAGO BRANCH,
by
Name:
Title:
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, CHICAGO BRANCH,
by
Name:
Title:
NATIONSBANK OF NORTH CAROLINA,
N.A., individually and as Co-Agent,
by
Name:
Title:
NORDDEUTSCHE LANDESBANK
GIROZENTRALE-NEW YORK and/or CAYMAN
ISLAND BRANCH,
by
Name:
Title:
by
Name:
Title:
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, individually and as an
Issuing Bank,
by
Name:
Title:
THE SUMITOMO BANK, LTD.,
CHICAGO BRANCH,
by
Name:
Title:
UNION BANK OF SWITZERLAND, CHICAGO
BRANCH,
by
Name:
Title:
by
Name:
Title:
THE YASUDA TRUST AND BANKING CO.,
LIMITED,
by
Name:
Title:
CREDIT LYONNAIS CHICAGO BRANCH,
by
Name:
Title:
CREDIT LYONNAIS CAYMAN ISLAND
BRANCH,
by
Name:
Title:
CAISSE NATIONALE DE CREDIT
AGRICOLE,
by
Name:
Title:
DEUTSCHE BANK AG-CHICAGO and/or
CAYMAN ISLAND BRANCH,
by
Name:
Title:
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA,
by
Name:
Title:
THE MITSUBISHI BANK, LIMITED
(CHICAGO BRANCH),
by
Name:
Title:
NBD BANK, N.A.,
by
Name:
Title:
THE SAKURA BANK, LIMITED,
by
Name:
Title:
Exhibit 11
FINGERHUT COMPANIES, INC. AND SUBSIDIARIES
Computation of Earnings Per Share
(In thousands of dollars, except per share data)
Unaudited
Thirteen Weeks Ended Thirty-Nine Weeks Ended
Sept. 30, Sept. 24, Sept. 30, Sept. 24,
1994 1993 1994 1993
Primary
Net earnings (a) $ 7,087 $ 13,759 $ 33,252 $ 34,499
Weighted average shares of
common stock outstanding 46,307,929 46,078,698 46,288,077 45,981,468
Common stock equivalents 4,076,930 4,176,035 4,309,668 3,915,707
Weighted average shares of
common stock and common
stock equivalents (b) 50,384,859 50,254,733 50,597,745 49,897,175
Primary earnings per share
of common stock and common
stock equivalents (a/b) $ .14 $ .27 $ .66 $ .69
Fully diluted
Net earnings (c) $ 7,087 $ 13,759 $ 33,252 $ 34,499
Weighted average shares of
common stock outstanding 46,307,929 46,078,698 46,288,077 45,981,468
Common stock equivalents 4,122,952 4,291,086 4,328,132 4,291,086
Weighted average shares of
common stock and common
stock equivalents (d) 50,430,881 50,369,784 50,616,209 50,272,554
Fully diluted earnings per
share of common stock and
common stock equivalents
(c/d) $ .14 $ .27 $ .66 $ .69
Common stock equivalents for primary earnings per share are computed
by the treasury stock method using the average market price.
Common stock equivalents for quarterly fully diluted earnings per
share are computed by the treasury stock method using the ending
market price, average market price for the last month or the average
of the fully diluted monthly amounts used in the quarter, whichever
is higher.
Common stock equivalents for year-to-date fully diluted earnings per
share are computed by the treasury stock method using the ending
market price or the average of the fully diluted monthly amounts used
in the period, whichever is higher.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Financial Statements of Fingerhut Companies, Inc. as of and
for the period ended September 30, 1994, and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-30-1994
<PERIOD-END> SEP-30-1994
<CASH> 41,961
<SECURITIES> 0
<RECEIVABLES> 426,528
<ALLOWANCES> 110,930
<INVENTORY> 176,561
<CURRENT-ASSETS> 695,968
<PP&E> 277,192
<DEPRECIATION> 75,990
<TOTAL-ASSETS> 1,013,262
<CURRENT-LIABILITIES> 250,638
<BONDS> 246,589
<COMMON> 463
0
0
<OTHER-SE> 501,298
<TOTAL-LIABILITY-AND-EQUITY> 1,013,262
<SALES> 1,094,974
<TOTAL-REVENUES> 1,237,620
<CGS> 545,500
<TOTAL-COSTS> 1,133,823
<OTHER-EXPENSES> 33,310
<LOSS-PROVISION> 144,715
<INTEREST-EXPENSE> 19,132
<INCOME-PRETAX> 51,355
<INCOME-TAX> 18,103
<INCOME-CONTINUING> 33,252
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 33,252
<EPS-PRIMARY> .66
<EPS-DILUTED> .66
</TABLE>
