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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A
AMENDMENT NO.1 TO CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 3, 1996
CONSOLIDATED STORES CORPORATION
(Exact name of registrant as specified in its charter)
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Delaware 1-8897 06-1119097
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(State or other jurisdiction (Commission File Number) (IRS Identification No.)
of incorporation)
1105 North Market Street, Suite 1300
P. O. Box 8985
Wilmington, DE 19899
(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code: (302) 478-4896
Not applicable
(Former name or former address, if changed since last report.)
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Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit
No. Description
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10 Amendment No. 1 to Stock Purchase Agreement dated as of March 25,
1996 between Melville Corporation and Consolidated Stores
Corporation relating to the purchase and sales of 100% of the Common
Stock of Kay-Bee Center, Inc. (Stock Purchase Agreement dated March
25, 1996 filed as Exhibit B to the Company's Current Report on Form
8-K dated April 8, 1996 and incorporated herein by reference)
10(a) $600,000,000 Revolving Credit Facility dated as of May 3, 1996 by
and among Consolidated Stores Corporation, an Ohio corporation (the
"Borrower"), the BANKS (as defined), and The Bank of New York, in
its capacity as Syndication Agent and as Managing Agent, National
City Bank of Columbus, in its capacity as Administrative Agent
("Administrative Agent") and as Managing Agent, PNC Bank, Ohio,
National Association, in its capacity as Arranger, as Documentation
Agent (the "Documentation Agent") and as Managing Agent , Bank One,
Columbus, N.A., in its capacity as Managing Agent, and National City
Bank in its capacity as Managing Agent
10(b) Consolidated Stores Corproation 7% Senior Subordinated Note due May
4, 2000
10(b)(i) Indenture, dated as of May 5, 1996, between Consolidated Stores
Corporation, an Ohio corporation, and The Bank of New York, a New
York banking corporation (the "Trustee") for the equal and ratable
benefit of the Holders of the Company's Subordinated Notes due May
4, 2000
10(c) Short Term Loan Agreement dated as of May 3, 1996 among Consolidated
Stores Corporation as Borrower, The Initial Lenders named therein,
as Initial Lenders, and Merrill Lynch Capital Corporation, as Agent
10(c)(i) Parent Guaranty dated as of May 3, 1996 from Consolidated Stores
Corporation, as Guarantor in favor of The Lenders Party to the
Short Term Loan Agreement and Merrill Lynch Capital Corporation, as
Agent
10(c)(ii) Subsidiary Guaranty dated as of May 3, 1996 from the Guarantors
Named Therein, as Guarantors in favor of The Lenders Party to the
Short Term Loan Agreement and Merrill Lynch Capital Corporation, as
Agent
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CONSOLIDATED STORES CORPORATION
Dated: May 10, 1996 By: /s/ Michael J. Potter
----------------------------
Michael J. Potter
Sr. Vice President and Chief
Financial Officer
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AMENDMENT NO. 1
TO
STOCK PURCHASE AGREEMENT
AMENDMENT NO. 1 dated as of May 3, 1996 between Consolidated Stores
Corporation, a Delaware corporation ("Buyer"), and Melville Corporation, a New
York corporation ("Seller").
WHEREAS, the parties hereto have previously entered into the Stock Purchase
Agreement dated as of March 25, 1996 (the "Agreement"); and
WHEREAS, the parties hereto desire to supplement and amend the provisions
of the Agreement in the manner set forth in this Amendment.
NOW THEREFORE, in consideration of the mutual agreements contained herein
and other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. Terms used herein and not otherwise defined herein shall
have the meanings set forth in the Agreement.
ARTICLE 2
AMENDMENT
2.1 Preamble. Section (ii) of the fourth "Whereas" clause of the Agreement
is hereby amended by deleting the number "100" in the phrase "100 shares of
common stock" and substituting therefor the number "1", and by deleting the word
"shares" and substituting therefor the word "share".
2.2 Schedules.
(a) Schedules 2.3, 3.18 and 5.6 of the Agreement are hereby deleted in
their entirety and replaced by Schedules 2.3, 3.18 and 5.6 attached to this
Amendment, respectively.
(b) Schedule 3.6 of the Agreement is hereby amended by removing the number
"100" and substituting therefor the number "1" in the row describing K&K
Kay-Bee, Inc.
Exhibit 10 Page 1
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(c) Schedule 3.12 of the Agreement is hereby amended by deleting item no. 2
in its entirety by redesignating item no. 3 as item no. "2" and by adding the
following items:
"3. A store in North Ridge, California, was damaged in the Southern
California earthquake. In connection with repairs to the
premises, the Landlord caused approximately $400,000 of damage to
the store. Insurance has covered approximately $90,000 of the
damage. The Company may initiate an action against the Landlord
to recover the remaining amount of damages.
4. A trade dress infringement civil action, No. 96 Cv 1103, by Fundamental
Too, Inc. was filed against Kay-Bee Toy & Hobby Shops, Inc.
relating to the manufacture and sale of the "Currency Can" at the
Company's stores."
(d) Item no. 1 of Schedule 3.14 of the Agreement is hereby amended by
deleting all references to the Leases with Store nos. 247, 769, 1732, 7084, 7480
and 8611.
(e) Item no. 9 of Schedule 5.1 of the Agreement is hereby amended by adding
in numerical order "3, 281, 362, 381, 396, 403, 423, 500, 640, 761, 765, 814,
887, 1179, 1758, 7016 and 7745".
(f) Schedule 7.5 of the Agreement is hereby amended by adding "#7480" in
numerical order to the list of Closed Store Leases.
2.3 Section 2.2. The first sentence of Section 2.2 is hereby deleted in its
entirety and replaced by the following sentence:
"The closing (the "Closing") of the purchase and sale of the Shares
hereunder shall take place at the offices of Davis Polk &
Wardwell, 450 Lexington Avenue, New York, New York at 10:00 a.m.
on May 4, 1996, effective as of 12:01 a.m. on May 5, 1996, or at
such other place or time as Buyer and Seller may agree."
2.4 Section 2.3(a). Section 2.3(a) of the Agreement is hereby amended by
deleting the number "14" in the sixth sentence and substituting therefor the
number "21".
2.5 Section 5.1. Section 5.1 of the Agreement is hereby amended by deleting
"Schedule 5.1" and substituting therefor the phrase "Schedules 5.1 and 7.5".
2.6 Section 9.3(a). Section 9.3(a) is hereby amended by:
(i) in clause (i), deleting the number "2" in the phrase "item no. 2"
and substituting therefor the number "3";
Exhibit 10 Page 2
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(ii) in clause (ii), deleting the number "3" in the phrase "item no. 3"
and substituting therefor the number "2";
(iii) inserting at the beginning of the last sentence the phrase "Except
as provided in the next succeeding sentence,"; and
(iv) inserting the following at the end thereof:
"In connection with any payment required to be made pursuant to Section 2.4
or, in the event that no such payment is required, within 90 days
of the Closing Date, (I) Buyer shall pay in cash to Seller an
amount equal to 50% of the severance amount payable by Seller
under clause (i) above in the case of Alan Fine and (II) Seller
shall pay in cash to Buyer an amount equal to 50% of the
severance amount payable by Buyer under clause (i) above in the
case of John Hendrix and Patti Ippoliti; provided that the
amounts payable pursuant to clauses (I) and (II) may be netted
against each other. With respect to Alan Fine, John Hendrix and
Patti Ippoliti, Seller shall retain all obligations and
liabilities (other than the severance payments described above)
under their respective severance agreements, including without
limitation, obligations and liabilities with respect to stock
options and relocation costs; provided that Buyer shall be
responsible for any continuing medical and dental benefit
coverage for John Hendrix and Patti Ippoliti."
2.7 Section 9.3(b). Section 9.3(b) of the Agreement is hereby amended by
inserting immediately before the period at the end of such Section, "including,
without limitation, Alan Fine".
2.8 Section 11.3. Section 11.3 of the Agreement is hereby amended by (i)
inserting the phrase "or any other contract or agreement to which the Company or
any Subsidiary is a party and in respect of which Melville or one of its
Affiliates is a guarantor" immediately after the phrase "(other than a
Terminated Lease)" and (ii) inserting the phrase "or any such other contract or
agreement" immediately before the word "occurring".
ARTICLE 3
SUPPLEMENTAL PROVISIONS
3.1 Representations and Warranties. For purposes of satisfying the
condition set forth in Section 10.2(i)(B), the parties hereto agree that, as of
the Closing Date:
(i) item no. 8 of Schedule 3.14, which discloses the list of Stores
being operated on a month-to-month basis, shall be deemed to have
been amended by deleting the following stores, as such stores are no
longer occupying their locations on a month-to-month basis: 44, 140,
319, 325, 361, 390, 422, 473, 701, 769, 771, 817, 7480, 7629, 7906,
8210 and 8647; and shall be deemed to have been
Exhibit 10 Page 3
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amended by adding the following stores, as such stores are now
occupying their locations on a month-to-month basis: 28, 48, 142,
393, 835 and 7555.
(ii) Seller has not, as of the Closing Date, delivered to Buyer true and
complete copies of each of the material contracts disclosed in item
no. 2 of Schedule 3.11 and Buyer hereby agrees to waive such
obligation.
ARTICLE 4
MISCELLANEOUS
4.1 Incorporation by Reference. The provisions of Article 13 of the
Agreement shall be incorporated by reference herein and each reference therein
to the Agreement shall apply to this Amendment as if this Amendment were
referred to therein.
4.2 Effect on Agreement. Except to the extent amended or supplemented as
set forth in this Amendment, all provisions of the Agreement are and shall
remain in full force and effect and are hereby ratified and confirmed in all
respects, and the execution, delivery and effectiveness of this Agreement shall
not operate as a waiver or amendment of any provision of the Agreement not
specifically amended or supplemented by this Amendment.
Exhibit 10 Page 4
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective authorized officers as of the date and year
first above written.
MELVILLE CORPORATION
By
-----------------------------
Name:
Title:
CONSOLIDATED STORES CORPORATION
By
-----------------------------
Name:
Title:
Exhibit 10 Page 5
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EXHIBIT 10(a)
$600,000,000 REVOLVING CREDIT FACILITY
CREDIT AGREEMENT
by and among
CONSOLIDATED STORES CORPORATION, an Ohio corporation, as Borrower
and
THE BANKS PARTY HERETO
and
THE BANK OF NEW YORK, As Syndication Agent and Managing Agent
and
NATIONAL CITY BANK OF COLUMBUS, As Administrative Agent and Managing Agent
and
PNC BANK, OHIO, NATIONAL ASSOCIATION, As Arranger, Documentation Agent
and Managing Agent
and
BANK ONE, COLUMBUS, N.A., as Managing Agent
and
NATIONAL CITY BANK, as Managing Agent
Dated as of May 3, 1996
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TABLE OF CONTENTS
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1. CERTAIN DEFINITIONS........................................................................................... 1
1.1 Certain Definitions....................................................................................... 1
1.2 Construction.............................................................................................. 18
1.2.1 Number; Inclusion.................................................................................... 18
1.2.2 Determination........................................................................................ 18
1.2.3 Documentation Agent's Discretion and Consent......................................................... 18
1.2.4 Documents Taken as a Whole........................................................................... 18
1.2.5 Headings............................................................................................. 18
1.2.6 Implied References to this Agreement................................................................. 19
1.2.7 Persons.............................................................................................. 19
1.2.8 Modifications to Documents........................................................................... 19
1.2.9 From, To and Through................................................................................. 19
1.2.10 Shall; Will......................................................................................... 19
1.3 Accounting Principles..................................................................................... 19
2. REVOLVING CREDIT FACILITY..................................................................................... 20
2.1 Revolving Credit Commitments.............................................................................. 20
2.2 Nature of Banks' Obligations with Respect to Revolving Credit Loans....................................... 20
2.3 Commitment Fees........................................................................................... 20
2.4 Reduction of Commitments.................................................................................. 21
2.4.1 Voluntary Reduction of Commitments................................................................... 21
2.4.2 Mandatory Reduction of Commitments................................................................... 22
2.5 Revolving Credit Loan Requests............................................................................ 23
2.6 Making Revolving Credit Loans............................................................................. 23
2.7 Revolving Credit Notes.................................................................................... 24
2.8 Use of Proceeds........................................................................................... 24
2.9 Letters of Credit Subfacility............................................................................. 24
2.9.1 Issuance of Letters of Credit........................................................................ 24
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2.9.2 Participations....................................................................................... 25
2.9.3 Letter of Credit Fees................................................................................ 26
2.9.3.1 Documentary Letter of Credit Fees............................................................... 26
2.9.3.2 Standby Letter of Credit Fees................................................................... 27
2.9.4 Disbursements, Reimbursement......................................................................... 28
2.9.5 Documentation........................................................................................ 29
2.9.6 Determinations to Honor Drawing Requests............................................................. 29
2.9.7 Nature of Participation and Reimbursement Obligations................................................ 29
2.9.8 Indemnity............................................................................................ 31
2.9.9 Liability for Acts and Omissions..................................................................... 31
2.10 Swing Loans.............................................................................................. 32
2.10.1 Swing Loan Commitment............................................................................... 32
2.10.2 Swing Loan Requests................................................................................. 32
2.10.3 Making of Swing Loans............................................................................... 33
2.10.4 Swing Note.......................................................................................... 33
2.10.5 Repayment of Swing Loans with Revolving Credit Loans Borrowings..................................... 33
2.11 Expiration Date; Extension of Expiration Date............................................................ 34
3. INTEREST RATES................................................................................................ 34
3.1 Interest Rate Options..................................................................................... 34
3.1.1 Revolving Credit Interest Rate Options............................................................... 34
3.2 Interest Periods.......................................................................................... 36
3.2.1 Ending Date and Business Day......................................................................... 36
3.2.2 Amount of Borrowing Tranche.......................................................................... 36
3.2.3 Termination Before Expiration Date................................................................... 36
3.2.4 Renewals............................................................................................. 36
3.2.5 Limitation on Interest Periods during Syndication.................................................... 36
3.3 Interest After Default.................................................................................... 37
3.3.1 Letter of Credit Fees, Interest Rate................................................................. 37
3.3.2 Other Obligations.................................................................................... 37
3.3.3 Acknowledgment....................................................................................... 37
3.4 Euro-Rate Unascertainable................................................................................. 37
3.4.1 Unascertainable...................................................................................... 37
3.4.2 Illegality; Increased Costs; Deposits Not Available.................................................. 37
3.4.3 Administrative Agent's and Bank's Rights............................................................. 38
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3.5 Selection of Interest Rate Options........................................................................ 39
4. PAYMENTS...................................................................................................... 39
4.1 Payments.................................................................................................. 39
4.2 Pro Rata Treatment of Banks............................................................................... 40
4.3 Interest Payment Dates.................................................................................... 40
4.4 Voluntary Prepayments..................................................................................... 40
4.4.1 Right to Prepay...................................................................................... 40
4.5 Mandatory Prepayments..................................................................................... 41
4.5.1 Sale of Assets....................................................................................... 41
4.5.2 Prepayment from Proceeds of Equity or Subordinated Bridge Facility................................... 42
4.5.3 Payment to Reduce Revolving Credit Loans Made Pursuant to Section 2.9.4.............................. 42
4.5.4 Payment to Reduce Revolving Credit Loans if Commitments are Reduced
Pursuant to Section 2.4.2(ii).............................................................................. 42
4.5.5 Application Among Interest Rate Options.............................................................. 42
4.6 Additional Compensation in Certain Circumstances.......................................................... 43
4.6.1 Increased Costs or Reduced Return Resulting From Taxes, Reserves, Capital
Adequacy Requirements, Expenses, Etc....................................................................... 43
4.6.2 Indemnity............................................................................................ 44
5. REPRESENTATIONS AND WARRANTIES................................................................................ 45
5.1 Representations and Warranties............................................................................ 45
5.1.1 Organization and Qualification....................................................................... 45
5.1.2 Capitalization and Ownership......................................................................... 45
5.1.3 Subsidiary Matters................................................................................... 45
5.1.4 Power and Authority.................................................................................. 46
5.1.5 Validity and Binding Effect.......................................................................... 46
5.1.6 No Conflict.......................................................................................... 46
5.1.7 Litigation........................................................................................... 46
5.1.8 Title to Properties.................................................................................. 47
5.1.9 Financial Statements................................................................................. 47
5.1.10 Margin Stock........................................................................................ 48
5.1.11 Full Disclosure..................................................................................... 48
5.1.12 Taxes............................................................................................... 49
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5.1.13 Consents and Approvals.............................................................................. 49
5.1.14 No Event of Default; Compliance with Instruments.................................................... 49
5.1.15 Patents, Trademarks, Copyrights, Licenses, Etc...................................................... 49
5.1.16 Insurance........................................................................................... 50
5.1.17 Compliance with Laws................................................................................ 50
5.1.18 Material Contracts.................................................................................. 50
5.1.19 Investment Companies................................................................................ 50
5.1.20 Plans and Benefit Arrangements...................................................................... 50
5.1.21 Employment Matters.................................................................................. 52
5.1.22 Environmental Matters............................................................................... 53
5.1.23 Senior Debt Status.................................................................................. 55
5.2 Subsidiaries Other than Material Subsidiaries............................................................. 55
5.3 Acquisition Closing....................................................................................... 55
5.4 Updates to Schedules...................................................................................... 56
6. CONDITIONS OF LENDING......................................................................................... 56
6.1 First Revolving Credit Loans.............................................................................. 56
6.1.1 Officer's Certificate................................................................................ 56
6.1.2 Secretary's Certificate.............................................................................. 57
6.1.3 Delivery of Loan Documents........................................................................... 57
6.1.4 Delivery of Certain Other Financing Documents........................................................ 58
6.1.5 Opinion of Counsel................................................................................... 58
6.1.6 Legal Details........................................................................................ 58
6.1.7 Payment of Fees...................................................................................... 58
6.1.8 Acquisition.......................................................................................... 58
6.1.9 Consents............................................................................................. 59
6.1.10 Officer's Certificate Regarding MACs................................................................ 59
6.1.11 No Violation of Laws................................................................................ 59
6.1.12 No Actions or Proceedings........................................................................... 59
6.1.13 Insurance Policies; Certificates of Insurance....................................................... 59
6.1.14 Termination of Existing Bank Facility............................................................... 59
6.2 Each Additional Revolving Credit Loan..................................................................... 60
7. COVENANTS..................................................................................................... 60
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7.1 Affirmative Covenants..................................................................................... 60
7.1.1 Preservation of Existence, Etc....................................................................... 60
7.1.2 Payment of Liabilities, Including Taxes, Etc......................................................... 60
7.1.3 Maintenance of Insurance............................................................................. 61
7.1.4 Maintenance of Properties and Leases................................................................. 61
7.1.5 Maintenance of Patents, Trademarks, Etc.............................................................. 61
7.1.6 Visitation Rights.................................................................................... 62
7.1.7 Keeping of Records and Books of Account.............................................................. 62
7.1.8 Plans and Benefit Arrangements....................................................................... 62
7.1.9 Compliance with Laws................................................................................. 62
7.1.10 Use of Proceeds..................................................................................... 62
7.1.11 Interest Rate Protection............................................................................ 63
7.1.12 Subordination of Intercompany Loans................................................................. 63
7.1.13 Retirement of Private Placement Notes............................................................... 63
7.2 Negative Covenants........................................................................................ 63
7.2.1 Indebtedness......................................................................................... 63
7.2.2 Liens................................................................................................ 64
7.2.3 Guaranties........................................................................................... 64
7.2.4 Loans and Investments................................................................................ 65
7.2.5 Dividends and Related Distributions.................................................................. 65
7.2.6 Liquidations, Mergers, Consolidations, Acquisitions.................................................. 66
7.2.7 Dispositions of Assets or Subsidiaries............................................................... 66
7.2.8 Affiliate Transactions............................................................................... 67
7.2.9 Subsidiaries, Partnerships and Joint Ventures........................................................ 67
7.2.10 Continuation of or Change in Business............................................................... 67
7.2.11 Plans and Benefit Arrangements...................................................................... 68
7.2.12 Fiscal Year......................................................................................... 69
7.2.13 Issuance of Stock................................................................................... 69
7.2.14 Changes in Organizational Documents................................................................. 69
7.2.15 Capital Expenditures and Leases..................................................................... 69
7.2.16 Minimum Fixed Charge Coverage Ratio................................................................. 70
7.2.17 Total Indebtedness to Total Capitalization Ratio.................................................... 71
7.2.18 Minimum Tangible Net Worth.......................................................................... 72
7.2.19 Minimum Working Capital Ratio....................................................................... 72
7.2.20 Amendments to Certain Documents..................................................................... 72
7.2.21 Outstanding Revolving Credit Loans.................................................................. 73
7.2.22 No Prepayment of Subordinated Debt.................................................................. 73
7.2.23 Inventory Purchases................................................................................. 73
7.2.24 Acquisition Closing................................................................................. 73
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7.3 Reporting Requirements.................................................................................... 74
7.3.1 Quarterly Financial Statements....................................................................... 74
7.3.2 Annual Financial Statements.......................................................................... 74
7.3.3 Certificate of the Borrower.......................................................................... 75
7.3.4 Notice of Default.................................................................................... 75
7.3.5 Notice of Litigation................................................................................. 75
7.3.6 Certain Events....................................................................................... 75
7.3.7 Budgets, Forecasts, Other Reports and Information.................................................... 76
7.3.8 Notices Regarding Plans and Benefit Arrangements..................................................... 77
7.3.8.1 Certain Events.................................................................................. 77
7.3.8.2 Notices of Involuntary Termination and Annual Reports........................................... 78
7.3.8.3 Notice of Voluntary Termination................................................................. 78
8. DEFAULT....................................................................................................... 79
8.1 Events of Default......................................................................................... 79
8.1.1 Payments Under Loan Documents........................................................................ 79
8.1.2 Breach of Warranty................................................................................... 79
8.1.3 Breach of Negative Covenants......................................................................... 79
8.1.4 Breach of Other Covenants............................................................................ 79
8.1.5 Defaults in Other Agreements or Indebtedness......................................................... 79
8.1.6 Final Judgments or Orders............................................................................ 80
8.1.7 Loan Document Unenforceable.......................................................................... 80
8.1.8 Notice of Lien or Assessment......................................................................... 80
8.1.9 Insolvency........................................................................................... 81
8.1.10 Events Relating to Plans and Benefit Arrangements................................................... 81
8.1.11 Cessation of Business............................................................................... 81
8.1.12 Change of Control................................................................................... 82
8.1.13 Involuntary Proceedings............................................................................. 82
8.1.14 Voluntary Proceedings............................................................................... 82
8.2 Consequences of Event of Default.......................................................................... 83
8.2.1 Events of Default Other Than Bankruptcy, Insolvency or Reorganization
Proceedings................................................................................................ 83
8.2.2 Bankruptcy, Insolvency or Reorganization Proceedings................................................. 83
8.2.3 Set-off.............................................................................................. 83
8.2.4 Suits, Actions, Proceedings.......................................................................... 84
8.2.5 Application of Proceeds.............................................................................. 84
8.2.6 Other Rights and Remedies............................................................................ 85
8.3 Notice of Sale............................................................................................ 85
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9. THE MANAGING AGENTS........................................................................................... 85
9.1 Appointment............................................................................................... 85
9.2 Delegation of Duties...................................................................................... 86
9.3 Nature of Duties; Independent Credit Investigation........................................................ 86
9.4 Actions in Discretion of Documentation Agent and Administrative Agent;
Instructions from the Banks................................................................................... 87
9.5 Reimbursement and Indemnification of Administrative Agent and Documentation
Agent by the Borrower......................................................................................... 87
9.6 Exculpatory Provisions.................................................................................... 88
9.7 Reimbursement and Indemnification by Banks of the Documentation Agent, the
Managing Agents, the Syndication Agent and the Administrative Agent........................................... 88
9.8 Reliance by Documentation Agent, Administrative Agent, Managing Agents and
Syndication Agent............................................................................................. 89
9.9 Notice of Default......................................................................................... 89
9.10 Notices.................................................................................................. 90
9.11 Banks in Their Individual Capacities..................................................................... 90
9.12 Holders of Revolving Credit Notes........................................................................ 90
9.13 Equalization of Banks.................................................................................... 90
9.14 Successor Administrative and Documentation Agents........................................................ 91
9.15 Other Fees............................................................................................... 92
9.16 Availability of Funds.................................................................................... 92
9.17 Calculations............................................................................................. 92
9.18 Beneficiaries............................................................................................ 92
9.19 Absence of Duties of Managing Agents and Syndication Agent............................................... 93
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10. MISCELLANEOUS................................................................................................ 93
10.1 Modifications, Amendments or Waivers..................................................................... 93
10.1.1 Increase of Commitment; Extension or Expiration Date................................................ 93
10.1.2 Extension of Payment; Reduction of Principal Interest or Fees; Modification
of Terms of Payment........................................................................................ 93
10.1.3 Release of Guarantor................................................................................ 93
10.1.4 Miscellaneous....................................................................................... 94
10.2 No Implied Waivers; Cumulative Remedies; Writing Required................................................ 94
10.3 Reimbursement and Indemnification of Banks by the Borrower; Taxes........................................ 94
10.4 Holidays................................................................................................. 95
10.5 Funding by Branch, Subsidiary or Affiliate............................................................... 95
10.5.1 Notional Funding.................................................................................... 95
10.5.2 Actual Funding...................................................................................... 96
10.6 Notices.................................................................................................. 96
10.7 Severability............................................................................................. 97
10.8 Governing Law............................................................................................ 97
10.9 Prior Understanding...................................................................................... 97
10.10 Duration; Survival...................................................................................... 97
10.11 Successors and Assigns.................................................................................. 98
10.12 Confidentiality......................................................................................... 99
10.13 Counterparts............................................................................................ 99
10.14 Documentation Agent's or Bank's Consent................................................................. 99
10.15 Exceptions.............................................................................................. 99
10.16 CONSENT TO FORUM; WAIVER OF JURY TRIAL.................................................................. 100
10.17 Tax Withholding Clause.................................................................................. 100
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10.18 Joinder of Guarantors................................................................................... 101
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LIST OF SCHEDULES AND EXHIBITS
SCHEDULE
SCHEDULE 1.1(B) - COMMITMENTS OF BANKS
SCHEDULE 1.1(P) - PERMITTED LIENS
SCHEDULE 2.9.1 ROLLOVER LCS
SCHEDULE 5.1.1 - SUBSIDIARIES
SCHEDULE 5.1.3 - SUBSIDIARY MATTERS
SCHEDULE 5.1.13 - CONSENTS AND APPROVALS
SCHEDULE 5.1.18 - MATERIAL CONTRACTS
SCHEDULE 5.1.20 - EMPLOYEE BENEFIT PLAN DISCLOSURES
SCHEDULE 5.1.22 - ENVIRONMENTAL DISCLOSURES
SCHEDULE 7.2.1 - EXISTING INDEBTEDNESS
SCHEDULE 7.2.4 - LOANS AND INVESTMENTS
EXHIBITS
EXHIBIT 1.1(A) FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT 1.1(G)(2) - FORM OF MASTER GUARANTY AGREEMENT
EXHIBIT 1.1(I)(1) FORM OF INTERCOMPANY NOTE
EXHIBIT 1.1(I)(2) - FORM OF MASTER INTERCOMPANY SUBORDINATION
AGREEMENT
EXHIBIT 1.1(R) - FORM OF REVOLVING CREDIT NOTE
EXHIBIT 1.1(S)(1) FORM OF SWING LOAN NOTE
EXHIBIT 2.5 - FORM OF LOAN REQUEST
EXHIBIT 2.10.2 FORM OF SWING LOAN REQUEST
EXHIBIT 6.1.5 - OPINION OF COUNSEL
EXHIBIT 7.3.3 - FORM OF COMPLIANCE CERTIFICATE
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT is dated as of May 3, 1996 and is made
by and among CONSOLIDATED STORES CORPORATION, an Ohio corporation (the
"Borrower"), the BANKS (as hereinafter defined), and THE BANK OF NEW YORK, in
its capacity as Syndication Agent and as Managing Agent, NATIONAL CITY BANK OF
COLUMBUS, in its capacity as Administrative Agent ("Administrative Agent") and
as Managing Agent, PNC BANK, OHIO, NATIONAL ASSOCIATION, in its capacity as
Arranger, as Documentation Agent (the "Documentation Agent") and as Managing
Agent , BANK ONE, COLUMBUS, N.A., in its capacity as Managing Agent, and
NATIONAL CITY BANK in its capacity as Managing Agent.
WITNESSETH:
WHEREAS, the Borrower has requested a revolving credit
facility in an aggregate principal amount of $600,000,000; and
WHEREAS, the Banks which have executed this Agreement as of
May 3, 1996 are willing to provide a revolving credit facility not to exceed
$600,000,000; and
WHEREAS, such revolving credit facility is to be used to fund
a portion of the Borrower's acquisition of Kay-Bee Center, Inc. and for certain
other general corporate purposes (including working capital);
WHEREAS, the Banks are willing to provide such credit upon the
terms and conditions hereinafter set forth.
NOW, THEREFORE, the parties hereto, in consideration of their
mutual covenants and agreements hereinafter set forth and intending to be
legally bound hereby, covenant and agree as follows:
1. CERTAIN DEFINITIONS
1.1 Certain Definitions.
In addition to words and terms defined elsewhere in this
Agreement, the following words and terms shall have the following meanings,
respectively, unless the context hereof clearly requires otherwise:
Acquisition shall mean the acquisition of 100% of the
common stock of Kay-Bee Center, Inc. by the Borrower from Melville Corporation
pursuant to that certain Stock Purchase Agreement (the "Stock Purchase
Agreement") dated as of March 25, 1996, as amended as of May 3, 1996, between
the Company and Melville Corporation.
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Administrative Agent shall mean National City Bank of
Columbus, it its capacity as Administrative Agent and its successors and
assigns.
Administrative Agent's Fee shall have the meaning
assigned to that term in Section 9.15.
Affiliate as to any Person shall mean any other
Person (i) which directly or indirectly controls, is controlled by, or is under
common control with such Person, (ii) which beneficially owns or holds 15% or
more of any class of the voting or other equity interests of such Person, or
(iii) 15% or more of any class of voting or other equity interests of which is
beneficially owned or held, directly or indirectly, by such Person. Control, as
used in this definition, shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise, including the power to elect a majority of the directors or trustees
of a corporation or trust, as the case may be.
Agreement shall mean this Credit Agreement, as the
same may be supplemented or amended from time to time, including all schedules
and exhibits.
Annual Statements shall have the meaning assigned to
that term in Section 5.1.9(i).
Applicable Documentary LC Percentage shall have the
meaning assigned to that term in Section 2.9.3.1.
Applicable Standby LC Percentage shall have the
meaning assigned to that term in Section 2.9.3.2.
Assignment and Assumption Agreement shall mean an
Assignment and Assumption Agreement by and among a Purchasing Bank, a Transferor
Bank and the Administrative Agent on behalf of the other Banks, substantially in
the form of Exhibit 1.1(A).
Authorized Officer shall mean those individuals,
designated by written notice to the Administrative Agent from the Borrower,
authorized to execute notices, reports and other documents on behalf of the Loan
Parties required hereunder. The Borrower may amend such list of individuals from
time to time by giving written notice of such amendment to the Administrative
Agent.
Banks shall mean the financial institutions named on
Schedule 1.1(B) and their respective successors and assigns as permitted
hereunder, each of which is referred to herein as a "Bank".
Base Rate shall mean the greater of (i) the interest
rate per annum announced from time to time by National City Bank at its
Principal Office as its then prime rate,
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which rate may not be the lowest rate then being charged commercial borrowers by
National City Bank, or (ii) the Federal Funds Effective Rate plus 1/2% per
annum.
Base Tangible Net Worth shall mean the sum of (i)
$350,000,000 plus 50% of net income of the Company and its Subsidiaries for each
fiscal quarter in which net income was earned (as opposed to a net loss) from
and after February 3, 1996, through the date of determination as determined and
consolidated in accordance with GAAP and (ii) the net cash proceeds from the
sale of any capital stock or other equity interest of the Company less any sums
paid or owing by the Company since the date hereof with respect to the
redemption, repurchase or other retirement or cancellation of any of its capital
stock or other equity interests.
Benefit Arrangement shall mean at any time an
"employee benefit plan," within the meaning of Section 3(3) of ERISA, which is
neither a Plan nor a Multiemployer Plan and which is maintained, sponsored or
otherwise contributed to by any member of the ERISA Group.
Borrower shall mean Consolidated Stores Corporation,
a corporation organized and existing under the laws of the State of Ohio.
Borrowing Date shall mean, with respect to any
Revolving Credit Loan, the date for the making thereof or the renewal or
conversion thereof at or to the same or a different Interest Rate Option, which
shall be a Business Day.
Borrowing Tranche shall mean specified portions of
Revolving Credit Loans outstanding as follows: (i) any Revolving Credit Loans to
which a Revolving Credit Euro-Rate Option applies under the applicable Loan
Request by the Borrower and which have the same Interest Period shall constitute
one Borrowing Tranche, and (ii) all Revolving Credit Loans to which a Revolving
Credit Base Rate Option applies shall constitute one Borrowing Tranche.
Business Day shall mean any day other than a Saturday
or Sunday or a legal holiday on which commercial banks are authorized or
required to be closed for business in Columbus, Ohio or New York, New York, and,
if the applicable Business Day relates to any Revolving Credit Loan to which the
Revolving Credit Euro-Rate Option applies, such day must also be a day on which
dealings in Dollar deposits are carried on in the London interbank market.
Capitalized Lease shall mean any lease of Property by
a Person as lessee which is a capital lease in accordance with GAAP.
Closing Date shall mean the Business Day on which the
first Revolving Credit Loan shall be made, which shall be May 3, 1996 or, if all
the conditions specified in Article 6 have not been satisfied or waived by such
date, not later than May 30, 1996, as designated by the Borrower by at least two
Business Days' advance notice to the Managing Agents at their Principal Offices,
or such other date as the parties agree. The closing shall take
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place at 10:00 a.m., Pittsburgh time, on the Closing Date at the offices of
Buchanan Ingersoll Professional Corporation, Pittsburgh, Pennsylvania, or at
such other time and place as the parties agree.
Commitment shall mean as to any Bank its Revolving
Credit Commitment and Commitments shall mean the aggregate of the Revolving
Credit Commitments of all of the Banks.
Commitment Fee shall have the meaning assigned to
that term in Section 2.3.
Company shall mean Consolidated Stores Corporation, a
Delaware corporation, which beneficially owns directly or indirectly all of the
capital stock of the Borrower and its Subsidiaries.
Consolidated Capital Expenditures means, for any
period, the aggregate of all expenditures (whether paid in cash or accrued as
liabilities and including that portion of Capitalized Leases which is
capitalized on a consolidated balance sheet of the Company and its Subsidiaries)
by the Company and its Subsidiaries during that period that, in conformity with
GAAP, are required to be included in or reflected in the property, plant or
equipment or similar fixed asset accounts reflected on a consolidated balance
sheet of the Company and its Subsidiaries.
Consolidated EBIT for any period of determination
shall mean an amount equal to (A) the sum of (i) the net income for such period
plus (ii) interest expense in respect of Indebtedness to the extent deducted in
determining net income for such period ("Interest Expense"), plus (iii) the
provision for taxes for such period based on income or profits to the extent
such income or profits were included in computing net income for such period,
minus (B) all extraordinary income and gains to net income to the extent
included in net income for such period, in each case of the Company and its
Subsidiaries for such period determined on a consolidated basis in accordance
with GAAP.
Consolidated Interest Expense for any period of
determination shall be equal to the Interest Expense of the Company and its
Subsidiaries as determined in subclause (ii) of clause (A) of the definition of
the term "Consolidated EBIT" for such period on a consolidated basis in
accordance with GAAP.
Consolidated Maturing Rentals shall mean the
aggregate rental amounts payable by the Company and its Subsidiaries for the
most recent four (4) full consecutive fiscal quarters immediately preceding the
date of determination under any lease of Property having a remaining term
(including any required renewals or any renewals at the option of the lessor or
lessee) of less than one year (but does not include any amounts payable under
Capitalized Leases), determined in accordance with GAAP.
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Consolidated Rentals shall mean the aggregate rental
amounts payable by the Company and its Subsidiaries for the most recent four (4)
full consecutive fiscal quarters immediately preceding the date of determination
under any lease of Property having a remaining term (including any required
renewals or any renewals at the option of the lessor or lessee) of one year or
more (but does not include any amounts payable under Capitalized Leases),
determined in accordance with GAAP.
Consolidated Tangible Net Worth shall mean as of any
date of determination total stockholders' equity less intangible assets of the
Company and its Subsidiaries as of such date determined and consolidated in
accordance with GAAP.
Documentary Letter of Credit shall have the meaning
assigned to that term in Section 2.9.1.
Documentary Letter of Credit Outstanding shall mean
at any time the sum of (i) aggregate undrawn face amount of outstanding
Documentary Letters of Credit and (ii) without duplication, the aggregate amount
of all unpaid and outstanding Reimbursement Obligations relating to Documentary
Letters of Credit.
Documentation Agent shall mean PNC Bank, Ohio,
National Association, and its successors and assigns, in its capacity as
Documentation Agent.
Dollar, Dollars, U.S. Dollars and the symbol $ shall
mean lawful money of the United States of America.
Environmental Complaint shall mean any written
complaint setting forth a cause of action for personal or property damage or
natural resource damage or equitable relief, order, notice of violation,
citation, request for information issued pursuant to any Environmental Laws by
an Official Body, subpoena or other written notice of any type relating to,
arising out of, or issued pursuant, to any of the Environmental Laws or any
Environmental Conditions, as the case may be.
Environmental Conditions shall mean any conditions of
the environment, including the workplace, the ocean, natural resources
(including flora or fauna), soil, surface water, groundwater, any actual or
potential drinking water supply sources, substrata or the ambient air, relating
to or arising out of, or caused by, the use, handling, storage, treatment,
recycling, generation, transportation, release, spilling, leaking, pumping,
emptying, discharging, injecting, escaping, leaching, disposal, dumping,
threatened release or other management or mismanagement of Regulated Substances
resulting from the use of, or operations on, any Property.
Environmental Laws shall mean all federal, state,
local and foreign Laws and regulations, including permits, licenses,
authorizations, bonds, orders, judgments, and
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consent decrees issued, or entered into, pursuant thereto, relating to pollution
or protection of human health or the environment or employee safety in the
workplace.
ERISA shall mean the Employee Retirement Income
Security Act of 1974, as the same may be amended or supplemented from time to
time, and any successor statute of similar import, and the rules and regulations
thereunder, as from time to time in effect.
ERISA Group shall mean, at any time, the Company and
all members of a controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control and all other entities which,
together with the Borrower, are treated as a single employer under Section 414
of the Internal Revenue Code.
Euro-Rate shall mean with respect to the Revolving
Credit Loans comprising any Borrowing Tranche to which the Revolving Credit
Euro-Rate Option applies for any Interest Period, the interest rate per annum
determined by the Administrative Agent by dividing (the resulting quotient
rounded upward to the nearest 1/16 of 1% per annum) (i) the rate of interest
determined by the Administrative Agent in accordance with its usual procedures
(which determination shall be conclusive absent manifest error) to be the
average of the London interbank offered rates set forth on the "LIBO" page of
the Reuters Monitor Money Rate Service (or appropriate successor) or, if
Reuters or its successor ceases to provide such quotes, a comparable replacement
determined by the Administrative Agent, at approximately 11:00 a.m. London time
two (2) Business Days prior to the first day of such Interest Period for an
amount comparable to such Borrowing Tranche and having a maturity comparable to
such Interest Period by (ii) a number equal to 1.00 minus the Euro-Rate Reserve
Percentage. The Euro-Rate may also be expressed by the following formula:
Average of London interbank offered rates
on LIBO page of Reuters Monitor Money
Euro-Rate = Rate Service or appropriate successor
------------------------------------------
1.00 - Euro-Rate Reserve Percentage
The Euro-Rate shall be adjusted with respect to any Revolving Credit Euro-Rate
Option outstanding on the effective date of any change in the Euro-Rate Reserve
Percentage as of such effective date. The Administrative Agent shall give prompt
notice to the Borrower of the Euro-Rate as determined or adjusted in accordance
herewith, which determination shall be conclusive absent manifest error.
Euro-Rate Reserve Percentage shall mean the maximum
percentage (expressed as a decimal rounded upward to the nearest 1/100 of 1%) as
determined by the Managing Agents which is in effect during any relevant period,
as prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the reserve requirements (including supplemental,
marginal and emergency reserve requirements) with respect to eurocurrency
funding (currently referred to as "Eurocurrency Liabilities") of a member bank
in such System.
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Event of Default shall mean any of the events
described in Section 8.1.
Executive Officer shall mean as to any designated
Person a natural Person who constitutes an executive officer of such designated
Person for purposes of item 401(b) of Regulation S-K promulgated under the
Securities Act of 1933 and the Securities Exchange Act of 1934.
Existing Bank Facility shall have the meaning
ascribed thereto in Section 2.8.
Expiration Date shall have the meaning assigned to
that term in Section 2.11.
Federal Funds Effective Rate for any day shall mean
the rate per annum (based on a year of 360 days and actual days elapsed and
rounded upward to the nearest 1/100 of 1%) announced by the Federal Reserve Bank
of New York (or any successor) on such day as being the weighted average of the
rates on overnight federal funds transactions arranged by federal funds brokers
on the previous trading day, as computed and announced by such Federal Reserve
Bank (or any successor) in substantially the same manner as such Federal Reserve
Bank computes and announces the weighted average it refers to as the "Federal
Funds Effective Rate" as of the date of this Agreement; provided, if such
Federal Reserve Bank (or its successor) does not announce such rate on any day,
the "Federal Funds Effective Rate" for such day shall be the Federal Funds
Effective Rate for the last day of which such rate was announced.
Financial Projections shall have the meaning assigned
to that term in Section 5.1.9(ii).
Fixed Charge Coverage Ratio shall mean on any date of
determination, the ratio of (i) the sum of (a) Consolidated EBIT for the most
recent four (4) full consecutive fiscal quarters immediately preceding the date
of determination plus (b) Consolidated Rentals plus (c) Consolidated Maturing
Rentals, to (ii) Fixed Charges.
Fixed Charges shall mean for any period of
determination the sum of (i) Consolidated Interest Expense for the most recent
four (4) full consecutive fiscal quarters immediately preceding the date of
determination plus (ii) Consolidated Rentals plus (iii) Consolidated Maturing
Rentals.
GAAP shall mean generally accepted accounting
principles as are in effect from time to time, subject to the provisions of
Section 1.3, and applied on a consistent basis both as to classification of
items and amounts.
Governmental Acts shall have the meaning assigned to
that term in Section 2.9.8.
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Guarantor shall mean each of the Company and the
Subsidiaries of the Company which is designated as a "Guarantor" on the
signature page to the Master Guaranty Agreement and each other Subsidiary of the
Company which joins the Master Guaranty Agreement and the other Loan Documents
as a Guarantor after the date hereof pursuant to Section 10.18.
Guarantor Joinder shall mean a joinder to the Master
Guaranty Agreement as provided in the Master Guaranty Agreement.
Guaranty of any Person shall mean any obligation of
such Person guaranteeing or in effect guaranteeing any liability or obligation
of any other Person in any manner, whether directly or indirectly, including any
agreement to indemnify or hold harmless any other Person, any performance bond
or other suretyship arrangement and any other form of assurance against loss,
except endorsement of negotiable or other instruments for deposit or collection
in the ordinary course of business.
Historical Statements shall have the meaning assigned
to that term in Section 5.1.9(i).
Indebtedness shall mean, as to any Person at any
time, any and all indebtedness, obligations or liabilities (whether matured or
unmatured, liquidated or unliquidated, direct or indirect, absolute or
contingent, or joint or several) of such Person for or in respect of: (i)
borrowed money, (ii) amounts raised under or liabilities in respect of any note
purchase or acceptance credit facility, (iii) reimbursement obligations
(contingent or otherwise) under any letter of credit, currency swap agreement,
interest rate swap, cap, collar or floor agreement or other interest rate
management device, (iv) any other transaction (including forward sale or
purchase agreements, capitalized leases (but not operating leases) and
conditional sales agreements) having the commercial effect of a borrowing of
money entered into by such Person to finance its operations or capital
requirements (but not including trade payables, trade credits and accrued
expenses incurred in the ordinary course of business which are not represented
by a promissory note or other evidence of indebtedness and which are not more
than thirty (30) days past due), or (v) any Guaranty of Indebtedness for
borrowed money. For purposes only of determining the ratio of total indebtedness
to total capitalization in Section 7.2.17, the Seller Note shall be excluded
from the term "Indebtedness" used in such section.
Intercompany Loans shall mean loans made by one Loan
Party to one or more other Loan Parties or their Subsidiaries and, in the case
of loans between the Borrower and the Material Subsidiaries and, if the
Acquisition closes, between K.B. Consolidated, Inc. and Kay-Bee Center, Inc.,
evidenced by intercompany notes (the "Intercompany Notes") in the form attached
hereto as Exhibit 1.1(I)(1).
Intercompany Notes shall have the meaning assigned to
that term in the definition of the term "Intercompany Loans".
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Interest Payment Date shall mean each date specified
for the payment of interest in Section 4.3.
Interest Period shall have the meaning assigned to
such term in Section 3.2.
Interest Rate Option shall mean any Revolving Credit
Euro-Rate Option or Revolving Credit Base Rate Option.
Internal Revenue Code shall mean the Internal Revenue
Code of 1986, as the same may be amended or supplemented from time to time, and
any successor statute of similar import, and the rules and regulations
thereunder, as from time to time in effect.
Issuing Letter of Credit Bank shall mean with respect
to a Letter of Credit either The Bank of New York (or an Affiliate of The Bank
of New York) or National City Bank of Columbus (or an Affiliate of National City
Bank of Columbus) which has issued that Letter of Credit pursuant to Section
2.9.
Labor Contracts shall mean all employment agreements,
employment contracts, collective bargaining agreements and other agreements
among any Loan Party or Subsidiary of a Loan Party and its employees.
Law shall mean any law (including common law),
constitution, statute, treaty, regulation, rule, ordinance, opinion, release,
ruling, order, injunction, writ, decree or award of any Official Body.
Letter of Credit shall have the meaning assigned to
that term in Section 2.9.1.
Letter of Credit Outstandings shall mean at any time
the sum of (i) the aggregate undrawn face amount of outstanding Documentary
Letters of Credit and Standby Letters of Credit and (ii) without duplication,
the aggregate amount of all unpaid and outstanding Reimbursement Obligations.
Letters of Credit Fees shall have the meaning
assigned to that term in Section 2.9.3.
Lien shall mean any mortgage, deed of trust, pledge,
lien, security interest, charge or other encumbrance or security arrangement of
any nature whatsoever, whether voluntarily or involuntarily given, including any
conditional sale or title retention arrangement, and any assignment, deposit
arrangement or lease intended as, or having the effect of, security and any
filed financing statement or other notice of any of the foregoing (whether or
not a lien or other encumbrance is created or exists at the time of the filing).
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Loan Documents shall mean this Agreement, the Master
Guaranty Agreement, the Master Intercompany Subordination Agreement, the
Revolving Credit Notes, and any other instruments, certificates or documents
delivered or contemplated to be delivered hereunder or thereunder or in
connection herewith or therewith, as the same may be supplemented or amended
from time to time in accordance herewith or therewith, and Loan Document shall
mean any of the Loan Documents.
Loan Parties shall mean the Borrower and the
Guarantors.
Loan Request shall have the meaning ascribed thereto
in Section 2.5.
Managing Agents shall mean all of the financial
institutions identified as a Managing Agent on the first page hereof, each of
which is referred to herein as a "Managing Agent".
Master Guaranty Agreement shall mean the Master
Guaranty and Suretyship Agreement in substantially the form of Exhibit 1.1(G)(2)
executed and delivered by the Company and the other Guarantors to the
Administrative Agent for the benefit of the Banks.
Master Intercompany Subordination Agreement shall
mean a subordination agreement among the Loan Parties in the form attached
hereto as Exhibit 1.1(I)(2).
Material Adverse Change shall mean any set of
circumstances or events which (a) has or could reasonably be expected to have
any material adverse effect whatsoever upon the validity or enforceability of
this Agreement or any other Loan Document, (b) is or could reasonably be
expected to be material and adverse to the business, properties, assets,
financial condition, results of operations or prospects of the Loan Parties and
their Subsidiaries taken as a whole, (c) impairs materially or could reasonably
be expected to impair materially the ability of the Loan Parties and their
Subsidiaries taken as a whole to duly and punctually pay or perform their
Indebtedness, or (d) impairs materially or could reasonably be expected to
impair materially the ability of the Documentation Agent or any of the Banks, to
the extent permitted, to enforce their legal remedies pursuant to this Agreement
or any other Loan Document; provided, however, that in no event shall the
failure to close the Acquisition be deemed to constitute a Material Adverse
Change.
Material Subsidiary shall mean any of C S Ross
Company, an Ohio corporation, CSIC Venture, Inc., a Delaware corporation, K.B.
Consolidated, Inc., an Ohio corporation, and, if the Acquisition closes, Kay-Bee
Center, Inc., a California corporation, and any Subsidiary of the Borrower
(other than CW Kay-Bee, Inc. or Kay-Bee Toy & Hobby Shops, Inc.) having at least
10% of the total consolidated assets of the Company and its Subsidiaries or at
least 10% of the total consolidated revenues of the Company and its Subsidiaries
for the 12-month period ending on the last day of the most recent fiscal quarter
of the Company.
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Month, with respect to an Interest Period under the
Revolving Credit Euro-Rate Option, shall mean the interval between the days in
consecutive calendar months numerically corresponding to the first day of such
Interest Period. If any Euro-Rate Interest Period begins on a day of a calendar
month for which there is no numerically corresponding day in the month in which
such Interest Period is to end, the final month of such Interest Period shall be
deemed to end on the last Business Day of such final month.
Multiemployer Plan shall mean any employee benefit
plan which is a "multiemployer plan" within the meaning of Section 4001(a)(3) of
ERISA and to which the Borrower or any member of the ERISA Group is then making
or accruing an obligation to make contributions or, within the preceding five
plan years, has made or had an obligation to make such contributions.
Multiple Employer Plan shall mean a Plan which has
two or more contributing sponsors (including the Borrower or any member of the
ERISA Group) at least two of whom are not under common control, as such a plan
is described in Sections 4063 and 4064 of ERISA.
Notices shall have the meaning assigned to that term
in Section 10.6.
Obligation shall mean any obligation or liability of
any of the Loan Parties to the Documentation Agent, the Syndication Agent, the
Administrative Agent, the Managing Agents, the Issuing Letter of Credit Banks or
any of the Banks, howsoever created, arising or evidenced, whether direct or
indirect, absolute or contingent, now or hereafter existing, or due or to become
due, under or in connection with this Agreement, the Revolving Credit Notes, the
Letters of Credit or any other Loan Document.
Official Body shall mean any national, federal,
state, local or other government or political subdivision or any agency,
authority, bureau, central bank, commission, department or instrumentality of
either, or any court, tribunal, grand jury or arbitrator, in each case whether
foreign or domestic.
PBGC shall mean the Pension Benefit Guaranty
Corporation established pursuant to Subtitle A of Title IV of ERISA or any
successor thereto.
Permitted Investments shall mean:
(i) direct obligations of the United States
of America or any agency or instrumentality thereof or obligations backed by the
full faith and credit of the United States of America maturing in twelve (12)
months or less from the date of acquisition;
(ii) commercial paper maturing in 180 days
or less rated not lower than A-1 by Standard & Poor's Ratings Services, a
division of The McGraw Hill Companies, Inc. or P-1 by Moody's Investors Service,
Inc. on the date of acquisition; and
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(iii) demand deposits, time deposits or
certificates of deposit maturing within one year in commercial banks whose
obligations are rated A-1, A or the equivalent or better by Standard & Poor's
Ratings Services, a division of The McGraw Hill Companies, Inc. on the date of
acquisition.
Permitted Liens shall mean:
(i) Liens for taxes, assessments, or similar
charges, incurred in the ordinary course of business and which are not yet due
and payable;
(ii) Pledges or deposits made in the
ordinary course of business to secure payment of workmen's compensation, or to
participate in any fund in connection with workmen's compensation, unemployment
insurance, old-age pensions or other social security programs;
(iii) Liens of mechanics, materialmen,
warehousemen, carriers, or other like Liens, securing obligations incurred in
the ordinary course of business that are not yet due and payable and Liens of
landlords securing obligations to pay lease payments that are not yet due and
payable or in default;
(iv) Good-faith pledges or deposits made in
the ordinary course of business to secure performance of bids, tenders,
contracts (other than for the repayment of borrowed money) or leases, not in
excess of the aggregate amount due thereunder, or to secure statutory
obligations, or surety, appeal, indemnity, performance or other similar bonds
required in the ordinary course of business;
(v) Encumbrances consisting of zoning
restrictions, easements or other restrictions on the use of real property, none
of which materially impairs the use of such property or the value thereof, and
none of which is violated in any material respect by existing or proposed
structures or land use;
(vi) Liens and security interests in favor
of the Administrative Agent for the benefit of the Banks or any Issuing Letter
of Credit Bank in the application for a Letter of Credit;
(vii) Liens on property leased by any Loan
Party or Subsidiary of a Loan Party or other interest or title of the lessor
under capital and operating leases not otherwise prohibited by Section 7.2.15
securing obligations of such Loan Party or Subsidiary to the lessor under such
leases;
(viii) Any Lien existing on the date of this
Agreement and described on Schedule 1.1(P), provided that the principal amount
secured thereby is not hereafter increased (although it may be refinanced), and
no additional assets become subject to such Lien;
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(ix) Purchase Money Security Interests to
the extent that (X) such Purchase Money Security Interests attach to inventory
purchased in the ordinary course of business pursuant to customary payment terms
and are not perfected by the filing of financing statements or other public
filings or (Y) the aggregate amount of loans and deferred payments secured by
Purchase Money Security Interests not described in the foregoing clause (X) do
not exceed at any one time outstanding $10,000,000 (excluding for the purpose of
this computation any loans or deferred payments secured by Liens described on
Schedule 1.1(P));
(x) Liens relating to the licensing by
Borrower, the other Loan Parties or their Subsidiaries of intellectual property;
(xi) Liens relating to a sublease entered
into by a Loan Party or its Subsidiary;
(xii) The following, (A) if the validity or
amount thereof is being contested in good faith by appropriate and lawful
proceedings diligently conducted so long as levy and execution thereon have been
stayed and continue to be stayed or (B) if a final judgment is entered and such
judgment is discharged within thirty (30) days of entry or (C) payments covered
in full (subject to customary deductibles) by an insurance company of reputable
standing if such insurance company has acknowledged that the applicable policy
applies to the following and is not reserving any right to contest
applicability, and in any case they do not in the aggregate, materially impair
the ability of any Loan Party to perform its Obligations hereunder or under the
other Loan Documents:
(1) Claims or Liens for taxes, assessments or charges
by the United States, or any department, agency or
instrumentality thereof, or by any state, county, municipal or
other governmental agency, including the PBGC, due and payable
and subject to interest or penalty, provided that the
applicable Loan Party maintains such reserves or other
appropriate provisions as shall be required by GAAP and pays
all such taxes, assessments or charges forthwith upon the
commencement of proceedings to foreclose any such Lien;
(2) Claims, Liens or encumbrances upon, and defects
of title to, real or personal property, including any
attachment of personal or real property or other legal process
prior to adjudication of a dispute on the merits; and
(3) Claims or Liens of mechanics, materialmen,
warehousemen, carriers, or other statutory nonconsensual
Liens; and
(xiii) additional Liens securing
Indebtedness not to exceed $10,000,000.
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<PAGE> 25
Person shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, joint
venture, limited liability company, government or political subdivision or
agency thereof, or any other entity.
Plan shall mean at any time an employee pension benefit plan
(including a Multiple Employer Plan, but not a Multiemployer Plan) which is
covered by Title IV of ERISA or is subject to the minimum funding standards
under Section 412 of the Internal Revenue Code and either (i) is maintained by
any member of the ERISA Group for employees of any member of the ERISA Group or
(ii) has at any time within the preceding five years been maintained by any
entity which was at such time a member of the ERISA Group for employees of any
entity which was at such time a member of the ERISA Group.
PNC Bank shall mean PNC Bank, Ohio, National Association, its
successors and assigns.
Potential Default shall mean any event or condition which with
notice, passage of time or a determination by the Managing Agents or the
Required Banks, or any combination of the foregoing, would constitute an Event
of Default.
Principal Office shall mean the main banking office of the
Administrative Agent in Columbus, Ohio or the main banking office of a Managing
Agent at the address shown on the signature page hereto, as the case may be.
Prohibited Transaction shall mean any prohibited transaction
as defined in Section 4975 of the Internal Revenue Code or Section 406 of ERISA
for which neither an individual nor a class exemption has been issued by the
United States Department of Labor.
Property shall mean all real property, both owned and leased,
of any Loan Party or Subsidiary of a Loan Party.
Purchase Money Security Interest shall mean Liens upon real or
personal property securing loans to any Loan Party or Subsidiary of a Loan Party
or deferred payments by such Loan Party or Subsidiary for the purchase of such
property.
Purchasing Bank shall mean a Bank which becomes a party to
this Agreement by executing an Assignment and Assumption Agreement.
Ratable Share shall mean the proportion that a Bank's
Commitment bears to the Commitments of all of the Banks.
Regulated Substances shall mean any substance including any
solid, liquid, semisolid, gaseous, thermal, thoriated or radioactive material,
refuse, garbage, wastes, chemicals, petroleum products, by-products and
coproducts, impurities, dust, scrap, and heavy metals defined as a "hazardous
substance," "pollutant," "pollution," "contaminant," "hazardous or
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<PAGE> 26
toxic substance," "extremely hazardous substance," "toxic chemical," "toxic
waste," "hazardous waste," "industrial waste," "residual waste," "solid waste,"
"municipal waste," "mixed waste," "infectious waste," "chemotherapeutic waste,"
"medical waste," or "regulated substance" or any related materials, substances
or wastes as now or hereafter defined pursuant to any Environmental Laws,
ordinances, rules, regulations or other directives of any Official Body, the
generation, manufacture, extraction, processing, distribution, treatment,
storage, disposal, transport, recycling, reclamation, use, reuse, spilling,
leaking, dumping, injection, pumping, leaching, emptying, discharge, escape,
release or other management or mismanagement of which is regulated by the
Environmental Laws.
Regulation U shall mean Regulation U, T, G or X as promulgated
by the Board of Governors of the Federal Reserve System, as amended from time to
time.
Reimbursement Obligation shall have the meaning assigned to
such term in Section 2.9.4.
Reportable Event shall mean a reportable event described in
Section 4043 of ERISA and regulations thereunder with respect to a Plan or
Multiemployer Plan.
Required Banks shall mean (i) prior to the termination of the
Commitments, Banks whose Commitments aggregate at least 66 2/3% of the
Commitments of all of the Banks, and (ii) after the termination of the
Commitments, Banks whose outstanding Revolving Credit Loans and Ratable Share
(as determined pursuant to Section 2.9.2) in the face amount of outstanding
Letters of Credit and Reimbursement Obligations aggregate at least 66 2/3% of
the total principal amount of the Revolving Credit Loans and the face amount of
Letters of Credit and Reimbursement Obligations outstanding hereunder.
Revolving Credit Base Rate Option shall mean the option of the
Borrower to have Revolving Credit Loans bear interest at the rate and under the
terms and conditions set forth in Section 3.1.1(i).
Revolving Credit Commitment shall mean, as to any Bank at any
time the amount initially set forth opposite its name in Part A on Schedule
1.1(B) in the column labeled "Revolving Credit Commitment" unless the closing of
the Acquisition shall not have occurred on or before 12:01 a.m. on May 8, 1996
in which event "Revolving Credit Commitment" shall then mean the amount
initially set forth opposite its name in Part B on Schedule 1.1(B) in the column
labeled " Revolving Credit Commitment," and thereafter on Schedule I to the most
recent Assignment and Assumption Agreement, as the same may have been reduced in
accordance with Section 2.4 and Revolving Credit Commitments shall mean the
aggregate Revolving Credit Commitments of all of the Banks.
Revolving Credit Euro-Rate Option shall mean the option of the
Borrower to have Revolving Credit Loans bear interest at the rate and under the
terms and conditions set forth in Section 3.1.1(ii).
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<PAGE> 27
Revolving Credit Euro-Rate Spread shall have the meaning given
to such term in Section 3.1.1(ii).
Revolving Credit Loans shall mean collectively and Revolving
Credit Loan shall mean separately all loans or any loan made by the Banks or one
of the Banks to the Borrower pursuant to Section 2.1 or 2.9.4.
Revolving Credit Notes shall mean collectively and Revolving
Credit Note shall mean separately all the Revolving Credit Notes of the Borrower
in the form attached hereto as Exhibit 1.1(R) evidencing the Revolving Credit
Loans together with all amendments, extensions, renewals, replacements,
refinancings or refundings thereof in whole or in part.
Revolving Facility Usage shall mean at any time the sum of the
Revolving Credit Loans outstanding, the Swing Loans outstanding and the Letter
of Credit Outstandings.
Rollover LCs shall mean those letters of credit identified on
Schedule 2.9.1 hereof which were issued by the Issuing Letter of Credit Banks
prior to the date hereof upon the application of the Borrower or one of its
Subsidiaries (including those Subsidiaries to be acquired in the Acquisition).
Seller Note shall mean the senior subordinated term note or
notes originally issued to Melville Corporation in the principal amount of
$100,000,000 pursuant to that certain Indenture to be dated May 5, 1996 and any
replacement note or notes for such note or notes including notes which may be
issued to transferees of holders thereof.
Settlement Date shall have the meaning assigned thereto in
Section 2.10.
Senior Notes shall have the meaning assigned thereto in
Section 2.8.
Shares shall have the meaning assigned to that term in Section
5.1.2.
Standby Letter of Credit shall have the meaning assigned to
that term in Section 2.9.1.
Stock Purchase Agreement shall have the meaning assigned to
that term in the definition of the term "Acquisition".
Standby Letter of Credit Outstandings shall mean at any time
the sum of (i) the aggregate undrawn face amount of outstanding Standby Letters
of Credit and (ii) without duplication, the aggregate amount of all unpaid and
outstanding Reimbursement Obligations relating to Standby Letters of Credit.
Subordinated Bridge Financing shall mean the Short Term Loan
Agreement to be dated as of May 3, 1996 and each guaranty thereof,as amended,
supplemented or otherwise modified from time to time in accordance with its
terms, and any replacements or
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<PAGE> 28
refinancings thereof to the extent permitted by the terms of such agreement,
between the Borrower, the Initial Lenders named therein and Merrill Lynch
Capital Corporation, a Delaware corporation, as agent for the Initial Lenders
named therein, which provides for the making of a single loan in the amount of
$100,000,000 to the Borrower and which loan is subordinated to the rights of the
Documentation Agent, the Administrative Agent, the Syndication Agent, the
Managing Agents, the Issuing Letter of Credit Banks and the Banks pursuant to
the subordination terms contained therein.
Subsidiary of any Person at any time shall mean (i) any
corporation or trust of which 50% or more (by number of shares or number of
votes) of the outstanding capital stock or shares of beneficial interest
normally entitled to vote for the election of one or more directors or trustees
(regardless of any contingency which does or may suspend or dilute the voting
rights) is at such time owned directly or indirectly by such Person or one or
more of such Person's Subsidiaries, or any partnership of which such Person is a
general partner or of which 50% or more of the partnership interests is at the
time directly or indirectly owned by such Person or one or more of such Person's
Subsidiaries, or (ii) any corporation, trust, partnership or other entity which
is controlled or capable of being controlled by such Person and/or one or more
of such Person's Subsidiaries.
Subsidiary Shares shall have the meaning assigned to that term
in Section 5.1.3.
Swing Lender shall mean National City Bank of Columbus.
Swing Loan Commitment shall mean the Swing Lender's commitment
to make Swing Loans to the Borrower pursuant to Section 2.10 in an aggregate
principal amount up to but not in excess of the lesser of (i) the Swing Lender's
Revolving Credit Commitment less the Swing Lender's Ratable Share of Revolving
Facility Usage or (ii)$10,000,000.
Swing Note shall mean the Swing Note of the Borrower in the
form of Exhibit 1.1(S)(1) evidencing the Swing Loans, together with all
amendments, extensions, renewals, replacements, refinancings or refundings
thereof in whole or in part.
Swing Loan Request shall mean a request for Swing Loans made
in accordance with Section 2.10.2.
Swing Loans shall mean collectively and Swing Loan shall mean
separately all Swing Loans or any Swing Loan made by the Swing Lender to the
Borrower pursuant to Section 2.10.
Syndication Agent shall mean The Bank of New York in its
capacity as Syndication Agent.
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<PAGE> 29
Transferor Bank shall mean the selling Bank pursuant to an
Assignment and Assumption Agreement.
1.2 Construction.
Unless the context of this Agreement otherwise clearly requires, the
following rules of construction shall apply to this Agreement and each of the
other Loan Documents:
1.2.1 Number; Inclusion.
References to the plural include the singular, the plural, the
part and the whole; "or" has the inclusive meaning represented by the phrase
"and/or," and "including" has the meaning represented by the phrase "including
without limitation";
1.2.2 Determination.
References to "determination" of or by the Administrative
Agent or the Banks shall be deemed to include good-faith estimates by the
Administrative Agent or the Banks (in the case of quantitative determinations)
and good-faith beliefs by the Administrative Agent or the Banks (in the case of
qualitative determinations) and such determination shall be conclusive absent
manifest error;
1.2.3 Documentation Agent's Discretion and Consent.
Whenever the Documentation Agent or the Banks are granted the
right herein to act in its or their sole discretion or to grant or withhold
consent such right shall be exercised in good-faith;
1.2.4 Documents Taken as a Whole.
The words "hereof," "herein," "hereunder," "hereto" and
similar terms in this Agreement or any other Loan Document refer to this
Agreement or such other Loan Document as a whole and not to any particular
provision of this Agreement or such other Loan Document;
1.2.5 Headings.
The section and other headings contained in this Agreement or
such other Loan Document and the Table of Contents (if any) preceding this
Agreement or such other Loan Document are for reference purposes only and shall
not control or affect the construction of this Agreement or such other Loan
Document or the interpretation thereof in any respect;
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<PAGE> 30
1.2.6 Implied References to this Agreement.
Article, section, subsection, clause, schedule and exhibit
references are to this Agreement or such other Loan Document, as the case may
be, unless otherwise specified;
1.2.7 Persons.
Reference to any Person includes such Person's successors and
assigns but, if applicable, only if such successors and assigns are permitted by
this Agreement or such other Loan Document, as the case may be, and reference to
a Person in a particular capacity excludes such Person in any other capacity;
1.2.8 Modifications to Documents.
Reference to any agreement (including this Agreement and any
other Loan Document together with the schedules and exhibits hereto or thereto),
document or instrument means such agreement, document or instrument as amended,
modified, replaced, substituted for, superseded or restated;
1.2.9 From, To and Through.
Relative to the determination of any period of time, "from"
means "from and including," "to" means "to but excluding," and "through" means
"through and including"; and
1.2.10 Shall; Will.
References to "shall" and "will" are intended to have the same
meaning.
1.3 Accounting Principles.
Except as otherwise provided in this Agreement, all computations and
determinations as to accounting or financial matters and all financial
statements to be delivered pursuant to this Agreement shall be made and prepared
in accordance with GAAP (including principles of consolidation where
appropriate), and all accounting or financial terms shall have the meanings
ascribed to such terms by GAAP. In the event that on or after the date hereof, a
material change occurs in GAAP, the Banks and the Borrower will consult in good
faith regarding whether such change in GAAP affects any financial covenants
contained herein that should be adjusted due to such change in GAAP.
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<PAGE> 31
2. REVOLVING CREDIT FACILITY
2.1 Revolving Credit Commitments.
Subject to the terms and conditions hereof and relying upon the
representations and warranties herein set forth, each Bank severally agrees to
make Revolving Credit Loans to the Borrower at any time or from time to time on
or after the date hereof to the Expiration Date in an aggregate principal amount
not to exceed at any one time such Bank's Revolving Credit Commitment minus such
Bank's Ratable Share of the Letter of Credit Outstandings. Within such limits of
time and amount and subject to the other provisions of this Agreement, the
Borrower may borrow, repay and reborrow pursuant to this Section 2.1; provided
that in no event shall (i) the Revolving Credit Loans exceed, at any one time,
the sum of $450,000,000 plus the amounts, if any, advanced by the Banks to all
Issuing Letter of Credit Banks with respect to disbursements under Letters of
Credit that have not been reimbursed by the Borrower as required by Section
2.9.4 or (ii) the Revolving Facility Usage exceed, at any one time, the
Revolving Credit Commitments or (iii) the Revolving Facility Usage exceed, at
any one time prior to the closing of the Acquisition, $460,000,000.
2.2 Nature of Banks' Obligations with Respect to Revolving Credit
Loans.
Each Bank shall be obligated to participate in each request for
Revolving Credit Loans pursuant to Section 2.5 in accordance with its Ratable
Share. The aggregate of each Bank's Revolving Credit Loans outstanding hereunder
to the Borrower at any time shall never exceed its Revolving Credit Commitment
minus its Ratable Share of the Letter of Credit Outstandings. The obligations of
each Bank hereunder are several. The failure of any Bank to perform its
obligations hereunder shall not affect the Obligations of the Borrower to any
other party nor shall any other party be liable for the failure of such Bank to
perform its obligations hereunder. The Banks shall have no obligation to make
Revolving Credit Loans hereunder on or after the Expiration Date.
2.3 Commitment Fees.
Accruing from the date hereof until the Expiration Date, the Borrower
agrees to pay to the Administrative Agent for the account of each Bank, as
consideration for such Bank's Revolving Credit Commitment hereunder, a
nonrefundable commitment fee (the "Commitment Fee") equal to a percentage per
annum (the "Applicable Commitment Percentage") (computed on the basis of a year
of 365 or 366 days, as the case may be, and actual days elapsed) times the
average daily difference between (i) the amount of such Bank's Revolving Credit
Commitment as the same may be constituted from time to time, and(ii) the sum of
such Bank's Revolving Credit Loans outstanding plus its Ratable Share of Letters
of Credit Outstanding. The Applicable Commitment Percentage shall be determined
based upon the Fixed Charge Coverage Ratio as follows:
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<PAGE> 32
<TABLE>
<CAPTION>
Fixed Charge Coverage Ratio Applicable Commitment Percentage (rate per annum)
--------------------------- -------------------------------------------------
<S> <C>
greater than or equal to 2.20 to 1.00 0.175%
greater than or equal to 2.05 to 1.00 but less than 2.20 to 1.00 0.200%
greater than or equal to 1.90 to 1.00 but less than 2.05 to 1.00 0.225%
greater than or equal to 1.75 to 1.00 but less than 1.90 to 1.00 0.250%
less than 1.75 to 1.00 0.375%
</TABLE>
All Commitment Fees shall be payable quarterly in arrears on the first
Business Day of each March, June, September and December after the date hereof
and on the Expiration Date or upon acceleration of the Revolving Credit Notes.
Until the Borrower shall have delivered to the Administrative Agent a
Compliance Certificate covering the four fiscal periods ending on the Saturday
nearest April 30, 1997, the Fixed Charge Coverage Ratio shall be deemed to be
1.75 to 1.00. For each fiscal quarter subsequent to the completion of four full
fiscal quarters after the Acquisition, the Fixed Charge Coverage Ratio shall be
computed based on the Compliance Certificate for such quarter. Any change in the
Fixed Charge Coverage Ratio ( and the Applicable Commitment Percentage) shall be
effective on the date on which the Compliance Certificate evidencing the
computation of such Fixed Charge Coverage Ratio is delivered to the
Administrative Agent; provided, however, that if the Compliance Certificate
evidencing the computation of the Fixed Charge Coverage Ratio is not delivered
on the date on which such Compliance Certificate is due to be delivered under
Section 7.3.3, the Fixed Charge Coverage Ratio on and after the date on which
such Compliance Certificate is due to be delivered under Section 7.3.3 and until
the date on which such Compliance Certificate is delivered to the Administrative
Agent shall be deemed to be less than 1.75 to 1.00 and the Applicable Commitment
Percentage for such period computed accordingly.
2.4 Reduction of Commitments.
2.4.1 Voluntary Reduction of Commitments.
The Borrower shall have the right at any time and from time to time
upon three (3) Business Days' prior written notice to the Banks to permanently
reduce, in whole multiples of
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<PAGE> 33
$10,000,000, or terminate the Revolving Credit Commitments without penalty or
premium, except as hereinafter set forth, provided that any such reduction or
termination shall be accompanied by (a) the payment in full of any Commitment
Fee then accrued on the amount of such reduction or termination and (b)
prepayment of the Revolving Credit Notes, together with the full amount of
interest accrued on the principal sum to be prepaid (and all amounts referred to
in Section 4.6 ) and the Borrower shall deposit in a non-interest bearing
account (provided that with the consent of the Managing Agents, such consent not
to be unreasonably withheld, such account may be an interest bearing account)
with the Administrative Agent, as cash collateral for its Obligations in respect
of the Letters of Credit and related applications and agreements, an amount
equal to the maximum amount currently or at any time thereafter available to be
drawn on all outstanding Letters of Credit, and the Borrower hereby pledges to
the Administrative Agent and the Banks, and grants to the Administrative Agent
and the Banks a security interest in, all such cash as security for such
Obligations, to the extent that the Revolving Credit Usage then exceeds the
Revolving Credit Commitments as so reduced or terminated. From the effective
date of any such reduction or termination the obligations of Borrower to pay the
Commitment Fee pursuant to Section 2.3 shall correspondingly be reduced or
cease.
2.4.2 Mandatory Reduction of Commitments.
The Revolving Credit Commitments shall be permanently reduced in
accordance with the following:
(i) with respect to sales, transfers or leases permitted
to be made pursuant to Section 7.2.7(iv), the
Revolving Credit Commitments shall be permanently
reduced to the extent that the aggregate after-tax net
cash proceeds (including without limitation cash, as
and when collected, pursuant to any notes or other
securities received as consideration for such sale,
transfer or lease), as reasonably estimated by the
Borrower, of all such sales, transfers or leases on
and after the date hereof are in excess of $25,000,000
and each Bank's Revolving Credit Commitment shall be
reduced by its Ratable Share of each such reduction in
the Revolving Credit Commitments;
(ii) the Revolving Credit Commitments shall be permanently
reduced to $250,000,000 in the event that the closing
of the Acquisition shall not have occurred prior to
12:01 a.m. on May 8, 1996 and each Bank's Revolving
Credit Commitment shall be as set forth on Part B of
Schedule 1.1(B).
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<PAGE> 34
2.5 Revolving Credit Loan Requests.
Except as otherwise provided herein, the Borrower may from time to time
prior to the Expiration Date request the Banks to make Revolving Credit Loans,
or renew or convert the Interest Rate Option applicable to existing Revolving
Credit Loans pursuant to Section 3.2, by delivering to the Administrative Agent,
not later than 10:00 a.m., Columbus, Ohio time, (i) three (3) Business Days
prior to the proposed Borrowing Date with respect to the making of Revolving
Credit Loans to which the Revolving Credit Euro-Rate Option applies or the
conversion to or the renewal of the Revolving Credit Euro-Rate Option for any
Revolving Credit Loans; and (ii) one (1) Business Day prior to either the
proposed Borrowing Date with respect to the making of a Revolving Credit Loan to
which the Revolving Credit Base Rate Option applies or the last day of the
preceding Interest Period with respect to the conversion to the Revolving Credit
Base Rate Option for any Revolving Credit Loan, of a duly completed request
therefor substantially in the form of Exhibit 2.5 or a request by telephone
immediately confirmed in writing by letter, facsimile or telex in such form
(each, a "Loan Request"), it being understood that the Administrative Agent may
rely on the authority of any individual making such a telephonic request without
the necessity of receipt of such written confirmation. Each Loan Request shall
be irrevocable and shall specify (i) the proposed Borrowing Date; (ii) the
aggregate amount of the proposed Revolving Credit Loans comprising each
Borrowing Tranche, which shall be in integral multiples of $1,000,000 and not
less than $5,000,000 for each Borrowing Tranche to which the Revolving Credit
Euro-Rate Option applies and not less than the lesser of $5,000,000 or the
maximum amount available for Borrowing Tranches to which the Revolving Credit
Base Rate Option applies; (iii) whether the Revolving Credit Euro-Rate Option or
Revolving Credit Base Rate Option shall apply to the proposed Revolving Credit
Loans comprising the applicable Borrowing Tranche; and (iv) in the case of a
Borrowing Tranche to which the Revolving Credit Euro-Rate Option applies, an
appropriate Interest Period for the proposed Revolving Credit Loans comprising
such Borrowing Tranche.
2.6 Making Revolving Credit Loans.
The Administrative Agent shall, promptly after receipt by it of a Loan
Request pursuant to Section 2.5, notify the Banks of its receipt of the related
Loan Request specifying: (i) the proposed Borrowing Date of such Revolving
Credit Loans; (ii) the amount and type of each such Revolving Credit Loan and
the applicable Interest Period (if any); and (iii) the apportionment among the
Banks of such Revolving Credit Loans as determined by the Administrative Agent
in accordance with Section 2.2. Each Bank shall remit the principal amount of
each Revolving Credit Loan to the Administrative Agent such that the
Administrative Agent is able to, and the Administrative Agent shall, to the
extent the Banks have made funds available to it for such purpose, fund such
Revolving Credit Loans to the Borrower in Dollars and immediately available
funds at the Principal Office prior to 2:00 p.m., Columbus, Ohio time, on the
applicable Borrowing Date, provided that if the Administrative Agent assumes
pursuant to
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<PAGE> 35
Section 9.16 that a Bank will make available to the Administrative
Agent such Bank's portion of a Revolving Credit Loan and such Bank fails to
remit such funds to the Administrative Agent in a timely manner, the
Administrative Agent may elect in its sole discretion to fund with its own funds
the Revolving Credit Loans of such Bank on such Borrowing Date, and such Bank
shall be subject to the repayment obligation in Section 9.16.
2.7 Revolving Credit Notes.
The Obligation of the Borrower to repay the aggregate unpaid principal
amount of the Revolving Credit Loans made to it by each Bank, together with
interest thereon, shall be evidenced by a Revolving Credit Note dated the
Closing Date payable to the order of such Bank in a face amount equal to the
Revolving Credit Commitment of such Bank.
2.8 Use of Proceeds.
The proceeds of the Revolving Credit Loans shall be used to finance a
portion of the Acquisition, to retire the 10.50% senior notes (the "Senior
Notes") issued pursuant to the several Note Purchase Agreements dated August 1,
1987, to repay all Indebtedness owing pursuant that certain Credit Agreement
dated May 27, 1994 among the Borrower, C.S. Ross Company and certain financial
institutions described therein(collectively the "Existing Bank Facility") and
for working capital and similar general corporate purposes, but shall not be
used, directly or indirectly, to repay, purchase or otherwise retire any
borrowings under the Subordinated Bridge Facility or to redeem, repurchase or
otherwise acquire any capital stock of the Company. Letters of Credit shall be
used for commercial purposes of the Borrower and its Subsidiaries in the
ordinary course of business for the purchase of goods and services and to assure
the Borrower's or its Subsidiaries' performance of workmen's compensation or
liability or of refund, warranty, or other obligations incurred in the ordinary
course of business of the Borrower or its Subsidiaries.
2.9 Letters of Credit Subfacility.
2.9.1 Issuance of Letters of Credit.
Borrower or a Material Subsidiary may request the issuance of (or
modification of any issued) commercial letters of credit in connection with the
Borrower's or Subsidiary of the Borrower's purchase of goods and services (each
a "Documentary Letter of Credit") and standby letters of credit for the benefit
of workmen's compensation or liability insurers, state and federal agencies to
assure compliance with applicable Laws and other Persons in support of refund,
warranty or other obligations of the Borrower or a Subsidiary of the Borrower
(each a "Standby Letter of Credit" and together with Documentary Letters of
Credit referred to as "Letters of Credit" in the aggregate or individually as a
"Letter of Credit") on behalf of itself or another Loan Party by delivering by
no later than 10:00 a.m., Columbus, Ohio time, at least two (2) Business Days in
the case of a Documentary Letter of Credit and three (3) Business Days in case
of a Standby Letter of Credit prior to the requested date of issuance of
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<PAGE> 36
such Letter of Credit to the applicable Issuing Letter of Credit Bank with a
copy to the Administrative Agent a written notice specifying the proposed
beneficiary, date of issuance and expiry date for such Letter of Credit or
modification to an existing Letter of Credit and the nature of the transactions
to be supported thereby. Subject to the terms and conditions hereof and to the
execution of a completed application and agreement for letters of credit in such
form as the applicable Issuing Letter of Credit Bank may specify from time to
time and in reliance on the agreements of the Banks set forth in this Section
2.9, such Issuing Letter of Credit Bank will issue a Letter of Credit provided
that each Letter of Credit shall (A) have a maximum maturity of 364 days from
the date of issuance, (B) in no event expire later than five Business Days prior
to the Expiration Date and provided further that in no event shall (i) the
Letter of Credit Outstandings exceed, at any one time, $200,000,000 or (ii) the
Revolving Facility Usage exceed, at any one time, the Revolving Credit
Commitments. Each of the Rollover LCs listed on Schedule 2.9.1 shall be deemed
to have been issued hereunder on the Closing Date (other than those which relate
to Kay-Bee Center, Inc. and its subsidiaries which if the Acquisition closes
shall be deemed to have been issued hereunder as of the closing of the
Acquisition) by the applicable Issuing Letter of Credit Bank upon the request of
the Borrower or a Material Subsidiary as indicated on Schedule 2.9.1 as a
Documentary Letter of Credit or Standby Letter of Credit, as the case may be,
and shall be deemed to be a Letter of Credit for all purposes of this Agreement.
In the event of any conflict between the terms of this Agreement and the terms
of any Issuing Letter of Credit Bank's application and agreement for letters of
credit, the terms of this Agreement shall control (provided that terms of any
Issuing Letter of Credit Bank's application and agreement for letters of credit
which are in addition to those contained herein and which do not expressly
conflict with the terms contained herein shall not be deemed to be in conflict
with this Agreement).
2.9.2 Participations.
Immediately upon issuance of each Letter of Credit, and without further
action, each Bank shall be deemed to, and hereby agrees that it shall, have
irrevocably purchased for such Bank's own account and risk from the applicable
Issuing Letter of Credit Bank an individual participation interest in such
Letter of Credit and drawings thereunder in an amount equal to such Bank's
Ratable Share of the maximum amount which is or at any time may become available
to be drawn thereunder, and each Bank shall be responsible to reimburse such
Issuing Letter of Credit Bank immediately for its Ratable Share of any
disbursement under any Letter of Credit which has not been reimbursed by
Borrower in accordance with Section 2.9.4 by making its Ratable Share of the
Revolving Credit Loans referred to in Section 2.9.4 available to such Issuing
Letter of Credit Bank. Upon the request of any Bank and no less frequently than
once in each calendar month, the Administrative Agent shall notify each Bank of
the amount of such Bank's participation in Letters of Credit.
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<PAGE> 37
2.9.3 Letter of Credit Fees.
The Borrower shall pay to the Administrative Agent for the
ratable account of the Banks fees with respect to Documentary Letters of Credit
("Documentary Letters of Credit Fees") and fees with respect to Standby Letters
of Credit ("Standby Letters of Credit Fees") (collectively, "Letters of Credit
Fees") in the amounts set forth in Sections 2.9.3.1 and 2.9.3.2 (as the same may
be increased as provided in Section 3.3). All Letters of Credit Fees shall be
payable quarterly in arrears commencing with the first Business Day of each
April, July, October and January following issuance of each Letter of Credit and
on the earlier of the Expiration Date or the acceleration of the Revolving
Credit Notes.
2.9.3.1 Documentary Letter of Credit Fees.
Documentary Letters of Credit Fees shall be determined by that
percentage per annum set forth in the following table which is applicable to the
Fixed Charge Coverage Ratio then in effect (the "Applicable Documentary LC
Percentage") (computed on the basis of a year of 365 or 366 days, as the case
may be, and actual days elapsed) times the average daily Documentary Letter of
Credit Outstandings. The Applicable Documentary LC Percentage shall be
determined as follows:
<TABLE>
<CAPTION>
Fixed Charge Coverage Ratio Applicable Documentary LC Percentage (rate per annum)
--------------------------- -----------------------------------------------------
<S> <C>
greater than or equal to 2.20 to 1.00 0.250%
greater than or equal to 2.05 to 1.00 but less than 2.20 to 1.00 0.3125%
greater than or equal to 1.90 to 1.00 but less than 2.05 to 1.00 0.375%
greater than or equal to 1.75 to 1.00 but less than 1.90 to 1.00 0.500%
less than 1.75 to 1.00 0.625%
</TABLE>
Until the Borrower shall have delivered to the Administrative
Agent a Compliance Certificate covering the four fiscal periods ending on the
Saturday nearest April 30, 1997, the Fixed Charge Coverage Ratio shall be deemed
to be 1.75 to 1.00. For each fiscal quarter subsequent to the completion of four
full fiscal quarters after the Acquisition, the Fixed Charge Coverage Ratio
shall be computed based on the Compliance Certificate for such quarter. Any
change in the Fixed Charge Coverage Ratio (and the Applicable LC Percentage)
shall be effective on the date on which the Compliance Certificate evidencing
the computation of such Fixed Charge Coverage Ratio is delivered to the
Administrative Agent; provided, however, that
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<PAGE> 38
if the Compliance Certificate evidencing the computation of the Fixed Charge
Coverage Ratio is not delivered on the date on which such Compliance Certificate
is due to be delivered under Section 7.3.3, the Fixed Charge Coverage Ratio on
and after the date on which such Compliance Certificate is due to be delivered
under Section 7.3.3 and until the date on which such Compliance Certificate is
delivered to the Administrative Agent shall be deemed to be less than 1.75 to
1.00 and the Applicable Documentary LC Percentage for such period computed
accordingly.
The Borrower shall also pay to the applicable Issuing Letter
of Credit Bank for its sole account (i) a fronting fee as determined by such
Issuing Letter of Credit Bank and the Borrower and (ii) such Issuing Letter of
Credit Bank's then in effect customary issuance fees and administrative expense
payable with respect to its Documentary Letters of Credit as such Issuing Letter
of Credit Bank may generally charge or incur from time to time in connection
with the issuance, maintenance, modification (if any), assignment or transfer
(if any), negotiation, and administration of commercial letters of credit,
payable at such times as such Issuing Letter of Credit Bank may specify.
2.9.3.2 Standby Letter of Credit Fees.
Standby Letters of Credit Fees shall be determined by that percentage
per annum set forth in the following table which is applicable to the Fixed
Charge Coverage Ratio then in effect (the "Applicable Standby LC Percentage")
(computed on the basis of a year of 365 or 366 days, as the case may be, and
actual days elapsed) times the average daily Standby Letter of Credit
Outstandings. The Applicable Standby LC Percentage shall be determined as
follows:
<TABLE>
<CAPTION>
Fixed Charge Coverage Ratio Applicable Standby LC Percentage (rate per annum)
--------------------------- -------------------------------------------------
<S> <C>
greater than or equal to 2.20 to 1.00 0.500%
greater than or equal to 2.05 to 1.00 but less than 2.20 to 1.00 0.625%
greater than or equal to 1.90 to 1.00 but less than 2.05 to 1.00 0.750%
greater than or equal to 1.75 to 1.00 but less than 1.90 to 1.00 1.000%
less than 1.75 to 1.00 1.250%
</TABLE>
Until the Borrower shall have delivered to the Administrative
Agent a Compliance Certificate covering the four fiscal periods ending on the
Saturday nearest April 30, 1997, the Fixed Charge Coverage Ratio shall be deemed
to be 1.75 to 1.00. For each fiscal
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<PAGE> 39
quarter subsequent to the completion of four full fiscal quarters after the
Acquisition, the Fixed Charge Coverage Ratio shall be computed based on the
Compliance Certificate for such quarter. Any change in the Fixed Charge Coverage
Ratio (and the Applicable Standby LC Percentage) shall be effective on the date
on which the Compliance Certificate evidencing the computation of such Fixed
Charge Coverage Ratio is delivered to the Administrative Agent; provided,
however, that if the Compliance Certificate evidencing the computation of the
Fixed Charge Coverage Ratio is not delivered on the date on which such
Compliance Certificate is due to be delivered under Section 7.3.3, the Fixed
Charge Coverage Ratio on and after the date on which such Compliance Certificate
is due to be delivered under Section 7.3.3 and until the date on which such
Compliance Certificate is delivered to the Administrative Agent shall be deemed
to be less than 1.75 to 1.00 and the Applicable Standby LC Percentage for such
period computed accordingly.
The Borrower shall also pay to the applicable Issuing Letter
of Credit Bank for its sole account (i) a fronting fee as determined by such
Issuing Letter of Credit Bank and the Borrower and (ii) such Issuing Letter of
Credit Bank's then in effect customary issuance fees and administrative expense
payable with respect to its Standby Letters of Credit as such Issuing Letter of
Credit Bank may generally charge or incur from time to time in connection with
the issuance, maintenance, modification (if any), assignment or transfer (if
any), negotiation, and administration of standby letters of credit payable at
such times as such Issuing Letter of Credit Bank may specify.
2.9.4 Disbursements, Reimbursement.
Borrower shall be obligated immediately to reimburse the
applicable Issuing Letter of Credit Bank (each a "Reimbursement Obligation") for
all amounts which such Issuing Letter of Credit Bank is required to pay pursuant
to the Letters of Credit issued by such Issuing Letter of Credit Bank on or
before the date on which the applicable Issuing Letter of Credit Bank is
required to make payment with respect to a draft presented thereunder. The
applicable Issuing Letter of Credit Bank will promptly notify (A) the Borrower
of each demand or presentment for payment or other drawing under each Letter of
Credit issued by such Issuing Letter of Credit Bank, and (B) the Administrative
Agent of the amount required to be paid by such Issuing Letter of Credit Bank
pursuant to each such Letter of Credit. The Administrative Agent shall promptly
notify each Bank of the amount required to be paid by such Bank as a result of a
drawing upon such Letter of Credit if the applicable Issuing Letter of Credit
Bank shall have notified the Administrative Agent that the Borrower has not
timely reimbursed such Issuing Letter of Credit Bank for such draw. If such
notice is received by a Bank before 1:00 p.m., Columbus, Ohio time, such Bank
shall deliver such Bank's Ratable Share of such payment in immediately available
funds to the Administrative Agent on that Business Day. If such notice is
received by a Bank after 1:00 p.m., Columbus, Ohio time, such Bank shall before
10:00 a.m., Columbus, Ohio time, on the next succeeding Business Day deliver to
the Administrative Agent such Bank's Ratable Share of such payment as a
Revolving Credit Loan from such Bank in immediately available funds. Upon
receipt of each Bank's Ratable Share of such payment, the
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<PAGE> 40
Administrative Agent shall immediately deliver such Bank's Ratable Share of such
payment to the applicable Issuing Letter of Credit Bank.
2.9.5 Documentation.
Each Loan Party agrees to be bound by the terms of each
Issuing Letter of Credit Bank's application and agreement for letters of credit
and each Issuing Letter of Credit Bank 's written regulations and customary
practices relating to letters of credit, though such interpretation may be
different from such Loan Party's own. In the event of a conflict between such
application or agreement and this Agreement, this Agreement shall govern
(provided that terms of any Issuing Letter of Credit Bank's application and
agreement for letters of credit which are in addition to those contained herein
and which do not expressly conflict with the terms contained herein shall be
deemed not to be in conflict with this Agreement). It is understood and agreed
that, except in the case of gross negligence or willful misconduct, the
applicable Issuing Letter of Credit Bank shall not be liable for any error,
negligence and/or mistakes, whether of omission or commission, in following any
Loan Party's instructions or those contained in the Letters of Credit issued by
such Issuing Letter of Credit Bank or any modifications, amendments or
supplements thereto;
2.9.6 Determinations to Honor Drawing Requests.
In determining whether to honor any request for drawing under
any Letter of Credit by the beneficiary thereof, the applicable Issuing Letter
of Credit Bank shall be responsible only to determine that the documents and
certificates required to be delivered under such Letter of Credit have been
delivered and that they appear to comply on their face with the requirements of
such Letter of Credit.
2.9.7 Nature of Participation and Reimbursement
Obligations.
The obligation of the Banks to participate in Letters of
Credit pursuant to Section 2.9.2 and the obligation of the Banks pursuant to
Section 2.9.4 to fund Revolving Credit Loans upon a draw under a Letter of
Credit or to acquire participations in Letters of Credit and the Obligations of
the Borrower to reimburse the applicable Issuing Letter of Credit Bank upon a
draw under any Letter of Credit pursuant to Section 2.9 shall be absolute
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of such sections under all circumstances, including the following
circumstances:
(i) the failure of any Loan Party or any other
Person to comply with the conditions set
forth in Sections 2.1, 2.5, 2.6 or 6.2 or as
otherwise set forth in this Agreement for the
making of a Revolving Credit Loan, it being
acknowledged that such conditions are not
required for the making of a Revolving Credit
Loan under Section 2.9.4;
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<PAGE> 41
(ii) any lack of validity or enforceability of any
Letter of Credit;
(iii) the existence of any claim, set-off, defense
or other right which any Loan Party or any
Bank may have at any time against a
beneficiary or any transferee of any Letter
of Credit (or any Persons for whom any such
transferee may be acting), such Issuing
Letter of Credit Bank or any Bank or any
other Person or whether in connection with
this Agreement, the transactions contemplated
herein or any unrelated transaction
(including any underlying transaction between
any Loan Party or Subsidiaries of a Loan
Party and the beneficiary for which any
Letter of Credit was procured);
(iv) any draft, demand, certificate or other
document presented under any 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 even if such Issuing Letter of Credit
Bank has been notified thereof;
(v) payment by such Issuing Letter of Credit Bank
under any Letter of Credit against
presentation of a demand, draft or
certificate or other document which does not
comply with the terms of such Letter of
Credit;
(vi) any adverse change in the business,
operations, properties, assets, condition
(financial or otherwise) or prospects of any
Loan Party or Subsidiaries of a Loan Party;
(vii) any breach of this Agreement or any other
Loan Document by any party thereto;
(viii) any other circumstance or happening
whatsoever, whether or not similar to any of
the foregoing;
(ix) the fact that an Event of Default or a
Potential Default shall have occurred and be
continuing; and
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<PAGE> 42
(x) the fact that the Expiration Date shall have
passed or this Agreement or the Commitments
hereunder shall have been terminated.
2.9.8 Indemnity.
In addition to amounts payable as provided in Section 9.5, the
Borrower hereby agrees to pay and to protect, indemnify and save harmless each
Issuing Letter of Credit Bank from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
fees, expenses and disbursements of counsel and allocated costs of internal
counsel) which such Issuing Letter of Credit Bank may incur or be subject to as
a consequence, direct or indirect, of (i) the issuance of any Letter of Credit,
other than as a result of (A) the gross negligence or willful misconduct of such
Issuing Letter of Credit Bank as determined by a final judgment of a court of
competent jurisdiction or (B) subject to the following clause (ii), the wrongful
dishonor by such Issuing Letter of Credit Bank of a proper demand for payment
made under any Letter of Credit or (ii) the failure of such Issuing Letter of
Credit Bank to honor a drawing under any such Letter of Credit as a result of
any act or omission, whether rightful or wrongful, of any present or future de
jure or de facto government or governmental authority (all such acts or
omissions herein called "Governmental Acts").
2.9.9 Liability for Acts and Omissions.
As between any Loan Party and each Issuing Letter of Credit
Bank, such Loan Party assumes all risks of the acts and omissions of, or misuse
of the Letters of Credit by, the respective beneficiaries of the Letters of
Credit. In furtherance and not in limitation of the foregoing, the applicable
Issuing Letter of Credit Bank shall not be responsible for: (i) the form,
validity, sufficiency, accuracy, genuineness or legal effect of any document
submitted by any party in connection with the application for an issuance of any
Letter of Credit issued by such Issuing Letter of Credit Bank, even if it should
in fact prove to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged (even if such Issuing Letter of Credit Bank shall have been
notified thereof); (ii) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any such Letter of
Credit or the rights or benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any reason; (iii) failure
of the beneficiary of any such Letter of Credit to comply fully with any
conditions required in order to draw upon such Letter of Credit; (iv) errors,
omissions, interruptions or delays in transmission or delivery of any messages,
by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher;
(v) errors in interpretation of technical terms; (vi) any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any such Letter of Credit or of the proceeds thereof; (vii) the
misapplication by the beneficiary of any such Letter of Credit of the proceeds
of any drawing under such Letter of Credit; or (viii) any consequences arising
from causes beyond the control of such Issuing Letter of Credit Bank, including
any Governmental Acts, and none of the above shall affect or impair, or prevent
the vesting of, any of such Issuing Letter of Credit Bank 's rights or powers
hereunder.
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<PAGE> 43
In furtherance and extension and not in limitation of the
specific provisions set forth above, any action taken or omitted by any Issuing
Letter of Credit Bank under or in connection with the Letters of Credit issued
by it or any documents and certificates delivered thereunder, if taken or
omitted in good faith, shall not put such Issuing Letter of Credit Bank under
any resulting liability to the Borrower or any Banks.
The Banks and any Loan Party may not commence a proceeding
against any Issuing Letter of Credit Bank for wrongful disbursement under a
Letter of Credit issued by such Issuing Letter of Credit Bank as a result of
acts or omissions constituting gross negligence or willful misconduct of such
Issuing Letter of Credit Bank, until the Banks have made and the Borrower has
repaid the Revolving Credit Loans described in Section 2.9.4; provided, however,
that nothing in this Section 2.9 shall adversely affect the right of any Loan
Party, after such payment, to commence any proceeding against such Issuing
Letter of Credit Bank for any breach of its obligations hereunder.
2.10 Swing Loans.
2.10.1 Swing Loan Commitment.
Subject to the terms and conditions hereof and relying upon
the representations and warranties herein set forth, and in order to facilitate
loans and repayments in amounts of $10,000,000 or less, the Swing Lender may, at
its option, cancelable at any time for any reason whatsoever, make swing loans
(the "Swing Loans") to the Borrower at any time or from time to time after the
date hereof to, but not including, the Expiration Date, in an aggregate
principal amount up to the Swing Loan Commitment, subject to reduction as
provided herein and to be made in accordance with the following provisions. The
Swing Lender may in its discretion make Swing Loans provided that the aggregate
principal amount of the Swing Loans and the Revolving Credit Loans of all of the
Banks at any one time outstanding plus the Letter of Credit Outstandings shall
not exceed the Revolving Credit Commitments. Within such limits of time and
amount and subject to the other provisions of this Agreement, the Borrower may
borrow, repay and reborrow pursuant to this Section 2.10.
2.10.2 Swing Loan Requests.
Except as otherwise provided herein, the Borrower may from
time to time prior to the Expiration Date request the Swing Lender to make Swing
Loans by delivery to the Swing Lender not later than 12:00 p.m. Columbus, Ohio
time on the proposed Borrowing Date of a duly completed request therefor
substantially in the form of Exhibit 2.10.2 hereto or a request by telephone
immediately confirmed in writing by letter, facsimile or telex (each, a "Swing
Loan Request"), it being understood that the Swing Lender may rely on the
authority of any individual making such a telephonic request without the
necessity of receipt of such written confirmation. Each Swing Loan Request shall
be irrevocable and shall specify the proposed Borrowing Date and the principal
amount of such Swing Loan, which shall be not less than $100,000 and in integral
multiples of $100,000.
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<PAGE> 44
2.10.3 Making of Swing Loans.
So long as the Swing Lender elects to make Swing Loans, the
Swing Lender shall, after receipt by it of a Swing Loan Request pursuant to
Section 2.10.2, fund a Swing Loan to the Borrower in U.S. Dollars and
immediately available funds at its Principal Office prior to 2:00 p.m. Columbus,
Ohio time on the related Borrowing Date.
2.10.4 Swing Note.
The obligation of the Borrower to repay the unpaid principal
amount of the Swing Loans made to it by the Swing Lender together with interest
thereon shall be evidenced by a demand promissory note of the Borrower dated the
Closing Date in substantially the form attached hereto as Exhibit 1.1(S) payable
to the order of the Swing Lender in a face amount equal to the Swing Loan
Commitment.
2.10.5 Repayment of Swing Loans with Revolving Credit
Loans Borrowings.
The Swing Lender may at its option, exercisable at any time
for any reason whatsoever, and shall no later than the fifth (5th) Business Day
following the making of a Swing Loan if the outstanding Swing Loans exceed
$5,000,000 on such date (a "Settlement Date"), demand repayment of all Swing
Loans to the extent that the aggregate of such Swing Loans exceeds $5,000,000,
and each Bank shall make a Revolving Credit Loan in an amount equal to such
Bank's Ratable Share of the aggregate principal amount of the outstanding Swing
Loans in excess of $5,000,000, plus, if the Swing Lender so requests, accrued
interest thereon, provided that no Bank shall be obligated in any event to make
Revolving Credit Loans in excess of its Commitment less its Ratable Share of
Letter of Credit Outstandings. In that event, such Revolving Credit Loans shall
bear interest at the Base Rate Option and shall be deemed to have been properly
requested in accordance with Section 2.5 without regard to any of the
requirements of that provision. The Swing Lender shall provide notice to the
Administrative Agent (which may be a telephonic or written notice by letter,
facsimile or telex) that such Revolving Credit Loans are to be made under this
Section 2.10.5; the Administrative Agent shall then provide notice to the Banks
(which may be a telephonic or written notice by letter, facsimile or telex) that
such Revolving Credit Loans are to be made under this Section 2.10.5 and of the
apportionment among the Banks, the Banks shall be unconditionally obligated to
fund such Revolving Credit Loans (whether or not the conditions specified in
Section 6.2 are then satisfied) by the time the Administrative Agent so
requests, which shall not be earlier than 2:00 p.m. Columbus, Ohio, time on the
Business Day next succeeding the date the Banks receive such notice from the
Administrative Agent; and the Administrative Agent shall promptly deliver the
funds it receives from the Banks to the Swing Lender.
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<PAGE> 45
2.11 Expiration Date; Extension of Expiration Date.
The term "Expiration Date" shall mean May 1, 1998; provided,
however, that if the closing of the Acquisition shall not have occurred prior to
12:01 a.m. on May 8, 1996, then the Expiration Date shall be May 2, 1997; and
provided, further, however, that (i) if the closing of the Acquisition shall
have occurred prior to 12:01 a.m. on May 8, 1996 and (ii) if on or before April
30, 1998 the Company shall have sold since the date hereof capital stock or
other equity interests in the Company that are not mandatorily redeemable at the
option of the holder of such capital stock or other equity interest and (iii) if
the net cash proceeds from such sales less any sums paid or owing by the
Borrower since the date hereof with respect to the redemption, repurchase or
other retirement or cancellation of any of its capital stock or other equity
interests equals or exceeds $100,000,000 and the Subordinated Bridge Financing
has been terminated and any sums borrowed thereunder have been repaid and not
refunded with other subordinated borrowings, then the Expiration Date shall mean
May 3, 1999.
3. INTEREST RATES
3.1 Interest Rate Options.
The Borrower shall pay interest in respect of the outstanding unpaid
principal amount of the Revolving Credit Loans as selected by it from the
Revolving Credit Base Rate Option or Revolving Credit Euro-Rate Option set forth
below applicable to the Revolving Credit Loans, it being understood that,
subject to the provisions of this Agreement, the Borrower may select different
Interest Rate Options and different Interest Periods to apply simultaneously to
the Revolving Credit Loans comprising different Borrowing Tranches and may
convert to or renew one or more Interest Rate Options with respect to all or any
portion of the Revolving Credit Loans comprising any Borrowing Tranche, provided
that there shall not be at any one time outstanding more than seven (7)
Borrowing Tranches in the aggregate among all the Revolving Credit Loans. If at
any time the designated rate applicable to any Revolving Credit Loan made by any
Bank exceeds such Bank's highest lawful rate, the rate of interest on such
Bank's Revolving Credit Loan shall be limited to such Bank's highest lawful
rate.
3.1.1 Revolving Credit Interest Rate Options.
The Borrower shall have the right to select from the following
Interest Rate Options applicable to the Revolving Credit Loans:
(i) Revolving Credit Base Rate Option: A
fluctuating rate per annum (computed on the
basis of a year of 365 or 366 days, as the
case may be, and actual days elapsed) equal
to the Base Rate, such interest rate to
change automatically from time to time
effective as
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<PAGE> 46
of the effective date of each change in the
Base Rate;
(ii) Revolving Credit Euro-Rate Option: A rate per
annum (computed on the basis of a year of 360
days and actual days elapsed) equal to the
Euro-Rate plus a percentage rate per annum
(the "Revolving Credit Euro-Rate Spread")
based on the Fixed Charge Coverage Ratio,
determined as follows:
<TABLE>
<CAPTION>
Fixed Charge Coverage Ratio Revolving Credit Euro-Rate Spread
--------------------------- ---------------------------------
<S> <C>
greater than or equal to 2.20 to 1.00 0.500%
greater than or equal to 2.05 to 1.00 but less than 2.20 to 1.00 0.625%
greater than or equal to 1.90 to 1.00 but less than 2.05 to 1.00 0.750%
greater than or equal to 1.75 to 1.00 but less than 1.90 to 1.00 1.000%
less than 1.75 to 1.00 1.250%
</TABLE>
Until the Borrower shall have delivered to the Administrative
Agent a Compliance Certificate covering the four fiscal periods ending on the
Saturday nearest April 30, 1997, the Fixed Charge Coverage Ratio shall be deemed
to be 1.75 to 1.00. For each fiscal quarter subsequent to the completion of four
full fiscal quarters after the Acquisition, the Fixed Charge Coverage Ratio
shall be computed based on the Compliance Certificate for such quarter. Any
change in the Fixed Charge Coverage Ratio ( and the applicable Revolving Credit
Euro-Rate Spread) shall be effective on the date on which the Compliance
Certificate evidencing the computation of such Fixed Charge Coverage Ratio is
delivered to the Administrative Agent; provided, however, that if the Compliance
Certificate evidencing the computation of the Fixed Charge Coverage Ratio is not
delivered on the date on which such Compliance Certificate is due to be
delivered under Section 7.3.3, the Fixed Charge Coverage Ratio on and after the
date on which such Compliance Certificate is due to be delivered under Section
7.3.3 and until the date on which such Compliance Certificate is delivered to
the Administrative Agent shall be deemed to be less than 1.75 to 1.00 and the
applicable Revolving Credit Euro-Rate Spread for such period computed
accordingly.
Swing Loans shall bear interest in accordance with Section
3.1.1(i) [Revolving Credit Base Rate Option] except to the extent that the Swing
Lender agrees in writing to a different rate of interest; provided, however,
that any Swing Loans with respect to which the
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<PAGE> 47
Swing Lender demands payment pursuant to Section 2.10.5 shall bear interest on
and after such demand for payment in accordance with Section 3.1.1(i) [Revolving
Credit Base Rate Option] notwithstanding any other interest rate agreed to by
the Administrative Agent.
3.2 Interest Periods.
At any time when the Borrower shall select, convert to or renew a
Revolving Credit Euro-Rate Option, the Borrower shall notify the Administrative
Agent thereof at least three (3) Business Days prior to the effective date of
such Revolving Credit Euro-Rate Option by delivering a Loan Request. Such notice
shall specify an interest period (the "Interest Period") during which such
Interest Rate Option shall apply, such Interest Period to be one, two, three or
six Months, provided, that:
3.2.1 Ending Date and Business Day.
Any Interest Period which would otherwise end on a date which
is not a Business Day shall be extended to the next succeeding Business Day
unless such Business Day falls in the next calendar month, in which case such
Interest Period shall end on the next preceding Business Day;
3.2.2 Amount of Borrowing Tranche.
Each Borrowing Tranche of a Revolving Credit Loan to which the
Revolving Credit Euro-Rate Option applies shall be in integral multiples of
$1,000,000 and not less than $5,000,000;
3.2.3 Termination Before Expiration Date.
The Borrower shall not select, convert to or renew an Interest
Period for any portion of the Revolving Credit Loans that would end after the
Expiration Date; and
3.2.4 Renewals.
In the case of the renewal of a Revolving Credit Euro-Rate
Option at the end of an Interest Period, the first day of the new Interest
Period shall be the last day of the preceding Interest Period, without
duplication in payment of interest for such day.
3.2.5 Limitation on Interest Periods during Syndication.
The Borrower shall select only one month Interest Periods for
Revolving Credit Loans to which the Revolving Credit Euro-Rate Option applies
which are borrowed prior to the earliest of the following dates: (i) the date on
which the Revolving Credit Commitment of each of the Managing Agents is equal to
or less than $50,000,000, (ii) the date which is one hundred and twenty (120)
days after the Closing Date, or (iii) the date on which the Borrower abandons
the Acquisition without a closing thereof.
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<PAGE> 48
3.3 Interest After Default.
To the extent permitted by Law, upon the occurrence of an Event of
Default and until such time such Event of Default shall have been cured or
waived:
3.3.1 Letter of Credit Fees, Interest Rate.
The Letter of Credit Fees and the rate of interest for each
Revolving Credit Loan otherwise applicable pursuant to Section 2.9 or Section
3.1, respectively, shall be increased by 2.0% per annum;
3.3.2 Other Obligations.
Each other Obligation hereunder if not paid when due shall
bear interest at a rate per annum equal to the sum of the rate of interest
applicable under the Revolving Credit Base Rate Option plus an additional 2.0%
per annum from the time such Obligation becomes due and payable and until it is
paid in full; and
3.3.3 Acknowledgment.
The Borrower acknowledges that the increased rates referred to
in this Section 3.3 reflect, among other things, the fact that such Revolving
Credit Loans or other amounts have become a substantially greater risk given
their default status and that the Banks are entitled to additional compensation
for such risk. All such interest shall be payable by Borrower upon demand by the
Administrative Agent.
3.4 Euro-Rate Unascertainable.
3.4.1 Unascertainable.
If on any date on which a Euro-Rate would otherwise be
determined, the Administrative Agent shall have determined that:
(i) adequate and reasonable means do not exist for
ascertaining such Euro-Rate, or
(ii) a contingency has occurred which materially and
adversely affects the London interbank eurodollar
market relating to the Euro-Rate,
then the Administrative Agent shall have the rights specified in Section 3.4.3.
3.4.2 Illegality; Increased Costs; Deposits Not
Available.
If at any time any Bank shall have determined that:
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(i) the making, maintenance or funding of any Revolving
Credit Loan to which a Revolving Credit Euro-Rate
Option applies has been made impracticable or unlawful
by compliance by such Bank in good faith with any Law
or any interpretation or application thereof by any
Official Body or with any request or directive of any
Official Body (whether or not having the force of Law),
or
(ii) such Revolving Credit Euro-Rate Option will not
adequately and fairly reflect the cost to such Bank of
the establishment or maintenance of any such Revolving
Credit Loan, or
(iii) after making all reasonable efforts, deposits of the
relevant amount in Dollars for the relevant Interest
Period for a Revolving Credit Loan to which a Revolving
Credit Euro-Rate Option applies, are not available to
such Bank with respect to such Revolving Credit Loan in
the London interbank market,
then such Bank shall have the rights specified in Section 3.4.3.
3.4.3 Administrative Agent's and Bank's Rights.
In the case of any event specified in Section 3.4.1, the
Administrative Agent shall promptly so notify the Banks and the Borrower
thereof, and in the case of a determination specified in Section 3.4.2, such
Bank shall promptly so notify the Administrative Agent and endorse a certificate
to such notice as to the specific circumstances of such notice, and the
Administrative Agent shall promptly send copies of such notice and certificate
to the other Banks and the Borrower. Upon such date as shall be specified in
such notice (which shall not be earlier than the date such notice is given) the
obligation of (A) the Banks, in the case of such notice given by the
Administrative Agent in respect of Section 3.4.1, or (B) such Bank, in the case
of such notice given by such Bank in respect of Section 3.4.2, to allow the
Borrower to select, convert to or renew a Revolving Credit Euro-Rate Option
shall be suspended until the Administrative Agent shall have later notified the
Borrower, or such Bank shall have later notified the Administrative Agent, of
the Administrative Agent's or such Bank's, as the case may be, determination
that the circumstances giving rise to such previous determination no longer
exist. If at any time the Administrative Agent makes a determination under
Section 3.4.1 and the Borrower has previously notified the Administrative Agent
of its selection of, conversion to or renewal of a Revolving Credit Euro-Rate
Option and such Interest Rate Option has not yet gone
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into effect, such notification shall be deemed to provide for selection of,
conversion to or renewal of the Revolving Credit Base Rate Option otherwise
available with respect to the affected Revolving Credit Loans. If any Bank
notifies the Administrative Agent of a determination under Section 3.4.2, the
Borrower shall, subject to the Borrower's indemnification Obligations under
Section 4.6.2, as to any Revolving Credit Loan of such Bank to which a Revolving
Credit Euro-Rate Option applies, on the date specified in such notice convert
such Revolving Credit Loan to the Revolving Credit Base Rate Option otherwise
available with respect to such Revolving Credit Loan. Absent due notice from the
Borrower of conversion, such Revolving Credit Loan shall automatically be
converted to the Revolving Credit Base Rate Option otherwise available with
respect to such Revolving Credit Loan upon such specified date. Upon any such
conversion, the Borrower shall have the right to prepay Revolving Credit Loans
in the amount of such Revolving Credit Loan on the date of such conversion
without providing the notice otherwise required by Section 4.4.1.
3.5 Selection of Interest Rate Options.
If the Borrower fails to select a new Interest Period to apply
to any Borrowing Tranche to which a Revolving Credit Euro-Rate Option applies at
the expiration of an existing Interest Period applicable to such Borrowing
Tranche in accordance with the provisions of Section 3.2, the Borrower shall be
deemed to have converted such Borrowing Tranche to the Revolving Credit Base
Rate Option commencing upon the last day of such Interest Period.
4. PAYMENTS
4.1 Payments.
All payments and prepayments to be made in respect of
principal, interest, Commitment Fees, Letters of Credit Fees, the Administrative
Agent's Fee, or other amounts due from the Borrower hereunder (other than the
fees and expenses referenced in Section 2.9.3.1 and Section 2.9.3.2 which are to
be paid to the Issuing Letter of Credit Bank as provided in such sections and
the fees and expenses referenced in Section 9.15, each of which shall be paid in
accordance with such sections) shall be payable prior to 11:00 a.m., Columbus,
Ohio time, on the date when due without presentment, demand, protest or notice
of any kind, all of which are hereby expressly waived by the Borrower, and
without set-off, counterclaim or other deduction of any nature, and an action
therefor shall immediately accrue. Payments of principal and interest on
Revolving Credit Loans and of Commitment Fees and Letters of Credit Fees shall
be made to the Administrative Agent at the Principal Office for the ratable
accounts of the Banks in Dollars and in immediately available funds, and the
Administrative Agent shall promptly distribute such amounts to the Banks in
immediately available funds,. The Administrative Agent's and each Bank's
statement of account, ledger or other relevant record shall, in the absence of
manifest error, be conclusive as the statement of the amount of principal of and
interest on the Revolving Credit Loans and other amounts owing under this
Agreement and shall be deemed an "account stated."
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4.2 Pro Rata Treatment of Banks.
Each borrowing of a Revolving Credit Loan shall be allocated
to each Bank according to its Ratable Share, and each selection of, conversion
to or renewal of any Interest Rate Option and each payment or prepayment by the
Borrower with respect to principal, interest, Commitment Fees, Letters of Credit
Fees, or other fees (except for the Administrative Agent's Fee, the Managing
Agents' fees, fees owing to PNC Securities Corp and any Issuing Letter of Credit
Bank's fees) or amounts due from the Borrower hereunder to the Banks with
respect to the Revolving Credit Loans, shall (except as provided in Section
3.4.2 [Illegality, Increased Costs; Deposits not Available], 4.4 [Voluntary
Prepayments] or 4.6 [Additional Compensation in Certain Circumstances]) be made
in proportion to the applicable Revolving Credit Loans outstanding from each
Bank and, if no such Revolving Credit Loans are then outstanding, in proportion
to the Ratable Share of each Bank.
4.3 Interest Payment Dates.
Interest on Revolving Credit Loans to which the Revolving
Credit Base Rate Option applies and on Swing Loans shall be due and payable in
arrears on the first Business Day of each March, June, September and December
after the date hereof and on the Expiration Date or upon acceleration of the
Revolving Credit Notes. Interest on Revolving Credit Loans to which the
Revolving Credit Euro-Rate Option applies shall be due and payable on the last
day of each Interest Period for those Revolving Credit Loans and, if any such
Interest Period is longer than three Months, also on the last day of every third
Month during such Interest Period. Without limitation on Section 4.4.1 interest
on mandatory prepayments of principal under Section 4.5 shall be due on the date
such mandatory prepayment is due. Interest on the principal amount of each
Revolving Credit Loan or other monetary Obligation shall be due and payable on
demand after such principal amount or other monetary Obligation becomes due and
payable (whether on the stated maturity date, upon acceleration or otherwise).
4.4 Voluntary Prepayments.
4.4.1 Right to Prepay.
The Borrower shall have the right at its option from
time to time to prepay the Revolving Credit Loans and Swing Loans in whole or
part without premium or penalty (except as provided in Section 4.6):
(i) at any time with respect to any
Revolving Credit Loan to which the
Revolving Credit Base Rate Option
applies or with respect to any Swing
Loan,
(ii) on the last day of the applicable
Interest Period with respect to
Revolving Credit Loans to which a
Revolving Credit Euro-Rate Option
applies, and
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(iii) on the date specified in a notice by
any Bank pursuant to Section 3.4.2
[Euro-Rate Unascertainable] with
respect to any Revolving Credit Loan
to which a Revolving Credit Euro-Rate
Option applies.
Whenever the Borrower desires to prepay any part of the
Revolving Credit Loans, it shall provide a prepayment notice to the
Administrative Agent not later than noon, Columbus, Ohio time on the Business
Day prior to the date of prepayment of Revolving Credit Loans setting forth the
following information (provided no notice from Borrower is required pursuant to
subsection (iii) above):
(x) the date, which shall be a Business Day, on which the
proposed prepayment is to be made;
(y) a statement indicating the application of the prepayment
to the Revolving Credit Loans or Swing Loans; and
(z) the total principal amount of such prepayment, which shall
not be less than $1,000,000.
All prepayment notices shall be irrevocable. The principal
amount of the Revolving Credit Loans and Swing Loans for which a prepayment
notice is given, together with interest on such principal amount except with
respect to Revolving Credit Loans to which the Revolving Credit Base Rate Option
applies, shall be due and payable on the date specified in such prepayment
notice as the date on which the proposed prepayment is to be made. If the
Borrower prepays a Revolving Credit Loan pursuant to this section or prepays a
Revolving Credit Loan pursuant to Section 4.5 but fails to specify the
applicable Borrowing Tranche which the Borrower is prepaying, the prepayment
shall be applied first to Revolving Credit Loans to which the Revolving Credit
Base Rate Option applies, then to Revolving Credit Loans to which the Revolving
Credit Euro-Rate Option applies. Any prepayment hereunder shall be subject to
the Borrower's Obligation to indemnify the Banks under Section 4.6.2.
4.5 Mandatory Prepayments.
4.5.1 Sale of Assets.
Within five (5) Business Days of any sale of assets authorized
by Section 7.2.7(iv), the Borrower shall make a mandatory prepayment of
principal on the Revolving Credit Loans (together with accrued interest on such
principal amount) equal to the lesser of (i) the extent that the aggregate
after-tax net cash proceeds (including without limitation cash, as and when
collected, pursuant to any notes or other securities received as consideration
for such sale, transfer or lease), as reasonably estimated by the Borrower, of
all such sales, transfers or leases on and after the date hereof are in excess
of $ 25,000,000 or (ii) the amount of
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the outstanding Revolving Credit Loans and the Revolving Credit Commitment of
each of the Banks shall each be reduced as provided in Section 2.4.2(i);
4.5.2 Prepayment from Proceeds of Equity or Subordinated
Bridge Facility.
On June 15, 1996, the Borrower shall prepay the lesser of all
outstanding Revolving Credit Loans or $100,000,000 from the proceeds of either
(i) the sale by the Company of its capital stock after the date hereof or (ii)
the Company's borrowing under the Subordinated Bridge Facility; provided,
however, that if in the reasonable discretion of the Managing Agents the sale
referred to in (i) above is near completion, such prepayment shall be made on
June 30, 1996. There shall be no reduction in the Revolving Credit Commitments
in connection with these prepayments;
4.5.3 Payment to Reduce Revolving Credit Loans Made
Pursuant to Section 2.9.4
In the event that the Banks have made Revolving Credit Loans
to reimburse an Issuing Letter of Credit Bank with respect to disbursements
under Letters of Credit that have not been reimbursed by the Borrower pursuant
to Section 2.9.4 and the then Revolving Credit Loans exceed the lesser of (i)
$450,000,000 or (ii) the Revolving Credit Commitments , the Borrower shall
immediately pay to the Banks an amount which would reduce the Revolving Credit
Loans to an amount which does not exceed the lesser of (i) $450,000,000 or (ii)
the Revolving Credit Commitments. There shall be no reduction in the Revolving
Credit Commitments in connection with these prepayments;
4.5.4 Payment to Reduce Revolving Credit Loans if
Commitments are Reduced Pursuant to Section 2.4.2(ii)
In the event that the Commitments are permanently reduced
pursuant to Section 2.4.2(ii), the Borrower shall immediately make a mandatory
prepayment of principal on the Revolving Credit Loans to the extent that the
Revolving Facility Usage exceeds the Commitments; and;
4.5.5 Application Among Interest Rate Options.
Unless the Borrower otherwise specifies in writing to the
Administrative Agent prior to or simultaneously with such prepayment (in which
case the funds shall be so applied) all prepayments required pursuant to this
Section 4.5 shall first be applied among the Interest Rate Options to the
principal amount of the Revolving Credit Loans subject to the Revolving Credit
Base Rate Option, and then to Revolving Credit Loans subject to a Revolving
Credit Euro-Rate Option. In accordance with Section 4.6.2, the Borrower shall
indemnify the Banks for any loss or expense, including loss of margin, incurred
with respect to any such
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prepayments applied against Revolving Credit Loans subject to a Revolving Credit
Euro-Rate Option on any day other than the last day of the applicable Interest
Period.
4.6 Additional Compensation in Certain Circumstances.
4.6.1 Increased Costs or Reduced Return Resulting From
Taxes, Reserves, Capital Adequacy Requirements,
Expenses, Etc.
If any Law, guideline or interpretation or any change
in any Law, guideline or interpretation or application thereof by any Official
Body charged with the interpretation or administration thereof or compliance
with any request or directive (whether or not having the
force of Law) of any central bank or other Official Body:
(i) subjects any Bank to any tax or changes the
basis of taxation with respect to this
Agreement, the Revolving Credit Notes, the
Revolving Credit Loans or payments by the
Borrower of principal, interest, Commitment
Fees, or other amounts due from the Borrower
hereunder or under the Revolving Credit Notes
(except for taxes on the overall net income
of such Bank),
(ii) imposes, modifies or deems applicable any
reserve, special deposit or similar
requirement against credits or commitments to
extend credit extended by, or assets (funded
or contingent) of, deposits with or for the
account of, or other acquisitions of funds
by, any Bank, or
(iii) imposes, modifies or deems applicable any
capital adequacy or similar requirement (A)
against assets (funded or contingent) of, or
letters of credit, other credits or
commitments to extend credit extended by, any
Bank, or (B) otherwise applicable to the
obligations of any Bank under this Agreement,
and the result of any of the foregoing is to increase the cost to, reduce the
income receivable by, or impose any expense (including loss of margin) upon any
Bank with respect to this Agreement, the Revolving Credit Notes or the making,
maintenance or funding of any part of the Revolving Credit Loans (or, in the
case of any capital adequacy or similar requirement, to have the effect of
reducing the rate of return on any Bank's capital, taking into consideration
such Bank's customary policies with respect to capital adequacy) by an amount
which such Bank in its sole discretion deems to be material, such Bank shall
from time to time notify the Borrower and the Administrative Agent of the amount
determined in good faith (using any averaging and
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attribution methods employed in good faith and shall be binding upon the parties
absent manifest error) by such Bank to be necessary to compensate such Bank for
such increase in cost, reduction of income or additional expense or reduced
rates of return. Such notice shall set forth in reasonable detail the basis for
such determination. Such amount shall be due and payable by the Borrower to such
Bank ten (10) Business Days after such notice is given.
4.6.2 Indemnity.
In addition to the compensation required by Section 4.6.1 ,
the Borrower shall indemnify each Bank against all liabilities, losses or
expenses (including loss of margin, any loss or expense incurred in liquidating
or employing deposits from third parties and any loss or expense incurred in
connection with funds acquired by a Bank to fund or maintain Revolving Credit
Loans subject to a Revolving Credit Euro-Rate Option) which such Bank sustains
or incurs as a consequence of any
(i) payment, prepayment, conversion or renewal of any
Revolving Credit Loan to which a Revolving Credit
Euro-Rate Option applies on a day other than the
last day of the corresponding Interest Period
(whether or not such payment or prepayment is
mandatory, voluntary or automatic and whether or
not such payment or prepayment is then due),
(ii) attempt by the Borrower to revoke (expressly, by
later inconsistent notices or otherwise) in whole
or part any Loan Requests under Section 2.5 or
any notice relating to prepayments under Section
4.4, or
(iii) default by the Borrower in the performance or
observance of any covenant or condition contained
in this Agreement or any other Loan Document,
including any failure of the Borrower to pay when
due (by acceleration or otherwise) any principal,
interest, Commitment Fee or any other amount due
hereunder.
If any Bank sustains or incurs any such loss or expense, it shall from
time to time notify the Borrower of the amount determined in good faith by such
Bank (which determination may include such assumptions, allocations of costs and
expenses and averaging or attribution methods as such Bank shall deem reasonable
and shall be binding on the parties absent manifest error) to be necessary to
indemnify such Bank for such loss or expense. Such notice shall set forth in
reasonable detail the basis for such determination. Such amount shall be due and
payable by the Borrower to such Bank ten (10) Business Days after such notice is
given.
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5. REPRESENTATIONS AND WARRANTIES
5.1 Representations and Warranties.
The Borrower represents and warrants to the Documentation Agent, the
Administrative Agent, the Syndication Agent, the Managing Agents, the Issuing
Letter of Credit Banks and each of the Banks as follows:
5.1.1 Organization and Qualification.
Each Loan Party and each Subsidiary of any Loan Party is a
corporation or partnership, duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization. Each Loan Party and
each Subsidiary of any Loan Party has the lawful power to own or lease its
properties and to engage in the business it presently conducts or proposes to
conduct. Each Loan Party and each Subsidiary of any Loan Party is listed on
Schedule 5.1.1 and duly licensed or qualified and in good standing in each
jurisdiction where the property owned or leased by it or the nature of the
business transacted by it or both makes such licensing or qualification
necessary (except where the failure to be so licensed or qualified would not
constitute a Material Adverse Change), and upon request of the Administrative
Agent, the Borrower will promptly furnish a written list of every jurisdiction
where each Subsidiary and Loan Party is so qualified.
5.1.2 Capitalization and Ownership.
The authorized capital stock of the Company consists of 90
million authorized shares of voting common stock, 48,044,742 of which were
outstanding as of April 12, 1996 (referred to herein as the "Shares"); 8 million
authorized shares of non-voting common stock, none of which are outstanding; and
2 million authorized shares of preferred stock, none of which are outstanding.
All of the Shares have been validly issued and are fully paid and nonassessable.
5.1.3 Subsidiary Matters.
Other than as set forth on Schedule 5.1.3, each of the
Company's Subsidiaries is directly or indirectly wholly owned by the Company and
all of the issued and outstanding shares of capital stock of each such
Subsidiary (referred to herein as the "Subsidiary Shares") are owned free and
clear in each case of any Lien. All Subsidiary Shares have been validly issued,
and all Subsidiary Shares are fully paid and nonassessable. There are no
options, warrants or other rights outstanding to purchase any Subsidiary Shares
except as indicated on Schedule 5.1.3.
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5.1.4 Power and Authority.
Each Loan Party has full power to enter into, execute, deliver
and carry out this Agreement and the other Loan Documents to which it is a
party, to incur the Indebtedness contemplated by the Loan Documents and to
perform its Obligations under the Loan Documents to which it is a party, and all
such actions have been duly authorized by all necessary proceedings on its part.
5.1.5 Validity and Binding Effect.
This Agreement has been duly and validly executed and
delivered by each Loan Party, and each other Loan Document which any Loan Party
is required to execute and deliver on or after the date hereof will have been
duly executed and delivered by such Loan Party on the required date of delivery
of such Loan Document. This Agreement and each other Loan Document constitutes,
or will constitute, legal, valid and binding obligations of each Loan Party
which is or will be a party thereto on and after its date of delivery thereof,
enforceable against such Loan Party in accordance with its terms, except to the
extent that enforceability of any such Loan Document may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforceability of creditors' rights generally or limiting the
right of specific performance.
5.1.6 No Conflict.
Neither the execution and delivery of this Agreement or the
other Loan Documents by any Loan Party nor the consummation of the transactions
herein or therein contemplated or compliance with the terms and provisions
hereof or thereof by any of them will conflict with, constitute a default under
or result in any breach of (i) the terms and conditions of the certificate of
incorporation, bylaws or other organizational documents of any Loan Party or
(ii) any Law or any material agreement or instrument or order, writ, judgment,
injunction or decree to which any Loan Party or any of its Subsidiaries is a
party or by which it or any of its Subsidiaries is bound or to which it or any
of its Subsidiaries is subject, or result in the creation or enforcement of any
Lien whatsoever upon any property (now or hereafter acquired) of any Loan Party
or any of its Subsidiaries (other than Liens granted under the Loan Documents).
5.1.7 Litigation.
There are no actions, suits, proceedings or investigations
pending or, to the knowledge of any Loan Party, threatened against such Loan
Party or any Subsidiary of any Loan Party at law or equity before any Official
Body which individually or in the aggregate may result in any Material Adverse
Change. None of the Loan Parties or any Subsidiaries of any Loan Party is in
violation of any order, writ, injunction or any decree of any Official Body
which may result in any Material Adverse Change.
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5.1.8 Title to Properties.
Each Loan Party and each Subsidiary of any Loan Party has good
and marketable title to or a valid leasehold interest in all properties, assets
and other rights which it purports to own or lease or which are reflected as
owned or leased on its books and records, free and clear of all Liens except
Permitted Liens, and subject to the terms and conditions of the applicable
leases. All leases of property are in full force and effect without the
necessity for any consent which has not previously been obtained upon
consummation of the transactions contemplated hereby.
5.1.9 Financial Statements.
(i) Historical Statements. The Company has
delivered to the Administrative Agent copies
of its audited consolidated year-end
financial statements for and as of the end of
the three fiscal years ended February 3, 1996
(the "Annual Statements" and the Annual
Statements are sometimes collectively
referred to as the "Historical Statements").
The Historical Statements were compiled from
the books and records maintained by the
Company's management, are correct and
complete and fairly represent the
consolidated financial condition of the
Company and its Subsidiaries as of their
dates and the results of operations for the
fiscal periods then ended and have been
prepared in accordance with GAAP consistently
applied;
(ii) Financial Projections. The Company has
delivered to the Administrative Agent
financial projections of the Company and its
Subsidiaries for fiscal years 1997, 1998 and
1999 derived from various assumptions of the
Company's management (the "Financial
Projections"). The Financial Projections
reflect the reasonable expectations of the
Company's management as of the Closing Date
in light of the history of the business,
present and foreseeable conditions and
intentions of the Company's management, all
based on the assumptions thereto. The
Financial Projections accurately reflect the
liabilities of the Company and its
Subsidiaries incurred pursuant to the Loan
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Documents upon consummation of the
transactions contemplated hereby as of the
Closing Date; and
(iii) Accuracy of Financial Statements. Neither
the Company nor any Subsidiary of the
Company has any material liabilities,
contingent or otherwise, or forward or
long-term commitments that are not disclosed
in the Historical Statements or in the notes
thereto, and except as disclosed therein
there are no unrealized or anticipated
losses from any commitments of the Company
or any Subsidiary of the Company which may
cause a Material Adverse Change. Since
February 3, 1996, no Material Adverse Change
has occurred.
5.1.10 Margin Stock.
None of the Loan Parties or any Subsidiaries of any Loan Party
engages or intends to engage principally, or as one of its important activities,
in the business of extending credit for the purpose, immediately, incidentally
or ultimately, of purchasing or carrying margin stock (within the meaning of
Regulation U). No part of the proceeds of any Revolving Credit Loan or issued
Letter of Credit has been or will be used, immediately, incidentally or
ultimately, to purchase or carry any margin stock or to extend credit to others
for the purpose of purchasing or carrying any margin stock or to refund
Indebtedness originally incurred for such purpose, or for any purpose which
entails a violation of or which is inconsistent with the provisions of the
regulations of the Board of Governors of the Federal Reserve System. None of the
Loan Parties or any Subsidiary of any Loan Party holds or intends to hold margin
stock in such amounts that more than 25% of the reasonable value of the assets
of any Loan Party or Subsidiary of any Loan Party are or will be represented by
margin stock.
5.1.11 Full Disclosure.
Neither this Agreement nor any other Loan Document, nor any
certificate, statement, agreement or other documents furnished to the
Documentation Agent, the Administrative Agent, the Syndication Agent, the
Managing Agents, the Issuing Letter of Credit Banks or any Bank in connection
herewith or therewith, contains any untrue statement of a material fact or omits
to state a material fact necessary in order to make the statements contained
herein and therein, in light of the circumstances under which they were made,
not misleading. There is no fact known to any Loan Party which materially
adversely affects the business, property, assets, financial condition, results
of operations or prospects of any Loan Party or Subsidiary of any Loan Party
which has not been set forth in this Agreement or in the certificates,
statements, agreements or other documents furnished in writing to the
Documentation Agent, the Administrative Agent, the Syndication Agent, the
Managing Agents,
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the Issuing Letter of Credit Banks and the Banks prior to or at
the date hereof in connection with the transactions contemplated hereby.
5.1.12 Taxes.
All federal, state, local and other tax returns required to
have been filed with respect to each Loan Party and each Subsidiary of any Loan
Party have been filed, and payment or adequate provision has been made for the
payment of all taxes, fees, assessments and other governmental charges shown to
be owing pursuant to said returns or to assessments received, except to the
extent that such taxes, fees, assessments and other charges are being contested
in good faith by appropriate proceedings diligently conducted and for which such
reserves or other appropriate provisions, if any, as shall be required by GAAP
shall have been made. There are no agreements or waivers extending the statutory
period of limitations applicable to any federal income tax return of any Loan
Party or Subsidiary of any Loan Party for any period.
5.1.13 Consents and Approvals.
No consent, approval, exemption, order or authorization of, or
a registration or filing with, any Official Body or any other Person is required
by any Law or any agreement in connection with the execution, delivery and
carrying out of this Agreement and the other Loan Documents by any Loan Party,
except as listed on Schedule 5.1.13, all of which shall have been obtained or
made on or prior to the Closing Date except as otherwise indicated on Schedule
5.1.13.
5.1.14 No Event of Default; Compliance with Instruments.
No event has occurred and is continuing and no condition
exists now or will exist after giving effect to and as a result of the
extensions of credit to be made on the Closing Date under the Loan Documents
which constitutes an Event of Default or Potential Default. None of the Loan
Parties or any Subsidiaries of any Loan Party is in violation of (i) any term of
its certificate of incorporation, bylaws, or other organizational documents or
(ii) any material agreement or instrument to which it is a party or by which it
or any of its properties may be subject or bound where such violation would
constitute a Material Adverse Change.
5.1.15 Patents, Trademarks, Copyrights, Licenses, Etc.
A Loan Party or a Subsidiary of a Loan Party owns or possesses
all the material patents, trademarks, service marks, trade names, copyrights,
licenses, registrations, franchises, permits and rights necessary to own and
operate its properties and to carry on its business as presently conducted and
planned to be conducted by the Borrower and its Subsidiaries taken as a whole,
without known conflict by, or with the rights of, others.
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5.1.16 Insurance.
The Borrower has delivered to the Administrative Agent a true
and correct listing of the property and general liability insurance of the
Borrower. No notice has been given or claim made and no grounds exist to cancel
or avoid any of such policies or bonds or to reduce the coverage provided
thereby. Such policies and bonds provide adequate coverage from reputable and
financially sound insurers in amounts sufficient to insure the assets and risks
of each Loan Party and each Subsidiary of any Loan Party in accordance with
prudent business practice in the industry of the Loan Parties and their
Subsidiaries.
5.1.17 Compliance with Laws.
The Loan Parties and their Subsidiaries are in compliance in
all material respects with all applicable Laws (other than Environmental Laws
which are specifically addressed in Section 5.1.22) in all jurisdictions in
which any Loan Party or Subsidiary of any Loan Party is presently or currently
anticipates it will be doing business except where the failure to do so would
not constitute a Material Adverse Change.
5.1.18 Material Contracts.
Schedule 5.1.18 lists all material contracts relating to the
business operations of each Loan Party and each Subsidiary of any Loan Party,
including all employee benefit plans and Labor Contracts. All such material
contracts are valid, binding and enforceable upon such Loan Party or Subsidiary
and each of the other parties thereto in accordance with their respective terms,
and there is no default thereunder, to the Loan Parties' knowledge, with respect
to parties other than such Loan Party or Subsidiary. For purposes of this
Section 5.1.18 the term "material contracts" shall mean those contracts or other
agreements which the Company would be required to file with the Securities and
Exchange Commission pursuant to item 601(a)(10) of Regulation S-K promulgated
under the Securities Act of 1933 and the Securities Exchange Act of 1934.
5.1.19 Investment Companies.
None of the Loan Parties or any Subsidiaries of any Loan Party
is an "investment company" registered or required to be registered under the
Investment Company Act of 1940 or under the "control" of an "investment company"
as such terms are defined in the Investment Company Act of 1940 and shall not
become such an "investment company" or under such "control".
5.1.20 Plans and Benefit Arrangements.
Except as set forth on Schedule 5.1.20:
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(i) The Company and each other member of the ERISA
Group are in compliance in all material respects
with any applicable provisions of ERISA with
respect to all Benefit Arrangements, Plans and
Multiemployer Plans. There has been no Prohibited
Transaction with respect to any Benefit
Arrangement or any Plan or, to the best knowledge
of the Company, with respect to any Multiemployer
Plan or Multiple Employer Plan, which could result
in any material liability of the Company or any
other member of the ERISA Group. The Company and
all other members of the ERISA Group have made
when due any and all payments required to be made
under any agreement relating to a Multiemployer
Plan or a Multiple Employer Plan or any Law
pertaining thereto. With respect to each Plan and
Multiemployer Plan, the Company and each other
member of the ERISA Group (i) have fulfilled in
all material respects their obligations under the
minimum funding standards of ERISA, (ii) have not
incurred any liability to the PBGC, and (iii) have
not had asserted against them any penalty for
failure to fulfill the minimum funding
requirements of ERISA;
(ii) To the best of each Loan Parties' knowledge, each
Multiemployer Plan and Multiple Employer Plan is
able to pay benefits thereunder when due;
(iii) Neither the Company nor any other member of the
ERISA Group has instituted or intends to institute
proceedings to terminate any Plan;
(iv) No event requiring notice to the PBGC under
Section 302(f)(4)(A) of ERISA has occurred or is
reasonably expected to occur with respect to any
Plan, and no amendment with respect to which
security is required under Section 307 of ERISA
has been made or is reasonably expected to be made
to any Plan;
(v) The aggregate accumulated benefit obligations
determined in accordance with GAAP as of the end
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of the most recent calendar year for all Plans
does not exceed by more than $8 million the fair
market value of all assets of the Plans;
(vi) Neither the Company nor any other member of the
ERISA Group has incurred or reasonably expects to
incur any material withdrawal liability under
ERISA to any Multiemployer Plan or Multiple
Employer Plan. Neither the Company nor any other
member of the ERISA Group has been notified by any
Multiemployer Plan or Multiple Employer Plan that
such Multiemployer Plan or Multiple Employer Plan
has been terminated within the meaning of Title IV
of ERISA and, to the best knowledge of the
Company, no Multiemployer Plan or Multiple
Employer Plan is reasonably expected to be
reorganized or terminated, within the meaning of
Title IV of ERISA;
(vii) To the extent that any Benefit Arrangement is
insured, the Company and all other members of the
ERISA Group have paid when due all premiums
required to be paid for all periods through the
Closing Date. To the extent that any Benefit
Arrangement is funded other than with insurance,
the Company and all other members of the ERISA
Group have made when due all contributions
required to be paid for all periods through the
Closing Date; and
(viii) All Plans, Benefit Arrangements and
Multiemployer Plans have been administered in
accordance with their terms and applicable Law.
5.1.21 Employment Matters.
Each of the Loan Parties and each of their Subsidiaries is in
compliance with the Labor Contracts and all applicable federal, state and local
labor and employment Laws including those related to equal employment
opportunity and affirmative action, labor relations, minimum wage, overtime,
child labor, medical insurance continuation, worker adjustment and relocation
notices, immigration controls and worker and unemployment compensation, where
the failure to comply would constitute a Material Adverse Change. There are no
outstanding grievances, arbitration awards or appeals therefrom arising out of
the Labor Contracts or current
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or threatened strikes, picketing, handbilling or other work stoppages or
slowdowns at facilities of any of the Loan Parties or any of their Subsidiaries
which in any case would constitute a Material Adverse Change.
5.1.22 Environmental Matters.
Except as disclosed on Schedule 5.1.22:
(i) Except for notices which could reasonably
relate to a Material Adverse Change, none of
the Loan Parties or any Subsidiaries of any
Loan Party has received any Environmental
Complaint from any Official Body or private
Person alleging that such Loan Party or
Subsidiary or any prior or subsequent owner
of any Property is a potentially responsible
party under the Comprehensive Environmental
Response, Compensation and Liability Act, 42
U.S.C. Section 9601, et seq., and none of
the Loan Parties has any reason to believe
that such an Environmental Complaint might
be received. There are no pending or, to any
Loan Party's knowledge, threatened
Environmental Complaints relating to any
Loan Party or any Subsidiary of any Loan
Party or, to any Loan Party's knowledge, any
prior or subsequent owner of any Property
pertaining to, or arising out of, any
Environmental Conditions which could
reasonably result in a Material Adverse
Change,
(ii) Except for Environmental Conditions,
violations or failures which individually
and in the aggregate are not reasonably
likely to result in a Material Adverse
Change, there are no circumstances at, on or
under any Property that constitute a breach
of or non-compliance with any of the
Environmental Laws, and there are no past or
present Environmental Conditions at, on or
under any Property or, to any Loan Party's
knowledge, at, on or under adjacent
property, that prevent compliance with the
Environmental Laws at any Property,
(iii) Neither any Property nor any structures,
improvements, equipment, fixtures,
activities or
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facilities thereon or thereunder contain or
use Regulated Substances, except in
compliance with Environmental Laws, which
could reasonably result in a Material
Adverse Change. There are no processes,
facilities, operations, equipment or other
activities at, on or under any Property, or,
to any Loan Party's knowledge, at, on or
under adjacent property, that currently
result in the release or threatened release
of Regulated Substances onto any Property,
except to the extent that such releases or
threatened releases are not a breach of or
otherwise not a violation of the
Environmental Laws or are not likely to
result in a Material Adverse Change,
(iv) There are no aboveground storage tanks,
underground storage tanks or underground
piping associated with such tanks, used for
the management of Regulated Substances at,
on or under any Property that (a) do not
have, to the extent required by
Environmental Laws, a full operational
secondary containment system in place, and
(b) are not otherwise in compliance with all
Environmental Laws, except in any case where
such would not result in a Material Adverse
Change. There are no abandoned underground
storage tanks or underground piping
associated with such tanks, previously used
for the management of Regulated Substances
at, on or under any Property that have not
either been closed in place in accordance
with Environmental Laws or removed in
compliance with all applicable Environmental
Laws and no contamination associated with
the use of such tanks exists on any Property
that is not in compliance with Environmental
Laws, except in any case where such would
not result in a Material Adverse Change,
(v) The applicable Loan Party or a Subsidiary of
a Loan Party has all permits, licenses,
authorizations, plans and approvals
necessary under the Environmental Laws for
the conduct of the business of the Borrower
and its Subsidiaries taken as a whole,
except in any case where the failure to so
have
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would not result in a Material Adverse
Change. Each Loan Party and each Subsidiary
of a Loan Party has submitted all notices,
reports and other filings required by the
Environmental Laws to be submitted to an
Official Body which pertain to past and
current operations on any Property, except
in any case where the failure to so submit
would not result in a Material Adverse
Change, and
(vi) Except for violations which individually and
in the aggregate are not likely to result in
a Material Adverse Change, all past and
present on-site generation, storage,
processing, treatment, recycling,
reclamation, disposal or other use or
management of Regulated Substances at, on,
or under any Property and all off-site
transportation, storage, processing,
treatment, recycling, reclamation, disposal
or other use or management of Regulated
Substances have been done in accordance with
the Environmental Laws.
5.1.23 Senior Debt Status.
The Obligations of each Loan Party under this Agreement, the
Revolving Credit Notes, the Master Guaranty Agreement and each of the other Loan
Documents to which it is a party do rank and will rank at least pari passu in
priority of payment with all other Indebtedness of such Loan Party except
Indebtedness of such Loan Party to the extent secured by Permitted Liens and, if
the Acquisition closes, will rank senior in priority of payment to the Seller
Note and to the Subordinated Bridge Financing. There is no Lien upon or with
respect to any of the properties or income of any Loan Party or Subsidiary of
any Loan Party which secures indebtedness or other obligations of any Person
except for Permitted Liens.
5.2 Subsidiaries Other than Material Subsidiaries.
The breach of any of the representations and warranties
contained in Section 5.1 with respect to a Subsidiary of the Borrower other than
a Material Subsidiary shall not be deemed to breach such representation or
warranty unless such breach constitutes a Material Adverse Change.
5.3 Acquisition Closing.
In the event that the Acquisition closes, the Borrower shall be deemed
to have remade all of the representations and warranties to the Administrative
Agent, the Managing Agents, the Syndication Agent, the Issuing Letter of Credit
Banks and each of the Banks as of
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the time of the closing of the Acquisition and after giving effect to the
Acquisition including each of Kay-Bee Center, Inc. and its subsidiaries becoming
a Subsidiary of the Borrower.
5.4 Updates to Schedules.
Should any of the information or disclosures provided on any
of the Schedules attached hereto become outdated or incorrect in any material
respect, the applicable Loan Parties shall promptly provide to the Managing
Agents in writing with such revisions or updates to such Schedule as may be
necessary or appropriate to update or correct same; provided, however, that no
Schedule shall be deemed to have been amended, modified or superseded by any
such correction or update (other than the amendments and updates contained in
the Schedules delivered on the Closing Date or on or as of the date of the
closing of the Acquisition which give effect to the consummation of the
Acquisition if the Acquisition closes and which shall be deemed to have amended
and updated the Schedules if the closing of the Acquisition occurs as of the
closing of the Acquisition), nor shall any breach of warranty or representation
resulting from the inaccuracy or incompleteness of any such Schedule be deemed
to have been cured thereby, unless and until the Required Banks, in their sole
and absolute discretion, shall have accepted in writing such revisions or
updates to such Schedule, which decision to accept or not must be communicated
to the Borrower promptly.
6. CONDITIONS OF LENDING
The obligation of each Bank to make Revolving Credit Loans and
of the Issuing Letter of Credit Banks to issue Letters of Credit hereunder is
subject to the performance by each of the Loan Parties of its Obligations to be
performed hereunder at or prior to the making of any such Revolving Credit Loans
or issuance of such Letters of Credit and to the satisfaction of the following
further conditions:
6.1 First Revolving Credit Loans.
On the Closing Date:
6.1.1 Officer's Certificate.
The representations and warranties of each of the Loan Parties
contained in Article 5 and in each of the other Loan Documents shall be true and
accurate on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date (except
representations and warranties which relate solely to an earlier date or time,
which representations and warranties shall be true and correct on and as of the
specific dates or times referred to therein), and each of the Loan Parties shall
have performed and complied with all covenants and conditions hereof and
thereof, no Event of Default or Potential
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Default shall have occurred and be continuing or shall exist; and there shall be
delivered to the Administrative Agent for the benefit of each Bank a certificate
of the Borrower, the Company and each of the Material Subsidiaries, dated the
Closing Date and signed by the Chief Executive Officer, President or Chief
Financial Officer of such Person, to each such effect (provided that the
certificate which gives effect to the closing of the Acquisition shall be
delivered in escrow pending the closing of the Acquisition).
6.1.2 Secretary's Certificate.
There shall be delivered to the Administrative Agent for the
benefit of each Bank a certificate dated the Closing Date and signed by the
Secretary or an Assistant Secretary of each of the Company, the Borrower and
each Material Subsidiary, certifying as appropriate as to:
(i) all action taken by such Loan Party in connection
with this Agreement and the other Loan Documents;
(ii) the names of the officer or officers authorized to
sign this Agreement and the other Loan Documents
and the true signatures of such officer or
officers and specifying the Authorized Officers
permitted to act on behalf of such Loan Party for
purposes of this Agreement and the true signatures
of such officers, on which the Administrative
Agent and each Bank may conclusively rely; and
(iii) copies of its organizational documents, including
its certificate of incorporation and bylaws as in
effect on the Closing Date certified by the
appropriate state official where such documents
are filed in a state office together with
certificates from the appropriate state officials
as to the continued existence and good standing of
such Loan Party in each state where organized or
qualified to do business;
provided that the certificate which gives effect to the closing of the
Acquisition shall be delivered in escrow pending the closing of the Acquisition.
6.1.3 Delivery of Loan Documents.
The Loan Documents shall been executed and delivered to the
Administrative Agent for the benefit of the Banks (provided that the Loan
Documents to which
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Kay Bee Center, Inc. is a party shall be delivered in escrow pending the closing
of the Acquisition).
6.1.4 Delivery of Certain Other Financing Documents.
The Subordinated Bridge Financing shall have been executed and
delivered by the parties thereto in form and substance satisfactory to the
Managing Agents, into escrow pending the closing of the Acquisition and upon
such closing shall be in full force and effect, and true and correct copies
thereof shall have been delivered to the Administrative Agent.
6.1.5 Opinion of Counsel.
There shall be delivered to the Administrative Agent for the
benefit of each Bank a written opinion of Benesch, Friedlander, Coplan & Aronoff
P.L.L. and of Albert J. Bell, Esq. counsel for the Loan Parties (who may rely on
the opinions of such other counsel as may be acceptable to the Administrative
Agent), dated the Closing Date and in form and substance satisfactory to the
Managing Agents and their counsel as to the matters set forth in Exhibit 6.1.5
(provided that opinions which give effect to the closing of the Acquisition
shall be delivered immediately following the Acquisition).
6.1.6 Legal Details.
All legal details and proceedings in connection with the
transactions contemplated by this Agreement and the other Loan Documents shall
be in form and substance satisfactory to the Managing Agents and their counsel,
and the Managing Agents shall have received all such other counterpart originals
or certified or other copies of such documents and proceedings in connection
with such transactions, in form and substance satisfactory to the Managing
Agents and said counsel, as the any of the Managing Agents or said counsel may
reasonably request.
6.1.7 Payment of Fees.
The Borrower shall have paid or caused to be paid to the
Administrative Agent for itself and for the account of the Banks to the extent
not previously paid all commitment and other fees accrued through the Closing
Date and the costs and expenses for which the Documentation Agent, the
Administrative Agent and the Banks are entitled to be reimbursed. The Borrower
shall have paid or caused to be paid all unpaid fees owing to PNC Securities
Corp under that certain engagement letter dated March 25, 1996 between PNC
Securities Corp and Company.
6.1.8 Acquisition.
All instruments and documents necessary to close the
Acquisition pursuant to the Stock Purchase Agreement on terms and conditions
satisfactory to the Managing Agents
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(with no amendment or modification having been made to the Stock Purchase
Agreement nor the Company or the Borrower having waived any rights thereunder,
except for minor matters reasonably needed to consummate the Acquisition) shall
have been delivered into escrow pending the closing of the Acquisition.
6.1.9 Consents.
All material consents required to effectuate the transactions
contemplated hereby as set forth on Schedule 5.1.13 shall have been obtained.
6.1.10 Officer's Certificate Regarding MACs.
Since February 3, 1996 (i) no Material Adverse Change shall
have occurred and (ii) there shall have been no material change in the
management of the Company or the Borrower (except as disclosed to the Banks in a
writing referencing this provision); and there shall have been delivered to the
Administrative Agent for the benefit of each Bank a certificate dated the
Closing Date and signed by the Chief Executive Officer, President or Chief
Financial Officer of the Borrower and the Company to each such effect.
6.1.11 No Violation of Laws.
The making of the Revolving Credit Loans and issuance of the
Letters of Credit shall not contravene any Law applicable to any Loan Party or
any of the Banks.
6.1.12 No Actions or Proceedings.
No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain or prohibit, or to
obtain damages in respect of, this Agreement, the other Loan Documents or the
consummation of the transactions contemplated hereby or thereby or which, in the
Managing Agents' sole discretion, would make it inadvisable to consummate the
transactions contemplated by this Agreement or any of the other Loan Documents.
6.1.13 Insurance Policies; Certificates of Insurance.
The Borrower shall have delivered to the Administrative Agent
upon its request evidence acceptable to the Administrative Agent that adequate
insurance in compliance with Section 7.1.3 is in full force and effect and that
all premiums then due thereon have been paid, together with if requested by the
Administrative Agent a certified copy of each Loan Party's casualty insurance
policy or policies.
6.1.14 Termination of Existing Bank Facility.
The Borrower shall have terminated the Existing Bank Facility
and paid all amounts owed thereunder.
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6.2 Each Additional Revolving Credit Loan.
At the time of making any Revolving Credit Loans or Swing
Loans or issuance of any Letters of Credit other than Revolving Credit Loans
made or Letters of Credit deemed issued on the Closing Date and after giving
effect to the proposed extensions of credit: the representations and warranties
of the Loan Parties contained in Article 5 and in the other Loan Documents shall
be true on and as of the date of such additional Revolving Credit Loan or Swing
Loan or Letter of Credit with the same effect as though such representations and
warranties had been made on and as of such date (except representations and
warranties which expressly relate solely to an earlier date or time, which
representations and warranties shall be true and correct on and as of the
specific dates or times referred to therein) and the Loan Parties shall have
performed and complied with all covenants and conditions hereof; no Event of
Default or Potential Default shall have occurred and be continuing or shall
exist; the making of the Revolving Credit Loans or Swing Loans or issuance of
such Letter of Credit shall not contravene any Law applicable to any Loan Party
or Subsidiary of any Loan Party or any of the Banks; and the Borrower shall have
delivered to the Administrative Agent or the Issuing Letter of Credit Bank, a
duly executed and completed Loan Request or application for a Letter of Credit
as the case may be.
7. COVENANTS
7.1 Affirmative Covenants.
The Borrower covenants and agrees that until payment in full
of the Revolving Credit Loans and Reimbursement Obligations and interest
thereon, expiration or termination of all Letters of Credit, satisfaction of all
of the Loan Parties' other Obligations under the Loan Documents and termination
of the Revolving Credit Commitments, the Loan Parties shall comply at all times
with the following affirmative covenants:
7.1.1 Preservation of Existence, Etc.
The Company, the Borrower and, except as permitted by
Section 7.2.6, each Material Subsidiary shall maintain its corporate existence
and its license or qualification and good standing in each jurisdiction in which
its ownership or lease of property or the nature of its business makes such
license or qualification necessary, except where the failure to be so licensed
or qualified would not result in a Material Adverse Change.
7.1.2 Payment of Liabilities, Including Taxes,
Etc.
Each Loan Party shall, and shall cause each of its
Subsidiaries to, duly pay and discharge all liabilities to which it is subject
or which are asserted against it, promptly as and
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when the same shall become due and payable, including all taxes, assessments and
governmental charges upon it or any of its properties, assets, income or
profits, prior to the date on which penalties attach thereto, except to the
extent that such liabilities, including taxes, assessments or charges, are being
contested in good faith and by appropriate and lawful proceedings diligently
conducted and for which such reserve or other appropriate provisions, if any, as
shall be required by GAAP shall have been made, but only to the extent that
failure to discharge any such liabilities would not result in any additional
liability which would adversely affect to a material extent the financial
condition of the Loan Parties and their Subsidiaries taken as a whole, provided
that the Loan Parties and their Subsidiaries will pay all such liabilities
forthwith upon the commencement of proceedings to foreclose any Lien which may
have attached as security therefor unless and as long as such proceedings are
stayed.
7.1.3 Maintenance of Insurance.
Each Loan Party shall, and shall cause each of its
Subsidiaries to, insure its properties and assets against loss or damage by fire
and such other insurable hazards as such assets are commonly insured (including
fire, extended coverage, property damage, workers' compensation, public
liability and business interruption insurance) and against other risks
(including errors and omissions) in such amounts as similar properties and
assets are insured by prudent companies in similar circumstances carrying on
similar businesses, and with reputable and financially sound insurers, including
self-insurance to the extent customary, all as reasonably determined by the
Documentation Agent. At the request of the Administrative Agent, the Loan
Parties shall deliver to the Administrative Agent (x) on the Closing Date and
annually thereafter an original certificate of insurance signed by the Loan
Parties' independent insurance broker describing and certifying as to the
existence of the insurance required to be maintained by this Agreement and the
other Loan Documents, and (y) from time to time a summary schedule indicating
all insurance then in force with respect to each of the Loan Parties.
7.1.4 Maintenance of Properties and Leases.
Each Loan Party shall, and shall cause each of its
Subsidiaries to, maintain in good repair, working order and condition (ordinary
wear and tear excepted) in accordance with the general practice of other
businesses of similar character and size, all of those material properties
necessary to its business, and from time to time, such Loan Party or such
Subsidiary will make or cause to be made all appropriate repairs, renewals or
replacements thereof.
7.1.5 Maintenance of Patents, Trademarks, Etc.
Each Loan Party shall, and shall cause each of its
Subsidiaries to, maintain in full force and effect all patents, trademarks,
service marks, trade names, copyrights, licenses, franchises, permits and other
authorizations necessary for the ownership and operation of its properties and
business if the failure so to maintain the same would constitute a Material
Adverse Change.
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7.1.6 Visitation Rights.
Each Loan Party shall, and shall cause each of its
Subsidiaries to, permit any of the officers or authorized employees or
representatives of the Documentation Agent, the Administrative Agent or any of
the Banks to visit and inspect any of its properties and to examine and make
excerpts from its books and records and discuss its business affairs, finances
and accounts with its officers, all in such detail and at such times and as
often as any of the Banks may reasonably request, provided that each Bank shall
provide the Borrower and the Administrative Agent with reasonable notice prior
to any visit or inspection.
7.1.7 Keeping of Records and Books of Account.
The Company shall, and shall cause each Subsidiary of
the Company including the Borrower to, maintain and keep proper books and
records which enable the Company and its Subsidiaries to issue financial
statements in accordance with GAAP and as otherwise required by applicable Laws
of any Official Body having jurisdiction over the Company or any Subsidiary of
the Company, and in which full, true and correct entries shall be made in all
material respects of all its dealings and business and financial affairs.
7.1.8 Plans and Benefit Arrangements.
The Company shall, and shall cause each other member of
the ERISA Group to, comply with ERISA, the Internal Revenue Code and other
applicable Laws applicable to Plans and Benefit Arrangements except where such
failure, alone or in conjunction with any other failure, would not result in a
Material Adverse Change. Without limiting the generality of the foregoing, the
Company shall cause all of its Plans and all Plans maintained by any other
member of the ERISA Group to be funded in accordance with the minimum funding
requirements of ERISA and shall make, and cause each other member of the ERISA
Group to make, in a timely manner, all contributions due to Plans, Benefit
Arrangements and Multiemployer Plans.
7.1.9 Compliance with Laws.
Each Loan Party shall, and shall cause each of its
Subsidiaries to, comply with all applicable Laws, including all Environmental
Laws, in all respects, provided that it shall not be deemed to be a violation of
this Section 7.1.9 if any failure to comply with any Law would not result in
fines, penalties, remediation costs, other similar liabilities or injunctive
relief which in the aggregate would constitute a Material Adverse Change.
7.1.10 Use of Proceeds.
The Borrower will use the Letters of Credit and the
proceeds of the Revolving Credit Loans only for lawful purposes in accordance
with Section 2.8 and such uses shall not contravene any applicable Law or any
other provision hereof.
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7.1.11 Interest Rate Protection.
In the event that the Borrower borrows the $100
million loan pursuant to the Subordinated Bridge Financing, the Borrower shall
have entered into an interest rate protection agreement with a financial
institution acceptable to the Borrower and the Managing Agents with such terms
and conditions as shall be acceptable to the Managing Agents and the Borrower
(the "Interest Rate Protection Agreement"). Documentation for the Interest Rate
Protection Agreement shall be in a standard International Swap Dealer
Association agreement.
7.1.12 Subordination of Intercompany Loans.
Each Loan Party shall cause any Intercompany Loans owed
by any Loan Party to any other Loan Party or Subsidiary of a Loan Party to be
subordinated pursuant to the terms of the Master Intercompany Subordination
Agreement.
7.1.13 Retirement of Private Placement Notes.
The Company on or before August 1, 1996 shall
irrevocably pay and discharge the Senior Notes and all Indebtedness relating to
the Senior Notes.
7.2 Negative Covenants.
The Borrower covenants and agrees that until payment in full
of the Revolving Credit Loans and Reimbursement Obligations and interest
thereon, expiration or termination of all Letters of Credit, satisfaction of all
of the Loan Parties' other Obligations hereunder and termination of the
Revolving Credit Commitments, the Loan Parties shall comply with the following
negative covenants:
7.2.1 Indebtedness.
Each of the Loan Parties shall not, and shall not
permit any of its Subsidiaries to, at any time create, incur, assume or suffer
to exist any Indebtedness, except:
(i) Indebtedness under the Loan
Documents;
(ii) existing Indebtedness as set
forth on Schedule 7.2.1
(including any extensions or
renewals thereof, provided there
is no increase in the amount
thereof or imposition of
additional material obligations
therein unless otherwise
specified on Schedule 7.2.1;
(iii) capitalized and operating leases
as and to the extent not
prohibited by Section 7.2.15;
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(iv) Indebtedness which is
subordinated in accordance with
the provisions of Section 7.1.12;
(v) Indebtedness secured by Purchase
Money Security Interests not
exceeding $10,000,000;
(vi) Indebtedness of a Loan Party to
another Loan Party;
(vii) the Seller Note;
(viii) the Subordinated Bridge Financing
(including any refinancings
thereof permitted under Section
7.2.22) to the extent not repaid
from the net proceeds of the
sales of any capital stock of the
Company;
(ix) Indebtedness in connection with
interest rate agreements as
referenced in Section 7.1.11;
(x) Indebtedness permitted under
Section 7.2.3; and
(xi) any other Indebtedness (excluding
Indebtedness relating to
documentary letters of credit)
not referenced above which does
not exceed in the aggregate
$25,000,000.
7.2.2 Liens.
Each of the Loan Parties shall not, and shall not
permit any of its Subsidiaries to, (i) at any time create, incur, assume or
suffer to exist any Lien on any of its property or assets, tangible or
intangible, now owned or hereafter acquired, or agree or become liable to do so,
except Permitted Liens or (ii) at any time agree, directly or indirectly, with
respect to any asset material to the Borrower and its Subsidiaries taken as a
whole to any restriction (including without limitation on the foregoing any
requirement to grant a third Person a Lien in the event that the Banks are
granted a Lien) on the granting or conveying of Liens to the Banks.
7.2.3 Guaranties.
Each of the Loan Parties shall not, and shall not
permit any of its Subsidiaries to, at any time, directly or indirectly, become
or be liable in respect of any Guaranty, or assume, guarantee, become surety
for, endorse or otherwise agree, become or remain directly or contingently
liable upon or with respect to any obligation or liability of any other Person,
except for Guaranties of Indebtedness of the Loan Parties permitted hereunder;
provided, however, that no Subsidiary of the Borrower shall guaranty the Seller
Note or any obligations to
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Melville Corporation arising in connection with the Acquisition and that any
Guaranties of the Subordinated Bridge Financing shall be subordinated on terms
satisfactory to the Managing Agents to the Subsidiary Guaranties.
7.2.4 Loans and Investments.
Each of the Loan Parties shall not, and shall not
permit any of its Subsidiaries to, at any time make or suffer to remain
outstanding any loan or advance to, or purchase, acquire or own any stock,
bonds, notes or securities of, or any partnership interest (whether general or
limited) in, or any other investment or interest in, or make any capital
contribution to, any other Person, or agree, become or remain liable to do any
of the foregoing, except as set forth on Schedule 7.2.4 and:
(i) trade credit extended on usual
and customary terms in the
ordinary course of business;
(ii) advances to employees to meet
expenses incurred by such
employees in the ordinary course
of business;
(iii) Permitted Investments;
(iv) loans, advances and investments
in other Loan Parties and
Subsidiaries of Loan Parties; and
(v) Indebtedness permitted by Section
7.2.1, liquidations, mergers,
consolidations and acquisitions
permitted by Section 7.2.6, and
capital expenditures permitted by
Section 7.2.15.
(vi) Investments other than those set
forth hereinabove not to exceed
$10,000,000.
7.2.5 Dividends and Related Distributions.
Except as provided herein, each of the Loan Parties
shall not, and shall not permit any of its Subsidiaries to, make or pay, or
agree to become or remain liable to make or pay, any dividend or other
distribution of any nature (whether in cash, property, securities or otherwise)
on account of or in respect of its shares of capital stock or partnership
interests on account of the purchase, redemption, retirement or acquisition of
its shares of capital stock (or warrants, options or rights therefor) or
partnership interests, except dividends or other distributions payable to
another Loan Party. The Company may declare and pay dividends on its capital
stock which are payable solely in shares of its capital stock or other equity
interests of the
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Company. The Company may make purchases and redemptions of its capital stock
pursuant to existing plans provided that the aggregate of all such purchases
does not exceed $10,000,000.
7.2.6 Liquidations, Mergers, Consolidations,
Acquisitions.
Except as permitted by Section 7.2.7 each of the Loan
Parties shall not, and shall not permit any of the Company, the Borrower and the
Material Subsidiaries to, dissolve, liquidate or wind-up its affairs, or become
a party to any merger or consolidation, or acquire by purchase, lease or
otherwise all or substantially all of the assets or capital stock of any other
Person, provided that any Loan Party other than the Borrower and the Company may
consolidate, liquidate, dissolve or merge into, or acquire, another Loan Party
which is wholly-owned, directly or indirectly, by the Company and that the
Borrower may acquire Kay-Bee Center, Inc. and its subsidiaries pursuant to and
otherwise consummate the Acquisition.
7.2.7 Dispositions of Assets or Subsidiaries.
Each of the Loan Parties shall not, and shall not
permit any of its Subsidiaries to, sell, convey, assign, lease, abandon or
otherwise transfer or dispose of, voluntarily or involuntarily, any of its
properties or assets, tangible or intangible (including sale, assignment,
discount or other disposition of accounts, contract rights, chattel paper,
equipment or general intangibles with or without recourse or of capital stock,
shares of beneficial interest or partnership interests of a Subsidiary of such
Loan Party), except:
(i) transactions involving the sale
of inventory in the ordinary
course of business;
(ii) any sale, transfer or lease of
assets in the ordinary course of
business which are no longer
necessary or required in the
conduct of such Loan Party's or
such Subsidiary's business;
(iii) any sale, transfer or lease of
assets by any wholly owned
Subsidiary of such Loan Party to
another Loan Party;
(iv) any sale, transfer or lease of
assets, other than those
specifically excepted pursuant to
clauses (i) through (iii) above
or clauses (v) and (vi)below,
provided that the aggregate
after-tax net cash proceeds
(including without limitation
cash, as and when collected,
pursuant to any notes or other
securities received as
consideration for such sale,
transfer or lease) of all such
sales, transfers or leases on and
after the date hereof (as
reasonably estimated by the
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Borrower) in excess of $
25,000,000 shall be applied as a
mandatory prepayment of the
Revolving Credit Loans in
accordance with the provisions of
Section 4.5.1;
(v) any sale or transfer by the
Company of the capital stock or
other equity interests of the
Company; and
(vi) cash payments pursuant to
transactions not prohibited
hereunder.
7.2.8 Affiliate Transactions.
Each of the Loan Parties shall not, and shall not
permit any of its Subsidiaries to, enter into or carry out any transaction with
any of its Affiliates (including purchasing property or services from or selling
property or services to any Affiliate of any Loan Party or other Person other
than a Loan Party) unless such transaction is not otherwise prohibited by this
Agreement, is entered into in the ordinary course of business upon fair and
reasonable arm's-length terms and conditions (including without limitation
employment arrangements with any Executive Officer of the Borrower and its
Subsidiaries) which are fully disclosed to the Administrative Agent and is in
accordance with all applicable Law.
7.2.9 Subsidiaries, Partnerships and Joint
Ventures.
Each of the Loan Parties shall not, and shall not
permit any of its Subsidiaries to, own or create directly or indirectly any
Subsidiaries other than (i) any Subsidiary which has joined this Agreement as
Guarantor on the Closing Date; and (ii) any Subsidiary acquired or formed after
the Closing Date which joins this Agreement as a Guarantor pursuant to Section
10.18. Each of the Loan Parties shall not become or agree to become a general or
limited partner in any general or limited partnership or a joint venturer in any
joint venture other than (i) solely with other Loan Parties; (ii) as permitted
by Section 7.2.4; (iii) for the acquisition of inventory; and (iv) for
transactions which when aggregated do not exceed $10,000,000, except that the
Loan Parties may be general or limited partners in other Loan Parties.
7.2.10 Continuation of or Change in Business.
Each of the Company and the Borrower shall not, and
shall not permit any of its Subsidiaries to, engage in any business other than
wholesale and retail sale of general merchandise, substantially as conducted and
operated by the Company, the Borrower and their Subsidiaries, and, if the
Acquisition is consummated, as conducted and operated by Kay-Bee Center, Inc.
and its Subsidiaries, during the present fiscal year.
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<PAGE> 79
7.2.11 Plans and Benefit Arrangements.
Each of the Loan Parties shall not, and shall not
permit any of its Subsidiaries to:
(i) fail to satisfy the minimum
funding requirements of ERISA and
the Internal Revenue Code with
respect to any Plan where such
would result in a Material
Adverse Change;
(ii) request a minimum funding waiver
from the Internal Revenue Service
with respect to any Plan;
(iii) engage in a Prohibited
Transaction with any Plan,
Benefit Arrangement or
Multiemployer Plan which, alone
or in conjunction with any other
circumstances or set of
circumstances resulting in
liability under ERISA, would
constitute a Material Adverse
Change;
(iv) permit, as of the end of any
calendar year, the aggregate
accumulated benefit obligations
determined in accordance with
GAAP for all Plans to exceed by
more than $8 million the fair
market value of all assets of the
Plans;
(v) fail to make when due any
contribution to any Multiemployer
Plan that the Borrower or any
member of the ERISA Group may be
required to make under any
agreement relating to such
Multiemployer Plan, or any Law
pertaining thereto where such
would result in a Material
Adverse Change;
(vi) withdraw (completely or
partially) from any Multiemployer
Plan or withdraw (or be deemed
under Section 4062(e) of ERISA to
withdraw) from any Multiple
Employer Plan, where any such
withdrawal is likely to result in
a material liability of the
Borrower or any member of the
ERISA Group;
(vii) terminate, or institute
proceedings to terminate, any
Plan, where such termination is
likely to result in a
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<PAGE> 80
material liability to the
Borrower or any member of the
ERISA Group;
(viii) make any amendment to any Plan
with respect to which security is
required under Section 307 of
ERISA; or
(ix) fail to give any and all notices
and make all disclosures and
governmental filings required
under ERISA or the Internal
Revenue Code, where such failure
is likely to result in a Material
Adverse Change.
7.2.12 Fiscal Year.
The Company shall not, and shall not permit any
Subsidiary of the Company to, change its fiscal year from the
fifty-two/fifty-three week fiscal year beginning on the Sunday closest to
February 1, and ending on the Saturday closest to February 1 of each year.
7.2.13 Issuance of Stock.
Each of the Loan Parties shall not, and shall not
permit any of its Subsidiaries to, issue any additional shares of its capital
stock or any options, warrants or other rights in respect thereof other than to
another Loan Party or Subsidiary of a Loan Party; provided, however, that
nothing contained herein shall prohibit the Company from issuing shares of its
capital stock or other equity interests of the Company.
7.2.14 Changes in Organizational Documents.
Except as permitted by Section 7.2.6, each of the Loan
Parties shall not, and shall not permit any of its Subsidiaries to, amend in any
respect its certificate of incorporation (including any provisions or
resolutions relating to capital stock), by-laws or other organizational
documents without providing at least five (5) calendar days' prior written
notice to the Administrative Agent and the Banks and, in the event such change
would be adverse to the Banks as determined by the Required Banks in their sole
discretion, obtaining the prior written consent of the Required Banks.
7.2.15 Capital Expenditures and Leases.
Each of the Loan Parties shall not, and shall not
permit any of its Subsidiaries to, make any payments or incur any obligation on
account of the purchase or lease of any assets which if purchased would
constitute fixed assets or which if leased would constitute a capitalized lease
under GAAP if the aggregate of such payments and incurred obligations
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<PAGE> 81
together with all other similar payments and incurred obligations made during
such fiscal year would exceed the amount set forth below for such fiscal year:
<TABLE>
<CAPTION>
Maximum Consolidated
Fiscal Year Ending Capital Expenditures
------------------ --------------------
<S> <C>
February 1, 1997 $110,000,000
January 31, 1998 $100,000,000
and each fiscal year
thereafter
</TABLE>
To the extent that the Consolidated Capital
Expenditures for any given fiscal year are less than the maximum amount
permitted for such fiscal year, the next succeeding fiscal year's maximum
Consolidated Capital Expenditures shall be increased by such difference.
7.2.16 Minimum Fixed Charge Coverage Ratio.
The Loan Parties shall not permit at any time the Fixed
Charge Coverage Ratio, calculated as of the end of each fiscal quarter ending
nearest the date set forth below to be less than the following minimum Fixed
Charge Coverage Ratio:
<TABLE>
<CAPTION>
Minimum Fixed Charge
Fiscal Quarter Ending nearest: Coverage Ratio
------------------------------ --------------------
<S> <C>
July 31, 1996 1.25
October 31, 1996 1.25
January 31, 1997 1.50
April 30, 1997 1.50
July 31, 1997 1.50
October 31, 1997 1.50
January 31, 1998 1.60
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<S> <C>
April 30, 1998 1.60
July 31, 1998 1.60
October 31, 1998 1.60
All Quarters subsequent to
October 31, 1998 1.70
</TABLE>
7.2.17 Total Indebtedness to Total
Capitalization Ratio.
The Loan Parties shall not permit at any time the ratio
of (i) the sum of (A) Indebtedness of the Company and its Subsidiaries
determined and consolidated in accordance with GAAP plus (B) the product of four
times the Consolidated Rentals, to (ii) the sum of (A) Indebtedness of the
Company and its Subsidiaries determined and consolidated in accordance with GAAP
plus (B) the product of four times the Consolidated Rentals plus (C) the
stockholders equity of the Company and its Subsidiaries determined and
consolidated in accordance with GAAP, to be greater than the following maximum
permitted percentage:
<TABLE>
<CAPTION>
Fiscal Quarter Ending nearest: Maximum Permitted Percentage
------------------------------ ----------------------------
<S> <C>
July 31, 1996 67.5%
October 31, 1996 72.5%
January 31, 1997 62.5%
April 30, 1997 67.5%
July 31, 1997 70.0%
October 31, 1997 72.5%
January 31, 1998 60.0%
April 30, 1998 65.0%
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<S> <C>
July 31, 1998 67.5%
October 31, 1998 70.0%
All Quarters subsequent to
October 31, 1998 57.5%
</TABLE>
7.2.18 Minimum Tangible Net Worth.
The Loan Parties shall not permit at any time
Consolidated Tangible Net Worth to be less than the Base Tangible Net Worth.
7.2.19 Minimum Working Capital Ratio.
The Loan Parties shall not permit at the end of any fiscal
quarter of the Company the ratio of (i) the sum of Company's and its
Subsidiaries' (A) cash and cash equivalents, (B) accounts receivable net of bad
debt reserves plus (C) inventory net of any reserves, in each case as determined
and consolidated in accordance with GAAP, to (ii) the sum of (A) the Revolving
Credit Loans plus (B) the Company's and its Subsidiaries' accounts payable as
determined and consolidated in accordance with GAAP plus (C) the Company's and
its Subsidiaries other current liabilities as determined and consolidated in
accordance with GAAP to be less than 1.15 to 1.00.
7.2.20 Amendments to Certain Documents.
The Loan Parties shall not (i) enter into the
Subordinated Bridge Financing other than in the form thereof delivered on the
Closing Date to the Administrative Agent or issue the Seller Note or enter into
the indenture pursuant to which the Seller Note is to be issued from the form
thereof delivered to the Administrative Agent on the Closing Date, or (ii) if
the Acquisition closes, the Subordinated Bridge Financing is entered into and
the Seller Note issued under the related indenture, permit, without the prior
written consent of the Required Banks, any amendment, waiver or modification to
the Subordinated Bridge Financing, the Stock Purchase Agreement, the Seller Note
and the indenture pursuant to which the Seller Note is issued, or any other
document or instrument delivered in connection with any of the foregoing except
for amendments, waivers or modifications to provisions other than those which
subordinate the Subordinated Bridge Financing and the Seller Note to the
Obligations and which amendments, waivers or modifications do not change or
otherwise affect the terms of such agreements or instruments in a material
manner .
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<PAGE> 84
7.2.21 Outstanding Revolving Credit Loans.
The Loan Parties shall not permit the Revolving Credit
Loans to exceed $75,000,000 for not less than thirty (30) consecutive calendar
days during the period commencing with December 1 of each calendar year and
ending on February 1 of the succeeding calendar year.
7.2.22 No Prepayment of Subordinated Debt.
If the Acquisition is closed, the Loan Parties shall
not (i) permit the prepayment prior to maturity, directly or indirectly
(including without limitation on the foregoing any purchase of one or more of
the notes issued thereunder or any interest or participation in any such notes),
of any principal of the $100 million loan made pursuant to the Subordinated
Bridge Financing (or the prepayment prior to maturity of the principal of any
subordinated indebtedness issued pursuant to refinancings thereof permitted by
clause (y) below) except to the extent (x) of and using the net proceeds from
any sales of capital stock or other equity interests of the Company which is not
mandatorily redeemable at the option of the holder thereof (including debt
instruments which are convertible to such capital stock or such other equity
interests and are so converted) and (y) of and using the net proceeds from any
incurrence of Indebtedness which is subordinated to the same extent and manner
as the Subordinated Bridge Financing is subordinated to the Obligations and
which has a maturity extending beyond the Expiration Date, in each case to
Persons other than the Company and direct or indirect Subsidiaries of the
Company, and, provided, in the case of clauses (x) and (y) above, that at the
time of such sale or incurrence that no Event of Default or Potential Default
has occurred and is continuing or (ii) permit the payment, directly or
indirectly (including without limitation on the foregoing any purchase of one or
more of the notes issued thereunder or any interest or participation in any such
notes), of any principal of the Seller Note (provided that this provision shall
not prohibit transfers by any holder or holders of the Seller Note to Persons
other than the Company and direct or indirect Subsidiaries of the Company).
7.2.23 Inventory Purchases.
The Loan Parties shall not permit (i) any material
amount of inventory to be purchased by any Person other than the Borrower and
the Material Subsidiaries or (ii) any Loan Party or any Subsidiary of a Loan
Party, other than the Borrower and the Material Subsidiaries, to be obligated
directly or indirectly to any Person other than a Loan Party with respect to any
material amount of purchased inventory.
7.2.24 Acquisition Closing.
The Loan Parties shall not permit the Acquisition to
close unless (i) such closing is pursuant to and in accordance with the terms
and conditions of the Stock Purchase Agreement with no amendment or modification
having been made to or term or condition waived in the Stock Purchase Agreement,
except for minor matters reasonably needed to consummate
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<PAGE> 85
the Acquisition and except as may be approved by the Managing Agents, (ii) the
Seller Note is issued and (iii) the Subordinated Bridge Financing has become
effective pursuant to Section 3.01 thereof.
7.3 Reporting Requirements.
The Borrower covenants and agrees that until payment in
full of the Revolving Credit Loans and Reimbursement Obligations and interest
thereon, expiration or termination of all Letters of Credit, satisfaction of all
of the Loan Parties' other Obligations hereunder and under the other Loan
Documents and termination of the Revolving Credit Commitments, the Loan Parties
will furnish or cause to be furnished to the Administrative Agent and each of
the Banks:
7.3.1 Quarterly Financial Statements.
As soon as available and in any event within forty-five
(45) calendar days after the end of each of the first three fiscal quarters in
each fiscal year, financial statements of the Company, consisting of a
consolidated and consolidating balance sheet as of the end of such fiscal
quarter and related consolidated and consolidating statements of income,
stockholders' equity and cash flows for the fiscal quarter then ended and the
fiscal year through that date, all in reasonable detail and certified (subject
to normal year-end audit adjustments) by the Chief Executive Officer, President
or Chief Financial Officer of the Borrower as having been prepared in accordance
with GAAP and as to fairness of presentation, consistently applied, and setting
forth in comparative form the respective financial statements for the
corresponding date and period in the previous fiscal year. Wherever referenced
in this Section 7, the term "consolidating" is limited to consolidating
information on a basis consistent with current accounting practices of the
Company.
7.3.2 Annual Financial Statements.
As soon as available and in any event within ninety
(90) days after the end of each fiscal year of the Company, consolidated and
consolidating financial statements of the Company consisting of a consolidated
and consolidating balance sheet as of the end of such fiscal year, and related
consolidated and consolidating statements of income, stockholders' equity and
cash flows for the fiscal year then ended, all in reasonable detail and setting
forth in comparative form the financial statements as of the end of and for the
preceding fiscal year, and with respect to the consolidated statements,
certified by independent certified public accountants of nationally recognized
standing satisfactory to the Administrative Agent. The certificate or report of
accountants shall be free of qualifications (other than any consistency
qualification that may result from a change in the method used to prepare the
financial statements as to which such accountants concur) and shall not indicate
the occurrence or existence of any event, condition or contingency which would
materially impair the prospect of payment or performance of any covenant,
agreement or duty of any Loan Party under any of the Loan Documents, together
with a letter of such accountants substantially to the effect that, based upon
their ordinary and
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<PAGE> 86
customary examination of the affairs of the Company, performed in connection
with the preparation of such consolidated financial statements, and in
accordance with generally accepted auditing standards, they are not aware of the
existence of any condition or event which constitutes an Event of Default or
Potential Default or, if they are aware of such condition or event, stating the
nature thereof and confirming the Borrower's calculations with respect to the
certificate to be delivered pursuant to Section 7.3.3 with respect to such
financial statements.
7.3.3 Certificate of the Borrower.
Concurrently with the financial statements of the
Company furnished to the Administrative Agent and to the Banks pursuant to
Sections 7.3.1 and 7.3.2, a certificate of the Borrower and the Company signed
by the Chief Executive Officer, President or Chief Financial Officer of the
Borrower and the Company, in the form of Exhibit 7.3.3, to the effect that,
except as described pursuant to Section 7.3.4, (i) the representations and
warranties contained in Article 5 and in the other Loan Documents are true on
and as of the date of such certificate with the same effect as though such
representations and warranties had been made on and as of such date (except
representations and warranties which expressly relate solely to an earlier date
or time) and the Loan Parties have performed and complied with all covenants and
conditions hereof, (ii) no Event of Default or Potential Default exists and is
continuing on the date of such certificate and (iii) containing calculations in
sufficient detail to demonstrate compliance as of the date of such financial
statements with all financial covenants contained in Section 7.2 and to compute
the Fixed Charge Coverage Ratio.
7.3.4 Notice of Default.
Promptly after any officer of any Loan Party has
learned of the occurrence of an Event of Default or Potential Default, a
certificate signed by the Chief Executive Officer, President or Chief Financial
Officer of such Loan Party setting forth the details of such Event of
Default or Potential Default and the action which the such Loan Party proposes
to take with respect thereto.
7.3.5 Notice of Litigation.
Promptly after the commencement thereof, notice of all
actions, suits, proceedings or investigations before or by any Official Body or
any other Person against any Loan Party or Subsidiary of any Loan Party which
involve a claim or series of uninsured claims (provided that a claim shall be
deemed to be uninsured unless the insurance company is a reputable insurance
company and has acknowledged that the claim is covered by the applicable
insurance policy without any reservation to challenge the applicability thereof)
in excess of $10,000,000 or which if adversely determined would constitute a
Material Adverse Change.
7.3.6 Certain Events.
Written notice:
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<PAGE> 87
(i) at least five (5) Business Days
prior thereto, with respect to
any proposed sale or transfer of
assets pursuant to Section
7.2.7(iv) which exceed $25
million,
(ii) within the time limits set forth
in Section 7.2.14, any amendment
to the organizational documents
of any Loan Party, and
(iii) promptly of any notice received
by the Company, the Borrower or
any Subsidiary of the Company
that the Borrower can not or may
not be able to borrow under the
Subordinated Bridge Financing.
7.3.7 Budgets, Forecasts, Other Reports and
Information.
Promptly upon their becoming available to any Loan
Party:
(i) the consolidated annual budget of
the Company , to be supplied not
later than the earlier of (i)
ninety (90) days following the
end of each fiscal year or (ii)
two (2) Business Days following
the date on which the Board of
Directors of the Company approves
such annual budget;
(ii) any reports including management
letters submitted to the Company
or the Borrower by independent
accountants in connection with
any annual, interim or special
audit;
(iii) any reports, notices or proxy
statements generally distributed
by the Company to its
stockholders on a date no later
than the date supplied to such
stockholders;
(iv) regular or periodic reports,
including Forms 10-K, 10-Q and
8-K, registration statements and
prospectuses, as may be filed by
the Company with the Securities
and Exchange Commission;
(v) a copy of any order in any
proceeding to which the Company,
the Borrower or any of its
Subsidiaries is a party issued by
any Official Body; and
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<PAGE> 88
(vi) such other reports and
information as any of the Banks
may from time to time reasonably
request. The Loan Parties shall
also notify the Banks promptly of
the enactment or adoption of any
Law which may result in a
Material Adverse Change.
7.3.8 Notices Regarding Plans and Benefit
Arrangements.
7.3.8.1 Certain Events.
Promptly upon becoming aware of the occurrence thereof,
notice (including the nature of the event and, when known, any action taken or
threatened by the Internal Revenue Service or the PBGC with respect thereto) of:
(i) any Reportable Event with respect
to the Company or any other
member of the ERISA Group
(regardless of whether the
obligation to report said
Reportable Event to the PBGC has
been waived),
(ii) any Prohibited Transaction which
could subject the Company or any
other member of the ERISA Group
to a civil penalty assessed
pursuant to Section 502(i) of
ERISA or a tax imposed by Section
4975 of the Internal Revenue Code
in connection with any Plan, any
Benefit Arrangement or any trust
created thereunder,
(iii) any assertion of material
withdrawal liability with respect
to any Multiemployer Plan,
(iv) any partial or complete
withdrawal from a Multiemployer
Plan by the Company or any other
member of the ERISA Group under
Title IV of ERISA (or assertion
thereof), where such withdrawal
is likely to result in material
withdrawal liability,
(v) any cessation of operations (by
the Company or any other member
of the ERISA Group) at a facility
in the circumstances described in
Section 4063(e) of ERISA,
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<PAGE> 89
(vi) withdrawal by the Company or any
other member of the ERISA Group
from a Multiple Employer Plan,
(vii) a failure by the Company or any
other member of the ERISA Group
to make a payment to a Plan
required to avoid imposition of a
Lien under Section 302(f) of
ERISA,
(viii) the adoption of an amendment to a
Plan requiring the provision of
security to such Plan pursuant to
Section 307 of ERISA, or
(ix) any change in the actuarial
assumptions or funding methods
used for any Plan, where the
effect of such change is to
materially increase or materially
reduce the unfunded benefit
liability or obligation to make
periodic contributions.
7.3.8.2 Notices of Involuntary
Termination and Annual Reports.
Promptly after receipt thereof, copies of (a) all
notices received by the Company or any other member of the ERISA Group of the
PBGC's intent to terminate any Plan administered or maintained by the Company or
any member of the ERISA Group, or to have a trustee appointed to administer any
such Plan; and (b) at the request of the Administrative Agent or any Bank each
annual report (IRS Form 5500 series) and all accompanying schedules, the most
recent actuarial reports, the most recent financial information concerning the
financial status of each Plan administered or maintained by the Company or any
other member of the ERISA Group, and schedules showing the amounts contributed
to each such Plan by or on behalf of the Company or any other member of the
ERISA Group in which any of their personnel participate or from which such
personnel may derive a benefit, and each Schedule B (Actuarial Information) to
the annual report filed by the Company or any other member of the ERISA Group
with the Internal Revenue Service with respect to each such Plan.
7.3.8.3 Notice of Voluntary
Termination.
Promptly upon the filing thereof, copies of any Form
5310, or any successor or equivalent form to Form 5310, filed with the PBGC in
connection with the termination of any Plan.
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8. DEFAULT
8.1 Events of Default.
An Event of Default shall mean the occurrence or existence of
any one or more of the following events or conditions (whatever the reason
therefor and whether voluntary, involuntary or effected by operation of Law):
8.1.1 Payments Under Loan Documents.
The Borrower shall fail to pay when due any principal
of any Revolving Credit Loan (including scheduled installments, mandatory
prepayments or the payment due at maturity) or any Reimbursement Obligations or
shall fail to pay within three (3) Business Days when due any interest on any
Revolving Credit Loan or on any Reimbursement Obligations or any other amount
owing hereunder or under the other Loan Documents after such principal, interest
or other amount becomes due in accordance with the terms hereof or thereof;
8.1.2 Breach of Warranty.
Any representation or warranty made or deemed made at
any time by any of the Loan Parties herein or by any of the Loan Parties in any
other Loan Document, or in any certificate, other instrument or statement
furnished pursuant to the provisions hereof or thereof, shall prove to have been
false or misleading in any material respect as of the time it was made or deemed
made or furnished;
8.1.3 Breach of Negative Covenants.
Any of the Loan Parties shall default in the observance
or performance of any covenant contained in Section 7.2;
8.1.4 Breach of Other Covenants.
Any of the Loan Parties shall default in the observance
or performance of any other covenant, condition or provision hereof or of any
other Loan Document and such default shall continue unremedied for a period of
ten (10) Business Days after any Executive Officer of the Borrower or the
Company becomes aware of the occurrence thereof (such grace period to be
applicable only in the event such default can be remedied by corrective action
of the Loan Parties as determined by the Managing Agents in their sole
discretion);
8.1.5 Defaults in Other Agreements or
Indebtedness.
If (i) the Acquisition closes and an event occurs prior
to the making of the $100 million loan under the Subordinated Bridge Financing
which permits the lenders thereunder to refuse to make the $100 million loan
provided for therein to the Borrower or (ii) the $100 million dollar loan is
made under the Subordinated Bridge Financing and not refinanced as
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permitted by Section 7.2.22 and either (x) the Required Banks believe in their
sole discretion two Business Days prior to the Maturity Date, as such term is
defined in the Subordinated Bridge Financing, of the Short Term Note (as such
term are defined in the Subordinated Bridge Financing), that the Exchange, as
such term is defined in the Subordinated Bridge Financing, will not occur or (y)
such Exchange does not occur or (iii) a breach, default or event of default
shall occur at any time under the terms of any other agreement involving
borrowed money or the extension of credit or any other Indebtedness under which
any Loan Party or Subsidiary of any Loan Party may be obligated as a borrower or
guarantor in excess of $10,000,000 in the aggregate and such breach, default or
event of default consists of the failure to pay (beyond any period of grace
permitted with respect thereto, whether waived or not) any indebtedness when due
(whether at stated maturity, by acceleration or otherwise) or such breach or
default permits or causes the acceleration of any indebtedness (whether or not
such right shall have been waived) or the termination of any commitment to lend;
8.1.6 Final Judgments or Orders.
Any final judgments or orders for the payment of money
in excess of $10,000,000 in the aggregate shall be entered against any Loan
Party by a court having jurisdiction in the premises, which judgment either (i)
is not discharged, vacated, bonded or stayed pending appeal within a period of
sixty (60) days from the date of entry, or (ii) is not fully insured (provided
that a judgment shall be deemed to be uninsured unless the insurance company is
a reputable insurance company and has acknowledged that the judgment is covered
by the applicable insurance policy without any reservation to challenge the
applicability thereof) or any Loan Parties' or any of their Subsidiaries' assets
having a value on the Company's books in excess of $10,000,000 are attached,
seized, levied upon or subjected to a writ or distress warrant; or such come
within the possession of any receiver, trustee, custodian or assignee for the
benefit of creditors and the same is not cured within sixty (60) days thereafter
;
8.1.7 Loan Document Unenforceable.
Any of the Loan Documents shall cease to be legal,
valid and binding agreements enforceable against the party executing the same or
such party's successors and assigns (as permitted under the Loan Documents) in
accordance with the respective terms thereof or shall in any way be terminated
(except in accordance with its terms) or become or be declared ineffective or
inoperative or shall in any way be challenged or contested;
8.1.8 Notice of Lien or Assessment.
A notice of Lien or assessment in excess of $10,000,000
which is not a Permitted Lien is filed of record with respect to all or any part
of any of the Loan Parties' or any of their Subsidiaries' assets by the United
States, or any department, agency or instrumentality thereof, or by any state,
county, municipal or other governmental agency, including the PBGC, or if any
taxes or debts owing at any time or times hereafter to any one of these becomes
payable and the same is not paid within sixty (60) days after the same becomes
payable (unless the
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validity or amount thereof is being contested in good faith by appropriate and
lawful proceedings diligently conducted so long as levy and execution thereon
have been stayed and continue to be stayed);
8.1.9 Insolvency.
The Company, the Borrower, any Material Subsidiary, or
one or more other Subsidiaries of the Borrower which individually or in the
aggregate represent more than five percent (5%) of the book value of the
consolidated assets of the Borrower and its Subsidiaries, ceases to be able to
pay its debts as they become due or admits in writing its inability to pay its
debts as they mature;
8.1.10 Events Relating to Plans and Benefit
Arrangements.
Any of the following occurs: (i) any Reportable Event,
which the Documentation Agent and the Administrative Agent determine in good
faith constitutes grounds for the termination of any Plan by the PBGC or the
appointment of a trustee to administer or liquidate any Plan, shall have
occurred and be continuing; (ii) proceedings shall have been instituted or other
action taken to terminate any Plan, or a termination notice shall have been
filed with respect to any Plan; (iii) a trustee shall be appointed to administer
or liquidate any Plan; (iv) the PBGC shall give notice of its intent to
institute proceedings to terminate any Plan or Plans or to appoint a trustee to
administer or liquidate any Plan; and, in the case of the occurrence of (i),
(ii), (iii) or (iv) above, the Administrative Agent determines in good faith
that the amount of the Company's liability is likely to exceed 10% of its
Consolidated Tangible Net Worth; (v) the Company or any member of the ERISA
Group shall fail to make any contributions when due to a Plan or a Multiemployer
Plan; (vi) the Company or any other member of the ERISA Group shall make any
amendment to a Plan with respect to which security is required under Section 307
of ERISA; (vii) the Company or any other member of the ERISA Group shall
withdraw completely or partially from a Multiemployer Plan; (viii) the Company
or any other member of the ERISA Group shall withdraw (or shall be deemed under
Section 4062(e) of ERISA to withdraw) from a Multiple Employer Plan; or (ix) any
applicable Law is adopted, changed or interpreted by any Official Body with
respect to or otherwise affecting one or more Plans, Multiemployer Plans or
Benefit Arrangements and, with respect to any of the events specified in (v),
(vi), (vii), (viii) or (ix), the Documentation Agent and the Administrative
Agent determine in good faith that any such occurrence would be reasonably
likely to materially and adversely affect the total enterprise represented by
the Company and the other members of the ERISA Group;
8.1.11 Cessation of Business.
Any of the Company, the Borrower, (except as permitted
by Section 7.2.6 or Section 7.2.7) any Material Subsidiary, or (except as
permitted by Section 7.2.6 or Section 7.2.7) one or more other Subsidiaries of
the Borrower which individually or in the aggregate represent more than five
percent (5%) of the book value of the consolidated assets of the
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Borrower and its Subsidiaries, ceases to conduct its business as contemplated or
such Loan Party is enjoined, restrained or in any way prevented by court order
from conducting all or any material part of its business and such injunction,
restraint or other preventive order is not dismissed within thirty (30) days
after the entry thereof;
8.1.12 Change of Control.
(i) Any person or group of persons (within the meaning
of Section 13(a) or 14(a) of the Securities Exchange Act of 1934, as amended)
shall have acquired beneficial ownership of (within the meaning of Rule 13d-3
promulgated by the Securities and Exchange Commission under said Act) 33.33% or
more of the voting capital stock of the Company; or (ii) within a period of
twelve (12) consecutive calendar months, individuals who were directors on the
board of directors of the Company on the first day of such period together with
any directors whose election by such board of directors or whose nomination for
election by the shareholders was approved by a vote of the majority of the
directors then in office shall cease to constitute a majority of the board of
directors of the Company;
8.1.13 Involuntary Proceedings.
A proceeding shall have been instituted in a court
having jurisdiction in the premises seeking a decree or order for relief in
respect of any the Company, the Borrower, any Material Subsidiary, or any other
Subsidiary the result of which proceeding against such other Subsidiary would be
a Material Adverse Change, in an involuntary case under any applicable
bankruptcy, insolvency, reorganization or other similar law now or hereafter in
effect, or for the appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator, conservator (or similar official) of any Loan Party or
any Subsidiary of any Loan Party for any substantial part of its property, or
for the winding-up or liquidation of its affairs, and such proceeding shall
remain undismissed or unstayed and in effect for a period of sixty (60)
consecutive days or such court shall enter a decree or order granting any of the
relief sought in such proceeding; or
8.1.14 Voluntary Proceedings.
Any of the Company, the Borrower, any Material
Subsidiary or any other Subsidiary the result of which voluntary case by such
other Subsidiary would be a Material Adverse Change, shall commence a voluntary
case under any applicable bankruptcy, insolvency, reorganization or other
similar law now or hereafter in effect, shall consent to the entry of an order
for relief in an involuntary case under any such law, or shall consent to the
appointment or taking possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator, conservator (or other similar official) of itself or for
any substantial part of its property or shall make a general assignment for the
benefit of creditors, or shall fail generally to pay its debts as they become
due, or shall take any action in furtherance of any of the foregoing.
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8.2 Consequences of Event of Default.
8.2.1 Events of Default Other Than Bankruptcy,
Insolvency or Reorganization Proceedings.
If an Event of Default specified under Sections 8.1.1
through 8.1.12 shall occur and be continuing , the Banks and the Administrative
Agent shall be under no further obligation to make Revolving Credit Loans or
issue Letters of Credit, as the case may be, no Swing Loans shall be made, and
the Administrative Agent may, and upon the request of the Required Banks, shall
(i) by written notice to the Borrower, declare the unpaid principal amount of
the Revolving Credit Notes, the Swing Note and all Reimbursement Obligations
then outstanding and all interest accrued thereon, any unpaid fees and all other
Indebtedness of the Borrower to the Banks hereunder and thereunder to be
forthwith due and payable, and the same shall thereupon become and be
immediately due and payable to the Administrative Agent for the benefit of each
Bank without presentment, demand, protest or any other notice of any kind, all
of which are hereby expressly waived, and (ii) require the Borrower to, and the
Borrower shall thereupon, deposit in a non-interest bearing account with the
Administrative Agent, as cash collateral for its Obligations under the Loan
Documents, an amount equal to the maximum amount currently or at any time
thereafter available to be drawn on all outstanding Letters of Credit, and the
Borrower hereby pledges to the Administrative Agent and the Banks, and grants to
the Administrative Agent and the Banks a security interest in, all such cash as
security for such Obligations. Upon the curing of all existing Events of Default
to the satisfaction of the Required Banks, the Administrative Agent shall return
such cash collateral to the Borrower;
8.2.2 Bankruptcy, Insolvency or Reorganization
Proceedings.
If an Event of Default specified under Section 8.1.13
or 8.1.14 shall occur, the Banks shall make no Revolving Credit Loans hereunder
and the Swing Lender shall make no Swing Loans hereunder and the unpaid
principal amount of the Revolving Credit Notes, the Swing Note and all
Reimbursement Obligations then outstanding and all interest accrued thereon, any
unpaid fees and all other Indebtedness of the Borrower to the Banks hereunder
and thereunder shall be immediately due and payable, without presentment,
demand, protest or notice of any kind, all of which are hereby expressly waived;
8.2.3 Set-off.
If an Event of Default shall occur and be continuing,
any Bank to whom any Obligation is owed by any Loan Party hereunder or under any
other Loan Document or any participant of such Bank which has agreed in writing
to be bound by the provisions of Section 9.13 and any branch, Subsidiary or
Affiliate of such Bank or participant anywhere in the world shall have the
right, subject to the approval of the Required Banks, in addition to all other
rights and remedies available to it, without notice to such Loan Party, to set
off against and apply to the then unpaid balance of all the Revolving Credit
Loans and all other Obligations of the Borrower and the other Loan Parties
hereunder or under any other Loan Document any debt
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owing to, and any other funds held in any manner for the account of, the
Borrower or such other Loan Party by such Bank or participant or by such branch,
Subsidiary or Affiliate, including all funds in all deposit accounts (whether
time or demand, general or special, provisionally credited or finally credited,
or otherwise) now or hereafter maintained by the Borrower or such other Loan
Party for its own account (but not including funds held in custodian or trust
accounts) with such Bank or participant or such branch, Subsidiary or Affiliate.
Such right shall exist whether or not any Bank or the Administrative Agent shall
have made any demand under this Agreement or any other Loan Document, whether or
not such debt owing to or funds held for the account of the Borrower or such
other Loan Party is or are matured or unmatured and regardless of the existence
or adequacy of any collateral, any Guaranty or any other security, right or
remedy available to any Bank or the Administrative Agent;
8.2.4 Suits, Actions, Proceedings.
If an Event of Default shall occur and be continuing,
and whether or not the Administrative Agent shall have accelerated the maturity
of Revolving Credit Loans pursuant to any of the foregoing provisions of this
Section 8.2, the Administrative Agent or any Bank, with the approval of the
Required Banks, if owed any amount with respect to the Revolving Credit Notes,
may proceed to protect and enforce its rights by suit in equity, action at law
and/or other appropriate proceeding, whether for the specific performance of any
covenant or agreement contained in this Agreement or the Revolving Credit Notes,
including as permitted by applicable Law the obtaining of the ex parte
appointment of a receiver, and, if such amount shall have become due, by
declaration or otherwise, proceed to enforce the payment thereof or any other
legal or equitable right of the Administrative Agent or such Bank;
8.2.5 Application of Proceeds.
From and after the date on which the Administrative
Agent has taken any action pursuant to this Section 8.2 and until all
Obligations of the Loan Parties have been paid in full, any and all proceeds
received by the Administrative Agent from any sale or other disposition of any
collateral, or any part thereof, the exercise of any other remedy by the
Administrative Agent, shall be applied as follows:
(i) first, to reimburse the
Administrative Agent and the
Banks for out-of-pocket costs,
expenses and disbursements,
including reasonable attorneys'
and paralegals' fees and legal
expenses, incurred by the
Administrative Agent or the Banks
in connection with realizing on
any collateral or collection of
any Obligations of any of the
Loan Parties under any of the
Loan Documents, including
advances made by the Banks or any
one of them or the Administrative
Agent for the reasonable
maintenance, preservation,
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protection or enforcement of, or
realization upon, any collateral,
including advances for taxes,
insurance, repairs and the like
and reasonable expenses incurred
to sell or otherwise realize on,
or prepare for sale or other
realization on, any of any
collateral;
(ii) second, to the repayment of all
Indebtedness then due and unpaid
of the Loan Parties to the Banks
incurred under this Agreement or
any of the other Loan Documents,
whether of principal, interest,
fees, expenses or otherwise, in
such manner as the Managing
Agents may determine in their
discretion; and
(iii) the balance, if any, to the
Borrower or as required by Law;
and
8.2.6 Other Rights and Remedies.
The Administrative Agent may, and upon the request of
the Required Banks shall, exercise all post-default rights granted to the
Administrative Agent and the Banks under the Loan Documents or applicable Law.
8.3 Notice of Sale.
Any notice required to be given by the Administrative
Agent of a sale, lease, or other disposition of the any collateral or any
intended action by the Administrative Agent, if given ten (10) days prior to
such proposed action, shall constitute commercially reasonable and fair notice
thereof to the Borrower.
9. THE MANAGING AGENTS
9.1 Appointment.
Each Bank hereby irrevocably designates, appoints and
authorizes PNC Bank to act as Documentation Agent and National City Bank of
Columbus to act as Administrative Agent for such Bank under this Agreement and
to execute and deliver or accept on behalf of each of the Banks the other Loan
Documents. Each Bank hereby irrevocably authorizes, and each holder of any
Revolving Credit Note by the acceptance of a Revolving Credit Note shall be
deemed irrevocably to authorize, the Documentation Agent and the Administrative
Agent to take such action on its behalf under the provisions of this Agreement
and the other Loan Documents and any other instruments and agreements referred
to herein, and to exercise such powers and to
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perform such duties hereunder as are specifically delegated to or required of
the Documentation Agent or the Administrative Agent by the terms hereof,
together with such powers as are reasonably incidental thereto. PNC Bank, agrees
to act as the Documentation Agent and National City Bank of Columbus agrees to
act as the Administrative Agent on behalf of the Banks to the extent provided in
this Agreement.
9.2 Delegation of Duties.
The Documentation Agent and the Administrative Agent may
perform any of their respective duties hereunder by or through agents or
employees (provided such delegation does not constitute a relinquishment of its
duties as Documentation Agent or Administrative Agent, respectively) and,
subject to Sections 9.5 and 9.6, shall be entitled to engage and pay for the
advice or services of any attorneys, accountants or other experts concerning all
matters pertaining to its duties hereunder and to rely upon any advice so
obtained.
9.3 Nature of Duties; Independent Credit Investigation.
The Documentation Agent, the Administrative Agent, the
Managing Agents and the Syndication Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement and no
implied covenants, functions, responsibilities, duties, obligations, or
liabilities shall be read into this Agreement or otherwise exist. The duties of
the Administrative Agent shall be mechanical and administrative in nature. The
Documentation Agent, the Administrative Agent, the Managing Agents and the
Syndication Agent shall not have by reason of this Agreement a fiduciary or
trust relationship in respect of any Bank; and nothing in this Agreement,
expressed or implied, is intended to or shall be so construed as to impose upon
the Documentation Agent, the Administrative Agent, the Managing Agents or the
Syndication Agent any obligations in respect of this Agreement except as
expressly set forth herein. Each Bank expressly acknowledges (i) that the
Documentation Agent, the Administrative Agent, the Managing Agents and the
Syndication Agent have not made any representations or warranties to it and that
no act by the Documentation Agent, any Managing Agent, the Syndication Agent or
the Administrative Agent hereafter taken, including any review of the affairs of
any of the Loan Parties, shall be deemed to constitute any representation or
warranty by the Documentation Agent, any Managing Agent, the Syndication Agent
or the Administrative Agent to any Bank; (ii) that it has made and will continue
to make, without reliance upon the Documentation Agent, the Administrative
Agent, the Managing Agents and the Syndication Agent, its own independent
investigation of the financial condition and affairs and its own appraisal of
the creditworthiness of each of the Loan Parties in connection with this
Agreement and the making and continuance of the Revolving Credit Loans
hereunder; and (iii) except as expressly provided herein, that the Documentation
Agent, the Managing Agents, the Syndication Agent and the Administrative Agent
shall have no duty or responsibility, either initially or on a continuing basis,
to provide any Bank with any credit or other information with respect thereto,
whether coming into its possession before the making of any Revolving Credit
Loan or at any time or times thereafter.
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9.4 Actions in Discretion of Documentation Agent and
Administrative Agent; Instructions from the Banks.
The Documentation Agent and the Administrative Agent each
agrees, upon the written request of the Required Banks, to take or refrain from
taking any action of the type specified as being within the Documentation
Agent's or the Administrative Agent's rights, powers or discretion herein,
provided that the Documentation Agent or Administrative Agent shall not be
required to take any action which exposes the Documentation Agent or the
Administrative Agent to personal liability or which is contrary to this
Agreement or any other Loan Document or applicable Law. In the absence of a
request by the Required Banks, the Documentation Agent or the Administrative
Agent shall have authority, in its sole discretion, to take or not to take any
such action, unless this Agreement specifically requires the consent of the
Required Banks or all of the Banks. Any action taken or failure to act pursuant
to such instructions or discretion shall be binding on the Banks, subject to
Section 9.6. Subject to the provisions of Section 9.6, no Bank shall have any
right of action whatsoever against the Administrative Agent as a result of the
Documentation Agent or the Administrative Agent acting or refraining from acting
hereunder in accordance with the instructions of the Required Banks, or in the
absence of such instructions, in the absolute discretion of the Documentation
Agent or the Administrative Agent.
9.5 Reimbursement and Indemnification of Administrative Agent
and Documentation Agent by the Borrower.
The Borrower unconditionally agrees to pay or reimburse the
Administrative Agent and Documentation Agent and save the Administrative Agent
and Documentation Agent harmless against (a) liability for the payment of all
reasonable out-of-pocket costs, expenses and disbursements, including fees and
expenses of counsel, appraisers and environmental consultants, incurred by the
Administrative Agent and Documentation Agent (i) in connection with the
development, negotiation, preparation, printing, execution, administration,
syndication, interpretation and performance of this Agreement and the other Loan
Documents, (ii) relating to any requested amendments, waivers or consents
pursuant to the provisions hereof, (iii) in connection with the enforcement of
this Agreement or any other Loan Document or collection of amounts due hereunder
or thereunder or the proof and allowability of any claim arising under this
Agreement or any other Loan Document, whether in bankruptcy or receivership
proceedings or otherwise, and (iv) in any workout or restructuring or in
connection with the protection, preservation, exercise or enforcement of any of
the terms hereof or of any rights hereunder or under any other Loan Document or
in connection with any foreclosure, collection or bankruptcy proceedings, and
(b) all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against the
Administrative Agent, in its capacity as such, the Documentation Agent, in its
capacity as such, in any way relating to or arising out of this Agreement or any
other Loan Documents or any action taken or omitted by the Documentation Agent
or the Administrative Agent hereunder or thereunder, provided that the Borrower
shall not
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be liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements if the
same results from the Documentation Agent's or Administrative Agent's gross
negligence or willful misconduct, or if the Borrower was not given notice of the
subject claim and the opportunity to participate in the defense thereof, at its
expense (except that the Borrower shall remain liable to the extent such failure
to give notice does not result in a loss to the Borrower), or if the same
results from a compromise or settlement agreement entered into without the
consent of the Borrower, which shall not be unreasonably withheld. In addition,
the Borrower agrees to reimburse and pay all reasonable out-of-pocket expenses
of the Administrative Agent's regular employees and agents engaged to perform
audits of the Loan Parties' books, records and business properties.
9.6 Exculpatory Provisions.
None of the Documentation Agent, the Administrative Agent, any
Managing Agent, the Syndication Agent or any Issuing Letter of Credit Bank or
any of their respective directors, officers, employees, agents, attorneys or
Affiliates shall (a) be liable to any Bank for any action taken or omitted to be
taken by it or them hereunder, or in connection herewith including pursuant to
any Loan Document, unless caused by its or its respective directors, officers,
employees, agents, attorneys or Affiliates own gross negligence or willful
misconduct, (b) be responsible in any manner to any of the Banks for the
effectiveness, enforceability, genuineness, validity or due execution of this
Agreement or any other Loan Documents or for any recital, representation,
warranty, document, certificate, report or statement herein or made or furnished
under or in connection with this Agreement or any other Loan Documents, or (c)
be under any obligation to any of the Banks to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions hereof or
thereof on the part of the Loan Parties, or the financial condition of the Loan
Parties, or the existence or possible existence of any Event of Default or
Potential Default. None of the Documentation Agent, the Administrative Agent,
any Managing Agent, the Syndication Agent or Issuing Letter of Credit Bank or
any Bank or any of their respective directors, officers, employees, agents,
attorneys or Affiliates shall be liable to any of the Loan Parties for
consequential damages resulting from any breach of contract, tort or other wrong
in connection with the negotiation, documentation, administration or collection
of the Revolving Credit Loans or any of the Loan Documents.
9.7 Reimbursement and Indemnification by Banks of the
Documentation Agent, the Managing Agents, the Syndication
Agent and the Administrative Agent.
Each Bank agrees to reimburse and indemnify the Documentation
Agent, the Administrative Agent, any Managing Agent, the Syndication Agent and
any Issuing Letter of Credit Bank (to the extent not reimbursed by the Borrower
and without limiting the Obligation of the Borrower to do so) in proportion to
its Ratable Share from and against all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by or
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asserted against the Documentation Agent, the Administrative Agent, any Managing
Agent, the Syndication Agent or any Issuing Letter of Credit Bank in its
capacity as such, in any way relating to or arising out of this Agreement or any
other Loan Documents or any action taken or omitted by the Documentation Agent,
the Administrative Agent, a Managing Agent, the Syndication Agent or any Issuing
Letter of Credit Bank hereunder or thereunder, provided that no Bank shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements (a) if
the same results from the Documentation Agent's, Administrative Agent's, any
Managing Agent's, the Syndication Agent's or any Issuing Letter of Credit Bank's
gross negligence or willful misconduct, or (b) if such Bank was not given notice
of the subject claim and the opportunity to participate in the defense thereof,
at its expense (except that such Bank shall remain liable to the extent such
failure to give notice does not result in a loss to the Bank), or (c) if the
same results from a compromise and settlement agreement entered into without the
consent of such Bank, which shall not be unreasonably withheld. In addition,
each Bank agrees promptly upon demand to reimburse the Administrative Agent (to
the extent not reimbursed by the Borrower and without limiting the Obligation of
the Borrower to do so) in proportion to its Ratable Share for all amounts due
and payable by the Borrower to the Administrative Agent in connection with the
Administrative Agent's periodic audit of the Loan Parties' books, records and
business properties.
9.8 Reliance by Documentation Agent, Administrative Agent,
Managing Agents and Syndication Agent.
The Documentation Agent, the Administrative Agent, the
Managing Agents, the Syndication Agent and the Issuing Letter of Credit Banks
shall be entitled to rely upon any writing, telegram, telex or teletype message,
resolution, notice, consent, certificate, letter, cablegram, statement, order or
other document or conversation by telephone or otherwise believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons, and upon the advice and opinions of counsel and other professional
advisers selected by the Administrative Agent. The Documentation Agent, the
Administrative Agent, the Managing Agents, the Syndication Agent and the Issuing
Letter of Credit Banks shall be fully justified in failing or refusing to take
any action hereunder unless it shall first be indemnified to its satisfaction by
the Banks against any and all liability and expense (other than a liability or
expense relating to gross negligence or willful misconduct) which may be
incurred by it by reason of taking or continuing to take any such action.
9.9 Notice of Default.
The Administrative Agent shall not be deemed to have knowledge
or notice of the occurrence of any Potential Default or Event of Default unless
the Administrative Agent has received written notice from a Bank or the Borrower
referring to this Agreement, describing such Potential Default or Event of
Default and stating that such notice is a "notice of default."
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9.10 Notices.
The Administrative Agent and the Documentation Agent shall
promptly send to each Bank a copy of all notices and other documents received
from the Borrower pursuant to the provisions of this Agreement or the other Loan
Documents promptly upon receipt thereof. The Administrative Agent shall promptly
notify the Borrower and the other Banks of each change in the Base Rate and the
effective date thereof.
9.11 Banks in Their Individual Capacities.
With respect to their Revolving Credit Commitments and the
Revolving Credit Loans made by them, the Documentation Agent and the
Administrative Agent shall have the same rights and powers hereunder as any
other Bank and may exercise the same as though it were not the Documentation
Agent or the Administrative Agent, and the term "Banks" shall, unless the
context otherwise indicates, include the Documentation Agent and the
Administrative Agent in their individual capacity. The Documentation Agent and
its Affiliates, the Administrative Agent and its Affiliates and each of the
Banks and their respective Affiliates may, without liability to account, except
as prohibited herein, make loans to, accept deposits from, discount drafts for,
act as trustee under indentures of, and generally engage in any kind of banking
or trust business with, the Loan Parties and their Affiliates, in the case of
the Documentation Agent, as though it were not acting as Documentation Agent
hereunder and in the case of each Bank, as though such Bank were not a Bank
hereunder.
9.12 Holders of Revolving Credit Notes.
The Administrative Agent may deem and treat any payee of any
Revolving Credit Note as the owner thereof for all purposes hereof unless and
until written notice of the assignment or transfer thereof shall have been filed
with the Administrative Agent. Any request, authority or consent of any Person
who at the time of making such request or giving such authority or consent is
the holder of any Revolving Credit Note shall be conclusive and binding on any
subsequent holder, transferee or assignee of such Revolving Credit Note or of
any Revolving Credit Note or Revolving Credit Notes issued in exchange therefor.
9.13 Equalization of Banks.
The Banks and the holders of any participations in any
Revolving Credit Notes agree among themselves that, with respect to all amounts
received by any Bank or any such holder for application on any Obligation
hereunder or under any Revolving Credit Note or under any such participation,
whether received by voluntary payment, by realization upon security, by the
exercise of the right of set-off or banker's lien, by counterclaim or by any
other non-pro rata source, equitable adjustment will be made in the manner
stated in the following sentence so that, in effect, all such excess amounts
will be shared ratably among the Banks and such holders in proportion to their
interests in payments under the Revolving Credit Notes, except as otherwise
provided in Sections 3.4.2 or 4.6.1. The Banks or any such holder receiving any
such amount
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shall purchase for cash from each of the other Banks an interest in such Bank's
Revolving Credit Loans in such amount as shall result in a ratable participation
by the Banks and each such holder in the aggregate unpaid amount under the
Revolving Credit Notes, provided that if all or any portion of such excess
amount is thereafter recovered from the Bank or the holder making such purchase,
such purchase shall be rescinded and the purchase price restored to the extent
of such recovery, together with interest or other amounts, if any, required by
law (including court order) to be paid by the Bank or the holder making such
purchase.
9.14 Successor Administrative and Documentation Agents.
The Administrative Agent (i) may resign as Administrative
Agent or (ii) shall resign if such resignation is requested by the Required
Banks (if the Administrative Agent is a Bank, the Administrative Agent's
Revolving Credit Loans and its Commitment shall be considered in determining
whether the Required Banks have requested such resignation) , in either case of
(i) or (ii) by giving not less than thirty (30) days' prior written notice to
the Borrower. The Documentation Agent may resign as Documentation Agent. If the
Administrative Agent or Documentation Agent shall resign under this Agreement,
then subject to the consent of the Borrower (which consent shall not be
unreasonably withheld and which consent shall not be required during any period
in which an Event of Default exists) either (a) the Required Banks shall appoint
from among the Banks a successor administrative agent or documentation agent for
the Banks, or (b) if a successor agent shall not be so appointed and approved
within the thirty (30) day period following the Administrative Agent's notice or
the Documentation Agent's notice to the Banks of its resignation, then the
Administrative Agent or the Documentation Agent, as the case may be, shall
appoint a successor administrative agent or documentation agent, as the case may
be, who shall serve as Administrative Agent or Documentation Agent until such
time as the Required Banks appoint a successor administrative agent or
documentation agent. Upon its appointment, such successor administrative agent
or documentation agent shall succeed to the rights, powers and duties of the
Administrative Agent or the Documentation Agent, as the case may be, and the
term "Administrative Agent" or "Documentation Agent" shall mean such successor
effective upon its appointment, and the former Administrative Agent's or
Documentation Agent's rights, powers and duties as Administrative Agent or
Documentation Agent, as the case may be, shall be terminated without any other
or further act or deed on the part of such former Administrative Agent or
Documentation Agent or any of the parties to this Agreement. After the
resignation of any Administrative Agent or Documentation Agent hereunder, the
provisions of this Article 9 shall inure to the benefit of such former
Administrative Agent or Documentation Agent and such former Administrative Agent
or Documentation Agent shall not by reason of such resignation be deemed to be
released from liability for any actions taken or not taken by it while it was an
Administrative Agent or Documentation Agent under this Agreement.
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9.15 Other Fees.
The Borrower shall pay to the Administrative Agent, the
Managing Agents, the Syndication Agent and the Documentation Agent or their
affiliates all fees and expenses due pursuant to that certain commitment letter
dated March 25, 1996 among the Borrower and the various Agents and to that
certain engagement letter dated March 25, 1996 between the Borrower and PNC
Securities Corp in each case at the times set forth in such letters.
9.16 Availability of Funds.
Unless the Administrative Agent shall have been notified by a
Bank prior to the date upon which a Revolving Credit Loan is to be made that
such Bank does not intend to make available to the Administrative Agent such
Bank's portion of such Revolving Credit Loan, the Administrative Agent may
assume that such Bank has made or will make such proceeds available to the
Administrative Agent on such date and the Administrative Agent may, in reliance
upon such assumption (but shall not be required to), make available to the
Borrower a corresponding amount. If such corresponding amount is not in fact
made available to the Administrative Agent by such Bank, the Administrative
Agent shall be entitled to recover such amount on demand from such Bank (or, if
such Bank fails to pay such amount forthwith upon such demand from the Borrower)
together with interest thereon, in respect of each day during the period
commencing on the date such amount was made available to the Borrower and ending
on the date the Administrative Agent recovers such amount, at a rate per annum
equal to the Federal Funds Effective Rate.
9.17 Calculations.
In the absence of gross negligence or willful misconduct, the
Administrative Agent shall not be liable for any error in computing the amount
payable to any Bank whether in respect of the Revolving Credit Loans, fees or
any other amounts due to the Banks under this Agreement. In the event an error
in computing any amount payable to any Bank is made, the Administrative Agent,
the Borrower and each affected Bank shall, forthwith upon discovery of such
error, make such adjustments as shall be required to correct such error, and any
compensation therefor will be calculated at the Federal Funds Effective Rate.
9.18 Beneficiaries.
Except as expressly provided herein, the provisions of this
Article 9 are solely for the benefit of the Documentation Agent, the
Administrative Agent, the Managing Agents, the Syndication Agent and the Banks,
and the Loan Parties shall not have any rights to rely on or enforce any of the
provisions hereof. In performing its functions and duties under this Agreement,
the Administrative Agent shall act solely as agent of the Banks and does not
assume and shall not be deemed to have assumed any obligation toward or
relationship of agency or trust with or for any of the Loan Parties.
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9.19 Absence of Duties of Managing Agents and Syndication
Agent.
The Managing Agents and the Syndication Agent shall have no
obligations or duties under this Agreement.
10. MISCELLANEOUS
10.1 Modifications, Amendments or Waivers.
With the written consent of the Required Banks, the
Administrative Agent, acting on behalf of all the Banks, and the Borrower, on
behalf of the Loan Parties, may from time to time enter into written agreements
amending or changing any provision of this Agreement or any other Loan Document
or the rights of the Banks or the Loan Parties hereunder or thereunder, or may
grant written waivers or consents to a departure from the due performance of the
Obligations of the Loan Parties hereunder or thereunder; provided, however, that
the written consent of the Required Banks shall not be required with respect to
the joinder of additional Loan Parties pursuant to Section 10.18. Any such
agreement, waiver or consent made with such written consent shall be effective
to bind all the Banks and the Loan Parties; provided, that, without the written
consent of all the Banks, no such agreement, waiver or consent may be made which
will:
10.1.1 Increase of Commitment; Extension or
Expiration Date.
Increase the amount of the Revolving Credit Commitment
of any Bank hereunder or extend the Expiration Date;
10.1.2 Extension of Payment; Reduction of
Principal Interest or Fees; Modification of
Terms of Payment.
Whether or not any Revolving Credit Loans are
outstanding, extend the time for payment of principal or interest of any
Revolving Credit Loan, the Commitment Fee or any other fee payable to any Bank,
or reduce the principal amount of or the rate of interest borne by any Revolving
Credit Loan or reduce the Commitment Fee or any other fee payable to any Bank,
or otherwise affect the terms of payment of the principal of or interest of any
Revolving Credit Loan, the Commitment Fee or any other fee payable to any Bank;
10.1.3 Release of Guarantor.
Release the Company or any Material Subsidiary from its
Obligations under the Master Guaranty Agreement or any other security for any of
the Loan Parties' Obligations; or
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10.1.4 Miscellaneous
Amend Sections 4.2 [Pro Rata Treatment of Banks], 9.6
[Exculpatory Provisions] or 9.13 [Equalization of Banks] or this Section 10.1,
alter any provision regarding the pro rata treatment of the Banks, change the
definition of Required Banks, or change any requirement providing for the Banks
or the Required Banks to authorize the taking of any action hereunder.
No agreement, waiver or consent which would modify the
interests, rights or obligations of the Documentation Agent in its capacity as
Documentation Agent, of the Administrative Agent in its capacity as
Administrative Agent or of an Issuing Letter of Credit Bank in its capacity as
the issuer of Letters of Credit shall be effective without the written consent
of the Documentation Agent, the Administrative Agent or such Issuing Letter of
Credit Bank, respectively.
10.2 No Implied Waivers; Cumulative Remedies; Writing
Required.
No course of dealing and no delay or failure of the
Documentation Agent, the Administrative Agent or any Bank in exercising any
right, power, remedy or privilege under this Agreement or any other Loan
Document shall affect any other or future exercise thereof or operate as a
waiver thereof, nor shall any single or partial exercise thereof or any
abandonment or discontinuance of steps to enforce such a right, power, remedy or
privilege preclude any further exercise thereof or of any other right, power,
remedy or privilege. The rights and remedies of the Documentation Agent, the
Administrative Agent, the Syndication Agent, the Managing Agents, the Issuing
Letter of Credit Banks and the Banks under this Agreement and any other Loan
Documents are cumulative and not exclusive of any rights or remedies which they
would otherwise have. Any waiver, permit, consent or approval of any kind or
character on the part of any Bank of any breach or default under this Agreement
or any such waiver of any provision or condition of this Agreement must be in
writing and shall be effective only to the extent specifically set forth in such
writing.
10.3 Reimbursement and Indemnification of Banks by the
Borrower; Taxes.
The Borrower agrees unconditionally upon demand to pay or
reimburse to each Bank (other than the Administrative Agent, as to which the
Borrower's Obligations are set forth in Section 9.5) and to save such Bank
harmless against (i) liability for the payment of all reasonable out-of-pocket
costs, expenses and disbursements (including fees and expenses of counsel for
each Bank except with respect to (a) and (b) below), incurred by such Bank (a)
in connection with the administration and interpretation of this Agreement, and
other instruments and documents to be delivered hereunder, (b) relating to any
amendments, waivers or consents pursuant to the provisions hereof, (c) in
connection with the enforcement of this Agreement or any other Loan Document, or
collection of amounts due hereunder or thereunder or the proof and allowability
of any claim arising under this Agreement or any other Loan Document, whether in
bankruptcy or receivership proceedings or otherwise, and (d) in any workout or
restructuring or
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in connection with the protection, preservation, exercise or enforcement of any
of the terms hereof or of any rights hereunder or under any other Loan Document
or in connection with any foreclosure, collection or bankruptcy proceedings, or
(ii) all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against such Bank,
in its capacity as such, in any way relating to or arising out of this Agreement
(including without limitation Section 4.6.2) or any other Loan Documents or any
action taken or omitted by such Bank hereunder or thereunder, provided that the
Borrower shall not be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements (A) if the same results from such Bank's gross negligence or
willful misconduct, or (B) if the Borrower was not given notice of the subject
claim and the opportunity to participate in the defense thereof, at its expense
(except that the Borrower shall remain liable to the extent such failure to give
notice does not result in a loss to the Borrower), or (C) if the same results
from a compromise or settlement agreement entered into without the consent of
the Borrower, which shall not be unreasonably withheld. The Banks will attempt
to minimize the fees and expenses of legal counsel for the Banks which are
subject to reimbursement by the Borrower hereunder by considering the usage of
one law firm to represent the Banks and the Administrative Agent if appropriate
under the circumstances. The Borrower agrees unconditionally to pay all stamp,
documentary, transfer, recording or filing taxes or fees and similar impositions
now or hereafter determined by the Administrative Agent or any Bank to be
payable in connection with this Agreement or any other Loan Document, and the
Borrower agrees unconditionally to save the Administrative Agent and the Banks
harmless from and against any and all present or future claims, liabilities or
losses with respect to or resulting from any omission to pay or delay in paying
any such taxes, fees or impositions.
10.4 Holidays.
Whenever any payment or action to be made or taken hereunder
shall be stated to be due on a day which is not a Business Day, such payment or
action shall be made or taken on the next following Business Day (except as
provided in Section 3.2.1 with respect to Interest Periods under the Revolving
Credit Euro-Rate Option), and such extension of time shall be included in
computing interest or fees, if any, in connection with such payment or action.
10.5 Funding by Branch, Subsidiary or Affiliate.
10.5.1 Notional Funding.
Each Bank shall have the right from time to time,
without notice to the Borrower, to deem any branch, Subsidiary or Affiliate
(which for the purposes of this Section 10.5 shall mean any corporation or
association which is directly or indirectly controlled by or is under direct or
indirect common control with any corporation or association which directly or
indirectly controls such Bank) of such Bank to have made, maintained or funded
any Revolving Credit Loan to which the Revolving Credit Euro-Rate Option applies
at any time,
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provided that immediately following (on the assumption that a payment were then
due from the Borrower to such other office), and as a result of such change, the
Borrower would not be under any greater financial obligation pursuant to Section
4.6 than it would have been in the absence of such change. Notional funding
offices may be selected by each Bank without regard to such Bank's actual
methods of making, maintaining or funding the Revolving Credit Loans or any
sources of funding actually used by or available to such Bank; and
10.5.2 Actual Funding.
Each Bank shall have the right from time to time to
make or maintain any Revolving Credit Loan by arranging for a branch, Subsidiary
or Affiliate of such Bank to make or maintain such Revolving Credit Loan subject
to the last sentence of this Section 10.5.2. If any Bank causes a branch,
Subsidiary or Affiliate to make or maintain any part of the Revolving Credit
Loans hereunder, all terms and conditions of this Agreement shall, except where
the context clearly requires otherwise, be applicable to such part of the
Revolving Credit Loans to the same extent as if such Revolving Credit Loans were
made or maintained by such Bank, but in no event shall any Bank's use of such a
branch, Subsidiary or Affiliate to make or maintain any part of the Revolving
Credit Loans hereunder cause such Bank or such branch, Subsidiary or Affiliate
to incur any cost or expenses payable by the Borrower hereunder or require the
Borrower to pay any other compensation to any Bank (including any expenses
incurred or payable pursuant to Section 4.6) which would otherwise not be
incurred.
10.6 Notices.
All notices, requests, demands, directions and other
communications (as used in this Section 10.6, collectively referred to as
"notices") given to or made upon any party hereto under the provisions of this
Agreement shall be by telephone or in writing (including telex or facsimile
communication) unless otherwise expressly permitted hereunder and shall be
delivered or sent by telex or facsimile to the respective parties at the
addresses and numbers set forth under their respective names on the signature
pages hereof or in accordance with any subsequent unrevoked written direction
from any party to the others. All notices shall, except as otherwise expressly
herein provided, be effective (a) in the case of telex or facsimile, when
received, (b) in the case of hand-delivered notice, when hand-delivered, (c) in
the case of telephone, when telephoned, provided, however, that in order to be
effective, telephonic notices must be confirmed in writing no later than the
next day by letter, facsimile or telex, (d) if given by mail, four (4) days
after such communication is deposited in the mail with first-class postage
prepaid, return receipt requested, and (e) if given by any other means
(including by air courier), when delivered; provided, that notices to the
Administrative Agent shall not be effective until received. Any Bank giving any
notice to any Loan Party shall simultaneously send a copy thereof to the
Administrative Agent, and the Administrative Agent shall promptly notify the
other Banks of the receipt by it of any such notice.
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10.7 Severability.
The provisions of this Agreement are intended to be severable.
If any provision of this Agreement shall be held invalid or unenforceable in
whole or in part in any jurisdiction, such provision shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without in any manner affecting the validity or enforceability
thereof in any other jurisdiction or the remaining provisions hereof in any
jurisdiction.
10.8 Governing Law.
Each Letter of Credit and Section 2.9 shall be subject to the
Uniform Customs and Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication No. 500, as the same may be
revised or amended from time to time, and to the extent not inconsistent
therewith, the internal laws of the New York without regard to its conflict of
laws principles and the balance of this Agreement shall be deemed to be a
contract under the Laws of the Ohio and for all purposes shall be governed by
and construed and enforced in accordance with the internal laws of the State of
Ohio without regard to its conflict of laws principles.
10.9 Prior Understanding.
This Agreement and the other documents and instruments
executed in connection herewith supersede all prior understandings and
agreements, whether written or oral, between the parties hereto and thereto
relating to the transactions provided for herein and therein, including any
prior confidentiality agreements and commitments.
10.10 Duration; Survival.
All representations and warranties of the Loan Parties
contained herein or made in connection herewith shall survive the making of
Revolving Credit Loans and issuance of Letters of Credit and shall not be waived
by the execution and delivery of this Agreement, any investigation by the
Administrative Agent, the Documentation Agent, the Syndication Agent, the
Managing Agents, the Issuing Letter of Credit Banks or the Banks, the making of
Revolving Credit Loans, issuance of Letters of Credit, or payment in full of the
Revolving Credit Loans. All covenants and agreements of the Loan Parties
contained in Sections 7.1, 7.2 and 7.3 shall continue in full force and effect
from and after the date hereof so long as the Borrower may borrow or request
Letters of Credit hereunder and until termination of the Revolving Credit
Commitments, repayment of all Revolving Credit Loans and expiration or
termination of all Letters of Credit. All covenants and agreements of the
Borrower contained herein relating to the payment of principal, interest,
premiums, additional compensation or expenses and indemnification, including
those set forth in the Revolving Credit Notes, Article 4 and Sections 9.5, 9.7
and 10.3, shall survive payment in full of the Revolving Credit Loans,
expiration or termination of the Letters of Credit and termination of the
Revolving Credit Commitments.
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10.11 Successors and Assigns.
This Agreement shall be binding upon and shall inure to the
benefit of the Banks, the Documentation Agent, the Administrative Agent, the
Syndication Agent, the Managing Agents, the Issuing Letter of Credit Banks, the
Loan Parties and their respective successors and assigns, except that none of
the Loan Parties may assign or transfer any of its rights and Obligations
hereunder or any interest herein without consent of all Banks. Each Bank may, at
its own cost, make assignments of all or any part of its Revolving Credit
Commitment and Revolving Credit Loans and its Ratable Share of Letter of Credit
Outstandings to one or more banks or other entities, subject to the consent of
the Borrower (which consent shall not be required during any period in which an
Event of Default exists), the Issuing Letter of Credit Banks and the
Administrative Agent with respect to any assignee, such consents not to be
unreasonably withheld, and provided that assignments may not be made in amounts
less than $ 10,000,000. Each Bank may, at its own cost, grant participations in
all or any part of its Revolving Credit Commitment and the Revolving Credit
Loans made by it and of its Ratable Share of Letter of Credit Outstandings to
one or more banks or other entities, without the consent of any party hereto. In
the case of an assignment, upon receipt by the Administrative Agent of the
Assignment and Assumption Agreement, the assignee shall have, to the extent of
such assignment (unless otherwise provided therein), the same rights, benefits
and obligations as it would have if it had been a signatory Bank hereunder, the
Commitments in Section 2.1 shall be adjusted accordingly, and upon surrender of
any Revolving Credit Note subject to such assignment, the Borrower shall execute
and deliver a new Revolving Credit Note to the assignee in an amount equal to
the amount of the Revolving Credit Commitment assumed by it and a new Revolving
Credit Note to the assigning Bank in an amount equal to the Revolving Credit
Commitment retained by it hereunder. Any assigning Bank shall pay to the
Administrative Agent a service fee in the amount of $3,500 for each assignment,
which amount shall not be subject to reimbursement or indemnification by the
Borrower. In the case of a participation, the participant shall only have the
rights specified in Section 8.2.3 (the participant's rights against such Bank in
respect of such participation to be those set forth in the agreement executed by
such Bank in favor of the participant relating thereto and not to include any
voting rights except with respect to changes of the type referenced in Sections
10.1.1, 10.1.2, and 10.1.3), all of such Bank's obligations under this Agreement
or any other Loan Document shall remain unchanged, and all amounts payable by
any Loan Party hereunder or thereunder shall be determined as if such Bank had
not sold such participation. Any assignee or participant which is not
incorporated under the Laws of the United States of America or a state thereof
shall deliver to the Borrower and the Administrative Agent the form of
certificate described in Section 10.17 relating to federal income tax
withholding. Each Bank may furnish any publicly available information concerning
any Loan Party or its Subsidiaries and any other information concerning any Loan
Party or its Subsidiaries in the possession of such Bank from time to time to
assignees and participants (including prospective assignees or participants),
provided that such assignees and participants agree to be bound by the
provisions of Section 10.12.
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10.12 Confidentiality.
The Documentation Agent, the Administrative Agent and the
Banks each agree to keep confidential all information obtained from any Loan
Party or its Subsidiaries which is nonpublic and confidential or proprietary in
nature (including any information the Borrower specifically designates as
confidential), except as provided below, and to use such information only in
connection with their respective capacities under this Agreement and for the
purposes contemplated hereby. The Documentation Agent, the Administrative Agent
and the Banks shall be permitted to disclose such information (i) to outside
legal counsel, accountants and other professional advisors who need to know such
information in connection with the administration and enforcement of this
Agreement and who are notified that the information is to be treated as
confidential , (ii) to assignees and participants as contemplated by Section
10.11, (iii) to the extent requested by any bank regulatory authority or, with
notice to the Borrower if not prohibited, as otherwise required by applicable
Law or by any subpoena or similar legal process, or in connection with any
investigation or proceeding arising out of the transactions contemplated by this
Agreement, (iv) if it becomes publicly available other than as a result of a
breach of this Agreement or becomes available from a source not known to be
subject to confidentiality restrictions, (v) if the Borrower shall have
consented to such disclosure, or (vi) after notice to the Borrower unless the
Borrower is an adverse party in such litigation, in connection with any
litigation to which any Bank is a party the subject matter of which involves
this Agreement or is deemed necessary upon the advice of legal counsel of such
Bank by such Bank in any defense of such litigation.
10.13 Counterparts.
This Agreement may be executed by different parties hereto on
any number of separate counterparts, including facsimiles, each of which, when
so executed and delivered, shall be an original, and all such counterparts shall
together constitute one and the same instrument.
10.14 Documentation Agent's or Bank's Consent.
Whenever the Documentation Agent's, the Administrative Agent's
any Managing Agent's, the Syndication Agent's, any Issuing Letter of Credit
Bank's or any Bank's consent is required to be obtained under this Agreement or
any of the other Loan Documents as a condition to any action, inaction,
condition or event, the Documentation Agent, the Administrative Agent each
Managing Agent, the Syndication Agent, each Issuing Letter of Credit Bank and
each Bank shall be authorized to give or withhold such consent in its sole and
absolute discretion and to condition its consent upon the giving of additional
collateral, the payment of money or any other matter.
10.15 Exceptions.
The representations, warranties and covenants contained herein
shall be independent of each other, and no exception to any representation,
warranty or covenant shall be
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deemed to be an exception to any other representation, warranty or covenant
contained herein unless expressly provided, nor shall any such exceptions be
deemed to permit any action or omission that would be in contravention of
applicable Law.
10.16 CONSENT TO FORUM; WAIVER OF JURY TRIAL.
EACH LOAN PARTY HEREBY IRREVOCABLY CONSENTS TO THE
NONEXCLUSIVE JURISDICTION OF THE COURT OF COMMON PLEAS OF FRANKLIN COUNTY AND
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF OHIO, AND WAIVES
PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH
SERVICE OF PROCESS BE MADE BY CERTIFIED OR REGISTERED MAIL DIRECTED TO SUCH LOAN
PARTY AT THE ADDRESSES PROVIDED FOR IN SECTION 10.6 AND SERVICE SO MADE SHALL BE
DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF. EACH LOAN PARTY WAIVES ANY
OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED AGAINST IT AS
PROVIDED HEREIN AND AGREES NOT TO ASSERT ANY DEFENSE BASED ON LACK OF
JURISDICTION OR VENUE OR INCONVENIENT FORUM. EACH LOAN PARTY, THE ADMINISTRATIVE
AGENT AND THE BANKS HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING
OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS AGREEMENT, ANY
OTHER LOAN DOCUMENT OR THE COLLATERAL TO THE FULL EXTENT PERMITTED BY LAW.
10.17 Tax Withholding Clause.
Each Bank or assignee or participant of a Bank that is not
incorporated under the Laws of the United States of America or a state thereof
agrees that it will deliver to each of the Borrower and the Administrative Agent
two (2) duly completed copies of the following: (i) Internal Revenue Service
Form W-9, 4224 or 1001, or other applicable form prescribed by the Internal
Revenue Service, certifying that such Bank, assignee or participant is entitled
to receive payments under this Agreement and the other Loan Documents without
deduction or withholding of any United States federal income taxes, or is
subject to such tax at a reduced rate under an applicable tax treaty, or (ii)
Internal Revenue Service Form W-8 or other applicable form or a certificate of
such Bank, assignee or participant indicating that no such exemption or reduced
rate is allowable with respect to such payments. Each Bank, assignee or
participant required to deliver to the Borrower and the Documentation Agent a
form or certificate pursuant to the preceding sentence shall deliver such form
or certificate as follows: (A) each Bank which is a party hereto on the Closing
Date shall deliver such form or certificate at least five (5) Business Days
prior to the first date on which any interest or fees are payable by the
Borrower hereunder for the account of such Bank; (B) each assignee or
participant shall deliver such form or certificate at least five (5) Business
Days before the effective date of such assignment or participation (unless the
Documentation Agent in its sole discretion shall permit such assignee or
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participant to deliver such form or certificate less than five (5) Business Days
before such date in which case it shall be due on the date specified by the
Documentation Agent). Each Bank, assignee or participant which so delivers a
Form W-8, W-9, 4224 or 1001 further undertakes to deliver to each of the
Borrower and the Documentation Agent two (2) additional copies of such form (or
a successor form) on or before the date that such form expires or becomes
obsolete or after the occurrence of any event requiring a change in the most
recent form so delivered by it, and such amendments thereto or extensions or
renewals thereof as may be reasonably requested by the Borrower or the
Documentation Agent, either certifying that such Bank, assignee or participant
is entitled to receive payments under this Agreement and the other Loan
Documents without deduction or withholding of any United States federal income
taxes or is subject to such tax at a reduced rate under an applicable tax treaty
or stating that no such exemption or reduced rate is allowable. The
Documentation Agent shall be entitled to withhold United States federal income
taxes at the full withholding rate unless the Bank, assignee or participant
establishes an exemption or that it is subject to a reduced rate as established
pursuant to the above provisions.
10.18 Joinder of Guarantors.
Any Subsidiary of the Borrower which is required to join the
Master Guaranty Agreement pursuant to Section 7.2.9 shall execute and deliver to
the Documentation Agent a signature page to the Master Guaranty Agreement and to
the Master Intercompany Subordination Agreement. The Loan Parties shall deliver
such Guarantor Joinder to the Documentation Agent within five (5) Business Days
after the date of the filing of such Subsidiary's articles of incorporation if
the Subsidiary is a corporation, the date of the filing of its certificate of
limited partnership if it is a limited partnership or the date of its
organization if it is an entity other than a limited partnership or corporation
or, if acquired, the date of acquisition.
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IN WITNESS WHEREOF, the parties hereto, by their officers
thereunto duly authorized, have executed this Agreement as of the day and year
first above written.
ATTEST: CONSOLIDATED STORES CORPORATION,
Borrower
By:
-----------------------------------------
Title:
--------------------------------------
[Seal]
Address for Notices:
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--------------------------------------------
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Telecopier No. ( ) -
---- ----- -----------------
Attention:
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Telephone No. ( ) -
---- ----- -----------------
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NATIONAL CITY BANK OF
COLUMBUS, as Administrative Agent, as
Managing Agent and as a Bank
By:
--------------------------------------
Title:
-----------------------------------
Address for Notices:
-----------------------------------------
-----------------------------------------
-----------------------------------------
Telecopier No. ( ) -
---- ----- -------------
Attention:
-------------------------------
Telephone No. ( ) -
---- ----- --------------
NATIONAL CITY BANK, as
Managing Agent and as a Bank
By:
--------------------------------------
Title:
-----------------------------------
Address for Notices:
-----------------------------------------
-----------------------------------------
-----------------------------------------
Telecopier No. ( ) -
---- ----- -------------
Attention:
-------------------------------
Telephone No. ( ) -
---- ----- --------------
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<PAGE> 115
BANK ONE, COLUMBUS, N.A., as
Managing Agent and as a Bank
By:
--------------------------------------
Title:
-----------------------------------
Address for Notices:
-----------------------------------------
-----------------------------------------
-----------------------------------------
Telecopier No. ( ) -
---- ----- -------------
Attention:
-------------------------------
Telephone No. ( ) -
---- ----- --------------
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<PAGE> 116
PNC BANK, OHIO, NATIONAL
ASSOCIATION, as Documentation Agent,
Managing Agent and as a Bank
By:
--------------------------------------
Title:
-----------------------------------
Address for Notices:
-----------------------------------------
-----------------------------------------
-----------------------------------------
Telecopier No. ( ) -
---- ----- -------------
Attention:
-------------------------------
Telephone No. ( ) -
---- ----- --------------
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<PAGE> 117
THE BANK OF NEW YORK, as
Syndication Agent, as Managing Agent and
as a Bank
By:
--------------------------------------
Title:
-----------------------------------
Address for Notices:
-----------------------------------------
-----------------------------------------
-----------------------------------------
Telecopier No. ( ) -
---- ----- -------------
Attention:
-------------------------------
Telephone No. ( ) -
---- ----- --------------
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<PAGE> 118
EXHIBIT 1.1(A)
FORM OF
ASSIGNMENT AND ASSUMPTION AGREEMENT
Reference is made to the Credit Agreement dated as of May 3,
1996 (as amended, restated, supplemented or modified from time to time, the
"Credit Agreement") among Consolidated Stores Corporation, an Ohio corporation
(the "Borrower"), the Banks (as defined in the Credit Agreement), The Bank of
New York, as Syndication Agent and Managing Agent, National City Bank of
Columbus, as Administrative Agent and Managing Agent, PNC Bank, Ohio, National
Association, as Arranger, Documentation Agent and Managing Agent, Bank One,
Columbus, N.A., as Managing Agent, and National City Bank, as Managing Agent.
Unless otherwise defined herein, terms defined in the Credit Agreement are used
herein with the same meanings.
_________________________ (the "Assignor") and
_______________________ (the "Assignee"), intending to be legally bound hereby,
make this Assignment and Assumption Agreement this ___ day of ___________, ____
and hereby agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and
the Assignee hereby purchases and assumes from the Assignor, WITHOUT RECOURSE to
the Assignor, a ________ percent (____%) interest in and to all of the
Assignor's rights and obligations under the Credit Agreement as of the Effective
Date (as defined below), including without limitation, such percentage interest
in the Assignor's Revolving Credit Commitment as in effect on the Effective
Date, the Revolving Credit Loans owing to the Assignor on the Effective Date,
the Assignor's Ratable Share of the Letter of Credit Outstandings on the
Effective Date and the Revolving Credit Note evidencing the outstanding
Revolving Credit Loans held by the Assignor.
2. The Assignor (i) represents and warrants that, as of the
date hereof, its Revolving Credit Commitment is $ _________ and the unpaid
principal amount of the Revolving Credit Loans owing to the Assignor is
$________; (ii) represents and warrants that it is the legal and beneficial
owner of the interest being assigned by it hereunder and that such interest is
free and clear of any adverse claim created by it; (iii) makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit Agreement
or any of the other Loan Documents or any other instrument or document furnished
pursuant thereto, or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement or any of the other
Loan Documents or any other instrument or document furnished pursuant thereto;
(iv) makes no representation or warranty and assumes no responsibility with
respect to the financial condition of Borrower or any other Loan Party, or the
performance or observance by the Borrower or any other Loan Party of any of its
obligations under the Credit Agreement or any of the other Loan Documents or any
other instrument or document furnished pursuant thereto; and (v) attaches the
Revolving Credit Note referred to in paragraph 1 above and requests that the
Administrative Agent exchange such Revolving Credit Note for new Revolving
Credit Note as follows:
<PAGE> 119
________________________
________________________
3. The Assignee (i) confirms that it has received a copy of
the Credit Agreement, together with copies of the financial statements (if any)
referred to in Sections 5.1.9, 7.3.1 and 7.3.2 of the Credit Agreement and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment and Assumption
Agreement; (ii) agrees that it will, independently and without reliance upon the
Administrative Agent, the Documentation Agent, the Syndication Agent, any
Managing Agent, the Assignor or any other Bank, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Credit Agreement;
(iii) appoints and authorizes the Administrative Agent to take such actions on
its behalf and to exercise such powers under the Loan Documents as are delegated
to the Administrative Agent by the terms thereof; (iv) agrees that it will
become a party to and be bound by the Credit Agreement on the Effective Date
(including without limitation the provisions of Section 10.11) as if it were an
original Bank thereunder, and will have the rights and obligations of a Bank
thereunder, and will perform in accordance with their terms all of the
obligations which by the terms of the Credit Agreement are required to be
performed by it as a Bank; and (v) specifies as its address for notices the
office set forth beneath its name on the signature pages hereof.
4. The effective date of this Assignment and Assumption
Agreement shall be _____________, _____ (the "Effective Date"). Following the
execution of this Assignment and Assumption Agreement in accordance with the
Credit Agreement, it will be delivered to the Administrative Agent for
acceptance and recording by the Administrative Agent.
5. Upon such acceptance and recording, as of the Effective
Date, (i) the Assignee shall be a party to the Credit Agreement and, to the
extent provided in this Assignment and Assumption Agreement, have the rights and
obligations of a Bank thereunder and under the other Loan Documents, and (ii)
the Assignor shall, to the extent provided in this Assignment and Assumption
Agreement, relinquish its rights and be released from its obligations under the
Credit Agreement except pursuant to Sections 4.6 and 10.3 thereof, and the
Commitments of the Assignor and the Assignee shall be as set forth in Schedule I
hereto.
6. Upon such acceptance and recording, from and after the
Effective Date, the Administrative Agent shall make all payments under the
Credit Agreement and the Assignor's Revolving Credit Note in respect of the
interest assigned hereby (including, without limitation, all payments of
principal, interest, Commitment Fees and Letter of Credit Fees with respect
thereto) to the Assignee. The Assignor and the Assignee shall make all
appropriate adjustments in payments under the Credit Agreement and the
Assignor's Revolving Credit Note for periods prior to the Effective Date
directly between themselves.
7. The Assignor makes this assignment to the Assignee in
consideration of the payment by the Assignee to the Assignor of the amount
previously agreed, receipt of which is hereby acknowledged by the Assignee.
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<PAGE> 120
8. This Assignment and Assumption Agreement shall be governed
by and construed in accordance with the internal laws of the State of Ohio,
without reference to its conflict of laws principles.
9. If required by Section 10.11 of the Credit Agreement, the
Assignor has paid to the Administrative Agent the $3,500 fee contemplated in
such Section.
[NAME OF ASSIGNOR]
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
[NAME OF ASSIGNEE]
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
Notice Address:
----------------------------------
----------------------------------
----------------------------------
Attention:
------------------------
Telephone No.:
--------------------
Telecopier No.:
------------------
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<PAGE> 121
CONSENTED TO this _____ day of _____________, ______.
NATIONAL CITY BANK OF COLUMBUS
as Administrative Agent
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
CONSOLIDATED STORES CORPORATION
By:
--------------------------------
Name:
-------------------------------
Title:
-----------------------------
- -----------------------------------,
as Issuing Letter of Credit Bank
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
- -----------------------------------,
as Issuing Letter of Credit Bank
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
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<PAGE> 122
SCHEDULE I
<TABLE>
<CAPTION>
Amount of
Commitment for Amount of Revolving
Revolving Credit Loans as Credit Loans held as of
of the Effective Date the Effective Date
<S> <C> <C>
[Assignor] $______________ $______________
[Assignor] $______________ $______________
</TABLE>
<PAGE> 123
EXHIBIT 1.1(G)(2)
FORM OF
MASTER
GUARANTY AND SURETYSHIP AGREEMENT
This Master Guaranty and Suretyship Agreement (the "Agreement") dated
as of May 3, 1996, is made and given by the undersigned signatories identified
in Schedule 1 attached hereto and made a part hereof (each a "Guarantor" and
collectively, the "Guarantors"), in favor of the Banks (as defined in that
certain Credit Agreement dated as of even date herewith among The Bank of New
York, in its capacity as Syndication Agent and as Managing Agent (the
"Syndication Agent"), National City Bank of Columbus, in its capacity as
Administrative Agent and as Managing Agent (the "Administrative Agent"), PNC
Bank, Ohio, National Association, in its capacity as Arranger, as Documentation
Agent and as Managing Agent (the "Documentation Agent"), Bank One, Columbus,
N.A., in its capacity as Managing Agent ("Bank One") and National City Bank, in
its capacity as Managing Agent ("NCB"), the Banks party thereto, and
Consolidated Stores Corporation, an Ohio corporation (the "Borrower"), as it may
from time to time be amended, restated, modified or supplemented, the "Credit
Agreement").
W I T N E S S E T H:
WHEREAS, the Borrower has entered into the Credit Agreement
with the Documentation Agent, the Syndication Agent, the Administrative Agent,
Bank One and NCB (collectively, the "Agents") and the Banks; and
WHEREAS, this Agreement is made by the Guarantors, among other
things, to comply with the requirements of the Credit Agreement; and
WHEREAS, the Borrower is a Subsidiary of Consolidated Stores
Corporation, a Delaware corporation (the "Parent"), and the Guarantors (other
than the Parent and TRO, Inc.) are each a Subsidiary of the Borrower; and
WHEREAS, the respective businesses and investments of the
Guarantors are interdependent and extensions of credit made to the Borrower
under the Credit Agreement are with the expectation that the profits and other
opportunities from such extensions of credit will directly or indirectly inure
to the benefit of each Guarantor and to all of them taken as an affiliated
group;
NOW, THEREFORE, in consideration of the premises, and
intending to be legally bound, the Guarantors hereby agree as follows:
<PAGE> 124
ARTICLE I
DEFINITIONS
1.01. Definitions. Capitalized terms used herein and not
otherwise defined herein shall have such meanings as given to them in the Credit
Agreement. In addition to the other terms defined elsewhere in this Agreement,
the following term shall have the following meaning:
"Guaranteed Obligations" shall mean all Obligations from time to
time of the Borrower to the Agents and the Banks under or in connection
with the Credit Agreement or any other Loan Document, whether for
principal, interest, fees, indemnities, expenses or otherwise, and all
refinancings or refundings thereof, whether such Obligations are direct
or indirect, otherwise secured or unsecured, joint or several, absolute
or contingent, due or to become due, whether for payment or performance,
now existing or hereafter arising (specifically including but not
limited to Obligations arising or accruing after the commencement of any
bankruptcy, insolvency, reorganization or similar proceeding with
respect to the Borrower or any other individual or entity (a "Person")
including any Guarantor or which would have arisen or accrued but for
the commencement of such proceeding, even if the claim for such
Obligation is not enforceable or allowable in such proceeding). Without
limitation of the foregoing, such Obligations include all Obligations
arising from any extensions of credit under or in connection with the
Loan Documents from time to time, regardless of whether any such
extensions of credit are in excess of the amount committed under or
contemplated by the Loan Documents or are made in circumstances in which
any condition to extension of credit is not satisfied. Without
limitation of the foregoing, the Agents and the Banks (or any successive
assignee or transferee) from time to time may, subject to the provisions
of the Credit Agreement, assign or otherwise transfer all of their
respective rights and obligations under the Loan Documents (including,
without limitation, all of any commitment to extend credit), or any
other Guaranteed Obligations, to any other Person, and such Guaranteed
Obligations (including, without limitation, any Guaranteed Obligations
resulting from any extension of credit by such other Person under or in
connection with the Loan Documents) assigned or otherwise transferred in
accordance with the terms of the Credit Agreement shall be and remain
Guaranteed Obligations entitled to the benefit of this Agreement.
ARTICLE II
GUARANTY AND SURETYSHIP
2.01 Guaranty and Suretyship. The Guarantors jointly and
severally hereby absolutely, unconditionally and irrevocably guarantee and
become surety for the full and punctual payment and performance of the
Guaranteed Obligations as and when such payment or performance shall become due
(at scheduled maturity, by acceleration or otherwise) in accordance with the
terms of the Loan Documents provided, however, as to any Guarantor the maximum
amount of its guaranty or surety hereunder shall be equal to its net worth on
the due date for such payment or performance. This Agreement is an agreement of
suretyship as well as
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<PAGE> 125
of guaranty, is a guarantee of payment and performance and not merely of
collectibility, and is in no way conditioned upon any attempt to collect from or
proceed against the Borrower or any other Person or any other event or
circumstance. The obligations of the Guarantors under this Agreement are direct
and primary obligations of each Guarantor and are independent of the Guaranteed
Obligations, and a separate action or actions may be brought against any one or
more of the Guarantors regardless of whether action is brought against the
Borrower, any other Guarantor or any other Person or whether the Borrower, any
other Guarantor or any other Person is joined in any such action or actions.
2.02 Obligations Absolute. The Guarantors agree that the
Guaranteed Obligations will be paid and performed strictly in accordance with
the terms of the Loan Documents, regardless of any law, regulation or order now
or hereafter in effect in any jurisdiction affecting the Guaranteed Obligations,
any of the terms of the Loan Documents or the rights of the Agent and the Banks
or any other Person with respect thereto. The obligations of the Guarantors
under this Agreement shall be absolute, unconditional and irrevocable,
irrespective of any of the following:
(a) Any lack of genuineness, legality, validity,
enforceability or allowability (in a bankruptcy, insolvency, reorganization or
similar proceeding, or otherwise), or any avoidance or subordination, in whole
or in part, of any Loan Document or any of the Guaranteed Obligations.
(b) Any increase, decrease or change in the amount, nature,
type or purpose of any of the Guaranteed Obligations (whether or not
contemplated by the Loan Documents as presently constituted); any change in the
time, manner, method or place of payment or performance of, or in any other term
of, any of the Guaranteed Obligations; any execution or delivery of any
additional Loan Documents; or any amendment, modification or supplement to, or
refinancing or refunding of, any Loan Document or any of the Guaranteed
Obligations.
(c) Any failure to assert any breach of or default under
any Loan Document or any of the Guaranteed Obligations; any extensions of credit
in excess of the amount committed under or contemplated by the Loan Documents,
or in circumstances in which any condition to such extensions of credit has not
been satisfied; any other exercise or non-exercise, or any other failure,
omission, breach, default, delay or wrongful action in connection with any
exercise or non-exercise, of any right or remedy against the Borrower or any
other Person under or in connection with any Loan Document or any of the
Guaranteed Obligations; any refusal of payment or performance of any of the
Guaranteed Obligations, whether or not with any reservation of rights against
any Guarantor; or any application of collections (including but not limited to
collections resulting from realization upon any direct or indirect security for
the Guaranteed Obligations) to other obligations, if any, not entitled to the
benefits of this Agreement, in preference to Guaranteed Obligations entitled to
the benefits of this Agreement, or if any collections are applied to Guaranteed
Obligations, any application to particular Guaranteed Obligations.
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<PAGE> 126
(d) Any taking, exchange, amendment, modification,
supplement, termination, subordination, release, loss or impairment of, or any
failure to protect, perfect, or preserve the value of, or any enforcement of,
realization upon, or exercise of rights, or remedies under or in connection
with, or any failure, omission, breach, default, delay or wrongful action by the
Agents and the Banks, or any of them, or any other Person in connection with the
enforcement of, realization upon, or exercise of rights or remedies under or in
connection with, or any other action or inaction by the Agents and the Banks, or
any of them, or any other Person in respect of, any direct or indirect security
for any of the Guaranteed Obligations. As used in this Agreement, "direct or
indirect security" for the Guaranteed Obligations, and similar phrases, includes
but is not limited to any collateral security, guaranty, suretyship, letter of
credit, capital maintenance agreement, put option, subordination agreement or
other right or arrangement of any nature providing direct or indirect assurance
of payment or performance of any of the Guaranteed Obligations, made by or on
behalf of any Person.
(e) Any merger, consolidation, liquidation, dissolution,
winding-up, charter revocation or forfeiture of, or other change in, or any
restructuring or termination of the corporate structure or existence of, the
Borrower or any other Person; any bankruptcy, insolvency, reorganization or
similar proceeding with respect to the Borrower or any other Person; or any
action taken or election made by the Agents and the Banks, or any of them
(including but not limited to any election under Section 1111(b)(2) of the
United States Bankruptcy Code), the Borrower or any other Person in connection
with any such proceeding.
(f) Any defense, setoff or counterclaim (excluding only the
defense of full, strict and indefeasible payment and performance), which may at
any time be available to or be asserted by the Borrower, any Guarantor or any
other Person with respect to any Loan Document or any of the Guaranteed
Obligations; or any discharge by operation of law or release of the Borrower,
any Guarantor or any other Person from the performance or observance of any Loan
Document or any of the Guaranteed Obligations.
(g) Any other event or circumstance, whether similar or
dissimilar to the foregoing, and whether known or unknown, which might otherwise
constitute a defense available to, or limit the liability of or discharge, any
Guarantor, a guarantor or a surety, excepting only full, strict and indefeasible
payment and performance of the Guaranteed Obligations in full.
2.03. Waivers, etc. The Guarantors hereby waive any defense to
or limitation on their obligations under this Agreement arising out of or based
on any event or circumstance referred to in Section 2.02 hereof. Without
limitation and to the full extent permitted by applicable law, the Guarantors
waive each of the following:
(a) All notices, disclosures and demands of any nature
which otherwise might be required from time to time to preserve intact any
rights against any Guarantor, including without limitation the following: any
notice of any event or circumstance described in Section 2.02 hereof; any notice
required by any law, regulation or order now or hereafter in effect in any
jurisdiction; any presentment, notice of nonpayment, nonperformance,
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<PAGE> 127
dishonor, or protest under any Loan Document or any of the Guaranteed
Obligations; any notice of the incurrence of any Guaranteed Obligation; any
notice of any default or any failure on the part of the Borrower or any other
Person to comply with any Loan Document or any of the Guaranteed Obligations or
any direct or indirect security for any of the Guaranteed Obligations; and any
notice of any information pertaining to the business, operations, condition
(financial or otherwise) or prospects of the Borrower or any other Person.
(b) Any right to any marshalling of assets, to the filing
of any claim against the Borrower or any other Person in the event of any
bankruptcy, insolvency, reorganization or similar proceeding, or to the exercise
against the Borrower or any other Person of any other right or remedy under or
in connection with any Loan Document or any of the Guaranteed Obligations or any
direct or indirect security for any of the Guaranteed Obligations; any
requirement of promptness or diligence on the part of the Agents and the Banks,
or any of them, or any other Person; any requirement to exhaust any remedies
under or in connection with, or to mitigate the damages resulting from default
under, any Loan Document or any of the Guaranteed Obligations or any direct or
indirect security for any of the Guaranteed Obligations; any benefit of any
statute of limitations; and any requirement of acceptance of this Agreement, and
any requirement that any Guarantor receive notice of such acceptance.
(c) Any defense or other right arising by reason of any law
now or hereafter in effect in any jurisdiction pertaining to election of
remedies (including but not limited to anti-deficiency laws, "one action" laws
or the like), or by reason of any election of remedies or other action or
inaction by the Agents and the Banks, or any of them (including but not limited
to commencement or completion of any judicial proceeding or nonjudicial sale or
other action in respect of collateral security for any of the Guaranteed
Obligations), which results in denial or impairment of the right of the Agents
and the Banks, or any of them, to seek a deficiency against the Borrower or any
other Person or which otherwise discharges or impairs any of the Guaranteed
Obligations.
(d) Notwithstanding any payment or payments made by each
Guarantor hereunder, or any set-off or application of funds of such Guarantor by
any Agent or any Bank, such Guarantor shall not be entitled to be subrogated to
any of the rights of any Agent or any Bank against the Borrower or against any
collateral security or guarantee or right of offset held by any Agent or any
Bank for the payment of the Guaranteed Obligations, nor shall such Guarantor
seek any reimbursement from the Borrower in respect of payments made by such
Guarantor hereunder, until all amounts owing to the Agents and the Banks by the
Borrower on account of the Guaranteed Obligations are paid in full and the
Commitments are terminated. If any amount shall be paid to any Guarantor on
account of such subrogation rights at any time when all of the Obligations shall
not have been paid in full, such amount shall be held by such Guarantor in trust
for the Agents and the Banks, segregated from other funds of such Guarantor, and
shall, forthwith upon receipt by such Guarantor, be turned over to the
Administrative Agent in the exact form received by such Guarantor (duly endorsed
by such Guarantor to the Administrative Agent, if required), to be applied
against the Guaranteed Obligations, whether matured or unmatured, in such order
as the Administrative Agent may determine.
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<PAGE> 128
2.04. Reinstatement. This Agreement shall continue to be
effective, or be automatically reinstated, as the case may be, if at any time
payment of any of the Guaranteed Obligations is avoided, rescinded or must
otherwise be returned by the Agents and the Banks, or any of them, for any
reason (including, without limitation, by reason of such payment being a
preference, fraudulent transfer or fraudulent conveyance), all as though such
payment had not been made.
2.05. No Stay. Without limitation of any other provision of this
Agreement, if any declaration of default or acceleration or other exercise or
condition to exercise of rights or remedies under or with respect to any
Guaranteed Obligation shall at any time be stayed, enjoined or prevented for any
reason (including but not limited to stay or injunction resulting from the
pendency against the Borrower or any other Person of a bankruptcy, insolvency,
reorganization or similar proceeding), the Guarantors agree that, for the
purposes of this Agreement and their obligations hereunder, the Guaranteed
Obligations shall be deemed to have been declared in default or accelerated, and
such other exercise or conditions to exercise shall be deemed to have been taken
or met.
2.06. Payments. All payments to be made by any Guarantor
pursuant to this Agreement shall be made without setoff, counterclaim, or other
deduction of any nature.
2.07. Continuing Guaranty. This Agreement is a continuing
agreement and shall continue in full force and effect (notwithstanding that no
Guaranteed Obligations may be outstanding from time to time, or any other event
or circumstance) until all Guaranteed Obligations and all other amounts payable
under this Agreement have been paid and performed in full, and all commitments
to extend credit under the Loan Documents have terminated, subject in any event
to reinstatement in accordance with Section 2.04 hereof. Any purported
termination, revocation or discharge of this Agreement (other than in accordance
with the preceding sentence) shall be void and of no effect. For purposes of
this Agreement the Guaranteed Obligations shall not be deemed to have been paid
in full until the Agents and the Banks shall have indefeasibly received payment
of the Guaranteed Obligations in full and in cash and all commitments to extend
credit under the Loan Documents have terminated.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each Guarantor hereby represents and warrants to the Agents and
the Banks with respect to itself as follows:
3.01. No Conditions Precedent. There are no conditions precedent
to the effectiveness of this Guaranty that have not been satisfied or waived.
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<PAGE> 129
3.02. No Reliance. Each Guarantor has, independently and without
reliance upon the Agents and the Banks, or any of them, and based upon such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement.
3.03. Representations and Warranties Remade at Each Extension of
Credit. Each request (including any deemed request) by the Borrower for any
extension of credit under the Credit Agreement shall be deemed to constitute a
representation and warranty by each Guarantor to the Agent and the Banks that
the representations and warranties made by each Guarantor in this Agreement are
true and correct on and as of the date of such request with the same effect as
though made on and as of such date. Failure by the Agents and the Banks to
receive notice from any Guarantor to the contrary before the Agents and the
Banks make any extension of credit under any Loan Document shall constitute a
further representation and warranty by such Guarantor to the Agents and the
Banks that the representations and warranties made by the Borrower are true and
correct on and as of the date of such extension of credit with the same effect
as though made on and as of such date.
ARTICLE IV
MISCELLANEOUS
4.01. Amendments, etc. No amendment to or waiver of any
provision of this Agreement, and no consent to any departure by any Guarantor
herefrom, shall in any event be effective unless in a writing manually signed by
or on behalf of the Administrative Agent and, in the case of an amendment, each
of the Guarantors. Any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
4.02. No Implied Waiver; Remedies Cumulative. No delay or
failure of the Agents and the Banks, or any of them, in exercising any right or
remedy under this Agreement shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right or remedy preclude any other or
further exercise thereof or the exercise of any other right or remedy. The
rights and remedies of the Agents and the Banks under this Agreement are
cumulative and not exclusive of any other rights or remedies available
hereunder, under any other agreement or instrument, by law, or otherwise.
4.03. Notices. Each Guarantor agrees that all notices,
statements, requests, demands and other communications under this Agreement
shall be given to such Guarantor at the address set forth on the signature page
hereof in the manner provided in Section 10.6 of the Credit Agreement. The
Agents and the Banks may rely on any notice (whether or not made in a manner
contemplated by this Agreement) purportedly made by or on behalf of a Guarantor,
and the Agent and the Banks shall have no duty to verify the identity or
authority of the Person giving such notice.
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<PAGE> 130
4.04. Expenses. Each Guarantor unconditionally agrees to pay all
costs and expenses, including reasonable attorney's fees, incurred by the Agents
and any of the Banks in enforcing this Agreement against any Guarantor.
4.05. Prior Understandings. This Agreement constitutes the
entire agreement of the parties hereto with respect to the subject matter hereof
and supersedes all prior and contemporaneous understandings and agreements
relating to such subject matter.
4.06. Survival. All representations and warranties of the
Guarantors contained in or made in connection with this Agreement shall survive,
and shall not be waived by, the execution and delivery of this Agreement, any
investigation by or knowledge of the Agents and the Banks, or any of them, any
extension of credit, or any other event or circumstance whatsoever.
4.07. Counterparts. This Agreement may be executed in any number
of counterparts, each of which, when so executed, shall be deemed an original,
but all such counterparts shall constitute but one and the same instrument.
4.08. Setoff. In the event that at any time any obligation of
the Guarantors now or hereafter existing under this Agreement shall have become
due and payable, the Agents and the Banks, or any of them, shall have the right
from time to time, without notice to any Guarantor, to set off against and apply
to such due and payable amount any obligation of any nature of any Agent or any
Bank to any Guarantor, including but not limited to all deposits (whether time
or demand, general or special, provisionally credited or finally credited,
however evidenced) now or hereafter maintained by any Guarantor with any Agent
or any Bank. Such right shall be absolute and unconditional in all circumstances
and, without limitation, shall exist whether or not the Agents and/or the Banks,
or any of them, shall have given any notice or made any demand under this
Agreement or under such obligation to such Guarantor, whether such obligation of
such Guarantor is absolute or contingent, matured or unmatured (it being agreed
that the Agents and the Banks, or any of them, may deem such obligation to be
then due and payable at the time of such setoff), and regardless of the
existence or adequacy of any guaranty or other direct or indirect security,
right or remedy available to the Agents and the Banks. The rights of the Agents
and the Banks under this Section are in addition to such other rights and
remedies (including, without limitation, other rights of setoff and banker's
lien) which the Agents and the Banks, or any of them, may have, and nothing in
this Agreement or in any other Loan Document shall be deemed a waiver of or
restriction on the right of setoff or banker's lien of the Agents and the Banks,
or any of them. The Guarantors hereby agree that, to the fullest extent
permitted by law, subject to the approval of the Required Banks, any Affiliate
of the Agents and the Banks, or any of them, and any holder of a participation
in any obligation of any Guarantor under this Agreement, shall have the same
rights of setoff as the Agents and the Banks as provided in this Section 4.08
(regardless of whether such Affiliate or participant otherwise would be deemed a
creditor of any Guarantor).
-8-
<PAGE> 131
4.09. Construction. The section and other headings contained in
this Agreement are for reference purposes only and shall not affect
interpretation of this Agreement in any respect. This Agreement has been fully
negotiated between the applicable parties, each party having the benefit of
legal counsel, and accordingly neither any doctrine of construction of
guaranties or suretyships in favor of the guarantor or surety, nor any doctrine
of construction of ambiguities in agreements or instruments against the party
controlling the drafting thereof, shall apply to this Agreement.
4.10. Successors and Assigns. This Agreement shall be binding
upon each Guarantor, its successors and assigns, and shall inure to the benefit
of and be enforceable by the Agents and the Banks, or any of them, and their
successors and permitted assigns (as provided in the Credit Agreement),
provided, however, except as permitted in the Credit Agreement, no Guarantor may
assign or transfer any of its rights and obligations hereunder or any interest
herein without the consent of the Banks. Without limitation of the foregoing,
the Agents and the Banks, or any of them (and any successive assignee or
transferee), from time to time may, subject to the applicable provisions of the
Credit Agreement, assign or otherwise transfer all or any portion of its rights
or obligations under the Loan Documents (including, without limitation, all or
any portion of any commitment to extend credit), or any other Guaranteed
Obligations, to any other Person and such Guaranteed Obligations (including,
without limitation, any Guaranteed Obligations resulting from extension of
credit by such other Person under or in connection with the Loan Documents)
assigned or otherwise transferred in accordance with the terms of the Credit
Agreement shall be and remain Guaranteed Obligations entitled to the benefit of
this Agreement, and to the extent of its interest in such Guaranteed Obligations
such other Person shall be vested with all the benefits in respect thereof
granted to the Agents and the Banks in this Agreement or otherwise.
4.11. Governing Law; Submission to Jurisdiction; Waiver of Jury
Trial.
(a) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF OHIO, WITHOUT
REGARD TO CONFLICT OF LAWS PRINCIPLES.
(b) Certain Waivers. EACH GUARANTOR HEREBY IRREVOCABLY:
(i) CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF THE
CIRCUIT COURT OF FRANKLIN COUNTY, OHIO AND THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF OHIO, AND WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY
CERTIFIED OR REGISTERED MAIL DIRECTED TO SUCH GUARANTOR AT THE ADDRESS PROVIDED
FOR IN SECTION 4.03 HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED
UPON ACTUAL RECEIPT THEREOF;
-9-
<PAGE> 132
(ii) WAIVES ANY OBJECTION TO JURISDICTION AND VENUE OF
ANY ACTION INSTITUTED AGAINST IT AS PROVIDED HEREIN AND AGREES NOT TO ASSERT ANY
DEFENSE BASED ON LACK OF JURISDICTION OR VENUE OR BASED ON INCONVENIENT FORUM;
AND
(iii) WAIVES TRIAL BY JURY IN ANY ACTION, SUIT,
PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE CREDIT AGREEMENT OR ANY OTHER LOAN DOCUMENT TO THE FULL EXTENT
PERMITTED BY LAW.
(c) Limitation of Liability. TO THE FULLEST EXTENT
PERMITTED BY LAW, NO CLAIM MAY BE MADE BY ANY GUARANTOR OR ANY OTHER PERSON
AGAINST THE AGENTS AND THE BANKS, OR ANY OF THEM, OR ANY AFFILIATE, DIRECTOR,
OFFICER, EMPLOYEE, ATTORNEY OR AGENT OF THE AGENTS AND THE BANKS, OR ANY OF
THEM, FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES IN RESPECT OF
ANY CLAIM ARISING FROM OR RELATING TO THIS AGREEMENT OR ANY STATEMENT, COURSE OF
CONDUCT, ACT, OMISSION, OR EVENT OCCURRING IN CONNECTION HEREWITH (WHETHER FOR
BREACH OF CONTRACT, TORT OR ANY OTHER THEORY OF LIABILITY); AND EACH GUARANTOR
HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE UPON ANY CLAIM FOR ANY SUCH
DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST
IN ITS FAVOR.
4.12. Severability; Modification to Conform to Law.
(a) It is the intention of the parties that this Agreement
be enforceable to the fullest extent permissible under applicable Law, but that
the unenforceability (or modification to conform to such Law) of any provision
or provisions hereof shall not render unenforceable, or impair, the remainder
hereof. If any provision in this Agreement shall be held invalid or
unenforceable in whole or in part in any jurisdiction, this Agreement shall, as
to such jurisdiction, be deemed amended to modify or delete, as necessary, the
offending provision or provisions and to alter the bounds thereof in order to
render it or them valid and enforceable to the maximum extent permitted by
applicable Law, without in any manner affecting the validity or enforceability
of such provision or provisions in any other jurisdiction or the remaining
provisions hereof in any jurisdiction.
(b) Without limitation of the preceding subsection (a), to
the extent that mandatory applicable law (including but not limited to
applicable laws pertaining to fraudulent conveyance or fraudulent transfer)
otherwise would render the full amount of any Guarantor's obligations hereunder
invalid or unenforceable, such Guarantor's obligations hereunder shall be
limited to the maximum amount which does not result in such invalidity or
unenforceability.
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<PAGE> 133
(c) Notwithstanding anything to the contrary in this
Section 4.12 or elsewhere in this Agreement, this Agreement shall be
presumptively valid and enforceable to its full extent in accordance with its
terms, as if this Section 4.12 (and references elsewhere in this Agreement to
enforceability to the fullest extent permitted by Law) were not a part of this
Agreement, and in any related litigation the burden of proof shall be on the
party asserting the invalidity or unenforceability of any provision hereof or
asserting any limitation on any Guarantor's obligations hereunder as to each
element of such assertion.
4.13. Additional Guarantors. At any time after the initial
execution and delivery of this Agreement to the Agents and the Banks, additional
Persons may become parties to this Agreement and thereby acquire the duties and
rights of being Guarantors hereunder by executing and delivering to the Agents
and the Banks a counterpart signature page for attachment hereto and inserting a
date thereon. No notice of the addition of any Guarantor shall be required to be
given to any pre-existing Guarantor.
4.14. Joint and Several Obligations. The obligations of each
Guarantor under this Agreement are joint and several.
4.15 Receipt of Credit Agreement and Other Loan Documents. Each
Guarantor hereby acknowledges that it has received a copy of the Credit
Agreement and the other Loan Documents and each Guarantor certifies that the
representations and warranties made therein with respect to such Guarantor are
true and correct. Further, each Guarantor acknowledges and agrees to perform,
comply with and be bound by all of the provisions of the Credit Agreement and
the other Loan Documents including, without limitation, those covenants
contained in Sections 7.1 and 7.2 of the Credit Agreement.
[SIGNATURE PAGE FOLLOWS]
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<PAGE> 134
[SIGNATURE PAGE 1 OF 1 TO MASTER GUARANTY AND SURETYSHIP
AGREEMENT]
IN WITNESS WHEREOF, the undersigned have caused this Agreement
to be duly executed and delivered as of the date first above written.
GUARANTORS:
ATTEST: EACH GUARANTOR LISTED ON SCHEDULE 1
By: By:
-------------------------- ------------------------------------
Name: Name:
------------------------ ----------------------------------
Title: Title:
----------------------- ---------------------------------
Address for notices to each Guarantor:
---------------------------------------
---------------------------------------
---------------------------------------
Attention:
-----------------------------
Telephone No.
--------------------------
Telecopier No.
-------------------------
With respect to any additional
Guarantors under Section 4.13, dated
as of , 199 .
--------------- --
<PAGE> 135
SCHEDULE 1
TO
MASTER GUARANTY AND SURETYSHIP AGREEMENT
---------------------------
List of Guarantors
<PAGE> 136
EXHIBIT 1.1(I)(2)
FORM OF
MASTER
INTERCOMPANY SUBORDINATION AGREEMENT
THIS MASTER INTERCOMPANY SUBORDINATION AGREEMENT is dated as of May 3,
1996 and is made by and among the entities listed on Schedule 1 attached hereto
(each being individually referred to herein as a "Company" and collectively as
the "Companies") in favor of the Agents and the Banks (as such terms are herein
defined).
WITNESSETH THAT:
WHEREAS, each capitalized term used herein shall, unless otherwise
defined herein, have the meaning specified in the Credit Agreement of even date
herewith (as it may be hereafter amended, restated, supplemented or otherwise
modified from time to time, the "Credit Agreement") among Consolidated Stores
Corporation, an Ohio corporation (the "Borrower"), the Banks set forth therein
(the "Banks"), The Bank of New York, as Syndication Agent and Managing Agent
(the "Syndication Agent"), National City Bank, as Administrative Agent and
Managing Agent (the "Administrative Agent"), PNC Bank, Ohio, National
Association, as Arranger, Documentation Agent and Managing Agent (the
"Documentation Agent"), Bank One, Columbus, N.A., as Managing Agent ("Bank One")
and National City Bank of Columbus, as Managing Agent ("NCB" and, together with
the Syndication Agent, the Administrative Agent, the Documentation Agent and
Bank One, the "Agents"); and
WHEREAS, pursuant to the Credit Agreement and the other Loan Documents
(collectively, the "Senior Loan Documents"), the Banks intend to make Loans to
and issue Letters of Credit for the account of the Borrower or a Subsidiary; and
WHEREAS, the Companies are indebted to one or more of each other,
and/or it is contemplated that the Companies may become indebted to one or more
of each other (the Indebtedness of each of the Companies to any other Company,
now existing or hereafter incurred (whether created directly or acquired by
assignment or otherwise), and interest and premiums, if any, thereon and other
amounts payable in respect thereof are hereinafter collectively referred to as
the "Intercompany Indebtedness"); and
WHEREAS, the obligations of the Banks to maintain the Commitments, make
Loans and issue Letters of Credit from time to time are subject to the
condition, among others, that the Companies subordinate the Intercompany
Indebtedness to the Indebtedness and all other obligations of the Borrower or
any other Company to the Agent or the Banks pursuant to the Credit Agreement and
the other Senior Loan Documents (collectively, the "Senior Debt") in the manner
set forth herein;
NOW, THEREFORE, intending to be legally bound hereby, the parties
hereto covenant and agree as follows:
1. Intercompany Indebtedness Subordinated to Senior Debt. The recitals
set forth above are hereby incorporated by reference. All Intercompany
Indebtedness shall be subordinate
<PAGE> 137
and subject in right of payment to the prior indefeasible payment in full of all
Senior Debt pursuant to the provisions contained herein.
2. Payment Over of Proceeds Upon Dissolution, Etc. Upon any
distribution of assets of any Company in the event of (a) any insolvency or
bankruptcy case or proceeding, or any receivership, liquidation, reorganization
or other similar case or proceeding in connection therewith, relative to such
Company or to its creditors, as such, or to its assets, or (b) except as
permitted under Section 7.2.6 or 7.2.7 of the Credit Agreement, any liquidation,
dissolution or other winding up of such Company, whether voluntary or
involuntary and whether or not involving insolvency or bankruptcy, or (c) any
assignment for the benefit of creditors or any marshalling of assets and
liabilities of such Company (a Company distributing assets as set forth herein
being referred to in such capacity as a "Distributing Company"), then and in any
such event, the Administrative Agent shall be entitled to receive, for the
benefit of the Agents and the Banks as their respective interests may appear,
indefeasible payment in full of all amounts due or to become due (whether or not
an Event of Default has occurred or the Senior Debt has been declared due and
payable prior to the date on which it would otherwise have become due and
payable) on or in respect of any and all Senior Debt before the holder of any
Intercompany Indebtedness owed by the Distributing Company is entitled to
receive any payment on account of the principal of or interest on such
Intercompany Indebtedness, and to that end, the Administrative Agent shall be
entitled to receive, for application to the payment of the Senior Debt, any
payment or distribution of any kind or character, whether in cash, property or
securities, which may be payable or deliverable in respect of the Intercompany
Indebtedness owed by the Distributing Company in any such case, proceeding,
dissolution, liquidation or other winding up event.
If, notwithstanding the foregoing provisions of this Section, a Company
which is owed Intercompany Indebtedness by a Distributing Company shall have
received any payment or distribution of assets from the Distributing Company of
any kind or character, whether in cash, property or securities, then and in such
event such payment or distribution shall be held in trust for the benefit of the
Agents and the Banks as their respective interests may appear, shall be
segregated from other funds and property held by such Company, and shall be
forthwith paid over to the Administrative Agent in the same form as so received
(with any necessary endorsement) to be applied (in the case of cash) to or held
as collateral (in the case of noncash property or securities) for the payment or
prepayment of the Senior Debt in accordance with the terms of the Credit
Agreement.
3. No Commencement of Any Proceeding. Each Company agrees that, so long
as the Senior Debt shall remain unpaid, it will not commence, or join with any
creditor other than the Banks and the Agents in commencing, any proceeding
referred to in the first paragraph of Section 2 against any other Company which
owes it any Intercompany Indebtedness.
4. Prior Payment of Senior Debt Upon Acceleration of Intercompany
Indebtedness. If any portion of the Intercompany Indebtedness owed by any
Company becomes or is declared due and payable before its stated maturity, then
and in such event the Agents and the Banks shall be entitled to receive
indefeasible payment in full of all amounts due and to become due on or in
respect of the Senior Debt (whether or not an Event of Default has occurred or
the Senior Debt
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<PAGE> 138
has been declared due and payable prior to the date on which it would otherwise
have become due and payable) before the holder of any such Intercompany
Indebtedness is entitled to receive any payment thereon.
If, notwithstanding the foregoing, any Company shall make any payment
of Intercompany Indebtedness prohibited by the foregoing provisions of this
Section, such payment shall be held in trust for the benefit of the Agents and
the Banks as their respective interests may appear, shall be segregated from
other funds and property held by such Company, and shall be paid over and
delivered forthwith to the Administrative Agent, for the benefit of the Agents
and the Banks as their respective interests may appear, in the same form as so
received (with any necessary endorsement) to be applied (in the case of cash) to
or held as collateral (in the case of noncash property or securities) for the
payment or prepayment of the Senior Debt in accordance with the terms of the
Credit Agreement.
The provisions of this Section shall not apply to any payment with
respect to which Section 2 hereof would be applicable.
5. No Payment When Senior Debt in Default. If any Event of Default or
Potential Default shall have occurred and be continuing, or such an Event of
Default or Potential Default would result from or exist after giving effect to a
payment with respect to any portion of the Intercompany Indebtedness, unless the
Required Banks shall have consented to or waived the same, so long as any of the
Senior Debt shall remain outstanding, no payment shall be made by the Company
owing such Intercompany Indebtedness on account of principal or interest on any
portion of the Intercompany Indebtedness.
If, notwithstanding the foregoing, any Company shall make any payment
of the Intercompany Indebtedness to another Company prohibited by the foregoing
provisions of this Section, such payment shall be held in trust for the benefit
of the Agents and the Banks as their respective interests may appear, shall be
segregated from other funds and property held by such Company, and shall be paid
over and delivered forthwith to the Administrative Agent, for the benefit of the
Agents and the Banks as their respective interests may appear, in the same form
as so received (with any necessary endorsement) to be applied (in the case of
cash) to or held as collateral (in the case of noncash property or securities)
for the payment or prepayment of the Senior Debt in accordance with the terms of
the Credit Agreement.
The provisions of this Section shall not apply to any payment with
respect to which Section 2 hereof would be applicable.
6. Payment Permitted if No Default. Nothing contained in this Agreement
shall prevent any of the Companies, at any time except during the pendency of
any of the conditions described in Sections 2, 4 and 5 hereof, from making
payments at any time of principal of or interest on any portion of the
Intercompany Indebtedness, or the retention thereof by any of the Companies of
any money deposited with them for the payment of or on account of the principal
of or interest on the Intercompany Indebtedness.
7. Rights of Subrogation. Each Company agrees that no payment or
distribution to the Agents or the Banks pursuant to the provisions of this
Agreement shall entitle it to exercise
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<PAGE> 139
any rights of subrogation in respect thereof until the Senior Debt shall have
been indefeasibly paid in full and the Commitments shall have terminated.
8. Instruments Evidencing Intercompany Indebtedness. Each Company shall
cause each instrument which now or hereafter evidences all or a portion of the
Intercompany Indebtedness to be conspicuously marked as follows:
"This instrument is subject to the terms of an
Intercompany Subordination Agreement dated as of May 3, 1996
in favor of National City Bank of Columbus, as Administrative
Agent for the other Agents and the Banks referred to therein,
which Intercompany Subordination Agreement is incorporated
herein by reference. Notwithstanding any contrary statement
contained in the within instrument, no payment on account of
the principal thereof or interest thereon shall become due or
payable except in accordance with the express terms of said
Intercompany Subordination Agreement."
Each Company will further mark its books of account in such a manner as shall be
effective to give proper notice to the effect of this Agreement.
9. Agreement Solely to Define Relative Rights. The purpose of this
Agreement is solely to define the relative rights of the Companies, on the one
hand, and the Agents and the Banks, on the other hand. Nothing contained in this
Agreement is intended to or shall impair, as between any of the Companies and
their creditors other than the Agents and the Banks, the obligation of the
Companies to each other to pay the principal of and interest on the Intercompany
Indebtedness as and when the same shall become due and payable in accordance
with its terms, or is intended to or shall affect the relative rights among the
Companies and their creditors other than the Agents and the Banks, nor shall
anything herein prevent any of the Companies from exercising all remedies
otherwise permitted by applicable Law upon default under any agreement pursuant
to which the Intercompany Indebtedness is created, subject to the rights, if
any, under this Agreement of the Agents and the Banks to receive cash, property
or securities otherwise payable or deliverable with respect to the Intercompany
Indebtedness.
10. No Implied Waivers of Subordination. No right of any Agent or any
Bank to enforce subordination, as herein provided, shall at any time in any way
be prejudiced or impaired by any act or failure to act on the part of any
Company or by any act or failure to act by any Agent or any Bank, or by any
non-compliance by any Company with the terms, provisions and covenants of any
agreement pursuant to which the Intercompany Indebtedness is created, regardless
of any knowledge thereof any Agent or any Bank may have or be otherwise charged
with. Each Company by its acceptance hereof shall agree that, so long as there
is Senior Debt outstanding or Commitments in effect under the Credit Agreement,
other than as permitted under the Credit Agreement, such Company shall not agree
to sell, assign, pledge, encumber or otherwise dispose of, or to compromise,
release, forgive or otherwise discharge the obligations of the other Companies
with respect to their Intercompany Indebtedness, other than by means of payment
of such Intercompany Indebtedness according to its terms, without the prior
written consent of the Required Banks.
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<PAGE> 140
Without in any way limiting the generality of the foregoing paragraph,
any Agent or any of the Banks may, at any time and from time to time, without
the consent of or notice to the Companies except the Borrower to the extent
provided in the Credit Agreement, without incurring responsibility to the
Companies and without impairing or releasing the subordination provided in this
Agreement or the obligations hereunder of the Companies to the Agents and the
Banks, do any one or more of the following: (i) change the manner, place or
terms of payment, or extend the time of payment, renew or alter the Senior Debt
or otherwise amend or supplement the Senior Debt or the Senior Loan Documents;
(ii) sell, exchange, release or otherwise deal with any property pledged,
mortgaged or otherwise securing the Senior Debt; (iii) release any person liable
in any manner for the payment or collection of the Senior Debt; and (iv)
exercise or refrain from exercising any rights against any of the Companies and
any other person.
11. Additional Subsidiaries. At any time after the initial execution
and delivery of this Agreement to the Agents and the Banks, additional Persons
may become parties to this Agreement and thereby acquire the duties and rights
of being Companies hereunder by executing and delivering to the Agents and the
Banks a counterpart signature page for attachment hereto and inserting a date
thereon. No notice of the addition of any Company shall be required to be given
to any pre-existing Company.
12. Continuing Force and Effect. This Agreement shall continue in force
for so long as any portion of the Senior Debt remains unpaid and any Commitments
under the Credit Agreement remain outstanding, it being contemplated that this
Agreement be of a continuing nature.
13. Modification, Amendments or Waivers. Any and all agreements
amending or changing any provision of this Agreement or the rights of the Agent
or the Banks hereunder, and any and all waivers or consents to Events of Default
or other departures from the due performance of the Companies hereunder, shall
be made only by written agreement, waiver or consent signed by the
Administrative Agent, acting on behalf of all the Banks, with the written
consent of the Required Banks, any such agreement, waiver or consent made with
such written consent being effective to bind all the Banks.
14. Expenses. The Companies unconditionally and jointly and severally
agree upon demand to pay to the Agents and the Banks the amount of any and all
reasonable and necessary out-of-pocket costs, expenses and disbursements for
which reimbursement is customarily obtained, including fees and expenses of
counsel, which any Agent or any of the Banks may incur in connection with (a)
the administration of this Agreement, (b) the exercise or enforcement of any of
the rights of the Agents or the Banks hereunder, or (c) the failure by the
Companies to perform or observe any of the provisions hereof.
15. Severability. The provisions of this Agreement are intended to be
severable. If any provision of this Agreement shall be held invalid or
unenforceable in whole or in part in any jurisdiction, such provision shall, as
to such jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without in any manner affecting the validity or enforceability
thereof in any other jurisdiction or the remaining provisions hereof in any
jurisdiction.
5
<PAGE> 141
16. Governing Law. This Agreement shall be a contract under the
internal laws of the State of Ohio and for all purposes shall be construed in
accordance with the internal laws of the State of Ohio without giving effect to
its principles of conflict of laws.
17. Successors and Assigns. This Agreement shall inure to the benefit
of the Agents and the Banks and their respective successors and assigns, as
permitted in the Credit Agreement, and the obligations of the Companies shall be
binding upon their respective successors and assigns. Except as permitted under
the Credit Agreement, the duties and obligations of the Companies may not be
delegated or transferred by the Companies without the written consent of the
Banks. Except to the extent otherwise required by the context of this Agreement,
the word "Banks" when used herein shall include, without limitation, any holder
of a Note or an assignment of rights therein originally issued to a Bank under
the Credit Agreement, and each such holder of a Note or assignment shall have
the benefits of this Agreement to the same extent as if such holder had
originally been a Bank under the Credit Agreement.
18. Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which, when executed and delivered, shall be deemed an original, but all such
counterparts shall constitute but one and the same instrument.
19. Attorneys-in-Fact. Each of the Companies hereby authorizes and
empowers the Administrative Agent, at its election and in the name of either
itself, for the benefit of the Agents and the Banks as their respective
interests may appear, or in the name of such Company as is owed Intercompany
Indebtedness, to execute and file proofs and documents and take any other action
the Administrative Agent may deem advisable to completely protect the Agents'
and the Banks' interests in the Intercompany Indebtedness and their right of
enforcement thereof, and to that end each of the Companies hereby irrevocably
makes, constitutes and appoints the Administrative Agent, its officers,
employees and agents, or any of them, with full power of substitution, as the
true and lawful attorney-in-fact and agent of such Company, and with full power
for such Company, and in the name, place and stead of such Company for the
purpose of carrying out the provisions of this Agreement, and taking any action
and executing, delivering, filing and recording any instruments which the
Administrative Agent may deem necessary or advisable to accomplish the purposes
hereof, which power of attorney, being given for security, is coupled with an
interest and is irrevocable. Each Company hereby ratifies and confirms, and
agrees to ratify and confirm, all action taken by the Administrative Agent, its
officers, employees or agents pursuant to the foregoing power of attorney.
20. Application of Payments. In the event any payments are received by
the Administrative Agent under the terms of this Agreement for application to
the Senior Debt at any time when the Senior Debt has not been declared due and
payable and prior to the date on which it would otherwise become due and
payable, such payment shall constitute a voluntary prepayment of the Senior Debt
for all purposes under the Credit Agreement.
21. Remedies. In the event of a breach by any of the Companies in the
performance of any of the terms of this Agreement, the Administrative Agent, on
behalf of the Banks, may demand specific performance of this Agreement and seek
injunctive relief and may exercise any
6
<PAGE> 142
other remedy available at law or in equity, it being recognized that the
remedies of the Administrative Agent on behalf of the Banks at law may not fully
compensate the Administrative Agent on behalf of the Banks for the damages they
may suffer in the event of a breach hereof.
22. Consent to Jurisdiction; Waiver of Jury Trial. Each of the
Companies hereby irrevocably consents to the non-exclusive jurisdiction of the
Court of Common Pleas of Franklin County, Ohio and the United States District
Court for the Southern District of Ohio, waives personal service of any and all
process upon it and consents that all such service of process be made by
certified or registered mail directed to the Companies at the addresses set
forth or referred to in Section 23 hereof and service so made shall be deemed to
be completed upon actual receipt thereof. Each of the Companies waives any
objection to jurisdiction and venue of any action instituted against it as
provided herein and agrees not to assert any defense based on lack of
jurisdiction or venue, AND EACH OF THE COMPANIES WAIVES TRIAL BY JURY IN ANY
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT TO THE FULL EXTENT PERMITTED
BY LAW.
23. Notices. All notices, statements, requests and demands and other
communications given to or made upon the Companies, the Agents or the Banks in
accordance with the provisions of this Agreement shall be given or made as
provided in Section 10.6 of the Credit Agreement. Notice to any Company other
than the Borrower shall be delivered or sent to such Company at its address set
forth on the signature page hereto.
24. Intercompany Notes. The Borrower and K.B. Consolidated, Inc. have
delivered to the Administrative Agent for the benefit of the Agents and the
Banks the Intercompany Notes and covenant and agree, immediately upon the
request of the Administrative Agent at the direction of the Required Banks, (i)
without the need to take any further action, the Intercompany Notes and any and
all rights and privileges pertaining thereto, any and all claims in respect
thereof and any proceeds thereof shall be pledged to the Administrative Agent
for the benefit of the Agents and the Banks to secure their respective
Obligations and (ii) to execute and deliver to the Administrative Agent any
pledge agreement or further documents or instruments which the Administrative
Agent may deem necessary, desirable or proper to effect such pledge or to better
evidence such pledge.
[SIGNATURE PAGE FOLLOWS]
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<PAGE> 143
[SIGNATURE PAGE 1 OF 1 TO MASTER INTERCOMPANY SUBORDINATION
AGREEMENT]
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed and delivered as of the date first above written.
COMPANIES:
ATTEST: EACH COMPANY LISTED ON SCHEDULE 1
By: By:
------------------------------- -------------------------------------
Name: Name:
----------------------------- -----------------------------------
Title: Title:
---------------------------- ----------------------------------
Address for notices to each Company:
----------------------------------------
----------------------------------------
----------------------------------------
Attention:
------------------------------
Telephone No.:
--------------------------
Telecopier No.:
-------------------------
With respect to any additional
Companies under Section 11, dated
as of , 199 .
----------------- -
<PAGE> 144
SCHEDULE 1
TO
MASTER INTERCOMPANY SUBORDINATION AGREEMENT
----------------------------------------------------
List of Companies
<PAGE> 1
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY
BE REOFFERED AND SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE.
CONSOLIDATED STORES CORPORATION
7% Senior Subordinated Note due May 4, 2000
No. SSN-1 $100,000,000
Consolidated Stores Corporation, an Ohio corporation ("the Company", which
term includes any successor corporation under the Indenture hereinafter referred
to), promises to pay to Melville Corporation or its registered assigns, the
principal amount of $100,000,000 Dollars on May 4, 2000.
Interest Payment Dates: April 15 and October 15, commencing October 15,
1996.
Record Dates: April 1 and October 1
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof which further provisions shall for all purposes have
the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Security to be signed
manually or by facsimile by its duly authorized officers.
Consolidated Stores Corporation
By:
---------------------------------
Name: Michael J. Potter
Title: Senior Vice President and
Chief Financial Officer
By:
---------------------------------
Name: James E. Eggenschwiler
Title: Assistant Secretary
Dated: May 5, 1996
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred
to in the within-mentioned Indenture.
The Bank of New York, as Trustee
By:
-----------------------------
Authorized Signatory
Exhibit 10(b) Page 1
<PAGE> 2
1. Interest
Consolidated Stores Corporation, an Ohio corporation ("the Company"),
promises to pay interest on the principal amount of this Security at the rate
per annum shown above. Interest will be payable semi-annually on each interest
payment date, commencing October 15, 1996. Interest on the Securities will
accrue from the most recent date to which interest has been paid, or if no
interest has been paid, from May 5, 1996. Interest will be computed on the basis
of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal and interest on overdue
installments of interest, to the extent lawful, at the rate per annum borne by
the Securities.
2. Method of Payment
The Company will pay interest on the Securities (except defaulted interest)
to the persons who are registered Holders at the close of business on April 1
and October 1 immediately preceding the interest payment date (whether or not a
Business Day) even if the Security is cancelled on registration of transfer or
registration of exchange (other than with respect to the purchase of Securities
pursuant to an offer to purchase securities made in connection with Sections
4.10 or 4.11 of the Indenture after such record date). Holders must surrender
Securities to a Paying Agent to collect principal payments. The Company will pay
principal, premium, if any, and interest in money of the United States that at
the time of payment is legal tender for payment of public and private debts.
However, the Company may pay principal and interest by its check payable in such
money. The Company may mail an interest payment to a Securityholder's registered
address.
3. Paying Agent and Registrar
Initially, the Trustee will act as Paying Agent and Registrar. The Company
may appoint and change any Paying Agent or Registrar without notice, other than
notice to the Trustee. The Company or any Subsidiary or an Affiliate of either
of them may act as Paying Agent, Registrar or co-registrar.
4. Indenture
The Company issued the Securities under an Indenture, dated as of May 5,
1996 (the "Indenture"), between the Company and The Bank of New York (the
"Trustee"). The terms of the Securities include those stated in the Indenture
and those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended and as in effect on the date of the Indenture (the "TIA"), and
as provided in the Indenture. Capitalized terms used herein and not defined
herein have the meanings ascribed thereto in the Indenture. The Securities are
subject to all such terms, and Securityholders are referred to the Indenture and
the TIA for a statement of those terms.
The Securities are general obligations of the Company limited to
$100,000,000 aggregate principal amount.
Exhibit 10(b) Page 2
<PAGE> 3
5. Redemption
The Securities are redeemable in whole or in part, or from time to time in
part, at any time on and after May 5, 1998 at the option of the Company at the
following redemption prices (expressed as a percentage of principal amount),
together with accrued and unpaid interest to the Redemption Date, if redeemed in
the 12-month period commencing:
<TABLE>
<CAPTION>
Optional
May 5, Redemption Price
----------------
<S> <C>
1998 103.00%
1999 102.00%
2000 and thereafter 100.00%
</TABLE>
The Securities are not entitled to the benefit of any sinking fund.
6. Notice of Redemption
Notice of redemption will be mailed at least 30 days but not more than 60
days before the Redemption Date to each Holder of Securities to be redeemed at
the Holder's registered address. Securities in denominations larger than $1,000
of principal amount may be redeemed in part but only in integral multiples of
$1,000 of principal amount.
7. Requirement that the Company Offer to Purchase Securities under Certain
Circumstances
Subject to the terms and conditions of the Indenture, the Company will be
obligated to offer to purchase the Securities pursuant to Section 4.10 of the
Indenture after the occurrence of a Change of Control of the Company at a price
equal to 101% of aggregate principal amount, plus accrued and unpaid interest,
if any, to the date of purchase. In addition, subject to the terms and
conditions of the Indenture, the Company will be obligated to offer to purchase
the Securities pursuant to Section 4.11 of the Indenture to the extent that
there are Excess Proceeds, at 100% of aggregate principal amount, plus accrued
and unpaid interest, if any.
8. Denominations; Transfer; Exchange
The Securities are in registered form, without coupons, in denominations of
$1,000 of principal amount and integral multiples of $1,000. A Holder may
transfer or exchange Securities in accordance with the Indenture. The Registrar
may require a Holder, among other things, to furnish appropriate endorsements
and transfer documents and to pay any taxes and fees required by law or
permitted by the Indenture. The Registrar need not transfer or exchange any
Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed) or any
Securities for a period of 15 days before a selection of Securities to be
redeemed.
Exhibit 10(b) Page 3
<PAGE> 4
9. Persons Deemed Owners
The registered Holder of this Security may be treated as the owner of this
Security for all purposes.
10. Amendment; Waiver
Subject to certain exceptions set forth in the Indenture: (a) the Indenture
or the Securities may be amended with the written consent of the Holders of at
least a majority in aggregate principal amount of the Securities at the time
outstanding; and (b) certain defaults or noncompliance with certain provisions
may be waived with the written consent of the Holders of at least a majority in
aggregate principal amount of the Securities at the time outstanding. Subject to
certain exceptions set forth in the Indenture, without the consent of any
Securityholder, the Company and the Trustee may amend the Indenture or the
Securities: (a) to cure any ambiguity, defect or inconsistency; (b) to comply
with Article 5 of the Indenture; (c) to provide for uncertificated Securities in
addition to certificated Securities; (d) to comply with any requirements of the
Securities and Exchange Commission in connection with the qualification of the
Indenture under the TIA; or (e) to make any change that does not adversely
affect the rights of any Securityholder.
11. Defaults and Remedies
Under the Indenture, Events of Default include: (a) default in payment of
the principal amount, premium if any, or interest, in respect of the Securities
when the same becomes due and payable subject, in the case of interest, to the
grace period contained in the Indenture; (b) failure by the Company to comply
with other agreements in the Indenture or the Securities, subject to notice and
lapse of time; (c) certain events of acceleration prior to maturity of certain
indebtedness; (d) certain final judgments which remain undischarged; or (e)
certain events of bankruptcy or insolvency. If an Event of Default occurs and is
continuing, the Trustee, or the Holders of at least 25% in aggregate principal
amount of the Securities at the time outstanding, may declare all the Securities
to be due and payable immediately. Certain events of bankruptcy or insolvency
are Events of Default which will result in the Securities becoming due and
payable immediately upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of at least a majority in aggregate principal
amount of the Securities at the time outstanding may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Securityholders
notice of any continuing Default (except a Default in payment of amounts
specified in clause (a) above) if it determines that withholding notice is in
their interests.
The Securities are subordinated in right of payment, in the manner and to
the extent set forth in the Indenture, to the prior payment in full in cash of
all Senior Indebtedness of the Company whether outstanding on the date of the
Indenture or thereafter created, incurred, assumed or guaranteed. Each Holder by
his acceptance hereof agrees to be bound by such
Exhibit 10(b) Page 4
<PAGE> 5
provisions and authorizes and expressly directs the Trustee, on his behalf, to
take such action as may be necessary or appropriate to effectuate the
subordinate provided for in the Indenture and appoints the Trustee his
attorney-in-fact for such purpose.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Security at the times, place, and rate, and in the coin or
currency, herein prescribed.
12. Trustee Dealings with the Company
Subject to certain limitations imposed by the TIA, the Trustee under the
Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
13. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the Company shall
not have any liability for any obligations of the Company under the Securities
or the Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.
14. Authentication
This Security shall not be valid until an authorized signatory of the
Trustee manually signs the Trustee's Certificate of Authentication on the other
side of this Security.
15. Abbreviations
Customary abbreviations may be used in the name of a Securityholder or an
assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with right of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
16. Unclaimed Money
If money for the payment of principal or interest remains unclaimed for two
years, the Trustee or Paying Agent will pay the money back to the Company at its
written request. After that, Holders entitled to money must look to the Company
for payment.
17. Discharge Prior to Maturity
If the Company deposits with the Trustee or Paying Agent money or U.S.
Government Obligations sufficient to pay the principal of and interest on the
Securities to maturity or
Exhibit 10(b) Page 5
<PAGE> 6
redemption, as the case may be, the Company will be discharged from the
Indenture except for certain Sections thereof.
18. Successor
When a successor Person to the Company assumes all the obligations of its
predecessor under the Securities and the Indenture such predecessor shall be
released from those obligations.
19. Governing Law
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAWS.
Exhibit 10(b) Page 6
<PAGE> 7
ASSIGNMENT FORM
To assign this Security, fill in the form below: I or we assign and
transfer this Security to:
(insert assignee's social security or tax I.D. number)
(print or type assignee's name, address and zip code)
and irrevocably appoint
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
Dated: Signature:
(sign exactly as your name appears on
the other side of this Security)
Signature
Guarantee:
OPTION OF HOLDER TO ELECT PURCHASE
If you receive a notice pursuant to Section 4.10 ("Change of Control
Offer") or Section 4.11 ("Excess Proceeds Offer") of the Indenture and you wish
to elect to have all or any portion of this Security purchased by the Company
pursuant to such notice, check the applicable boxes and complete the following
form:
- Change of Control Offer: - Excess Proceeds Offer:
in whole - in whole -
in part - in part -
Amount to be Amount to be
purchased: $______________ purchased: $______________
Dated: Signature:
(Sign exactly as your name appears on
the other side of this Security)
Signature
Guarantee:
Social Security Number or
Taxpayer Identification Number:
Exhibit 10(b) Page 7
<PAGE> 1
EXHIBIT 10(b)(i)
CONSOLIDATED STORES CORPORATION
The Company,
and
THE BANK OF NEW YORK
The Trustee,
---------------
INDENTURE
Dated as of May 5, 1996
---------------
$100,000,000
7% Senior Subordinated Notes due May 4, 2000
<PAGE> 2
CROSS REFERENCE TABLE(1) EXHIBIT 10(b)(i)
TIAIndenture
Section Section
------- -------
310(a)(1)...................................................... 7.10
(a)(2).................................................... 7.10
(a)(3).................................................... N.A.(2)
(a)(4).................................................... N.A.
(a)(5).................................................... 7.10
(b)....................................................... 7.08; 7.10
(c)....................................................... N.A.
311(a)......................................................... 7.11
(b)....................................................... 7.11
(c)....................................................... N.A.
312(a)......................................................... 2.05
(b)....................................................... 11.03
(c)....................................................... 11.03
313(a)......................................................... 7.06
(b)(1).................................................... N.A.
(b)(2).................................................... 7.06
(c)....................................................... 7.06; 11.02
(d)....................................................... 7.06
314(a)......................................................... 4.02; 11.02
(b)....................................................... N.A.
(c)(1).................................................... 11.04
(c)(2).................................................... 11.04
(c)(3).................................................... N.A.
(d)....................................................... N.A.
(e)....................................................... 11.05
(f)....................................................... 4.03
315(a)......................................................... 7.01; 7.02
(b)....................................................... 7.05; 11.02
(c)....................................................... 7.01
(d)....................................................... 6.05; 7.01
(e)....................................................... 6.11
316(a)(last sentence).......................................... 2.08
(a)(1)(A)................................................. 6.05
(a)(1)(B) ................................................ 6.04
(a)(2).................................................... N.A.
(b)....................................................... 6.07
(c)....................................................... 1.05; 9.04
317(a)(1)...................................................... 6.08
(a)(2).................................................... 6.09
(b)....................................................... 2.04
318(a)......................................................... 11.01
- --------------------------------------------------------------------------------
(1) Note: This cross reference table shall not, for any purpose, be deemed to be
part of this Indenture.
(2) N.A. means Not Applicable.
<PAGE> 3
TABLE OF CONTENTS(3) EXHIBIT 10(b)(i)
Page
----
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE 1
SECTION 1.01. Definitions 1
SECTION 1.02. Other Definitions 8
SECTION 1.03. Incorporation by Reference of Trust Indenture Act 8
SECTION 1.04. Rules of Construction 9
SECTION 1.05. Acts of Holders 9
ARTICLE 2 THE SECURITIES 10
SECTION 2.01. Form and Dating 10
SECTION 2.02. Execution and Authentication 10
SECTION 2.03. Registrar and Paying Agent 11
SECTION 2.04. Paying Agent to Hold Money in Trust 12
SECTION 2.05. Securityholder Lists 12
SECTION 2.06. Transfer and Exchange 12
SECTION 2.07. Replacement Securities 13
SECTION 2.08. Outstanding Securities; Determinations of
Holders' Action 14
SECTION 2.09. Temporary Securities 14
SECTION 2.10. Cancellation 15
SECTION 2.11. CUSIP Numbers 15
SECTION 2.12. Defaulted Interest 15
ARTICLE 3 REDEMPTION 16
SECTION 3.01. Right to Redeem: Notices to Trustee 16
SECTION 3.02. Selection of Securities to Be Redeemed 16
SECTION 3.03. Notice of Redemption 16
SECTION 3.04. Effect of Notice of Redemption 17
SECTION 3.05. Deposit of Redemption Price 17
SECTION 3.06. Securities Redeemed in Part 17
ARTICLE 4 COVENANTS 17
SECTION 4.01. Payment of Securities 17
SECTION 4.02. SEC Reports 18
SECTION 4.03. Compliance Certificates 19
SECTION 4.04. Further Instruments and Acts 20
SECTION 4.05. Maintenance of Office or Agency 20
SECTION 4.06. Limitation on Restricted Payments 20
SECTION 4.07. Limitation on Additional Indebtedness 21
- --------------------------------------------------------------------------------
(3) This Table of Contents shall not, for any purpose, be deemed to be part of
this Indenture.
<PAGE> 4
EXHIBIT 10(b)(i)
Page
----
SECTION 4.08. Dividend and Payment Restrictions
Affecting Subsidiaries 21
SECTION 4.09. Limitation on Transactions with Affiliates 22
SECTION 4.10. Repurchase Upon Change of Control 22
SECTION 4.11. Limitation on Asset Sales 24
SECTION 4.12. Payment of Taxes and Other Claims 25
SECTION 4.13. Corporate Existence 25
SECTION 4.14. Maintenance of Properties and Insurance 25
SECTION 4.15. Investment Company Act 26
SECTION 4.16. Covenant to Comply with Securities Laws Upon
Purchase of Securities 26
ARTICLE 5 SUCCESSOR CORPORATION 26
SECTION 5.01. When The Company May Merge or Transfer Assets 26
SECTION 5.02. Successor Corporation Substituted 27
ARTICLE 6 DEFAULTS AND REMEDIES 27
SECTION 6.01. Events of Default 27
SECTION 6.02. Acceleration 29
SECTION 6.03. Other Remedies 29
SECTION 6.04. Waiver of Past Defaults 29
SECTION 6.05. Control by Majority 30
SECTION 6.06. Limitation on Suits 30
SECTION 6.07. Rights of Holders to Receive Payment 30
SECTION 6.08. Collection Suit by Trustee 31
SECTION 6.09. Trustee May File Proofs of Claim 31
SECTION 6.10. Priorities 31
SECTION 6.11. Undertaking for Costs 32
ARTICLE 7 TRUSTEE 32
SECTION 7.01. Duties of Trustee 32
SECTION 7.02. Rights of Trustee 33
SECTION 7.03. Individual Rights of Trustee 33
SECTION 7.04. Trustee's Disclaimer 34
SECTION 7.05. Notice of Defaults 34
SECTION 7.06. Reports by Trustee to Holders 34
SECTION 7.07. Compensation and Indemnity 34
SECTION 7.08. Replacement of Trustee 35
SECTION 7.09. Successor Trustee by Merger 36
SECTION 7.10. Eligibility; Disqualification 36
SECTION 7.11. Preferential Collection of Claims Against The
Company 36
<PAGE> 5
EXHIBIT 10(b)(i)
Page
----
ARTICLE 8 DISCHARGE OF INDENTURE AND DEFEASANCE 36
SECTION 8.01. Satisfaction and Discharge of Indenture 36
SECTION 8.02. Defeasance 37
SECTION 8.03. Conditions to Defeasance 37
SECTION 8.04. Deposited Money and U.S. Government Obligations
to be Held in Trust; Miscellaneous Provisions 38
SECTION 8.05. Repayment to the Company 39
SECTION 8.06. Reinstatement 39
ARTICLE 9 AMENDMENTS 39
SECTION 9.01. Without Consent of Holders 39
SECTION 9.02. With Consent of Holders 40
SECTION 9.03. Compliance with Trust Indenture Act 41
SECTION 9.04. Revocation and Effect of Consents, Waivers and
Actions 41
SECTION 9.05. Notation on or Exchange of Securities 42
SECTION 9.06. Trustee to Sign Supplemental Indentures 42
SECTION 9.07. Effect of Supplemental Indentures 42
ARTICLE 10 SUBORDINATION 42
SECTION 10.01. Securities Subordinate to Senior Indebtedness 42
SECTION 10.02. Payment Over of Proceeds upon Dissolution, etc. 43
SECTION 10.03. No Payment When Senior Indebtedness in Default. 45
SECTION 10.04. Payment Permitted If No Default. 46
SECTION 10.05. Subrogation to Rights of Holders of Senior
Indebtedness. 46
SECTION 10.06. Provisions Solely to Define Relative Rights. 46
SECTION 10.07. Trustee to Effectuate Subordination; Further
Actions. 46
SECTION 10.08. No Waiver of Subordination Provisions. 47
SECTION 10.09. Notice to Trustee. 48
SECTION 10.10. Reliance on Judicial Order or Certificate of
Liquidating Agent. 48
SECTION 10.11. Rights of Trustee as a Holder of Senior
Indebtedness; Preservation of Trustee's Rights. 49
SECTION 10.12. Article Applicable to Paying Agents. 49
SECTION 10.13. Trust Moneys Not Subordinated 49
SECTION 10.14. Trustee Not Fiduciary for Holders of Senior
Indebtedness 49
SECTION 10.15. Waiver 49
SECTION 10.16. No Waiver; Remedies 49
ARTICLE 11 MISCELLANEOUS 50
<PAGE> 6
EXHIBIT 10(b)(i)
Page
----
SECTION 11.01. Trust Indenture Act Controls 50
SECTION 11.02. Notices 50
SECTION 11.03. Communication by Holders with Other Holders 51
SECTION 11.04. Certificate and Opinion as to Conditions Precedent 51
SECTION 11.05. Statements Required in Certificate or Opinion 51
SECTION 11.06. Separability Clause 51
SECTION 11.07. Rules by Trustee, Paying Agent and Registrar 51
SECTION 11.08. Legal Holidays 52
SECTION 11.09. Governing Law 52
SECTION 11.10. No Recourse Against Others 52
SECTION 11.11. Successors 52
SECTION 11.12. Multiple Originals 52
SIGNATURES 53
EXHIBIT "A"A-1
<PAGE> 7
INDENTURE, dated as of May 5, 1996, between Consolidated Stores
Corporation, an Ohio corporation ("the Company"), and The Bank of New York, a
New York banking corporation (the "Trustee").
Each party agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the Holders of the Company's Subordinated Notes due
May 4, 2000 (the "Securities"):
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Acquired Indebtedness" means, with respect to any specified Person,
Indebtedness of any other Person: (a) existing at the time such other Person
merged with or into or became a Subsidiary of such specified Person, including
Indebtedness incurred in connection with, or in contemplation of, such other
Person merging with or into or becoming a Subsidiary of such specified Person;
or (b) assumed by such specified Person in connection with its acquisition of
assets owned by such other Person.
"Affiliate" as to any Person shall mean any other Person (i) which directly
or indirectly controls, is controlled by, or is under common control with such
Person, (ii) which beneficially owns or holds 15% or more of any class of the
voting or other equity interests of such Person, or (iii) 15% or more of any
class of voting or other equity interests of which is beneficially owned or
held, directly or indirectly, by such Person. Control, as used in this
definition, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or otherwise, including
the power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise, including the power to elect a majority of the directors or trustees
of a corporation or trust, as the case may be.
"Asset Sale" by any Person means any sale, transfer or lease (or series of
related sales, transfers or leases) by such Person or any of its Subsidiaries of
any property or assets, including shares of Capital Stock (other than directors'
qualifying shares) or other ownership interests of a Subsidiary of such Person;
provided, however, that Asset Sale will not include: (i) transactions involving
the sale of inventory in the ordinary course of business; (ii) any sale,
transfer or lease of assets in the ordinary course of business which are no
longer necessary or required in the conduct of the Company's or any of its
Subsidiary's business; (iii) any sale, transfer or lease of assets by any Wholly
Owned Subsidiary to the Company or another Wholly Owned Subsidiary; (iv) any
sale, transfer or lease of assets in the ordinary course of business; (v) any
sale, transfer or lease or other disposition that is governed by and in
compliance with Section 5.01; (vi) the issuance by such Person of shares of its
Capital Stock; (vii) any payment of purchase price to Melville Corporation in
connection with that certain Stock Purchase Agreement dated as of March 26, 1996
between Melville Corporation and Consolidated Stores Corporation; or
Exhibit 10(b)(i) Page 1
<PAGE> 8
(viii) any sale, transfer or lease of assets, other than those specifically
excepted pursuant to clauses (i) through (iv) above, provided that the aggregate
after-tax proceeds of all such sales, transfers or leases on and after the date
thereof (as reasonably estimated by the Company) does not exceed $25,000,000.
"Board of Directors" of any corporation means the Board of Directors of
such corporation, or any duly authorized committee of such Board of Directors.
"Business Day" means any day that is not a Saturday, a Sunday or a day on
which banking institutions in New York are required to close.
"Capital Lease Obligation" of any Person means the amount of the liability
in respect of a lease of (or other Indebtedness arrangements conveying the right
to use) real or personal property of such Person which is required to be
classified and accounted for as a capital lease or liability on the face of a
balance sheet of such Person in accordance with GAAP.
"Capital Stock" means any and all shares, interests, participations, rights
or other equivalents (however designated) of corporate stock (including each
class of common stock and preferred stock) or partnership interests and any
warrants, options or other rights to acquire such stock or interests, but
excluding any debt securities convertible into such stock.
"Change of Control" means: (i) any person or group of persons (within the
meaning of Section 13(a) or 14(a) of the Securities Exchange Act of 1934, as
amended) shall have acquired beneficial ownership of (within the meaning of Rule
13d-3 promulgated by the Securities and Exchange Commission under said Act)
33.33% or more of the voting capital stock of the Company; or (ii) within a
period of twelve (12) consecutive calendar months, individuals who were
directors on the board of directors of the Company on the first day of such
period together with any directors whose election by such board of directors or
whose nomination by the shareholders was approved by a vote of the majority of
the directors then in office shall cease to constitute a majority of the board
of directors of the Company.
"Company" means the party named as the "Company" in the first paragraph of
this Indenture until a successor replaces it pursuant to the applicable
provisions of this Indenture and, thereafter, shall mean such successor.
"Consolidated EBIT" means, with respect to a Person, (a) Consolidated Net
Income (loss) plus (b) Consolidated Income Tax Expense plus (c) Consolidated
Interest Expense of such Person for such period, determined on a consolidated
basis in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" means on any date of
determination the ratio of (a) the Company's Consolidated EBIT for the most
recent four fiscal quarters immediately preceding the date of determination plus
Consolidated Rent Expense, to (b) Consolidated Interest Expense for the most
recent four fiscal quarters immediately preceding the date of determination plus
Consolidated Rent Expense.
"Consolidated Income Tax Expense" means, with respect to a Person for any
period, the provision for taxes for such period for such Person and its
Subsidiaries based on income
Exhibit 10(b)(i) Page 2
<PAGE> 9
or profits to the extent such income or profits were included in computing
Consolidated Net Income for such period, determined on a consolidated basis in
accordance with GAAP.
"Consolidated Interest Expense" means, with respect to a Person for any
period, the interest expense of such Person and its Subsidiaries in respect of
Indebtedness to the extent deducted in determining Consolidated Net Income for
such period, determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, with respect to a Person for any period,
the Net Income of such Person and its Subsidiaries for such period determined on
a consolidated basis in accordance with GAAP, excluding all extraordinary income
and gains to net income to the extent included in net income for such period.
"Consolidated Net Worth" means, with respect to any Person, the
stockholders' equity of such Person and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP.
"Consolidated Rent Expense" means, with respect to a Person, the aggregate
rental amounts payable by such Person and its Subsidiaries for the most recent
four consecutive fiscal quarters immediately preceding the date of determination
under any lease of real property having an original term (including any required
renewals or any renewals at the option of the lessor or lessee) of one year or
more (but excluding any Capital Lease Obligation), determined on a consolidated
basis in accordance with GAAP.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Disqualified Capital Stock" means, with respect to any Person, any Capital
Stock of such Person that, by its terms (or by the terms of any security into
which it is convertible or for which it is exercisable, redeemable or
exchangeable), matures, or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the Holder thereof,
in whole or in part, on or prior to the maturity of the Securities.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as approved by a significant segment of the accounting profession
in the United States, consistently applied to such Person, that are in effect
from time to time.
"Holder" or "Securityholder" means a Person in whose name a Security is
registered on the Registrar's books.
"Incur" means, with respect to any Indebtedness, to create, issue, assume,
guarantee, incur or otherwise become liable, directly or indirectly, in respect
of such Indebtedness. The term "Incurrence" when used as a noun shall have a
correlative meaning.
Exhibit 10(b)(i) Page 3
<PAGE> 10
"Indebtedness" means as to any Person at any time, any and all
indebtedness, obligations or liabilities (whether matured or unmatured,
liquidated or unliquidated, direct or indirect, absolute or contingent, or joint
or several) of such Person for or in respect of: (i) borrowed money, (ii)
amounts raised under or liabilities in respect of any note purchase or
acceptance credit facility, (iii) reimbursement obligations (contingent or
otherwise) under any letter of credit, currency swap agreement, interest rate
swap, cap, collar or floor agreement or other interest rate management device,
(iv) any other transaction (including forward sale or purchase agreements,
capitalized leases (but not operating leases) and conditional sales agreements)
having the commercial effect of a borrowing of money entered into by such Person
to finance its operations or capital requirements (but not including trade
payables, trade credits and accrued expenses incurred in the ordinary course of
business which are not represented by a promissory note or other evidence of
indebtedness and which are not more than thirty (30) days past due), or (v) any
guaranty of Indebtedness for borrowed money.
"Indenture" means this Indenture, as amended or supplemented from time to
time in accordance with the terms hereof, including the provisions of the TIA
that are deemed to be a part hereof.
"Investments" of any Person means all investments in other Persons in the
form of loans, advances or other extensions of credit or capital contributions
(excluding travel and similar advances to officers and employees made in the
ordinary course of business and excluding all indebtedness and receivables from
another Person which are current assets or arose from sales or leases of goods
or services on terms consistent with such Person's past practices or such
Person's industry's common practices), purchases (or other acquisitions for
consideration) of Indebtedness, Capital Stock or other securities and all other
items that are or would be classified as investments (including, without
limitation, purchases of assets outside the ordinary course of business) on a
balance sheet prepared in accordance with GAAP.
"Issue Date" means the date of original issue of the Securities.
"Officer" means, with respect to any corporation, the Chairman of the
Board, any Vice Chairman, the President, any Vice President, the Treasurer, or
the Secretary of such corporation.
"Officers' Certificate" means a written certificate containing the
information specified in Sections 11.04 and 11.05 herein, signed in the name of
the Company by any two of its Officers, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion (containing as applicable the
information specified in Sections 11.04 and 11.05 hereof) rendered by legal
counsel who is acceptable to the Trustee which may be counsel to the Company.
"Permitted Indebtedness" will include (i) Indebtedness incurred by the
Company or any Subsidiary of the Company under the Revolving Credit Facility up
to a maximum permitted amount of $750,000,000; (ii) all obligations owed by the
Company or any Subsidiary of the Company under or in connection with that
certain Short Term Loan Agreement dated as of May 3, 1996 among Consolidated
Stores Corporation, the initial Lenders named therein and Merrill Lynch Capital
Corporation, as Agent and the related guarantees and documents as
Exhibit 10(b)(i) Page 4
<PAGE> 11
such agreement, guarantees or documents may be further amended, modified,
refinanced or refunded from time to time (the "Merrill Loan"); (iii)
Indebtedness owed by Company to any Wholly Owned Subsidiary of the Company or
Indebtedness owed by any Subsidiary to the Company or to a Wholly Owned
Subsidiary of the Company; (iv) Indebtedness of the Company and its Subsidiaries
outstanding on the date hereof; (v) Indebtedness secured by purchase money
security interests; (vi) Indebtedness in connection with interest rate
agreements permitted by the Revolving Credit Facility; (vii) $35,000,000
principal amount of the Company's 10.50% Senior Notes Due August 1, 2002; (viii)
any other Indebtedness not referred to above which does not exceed in the
aggregate $25,000,000; and (ix) renewals, extensions, refinancings or refundings
of any Indebtedness (such new Indebtedness being "Refinancing Indebtedness");
provided that such Refinancing Indebtedness (a) does not exceed the maximum
permitted principal or accreted amount of, (b) ranks no more favorably in order
of payment to the Notes as, and (c) if such Indebtedness so renewed, extended,
refinanced or refunded is not Senior Indebtedness, does not have a Weighted
Average Life to Stated Maturity shorter than that of, the Indebtedness being
renewed, extended, refinanced or refunded; and (x) Indebtedness not otherwise
permitted to be incurred in an aggregate principal amount not to exceed
$50,000,000 at any one time outstanding.
"Permitted Investments" means an Investment which consists of: (a)
marketable obligations of or obligations guaranteed by the United States of
America or issued by any agency thereof and backed by the full faith and credit
of the United States of America in each case with final maturities of one year
or less; (b) commercial paper having a rating of at least P-1 or A-1 (or their
respective equivalents) by Moody's Investor Service, Inc. or Standard & Poor's
Rating Services, a division of The McGraw Hill Companies, Inc., respectively;
(c) certificates of deposit with final maturities of one year or less issued by
United States commercial banks of recognized standing with capital and surplus
aggregating in excess of $100,000,000; (d) shares of money market funds that
have assets in excess of $100,000,000 and that invest solely in Permitted
Investments of the kind described in clauses (a) through (c) above; (e)
Investments other than set forth above not to exceed $10,000,000; (f) an
Investment in or to any of the Wholly-owned Subsidiaries of the Company; (g)
loans to employees outstanding on the date hereof; and (h) investments related
to Company owned life insurance contracts.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, trust, estate, unincorporated organization or government
or other agency or political subdivision thereof or any other entity.
"Redemption Date" or "redemption date" means the date specified for
redemption of the Securities in accordance with the terms of the Securities and
this Indenture.
"Redemption Price" or "redemption price" shall have the meaning set forth
in paragraph 5 of the Securities.
"Revolving Credit Facility" means the Credit Agreement dated as of May 3,
1996, among the Company, the banks party thereto, from time to time and their
respective successors and assigns, The Bank of New York as syndication agent and
managing agent, National City Bank of Columbus as administrative agent and
managing agent, PNC Bank, Ohio, National Association as arranger, documentation
agent and managing agent, Bank One, Columbus, N.A. as managing agent, and
National City Bank as managing agent, and any
Exhibit 10(b)(i) Page 5
<PAGE> 12
guarantees by Subsidiaries of the Company and any other agreements executed in
connection therewith as such agreements or guarantees may be further amended,
modified, refinanced or refunded from time to time.
"SEC" means the Securities and Exchange Commission.
"Security" or "Securities" means any of the Company's Subordinated Notes
due May 4, 2000, issued under this Indenture, as amended or supplemented from
time to time pursuant to this Indenture.
"Securityholder" or "Holder" means a Person in whose name a Security is
registered on the Registrar's books.
"Senior Indebtedness" means (i) all obligations owed by the Company or any
Subsidiary of the Company under or in connection with the Revolving Credit
Facility, whether outstanding on the date hereof or thereafter created, assumed
or incurred and any refinancing, refunding or replacement thereof; provided,
however, that any Indebtedness under any refinancing, refunding or replacement
of the Revolving Credit Facility shall not constitute Senior Indebtedness to the
extent that Indebtedness thereunder is by its terms expressly subordinated in
right of payment to any other Indebtedness of the Company; (ii) all obligations
owed by the Company or any Subsidiary of the Company under or in connection with
the Merrill Loan and the related guarantees and documents; and (iii) the
principal of, premium, if any, and accrued and unpaid interest on Indebtedness
of the Company, contingent or otherwise, in respect of borrowed money, whether
outstanding on the date hereof or hereafter created, incurred or assumed, unless
in the case of any particular Indebtedness, the instrument creating or
evidencing the same or pursuant to which the same is outstanding expressly
provides that such Indebtedness shall not be senior in right of payment to the
Securities. Notwithstanding the foregoing, "Senior Indebtedness" shall not
include (i) Indebtedness evidenced by the Securities, (ii) Indebtedness that is
expressly subordinated or junior in rights of payment to any Indebtedness of the
Company, (iii) any liability for federal, state, provincial, local or other
taxes owned or owing by the Company, (iv) Indebtedness of or amounts owned by
the Company for compensation to employees and for services, (v) Indebtedness of
the Company to a Subsidiary of the Company or any other Affiliate of the
Company, (vi) amounts owing under leases (other than Capital Lease Obligations)
and (vii) any Indebtedness Incurred which is not permitted by the terms of this
Indenture. All interest which would accrue after the filing of a petition by or
against the Company under any federal, state or foreign bankruptcy or similar
law, whether or not such interest is allowed as a claim after such filing any
proceeding under such bankruptcy or similar law, shall constitute Senior
Indebtedness.
"Stated Maturity" means, when used with respect to any security, the date
specified in such security as the fixed date on which an amount equal to the
principal of such security is due and payable.
"Subsidiary" of any Person means (i) a corporation more than 50% of the
Voting Power of which is owned, directly or indirectly, by such Person or by one
or more other Subsidiaries of such Person or by such Person and one or more
Subsidiaries of such Person, (ii) a partnership of which such Person, one or
more other Subsidiaries of such Person or such Person and one or more
Subsidiaries of such Person, directly or indirectly, is the general partner and
has
Exhibit 10(b)(i) Page 6
<PAGE> 13
the power to direct the policies, management and affairs or (iii) any other
Person (other than a corporation) in which such Person, one or more other
Subsidiaries of such Person or such Person and one or more Subsidiaries of such
Person, directly or indirectly, has at least a majority ownership interest or
the power to direct the policies, management and affairs thereof.
"TIA" means the Trust Indenture Act of 1939, as amended, and as in effect
on the date of this Indenture; provided, however, that in the event the TIA is
amended after such date, TIA means, to the extent required by any such
amendment, the TIA as so amended.
"Trust Officer", when used with respect to the Trustee, means the chairman
or vice chairman of the Board of Directors, the chairman or vice chairman of the
executive committee of the Board of Directors, the President, any vice
president, any assistant vice president, the secretary, any assistant secretary,
the treasurer, any assistant treasurer, any trust officer or assistant trust
officer, the controller and any assistant controller or any other officer of the
Trustee customarily performing functions similar to those performed by any of
the above designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of his knowledge of and familiarity with the particular subject.
"Trustee" means the party named as the "Trustee" in the first paragraph of
this Indenture until a successor replaces it pursuant to the applicable
provisions of this Indenture and, thereafter, shall mean such successor.
"Voting Power" of any Person means the aggregate number of votes of all
classes of Capital Stock of such Person which ordinarily has voting power for
the election of a member of the Board of Directors or their equivalents of such
Person.
"Weighted Average Life to Stated Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding principal amount of such Indebtedness into (b) the total of the
products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest-twelfth) which will elapse between
such date and the making of such payment.
"Wholly-owned Subsidiary" of any Person means any Subsidiary of such Person
to the extent the entire voting share capital of such Subsidiary is owned by
such Person (either directly or indirectly through Wholly-owned Subsidiaries).
Exhibit 10(b)(i) Page 7
<PAGE> 14
SECTION 1.02. Other Definitions.
<TABLE>
<CAPTION>
Term Defined in Section
---- ------------------
<S> <C>
"Acceleration Notice"....................... 6.02
"Act"....................................... 1.05
"Bankruptcy Law"............................ 6.01
"Change of Control Payment Date"............ 4.10
"Custodian"................................. 6.01
"Event of Default".......................... 6.01
"Excess Proceeds"........................... 4.11
"Exchange Act".............................. 4.02
"Legal Holiday"............................. 11.08
"Net Cash Proceeds"......................... 4.11
"Notice of Election"........................ 4.10
"Notice of Default"......................... 6.01
"Paying Agent".............................. 2.03
"Register".................................. 2.03
"Registrar"................................. 2.03
"Restricted Payment"........................ 4.06
"U.S. Government Obligations"............... 8.03
</TABLE>
SECTION 1.03. Incorporation by Reference of Trust Indenture Act. Whenever
this Indenture refers to a provision of the TIA, such provision is incorporated
by reference in and made a part of this Indenture. The following TIA terms used
in this Indenture have the following meanings:
"Commission" means the SEC.
"Indenture securities" means the Securities.
"Indenture security holder" means a Securityholder.
"Indenture to be qualified" means this Indenture.
"Indenture trustee" or "institutional trustee" means the Trustee.
"Obligor" on the indenture securities means the Company.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.
Exhibit 10(b)(i) Page 8
<PAGE> 15
SECTION 1.04. Rules of Construction. Unless the context otherwise requires:
(a) A term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(c) "or" is not exclusive;
(d) "including" means including, without limitation;
(e) words in the singular include the plural, and words in the plural
include the singular;
(f) "herein," "hereof," "hereto" and other words of similar import
refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision; and
(g) any gender used in this Indenture shall be deemed to include the
neuter, masculine and feminine gender.
SECTION 1.05. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor executed by such Holders in person or by an
agent or proxy duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument
or instruments are delivered to the Trustee and, where it is hereby
expressly required, to the Company. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes
referred to as the "Act" of Holders signing such instrument or instruments.
Proof of execution of any such instrument or of a writing appointing any
such agent shall be sufficient for any purpose of this Indenture and
conclusive in favor of the Trustee and the Company, if made in the manner
provided in this Section 1.05.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any manner which the Trustee deems
sufficient.
(c) The ownership of Securities shall be proved by the Register or by
a certificate of the Registrar.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall be conclusive and
binding upon such Holder and upon every future Holder of the same Security
and the holder of every Security issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof in respect of anything
done, omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such
Security.
Exhibit 10(b)(i) Page 9
<PAGE> 16
(e) If the Company shall solicit from the Holders any request, demand,
authorization, direction, notice, consent, waiver or other Act, the Company
may, at its option, by or pursuant to a resolution of its Board of
Directors, fix in advance a record date for the determination of Holders
entitled to give such request, demand, authorization, direction, notice,
consent, waiver or other Act, but the Company shall have no obligation to
do so. If such a record date is fixed, such request, demand, authorization,
direction, notice, consent, waiver or other Act may be given before or
after such record date, but only the Holders of record at the close of
business on such record date shall be deemed to be Holders for the purposes
of determining whether Holders of the requisite proportion of outstanding
Securities have authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other Act, and for
that purpose the outstanding Securities shall be computed as of such record
date; provided, however, that no such authorization, agreement or consent
by the Holders on such record date shall be deemed effective unless it
shall become effective pursuant to the provisions of this Indenture not
later than six months after the record date.
ARTICLE 2
THE SECURITIES
SECTION 2.01. Form and Dating. The Securities and the Trustee's certificate
of authentication shall be substantially in the form of Exhibit "A" attached
hereto. The Securities may have notations, legends or endorsements required by
law, stock exchange rule or usage. The form of the Securities and any notation,
legend or endorsement shall be in a form acceptable to the Company. Each
Security shall be dated the date of its authentication.
The terms and provisions contained in the Securities, annexed hereto as
Exhibit "A", shall constitute, and are hereby expressly made, a part of this
Indenture. To the extent applicable, the Company, by its execution and delivery
of this Indenture, expressly agrees to such terms and provisions and to be bound
thereby.
SECTION 2.02. Execution and Authentication. The Securities shall be
executed on behalf of the Company by any two of its Officers. The signature of
any such Officer on the Securities may be manual or facsimile. The Company's
corporate seal may, if required, be impressed, affixed, imprinted or reproduced
on the Securities and may be in facsimile form.
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper Officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for in Exhibit
"A" annexed hereto duly executed by the Trustee by manual signature of an
authorized signatory, and such executed certificate upon any Security shall be
conclusive evidence, and the only evidence, that such Security has been duly
authenticated and made available for delivery hereunder.
Exhibit 10(b)(i) Page 10
<PAGE> 17
The Trustee shall authenticate and make available for delivery Securities
for original issue in the aggregate principal amount of $100,000,000 upon a
Board of Directors resolution and a written order of the Company signed by two
Officers of the Company, but without any further action by the Company. Such
order shall specify the amount of the Securities to be authenticated and the
date on which the original issue of Securities is to be authenticated and
delivered. The aggregate principal amount of Securities outstanding at any time
may not exceed $100,000,000, except as provided in Section 2.07.
The Trustee shall act as the initial authenticating agent. Thereafter, the
Trustee may appoint an authenticating agent reasonably acceptable to the Company
to authenticate Securities. An authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as a Paying Agent to deal with the
Company or an Affiliate of the Company.
The Securities shall be issuable only in registered form without coupons
and only in denominations of $1,000 and any integral multiple thereof.
SECTION 2.03. Registrar and Paying Agent. The Company shall maintain or
cause to be maintained an office or agency where Securities may be presented for
registration of transfer or for exchange ("Registrar"), an office or agency
where Securities may be presented or surrendered for purchase or payment
("Paying Agent") and an office or agency where notices and demands to or upon
the Company in respect of the Securities and this Indenture may be served. The
Registrar shall keep a register of the Securities and of their transfer and
exchange (the "Register"). The Company may have one or more co-registrars and
one or more additional paying agents. The term Paying Agent includes any
additional paying agent.
The Company shall enter into an appropriate agency agreement with any
Registrar, Paying Agent or co-registrar (if not the Trustee or the Company). The
agreement shall implement the provisions of this Indenture that relate to such
agent. The Company shall notify the Trustee of the name and address of any such
agent. If the Company fails to maintain a Registrar, Paying Agent or agent for
service of notices or demands, the Trustee shall act as such and shall be
entitled to appropriate compensation therefor pursuant to Section 7.07 hereof.
The Company or any Subsidiary or an Affiliate of either of them may act as
Paying Agent, Registrar or co-registrar or agent for service of notices and
demands.
The Company initially appoints the Trustee as Registrar, Paying Agent and
agent for service of notices and demands.
Exhibit 10(b)(i) Page 11
<PAGE> 18
SECTION 2.04. Paying Agent to Hold Money in Trust. Except as otherwise
provided herein, not later than each due date of the principal, premium, if any,
and interest on any Security, the Company shall deposit with the Paying Agent a
sum of money sufficient to pay such principal, premium, if any, and interest so
becoming due. Subject to Article 10, the Company shall require each Paying Agent
(other than the Trustee or the Company) to agree in writing that such Paying
Agent shall hold in trust for the benefit of Securityholders or the Trustee all
money held by the Paying Agent for the payment of principal, premium, if any,
and interest on the Securities (whether such money has been paid to it by the
Company or any other obligor on the Securities) and shall notify the Trustee of
any default by the Company (or any other obligor on the Securities) in making
any such payment. At any time during the continuance of any such default, the
Paying Agent shall, upon the request of the Trustee, forthwith pay to the
Trustee all money so held in trust and account for any money disbursed by it.
The Company at any time may require a Paying Agent to pay all money held by it
to the Trustee and to account for any money disbursed by it. Upon doing so, the
Paying Agent shall have no further liability for the money so paid over to the
Trustee. If the Company, a Subsidiary or an Affiliate of either of them acts as
Paying Agent, it shall segregate the money held by it as Paying Agent and hold
it as a separate trust fund.
SECTION 2.05. Securityholder Lists. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Securityholders. If the Trustee is not the
Registrar, the Company shall cause to be furnished to the Trustee on or before
each interest payment date and at such other times as the Trustee may request in
writing, within five Business Days of such request, a list in such form as the
Trustee may reasonably require of the names and addresses of Securityholders.
SECTION 2.06. Transfer and Exchange. Upon surrender for registration of
transfer of any Security at the office or agency of the Company designated as
Registrar or co-registrar pursuant to Section 2.03 or at the office or agency
referred to in Section 4.05, the Company shall execute, and the Trustee shall
authenticate and make available for delivery, in the name of the designated
transferee or transferees, one or more new Securities of any authorized
denomination or denominations, of a like aggregate principal amount.
At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denomination or denominations, of a like aggregate
principal amount, upon surrender of the Securities to be exchanged at such
office or agency. Whenever any Securities are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and make available for
delivery, the Securities which the Holder making the exchange is entitled to
receive.
Every Security presented or surrendered for registration of transfer or for
exchange shall (if so required by the Company or the Trustee) be duly endorsed,
or be accompanied by a written instrument of transfer in form reasonably
satisfactory to the Company and the Registrar duly executed by the Holder or his
attorney duly authorized in writing.
Each Holder agrees to indemnify the Company and the Trustee against any
liability that may result from the transfer, exchange or assignment of such
Holder's Security in violation of any provision of this Indenture and/or
applicable United States federal or state securities law.
Exhibit 10(b)(i) Page 12
<PAGE> 19
The Company shall not charge a service charge for any registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
pay all taxes, assessments or other governmental charges that may be imposed in
connection with the transfer or exchange of the Securities from the
Securityholder requesting such transfer or exchange (other than any exchange of
a temporary Security for a definitive Security not involving any change in
ownership).
The Company shall not be required to make, and the Registrar need not
register, transfers or exchanges of Securities selected for redemption (except,
in the case of Securities to be redeemed in part, the portion thereof not to be
redeemed) or any Securities for a period of 15 days before the mailing of a
notice of redemption.
SECTION 2.07. Replacement Securities. If (a) any mutilated Security is
surrendered to the Company or the Trustee, or (b) the Company and the Trustee
receive evidence to their satisfaction of the destruction, loss or theft of any
Security, and there is delivered to the Company and the Trustee such security or
indemnity as may be required by them to save each of them harmless, then, in the
absence of notice to the Company or the Trustee that such Security has been
acquired by a bona fide purchaser, the Company shall execute, and upon its
written request, the Trustee shall authenticate and make available for delivery,
in exchange for any such mutilated Security or in lieu of any such destroyed,
lost or stolen Security, a new Security of like tenor and principal amount,
bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, or is about to be redeemed or purchased
by the Company pursuant to Articles 3 or 4 hereof, the Company in its discretion
may, instead of issuing a new Security, pay, redeem or purchase such Security,
as the case may be.
Upon the issuance of any new Securities under this Section 2.07, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) in connection
therewith.
Every new Security issued pursuant to this Section 2.07 in lieu of any
mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the mutilated,
destroyed, lost or stolen Security shall be at any time enforceable by anyone,
and shall be entitled to all benefits of this Indenture equally and
proportionately with any and all other Securities duly issued hereunder.
The provisions of this Section 2.07 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
Exhibit 10(b)(i) Page 13
<PAGE> 20
SECTION 2.08. Outstanding Securities; Determinations of Holders' Action.
Securities outstanding at any time are all the Securities that have been
authenticated by the Trustee except for those canceled by it, those delivered to
it for cancellation, those referred to in Section 2.07 hereof, or redeemed by
the Company pursuant to Article 3 hereof and those described in this Section
2.08 as not outstanding. A Security does not cease to be outstanding because the
Company, a Subsidiary or an Affiliate thereof holds the Security; provided,
however, that in determining whether the Holders of the requisite principal
amount of Securities have given or concurred in any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company, any other obligor upon the Securities or any Subsidiary or
Affiliate of the Company or such other obligor shall be disregarded and deemed
not to be outstanding, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Securities which the Trustee actually knows to
be so owned shall be so disregarded. Subject to the foregoing, only Securities
outstanding at the time of such determination shall be considered in any such
determination (including determinations pursuant to Articles 6 and 9).
If a Security is replaced pursuant to Section 2.07, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If the Paying Agent (other than the Company) holds, in accordance with this
Indenture, at maturity or on a Redemption Date, money sufficient to pay the
Securities payable on that date, then immediately on the date of maturity or
such Redemption Date, as the case may be, such Securities shall cease to be
outstanding and interest, if any, on such Securities shall cease to accrue.
SECTION 2.09. Temporary Securities. Pending the preparation of definitive
Securities, the Company may execute, and upon written request from the Company
signed by two Officers of the Company, the Trustee shall authenticate and make
available for delivery, temporary Securities which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the Officers of the Company executing such Securities may
determine, as conclusively evidenced by their execution of such Securities.
If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at the office
or agency of the Company designated for such purpose pursuant to Section 2.03
hereof, without charge to the Holder. Upon surrender for cancellation of any one
or more temporary Securities, the Company shall execute and the Trustee, upon
written request of the Company signed by two Officers of the Company, shall
authenticate and make available for delivery in exchange therefor a like
principal amount of definitive Securities of authorized denominations. Until so
exchanged, the temporary Securities shall in all respects be entitled to the
same benefits under this Indenture as definitive Securities.
Exhibit 10(b)(i) Page 14
<PAGE> 21
SECTION 2.10. Cancellation. All Securities surrendered for payment,
purchase by the Company, redemption by the Company pursuant to Article 3 hereof,
or registration of transfer or exchange shall, if surrendered to any Person
other than the Trustee, be delivered to the Trustee and shall be promptly
canceled by it. The Company may at any time deliver to the Trustee for
cancellation any Securities previously authenticated and made available for
delivery hereunder which the Company may have acquired in any manner whatsoever,
and all Securities so delivered shall be promptly canceled by the Trustee. The
Company may not reissue, or issue new Securities to replace Securities it has
paid or delivered to the Trustee for cancellation. No Securities shall be
authenticated in lieu of or in exchange for any Securities canceled as provided
in this Section 2.10, except as expressly permitted by this Indenture. All
canceled Securities held by the Trustee shall be delivered to the Company.
SECTION 2.11. CUSIP Numbers. The Company, in issuing the Securities may use
"CUSIP" numbers (if then generally in use), and the Trustee shall use CUSIP
numbers in notices of redemption or exchange as a convenience to Holders;
provided, however, that any such notice shall state that no representation is
made as to the correctness of such numbers either as printed on the Securities
or as contained in any notice of redemption or exchange and that reliance may be
placed only on the other identification numbers printed on the Securities and
any redemption shall not be affected by any defect in or omission of such
numbers. The Company shall promptly notify the Trustee of any change in the
CUSIP numbers.
SECTION 2.12. Defaulted Interest. If the Company defaults in a payment of
interest on the Securities, it shall pay the defaulted interest, plus (to the
extent lawful) any interest payable on the defaulted interest, to the Persons
who are Holders on a subsequent special record date, and such special record
date, as used in this Section 2.12 with respect to the payment of any defaulted
interest, shall mean the 15th day next preceding the date fixed by the Company
for the payment of defaulted interest, whether or not such day is a Business
Day. At least 15 days before the subsequent special record date, the Company
shall mail to each Holder and to the Trustee a notice that states the subsequent
special record date, the payment date and the amount of defaulted interest to be
paid. The Company may also pay defaulted interest in any other lawful manner.
Exhibit 10(b)(i) Page 15
<PAGE> 22
ARTICLE 3
REDEMPTION
SECTION 3.01. Right to Redeem: Notices to Trustee. At any time on and after
May 5, 1998, the Company, at its option, may redeem the Securities for cash in
accordance with this Article 3 and the provisions of paragraphs 5 and 6 of the
Securities. If the Company elects to redeem Securities, it shall notify the
Trustee in writing of the Redemption Date, the principal amount of Securities to
be redeemed and the Redemption Price.
The Company shall give the notice to the Trustee provided for in this
Section 3.01 at least 45 days before the Redemption Date (unless a shorter
notice shall be satisfactory to the Trustee).
SECTION 3.02. Selection of Securities to Be Redeemed. If less than all the
outstanding Securities are to be redeemed at any time, the Trustee shall select
the Securities to be redeemed pro rata or by lot or, if such methods are
prohibited by the rules of any stock exchange on which the Securities are then
listed, any other method that complies with applicable legal requirements and
the requirements of any exchange on which the Securities are listed and which
the Trustee considers fair and appropriate. The Trustee shall make the selection
from outstanding Securities not previously called for redemption. Securities and
portions of them the Trustee selects shall be in principal amounts of $1,000 or
an integral multiple of $1,000. Provisions of this Indenture that apply to
Securities called for redemption also apply to portions of Securities called for
redemption. The Trustee shall notify the Company promptly of the Securities or
portions of Securities to be redeemed.
SECTION 3.03. Notice of Redemption. At least 30 days but not more than 60
days before a Redemption Date, the Company shall mail or cause to be mailed a
notice of redemption by first class mail, postage prepaid, to each Holder of
Securities to be redeemed at the Holder's last address, as it shall appear on
the Register. A copy of such notice shall be mailed to the Trustee on the same
day the notice is mailed to Holders of Securities.
The notice shall identify the Securities to be redeemed and shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) the CUSIP number (subject to the provisions of Section 2.11
hereof);
(d) the name and address of the Paying Agent;
(e) that Securities called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price;
(f) if fewer than all the outstanding Securities are to be redeemed,
the identification and principal amounts of the particular Securities to be
redeemed; and
Exhibit 10(b)(i) Page 16
<PAGE> 23
(g) that, unless the Company defaults in making such redemption
payment, interest will cease to accrue on Securities called for redemption
on and after the Redemption Date and the only remaining right of the
Holders of such Securities is to receive payment of the Redemption Price
upon surrender to the Trustee of the Securities.
At the Company's written request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense; provided,
however, that in all cases, the text of such notice of redemption shall be
prepared or approved by the Company and the Trustee shall have no responsibility
whatsoever with regard to such notice being accurate or correct.
SECTION 3.04. Effect of Notice of Redemption. Once notice of redemption is
given, Securities called for redemption become due and payable on the Redemption
Date and at the Redemption Price. Upon the later of the Redemption Date and the
date such Securities are surrendered to the Paying Agent, such Securities called
for redemption shall be paid at the Redemption Price, plus accrued and unpaid
interest to the Redemption Date, if money sufficient for that purpose has been
deposited as provided in Section 3.06 hereof.
Notice of redemption shall be deemed to be given when mailed, whether or
not the Holder receives the notice. In any event, failure to give such notice,
or any defect therein, shall not affect the validity of the proceedings for the
redemption of the Securities.
SECTION 3.05. Deposit of Redemption Price. Prior to the Redemption Date,
the Company shall deposit with the Paying Agent (or if the Company or a
Subsidiary or an Affiliate of either of them is the Paying Agent, shall
segregate and hold in trust) money sufficient to pay the Redemption Price of all
Securities to be redeemed on that date other than Securities or portions of
Securities called for redemption which prior thereto have been delivered by the
Company to the Trustee for cancellation.
SECTION 3.06. Securities Redeemed in Part. Upon surrender of a Security
that is redeemed in part, the Company shall execute, and the Trustee shall
authenticate and make available for delivery to the Holder, a new Security in an
authorized denomination equal in principal amount to the unredeemed portion of
the Security surrendered.
ARTICLE 4
COVENANTS
SECTION 4.01. Payment of Securities. The Company shall pay the principal
of, premium, if any, and interest (including interest accruing on or after the
filing of a petition in bankruptcy or reorganization relating to the Company,
whether or not a claim for post-filing interest is allowed in such proceeding)
on the Securities on (or prior to) the dates and in the manner provided in the
Securities or pursuant to this Indenture. An installment of principal, premium,
if any, or interest shall be considered paid on the applicable date due if on
such date the Trustee or the Paying Agent holds, in accordance with this
Indenture, money sufficient to pay all of such installment then due. The Company
shall pay interest on overdue principal and premium, if any, and interest on
overdue installments of interest (including interest accruing on or after the
filing of a petition in bankruptcy or reorganization relating to the Company,
whether or not a claim for post-filing interest is allowed in such proceeding),
to the extent lawful, at the
Exhibit 10(b)(i) Page 17
<PAGE> 24
rate per annum borne by the Securities, which interest on overdue interest shall
accrue from the date such amounts became overdue. The provisions of this Section
4.01 shall not be deemed to excuse any Event of Default set forth in Section
6.01.
SECTION 4.02. SEC Reports.
(a) The Company shall
(1) file with the Trustee and supply to each Holder of the
Securities, without cost, within 15 days after it files the same with
the SEC, copies of its annual reports and of the information,
documents and other reports, (or copies of such portions of any of the
foregoing as the SEC may by rules and regulations prescribe) which the
Company is required to file with the SEC pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"); or, if the Company is not subject to the reporting
requirements of the Exchange Act, then the Company shall file with the
SEC and the Trustee, in accordance with rules and regulations
prescribed by the SEC, and supply to each Holder of the Securities,
without cost, within 15 days after it has filed with the SEC, such of
the supplementary and periodic information, documents and reports
which may be required pursuant to Section 13 of the Exchange Act, in
respect of a security listed and registered on a national securities
exchange as may be prescribed in such rules and regulations;
(2) file with the SEC and the Trustee, in accordance with rules
and regulations prescribed by the SEC, and supply to each Holder of
the Securities, without cost, within 15 days after it has filed with
the SEC, such additional information, documents, and reports with
respect to compliance by the Company with the conditions and covenants
provided for in this Indenture, as may be required by such rules and
regulations; and
(3) if not otherwise required pursuant to this Section 4.02, file
with the Trustee, within 30 days after it would have been required to
file with the SEC had it been subject to the requirements of Sections
13 or 15(d) of the Exchange Act, and supply to each Holder of the
Securities, without cost, within 15 days after it has filed with the
Trustee, financial statements, including any notes thereto, comparable
to that which the Company would have been required to include in such
quarterly or annual reports, as the case may be, if the Company was
subject to the requirements of such Sections 13 or 15(d) of the
Exchange Act.
(b) The Company shall also make such reports available to prospective
purchasers of the Securities, securities analysts and broker-dealers upon
their request. The Company shall also comply with the other provisions of
TIA Section 314(a).
(c) Delivery of such reports, information and documents to the Trustee
is for informational purposes only and the Trustee's receipt of such shall
not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
Exhibit 10(b)(i) Page 18
<PAGE> 25
SECTION 4.03. Compliance Certificates.
(a) The Company shall deliver to the Trustee within 120 days after the
end of each of the Company's fiscal years a certification from the
principal executive officer, principal financial officer or principal
accounting officer of the Company as to his or her knowledge of the
Company's compliance with all conditions and covenants under this
Indenture. For purposes of this Section 4.03(a), such compliance shall be
determined without regard to any period of grace or requirement of notice
provided under this Indenture. If they do know of such a Default or Event
of Default, the certificate shall describe any such Default or Event of
Default, and its status. Such Officers' Certificate need not comply with
Sections 11.04 and 11.05 hereof.
(b) So long as not contrary to the then current recommendation of the
American Institute of Certified Public Accountants, the Company shall
deliver to the Trustee within 120 days after the end of each fiscal year a
written statement by the Company's independent certified public accountants
stating: (i) that their audit examination has included a review of the
terms of this Indenture and the Securities as they relate to accounting
matters; and (ii) whether, in connection with their audit examination, any
Default has come to their attention and, if such a Default has come to
their attention, specifying the nature and period of the existence thereof;
provided, however, that the independent certified public accountants
delivering such statement shall not be liable in respect of such statement
by reason of any failure to obtain knowledge of any such Default or Event
of Default that would not be disclosed in the course of an audit
examination conducted in accordance with GAAP.
(c) The Company shall deliver to the Trustee as soon as possible and
in any event within 15 days after the Company becomes aware of the
occurrence of each Default or Event of Default, which is continuing, a
certificate from the principal financial officer of the Company setting
forth the details of such Default or Event of Default, and the action which
the Company proposes to take with respect thereto.
(d) The Company shall deliver to the Trustee any information
reasonably requested by the Trustee in connection with the compliance by
the Trustee or the Company with the TIA.
Exhibit 10(b)(i) Page 19
<PAGE> 26
SECTION 4.04. Further Instruments and Acts. Upon request of the Trustee,
the Company will execute and deliver such further instruments and do such
further acts as may be reasonably necessary or proper to carry out more
effectively the purposes of this Indenture.
SECTION 4.05. Maintenance of Office or Agency. The Company will maintain,
or cause to be maintained, within the City and State of New York, an office or
agency of the Trustee, Registrar and Paying Agent where Securities may be
presented or surrendered for payment, where Securities may be surrendered for
registration of transfer, exchange or redemption and where notices and demands
to or upon the Company in respect of the Securities and this Indenture may be
served. The corporate trust office of the Trustee at 101 Barclay Street, Floor
21 West, New York, New York 10286, Attention: Corporate Trust Trustee
Administration, shall initially be such office or agency for all of the
aforesaid purposes. The Company shall give prompt written notice to the Trustee
of any change of location of such office or agency. If at any time the Company
shall fail to maintain or cause to be maintained any such required office or
agency or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
address of the Trustee set forth in Section 11.02 hereof.
The Company may also from time to time designate one or more other offices
or agencies where the Securities may be presented or surrendered for any or all
such purposes and may from time to time rescind such designations. The Company
will give prompt written notice to the Trustee of any such designation or
rescission and of any change in location of any such other office or agency.
SECTION 4.06. Limitation on Restricted Payments. The Company will not, and
will not permit any of its Subsidiaries to, directly or indirectly: (a) declare
or pay any dividend on, or make any distribution in respect of its Capital
Stock; (b) purchase, redeem or otherwise acquire or retire for value any of its
Capital Stock; (c) make any Investment in any Person (other than Permitted
Investments); or (d) purchase, redeem or otherwise acquire or retire for value,
prior to a scheduled mandatory sinking fund payment date or maturity date, (1)
any Indebtedness of the Company which ranks subordinate in right of payment to
the Securities or (2) any Indebtedness of any Subsidiary (each such declaration,
payment, distribution, purchase, redemption, acquisition, retirement or
Investment being referred to as a "Restricted Payment") if, at the time of such
action, or after giving effect to such Restricted Payment: (i) an Event of
Default or a Default shall have occurred and be continuing; (ii) the aggregate
amount of all Restricted Payments declared or made beginning on the Issue Date
shall exceed the sum of (X) 50% of the Company's Consolidated Net Income accrued
on a cumulative basis from February 4, 1996 through the last fiscal quarter
ending prior to the date of such proposed Restricted Payment (or if the
Company's cumulative Consolidated Net Income during such period shall be a
deficit, minus 100% of such deficit) plus (Y) the aggregate net proceeds
received by the Company (other than from a Subsidiary) after the Issue Date as a
capital contribution to the Company or from the issuance and sale of either
Capital Stock (other than Disqualified Capital Stock) or Indebtedness that is
convertible into such Capital Stock to the extent such Indebtedness is converted
into Capital Stock; or (iii) the Company could not incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) pursuant to Section 4.07.
Notwithstanding any of the foregoing provisions of Section 4.06, such
provisions will not prevent: (1) the payment of any dividend within 60 days
after the date of declaration, if at the
Exhibit 10(b)(i) Page 20
<PAGE> 27
date of declaration, such payment would comply with such provisions; (2) any
dividend or other distribution on shares of Capital Stock payable solely in
shares of Capital Stock (other than Disqualified Capital Stock); (3) any
dividend or other distribution payable from a Subsidiary to the Company or to
any Wholly-owned Subsidiary of the Company; and (4) payment by a Subsidiary of
any amounts due in accordance with the provisions of any Senior Indebtedness.
SECTION 4.07. Limitation on Additional Indebtedness. The Company will not,
and will not permit any of its Subsidiaries to, directly or indirectly, create,
incur, assume, guarantee or otherwise become directly or indirectly liable for
the payment of any Indebtedness (including Acquired Indebtedness), except that
the Company or its Subsidiaries may Incur Permitted Indebtedness and may create,
incur, assume, guarantee or otherwise become directly or indirectly liable for
the payment of Indebtedness (in addition to Permitted Indebtedness) if, after
giving pro forma effect to the incurrence of such Indebtedness, the Consolidated
Fixed Charge Coverage Ratio for the four full fiscal quarters immediately
preceding the incurrence of such Indebtedness, taken as one period and
calculated on the assumption that such Indebtedness had been incurred (and the
proceeds thereof were used to repay Indebtedness, if applicable) on the first
day of such four full fiscal quarter period and, in the case of Acquired
Indebtedness, on the assumption that the related acquisition (whether by means
of purchase, merger, amalgamation or otherwise) also had occurred on such date
with the appropriate adjustments (including the inclusion of the Consolidated
Net Income of the acquired Person) with respect to such acquisition being
included in such pro forma calculation, would have been greater than or equal to
1.1 to 1.0.
SECTION 4.08. Dividend and Payment Restrictions Affecting Subsidiaries. The
Company will not, and will not permit any Subsidiary to, directly or indirectly,
create or otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any Subsidiary to: (a)
pay dividends or make any other distribution in respect of its Capital Stock;
(b) pay any Indebtedness owed to the Company or any Subsidiary; (c) make loans
or advances to the Company or any Subsidiary; or (d) transfer any of its
property or assets to the Company or any Subsidiary, except for such
encumbrances or restrictions (i) existing as of the date of the Indenture or
arising pursuant to the Revolving Credit Facility or the Merrill Loan, (ii)
pursuant to an agreement relating to any Indebtedness by such Subsidiary prior
to the date on which such Subsidiary was acquired, (iii) pursuant to an
agreement which has been entered into for the pending sale or disposition of all
or substantially all of the Capital Stock or assets of such Subsidiary (provided
that such restriction terminate upon consummation of such disposition), (iv)
pursuant to customary non-assignment provisions and leases entered into in the
ordinary course of business or (v) pursuant to an agreement effecting a renewal,
extension, refinancing or refunding of Indebtedness incurred pursuant to an
agreement or arrangement referred to in clauses (i) or (ii) above; provided,
however, that provisions related to such encumbrance or restriction contained in
any such renewal, extension, refinancing or refunding are no more restrictive in
any material respect than the provisions contained in the agreement it replaces.
Exhibit 10(b)(i) Page 21
<PAGE> 28
SECTION 4.09. Limitation on Transactions with Affiliates. The Company will
not, and will not permit any of its Subsidiaries to, directly or indirectly,
enter into or suffer to exist any transaction or series of related transactions
(including, without limitation, any sale, purchase, exchange or lease of assets,
property or services or any loan or any other direct or indirect payment,
transfer or other disposition) with any Affiliate unless: (a) such Affiliate is
(both before and after such transaction) (i) a Wholly-owned Subsidiary or (ii) a
Subsidiary the minority interests in which are not held by an Affiliate; or (b)
each such transaction and any series of related transactions is on terms that
are no less favorable to the Company or such Subsidiary, as the case may be,
than would be available in a comparable transaction with an unrelated third
party; provided, however, that with respect to a transaction or series of
related transactions for which the total consideration (based on fair market
value) is equal to or in excess of $5,000,000, a committee of the Board of
Directors of the Company composed entirely of all of the disinterested Directors
of the Company shall approve by unanimous resolution certifying that such
transaction or series of transactions comply with clause (b) above; and
provided, further, that the foregoing restriction shall not apply to (i) any
transaction pursuant to agreements in place as of the date hereof, and (ii) any
transaction with an officer or director of the Company or of any Subsidiary in
their capacity as officer or director entered into in the ordinary course of
business (including compensation and employee benefit arrangements with any
officer or director of the Company or of any Subsidiary). Notwithstanding the
foregoing, nothing in this Section shall prohibit the Company from engaging in
transactions expressly permitted by Section 4.06.
SECTION 4.10. Repurchase Upon Change of Control. Unless the Company shall
have theretofore sent notice to the Trustee pursuant to Section 3.01 to call all
of the outstanding Securities for redemption, upon the occurrence of a Change of
Control, each Holder of the Securities will have the right to require that the
Company purchase all or a portion of such Holder's Securities at a purchase
price in cash equal to 101% of the principal amount thereof, plus accrued and
unpaid interest, if any, on the principal amount purchased, to the Change of
Control Payment Date (as defined) in accordance with the terms set forth below.
Notwithstanding the foregoing, if at the time of the occurrence of a Change
of Control, the terms of any Senior Indebtedness restrict or prohibit the
repurchase of the Securities pursuant to this Section 4.10, then prior to the
mailing of the notice to Holders provided for in this Section 4.10 but in any
event within 30 days following any such Change of Control, the Company shall (i)
repay in full all such Senior Indebtedness or offer to repay in full all such
Senior Indebtedness and repay the Indebtedness of each lender who accepted such
offer or (ii) obtain any required consent or waiver under all such Senior
Indebtedness to permit the repurchase of the Securities as provided for in this
Section 4.10.
Within thirty days following any Change of Control, the Company will mail a
notice to the Trustee and to each Holder stating:
(a) that a Change of Control has occurred and that such Holder has the
right to require the Company to purchase all or a portion of such Holder's
Securities at a purchase price in cash equal to 101% of the principal
amount thereof, plus accrued and unpaid interest on the principal amount
purchased, if any, to the Change of Control Payment Date;
Exhibit 10(b)(i) Page 22
<PAGE> 29
(b) the circumstances and relevant facts regarding such Change of
Control (including information with respect to historical, pro forma and
projected financial information, after giving effect to such Change of
Control and information regarding the Persons acquiring control and such
Persons' business plans for the Company);
(c) the purchase date specified by the Company (which will be not
earlier than 30 days or later than 45 days from the date of such notice,
unless otherwise required by law) (the "Change of Control Payment Date");
(d) that on the Change of Control Payment Date, the purchase price
will become due and payable upon the Securities accepted for payment, and
that interest thereon shall cease to accrue on and after such date unless
there is a default in payment by the Company;
(e) that any Security not tendered for purchase by the Company will
continue to accrue interest;
(f) the place or places where such Securities are to be surrendered
for payment of the purchase price (each of which shall be an office or
agency maintained by the Company pursuant to Section 4.05 hereof);
(g) that a Holder of Securities electing to require the Company to
purchase its Securities will be required to deliver such Securities with
the form entitled "Option of Holder to Elect Purchase" on the reverse side
of the Securities properly completed ("Notice of Election"), at the place
or places specified in the notice at least five Business Days prior to the
Change of Control Payment Date;
(h) that such Notice of Election shall be irrevocable absent the
written consent of the Company; and
(i) that Holders whose Securities are being purchased only in part
will be issued new Securities equal in principal amount to the unpurchased
portion of the Securities surrendered; provided, however, that each
Security purchased and each such new Security issued shall be in a
principal amount of $1,000 or integral multiples thereof.
Holders of Securities will have the right to have their Securities
purchased by the Company if such Securities, with the Notice of Election
properly completed, are tendered for purchase, to the place referred to in (f)
above, at any time beginning on the date such notice is mailed and ending at the
close of business on the fifth Business Day prior to the applicable Change of
Control Payment Date.
Before a Change of Control Payment Date, the Company shall (i) accept for
payment Securities properly surrendered pursuant to the provisions hereof, (ii)
deposit with the Paying Agent money sufficient to pay the purchase price of all
Securities so accepted and (iii) deliver to the Trustee Securities so accepted
together with an Officers' Certificate stating that the Securities have been so
accepted for payment by the Company. The Paying Agent shall
Exhibit 10(b)(i) Page 23
<PAGE> 30
promptly mail or deliver to Holders of Securities so accepted payment in an
amount equal to the purchase price.
SECTION 4.11. Limitation on Asset Sales. The Company will not, and will not
permit any of its Subsidiaries to, directly or indirectly, make any Asset Sale
unless: (a) the Company or such Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the fair market
value for the stock or assets sold or otherwise disposed of (such value to be
determined in good faith by the Board of Directors of the Company, whose
determination shall be conclusive and evidenced by a board resolution filed with
the Trustee); and (b) at least 75% of such consideration consists of cash.
Within 180 days of the receipt of Net Cash Proceeds (as defined) from any Asset
Sale, the Company, at its option, may apply the Net Cash Proceeds from such
Asset Sale to (i) the permanent reduction of Senior Indebtedness in accordance
with its terms, (ii) the purchase of replacement assets for the assets subject
to such Asset Sale, (iii) any combination of (i) and (ii) above.
For purposes of the foregoing, "Net Cash Proceeds" means the aggregate
amount of cash (including any other consideration that is immediately converted
into cash) received by the Company or any of its Subsidiaries in respect of such
an Asset Sale, less the sum of: (a) all out-of-pocket fees, commissions and
other expenses incurred in connection with such Asset Sale, including the amount
of income taxes required to be paid by the Company or any of its Subsidiaries in
connection therewith; and (b) the aggregate amount of cash so received which is
used to retire any existing Indebtedness of the Company or any of its
Subsidiaries which is required to be repaid in connection therewith. If at any
time any funds are received by or for the account of the Company or any of its
Subsidiaries upon the sale, conversion, collection or other liquidation of any
non-cash consideration received in respect of an Asset Sale, such funds shall,
when received, constitute Net Asset Sale Proceeds and shall, within 180 days
after the receipt of such funds, be applied as provided in the preceding
paragraph or as provided in the succeeding paragraph. Notwithstanding the
foregoing, $35,000,000 of what otherwise would be deemed Net Cash Proceeds
received in any fiscal year will be excluded from "Net Cash Proceeds" and will
not be subject to the restrictions contained in this Section 4.11.
Any Net Cash Proceeds that are not applied or invested as provided above
shall constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds
exceeds $5,000,000, the Company will offer to purchase Securities from all
Holders of the Securities at an offer price in cash in an amount equal to 100%
of the principal amount thereof, plus accrued and unpaid interest, if any, to
the date fixed for the closing of such offer, substantially in accordance with
the procedures for a repurchase upon a Change of Control described in Section
4.10 hereof. To the extent that the aggregate principal amount, plus accrued and
unpaid interest thereon, of the Securities tendered pursuant to such offer is
less than the Excess Proceeds, the Company may use such unused Excess Proceeds,
or a portion thereof, for general corporate purposes. If the aggregate principal
amount, plus accrued and unpaid interest thereon, of the Securities properly
tendered pursuant to such offer is greater than the Excess Proceeds, the Trustee
or its agent shall select the Securities to be purchased on a pro rata basis,
based upon the proportion of a Security properly tendered to the aggregate
amount of all Securities properly tendered, and shall promptly return to the
Holder thereof all Securities, or portions thereof, delivered but not purchased.
Upon completion of such offer to purchase, the amount of Excess Proceeds will be
reset at zero.
Exhibit 10(b)(i) Page 24
<PAGE> 31
SECTION 4.12. Payment of Taxes and Other Claims. The Company shall pay or
discharge or cause to be paid or discharged, before any penalty accrues thereon:
(a) all taxes, assessments and governmental charges levied or imposed upon the
Company or any Subsidiary upon the income, profits or property of the Company or
any Subsidiary; and (b) all lawful claims for labor, materials and supplies
which, if unpaid, would by law become a lien upon the property of the Company or
any Subsidiary; provided, however, that none of the Company or any Subsidiary
shall be required to pay or discharge or cause to be paid or discharged any such
tax, assessment, charge or claim the amount, applicability or validity of which
is being contested in good faith by appropriate proceedings and, if required by
GAAP, for which adequate provision has been made.
SECTION 4.13. Corporate Existence. Subject to Article 5 hereof, the Company
will do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence and the corporate, partnership or other
existence of any Subsidiary in accordance with the respective organizational
documents of such Subsidiary and the rights (charter and statutory), licenses
and franchises of the Company and its Subsidiaries, provided, however, that the
Company shall not be required to preserve any such right, license or franchise,
or the corporate, partnership or other existence of any Subsidiary, if the Board
of Directors of the Company shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company and its
Subsidiaries taken as a whole, and that the loss thereof is not adverse in any
material respect to the Holders.
SECTION 4.14. Maintenance of Properties and Insurance. The Company shall
cause all material properties owned by or leased to it or any Subsidiary and
necessary in the conduct of its business or the business of such Subsidiary to
be maintained and kept in normal condition, repair and working order and
supplied with all necessary equipment and shall cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as in
the judgment of the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided, however, that nothing in this Section 4.14 shall prevent the Company
or any Subsidiary from discontinuing the operation or maintenance of any such
properties or disposing of any of them, if such discontinuance or disposal is
determined by the Board of Directors of the Company or the Board of Directors of
the applicable Subsidiary to be desirable in the conduct of the business of the
Company or the business of such Subsidiary.
The Company shall provide or cause to be provided, for itself and any
Subsidiaries, insurance (including appropriate self-insurance) against loss or
damage of the kinds customarily insured against by corporations similarly
situated and owning like properties, including, but not limited to, public
liability insurance, with reputable insurers in such amounts with such
deductibles and by such methods as shall be customary for corporations similarly
situated in the industry.
Exhibit 10(b)(i) Page 25
<PAGE> 32
SECTION 4.15. Investment Company Act. The Company shall not become an
investment company subject to registration under the Investment Company Act of
1940, as amended.
SECTION 4.16. Covenant to Comply with Securities Laws Upon Purchase of
Securities. In connection with any offer to purchase or purchase of Securities
under Sections 4.10 or 4.11 hereof, the Company shall: (a) comply with all
tender offer rules under the Exchange Act which may then be applicable,
including Rule 14e-1 thereunder; and (b) otherwise comply with all federal and
state securities laws so as to permit the rights and obligations under Sections
4.10 and 4.11 hereof to be exercised in the time and in the manner specified in
Sections 4.10 and 4.11 hereof.
ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.01. When The Company May Merge or Transfer Assets. The Company
(i) may not consolidate with or merge into any other Person; (ii) may not,
directly or indirectly, in one or a series of transactions, transfer, convey,
sell, lease or otherwise dispose of all or substantially all of the properties
and assets of the Company and its Subsidiaries on a consolidated basis; (iii)
may not, and may not permit any Subsidiary to acquire capital stock of or other
ownership interests in any other Person such that such other Person becomes a
Subsidiary; and (iv) may not, and may not permit any Subsidiary to, (x)
purchase, lease or otherwise acquire all or substantially all of the properties
and assets of any Person or any existing business (whether existing as a
separate entity, subsidiary, division, unit or otherwise) of any Person or (y)
make any Investment in a Person that, as a consequence of such Investment,
becomes a Subsidiary of the Company, unless:
(a) the Company shall be the continuing Person, or the Person, if
other than the Company, formed by such consolidation or into which the
Company is merged or to which the properties and assets of the Company,
substantially as an entirety, are transferred shall be a corporation
organized and existing under the laws of the United States or any State
thereof or the District of Columbia and shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee, in
form satisfactory to the Trustee, all the obligations of the Company under
the Securities and this Indenture, and this Indenture remains in full force
and effect;
(b) immediately before and immediately after giving effect to such
transaction, no Event of Default and no Default shall have occurred and be
continuing; and
(c) immediately after giving effect to such transaction on a pro forma
basis the Consolidated Net Worth of the surviving entity shall be equal to
or greater than the Consolidated Net Worth of the Company immediately
before such transaction.
Notwithstanding the foregoing, any Subsidiary of the Company may
consolidate with, merge into or transfer all or part of its properties and
assets to the Company or any other Subsidiary or Subsidiaries of the Company.
Exhibit 10(b)(i) Page 26
<PAGE> 33
This Section 5.01 shall not apply to any transaction or series of
transactions involving the Company if a Change of Control shall result therefrom
and the Company is required to comply with the provisions of Section 4.10, in
which case Section 4.10 shall apply.
In connection with any consolidation, merger or transfer contemplated
hereby, the Company shall deliver, or cause to be delivered, to the Trustee, in
form and substance reasonably satisfactory to the Trustee, an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger or transfer and the supplemental indenture in respect thereto comply with
this Section 5.01 and that all conditions precedent herein provided for relating
to such transactions have been complied with.
SECTION 5.02. Successor Corporation Substituted. Upon any consolidation or
merger or any transfer of all or substantially all of the assets of the Company
in accordance with the foregoing, the successor corporation formed by such
consolidation or into which the Company is merged or to which such transfer is
made, shall succeed to, and be substituted for, and may exercise every right and
power of the Company under this Indenture with the same effect as if such
successor corporation had been named as the Company herein; and thereafter, the
Company shall be discharged and released from all obligations and covenants
under this Indenture and the Securities.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. Events of Default. An "Event of Default" occurs if one of the
following shall have occurred and be continuing:
(a) the Company defaults in the payment, when due and payable, of (i)
interest on any Security and the default continues for a period of 30 days,
or (ii) the principal of or premium, if any, on any Securities when the
same becomes due and payable at maturity, acceleration, on the Redemption
Date, on the Change of Control Payment Date, on any payment date respecting
an offer to purchase using Excess Proceeds or otherwise;
(b) the Company fails to comply with any of its covenants or
agreements in Article 5 of this Indenture;
(c) the Company fails to comply with any of its covenants or
agreements in the Securities or this Indenture (other than those referred
to in clauses (a) and (b) of this Section 6.01) and such failure continues
for 60 days after receipt by the Company of a Notice of Default;
(d) a default by the Company or any Subsidiary in the payment of any
principal of or interest on any Indebtedness (including the Revolving
Credit Facility) when due (after giving effect to any applicable grace
periods and waivers), the principal amount of which, individually or in the
aggregate, exceeds $10,000,000 (whether such Indebtedness exists as of the
Issue Date or is thereafter created) and such payment
Exhibit 10(b)(i) Page 27
<PAGE> 34
default shall have resulted in such Indebtedness becoming due prior to its
stated maturity;
(e) the Company or any Subsidiary pursuant to or within the meaning of
any Bankruptcy Law:
(i) commences a voluntary case or proceeding;
(ii) consents to the entry of an order for relief against it in an
involuntary case or proceeding;
(iii) consents to the appointment of a Custodian of it or for all
or substantially all of its property;
(iv) makes a general assignment for the benefit of its creditors;
or
(v) admits in writing its inability to pay its debts generally as
they become due;
(f) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(i) is for relief against the Company or any Subsidiary in an
involuntary case or proceeding;
(ii) appoints a Custodian of the Company or any Subsidiary for all
or substantially all of its properties;
(iii) orders the liquidation of the Company or any Subsidiary;
(iv) and, in each case, the order or decree remains unstayed and
in effect for 60 days; or
(g) the Company or any of its Subsidiaries fails to pay final
judgments or orders against it which require the payment of money, either
individually or in an aggregate amount, that is in excess of $10,000,000
and either (i) the commencement by any creditor of any enforcement
proceeding upon any such judgment or order, or (ii) such judgment or order
remains unsatisfied or unstayed for 60 days.
"Bankruptcy Law" means Title 11, United States Code, or any similar federal
or state law for the relief of debtors. "Custodian" means any receiver, trustee,
assignee, liquidator, sequestrator, custodian or similar official under any
Bankruptcy Law.
A Default under clause (c) above is not an Event of Default until the
Trustee notifies the Company or the Holders of at least 25% in aggregate
principal amount of the Securities at the time outstanding notify the Company
and the Trustee, of the Default and the Company does not cure such Default
within the time specified in clause (c) above after receipt of such notice.
Exhibit 10(b)(i) Page 28
<PAGE> 35
Any such notice must specify the Default, demand that it be remedied and state
that such notice is a "Notice of Default."
SECTION 6.02. Acceleration. If any Event of Default under clauses (a), (b),
(c), (d) or (g) of Section 6.01 occurs and is continuing, the Trustee may, by
notice to the Company, or the Holders of at least 25% in aggregate principal
amount of the Securities at the time outstanding may, by notice to the Company
and the Trustee (each, an "Acceleration Notice"), and the Trustee shall, upon
the request of such Holders, declare the principal of the Securities, premium,
if any, and accrued and unpaid interest to be due and payable immediately. If
any Event of Default under clauses (e) or (f) of Section 6.01 occurs, all
principal, premium, if any, and interest on the Securities will immediately
become due and payable without any declaration or other act on the part of the
Trustee or any Holder. The Holders of at least a majority in aggregate principal
amount of the Securities at the time outstanding by written notice to the
Trustee and to the Company may rescind an Acceleration Notice and its
consequences (except an acceleration due to a default in payment of the
principal on any of the Securities) if all existing Events of Default have been
cured or waived except non-payment of principal or interest that has become due
solely because of the acceleration. No such rescission shall affect any
subsequent Default or impair any right consequent thereto.
SECTION 6.03. Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy by proceeding at law or
in equity to collect the payment of principal of, premium, if any, or interest
on the Securities or to enforce the performance of any provision of the
Securities or this Indenture.
The Trustee may maintain a proceeding even if the Trustee does not possess
any of the Securities or does not produce any of the Securities in the
proceeding. A delay or omission by the Trustee or any Securityholder in
exercising any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of, or acquiescence in, the
Event of Default. No remedy is exclusive of any other remedy. All available
remedies are cumulative.
SECTION 6.04. Waiver of Past Defaults. The Holders of at least a majority
in aggregate principal amount of the Securities at the time outstanding, by
notice to the Trustee (and without notice to any other Securityholder), may
waive an existing Default or Event of Default and its consequences except (a) an
Event of Default described in Section 6.01(a) hereof, or (b) a Default in
respect of a provision that under Section 9.02 hereof cannot be amended without
the consent of each Securityholder affected. When a Default or Event of Default
is waived, it is deemed cured and shall cease to exist, but no such waiver shall
extend to any subsequent or other Default or Event of Default or impair any
consequent right.
Exhibit 10(b)(i) Page 29
<PAGE> 36
SECTION 6.05. Control by Majority. The Holders of at least a majority in
aggregate principal amount of the Securities at the time outstanding may direct
the time, method and place of conducting any proceeding for any remedy available
to the Trustee or of exercising any trust or power conferred on the Trustee.
However, the Trustee may refuse to follow any direction that conflicts with law
or this Indenture or that the Trustee determines in good faith is unduly
prejudicial to the rights of other Securityholders or would involve the Trustee
in personal liability. The Trustee may take any other action deemed proper by
the Trustee which is not inconsistent with such direction.
SECTION 6.06. Limitation on Suits. Except as provided in Section 6.07
hereof, a Holder may not pursue any remedy with respect to this Indenture or the
Securities unless:
(a) the Holder gives to the Trustee written notice stating that an
Event of Default is continuing;
(b) the Holders of at least 25% in aggregate principal amount of the
Securities at the time outstanding make a written request to the Trustee to
pursue the remedy;
(c) such Holder or Holders offer and, if requested, provide to the
Trustee reasonable security or indemnity against any loss, liability or
expense satisfactory to the Trustee;
(d) the Trustee does not comply with the request within 30 days after
receipt of the notice, the request and the offer of security or indemnity;
and
(e) the Holders of at least a majority in aggregate principal amount
of the Securities at the time outstanding do not give the Trustee a
direction inconsistent with the request during such 30-day period.
A Securityholder may not use this Indenture to prejudice the rights of any
other Securityholder or to obtain a preference or priority over any other
Securityholder.
SECTION 6.07. Rights of Holders to Receive Payment. Notwithstanding any
other provision of this Indenture, the right of any Holder to receive payment of
the principal amount, premium, if any, and interest, in respect of the
Securities held by such Holder, on or after the respective due dates expressed
in the Securities, any Redemption Date, any Change of Control Payment Date, or
any payment date respecting an obligation to purchase using Excess Proceeds, or
to bring suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected adversely without the
consent of each such Holder.
Exhibit 10(b)(i) Page 30
<PAGE> 37
SECTION 6.08. Collection Suit by Trustee. If an Event of Default described
in Section 6.01(a) hereof occurs and is continuing, the Trustee may recover
judgment in its own name and as trustee of an express trust against the Company
for the whole amount then due and owing (together with interest on any unpaid
interest to the extent lawful) with respect to the Securities and the amounts
provided for in Section 7.07 hereof.
SECTION 6.09. Trustee May File Proofs of Claim. In case of the pendency of
any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceeding relative to
the Company or the property of the Company, the Trustee shall be entitled and
empowered, by intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of the principal
amount, premium, if any, and interest on the Securities and to file such
other papers or documents as may be necessary or advisable in order to have
the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel) and of the Holders allowed in such judicial proceeding;
and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any Custodian in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay the
Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07 hereof.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
SECTION 6.10. Priorities. If the Trustee collects any money pursuant to
this Article 6, it shall pay out the money in the following order:
FIRST: to the Trustee for amounts due under Section 7.07 hereof;
SECOND: to holders of Senior Indebtedness to the extent required by Article
10;
THIRD: to Securityholders for amounts due and unpaid on the Securities for
the principal amount, premium, if any, Redemption Price or interest, if any, as
the case may be, ratably, without preference or priority of any kind, according
to such amounts due and payable on the Securities; and
FOURTH: the balance, if any, to the Company.
Exhibit 10(b)(i) Page 31
<PAGE> 38
The Trustee may fix a record date and payment date for any payment to
Securityholders pursuant to this Section 6.10.
SECTION 6.11. Undertaking for Costs. In any suit for the enforcement of any
right or remedy under this Indenture or in any suit against the Trustee for any
action taken or omitted by it as Trustee, a court in its discretion may require
the filing by any party litigant (other than the Trustee) in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees and expenses,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section 6.11
does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section
6.07 hereof or a suit by Holders of more than 10% in aggregate principal amount
of the Securities at the time outstanding.
ARTICLE 7
TRUSTEE
SECTION 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise the rights and powers vested in it by this Indenture and use
the same degree of care and skill in its exercise as a prudent Person would
exercise or use under the circumstances in the conduct of such Person's own
affairs.
(b) Except during the continuance of an Event of Default:
(i) the Trustee need perform only those duties that are
specifically set forth in this Indenture and no others; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statement and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture. However, in the case of any such certificate or
opinion which by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall examine certificates and
opinions to determine whether or not they conform to the requirements
of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own failure to act or its own willful misconduct,
except that:
(i) this paragraph (c) does not limit the effect of paragraph (b)
of this Section 7.01;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
Exhibit 10(b)(i) Page 32
<PAGE> 39
(iii) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05 hereof.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (e) of this Section 7.01
and Section 7.02.
(e) The Trustee may refuse to perform any duty or exercise any right
or power or extend or risk its own funds or otherwise incur any financial
liability unless it receives security or indemnity reasonably satisfactory
to it against any loss, liability or expense.
(f) Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The
Trustee shall be under no liability for interest on any money held by it
hereunder.
SECTION 7.02. Rights of Trustee.
(a) The Trustee may rely on any document believed by it to be genuine
and to have been signed or presented by the proper Person. The Trustee need
not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate and an Opinion of Counsel. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance
on such Officers' Certificate and Opinion of Counsel.
(c) The Trustee may act through agents and shall not be responsible
for the misconduct or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that the Trustee's conduct does not
constitute willful misconduct or negligence.
(e) The Trustee may consult with counsel of its selection and the
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon.
SECTION 7.03. Individual Rights of Trustee. The Trustee in its individual
or any other capacity may become the owner or pledgee of Securities and may
otherwise deal with the Company or its Affiliates with the same rights it would
have if it were not Trustee. Any Paying Agent, Registrar or co-registrar may do
the same with like rights. However, the Trustee must comply with Sections 7.10
and 7.11 hereof.
Exhibit 10(b)(i) Page 33
<PAGE> 40
SECTION 7.04. Trustee's Disclaimer. The Trustee makes no representation as
to the validity or adequacy of this Indenture or the Securities, it shall not be
accountable for the Company's use of the proceeds from the Securities, and it
shall not be responsible for any statement in this Indenture or the Securities
(other than its certificate of authentication) or in any document issued in
connection with the sale of the Securities, or the determination as to which
beneficial owners are entitled to receive any notices hereunder.
SECTION 7.05. Notice of Defaults. If a Default occurs and is continuing and
if it is known to the Trustee, the Trustee shall mail to each Securityholder as
their names and addresses appear on the Register notice of the Default within 90
days after it becomes known to the Trustee unless such Default shall have been
cured or waived. Except in the case of a Default described in Section 6.01(a)
hereof, the Trustee may withhold such notice if and so long as a committee of
Trust Officers in good faith determines that the withholding of such notice is
in the interests of Securityholders. The second sentence of this Section 7.05
shall be in lieu of the proviso to Section 315(b) of the TIA and said proviso is
hereby expressly excluded from this Indenture, as permitted by the TIA.
SECTION 7.06. Reports by Trustee to Holders. Within 60 days after each
April 15 beginning with April 15, 1997, the Trustee shall mail to each
Securityholder a brief report dated as of such April 15 in accordance with and
to the extent required under Section 313 of the TIA. The Trustee shall also
comply with Section 313(b)(2) of the TIA.
A copy of each report at the time of its mailing to Securityholders shall
be filed with the Company and, if applicable, the SEC and each stock exchange on
which the Securities are listed. The Company agrees to promptly notify the
Trustee whenever the Securities become listed on any stock exchange and of any
delisting thereof.
SECTION 7.07. Compensation and Indemnity. The Company agrees:
(a) To pay to the Trustee from time to time such compensation as shall
be agreed in writing between the Company and the Trustee for all services
rendered by it hereunder (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust);
(b) To reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the reasonable
compensation and the expenses, disbursements and advances of its agents and
counsel), including all reasonable expenses, disbursements and advances
incurred or made by the Trustee in connection with any membership on any
creditor's committee, except any such expense, disbursement or advance as
may be attributable to its negligence or bad faith; and
(c) To indemnify the Trustee, its officers, directors and
stockholders, for, and to hold it harmless against, any and all loss,
liability, damage, claim, or expense, including taxes (other than taxes
based on the income of the Trustee) incurred without negligence or bad
faith on its part, arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.
Exhibit 10(b)(i) Page 34
<PAGE> 41
The Trustee shall have a claim and lien prior to the Securities as to all
property and funds held by it hereunder for any amount owing it or any
predecessor Trustee pursuant to this Section 7.07, except with respect to funds
held in trust for the payment of principal of, premium, if any, or interest on
particular Securities.
The Company's payment obligations pursuant to this Section 7.07 will
survive the discharge of this Indenture. When the Trustee renders services or
incurs expenses after the occurrence of a Default specified in Section 6.01
hereof, the compensation for services and expenses are intended to constitute
expenses of administration under any Bankruptcy Law.
SECTION 7.08. Replacement of Trustee. The Trustee may resign by so
notifying the Company in writing at least 30 days prior to the date of the
proposed resignation; provided, however , no such resignation shall be effective
until a successor Trustee has accepted its appointment pursuant to this Section
7.08. The Holders of at least a majority in aggregate principal amount of the
Securities at the time outstanding may remove the Trustee by so notifying the
Trustee in writing and may appoint a successor Trustee subject to the consent of
the Company. The Trustee shall resign if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged bankrupt or insolvent;
(c) a receiver or public officer takes charge of the Trustee or its
property; or
(d) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint, by resolution of
its Board of Directors, a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon the resignation or removal
of the retiring Trustee shall become effective, and the successor Trustee shall
have all the rights, powers and duties of the Trustee under this Indenture. The
successor Trustee shall mail a notice of its succession to Securityholders.
Subject to payment of all amounts owing to the Trustee under Section 7.07 hereof
and subject further to its lien under Section 7.07, the retiring Trustee shall
promptly transfer all property held by it as Trustee to the successor Trustee.
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, then the retiring Trustee, the Company
or the Holders of at least a majority in aggregate principal amount of the
Securities at the time outstanding may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10 hereof, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Exhibit 10(b)(i) Page 35
<PAGE> 42
SECTION 7.09. Successor Trustee by Merger. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all its
corporate trust business or assets (including this Trusteeship) to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall at all times
satisfy the requirements of TIA Section 310(a)(1). The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition. No obligor (as such term is defined
in the TIA) upon the Securities or Person, directly or indirectly, controlling,
controlled by, or under common control with such obligor shall serve as the
Trustee with respect to the Securities. The Trustee shall comply with TIA
Section 310(b). In determining whether the Trustee has conflicting interests as
defined in TIA Section 310(b)(1), the provisions contained in the proviso to TIA
Section 310(b)(1) shall be deemed incorporated herein.
SECTION 7.11. Preferential Collection of Claims Against The Company. If and
when the Trustee shall be or become a creditor of the Company (or any other
obligor under the Securities), the Trustee shall be subject to the provisions of
the TIA regarding the collection of claims against the Company (or any such
other obligor).
ARTICLE 8
DISCHARGE OF INDENTURE AND DEFEASANCE
SECTION 8.01. Satisfaction and Discharge of Indenture. Subject to Sections
2.06 and 7.07 hereof, this Indenture shall cease to be of further effect with
respect to the Securities (except as to any surviving rights of registration of
transfer or exchange of Securities herein expressly provided for and rights to
receive payments of principal, premium, if any, and interest thereon) and the
Trustee, at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture, when: (a) all
Securities theretofore authenticated and delivered (other than (A) Securities
which have been destroyed, lost or stolen and which have been replaced or paid
as provided in Section 2.07 hereof; (B) Securities which are purchased pursuant
to Sections 4.10 or 4.11 hereof; and (C) Securities for whose payment money has
theretofore been deposited in trust or segregated and held in trust by the
Company and thereafter repaid to the Company or discharged from such trust, as
provided in Section 8.05) have been delivered to the Trustee for cancellation;
(b) the Company has paid or caused to be paid all other sums payable hereunder
by the Company with respect to the Securities; and (c) the Company has delivered
to the Trustee an Officers' Certificate and an Opinion of Counsel each stating
that all conditions precedent herein provided for relating to the satisfaction
and discharge of this Indenture have been complied with.
Exhibit 10(b)(i) Page 36
<PAGE> 43
SECTION 8.02. Defeasance. The Company may, at its option, at any time,
elect to have either clause (a) or (b) below applied to the outstanding
Securities upon compliance with the conditions set forth in Section 8.03 below:
(a) upon exercise of the option applicable to this clause (a), the Company shall
be deemed to have been released and discharged from its obligations with respect
to the outstanding Securities on the date the conditions set forth in Section
8.03 below are satisfied (hereinafter, "legal defeasance"). For this purpose,
the Company shall be deemed to have paid and discharged the entire indebtedness
represented by the outstanding Securities, which shall thereafter be deemed to
be "outstanding" only for the purposes of Section 8.04 and the other Sections of
this Indenture referred to in (i) and (ii) below, and to have satisfied all its
other obligations under such Securities and this Indenture (and the Trustee, on
demand of and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following which shall survive until
otherwise terminated or discharged hereunder (i) the rights of Holders of
outstanding Securities to receive solely from the trust fund described in
Section 8.03 and as more fully set forth in such Section, payments in respect of
the principal of (and premium, if any) and interest on such Securities when such
payments are due, (ii) the Company's obligations with respect to such Securities
under Sections 2.04, 2.06, 2.07, 2.09 and 4.05, (iii) the rights, powers,
trusts, duties and immunities of the Trustee hereunder and the Company's
obligations in connection therewith, and (iv) this Article 8; and (b) upon
exercise of the option applicable to this clause (b), the Company shall be
released and discharged from its obligations under any covenant contained in
Sections 4.02 through 4.04, Sections 4.06 through 4.16 and in Article 5 with
respect to the outstanding Securities on or after the date the conditions set
forth in Section 8.03 below are satisfied (hereinafter, "covenant defeasance"),
and the Securities shall thereafter be deemed to be not "outstanding" for the
purpose of any direction, waiver, consent or declaration or act of Holders of
Securities (and the consequences of any thereof) in connection with such
covenants, but shall continue to be deemed "outstanding" for all other purposes
hereunder. For this purpose, such covenant defeasance means that, with respect
to the outstanding Securities, the Company may omit to comply with and shall
have no liability in respect of any term, condition or limitation set forth in
any such covenant, whether directly or indirectly, by reason of any reference
elsewhere herein to any such covenant or by reason of any reference in any such
covenant to any other provision herein or in any other document and such
omission to comply shall not constitute a Default or an Event of Default under
Section 6.01, but, except as specified above, the remainder of this Indenture
and such Securities shall be unaffected thereby.
SECTION 8.03. Conditions to Defeasance. The following shall be the
conditions to application of either clause (a) or (b) of Section 8.02 above to
the outstanding Securities: (a) the Company shall irrevocably have deposited or
caused to be deposited with the Trustee as trust funds in trust for the purpose
of making the following payments, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of such Securities, money,
direct non-callable obligations of, or non-callable obligations guaranteed by,
the United States of America for the payment of which guarantee or obligation
the full faith and credit of the United States is pledged ("U.S. Government
Obligations") which through the scheduled payment of principal and interest in
respect thereof in accordance with their terms will provide cash in an amount,
or a combination of money and U.S. Government Obligations in such amounts, as
will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay and discharge and which shall be applied by the
Trustee to pay and discharge the principal of
Exhibit 10(b)(i) Page 37
<PAGE> 44
(and premium, if any) and interest on the outstanding Securities on the Stated
Maturity of such principal (and premium, if any) or installment of interest or
upon redemption on the day on which such payments are due and payable in
accordance with the terms of this Indenture and of such Securities; provided,
however, that the Trustee shall have been irrevocably instructed to apply such
money or the proceeds of such U.S. Government Obligations to said payments with
respect to the Securities; (b) in the case of a legal defeasance under clause
(a) of Section 8.02 above, the Company shall have delivered to the Trustee an
Opinion of Counsel stating that (i) the Company has received from, or there has
been published by, the Internal Revenue Service a ruling or (ii) since the date
hereof there has been a change in the applicable federal income tax law, in
either case to the effect that, and based thereon such opinion shall confirm
that, the Holders of the outstanding Securities will not recognize income, gain
or loss for federal income tax purposes as a result of such legal defeasance and
will be subject to federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such legal defeasance had
not occurred; (c) in the case of a covenant defeasance under clause (b) of
Section 8.02 above, the Company shall have delivered to the Trustee an Opinion
of Counsel to the effect that the Holders of the outstanding Securities will not
recognize income, gain or loss for federal income tax purposes as a result of
such covenant defeasance and will be subject to federal income tax on the same
amounts in the same manner and at the same times as would have been the case if
such covenant defeasance had not occurred; (d) no Default or Event of Default
with respect to the Securities shall have occurred and be continuing on the date
of such deposit or, insofar as subsection 6.01(e) or 6.01(f) is concerned, at
any time during the period ending on the 91st day after the date of such deposit
(it being understood that this condition shall not be deemed satisfied until the
expiration of such period); (e) such legal or covenant defeasance shall not
result in a breach or violation of, or constitute a default under, this
Indenture or any other material agreement or instrument to which the Company is
a party or by which the Company is bound; (f) the Company shall have paid or
duly provided for payment of all amounts due to the Trustee pursuant to this
Indenture; (g) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that all preference periods applicable to the defeasance
trust have expired under applicable bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally; and (h) the Company shall
have delivered to the Trustee an Officers' Certificate and an Opinion of
Counsel, each stating that all conditions precedent provided for relating to the
legal or covenant defeasance, as the case may be, under Section 8.02 above have
been complied with.
SECTION 8.04. Deposited Money and U.S. Government Obligations to be Held in
Trust; Miscellaneous Provisions. Subject to Section 8.05, all money and U.S.
Government Obligations (including the proceeds thereof) deposited with the
Trustee pursuant to Section 8.03 in respect of the outstanding Securities shall
be held in a trust and applied by the Trustee, in accordance with the provisions
of such Securities and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as its own Paying Agent)
as the Trustee may determine, to the Holders of such Securities of all sums due
and to become due thereon in respect of principal (and premium, if any) and
interest, but such money need not be segregated from other funds except to the
extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 8.03 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of outstanding Securities.
Exhibit 10(b)(i) Page 38
<PAGE> 45
SECTION 8.05. Repayment to the Company. Subject to Section 7.07, the
Trustee and the Paying Agent shall promptly pay to the Company upon written
request any excess money or U.S. Government Obligations held by them at any
time. The Trustee and the Paying Agent shall return to the Company upon written
request any money held by them for the payment of any amount with respect to the
Securities that remain unclaimed for two years; provided, however, that the
Trustee or such Paying Agent, before being required to make such return, may, in
the name and at the expense of the Company, cause to be published once in The
Wall Street Journal or another daily newspaper of national circulation or mail
to each such Holder notice that such money or securities remain unclaimed and
that, after a date specified therein, which shall not be less than 30 days from
the date of such mailing, any unclaimed money or securities then remaining will
be returned to the Company. After return to the Company, Holders entitled to the
money must look to the Company for payment as general creditors unless an
applicable abandoned property law designates another Person, and all liability
of the Trustee and such Paying Agent with respect to such money shall cease.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is unable to
apply any money in accordance with Section 8.03 by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, then the Company's obligations under
this Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to Section 8.03 until such time as the Trustee or
Paying Agent is permitted to apply all such money in accordance with Section
8.03; provided, however, that if the Company makes any payment of interest on or
principal of any Security following the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Securities to
receive such payment from the money held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENTS
SECTION 9.01. Without Consent of Holders. From time to time the Company,
when authorized by a resolution of its Board of Directors, and the Trustee,
without notice to or the consent of the holders of the Securities issued
hereunder, may amend or supplement this Indenture or the Securities as follows:
(a) to cure any ambiguity, defect or inconsistency;
(b) to comply with Article 5 hereof;
(c) to provide for uncertificated Securities in addition to or in
place of certificated Securities so long as such uncertificated Securities
are in registered form for purposes of the Internal Revenue Code of 1986,
as amended;
(d) to make any other change that does not adversely affect the rights
of any Securityholder; or
(e) to comply with any requirement of the SEC in connection with the
qualification of this Indenture under the TIA.
Exhibit 10(b)(i) Page 39
<PAGE> 46
The Trustee is hereby authorized and directed to join with the Company in
the execution of any supplemental indenture authorized or permitted by the terms
of this Indenture and to make any further appropriate agreements and
stipulations which may be therein contained, but the Trustee shall not be
obligated to enter into any such supplemental indenture which affects its own
rights, duties or immunities under this Indenture.
After an amendment under this Section 9.01 becomes effective, the Company
shall mail to each Holder a notice briefly describing the amendment. Any failure
of the Company to mail such notice, or any defect therein, shall not, however,
in any way impair or affect the validity of any such amendment or waiver.
SECTION 9.02. With Consent of Holders. With the written consent of the
Holders of at least a majority in aggregate principal amount of the Securities
at the time outstanding, the Company and the Trustee may amend this Indenture or
the Securities or may waive future compliance by the Company with any provisions
of this Indenture or the Securities. However, without the consent of each
Securityholder affected, a waiver or an amendment to this Indenture or the
Securities may not:
(a) reduce the percentage of principal amount of the Securities whose
Holders must consent to an amendment or waiver;
(b) make any change to the stated maturity of the principal of,
premium, if any, or any interest on, the Securities or any Redemption Price
thereof, or impair the right to institute suit for the enforcement of any
such payment or make any Security payable in money or securities other than
that stated in the Security;
(c) waive a default in the payment of the principal of, premium, if
any, or interest on, any Security;
(d) make any change in the provisions of Sections 4.10, 4.11, 6.04 or
6.07 hereof;
(e) make any change to Sections 9.01 or 9.02 hereof; and
(f) modify the provisions of Article 10 hereof in a manner adverse to
the Holders.
For the purposes of determining whether Holders of the required principal amount
have consented to such waiver, modification or action, Securities of a Holder
which are tendered or offered for sale to or are repurchased, redeemed or
retired by the Company or any of its Subsidiaries or any of their Affiliates
substantially contemporaneously or in connection with the solicitation of such
consent shall be disregarded.
It shall not be necessary for the consent of the Holders under this Section
9.02 to approve the particular form of any proposed amendment, but it shall be
sufficient if such consent approves the substance thereof.
Exhibit 10(b)(i) Page 40
<PAGE> 47
In the event that certain Holders are willing to defer or waive certain
obligations of the Company hereunder with respect to Securities held by them,
such deferral or waiver shall not be deemed to affect any other Holder who
receives the subject payment or performance in a timely manner.
After an amendment or waiver under this Section 9.02 becomes effective, the
Company shall mail to each Holder a notice briefly describing the amendment or
waiver. Any failure of the Company to mail such notice, or any defect therein,
shall not, however, in any way impair or affect the validity of any such
amendment or waiver.
An amendment under this Section 9.02 may not make any change in Article 10
or the definition of Senior Indebtedness or Revolving Credit Facility unless the
holders of Senior Indebtedness, pursuant to its terms, consent to the change.
The Trustee shall give prompt notice to the holders of any Senior Indebtedness
of any proposed amendment, waiver, or supplement under this Section 9.02 and a
copy of the final form thereof.
SECTION 9.03. Compliance with Trust Indenture Act. Every supplemental
indenture executed pursuant to this Article 9 shall comply with the TIA.
SECTION 9.04. Revocation and Effect of Consents, Waivers and Actions. Until
an amendment, waiver or other action by Holders becomes effective, a consent to
it or any other action by a Holder of a Security hereunder is a continuing
consent by the Holder and every subsequent Holder of that Security or portion of
the Security that evidences the same obligation as the consenting Holder's
Security, even if notation of the consent, waiver or action is not made on the
Security. However, any such Holder or subsequent Holder may revoke the consent,
waiver or action as to such Holder's Security or portion of the Security if the
Trustee receives the notice of revocation before the consent of the requisite
aggregate principal amount of the Securities at the time outstanding has been
obtained and not revoked. After an amendment, waiver or action becomes
effective, it shall bind every Securityholder, except as provided in Section
9.02 hereof.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to consent to any amendment or
waiver. If a record date is fixed, then, notwithstanding the first two sentences
of the immediately preceding paragraph, those Persons who were Holders at such
record date (or their duly designated proxies), and only those Persons, shall be
entitled to consent to such amendment, supplement or waiver or to revoke any
consent previously given, whether or not such Persons continue to be Holders
after such record date. No such consent shall be valid or effective for more
than six months after such record date.
Exhibit 10(b)(i) Page 41
<PAGE> 48
SECTION 9.05. Notation on or Exchange of Securities. Securities
authenticated and made available for delivery after the execution of any
supplemental indenture pursuant to this Article 9 may, and shall, if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Trustee and the
Board of Directors of the Company, to any such supplemental indenture may be
prepared and executed by the Company and authenticated and made available for
delivery by the Trustee in exchange for outstanding Securities.
SECTION 9.06. Trustee to Sign Supplemental Indentures. The Trustee shall
sign any supplemental indenture authorized pursuant to this Article 9 if the
supplemental indenture does not adversely affect the rights, duties, liabilities
or immunities of the Trustee. If it does, the Trustee may, but need not, sign
it. In signing such amendment the Trustee shall be entitled to receive, and
shall be fully protected in relying upon, an Officers' Certificate and Opinion
of Counsel stating that such supplemental indenture is authorized or permitted
by this Indenture.
SECTION 9.07. Effect of Supplemental Indentures. Upon the execution of any
supplemental indenture under this Article 9, this Indenture shall be modified in
accordance therewith, and such supplemental indenture shall form a part of this
Indenture for all purposes; and every Holder of Securities theretofore or
thereafter authenticated and made available for delivery hereunder shall be
bound thereby.
ARTICLE 10
SUBORDINATION
SECTION 10.01. Securities Subordinate to Senior Indebtedness. Anything in
this Indenture or the Securities to the contrary notwithstanding, the Company
covenants and agrees, and each Holder of a Security, by his acceptance thereof,
likewise covenants and agrees, that, to the extent and in the manner hereinafter
set forth in this Article, the Indebtedness represented by the Securities and
the payment of the principal of (and premium, if any) and interest on (including
any payments required under any provision of this Indenture and the Securities,
including Section 4.10 and 4.11) each and all of the Securities and other
amounts owed by the Company under this Indenture and the Securities are hereby
expressly made subordinate and subject in right of payment to the prior payment
in full in cash of all Senior Indebtedness (including any interest accruing
after the occurrence of an Event of Default under Section 6.01(e) or (f),
whether or not such interest is an allowed claim enforceable against the debtor
in a case brought under the Bankruptcy Code).
As used in this Indenture and the Securities, "paying the Securities",
"payment of the Securities" and similar phrases mean any direct or indirect
payment or distribution by or on behalf of the Company on account of principal
of (or premium, if any) or interest on the Securities or other amounts owed by
the Company under this Indenture and the Securities (other than amounts owing to
the Trustee pursuant to Section 7.07 hereof) or to acquire or repurchase
pursuant to the provisions of this Indenture or redeem, retire or defease all or
any portion of the Securities or to make any deposit, payment or transfer in
furtherance of any of the foregoing.
Exhibit 10(b)(i) Page 42
<PAGE> 49
This Article 10 shall constitute a continuing offer to all Persons who
become holders of, or continue to hold, Senior Indebtedness, and such provisions
are made for the benefit of the holders of Senior Indebtedness and such holders
are made obligees hereunder and any one or more of them may enforce such
provisions. Holders of Senior Indebtedness need not prove reliance on the
subordination provisions hereof.
SECTION 10.02. Payment Over of Proceeds upon Dissolution, etc. In the event
of (a) any insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding in connection
therewith, relative to the Company or to its creditors, as such, or to its
assets, or (b) any liquidation, dissolution or other winding up of the Company,
whether voluntary or involuntary and whether or not involving insolvency or
bankruptcy, or (c) any assignment for the benefit of creditors or any other
marshalling of assets and liabilities of the Company, whether voluntary or
involuntary and whether or not involving insolvency or bankruptcy, then and in
any such event:
(1) the holders of Senior Indebtedness shall be entitled to receive
payment in full in cash of all amounts due or to become due on or in
respect of all Senior Indebtedness, or provision shall be made for such
payment in accordance with the instruments governing such Senior
Indebtedness, before the Holders of the Securities are entitled to receive
any payment on account of principal of (or premium, if any) or interest on
the Securities or other amounts owed by the Company under this Indenture
and the Securities (other than amounts owing to the Trustee pursuant to
Section 7.07 hereof); and
(2) any payment or distribution of assets or securities of the Company
of any kind or character, whether in cash, property or securities, to which
the Holders or the Trustee would be entitled but for the provisions of this
Article 10, including any such payment or distribution which may be payable
or deliverable by reason of the payment of any other Indebtedness of the
Company being subordinated to the payment of the Securities (except for any
such payment or distribution (x) authorized by an order or decree giving
effect, and stating in such order or decree that effect is given, to the
subordination of the Securities to the Senior Indebtedness, and made by a
court of competent jurisdiction in a reorganization proceeding under any
applicable bankruptcy law, or (y) of securities that are subordinated, to
at least the same extent as the Securities, to the payment in cash of all
Senior Indebtedness then outstanding), shall be paid by the liquidating
trustee or agent or other Person making such payment or distribution,
whether a trustee in bankruptcy, a receiver or liquidating trustee or
otherwise, directly to the holders of Senior Indebtedness or their
representative or representatives, ratably according to the aggregate
amounts remaining unpaid on the Senior Indebtedness, for application to the
payment of all Senior Indebtedness remaining unpaid, to the extent
necessary to pay all Senior Indebtedness in full in cash, after giving
effect to any concurrent payment or distribution to the holders of such
Senior Indebtedness; and
(3) in the event that, notwithstanding the foregoing provisions of
this Section, the Trustee or the Holder of any Security shall have received
any such
Exhibit 10(b)(i) Page 43
<PAGE> 50
payment or distribution of assets or securities of the Company of any kind
or character, whether in cash, property or securities (other than payments
or distributions authorized by an order or decree giving effect to the
subordination of payments or distributions of securities that are
subordinated to the payment in cash of all Senior Indebtedness, all as
described in paragraph (2) above), including any such payment or
distribution which may be payable or deliverable by reason of the payment
of any other Indebtedness of the Company being subordinated to the payment
of the Securities, before all Senior Indebtedness is paid in full in cash
or payment thereof provided for, then and in such event such payment or
distribution shall be received and held in trust for the benefit of, and
shall be paid over or delivered to, the holders of Senior Indebtedness or
their representative or representatives, ratably according to the aggregate
amount remaining unpaid on the Senior Indebtedness, for application to the
payment of all Senior Indebtedness remaining unpaid, to the extent
necessary to pay all Senior Indebtedness in full in cash, after giving
effect to any concurrent payment or distribution to or for the holders of
Senior Indebtedness.
The consolidation of the Company with, or the merger of the Company into,
another corporation or the liquidation or dissolution of the Company following
the conveyance, transfer or lease of its properties and assets substantially as
an entirety to another corporation upon the terms and conditions set forth in
Article 5 shall not be deemed a dissolution, winding up, liquidation,
reorganization, assignment for the benefit of creditors or marshalling of assets
and liabilities of the Company for the purposes of this Section if the
corporation formed by such consolidation or into which the Company is merged or
the corporation which acquires substantially as an entirety, as the case may be,
shall, as a part of such consolidation, merger, conveyance, transfer or lease,
comply with the conditions set forth in Article 5.
Exhibit 10(b)(i) Page 44
<PAGE> 51
SECTION 10.03. No Payment When Senior Indebtedness in Default.
(i) In the event of and during the continuation of any default in the
payment of any Senior Indebtedness whether at maturity, upon acceleration
or otherwise beyond any applicable grace period with respect thereto
("payment default"), and written notice (the "Payment Notice") thereof
shall have been given to each of the Company and the Trustee by (a) in the
case of the Revolving Credit Facility, the bank agent under the Revolving
Credit Facility, or (b) in the case of any other issue of Senior
Indebtedness, the representative for, or the holders of at least a majority
of the principal amount of, the Senior Indebtedness, then no payment shall
be made by or on behalf of the Company on the Securities (except from those
funds held in trust for the benefit of the Holders of any Securities to
such Holders pursuant to the provisions of Article 3 or Article 8) until
the date, if any, on which such default or event of default is waived by
the holders of such Senior Indebtedness or otherwise cured or has ceased to
exist or the Senior Indebtedness to which such default or event of default
relates is discharged by payment in full in cash.
(ii) In the event that any other event of default with respect to any
Senior Indebtedness shall have occurred and be continuing that permits the
holders of such Senior Indebtedness (or a trustee on behalf of such
holders) to declare such Senior Indebtedness due and payable prior to the
date on which it would otherwise have become due and payable, and written
notice thereof shall have been given to each of the Company and the Trustee
by (a) in the case of the Revolving Credit Facility, the bank agent under
the Revolving Credit Facility, or (b) in the case of any other issue of
Senior Indebtedness, the representative for, or the holders of at least a
majority of the principal amount of Senior Indebtedness ("Covenant Default
Notice") then no payment shall be made by or on behalf of the Company on
the Securities (except from those funds held in trust for the benefit of
the Holders of any Securities to such Holders pursuant to the provisions of
Article 3 or Article 8) until the earlier of (x) 179 days after the date on
which a Covenant Default Notice shall have been given and (y) the date, if
any, on which such default or event of default is waived by the holders of
such Senior Indebtedness or otherwise cured or has ceased to exist or the
Senior Indebtedness to which such default or event of default relates is
discharged by payment in full in cash (provided, however, that further
written notice relating to the same or any other event of default with
respect to any Senior Indebtedness received by the Company or the Trustee
within 360 days after such prior receipt of a Covenant Default Notice shall
not be effective to further prohibit such payments, provided, further, that
notwithstanding anything herein to the contrary, there must be at least 181
consecutive days in any 360 day period in which no limitation on payment
pursuant to this Section 10.03 is in effect, and provided, further, that
further written notice relating to the same default or event of default or
any other default or event of default specified above existing or
continuing on the date of receipt of the Covenant Default Notice, whether
or not received by the Company or Trustee within 360 days after prior
receipt of a Covenant Default Notice, shall not be effective to further
prohibit such payments unless all defaults and events of default shall have
been cured or waived after such date for a period of not less than 90
consecutive days).
Exhibit 10(b)(i) Page 45
<PAGE> 52
In the event that, notwithstanding the foregoing, any payment or
distribution shall be made by or on behalf of the Company to the Trustee or
the Holder of any Security prohibited by the foregoing provisions of this
Section 10.03, then and in such event such payment or distribution shall be
received and held in trust for the benefit of, and shall be paid over or
delivered to, the holders of Senior Indebtedness or their representative or
representatives, ratably according to the aggregate amounts remaining
unpaid on account of the Senior Indebtedness, for application to the
payment of all Senior Indebtedness remaining unpaid, to the extent
necessary to pay all Senior Indebtedness in full in cash, after giving
effect to any concurrent payment or distribution to or for the holders of
Senior Indebtedness.
The provisions of this Section shall not apply to any payment with
respect to which Section 10.02 would be applicable.
SECTION 10.04. Payment Permitted If No Default. Nothing contained in this
Article or elsewhere in this Indenture or in any of the Securities shall prevent
the Company, at any time except under the circumstances described in Section
10.02 or under the conditions described in Section 10.03, from making payments
at any time of principal of (and premium, if any) or interest on the Securities
or other amounts owed by the Company under this Indenture and the Securities
(other than amounts owing to the Trustee pursuant to Section 7.07 hereof).
SECTION 10.05. Subrogation to Rights of Holders of Senior Indebtedness. No
payment or distributions to the holders of Senior Indebtedness or their
representatives pursuant to the provisions of this Article 10 shall entitle any
Holders of the Securities or the Trustee to exercise any right of subrogation in
respect thereof until the Senior Indebtedness shall have been paid in full.
SECTION 10.06. Provisions Solely to Define Relative Rights. The provisions
of this Article 10 are and are intended solely for the purpose of defining the
relative rights of the Holders of the Securities on the one hand and the holders
of Senior Indebtedness on the other hand. Nothing contained in this Article or
elsewhere in this Indenture or in the Securities is intended to or shall (a)
impair, as among the Company, its creditors other than holders of Senior
Indebtedness and the Holders of the Securities, the obligation of the Company,
which is absolute and unconditional, to pay to the Holders of the Securities the
principal of (and premium, if any) and interest on the Securities as and when
the same shall become due and payable in accordance with their terms; or (b)
affect the relative rights against the Company of the Holders of the Securities
and creditors of the Company other than the holders of Senior Indebtedness; or
(c) prevent the Trustee or the Holder of any Security from exercising all
remedies otherwise permitted by applicable law upon default under this
Indenture, subject to the express limitations set forth in Article 6 and to the
rights, if any, under this Article 10 of the holders of Senior Indebtedness.
SECTION 10.07. Trustee to Effectuate Subordination; Further Actions. Each
Holder of a Security by his acceptance thereof authorizes and directs the
Trustee on his behalf to take such action as may be necessary or appropriate to
effectuate the subordination provided in this Article 10 and appoints the
Trustee his attorney-in-fact for any and all such purposes.
Exhibit 10(b)(i) Page 46
<PAGE> 53
If any proceeding referred to in Section 10.02(a), (b) or (c) above is
commenced by or against the Company, the Trustee and Holders of the Securities
shall duly and promptly take such action as the holders of Senior Indebtedness
may reasonably request to collect on the Securities and to file appropriate
claims or proofs of claim in respect of the Securities and to collect and
receive any and all payments which may be payable upon or with respect to the
Securities.
Holders of Senior Indebtedness or their representatives are hereby
authorized to demand specific performance of the provisions of this Article,
whether or not the Trustee or the Company shall have complied with any of the
provisions hereof applicable to it, at any time when the Trustee or any Holder
of Securities shall have failed to comply with any of the provisions of this
Article applicable to it. The Trustee and Holders of the Securities hereby
irrevocably waive any defense based on the adequacy of a remedy at law, which
might be asserted as a bar to such remedy of specific performance.
The Trustee and Holders of the Securities and the Company each will, at the
Company's expense and at any time and from time to time, promptly execute and
deliver all further instruments and documents, and take all further action, that
may reasonably be necessary, or that the holders of Senior Indebtedness or their
representatives may reasonably request, in order to protect any right or
interest granted or purported to be granted hereby or to enable the holders of
Senior Indebtedness or any of their representatives to exercise and enforce its
rights and remedies hereunder.
SECTION 10.08. No Waiver of Subordination Provisions. No right of any
present or future holder of any Senior Indebtedness to enforce subordination as
herein provided shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Company or by any act or failure to
act, in good faith, by any such holder, or by any noncompliance by the Company
with the terms, provisions and covenants of this Indenture, regardless of any
knowledge thereof any such holder may have or be otherwise charged with.
Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Indebtedness may, at any time and from time to time, without
the consent of or notice to the Trustee or the Holders of the Securities,
without incurring responsibility to the Holders of the Securities and without
impairing or releasing the subordination provided in this Article 10 or the
obligations hereunder of the Holders of the Securities to the holders of Senior
Indebtedness, do any one or more of the following: (a) change the manner, place
or terms of payment or extend the time of payment of or renew, refinance or
refund Senior Indebtedness or any instrument evidencing the same or any
agreement under which Senior Indebtedness is outstanding; (b) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing Senior Indebtedness; (c) release any Person liable in any manner for
the collection of Senior Indebtedness; and (d) exercise or refrain from
exercising any rights against the Company and any other Person.
Exhibit 10(b)(i) Page 47
<PAGE> 54
SECTION 10.09. Notice to Trustee. The Company shall give prompt written
notice to the Trustee of any fact known to the Company which would prohibit the
making of any payment to or by the Trustee in respect of the Securities.
Notwithstanding the provisions of this Article 10 or any other provision of this
Indenture, the Trustee shall not be charged with knowledge of the existence of
any facts which would prohibit the making of any payment to or by the Trustee in
respect of the Securities, unless and until the Trustee shall have received
written notice thereof from the Company or a holder of Senior Indebtedness or
from any trustee, fiduciary or agent therefor; and, prior to the receipt of any
such written notice, the Trustee, subject to the provisions of Section 7.05,
shall be entitled in all respects to assume that no such facts exist; provided,
however, that if the Trustee shall not have received the notice provided for in
this Section 10.09 at least two Business Days prior to the date upon which by
the terms hereof any money may become payable for any purpose (including,
without limitation, the payment of the principal of (and premium, if any) or
interest on any Security), then, anything herein contained to the contrary
notwithstanding, the Trustee shall have full power and authority to receive such
money and to apply the same to the purpose for which such money was received and
shall not be affected by any notice to the contrary which may be received by it
within two Business Days prior to such date.
Subject to the provisions of Section 7.05, the Trustee shall be entitled to
rely on the delivery to it of a written notice by a Person representing himself
to be a holder of Senior Indebtedness (or a trustee, fiduciary or agent
therefor) to establish that such notice has been given by a holder of Senior
Indebtedness (or a trustee, fiduciary or agent therefor). In the event that the
Trustee determines in good faith that further evidence is required with respect
to the right of any Person as a holder of Senior Indebtedness to participate in
any payment or distribution pursuant to this Article 10, the Trustee may request
that such Person furnish evidence to the reasonable satisfaction of the Trustee
as to the amount of Senior Indebtedness held by such Person, the extent to which
such Person is entitled to participate in such payment or distribution and any
other facts pertinent to the rights of such Person under this Article 10, and if
such evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.
SECTION 10.10. Reliance on Judicial Order or Certificate of Liquidating
Agent. Upon any payment or distribution of assets or securities of the Company
referred to in Section 10.02, the Trustee, subject to the provisions of Section
7.05, and the Holders of the Securities shall be entitled to rely upon any order
or decree entered by any court of competent jurisdiction in which such
insolvency, bankruptcy, receivership, liquidation, reorganization, dissolution,
winding up or similar case or proceeding is pending, or a certificate of the
trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for
the benefit of creditors, agent or other Person making such payment or
distribution, delivered to the Trustee or to the Holders of Securities, for the
purpose of ascertaining the Persons entitled to participate in such payment or
distribution, the holders of Senior Indebtedness and other indebtedness of the
Company, the amount thereof or payment thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 10.
Exhibit 10(b)(i) Page 48
<PAGE> 55
SECTION 10.11. Rights of Trustee as a Holder of Senior Indebtedness;
Preservation of Trustee's Rights. The Trustee in its individual capacity shall
be entitled to all the rights set forth in this Article 10 with respect to any
Senior Indebtedness which may at any time be held by it, to the same extent as
any other holder of Senior Indebtedness, and nothing in this Indenture shall
deprive the Trustee of any of its rights as such holder.
Nothing in this Article 10 shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 7.07.
SECTION 10.12. Article Applicable to Paying Agents. In case at any time any
Paying Agent other than the Trustee shall have been appointed by the Company and
be then acting hereunder, the term "Trustee" as used in this Article shall in
such case (unless the context otherwise requires) be construed as extending to
and including such Paying Agent within its meaning as fully for all intents and
purposes as if such Paying Agent were named in this Article in addition to or in
place of the Trustee; provided, however, that the proviso clause in Section
10.09 and Section 10.10 shall not apply to the Company or any Affiliate of the
Company if it or such Affiliate acts as Paying Agent.
SECTION 10.13. Trust Moneys Not Subordinated. Notwithstanding anything
contained in this Indenture to the contrary, payments from money or the proceeds
of U.S. Government Obligations held in trust under Article 8 by the Trustee for
the payment of principal, premium, if any, and interest on the Securities shall
not be subordinated to the prior payment of any Senior Indebtedness or subject
to the restrictions set forth in this Article 10, and none of the
Securityholders shall be obligated to pay over any such amount to the Company or
any holder of Senior Indebtedness or any other creditor of the Company.
SECTION 10.14. Trustee Not Fiduciary for Holders of Senior Indebtedness.
The Trustee shall not be deemed to owe any fiduciary duty to the holders of
Senior Indebtedness and shall not be liable to any such holders if the Trustee
shall in good faith mistakenly pay over or distribute to Holders or to the
Company or to any other person cash, property or securities to which any holders
of Senior Indebtedness shall be entitled by virtue of this Article 10 or
otherwise. With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants or obligations as
are specifically set forth in this Article 10 and no implied covenants or
obligations with respect to holders of Senior Indebtedness shall be read into
this Indenture against the Trustee.
SECTION 10.15. Waiver. The Trustee, Holders of the Securities and the
Company each hereby waives promptness, diligence, notice of acceptance and any
other notice with respect to any of the Senior Indebtedness and this Article and
any requirement that the holders of Senior Indebtedness or any of their
representatives protect, secure, perfect or insure any security interest or lien
or any property subject thereto or exhaust any right to take any action against
the Company or any other person or entity or any collateral.
SECTION 10.16. No Waiver; Remedies. No failure on the part of the holders
of Senior Indebtedness or any of their representatives to exercise, and no delay
in exercising, any right hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other
Exhibit 10(b)(i) Page 49
<PAGE> 56
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies or conflicts with the duties imposed by operation of
subsection (c) of Section 318 of the TIA, the imposed duties shall control. The
provisions of Sections 310 to 317, inclusive, of the TIA that impose duties on
any Person (including provisions automatically deemed included in an indenture
unless the indenture provides that such provisions are excluded) are a part of
and govern this Indenture, except as, and to the extent, expressly excluded from
this Indenture, as permitted by the TIA.
SECTION 11.02. Notices. Any notice or communication shall be in writing and
delivered in Person or mailed by first class mail, postage prepaid, addressed as
follows:
If to the Company:
Consolidated Stores Corporation
300 Phillipi Road
P.O. Box 28512
Columbus, Ohio 43228-0512
Attention: General Counsel
If to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Trustee Administration
The Company, or the Trustee by notice to the other may designate additional
or different addresses for subsequent notices or communications.
Any notice or communication given to a Securityholder shall be mailed to
the Securityholder at the Securityholder's address as it appears on the
registration books of the Registrar and shall be sufficiently given if so mailed
within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any defect
in it shall not affect its sufficiency with respect to other Securityholders. If
a notice or communication is mailed in the manner provided above, it is duly
given, whether or not received by the addressee.
If the Company mails a notice or communication to the Securityholders, it
shall mail a copy to the Trustee and each Registrar, Paying Agent or
co-registrar.
Exhibit 10(b)(i) Page 50
<PAGE> 57
SECTION 11.03. Communication by Holders with Other Holders. Securityholders
may communicate pursuant to TIA Section 312(b) with other Securityholders with
respect to their rights under this Indenture or the Securities. The Company, the
Trustee, the Registrar, the Paying Agent and anyone else shall have the
protection of TIA Section 312(c).
SECTION 11.04. Certificate and Opinion as to Conditions Precedent. Upon any
request or application by the Company to the Trustee to take any action under
this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(b) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 11.05. Statements Required in Certificate or Opinion. Each
Officers' Certificate and Opinion of Counsel with respect to compliance with a
covenant or condition provided for in this Indenture shall include:
(a) a statement that each Person making such Officers' Certificate or
Opinion of Counsel has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
Officers' Certificate or Opinion of Counsel are based;
(c) a statement that, in the opinion of each such Person, he has made
such examination or investigation as is necessary to enable such Person to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement that, in the opinion of such Person, such covenant or
condition has been complied with; provided, however, that with respect to
matters of fact, an Opinion of Counsel may rely on an Officers' Certificate
or certificates of public officials.
SECTION 11.06. Separability Clause. In case any provision in this Indenture
or in the Securities shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 11.07. Rules by Trustee, Paying Agent and Registrar . The Trustee
may make reasonable rules for meetings of Securityholders or action by
Securityholders. The Registrar and Paying Agent may make reasonable rules for
their functions.
Exhibit 10(b)(i) Page 51
<PAGE> 58
SECTION 11.08. Legal Holidays. A "Legal Holiday" is any day other than a
Business Day. If any specified date (including a date for giving notice) is a
Legal Holiday, the action shall be taken on the next succeeding day that is not
a Legal Holiday, and, if the action to be taken on such date is a payment in
respect of the Securities, no principal, premium, if any, or interest
installment shall accrue for the intervening period.
SECTION 11.09. Governing Law. THIS INDENTURE AND THE SECURITIES SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
SECTION 11.10. No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Securities or this Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Securityholder shall waive and release
the directors, officers, employees or stockholders, as such, of the Company from
all such liability for obligations of the Company under the Securities or this
Indenture. The waiver and release shall be part of the consideration for the
issue of the Securities.
SECTION 11.11. Successors. All agreements of the Company in this Indenture
and the Securities shall bind its successors. All agreements of the Trustee in
this Indenture shall bind its successors.
SECTION 11.12. Multiple Originals. The parties may sign any number of
copies of this Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement. One signed copy is enough to prove this
Indenture.
Exhibit 10(b)(i) Page 52
<PAGE> 59
SIGNATURES
IN WITNESS WHEREOF, the undersigned, being duly authorized, have executed
this Indenture on behalf of the respective parties hereto as of the date first
above written.
CONSOLIDATED STORES CORPORATION
The Company
By:
Name:
Title:
THE BANK OF NEW YORK
The Trustee
By:
Name:
Title:
Exhibit 10(b)(i) Page 53
<PAGE> 1
EXHIBIT 10(c)
SHORT TERM LOAN AGREEMENT
Dated as of May 3, 1996
Among
CONSOLIDATED STORES CORPORATION,
as Borrower,
THE INITIAL LENDERS NAMED HEREIN,
as Initial Lenders,
and
MERRILL LYNCH CAPITAL CORPORATION,
as Agent
<PAGE> 2
EXHIBIT 10(c)
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
<S> <C> <C> <C>
PARTIES 1
PRELIMINARY STATEMENT 1
ARTICLE I
DEFINITIONS
1.01. Definitions 1
1.02. Computation of Time Periods 16
1.03. Accounting Terms 16
ARTICLE II
AMOUNT AND TERMS OF THE LOAN
2.01. The Loan 16
2.02. Making the Loan 16
2.03. Fees 17
2.04. Repayment 18
2.05. Interest 19
2.06. Termination or Reduction of the Commitments 19
2.07. Prepayments 19
2.08. Payments and Computations 20
2.09. Use of Proceeds 21
2.10. Taxes 21
2.11. Increased Costs 23
2.12. Sharing of Payments, Etc. 24
ARTICLE III
CONDITIONS TO EFFECTIVENESS AND LENDING
3.01. Conditions Precedent to Effectiveness of Section 2.01 25
3.02. Conditions Precedent to the Loan 29
</TABLE>
<PAGE> 3
EXHIBIT 10(c)
<TABLE>
<CAPTION>
Section Page
<S> <C> <C> <C>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.01. Representations and Warranties 30
ARTICLE V
COVENANTS
5.01. Affirmative Covenants 36
5.02. Negative Covenants 41
5.03. Financial Covenants 46
ARTICLE VI
EVENTS OF DEFAULT
6.01. Events of Default 47
ARTICLE VII
THE AGENT
7.01. Authorization and Action 50
7.02. Agent's Reliance, Etc. 50
7.03. MLCC and Affiliates 51
7.04. Lender Credit Decision 51
7.05. Indemnification 51
7.06. Successor Agent 52
ARTICLE VIII
TERMS OF SUBORDINATION
8.01. Subordinated Debt Subordinate to Senior Indebtedness 52
8.02. Events of Subordination 52
8.03. In Furtherance of Subordination 53
8.04. Rights of Subrogation 54
8.05. Further Assurances 54
8.06. Agreements in Respect of Subordinated Debt 54
</TABLE>
<PAGE> 4
EXHIBIT 10(c)
<TABLE>
<CAPTION>
Section Page
<S> <C> <C> <C>
8.07. Agreement by the Borrower 55
8.08. Waiver 55
8.09. No Waiver; Remedies 55
ARTICLE IX
MISCELLANEOUS
9.01. Amendments, Etc. 55
9.02. Notices, Etc. 56
9.03. No Waiver; Remedies 56
9.04. Costs and Expenses 56
9.05. Binding Effect 57
9.06. Indemnity 57
9.07. Right of Set-off 59
9.08. Assignments and Participations 59
9.09. Governing Law 62
9.10. Execution in Counterparts 62
9.11. Consent to Jurisdiction 62
9.12. WAIVER OF JURY TRIAL 62
TESTIMONIUM 63
SIGNATURES 63
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
SCHEDULES AND EXHIBITS:
Schedule 4.01(d) - Orders, Licenses, Consents, Authorizations
and Approvals
Schedule 4.01(j) - Subsidiaries
Schedule 4.01(t) - Open Years
Schedule 5.02(a) - Existing Debt
Schedule 5.02(b) - Existing Liens
Schedule 5.02(c) - Investments
Exhibit A-1 Short Term Subordinated Promissory Note
Exhibit A-2 Exchange Loan Promissory Note
Exhibit B Notice of Loan
Exhibit C Assignment and Acceptance
</TABLE>
<PAGE> 5
EXHIBIT 10(c)
<TABLE>
<CAPTION>
Section Page
<S> <C>
Exhibit D-1 Parent Guaranty
Exhibit D-2 Subsidiary Guaranty
Exhibit E Opinion of Counsel for the Loan Parties
Exhibit F Compliance Certificate
</TABLE>
<PAGE> 6
SHORT TERM LOAN AGREEMENT
SHORT TERM LOAN AGREEMENT, dated as of May 3, 1996 among CONSOLIDATED
STORES CORPORATION, an Ohio corporation (the "Borrower"), and the banks,
financial institutions and other institutional lenders listed on the signature
pages hereof (collectively, the "Initial Lenders"), and MERRILL LYNCH CAPITAL
CORPORATION, a Delaware corporation ("MLCC"), as agent (the "Agent") for the
Lenders (as hereinafter defined).
PRELIMINARY STATEMENT
The Borrower has requested the Lenders and the Agent to enter into this
Agreement and to make the loan provided for herein, on the terms and conditions
set forth in this Agreement, including, without limitation, the agreement of the
Borrower to repay the Lenders with the proceeds of the Offering (as hereinafter
defined) or otherwise. The Lenders have agreed to make a single loan to the
Borrower on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"Acquisition" means the acquisition by the Borrower from Melville
Corporation of 100% of the common stock of the Company pursuant to the terms of
the Stock Purchase Agreement.
"Affiliate" of any Person means any other Person (a) which directly or
indirectly controls, is controlled by, or is under common control with such
Person, (b) which beneficially owns or holds 15% or more of any class of the
voting or other equity interests of such Person, or (c) 15% or more of any class
of voting or other equity interests of which is beneficially owned or held,
directly or indirectly, by such Person. Control, as used in this definition,
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through
the ownership of voting securities, by contract or otherwise, including the
power to elect a majority of the directors or trustees of a corporation or
trust, as the case may be.
Exhibit 10(c) Page 1
<PAGE> 7
"Agent's Account" means the account of the Agent maintained by the
Agent at Chemical Bank with its office at 4 New York Plaza, 2nd Floor, New York,
New York 10004, Account No. 1400-21153, Attention: Neil Parachini.
"Agreement" means this Short Term Loan Agreement, as the same may be
amended, supplemented or otherwise modified from time to time.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and an Eligible Assignee, and accepted by the Agent, in
substantially the form of Exhibit C hereto.
"Bank Agent" means PNC Bank, Ohio, National Association, as
documentation agent and managing agent for the banks under the Bank Credit
Agreement.
"Bank Credit Agreement" means the Credit Agreement dated as of May 3,
1996 among the Borrower, the Bank Agent, The Bank of New York, as syndication
agent and managing agent, National City Bank of Columbus, as administrative
agent and managing agent, Bank One, Columbus, N.A., as managing agent, National
City Bank, as managing agent, and the banks parties thereto, and each of the
other Loan Documents referred to therein, in each case as amended, supplemented
or otherwise modified from time to time in accordance with its terms, and any
replacements or refinancings thereof, in each case, to the extent permitted
under the Loan Documents.
"Bank Event of Default" means an "Event of Default" described in
Section 8.1 of the Bank Credit Agreement.
"Bank Notes" means the promissory notes issued to the Banks pursuant to
the Bank Credit Agreement, as such promissory notes may hereafter be amended,
supplemented or otherwise modified from time to time in accordance with their
respective terms, to the extent permitted under the Loan Documents.
"Banks" means the banks and other financial institutions parties from
time to time to the Bank Credit Agreement.
"Base Tangible Net Worth" means the sum of (i) $325,000,000 plus 50% of
Net Income of Parent and its Subsidiaries for each fiscal quarter in which net
income was earned (as opposed to a net loss) from and after February 3, 1996,
through the date of determination, as determined and consolidated in accordance
with GAAP and (ii) the net cash proceeds from the sale of any capital stock or
other equity interest of Parent less any sums paid or owing by the Parent since
the date hereof with respect to the redemption, repurchase or other retirement
or cancellation of any of its capital stock or other equity interests.
"Business Day" means any day other than a Saturday, Sunday or any other
day on which commercial banks are required by law or authorized to close in
Cleveland, Ohio
Exhibit 10(c) Page 2
<PAGE> 8
or New York City and, if the applicable Business Day relates to the
Loan, on which dealings are carried on in the London interbank market and banks
are open for business in London.
"Capital Expenditure" means any expenditure that is considered to be a
capital expenditure under GAAP, including any amount which is required to be
treated as an asset subject to a Capital Lease.
"Capitalized Lease" of any Person means any lease of Property or
personal property by such Person as lessee which is a capital lease in
accordance with GAAP.
"Change of Control" means any transaction if, after giving effect
thereto, (a) Parent shall, directly or indirectly, own less than 100% of the
Voting Stock of the Borrower, (b) any Person or group of Persons (within the
meaning of Section 13(a) or 14(a) of the Securities Exchange Act of 1934, as
amended) shall have acquired beneficial ownership (within the meaning of Rule
13d-3 promulgated by the Securities and Exchange Commission under such Act),
directly or indirectly, of 33.33% or more of the combined Voting Stock of Parent
or (c) within a period of 12 consecutive calendar months, individuals who were
directors on the board of directors of the Parent on the first day of such
period together with any directors whose election by such board of directors or
whose nomination for election by the shareholders was approved by a vote of the
majority of the directors then in office shall cease to constitute a majority of
the board of directors of the Parent.
"Closing Date" has the meaning specified in Section 3.01.
"Commitment" has the meaning specified in Section 2.01.
"Company" means Kay-Bee Center, Inc., a California corporation.
"Compliance Certificate" means a compliance certificate in the form of
Exhibit F signed by the chief executive officer or president and the chief
financial officer of the Borrower.
"Consolidated" means the consolidation of the accounts of Parent and
its Subsidiaries in accordance with GAAP.
"Consolidated Capital Expenditures" means, for any period, the
aggregate of all expenditures (whether paid in cash or accrued as liabilities
and including that portion of Capitalized Leases which is capitalized on a
consolidated balance sheet of the Parent and its Subsidiaries) by the Parent and
its Subsidiaries during that period that, in conformity with GAAP, are required
to be included in or reflected in the property, plant or equipment or similar
fixed asset accounts reflected on a consolidated basis of the Parent and its
Subsidiaries.
Exhibit 10(c) Page 3
<PAGE> 9
"Consolidated EBIT" for any period of determination means an amount
equal to (a) the sum of (i) the net income for such period plus (ii) interest
expense in respect of Debt to the extent deducted in determining net income for
such period ("Interest Expense"), plus (iii) the provision for taxes for such
period based on income or profits to the extent such income or profits were
included in computing net income for such period, minus (b) all extraordinary
income and gains to net income to the extent included in net income for such
period, in each case of Parent and its Subsidiaries for such period determined
on a Consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" for any period of determination means
an amount equal to the Interest Expense of Parent and its Subsidiaries as
determined in clause (a)(ii) of the definition of the term "Consolidated EBIT"
for such period on a Consolidated basis in accordance with GAAP.
"Consolidated Maturing Rentals" means the aggregate rental amounts
payable by the Parent and its Subsidiaries for the most recent four full
consecutive fiscal quarters immediately preceding the date of determination
under any lease of Property having a remaining term (including any required
renewals or any renewals at the option of the lessor or lessee) of less than one
year (but does not include any amounts payable under Capitalized Leases),
determined in accordance with GAAP.
"Consolidated Rentals" means, for any period of determination the
aggregate rental amounts payable by Parent and its Subsidiaries for the most
recent four consecutive fiscal quarters immediately preceding the date of
determination under any lease of Property having a remaining term (including any
required renewals or any renewals at the option of the lessor or lessee) of one
year or more (but does not include any amounts payable under Capitalized
Leases), determined in accordance with GAAP.
"Consolidated Tangible Net Worth" means as of any date of determination
total stockholders' equity less intangible assets of Parent and its Subsidiaries
as of such date determined and Consolidated in accordance with GAAP.
"Debt" means, as to any Person at any time, any and all debt,
obligations or liabilities (whether matured or unmatured, liquidated or
unliquidated, direct or indirect, absolute or contingent, or joint or several)
of such Person for or in respect of: (a) borrowed money, (b) amounts raised
under or liabilities in respect of any note purchase or acceptance credit
facility, (c) reimbursement obligations (contingent or otherwise) under any
letter of credit, currency swap agreement, interest rate swap, cap, collar or
floor agreement or other interest rate management devise, (d) any other
transaction (including forward sale or purchase agreements, Capitalized Leases
(but not operating leases) and conditional sales agreements) having the
commercial effect of a borrowing of money entered into by such Person to finance
its operations or capital requirements (but not including trade payables trade
credits and accrued expenses incurred in the ordinary course of business which
are not represented by a promissory note or other evidence of debt and which are
not more than 30 days past due) and (e) all Debt for borrowed
Exhibit 10(c) Page 4
<PAGE> 10
money of others guaranteed directly or indirectly in any manner by such
Person, or in effect guaranteed directly or indirectly by such Person, including
through an agreement to indemnify or hold harmless such other Person, any
performance bond or other suretyship arrangement and any other form of assurance
against loss, except endorsement of negotiable or other instruments for deposit
or collection in the ordinary course of business.
"Default" means any event or condition that, with notice or lapse of
time or both, would become an Event of Default.
"Eligible Assignee" means (a) a Lender; (b) an Affiliate of a Lender;
and (c) any other Person approved by the Agent and, so long as no Default shall
have occurred and be continuing, by the Borrower, such approval not to be
unreasonably withheld or delayed; provided, however, that neither the Borrower
nor an Affiliate of the Borrower shall qualify as an Eligible Assignee.
"Environmental Action" means any administrative, regulatory or judicial
action, suit, demand, demand letter, claim, notice of non-compliance or
violation, investigation, proceeding, consent order or consent agreement
relating in any way to any Environmental Law or any Environmental Permit,
including, without limitation, (a) any claim by any governmental or regulatory
authority for enforcement, cleanup, removal, response, remedial or other actions
or damages pursuant to any Environmental Law and (b) any claim by any third
party seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from Hazardous Materials or arising
from alleged injury or threat of injury to human health and safety or the
environment.
"Environmental Law" means any applicable federal, state or local law,
rule, regulation, order, writ, judgment, injunction, decree, written
determination or award, or written judicial or agency interpretation, policy or
guidance relating to the environment, human health and safety or Hazardous
Materials, including, without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, the Resource Conservation and
Recovery Act, the Hazardous Materials Transportation Act, the Clean Water Act,
the Toxic Substances Control Act, the Clean Air Act, the Safe Drinking Water
Act, the Atomic Energy Act, the Federal Insecticide, Fungicide and Rodenticide
Act and the Occupational Safety and Health Act, in each case as amended from
time to time.
"Environmental Permit" means any permit, approval, identification
number, license or other authorization required under any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings
issued thereunder.
Exhibit 10(c) Page 5
<PAGE> 11
"ERISA Affiliate" means any Person that for purposes of Title IV of
ERISA is a member of the controlled group of any Loan Party, or under common
control with any Loan Party, within the meaning of Section 414 of the Internal
Revenue Code.
"ERISA Event" means (a) (i) the occurrence of a reportable event,
within the meaning of Section 4043 of ERISA, with respect to any Plan unless the
30-day notice requirement with respect to such event has been waived by the
PBGC, or (ii) the requirements of subsection (1) of Section 4043(b) of ERISA
(without regard to subsection (2) of such Section) are met with a contributing
sponsor, as defined in Section 4001(a)(13) of ERISA, of a Plan, and an event
described in paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA
is reasonably expected to occur with respect to such Plan within the following
30 days; (b) the application for a minimum funding waiver with respect to a
Plan; (c) the provision by the administrator of any Plan of a notice of intent
to terminate such Plan pursuant to Section 4041(a)(2) of ERISA (including any
such notice with respect to a plan amendment referred to in Section 4041(e) of
ERISA); (d) the cessation of operations at a facility of any Loan Party or any
ERISA Affiliate in the circumstances described in Section 4062(e) of ERISA; (e)
the withdrawal by any Loan Party or any ERISA Affiliate from a Multiple Employer
Plan during a plan year for which it was a substantial employer, as defined in
Section 4001(a)(2) of ERISA; (f) the conditions for the imposition of a lien
under Section 302(f) of ERISA shall have been met with respect to any Plan; (g)
the adoption of an amendment to a Plan requiring the provision of security to
such Plan pursuant to Section 307 of ERISA; or (h) the institution by the PBGC
of proceedings to terminate a Plan pursuant to Section 4042 of ERISA, or the
occurrence of any event or condition described in Section 4042 of ERISA that
constitutes grounds for the termination of, or the appointment of a trustee to
administer, a Plan.
"Event of Default" has the meaning specified in Section 6.01.
"Exchange" has the meaning specified in Section 2.04(b)(i).
"Exchange Date" means May 3, 1997.
"Exchange Documents" means the Exchange Indenture, the Exchange
Securities and the Registration Rights Agreement, in each case as amended,
supplemented or otherwise modified from time to time in accordance with its
terms.
"Exchange Indenture" means the indenture, in form and substance
reasonably satisfactory to the Required Lenders and the Borrower, pursuant to
which the Exchange Securities are to be issued.
"Exchange Loan Note" means a promissory note of the Borrower payable to
the order of any Lender, in substantially the form of Exhibit A-2 hereto,
evidencing the aggregate indebtedness of the Borrower to such Lender resulting
from such Lender's Pro Rata Share of the Loan.
Exhibit 10(c) Page 6
<PAGE> 12
"Exchange Securities" means the senior subordinated notes, in
substantially the form set forth in the Exchange Indenture, to be issued under
the Exchange Indenture pursuant to Section 2.04(b)(iii) in connection with the
consummation of the Exchange.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on the previous trading day, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the Federal Funds
Rate for the last day of which such rate was announced.
"Fixed Charge Coverage Ratio" means, on any date of determination, the
ratio of (i) the sum of (a) Consolidated EBIT for the most recent four fiscal
quarters ending on or prior to such date of determination plus (b) Consolidated
Rentals plus (c) Consolidated Maturing Rentals to (ii) Fixed Charges for the
most recent four fiscal quarters ending on or prior to such date.
"Fixed Charges" means, with respect to any Person for any period of
determination, the sum of (a) Consolidated Interest Expense of such Person for
the most recent four full consecutive fiscal quarters immediately preceding the
date of plus (b) Consolidated Rentals of such Person during such period plus (c)
Consolidated Maturing Rentals of such Person during such period.
"GAAP" has the meaning specified in Section 1.03.
"Guarantors" means the Parent and the Subsidiary Guarantors.
"Guaranties" means the Parent Guaranty and the Subsidiary Guaranty.
"Hazardous Materials" means (a) petroleum or petroleum products,
natural or synthetic gas, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation and radon gas, (b) any substances defined as
or included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous wastes," "restricted hazardous
wastes," "toxic substances," "toxic pollutants," "contaminants" or "pollutants,"
or words of similar import, under any Environmental Law and (c) any other
substance exposure to which is regulated under any Environmental Law.
"Hedge Agreements" means interest rate swap, cap or collar
agreements, interest rate future or option contracts, currency swap
agreements, currency future or option contracts and other similar agreements.
"Indemnified Party" has the meaning specified in Section 9.06(a).
Exhibit 10(c) Page 7
<PAGE> 13
"Interest Expense" has the meaning specified in clause (a)(ii) of the
definition of Consolidated EBIT.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"Lenders" means the Initial Lenders and each Person that shall become a
party hereto pursuant to Section 9.08.
"Lending Office" means, with respect to any Lender, the office of such
Lender specified as its "Lending Office" below its name on the signature pages
hereto or in the Assignment and Acceptance pursuant to which it became a Lender,
or such other office of such Lender as such Lender may from time to time specify
to the Borrower and the Agent.
"Lien" means any mortgage, deed of trust, pledge, lien, security
interest, charge or other encumbrance or security arrangement of any nature
whatsoever, whether voluntarily or involuntarily given, including any
conditional sale or title retention arrangement, and any assignment, deposit
arrangement or lease intended as, or having the effect of, security and any
filed financing statement or other notice of any of the foregoing (whether or
not a lien or other encumbrance is created or exists at the time of the filing).
"Loan" means the loans made by the Lenders pursuant to Section 2.01.
"Loan Documents" means this Agreement, the Short Term Notes, the
Exchange Loan Notes and the Guaranties.
"Loan Parties" means the Company, the Borrower, Parent and each
Guarantor.
"Material Adverse Effect" means any change or changes, or prospective
change or changes, or effect or effects, or prospective effect or effects, that
have occurred or are threatened, and that could be reasonably likely, or any
other set of circumstances or events that could be reasonably likely, to be
materially adverse to (a) the business, operations, properties, prospects or
condition (financial or otherwise) of the Borrower and its Subsidiaries taken as
a whole or the Company and its Subsidiaries taken as a whole, or (b) the ability
of the Loan Parties and their respective Subsidiaries taken as a whole to
perform its obligations under, or the legality, validity, binding nature or
enforceability against such Loan Party of, any Loan Document, Exchange Document
or Material Contract to which it is a party or pursuant to which it has any
obligation.
"Material Contracts" means the Seller Note, the Stock Purchase
Agreement and the Bank Credit Agreement and the documents delivered in
connection therewith, in each case as amended, supplemented or otherwise
modified from time to time in accordance with its terms, to the extent permitted
hereunder.
Exhibit 10(c) Page 8
<PAGE> 14
"Material Subsidiary" means C S Ross Company, an Ohio corporation, CSIC
Venture, Inc., a Delaware corporation, K.B. Consolidated, Inc., an Ohio
corporation, the Company and any Subsidiary of the Borrower having at least 10%
of the total Consolidated assets of the Parent and its Subsidiaries (determined
as of the last day of the most recent fiscal quarter of the Parent) or at least
10% of the total Consolidated revenues of the Parent and its Subsidiaries for
the 12-month period ending on the last day of the most recent fiscal quarter of
the Parent, provided, however, that CWKSB, Inc. and Kay-Bee Toy and Hobby, Inc.
shall not be considered Material Subsidiaries.
"Maturity Date" means, with respect to any Short Term Note, May 3,
1997, and, with respect to any Exchange Loan Note, May 3, 1999.
"MLPF&S" means Merrill Lynch, Pierce, Fenner & Smith Incorporated.
"Multiemployer Plan" means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, to which any Loan Party or any ERISA Affiliate 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.
"Multiple Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of any Loan
Party or any ERISA Affiliate and at least one Person other than the Loan Parties
and the ERISA Affiliates or (b) was so maintained and in respect of which any
Loan Party or any ERISA Affiliate could have liability under Section 4064 or
4069 of ERISA in the event such plan has been or were to be terminated.
"Net Income" means, with respect to any Person for any fiscal period,
the net income (or net loss) of such Person for such period as determined on a
Consolidated basis and in accordance with GAAP, adjusted, to the extent included
in calculating such net income (or net loss), by excluding (a) all extraordinary
gains or losses (less all fees and expenses relating thereto), (b) the portion
of net income (or net loss) of such Person allocable to minority interests in
unconsolidated entities to the extent that cash dividends or distributions have
not actually been received by such Person, (c) net income (or net loss) of any
entity combined with such Person in a "pooling of interests" basis attributable
to any period prior to the date of combination, (d) any gain or loss, net of
taxes, realized upon the termination of any employee pension benefit plan, (e)
any gains or losses (less all fees and expenses relating thereto) in respect of
dispositions of assets other than in the ordinary course of business, and (f)
the net income of any Subsidiary of such Person to the extent that the
declaration of dividends or similar distributions by that Subsidiary of that
income is not at the time permitted, directly or indirectly, by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Subsidiary or its
shareholders.
Exhibit 10(c) Page 9
<PAGE> 15
"Net Proceeds" means, with respect to any sale, lease, transfer or
other disposition of assets (including, without limitation, the sale of any debt
or equity securities) by any Person, the cash proceeds (including, without
limitation, all cash proceeds received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise, but only as and when
received) received by such Person or any Subsidiary thereof, minus the sum of
(a) commercially reasonable and customary brokerage commissions, finder's fees
and similar commissions and fees, and other commercially reasonable and
customary fees and expenses, in each case that are paid to Persons that are not
Affiliates of such Person or its Subsidiaries (including commercially reasonable
and customary fees and expenses of counsel and investment bankers), related to
such sale or other disposition and (b) the amount of all taxes payable as a
direct result of such sale, lease, transfer or other disposition of assets and
solely in connection therewith.
"Note" means a Short Term Note or an Exchange Loan Note.
"Notice of Loan" has the meaning specified in Section 2.02(a).
"Obligation" means, with respect to any Person, any obligation of such
Person of any kind, including, without limitation, any liability of such Person
on any claim, whether or not the right of any creditor to payment in respect of
such claim is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, disputed, undisputed, legal, equitable, secured or unsecured, and
whether or not such claim is discharged, stayed or otherwise affected by any
proceeding referred to in Section 6.01(e). Without limiting the generality of
the foregoing, the Obligations of the Loan Parties under the Loan Documents
include the obligation to pay principal, interest, charges, expenses, fees,
attorneys' fees and disbursements, indemnities and other amounts payable by any
Loan Party under any Loan Document.
"Offering" has the meaning specified in the Parent Guaranty.
"Official Body" means any national, federal, state, local or other
government or political subdivision or any agency, authority, bureau, central
bank, commission, department or instrumentality of either, or any court,
tribunal, grand jury or arbitrator, in each case whether foreign or domestic.
"Open Year" has the meaning specified in Section 4.01(u).
"Other Taxes" has the meaning specified in Section 2.10(b).
"Parent" means Consolidated Stores Corporation, a Delaware corporation.
"Parent Guaranty" has the meaning set forth in Section 3.01(a)(viii).
"PBGC" means the Pension Benefit Guaranty Corporation (or any
successor).
Exhibit 10(c) Page 10
<PAGE> 16
"Permitted Debt" means (a) Debt of the Borrower and its Subsidiaries
under the agreements and instruments listed on Schedule 5.02(a) (including any
extensions or renewals thereof, provided there is no increase in the amount
thereof on imposition of additional material obligations unless otherwise
specified in Schedule 5.02(a)) up to a maximum amount equal to the maximum
amount of principal permitted to be borrowed under the terms of such agreements
and instruments from the other parties thereto as in effect on the date hereof;
(b) the indorsement of negotiable instruments for deposit or collection or
similar transaction in the ordinary course of business; (c) Debt of any Loan
Party owing to any other Loan Party (provided that this clause (c) shall not
apply to Debt of the Borrower); (d) Debt of the Borrower under the Bank Credit
Agreement in an aggregate principal amount not to exceed $700,000,000 at any
time outstanding together with all interest, fees and premiums owing pursuant
thereto and Debt of the Loan Parties under the Guaranty referred to therein; (e)
Debt of the Borrower in respect of the Seller Note in an aggregate principal
amount not to exceed $100,000,000 at any time outstanding; (f) Capitalized and
operating leases to the extent not prohibited by Section 5.02(q); (g) in the
case of Capitalized Leases to which any Subsidiary of the Borrower is a party,
Debt of the Borrower of the type described in clause (e) of the definition of
"Debt" guaranteeing the Obligations of such Subsidiary under such Capitalized
Leases; (h) Debt in connection with interest rate agreements referred to in
Section 7.1.11 of the Bank Credit Agreement as in effect on the date hereof and
(i) in the case of the Borrower and its Subsidiaries, any additional Debt not to
exceed $25,000,000 in the aggregate at any time outstanding.
"Permitted Investments" means (a) direct obligations of the United
States of America or any agency or instrumentality thereof or obligations backed
by the full faith and credit of the United States of America maturing in 12
months or less from the date of acquisition; (b) commercial paper maturing in
180 days or less rated not lower than A-1 by Standard & Poor's Ratings Services,
a division of the McGraw Hill Companies, Inc., or P-1 by Moody's Investors
Service, Inc., on the date of acquisition thereof; and (c) demand deposits, time
deposits or certificates of deposit maturing within one year in commercial banks
whose obligations are rated A-1, A or the equivalent or better by Standard &
Poor's Corporation on the date of acquisition.
"Permitted Liens" means (a) Liens for taxes, assessments, or similar
charges, incurred in the ordinary course of business and which are not yet due
and payable; (b) pledges or deposits made in the ordinary course of business to
secure payment of workmen's compensation, or to participate in any fund in
connection with workmen's compensation, unemployment insurance, old-age pensions
or other social security programs; (c) Liens of mechanics, materialmen,
warehousemen, carriers, or other like Liens, securing obligations incurred in
the ordinary course of business that are not yet due and payable or in default;
(d) good-faith pledges or deposits made in the ordinary course of business to
secure performance of bids, tenders, contracts (other than for the repayment of
borrowed money) or leases, not in excess of the aggregate amount due thereunder,
or to secure statutory obligations, or surety, appeal, indemnity, performance
Exhibit 10(c) Page 11
<PAGE> 17
or other similar bonds required in the ordinary course of business; (e)
encumbrances consisting of zoning restrictions, easements or other restrictions
on the use of real property, none of which materially impairs the use of such
property or the value thereof, and none of which is violated in any material
respect by existing or proposed structures or land use; (f) Liens and security
interests in favor of the administrative agent under the Bank Credit Agreement
for the benefit of the Banks parties thereto; (g) Liens on property leased by
any Loan Party or Subsidiary of a Loan party or other interest or title of the
lessor under capital and operating leases not otherwise prohibited by Section
7.2.15 of the Bank Credit Agreement of such Loan Party or Subsidiary to the
lessor under such leases; (h) any Lien existing on the date of this Agreement
and described on 5.02(b), provided that the principal amount secured thereby is
not hereafter increased (although it may be refinanced), and no additional
assets become subject to such Lien; (i) Purchase Money Security Interests to the
extent that (X) such Purchase Money Security Interests attach to inventory
purchased in the ordinary course of business pursuant to customary payment terms
and are not perfected by the filing of financing statements or other public
filings or (Y) the aggregate amount of loans and deferred payments secured by
Purchase Money Security Interests not described in the foregoing clause (X) do
not exceed at any one time outstanding $10,000,000 (excluding for the purpose of
this computation any loans or deferred payments secured by Liens described on
5.02(b). (j) Liens relating to the licensing by Borrower, the other Loan Parties
or their Subsidiaries of intellectual property; (k) Liens relating to a sublease
entered into by a Loan Party or its Subsidiary; and (l) the following, (A) if
the validity or amount thereof is being contested in good faith by appropriate
and lawful proceedings diligently conducted so long as Levy and execution
thereon have been stayed and continue to be stayed or (B) if a final judgment is
entered and such judgment is discharged within thirty days of entry or (C)
payments covered in full (subject to customary deductibles) by an insurance
company of reputable standing if such insurance company has acknowledged that
the applicable policy applies to the following and is not reserving any right to
contest applicability, and in any case they do not in the aggregate, materially
impair the ability of any Loan Party to perform its Obligations hereunder or
under the other Loan Documents: (i) claims or Liens for taxes, assessments or
charges by the United States, or any department, agency or instrumentality
thereof, or by any state, county, municipal or other governmental agency,
including the PBGC, due and payable and subject to interest or penalty, provided
that the applicable Loan Party maintains such reserves or other appropriate
provisions as shall be required by GAAP and pays all such taxes, assessments or
charges forthwith upon the commencement of proceedings to foreclose any such
Lien; (ii) claims, Liens or encumbrances upon, and defects of title to, real or
personal property, including any attachment of personal or real property or
other legal process prior to adjudication of a dispute on the merits; and (iii)
claims or Liens of mechanics, materialmen, warehousemen, carriers, or other
statutory nonconsensual Liens; and (m) additional Liens securing Indebtedness
not to exceed $10,000,000.
"Person" means an individual, corporation, partnership, business trust,
joint venture, association, joint stock company, trust, unincorporated
organization, joint venture,
Exhibit 10(c) Page 12
<PAGE> 18
limited liability company or other entity, or a government or any agency or
political subdivision thereof.
"Plan" means a Single Employer Plan or a Multiple Employer Plan.
"Property" means all real property, both owned and leased, of any Loan
Party or any Subsidiary of any Loan Party.
"Pro Rata Share" of any amount means, with respect to any Lender at
any time, the product of such amount times a fraction the numerator of
which is the amount of such Lender's Commitment at such time and the denominator
of which is the aggregate amount of the Lenders' Commitments at such time.
"Purchase Money Security Interest" shall mean Liens upon real or
personal property securing loans to any Loan party or Subsidiary of a Loan Party
or deferred payments by such Loan Party or Subsidiary for the purchase of such
property.
"Refinancing" means the Offering or a Refinancing, each as defined in
the Parent Guaranty.
"Register" has the meaning specified in Section 9.08(c).
"Registration Rights Agreement" means the Registration Rights
Agreement, to be executed and delivered by the Borrower in connection with the
Exchange, in form and substance satisfactory to the Required Lenders and the
Borrower.
"Required Lenders" means at any time Lenders owed at least 51% of the
then aggregate unpaid principal amount of the Loan, or, if no such principal
amount is then outstanding, Lenders having at least 51% of the Commitments.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller Note" means the subordinated term note or notes of the Borrower
payable to the order of Melville Corporation and transferees in the principal
amount of $100,000,000 issued pursuant to the Indenture dated May 5, 1996 among
the Borrower and The Bank of New York, as Trustee, as amended, supplemented or
otherwise modified from time to time in accordance with its terms, to the extent
permitted under the Loan Documents.
"Senior Indebtedness" means (i) all Obligations of the Borrower now or
hereafter existing under the Bank Credit Agreement and the other Loan Documents
referred to therein (whether created directly or acquired by assignment or
otherwise) consisting of principal, interest (including, without limitation,
interest accruing after the filing of a petition initiating any proceeding
referred to in Section 8.02(a), whether or not such interest accrues after the
filing of such petition for purposes of the Federal Bankruptcy Code or
Exhibit 10(c) Page 13
<PAGE> 19
is an allowed claim in such proceeding) or fees and (ii) the obligations
of the Borrower in a principal amount not to exceed $35,000,000 plus
accrued interest and make-whole fees and expenses under the Note Purchase
Agreement dated as of August 1, 1987 among the Borrower, the Parent and the
Purchasers named therein.
"Short Term Note" means a promissory note of the Borrower payable to
the order of any Lender, in substantially the form of Exhibit A-1 hereto,
evidencing the aggregate indebtedness of the Borrower to such Lender resulting
from such Lender's Pro Rata Share of the Loan.
"Single Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of any Loan
Party or any ERISA Affiliate and no Person other than the Loan Parties and the
ERISA Affiliates or (b) was so maintained and in respect of which any Loan Party
or any ERISA Affiliate could have liability under Section 4069 of ERISA in the
event such plan has been or were to be terminated.
"Stock Purchase Agreement" means the Stock Purchase Agreement dated as
of March 25, 1996, between the Parent and Melville Corporation, pursuant to
which the Borrower has agreed to acquire all of the capital stock of the
Company.
"Subordinated Debt" means all Obligations of the Borrower now or
hereafter existing under the Loan Documents (whether created directly or
acquired by assignment or otherwise) consisting of principal, interest
(including, without limitation, interest accruing after the filing of a petition
initiating any proceeding referred to in Section 8.02(a), whether or not such
interest accrues after the filing of such petition for purposes of the Federal
Bankruptcy Code or is an allowed claim in such proceeding) or fees, including,
without limitation, the fees referred to in Section 2.02(b) or 2.07(c).
"Subsidiary" of any Person at any time shall mean (i) any corporation,
joint venture, limited liability company, trust, estate or other entity of which
50% or more (by number of shares or number of votes) of the outstanding Voting
Stock is at such time owned directly or indirectly by such Person or one or more
of such Person's Subsidiaries, or any partnership of which such Person is a
general partner or of which 50% or more of the partnership interests is at the
time directly or indirectly owned by such Person or one or more of such Person's
Subsidiaries, or (ii) any corporation, trust, partnership or other entity which
is controlled or capable of being controlled by such Person and/or one or more
of such Person's Subsidiaries.
"Subsidiary Guarantors" means the Subsidiaries of the Borrower listed
on Schedule 4.01(j) hereto and each other Subsidiary of the Borrower that shall
be required to execute and deliver a guaranty pursuant to Section 5.01(l).
"Subsidiary Guaranty" has the meaning specified in Section 3.01(a)(ix).
"Taxes" has the meaning specified in Section 2.10(a).
Exhibit 10(c) Page 14
<PAGE> 20
"Termination Date" means the earlier of August 2, 1996 and the date of
termination in whole of the Commitments pursuant to Section 2.06 or 6.01.
"Total Liabilities" of any Person means all obligations which in
accordance with GAAP would be included in determining total liabilities as shown
on the liabilities side of a balance sheet of such Person, including, without
limitation, all Debt of such Person.
"United States" and "U.S." each means United States of America.
"Voting Stock" means capital stock issued by, or equivalent interests
in, any Person, the holders of which are ordinarily, in the absence of any
contingency, entitled to vote for the election of directors (or persons
performing similar functions) of such Person, even though the right so to vote
has been suspended by the happening of such a contingency.
"Withdrawal Liability" has the meaning specified in Part I of Subtitle
E of Title IV of ERISA.
Exhibit 10(c) Page 15
<PAGE> 21
Section 1.02. Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding".
Section 1.03. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles consistent with those applied in the preparation of the
financial statements referred to in Section 4.01(e) ("GAAP").
ARTICLE II
AMOUNT AND TERMS OF THE LOAN
Section 2.01. The Loan. Each Lender severally agrees, on the terms and
conditions hereinafter set forth, to make to the Borrower on any Business Day on
or before the Termination Date, a single loan, in an amount not to exceed at any
time outstanding the amount set forth opposite such Lender's name on the
signature pages hereof or, if such Lender has entered into any Assignment and
Acceptance, set forth for such Lender in the Register maintained by the Agent
pursuant to Section 9.08(c), as such amount may be reduced pursuant to Section
2.06 (such Lender's "Commitment"). Amounts borrowed under this Section 2.01 and
repaid or prepaid may not be reborrowed.
Section 2.02. Making the Loan. (a) The Loan shall be made upon notice
from the Borrower to the Agent (which shall give prompt notice thereof to the
Lenders), which notice shall be received by the Agent not later than 11:00 A.M.
(New York City time) on the third Business Day prior to the date of the proposed
Loan. Such notice (the "Notice of Loan") shall be irrevocable and binding on the
Borrower, and shall be given in writing, in substantially the form of Exhibit B
hereto, specifying therein the requested date and amount of the Loan. After the
Agent's receipt of such funds and upon fulfillment of the applicable conditions
set forth in Article III, the Agent will make such funds available to the
Borrower by crediting an account at National City Bank, Account No. 801871009,
for the account of the Borrower in the amount of the Loan, net of any fees,
expenses or other amounts owing to the Lenders or any of their respective
Affiliates by the Borrower on the date of the Loan.
(b) The Borrower shall indemnify each Lender against any loss, cost or
expense incurred by such Lender as a result of any failure to fulfill on or
before the date specified in such Notice of Loan the applicable conditions set
forth in Article III, including, without limitation, any loss (including loss of
anticipated profits net of profits, if any, earned), cost or expense incurred by
reason of the liquidation or reemployment of deposit or other funds acquired by
such Lender to fund the Loan. A certificate as to such amounts, submitted to the
Borrower promptly after the incurrence of any such loss, cost
Exhibit 10(c) Page 16
<PAGE> 22
or expense by such Lender, shall be conclusive and binding for all purposes,
absent manifest error.
(c) Unless the Agent shall have received notice from a Lender prior to
the date of the Loan that such Lender will not make available to the Agent such
Lender's ratable portion of the Loan, the Agent may assume that such Lender has
made such portion available to the Agent on the date of the Loan in accordance
with subsection (a) of this Section 2.02 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 so made such
ratable portion available to the Agent, (i) 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 (A) in the case of the Borrower, the interest rate applicable at the
time to Advances comprising such Borrowing and (B) in the case of such Lender,
the Federal Funds Rate and (ii) neither the Borrower nor the Agent on behalf of
the Borrower will be required to pay to such Lender its ratable portion of the
funding fee referred to in Section 2.03(a). If such Lender shall repay to the
Agent such corresponding amount, such amount so repaid shall constitute such
Lender's portion of the Loan for purposes of this Agreement. If the Borrower
shall repay to the Agent such corresponding amount, the Agent shall refund to
the Borrower the portion of the funding fee referred to in Section 2.03(a) paid
by the Borrower to the Agent in respect of such corresponding amount.
(d) The failure of any Lender to make its portion of the Loan to be
made by it shall not relieve any other Lender of its obligation, if any,
hereunder to make its portion of the Loan on the date of the Loan, but no Lender
shall be responsible for the failure of any other Lender to make the portion of
the Loan to be made by such other Lender on the date of the Loan.
Section 2.03. Fees. (a) Funding Fee. The Borrower shall pay to the
Agent for the ratable account of the Lenders that have made a Loan a funding fee
in an amount equal to 1.5% of the Loan to be paid in cash on the date of the
Loan out of the proceeds thereof, subject to the terms of Section 2.02(c).
(b) Exchange Fee. The Borrower shall pay to the Agent for the ratable
account of the Lenders an exchange fee in an amount equal to 1.00% of the Loan
outstanding immediately prior to, and as a condition precedent to, the
consummation of the Exchange.
(c) Agent's Fees. The Borrower shall pay to the Agent for its own
account such fees as may from time to time be agreed between the Borrower and
the Agent.
Exhibit 10(c) Page 17
<PAGE> 23
Section 2.04. Repayment. (a) The Borrower shall repay to the Agent for
the ratable account of the Lenders the aggregate outstanding principal amount of
the Loan on the Maturity Date, together with all other amounts in respect of the
Loan then owing to the Lenders (whether for accrued and unpaid interest, fees or
other amounts).
(b) (i) If, on the Exchange Date, the Refinancing shall not have
occurred as contemplated by Section 8 of the Parent Guaranty, then, subject to
the terms contained herein and the satisfaction of the conditions set forth
below, each Short Term Note shall be exchanged (the "Exchange") for an Exchange
Security or an Exchange Loan Note (as specified to the Agent by the Lender
holding such Short Term Note), in either case in a principal amount equal to the
principal amount of such Short Term Note outstanding on the Exchange Date. Any
accrued and unpaid interest on the Short Term Notes shall be due and payable on
the Exchange Date.
(ii) The consummation of the Exchange shall be subject to the following
conditions precedent:
(A) No Default or Event of Default shall have occurred and be
continuing;
(B) The Exchange would not violate the terms of any order, decree or
judgment entered by a court of competent jurisdiction;
(C) The Borrower shall have paid all accrued fees and expenses of the
Agent and the Lenders (including the accrued fees and expenses of
counsel); and
(D) The Agent shall have received each of the documents required to be
delivered pursuant to clause (iii) below.
(iii) On the Exchange Date, the Borrower shall deliver to the Agent the
following documents, each dated the Exchange Date and duly executed or
authenticated, as the case may be, by each Person party thereto:
(A) The Exchange Securities (or, at the option of each Lender, the
Exchange Loan Notes) for the account of each Lender;
(B) The Exchange Indenture;
(C) The Registration Rights Agreement; and
(D) A favorable opinion of counsel to the Borrower, in form and
substance satisfactory to the Agent, as to such matters as any
Lender through the Agent may reasonably request.
Exhibit 10(c) Page 18
<PAGE> 24
(iv) Upon the consummation of the Exchange, (A) Article V and Article
VI shall be amended in full on terms mutually acceptable to the Borrower and the
Required Lenders.
Section 2.05. Interest. (a) Interest. The Borrower shall pay to the
Lenders interest on the unpaid principal amount of the Loan as set forth in the
Notes.
(b) Default Interest. Upon the occurrence and during the continuance of
an Event of Default, the Borrower shall pay on demand (i) interest on the unpaid
principal amount of the Loan at the rate per annum set forth in the Notes
therefor plus 200 basis points and (ii) interest on the amount of any interest,
fee or other amount payable hereunder that is not paid when due, from the date
such amount shall be due until such amount shall be paid in full, at a rate per
annum equal to the non-default rate of interest required to be paid on the
unpaid principal amount of the Loan during such period plus 200 basis points.
Section 2.06. Termination or Reduction of the Commitments. (a)
Optional. The Borrower shall have the right, upon at least one Business Day's
notice to the Agent, to terminate in whole or reduce ratably in part the unused
portions of the respective Commitments of the Lenders, provided that each
partial reduction shall be in the aggregate amount of $5,000,000 or an integral
multiple of $1,000,000 in excess thereof.
(b) Mandatory. (i) On the date of the Loan, after giving effect to the
Loan, and from time to time thereafter upon each repayment or prepayment of any
portion of the Loan, the aggregate Commitments of the Lenders shall be
automatically and permanently reduced, on a pro rata basis, by an amount equal
to the amount by which the aggregate Commitments immediately prior to such
reduction exceed the aggregate unpaid principal amount of the Loan then
outstanding.
(ii) Upon the consummation of the Refinancing, the aggregate
Commitments of the Lenders shall be automatically and permanently terminated.
Section 2.07. Prepayments. (a) Voluntary. The Borrower may, subject to
payment of the amounts provided for in Section 2.03, if applicable, and Section
2.07(c), by prior notice to the Agent given by 12:00 Noon (Cleveland time) on
the day preceding a prepayment stating the proposed date of prepayment and the
amount of such prepayment, and if such notice is given the Borrower shall,
prepay the outstanding unpaid principal amount of the Loan in whole or in part,
together with accrued interest thereon to the date of such prepayment on the
principal amount prepaid; provided that each partial prepayment shall be in an
aggregate principal amount not less than $5,000,000 and $1,000,000 multiples in
excess thereof.
(b) Mandatory. (i) Within five Business Days after receipt of Net
Proceeds from any sale of any assets other than as set forth in clauses (i) or
(ii) of Section 5.02(k), the Borrower shall prepay the Loan in an amount equal
to the lesser of (A) the then
Exhibit 10(c) Page 19
<PAGE> 25
outstanding principal amount of the Loan and (B) the amount of such Net
Proceeds from such sale to the extent required pursuant to Section 5.02(k)(iv)
(as estimated in good faith by the Borrower) (less any amount required by the
terms of the Bank Credit Agreement to be applied to prepay Debt outstanding
thereunder), in either case together with accrued interest to the date of such
prepayment on the principal amount prepaid and all fees, expenses and other
payments due to the Lenders under the Loan Documents.
(ii) Upon receipt by Parent, the Borrower or any of its Subsidiaries of
the Net Proceeds from (A) the incurrence or issuance by the Borrower or any of
its Subsidiaries of any Debt (other than the Seller Note and Permitted Debt or
(B) the sale or issuance by Parent, the Borrower or any of its Subsidiaries of
any capital stock, any securities convertible into or exchangeable for capital
stock or any warrants, rights or options to acquire capital stock, debt or
equity securities, the Borrower shall prepay the Loan in an amount equal to the
lesser of (x) the then outstanding principal amount of the Loan and (y) the
amount of such Net Proceeds from such incurrence, issuance or sale (less any
amount required by the terms of the Bank Credit Agreement to be applied to
prepay Debt outstanding thereunder), in either case, together with accrued
interest to the date of such prepayment on the principal amount prepaid and all
fees, expenses and other payments due to the Lenders under the Loan Documents.
(c) Breakage Fees. Upon any prepayment of principal of the Loan under
Section 2.06(a) or 2.06(b) or acceleration of maturity of the Notes pursuant to
Section 6.01 or for any other reason, the Borrower shall pay upon demand by any
Lender the amount required to compensate such Lender for any losses, costs or
expenses which it may reasonably incur as a result of such payment or
acceleration including, without limitation, any loss (including loss of
anticipated profits net of profits, if any, earned), cost or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired by
such Lender to fund or maintain the Loan.
Section 2.08. Payments and Computations. (a) The Borrower shall make
each payment hereunder and under the Notes not later than 11:00 A.M. (New York
City time) on the day when due, in United States Dollars to the Agent at the
Agent's Account in immediately available funds. Such payments shall be made by
wire transfer to the account of MLCC at Chemical Bank, New York, New York, ABA
#021-000-128 (Account #1400-21153) or such other account as MLCC may designate
to the Borrower by notice. The Agent will promptly thereafter cause to be
distributed like funds relating to the payment of principal or interest or
facility fees ratably (other than amounts payable pursuant to Section 2.02(b),
2.07(c), 2.10 or 2.11) to the Lenders for the account of their respective
Lending Offices, and like funds relating to the payment of any other amount
payable to any Lender to such Lender for the account of its Lending Office, in
each case to be applied in accordance with the terms of this Agreement. Upon its
acceptance of an Assignment and Acceptance and recording of the information
contained therein in the Register pursuant to Section 9.08(d), from and after
the effective date specified in such Assignment and Acceptance, the Agent shall
make all payments
Exhibit 10(c) Page 20
<PAGE> 26
hereunder and under the Notes in respect of the interest assigned
thereby to the Lender assignee thereunder, and the parties to such Assignment
and Acceptance shall make all appropriate adjustments in such payments for
periods prior to such effective date directly between themselves.
(b) All computations of interest and fees shall be made by the Agent on
the basis of a year of 365 or 366 days, as the case may be, in each case for the
actual number of days (including the first day but excluding the last day)
occurring in the period for which such interest or fees are payable. Each
determination by the Agent of an interest rate or fee hereunder and under the
Notes shall be conclusive and binding for all purposes, absent manifest error.
(c) Whenever any payment hereunder or under the Notes shall be stated
to be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in each case be
included in the computation of payment of interest or any fee, as the case may
be; provided, however, that if such extension would cause the payment of
interest on or principal of the Loan to be made in the next following calendar
month, such payment shall be made on the next preceding Business Day.
(d) To the fullest extent permitted by law, the Borrower shall make all
payments hereunder and under the Notes regardless of any defense or
counterclaim, including, without limitation, any defense or counterclaim based
on any law, rule or policy which is now or hereafter promulgated by any
governmental authority or regulatory body and which may adversely affect the
Borrower's obligation to make, or the right of the holder of any Note to
receive, such payments.
Section 2.09. Use of Proceeds. The Borrower shall use the proceeds of
the Loan solely to pay for (i) the repayment of borrowings under the Bank Credit
Agreement, (ii) the consummation of the Acquisition, (iii) the payment of
transaction costs incurred in connection therewith, (iv) the refinancing of
certain Debt of the Borrower then outstanding and (v) the payment of fees and
expenses payable under the Loan Documents.
Section 2.10. Taxes. (a) Any and all payments by the Borrower hereunder
or under the Notes shall be made, in accordance with Section 2.08, 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, in the case of each Lender and the Agent, taxes imposed on
its overall net income, and franchise taxes imposed on it in lieu of net income
taxes, by the jurisdiction under the laws of which such Lender or the Agent (as
the case may be) is organized or any political subdivision thereof and, in the
case of each Lender, taxes imposed on its overall net income, and franchise
taxes imposed on it in lieu of net income taxes, by the jurisdiction of such
Lender's Lending Office or any political subdivision thereof (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities in
Exhibit 10(c) Page 21
<PAGE> 27
respect of payments hereunder or under the Notes 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 or under any Note to any
Lender or the Agent, (i) the sum payable shall be increased as may be necessary
so that after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.10) such Lender or the Agent (as
the case may be) receives 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 taxation
authority or other authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies that arise from any payment made hereunder or under the Notes or from the
execution, delivery or registration of, performing under, or otherwise with
respect to, this Agreement or the Notes (hereinafter referred to as "Other
Taxes").
(c) The Borrower shall indemnify each Lender and the Agent for the full
amount of Taxes or Other Taxes (including, without limitation, any taxes imposed
by any jurisdiction on amounts payable under this Section 2.10) imposed on or
paid by such Lender or the Agent (as the case may be) and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto. This indemnification shall be made within 30 days from the date such
Lender or the Agent (as the case may be) makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, the Borrower
shall furnish to the Agent, at its address referred to in Section 9.02, the
original or a certified copy of a receipt evidencing payment thereof. In the
case of any payment hereunder or under the Notes by or on behalf of the Borrower
through an account or branch outside the United States or by or on behalf of the
Borrower by a payor that is not a United States person, if the Borrower
determines that no Taxes are payable in respect thereof, the Borrower shall
furnish, or shall cause such payor to furnish, to the Agent, at such address, an
opinion of counsel acceptable to the Agent stating that such payment is exempt
from Taxes. For purposes of this subsection (d) and subsection (e), the terms
"United States" and "United States person" shall have the meanings specified in
Section 7701 of the Internal Revenue Code.
(e) Each Lender organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Initial Lender and on the date of the Assignment
and Acceptance pursuant to which it becomes a Lender in the case of each other
Lender, and from time to time thereafter as requested in writing by the Borrower
(but only so long as such Lender remains lawfully able to do so), shall provide
each of the Agent and the Borrower with two original Internal Revenue Service
forms 1001 or 4224, as appropriate, or any successor or other form prescribed by
the Internal Revenue Service, certifying that such Lender is
Exhibit 10(c) Page 22
<PAGE> 28
exempt from or entitled to a reduced rate of United States withholding
tax on payments pursuant to this Agreement or the Notes. If the forms provided
by a Lender at the time such Lender first becomes a party to this Agreement
indicates a United States interest withholding tax rate in excess of zero,
withholding tax at such rate shall be considered excluded from Taxes unless and
until such Lender provides the appropriate forms certifying that a lesser rate
applies, whereupon withholding tax at such lesser rate only shall be considered
excluded from Taxes for periods governed by such form; provided, however, that,
if at the date of the Assignment and Acceptance pursuant to which a Lender
assignee becomes a party to this Agreement, the Lender assignor was entitled to
payments under subsection (a) in respect of United States withholding tax with
respect to interest paid at such date, then, to such extent, the term Taxes
shall include (in addition to withholding taxes that may be imposed in the
future or other amounts otherwise includable in Taxes) United States withholding
tax, if any, applicable with respect to the Lender assignee on such date. If any
form or document referred to in this subsection (e) requires the disclosure of
information, other than information necessary to compute the tax payable and
information required on the date hereof by Internal Revenue Service form 1001 or
4224, that the Lender reasonably considers to be confidential, the Lender shall
give notice thereof to the Borrower and shall not be obligated to include in
such form or document such confidential information.
(f) For any period with respect to which a Lender has failed to provide
the Borrower with the appropriate form described in Section 2.10(e) (other than
if such failure is due to a change in law occurring subsequent to the date on
which a form originally was required to be provided, or if such form otherwise
is not required under the first sentence of subsection (e) above), such Lender
shall not be entitled to indemnification under Section 2.10(a) or (c) with
respect to Taxes imposed by the United States by reason of such failure;
provided, however, that should a Lender become subject to Taxes because of its
failure to deliver a form required hereunder, the Borrower shall take such steps
as the Lender shall reasonably request to assist the Lender to recover such
Taxes.
Section 2.11. Increased Costs. (a) If, due to either (i) the
introduction of or any change in or in the interpretation of any law or
regulation or (ii) the compliance with any guideline or request from any central
bank or other governmental authority (whether or not having the force of law),
there shall be any increase in the cost to any Lender of agreeing to make or
making, funding or maintaining its Pro Rata Share of the Loan (excluding for
purposes of this Section 2.11 any such increased costs resulting from (A) Taxes
or Other Taxes (as to which Section 2.10 shall govern) and (B) changes in the
basis of taxation of overall net income or overall gross income by the United
States or by the foreign jurisdiction or state under the laws of which such
Lender is organized or has its Lending Office or any political subdivision
thereof), then the Borrower shall from time to time, upon demand by such Lender
(with a copy of such demand to the Agent), pay to the Agent for the account of
such Lender additional amounts sufficient to compensate such Lender for such
increased cost. A certificate as to the amount of
Exhibit 10(c) Page 23
<PAGE> 29
such increased cost, submitted to the Borrower and the Agent by such
Lender, shall be conclusive and binding for all purposes, absent manifest error.
(b) If any Lender determines that compliance with any law or regulation
or any guideline or request from any central bank or other governmental
authority (whether or not having the force of law) affects or would affect the
amount of capital required or expected to be maintained by such Lender or any
corporation controlling such Lender and that the amount of such capital is
increased by or based upon the existence of such Lender's commitment to lend
hereunder and other commitments of this type, then, upon demand by such Lender
(with a copy of such demand to the Agent), the Borrower shall pay to the Agent
for the account of such Lender, from time to time as specified by such Lender,
additional amounts sufficient to compensate such Lender or such corporation in
the light of such circumstances, to the extent that such Lender reasonably
determines such increase in capital to be allocable to the existence of such
Lender's commitment to lend hereunder. A certificate as to such amounts
submitted to the Borrower and the Agent by such Lender shall be conclusive and
binding for all purposes, absent manifest error.
Section 2.12. Sharing of Payments, Etc. If any Lender shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) on account of the Note held by it (other than pursuant to
Section 2.02(b), 2.07(c), 2.10 or 2.11) in excess of its ratable share of
payments on account of the Notes obtained by all the Lenders, such Lender shall
forthwith purchase from the other Lenders such participations in the Notes held
by them as shall be necessary to cause such purchasing Lender to share the
excess payment ratably with each of them; provided, however, that if all or any
portion of such excess payment is thereafter recovered from such purchasing
Lender, such purchase from each Lender shall be rescinded and such Lender shall
repay to the purchasing Lender the purchase price to the extent of such recovery
together with an amount equal to such Lender's ratable share (according to the
proportion of (i) the amount of such Lender's required repayment to (ii) the
total amount so recovered from the purchasing Lender) of any interest or other
amount paid or payable by the purchasing Lender in respect of the total amount
so recovered. The Borrower agrees that any Lender so purchasing a participation
from another Lender pursuant to this Section 2.12 may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
set-off) with respect to such participation as fully as if such Lender were the
direct creditor of the Borrower in the amount of such participation.
Exhibit 10(c) Page 24
<PAGE> 30
ARTICLE III
CONDITIONS TO EFFECTIVENESS AND LENDING
Section 3.01. Conditions Precedent to Effectiveness of Section 2.01.
Section 2.01 of this Agreement shall become effective on and as of May 5, 1996
(the "Closing Date") provided that the following conditions precedent have been
satisfied:
(a) Documents Delivered. The Agent shall have received on or before the
Closing Date the following documents, each dated such day, in form
and substance satisfactory to the Agent and (except for the Notes)
in sufficient copies for each Lender:
(i) The Short Term Notes to the order of the Lenders,
respectively.
(ii) Certified copies of the resolutions of the Board of
Directors (A) of the Borrower, Parent and each Material
Subsidiary approving each Loan Document and each Material
Contract to which it is or is to be a party and the
transactions contemplated hereby and thereby, including,
without limitation, the Acquisition and of all documents
evidencing other necessary corporate action with respect to
each such Loan Document, and Material Contract and each
such other document and the transactions contemplated
hereby and thereby and (B) of Parent approving the
consummation of the Offering and the other actions
specified in the Parent Guaranty in connection with the
Offering.
(iii) Certified copies of all documents and instruments,
including all material authorizations, consents and
approvals of, evidence of all other actions by, and notices
and filings with, all governmental authorities and
regulatory bodies or other Persons to whom the Borrower,
Parent or any Subsidiary has contractual obligations as
shall be required for the consummation of the transactions
contemplated by the Loan Documents, including, without
limitation, the Acquisition.
(iv) A certificate of the Borrower, Parent and each Material
Subsidiary, signed on behalf of the Borrower, Parent or
such Material Subsidiary, as the case may be, by its
president or a vice president and the secretary or
assistant secretary (the statements made in which
certificate shall be true on and as of the Closing Date),
certifying as to: (A) true and complete copies of the
charter and by-laws of the Borrower, Parent or such
Material Subsidiary, as the case may be, as in effect on
the date the resolutions specified in clauses (ii) and
(iii) were adopted and the absence of any amendments to the
charter or by-laws since such dates; (B) the due
incorporation and good standing of each Loan Party and each
of its Subsidiaries in its state of incorporation and the
absence of any proceeding for the dissolution or
Exhibit 10(c) Page 25
<PAGE> 31
liquidation Loan Party or any of its Subsidiaries; (C) the
truth of the representations and warranties made by each
Loan Party in the Loan Documents before and after giving
effect to the Acquisition, as though made on and as of the
Closing Date; (D) the absence of any event occurring and
continuing that constitutes a Default or an Event of
Default; (E) to the best knowledge of the Borrower, Parent
or such Material Subsidiary, as the case may be, the
absence of any existing or threatened event which could
reasonably be anticipated to impair the ability of Parent
to consummate the Offering; and (F) the satisfaction of all
conditions precedent by each Loan Party, as applicable, to
the effectiveness of Section 2.01.
(v) A signed copy of a certificate of the Secretary or an
Assistant Secretary or other appropriate officer of the
Borrower, Parent and each Material Subsidiary, as the case
may be certifying the names and true signatures of the
officers of each Loan Party authorized to sign each Loan
Document, each Exchange Document and each Material Contract
to which it is or is to be a party, and the other documents
to be delivered hereunder and thereunder.
(vi) (A) Certificates from the chief financial officer of the
Borrower, Parent and each Material Subsidiary, as the case
may be, with respect to the balance sheet of the Borrower,
Parent or such Material Subsidiary, as the case may be, as
of March 30, 1996, and in the case of the Company, dated as
of March 31, 1996, and (B) a certificate of the chief
financial officer of the Borrower with respect to pro forma
financial statements of the Parent and its Subsidiaries on
a basis satisfactory to the Agent giving effect to the
Acquisition and the other transactions contemplated by the
Loan Documents.
(vii) Certified copies of the financial statements referred to in
Section 4.01(e).
(viii) A guaranty in substantially the form of Exhibit D-1 hereto
(as amended, supplemented or otherwise modified from time
to time in accordance with its terms, the "Parent
Guaranty"), duly executed by the Parent.
(ix) A guaranty in substantially the form of Exhibit D-2 hereto
(together with each other guaranty delivered or to be
delivered pursuant to Section 5.01(l), in each case as
amended, supplemented or otherwise modified from time to
time in accordance with its terms, the "Subsidiary
Guaranty"), duly executed by the Subsidiary Guarantors.
(x) Certified copies of the Material Contracts, in form and
substance satisfactory to the Initial Lenders.
(xi) (A) A favorable opinion of Albert J. Bell, internal counsel
to the Loan Parties, substantially in the form of Exhibit
E-1 hereto and (B) a favorable
Exhibit 10(c) Page 26
<PAGE> 32
opinion of Benesch, Friedlander, Coplan & Aronoff,
counsel to the Loan Parties, substantially in the form of
Exhibit E-2 hereto.
(xii) A favorable opinion of Shearman & Sterling, special New
York counsel to the Agent, in form and substance
satisfactory to the Agent.
(xiii) Such other approvals, opinions or documents as MLCC may
reasonably request.
(b) No Material Adverse Effect. No Material Adverse Effect shall have
occurred, or be threatened, since February 3, 1996.
(c) Material Conditions. No material adverse change shall have occurred
in loan syndication, financial or capital market conditions
generally from those in effect on March 25, 1996 which could
reasonably be expected to adversely affect the consummation of the
transactions contemplated by this Agreement (including without
limitation the Offering referred to in the Parent Guaranty).
(d) No Offerings. Since February 3, 1996, none of Parent, the Borrower
or any of their respective Subsidiaries shall have offered, placed
or sold or have caused to be offered, placed or sold directly or
indirectly by private or public offering or offerings any
securities or other obligations that would, in the reasonable sole
judgment of the Agent, impair the ability of MLPF&S to sell debt or
equity securities as contemplated by Section 8 of the Parent
Guaranty, other than the securities referred to in the registration
statement filed on Form S-3 with the Securities Exchange Commission
on April 16, 1996.
(e) Due Diligence. The Initial Lenders shall have completed a due
diligence investigation of each Loan Party and its Subsidiaries in
scope, and with results, satisfactory to the Initial Lenders and
shall have been given such access to the management, records, books
of account, contracts and properties of each Loan Party and its
Subsidiaries and shall have received such financial, business and
other information regarding each Loan Party and its Subsidiaries as
it shall have reasonably requested.
(f) No Litigation or Other Proceedings. There shall exist no action,
suit, investigation, litigation or proceeding affecting any Loan
Party or any of its Subsidiaries instituted, pending or threatened
before any court, governmental, administrative or regulatory agency
or authority or arbitrator, domestic or foreign, (i) challenging
the consummation of the Acquisition or the other transactions
contemplated by the Loan Documents or (ii) seeking to obtain, or
having resulted in the entry of, any judgment, order or injunction
that (A) would restrain, prohibit or impose adverse conditions on
the ability of the Lenders to make the Loan, (B) could be
reasonably expected to have a Material Adverse Effect, (C) would
impair the ability of MLPF&S to sell debt or equity securities as
contemplated by Section 8 of the
Exhibit 10(c) Page 27
<PAGE> 33
Parent Guaranty or (D) would reasonably be expected to affect
the legality, validity or enforceability of this Agreement, any
other Loan Document, any Exchange Document or the consummation
of the transactions contemplated hereby, including, without
limitation, the Acquisition and the Offering and, in each case
there is a reasonable probability that such action, suit,
investigation, litigation or proceeding would be successful on
the merits.
(g) Fees and Expenses. All accrued fees and expenses (including the
fees and expenses of counsel to the Agent) shall have been paid.
(h) Additional Matters. All corporate or other proceedings, and all
documents, instruments and other legal matters in connection
with the transactions contemplated by the Loan Documents or
which, in the discretion of the Agent, affect the Loan or the
transactions contemplated by the Loan Documents shall be in form
and substance satisfactory to the Agent and its counsel.
(i) Ownership of Capital Stock. The Borrower shall own 100% of the
capital stock of each of its Subsidiaries (including, without
limitation, directly or indirectly 100% of the capital stock of
the Company), and the legal and capital structure of the
Borrower and each of its subsidiaries (including, without
limitation, the Company) shall be satisfactory to the Agent.
(j) No Default. No event shall have occurred and be continuing or
would result from the Loan, or from the application of the
proceeds therefrom, that shall constitute a Default or an Event
of Default.
(k) Governmental and Third Party Consents and Approvals. All
governmental and third party consents and approvals necessary in
connection with the Acquisition and the Loan shall have been
obtained (without the imposition of any conditions that are not
acceptable to the Agent) and shall remain in effect; all
applicable waiting periods shall have expired without any action
being taken by any competent authority; and no law or regulation
shall be applicable in the judgment of the Agent that restrains,
prevents or imposes materially adverse conditions upon the
Acquisition or the other transactions contemplated by the Loan
Documents or the Loan or the Loan Documents.
(l) Stock Purchase Agreement. The Stock Purchase Agreement shall be
in the form previously delivered to the Initial Lenders and
shall be in full force and effect and the Acquisition shall have
been consummated at or below the price and otherwise
substantially as set forth in the Stock Purchase Agreement.
Section 3.02. Conditions Precedent to the Loan. The obligation of each
Lender to make its portion of the Loan shall be subject to the conditions
precedent that the Closing Date shall have occurred and on the date of the Loan
(a) the following statements shall be true (and each of the giving of the Notice
of Loan and the acceptance by the
Exhibit 10(c) Page 28
<PAGE> 34
Borrower of the proceeds of the Loan shall constitute a representation
and warranty by the Borrower that on the date of the Loan such statements are
true) before and after giving effect to the Loan and to the application of the
proceeds therefrom, as though made on and as of such date:
(i) No Litigation or Other Proceedings. There shall exist no action,
suit, investigation, litigation or proceeding affecting any Loan
Party or any of its Subsidiaries instituted, pending or
threatened before any court, governmental, administrative or
regulatory agency or authority or arbitrator, domestic or
foreign, seeking to obtain, or having resulted in the entry of,
any judgment, order or injunction that would reasonably be
expected to affect the legality, validity or enforceability of
this Agreement, any other Loan Document or any Exchange
Document;
(ii) Ownership of Capital Stock. The Borrower shall own 100% of the
capital stock of each of its Subsidiaries (including, without
limitation, directly or indirectly, 100% of the capital stock of
each of the Company), and, except to the extent permitted
hereunder or under the Bank Credit Agreement as in effect on the
date hereof, the legal and capital structure of the Borrower and
each of its Subsidiaries (including, without limitation, the
Company) shall not have changed in any material respect from
that existing on the Closing Date;
(iii) Fees and Expenses. All accrued fees and expenses (including the
fees and expenses of counsel to the Agent) shall have been paid;
and
(iv) no event has occurred and is continuing, or would result from
the Loan or from the application of the proceeds therefrom, that
constitutes a Default or an Event of Default (other than any
Default or Event of Default under (A) Section 6.01(c) with
respect to Section 5.01(c) (unless the breach thereof would be
reasonably likely to result in a Material Adverse Effect) or (g)
or Section 5.02(h), (B) Section 6.01(i), (j) or (k), or (C)
Section 6.01(d) or (f) to the extent that any such Default or
Event of Default thereunder shall be in respect of an amount,
individually or in the aggregate, of less than $15,000,000).
and (b) the Agent shall have received such other approvals, opinions or
documents as any Lender through the Agent may reasonably request in order to
confirm satisfaction of the conditions set forth in this Section 3.02.
Exhibit 10(c) Page 29
<PAGE> 35
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. Representations and Warranties. The Borrower hereby
represents and warrants as follows:
(a) Due Incorporation, Etc. Each Loan Party and each of its
Subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of
incorporation and has all requisite corporate power and
authority to own or lease and operate its properties and to
carry on its business as now conducted. Each Loan Party and each
of its Subsidiaries listed on Schedule 4.01(j) is duly qualified
or licensed to do business as a foreign corporation in good
standing in all jurisdictions in which it owns or leases
property or proposes to own or lease property or in which the
conduct of its business requires it to so qualify or be
licensed, except for such jurisdictions where the failure to so
qualify or be licensed would not have a Material Adverse Effect.
All of the outstanding capital stock of the Borrower has been
validly issued, is fully paid and non-assessable and is owned by
Parent.
(b) Corporate Power, Etc. Each Loan Party has full corporate power
and authority to enter into, deliver and perform its obligations
under each Loan Document and each Material Contract to which it
is or will be a party and to consummate each of the transactions
contemplated by each such Loan Document and Material Contract
and has taken all necessary corporate action to authorize the
execution, delivery and performance by it of each Loan Document
and each Material Contract to which it is or will be a party,
and, in the case of the Parent, to authorize the Acquisition;
and each Loan Document to which it is a party constitutes, and
each Material Contract to which it is or will be party when
delivered hereunder will constitute, the legal, valid and
binding obligation of such Loan Party, enforceable against such
Loan Party in accordance with its terms, except as enforcement
may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereafter in effect affecting
the enforcement of creditors' rights generally.
(c) No Conflict. Neither the execution and delivery of any Loan
Document or any Material Contract to which any Loan Party is or
is to be a party nor the performance by such Loan Party of its
obligations thereunder, nor the consummation of the transactions
contemplated thereby including, without limitation, the
Acquisition will, (i) conflict with the charter or by-laws of
such Loan Party or (ii) conflict with or result in a breach of,
or constitute a default under, or result in the creation or
imposition of any Lien upon any of the property or assets of any
Loan Party or any Subsidiary of any Loan Party, as the case may
be, under, (A) any applicable laws (including, without
limitation, Regulation X issued by the Board of Governors of the
Federal Reserve System), (B) any loan agreement, indenture or
Exhibit 10(c) Page 30
<PAGE> 36
similar instrument or agreement, or (C) any material mortgage,
deed of trust or other similar debt instrument or agreement, in
each case, to which such Loan Party or such Subsidiary, as the
case may be, may be or become a party or by which it may be or
become bound or to which any of the property or assets of such
Loan Party or such Subsidiary, as the case may be, may be
subject.
(d) Approvals, Etc. No consent, approval, exemption, order or
authorization of, or a registration or filing with, any Official
Body or any other Person is required by any law, constitution,
statute, treaty, regulation, rule, ordinance, opinion, release,
ruling, order, injunction, writ, decree or award of any Official
Body or any agreement in connection with the execution, delivery
and carrying out of this Agreement, the other Loan Documents or
the Material Contracts by any Loan Party, except as listed on
Schedule 4.01(d), all of which shall have been obtained or made
on or prior to the Closing Date.
(e) Financial Statements. The Consolidated balance sheets of Parent
and its Subsidiaries as at February 3, 1996, and the related
Consolidated statements of income and cash flows of Parent and
its Subsidiaries for the fiscal year then ended, accompanied by
an opinion of Deloitte & Touche, LLP, independent public
accountants, copies of which have been furnished to the Lenders,
fairly present the Consolidated financial condition of Parent
and its Subsidiaries as at such date and the Consolidated
results of the operations of Parent and its Subsidiaries for the
period ended on such date. The Consolidated balance sheets of
the Company and its Subsidiaries as at December 31, 1995, and
the related Consolidated statements of income and cash flows of
the Company and its Subsidiaries for the fiscal year then ended,
accompanied by an opinion of KPMG Peat Marwick, LLP, independent
public accountants, copies of which have been furnished to the
Lenders, fairly present the Consolidated financial condition of
the Company and its Subsidiaries as at such date and the
Consolidated results of the operations of the Company and its
Subsidiaries for the period ended on such date. All such
financial statements, including the related schedules and notes
thereto, have been prepared in accordance with GAAP applied
consistently throughout the periods involved, except as
otherwise disclosed in such Financial Statements.
(f) No Material Adverse Effect. Since February 3, 1996, there has
been no, nor has there been threatened any, Material Adverse
Effect (or any development involving a prospective Material
Adverse Effect).
(g) Litigation, Etc. There are no actions, suits, proceedings or
investigations pending or, to the knowledge of any Loan Party,
threatened against such Loan Party or any Subsidiary of any Loan
Party at law or equity before any Official Body which
individually or in the aggregate (A) would restrain, prohibit or
impose adverse conditions on the ability of the Lenders to make
the Loan, (B) could be reasonably expected to have a Material
Adverse Effect, (C) would impair the ability
Exhibit 10(c) Page 31
<PAGE> 37
of MLPF&S to sell debt or equity securities as contemplated by
Section 8 of the Parent Guaranty or (D) could purport to affect
the legality, validity or enforceability of this Agreement, any
other Loan Document or the consummation of the transactions
contemplated hereby, including, without limitation, the
Acquisition and the Offering, and, in each case there is a
reasonable probability that such action, suit, investigation,
litigation or proceeding would be successful on the merits.
(h) No Violation, Etc. No event has occurred and is continuing and
no condition exists now or will exist after the execution of the
Loan Documents or Material Contracts which constitutes a
Default. None of the Loan Parties or any Subsidiaries of any
Loan Party is in violation of (i) any term of its certificate of
incorporation, bylaws, or other organizational documents or (ii)
any material agreement or instrument to which it is a party or
by which it or any of its properties may be subject or bound
where such violation would reasonably be expected to have a
Material Adverse Effect.
(i) Debt. At the time of and immediately after giving effect to the
Loan, there is no Debt of any Loan Party or any of the
Subsidiaries other than Debt permitted under Section 5.02(a).
(j) Subsidiaries. Set forth on Schedule 4.01(j) is (i) a complete
and accurate list of all Subsidiaries of each Loan Party, except
with respect to the Subsidiaries of the Company and (ii) with
respect to the Company, a complete and accurate list, to the
best knowledge of the Company, of all Subsidiaries of the
Company, in each case, showing (as to each Subsidiary) (A) the
jurisdiction of its incorporation, (B) the number of shares of
each class of capital stock authorized, and the number
outstanding, (C) the percentage of the outstanding shares of
each such class owned (directly or indirectly) by such Loan
Party and (D) the number of shares covered by all outstanding
options, warrants, rights of conversion or purchase and similar
rights. All of the outstanding capital stock of each Subsidiary
of such Loan Party has been validly issued, is fully paid and
non-assessable and is owned by such Loan Party or one or more of
its Subsidiaries free and clear of all Liens.
(k) Margin Stock. Neither any Loan Party nor any of its Subsidiaries
is engaged in the business of extending credit for the purpose
of purchasing or carrying margin stock within the meaning of
Regulations G, T and X issued by the Board of Governors of the
Federal Reserve System; and no part of the proceeds of the Loan
will be used to purchase or carry any margin stock or extend
credit to others for the purpose of purchasing or carrying any
margin stock.
(l) Use of Proceeds. No proceeds of the Loan will be used to acquire
any equity security of a class which is registered pursuant to
Section 12 of the Securities Exchange Act of 1934.
Exhibit 10(c) Page 32
<PAGE> 38
(m) Investment Company Act. Neither any Loan Party nor any of its
Subsidiaries is an "investment company" or a company
"controlled" by an "investment company" (as each of such terms
is defined or used in the Investment Company Act of 1940, as
amended).
(n) Taxes. Each Loan Party has filed all tax returns required to be
filed by it and its Subsidiaries and has paid all taxes,
assessments, fees and other charges (including interest and
penalties) due with respect to the years covered by such
returns, except for any such failures to file or to pay such
amounts which, in the aggregate, would not have a Material
Adverse Effect.
(o) ERISA Event. No ERISA Event has occurred or is reasonably
expected to occur with respect to any Plan that, individually or
in the aggregate, has resulted in or is reasonably likely to
result in a material liability of any Loan Party or any ERISA
Affiliate.
(p) Funded Current Liability Percentage. As of the last annual
actuarial valuation date, the funded current liability
percentage as defined in Section 302(d)(8) of ERISA, of each
Plan exceeds 90%, and there has been no material adverse change
in the funding status of any such Plan since such date.
(q) Withdrawal Liability. Neither any Loan Party nor any ERISA
Affiliate has incurred or is reasonably expected to incur any
Withdrawal Liability to any Multiemployer Plan.
(r) Multiemployer Plans. Neither any Loan Party nor any ERISA
Affiliate has been notified by the sponsor of a Multiemployer
Plan that such Multiemployer Plan is in reorganization or has
been terminated, within the meaning of Title IV of ERISA, and no
such Multiemployer Plan is reasonably expected to be in
reorganization or to be terminated, within the meaning of Title
IV of ERISA.
(s) Expected Post-Retirement Benefits. Excepts as set forth in the
financial statements referred to in this Section 4.01 and in
Section 5.01(g), the Loan Parties and their respective
Subsidiaries have no material liability with respect to
"expected post-retirement benefit donations" within the meaning
of Statement of Financial Accounting Standards No. 106.
(t) Taxable Years. Set forth on Schedule 4.01(t) hereto is a
complete and accurate list, as of the date hereof, of each
taxable year of each Loan Party (except the Company) and its
Subsidiaries for which Federal income tax returns have been
filed and for which the expiration of the applicable statute of
limitations for assessment or collection has not occurred by
reason of extension or otherwise (an "Open Year").
Exhibit 10(c) Page 33
<PAGE> 39
(u) Federal Tax Adjustments. The aggregate unpaid amount, as of the
date hereof, of adjustments to the Federal income tax liability
of each Loan Party and its Subsidiaries proposed by the Internal
Revenue Service with respect to Open Years does not exceed
$1,000,000. No issues have been raised by the Internal Revenue
Service in respect of Open Years that, in the aggregate, could
be reasonably likely to have a Material Adverse Effect.
(v) Other Tax Adjustments. The aggregate unpaid amount, as of the
date hereof, of adjustments to the state, local and foreign tax
liability of each Loan Party (except the Company) and its
Subsidiaries proposed by all state, local and foreign taxing
authorities (other than amounts arising from adjustments to
Federal income tax returns) does not exceed $5,000,000. No
issues have been raised by such taxing authorities that, in the
aggregate, could be reasonably likely to have a Material Adverse
Effect.
(w) Representations. No representation or warranty made by any Loan
Party under or in connection with any Loan Document or any other
document furnished to the Lenders in connection with the
transactions contemplated hereby, contains any misrepresentation
of a material fact or omits to state any material fact necessary
to make the statements herein or therein not misleading; and
there is no fact known to the Borrower which has, or could have,
a Material Adverse Effect, or which, to the best knowledge of
the Borrower based on facts currently known to it, could in the
future have a Material Adverse Effect.
(x) Disclosure. All information which has been made available to the
Lenders by any Loan Party or any of its representatives in
connection with the transactions contemplated hereby, to the
best of its knowledge, was, or has been subsequently
supplemented (including by the Schedules attached hereto) so as
to be, complete and correct in all material respects and does
not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements
contained therein not materially misleading in light of the
circumstances under which such statements were made and all
financial projections that have been prepared by any Loan Party
and made available to the Lenders have been prepared in good
faith based upon reasonable assumptions. No fact is known to the
Borrower which could reasonably be expected to have a Material
Adverse Effect which has not been set forth in such information,
reports, papers and data or otherwise disclosed in writing to
the Initial Lenders prior to the making of the Loan.
(y) Environmental Laws. The operations and properties of each Loan
Party and each of its Subsidiaries comply in all material
respects with all Environmental Laws, all necessary
Environmental Permits have been obtained and are in effect for
the operations and properties of each Loan Party and its
Subsidiaries, except for such Environmental Permits where the
failure to obtain the same, individually or in the aggregate,
could not be reasonably expected to have a Material
Exhibit 10(c) Page 34
<PAGE> 40
Adverse Effect; each Loan Party and each of its Subsidiaries are
in compliance with all such Environmental Permits except for any
instances of non-compliance which, individually or in the
aggregate, could not be reasonably expected to have a Material
Adverse Effect, and no circumstances exist that would be
reasonably likely to (i) form the basis of an Environmental
Action against any Loan Party or any of its Subsidiaries or any
of their respective properties that could have a Material
Adverse Effect or (ii) cause any such property to be subject to
any restrictions on ownership, occupancy, use or transferability
under any Environmental Law that could have a Material Adverse
Effect.
(z) Hazardous Materials. Neither any Loan Party nor any of its
Subsidiaries has transported or arranged for the transportation
of any Hazardous Materials to any location that is listed or
proposed for listing on the National Priorities List under the
Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, or on the Comprehensive
Environmental Response, Compensation and Liability Information
System maintained by the Environmental Protection Agency or any
analogous state list; Hazardous Materials have not been
generated, used, treated, handled, stored or disposed of on, or
released or transported to or from, any property currently or
formerly owned or operated by any Loan Party or any of its
Subsidiaries or, to the best of their knowledge, any adjoining
property, except in any such case, any such actions that,
individually or in the aggregate, could not be reasonably
expected to have a Material Adverse Effect.
(aa) Material Contracts. Each Material Contract has been duly
authorized, executed and delivered by all parties thereto, has
not been amended or otherwise modified, is in full force and
effect and is binding upon and enforceable against all parties
thereto in accordance with its terms, and there exists no
default under any Material Contract by any party thereto.
(bb) Subsidiaries Other than Material Subsidiaries. The breach of any
of the foregoing representations and warranties with respect to
a Subsidiary of the Borrower other than a Material Subsidiary
shall not be deemed to breach such representation or warranty
unless such breach has a Material Adverse Effect.
Exhibit 10(c) Page 35
<PAGE> 41
ARTICLE V
COVENANTS
Section 5.01. Affirmative Covenants. The Borrower covenants and agrees
that, so long as any Lender shall have any Commitment hereunder or any amount is
outstanding under any of the Loan Documents:
(a) Corporate Existence. The Borrower shall preserve and maintain,
and shall cause each Material Subsidiary to preserve and
maintain, in full force and effect its corporate existence,
rights (charter and statutory), franchises and privileges and
qualify and remain qualified, as a corporation in good standing
in each jurisdiction in which such qualification is from time to
time necessary or desirable in view of its business and
operations or the ownership of its properties, except for such
jurisdictions where the failure to so qualify would not have a
Material Adverse Effect; provided, however, that the Borrower
may consummate any merger or consolidation permitted under
Section 5.02(f).
(b) Compliance with Laws. The Borrower shall comply, and shall cause
each of its Subsidiaries to comply, in all material respects
with all applicable laws, rules, regulations and orders, such
compliance to include, without limitation, compliance with
Environmental Laws provided, however, that it shall not be
deemed to be a violation of this Section 5.01(b) if any failure
to comply with such law, rule, regulation or order would not
result in fines, penalties, remediation costs, other similar
liabilities or injunctive relief which in the aggregate
wouldhave a material Adverse Effect.
(c) Maintenance of Property; Insurance. The Borrower shall preserve
and maintain, and shall cause each of its Subsidiaries to
preserve and maintain, all of its properties, owned or leased,
that are used or useful in the conduct of its business in good
working order and condition, ordinary wear and tear excepted;
and maintain insurance with financially sound and reputable
insurers in such amounts and against such risks, as are usually
and customarily insured by companies engaged in a similar
business with respect to properties of a similar character.
(d) Keeping of Books. The Borrower shall keep, and shall cause each
of its Subsidiaries to keep, proper books of record and
accounts, in which full and correct entries shall be made of all
financial transactions and the assets and business of the
Borrower and its Subsidiaries in accordance with generally
accepted accounting principles in effect from time to time or as
otherwise required by applicable rules and regulations of any
governmental agency or regulatory authority having jurisdiction
over the Borrower and its Subsidiaries
Exhibit 10(c) Page 36
<PAGE> 42
(e) Access to Records. The Borrower shall provide, and shall cause
each of its Subsidiaries to provide, the Agent and the Lenders
and their respective authorized advisors and representatives
reasonable access to all books, records, offices and other
facilities and properties of the Borrower and its Subsidiaries
upon reasonable notice, and allow the Agent or any Lender or its
authorized advisors or representatives (as the case may be) to
make such examinations thereof and copies of and abstracts from
such books and records as the Agent or any Lender or its
authorized advisors or representatives (as the case may be) may
reasonably request; provided, however, that prior to the
occurrence of a Default or Event of Default any such
investigation shall be conducted only during regular business
hours and in a manner that does not interfere unreasonably with
the business or operations of the Borrower or its Subsidiaries.
(f) Payment of Taxes, Etc. The Borrower shall pay and discharge, and
shall cause each of its Subsidiaries to pay and discharge,
before the same shall become delinquent (i) all taxes,
assessments and governmental charges or levies imposed upon it
or upon its property and (ii) all lawful claims that, if unpaid,
might become a Lien upon its property; provided, however, that
neither the Borrower nor such Subsidiary shall be required to
pay or discharge any such tax, assessment, charge or claim that
is being contested in good faith and by proper proceedings and
as to which appropriate cash reserves are being maintained,
unless and until any Lien resulting therefrom attaches to its
property and becomes enforceable against its other creditors.
(g) Reporting Requirements. The Borrower shall:
(i) as soon as available and in any event within 45 days
after the end of each quarter of each fiscal year of the
Parent, furnish to the Agent and the Lenders, without
cost to the Agent or the Lenders, (A) quarterly
Consolidated balance sheets, statements of income and
cash flows of the Parent and its Subsidiaries, and
consolidating balance sheets, statements of income and
cash flows of K.B. Consolidated, Inc., all in reasonable
detail and duly certified (subject to normal year-end
audit adjustments) by the chief financial officer of the
Borrower as having been prepared in accordance with GAAP
and (B) a Compliance Certificate dated as of the last
day of such quarter, executed by the president and the
chief financial officer of the Borrower;
(ii) as soon as available and in any event within 90 days
after the end of each fiscal year of the Parent, furnish
to the Agent and the Lenders, without cost to the Agent
or the Lenders, (A) a copy of the annual audit report
for such fiscal year for the Parent and its
Subsidiaries, including therein Consolidated balance
sheets, statements of income and cash flows for such
year certified by nationally recognized independent
certified public
Exhibit 10(c) Page 37
<PAGE> 43
accountants satisfactory to the Agent and (B) a
Compliance Certificate dated as of the last day of such
year, executed by the president and the chief financial
officer of the Borrower;
(iii) furnish to the Agent and the Lenders, without cost to
the Agent or the Lenders, copies of all documents and
certificates delivered to any other lender or holder of
Debt promptly after delivery thereof to such other
lender or holder of Debt;
(iv) furnish to the Agent and the Lenders, without cost to
the Agent or the Lenders, copies of all reports which
the Borrower or any of its Subsidiaries sends to any of
its security holders, and copies of all reports and
registration statements which the Borrower or any of its
Subsidiaries files with the Securities and Exchange
Commission or any national securities exchange;
(v) promptly upon receipt thereof, copies of all notices,
requests and other documents received by the Borrower or
any of its Subsidiaries under or pursuant to any
Material Contract or indenture, loan or credit or
similar agreement and, from time to time upon request by
the Agent, such information and reports regarding the
Material Contracts as the Agent may reasonably request;
(vi) (A) promptly and in any event within 10 days after any
Loan Party or any ERISA Affiliate knows or has reason to
know that any ERISA Event has occurred, a statement of
the chief financial officer of such Loan Party
describing such ERISA Event and the action, if any, that
such Loan Party or such ERISA Affiliate has taken and
proposes to take with respect thereto and (B) on the
date any records, documents or other information must be
furnished to the PBGC with respect to any Plan pursuant
to Section 4010 of ERISA, a copy of such records,
documents and information;
(vii) promptly and in any event within two Business Days after
receipt thereof by any Loan Party or any ERISA
Affiliate, copies of each notice from the PBGC stating
its intention to terminate any Plan or to have a trustee
appointed to administer any Plan;
(viii) promptly and in any event within 30 days after the
receipt thereof by any Loan Party or any ERISA
Affiliate, a copy of the annual actuarial report for
each Plan the funded current liability percentage (as
defined in Section 302(d)(8) of ERISA) of which is less
than 90%;
(ix) promptly and in any event within five Business Days
after receipt thereof by any Loan Party or any ERISA
Affiliate from the sponsor of a Multiemployer Plan,
copies of each notice concerning (A) the imposition of
Exhibit 10(c) Page 38
<PAGE> 44
Withdrawal Liability by any such Multiemployer Plan, (B)
the reorganization or termination, within the meaning of
Title IV of ERISA, of any such Multiemployer Plan or (C)
the amount of liability incurred, or that may be
incurred, by any Loan Party or any ERISA Affiliate in
connection with any event described in clause (A) or
(B);
(x) promptly after the assertion or occurrence thereof,
notify the Agent and the Lenders of (A) any
Environmental Action against or of any noncompliance by
any Loan Party or any of its Subsidiaries with any
Environmental Law or Environmental Permit, and (B) any
release of any Hazardous Material into the environment,
that could reasonably be expect to have a Material
Adverse Effect;
(xi) promptly after the commencement thereof, notice of all
actions and proceedings before any court, governmental
agency or arbitrator affecting any Loan Party or any of
its Subsidiaries of the type described in Section
4.01(g); and
(xii) furnish to the Agent and the Lenders, without cost to
the Agent or the Lenders, any other information with
respect to the financial condition, business and
property of the Borrower and its Subsidiaries, as any
Lender through the Agent may from time to time
reasonably request.
(h) Notice of Defaults. The Borrower shall and shall cause each of
its Subsidiaries to promptly upon any officer of any Loan Party
obtaining knowledge thereof, give notice to the Agent and the
Lenders (i) of any development, including, without limitation,
any litigation, investigation or proceeding affecting any Loan
Party or any of its Subsidiaries, which has a Material Adverse
Effect, could reasonably be expected to have a Material Adverse
Effect or, in the case of any litigation, investigation or other
proceeding, which could, if adversely decided, reasonably be
expected to have a Material Adverse Effect and (ii) of a Default
or Event of Default under this Agreement, each such notice being
in the form of an officers' certificate, signed by the president
or any vice president and the treasurer of the Borrower,
specifying the nature and period of existence of any such event
and what action the Borrower has taken, is taking or proposes to
take with respect thereto.
(i) Refinancing. The Borrower will use its best efforts to assist
Parent in effectuating an offering and sale of equity securities
of Parent to Persons other than the Borrower or any of its
Subsidiaries, reasonably acceptable in form and substance to
MLPF&S, for the purpose of refinancing the principal amount of
the Loan and paying interest accrued thereon and all fees,
expenses, commissions and other amounts payable by the Loan
Parties under the Loan Documents in an amount to be agreed upon
between Parent and MLPF&S, but in no event less than an amount
which will provide Net Proceeds sufficient to refinance the
principal amount of the Loan and to pay accrued interest thereon
and all fees, expenses,
Exhibit 10(c) Page 39
<PAGE> 45
commissions and other amounts payable by the Loan Parties under
the Loan Documents.
(j) MLPF&S as Underwriter. The Borrower shall retain MLPF&S as an
underwriter or placement agent for the Borrower and any of its
Subsidiaries with respect to any offering or placement of
securities (other than securities consisting of traditional
senior bank debt), including, without limitation, on any
refinancing referred to in Section 8 of the Parent Guaranty,
issued by the Borrower or any of its Subsidiaries to refinance
all or part of the aggregate outstanding unpaid principal amount
of the Loan, such retention to be on terms mutually acceptable
to the Borrower and MLPF&S.
(k) Performance of Material Contracts. The Borrower shall perform
and observe, and shall cause each of its Subsidiaries to perform
and observe all the terms and provisions of each Material
Contract (except the Bank Credit Agreement) to be performed or
observed by it, maintain each such Material Contract in full
force and effect, enforce each such Material Contract in
accordance with its terms, take all such action to such end as
may be from time to time requested by the Agent and, upon
request of the Agent, make to each other party to each such
Material Contract such demands and requests for information and
reports or for action as the Borrower is entitled to make under
such Material Contract, and cause each of its Subsidiaries to do
so.
(l) Covenant to Guarantee Obligations. The Borrower shall and shall
cause each of its Subsidiaries to at any time as any new direct
or indirect Subsidiaries of the Borrower are formed or acquired,
at the expense of the Borrower:
(i) within 10 days after such request, formation or
acquisition, cause each such Subsidiary, and cause each
direct and indirect parent (other than the Borrower) of
such Subsidiary (if it has not already done so), to duly
execute and deliver to the Agent a guaranty, in
substantially the form of Exhibit D-2 hereto or
otherwise in form and substance satisfactory to the
Agent, guaranteeing the other Loan Parties' Obligations
under the Loan Documents,
(ii) within 30 days after such formation or acquisition,
deliver to the Agent a signed copy of a favorable
opinion, addressed to the Agent and the other Lenders,
of counsel for the Borrower acceptable to the Agent as
to the matters contained in clause (i) above, as to such
guaranties being legal, valid and binding obligations of
each Loan Party thereto enforceable in accordance with
their terms and as to such other matters as the Agent
may reasonably request,
(iii) at any time and from time to time, promptly execute and
deliver any and all further instruments and documents
and take all such other action as
Exhibit 10(c) Page 40
<PAGE> 46
the Agent may deem necessary or desirable in obtaining
the full be nefits of such guaranties.
Section 5.02. Negative Covenants. The Borrower covenants and agrees
that, so long as any Lender shall have any Commitment hereunder or any amount is
outstanding under any of the Loan Documents, the Borrower shall not, and shall
cause its Subsidiaries not to:
(a) Additional Debt. Create, incur, assume or suffer to exist any
Debt other than Debt arising under this Agreement and the other
Loan Documents and Permitted Debt.
(b) Liens, Etc. (i) At any time create, incur, assume or suffer to
exist any Lien on any of its property or assets, tangible or
intangible, now owned or hereafter acquired, or agree or become
liable to do so, except Permitted Liens and (ii) at any time
agree, directly or indirectly, with respect to any asset
material to the Borrower and its Subsidiaries taken as a whole
to any restriction (including without limitation on the
foregoing any requirement to grant a third Person a Lien in the
event that the Lenders are granted a Lien) on the granting or
conveying of Liens to the Lenders.
(c) Investments, Loans, Advances. At any time make or suffer to
remain outstanding any loan or advance to, or purchase, acquire
or own any stock, bonds, notes or securities of, or any
partnership interest (whether general or limited) in, or any
other investment or interest in, or make any capital
contribution to, any other Person, or agree, become or remain
liable to do any of the foregoing, except as set forth on
Schedule 5.02(c), other than:
(i) trade credit extended on usual and customary terms in
the ordinary course of business;
(ii) advances to employees to meet expenses incurred by such
employees in the ordinary course of business;
(iii) Permitted Investments;
(iv) loans, advances and investments in other Loan Parties
and Subsidiaries of Loan Parties;
(v) Debt permitted pursuant to Section 5.02(a) and
liquidations, mergers and consolidations permitted
pursuant to Section 5.02(f); and
(vi) Investments other than that set forth hereinabove not to
exceed $10,000,000.
Exhibit 10(c) Page 41
<PAGE> 47
(d) Operate Other Than in Ordinary Course. Operate its business,
other than in the usual and ordinary course and other than that
which is consistent with the past practice established by the
Borrower or such Subsidiary, as the case may be.
(e) Dividends, Etc. Except as provided herein, each of the Loan
Parties shall not, and shall not permit any of its Subsidiaries
to, make or pay, or agree to become or remain liable to make or
pay, any dividend or other distribution of any nature (whether
in cash, property, securities or otherwise) on account of or in
respect of its shares of capital stock or partnership interests
on account of the purchase, redemption, retirement or
acquisition of its shares of capital stock (or warrants, options
or rights therefor) or partnership interests, except dividends
or other distributions payable to another Loan Party; provided
that nothing in this Section 5.02(e) shall be deemed to prohibit
cash dividends paid to the Borrower by its wholly owned
Subsidiaries the proceeds of which are used to repay the Loan.
The Company may declare and pay dividends on its capital stock
which are payable solely in shares of its capital stock or other
equity interests of the Company. The Company may make purchases
and redemptions of its capital stock pursuant to existing plans
provided that the aggregate of all such purchases does not
exceed $10,000,000.
(f) Merger or Consolidation. Merge into or consolidate with, or
convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or substantially
all of its assets (whether now owned or hereafter acquired) to,
or acquire all or substantially all of the assets of, any
Person, except that nothing in this Section 5.02(f) shall
prohibit (i) any direct or indirect wholly owned Subsidiary of
the Borrower (other than a Loan Party) from merging into or
consolidating with, or disposing of assets to, or acquiring
assets of, any other wholly owned direct or indirect Subsidiary
of the Borrower, (ii) any Subsidiary of the Borrower (other than
a Loan Party) from merging into or disposing of assets to the
Borrower, (iii) any Loan Party (other than the Borrower and
Parent) from merging into or consolidating with any Loan Party
which is wholly owned by Parent and (iv) the Parent from
acquiring the Company pursuant to the Stock Purchase Agreement
or from otherwise consummating the Acquisition.
(g) Voluntary Payment or Redemption of Debt. Voluntarily prepay,
redeem, purchase, defease or otherwise satisfy prior to the
scheduled maturity thereof in any manner, or make any payment in
violation of any subordination terms of, any Debt except, in
each case, the Loan and except that the Borrower may make
prepayments under the Bank Credit Agreement and payments in a
principal amount not to exceed $35,000,000 plus accrued interest
and make-whole fees and expenses under the Note Purchase
Agreement dated as of August 1, 1987 among the Borrower, the
Parent and the Purchasers named therein.
(h) Accounting Changes. Change its fiscal year to any fiscal year
ending on any date which is not the end of a fiscal quarter as
of the date of the making of the
Exhibit 10(c) Page 42
<PAGE> 48
Loan, or make any other significant change in accounting
treatment and reporting practices except as required or
permitted by GAAP; provided, however, that if any such change in
the Borrower's fiscal year, or any other change after the date
of the making of the Loan in GAAP, affects the substantive
provisions of the financial covenants set forth in Section 5.03,
the Lenders and the Borrower shall negotiate in good faith to
amend or otherwise modify such covenants so that the substantive
provisions of such covenants under GAAP as then in effect shall
be as nearly equivalent as possible to the substantive
provisions of such covenants under GAAP as of the date of the
making of the Loan.
(i) Restriction on Payments and Transfers. Other than encumbrances
or restrictions that exist as of the date of this Agreement or
created pursuant to the Bank Credit Agreement as in effect as of
the date hereof, create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction on
the Borrower's or any of its Subsidiaries' ability to (i) pay
dividends or make distributions of the Borrower or such
Subsidiaries' capital stock, as the case may be, (ii) pay any
debt owed to the Borrower or any of its other Subsidiaries,
(iii) make loans or advances to the Borrower or any of its other
Subsidiaries or (iv) transfer assets to, or create Liens in
favor of, the Borrower or any of its Subsidiaries, as the case
may be.
(j) Amendments or Waivers. Amend, modify or change in any manner, or
waive any rights of the Borrower or any of its Subsidiaries
pursuant to, any agreement which, in the reasonable judgment of
MLCC, could adversely affect in any material respect the
refinancing contemplated by Section 8 of the Parent Guaranty or
its rights and benefits under the Loan Documents and the
documents delivered pursuant thereto, to which the Borrower or
its Subsidiaries may be or become a party.
(k) Sales, Etc. of Assets. Sell, convey, assign, lease, abandon or
otherwise transfer or dispose of, voluntarily or involuntarily,
any of its properties or assets, tangible or intangible
(including sale, assignment, discount or other disposition of
accounts, contract rights, chattel paper, equipment or general
intangibles with or without recourse or of capital stock, shares
of beneficial interest or partnership interests of a Subsidiary
of such Loan Party), except:
(i) transactions involving the sale of inventory in the
ordinary course of business.
(ii) any sale, transfer or lease of assets in the ordinary
course of business which are no longer necessary or
required in the conduct of such Loan Party's or such
Subsidiary's business;
(iii) any sale, transfer or lease of assets by any wholly
owned Subsidiary of such Loan Party to another Loan
Party; and
Exhibit 10(c) Page 43
<PAGE> 49
(iv) any sale, transfer or lease of assets, other than those
specifically excepted pursuant to clauses (i) through
(iii) above or clause (v) below, provided, however, that
the aggregate after-tax net cash proceeds (including
without limitation cash, as and when collected, pursuant
to any notes or other securities received as
consideration for such sale, transfer or lease) of all
such sales, transfers or leases on and after the date
hereof (as reasonably estimated by the Borrower) in
excess of $35,000,000 shall be applied in accordance
with the terms of the Bank Credit Agreement and if the
Commitments thereunder have been terminated, then shall
be applied as a mandatory prepayment of the Loan in
accordance with the provisions of Section 2.07(b)(i);
(v) any sale or transfer by the Parent of the capital stock
or other equity interests of the Parent.
(l) Maintenance of Ownership of Subsidiaries. Sell or otherwise
dispose of any shares of capital stock of any Subsidiary or any
warrants, rights or options to acquire such capital stock or
permit any Subsidiary to issue, sell or otherwise dispose of any
shares of its capital stock or the capital stock of any other
Subsidiary or any warrants, rights or options to acquire such
capital stock except (i) to the Borrower or another Subsidiary
and (ii) to the extent that the Net Proceeds of such sale or
disposition are used to repay the outstanding aggregate unpaid
principal amount of the Loan as required under Section 2.07(b).
(m) Transactions with Affiliates. Except as set forth on Schedule
5.02(c) enter into or carry out any transaction or agreement
with any Affiliate (including purchasing property or services
from or selling property or services to any Affiliate of any
Loan Party or other Person other than a Loan Party) unless such
transaction is not otherwise prohibited by this Agreement, is
entered into in the ordinary course of business upon fair and
reasonable arm's-legnth terms and conditions (including, without
limitation, employment arrangements with any executive offices
of the Borrower and its Subsidiaries) which are fully disclosed
to the Agent and is in accordance with all applicable laws,
rules, regulations and orders.
(n) Issuance of Capital Stock. Issue any capital stock or any
warrants, rights or options to acquire any such capital stock.
(o) Amendment, Etc. of Material Contracts. Cancel or terminate any
Material Contract (other than the Bank Credit Agreement) or
consent to or accept any cancellation or termination thereof,
amend or otherwise modify in any material respect any Material
Contract (other than the Bank Credit Agreement) or give any
consent, waiver or approval thereunder, waive any default under
or breach of any Material Contract (other than the Bank Credit
Agreement), agree in any manner to any other material amendment,
modification or change of any term or
Exhibit 10(c) Page 44
<PAGE> 50
condition of any Material Contract (other than the Bank Credit
Agreement) or take any other action in connection with any
Material Contract (other than the Bank Credit Agreement) that
would impair the value of the interest or rights of the Borrower
thereunder or that would impair the interest or rights of the
Agent or any Lender, or permit any of its Subsidiaries to do any
of the foregoing provided, however, that nothing contained
herein shall permit any amendment, modification or change of any
term or condition in the Bank Credit Agreement that would limit
or adversely affect any Loan Party's right or ability to repay
the Loan as set forth in any Loan Agreement.
(p) Investment Company. Be or become an investment company subject
to the registration requirements under the Investment Company
Act of 1940, as amended.
(q) Capital Expenditures and Leases. Make any payments or incur any
obligation on account of the purchase or lease of any assets
which if purchased would constitute fixed assets or which if
leased would constitute a capitalized lease under GAAP if the
aggregate of such payments and incurred obligations together
with all other similar payments and incurred obligations made
during such fiscal year would exceed the amount set forth below
for such fiscal year:
<TABLE>
<CAPTION>
Maximum Consolidated
Fiscal Year Ending Capital Expenditures
------------------ --------------------
<S> <C>
February 1, 1997 $110,000,000
January 31, 1998 $100,000,000
and each fiscal year
thereafter
</TABLE>
Exhibit 10(c) Page 45
<PAGE> 51
Section 5.03. Financial Covenants. So long as any Lender shall have any
Commitment hereunder or any amount is outstanding under any of
the Loan Documents, Parent shall not:
(a) Maintenance of Tangible Net Worth. Permit, at any time,
Consolidated Tangible Net Worth to be less than the Base
Tangible Net Worth.
(b) Minimum Fixed Charge Coverage Ratio. Permit at any time the
Fixed Charge Coverage Ratio of the Borrower, calculated as of
the end of each fiscal quarter, to be less than 1.1 to 1.
Exhibit 10(c) Page 46
<PAGE> 52
ARTICLE VI
EVENTS OF DEFAULT
Section 6.01. Events of Default. If any of the following events
("Events of Default") shall occur and be continuing:
(a) (i) The Borrower shall fail to pay the principal on any Note
when due and payable or (ii) the Borrower shall fail to pay any
interest on any Note, or any Loan Party shall fail to pay any
other amount payable under any Loan Document, in each case under
this clause (ii), within five days after the same becomes due
and payable; or
(b) Any representation or warranty made by any Loan Party (or any of
their respective officers) under or in connection any Loan
Document shall prove to have been incorrect in any material
respect when made; or
(c) Any Loan Party shall fail to perform or observe (i) any term,
covenant or agreement contained in Sections 2.09, 5.01(a), (e),
(g) and (h), 5.02 or 5.03; or (ii) any other term, covenant or
agreement contained in this Agreement and any other Loan
Document (excluding any term, covenant or agreement covered by
Section 6.01(a)), if such failure shall remain unremedied for 15
days after written notice thereof shall have been given to the
Borrower by any Lender; or
(d) Any Loan Party or any of its Subsidiaries shall fail to pay any
principal of, premium or interest on, or other amount payable in
respect of, any Debt which is outstanding in a principal amount
of at least $10,000,000 in the aggregate (but excluding Debt
evidenced by the Notes) of such Person when the same becomes due
and payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) and such failure shall
continue after the applicable grace period, if any, specified in
the agreement or instrument relating to such Debt; or any other
event shall occur or condition shall exist under any agreement
or instrument relating to any such Debt and shall continue after
the applicable grace period, if any, specified in such agreement
or instrument, if, in the case of Debt under the Bank Credit
Agreement, the effect of such event or condition is to
accelerate the maturity of such Debt or otherwise cause such
Debt to mature, and in the case of all other Debt, the effect of
such event or condition is to accelerate, or to permit the
acceleration of, the maturity of such Debt or otherwise cause,
or permit the holder thereof to cause, such Debt to mature; or
any such Debt shall be declared to be due and payable, or
required to be prepaid or redeemed (other than by a regularly
scheduled required prepayment or redemption), purchased or
defeased, or an offer to prepay, redeem, purchase or defease
such Debt shall be required to be made, in each case prior to
the stated maturity thereof; or
Exhibit 10(c) Page 47
<PAGE> 53
(e) Parent, the Borrower, any Material Subsidiary or one or more
other Subsidiaries of the Borrower which individually or in the
aggregate represent more than 5% of the book value of the
Consolidated assets of the Borrower and its Subsidiaries shall
generally not pay its debts as such debts become due, or shall
admit in writing its inability to pay its debts generally, or
shall make a general assignment for the benefit of creditors; or
any proceeding shall be instituted by or against Parent, the
Borrower, any Material Subsidiary or any such other Subsidiary
seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debt
under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee, or
other similar official for it or for any substantial part of its
property and, with respect to such other Subsidiary, the result
of such proceeding would have a Material Adverse Effect; or
seeking a warrant of attachment, execution or similar process
against any substantial part of the property of Parent, the
Borrower, any Material Subsidiary or any such other Subsidiary
property and, in the case of any such proceeding instituted
against it (but not instituted by it), either such proceeding
shall remain undismissed or unstayed for a period of 60 days, or
any of the actions sought in such proceeding (including, without
limitation, the entry of an order for relief against, or the
appointment of a receiver, trustee, custodian or other similar
official for, or for any substantial part of, its property)
shall occur and, with respect to such other Subsidiary, the
result of such proceeding would have a Material Adverse Effect;
or any Loan Party shall take corporate action to authorize any
of the actions set forth above in this subsection (e); or
(f) Any judgment or order for the payment of money in excess of
$10,000,000 shall be rendered against any Loan Party or any of
its Subsidiaries, and either (i) an enforcement proceeding shall
have been commenced by any creditor upon such judgment or order
or (ii) there shall have been a period of 60 consecutive days
during which a stay of enforcement of such judgment or order, by
reason of a pending appeal or otherwise, shall not be in effect;
or
(g) Any non-monetary judgment or order shall be rendered against any
Loan Party or any of its Subsidiaries that could be reasonably
likely to have a Material Adverse Effect, and there shall be any
period of 60 consecutive days during which a stay of enforcement
or such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; or
(h) Any provision of any Loan Document after delivery thereof shall
for any reason cease to be valid and binding on any Loan Party
thereto or such Loan Party shall so state in writing; or
(i) Any ERISA Event shall have occurred with respect to a Plan and
the sum (determined as of the date of occurrence of such ERISA
Event) of the Insufficiency of
Exhibit 10(c) Page 48
<PAGE> 54
such Plan and the Insufficiency of any and all other Plans with
respect to which an ERISA Event shall have occurred and then
exist (or the liability of the Loan Parties and the ERISA
Affiliates related to such ERISA Event) exceeds $10,000,000; or
(j) Any Loan Party 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 in an amount
that, when aggregated with all other amounts required to be paid
to Multiemployer Plans by the Loan Parties and the ERISA
Affiliates as Withdrawal Liability (determined as of the date of
such notification), exceeds $10,000,000 or requires payments
exceeding $2,000,000 per annum; or
(k) Any Loan Party 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, and as result of such
reorganization or termination the aggregate annual contributions
of the Loan Parties and the ERISA Affiliates to all
Multiemployer Plans that are then in reorganization or being
terminated have been or will be increased over the amounts
contributed to such Multiemployer Plans for the plan years of
such Multiemployer Plans immediately preceding the plan year in
which such reorganization or termination occurs by an amount
exceeding $2,000,000; or
(l) Any Change of Control shall occur; or
(m) The Borrower shall cease to own, directly or indirectly, 100% of
the outstanding shares of capital stock of the Company; or
then, and in any such event, the Agent (i) shall at the request, or may with the
consent, of the Lenders, by notice to the Borrower and the Bank Agent, declare
the obligation of the Lenders to make the Loan to be terminated, whereupon the
same shall forthwith terminate, and (ii) shall at the request, or may with the
consent, of the Required Lenders, by notice to the Borrower and the Bank Agent,
declare the Notes, all interest thereon and all other amounts payable under this
Agreement to be forthwith due and payable, whereupon the Notes, all such
interest and all such other amounts shall become and be forthwith due and
payable, without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by the Borrower; provided, however, that in
the event of an actual or deemed entry of an order for relief with respect to
the Borrower under the Federal Bankruptcy Code, (A) the obligation of the
Lenders to make the Loan shall automatically be terminated and (B) the Notes,
all such interest and all such amounts shall automatically become and be due and
payable, without presentment, demand, protest or any notice of any kind, all of
which are hereby expressly waived by the Borrower.
Exhibit 10(c) Page 49
<PAGE> 55
ARTICLE VII
THE AGENT
Section 7.01. Authorization and Action. Each Lender hereby
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers and discretion under this Agreement and the other Loan
Documents as are delegated to the Agent by the terms hereof and thereof,
together with such powers and discretion as are reasonably incidental thereto.
As to any matters not expressly provided for by the Loan Documents (including,
without limitation, enforcement or collection of the Notes), the Agent shall not
be required to exercise any discretion or take any action, but shall be required
to act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Required Lenders, and such
instructions shall be binding upon all Lenders and all holders of Notes;
provided, however, that the Agent shall not be required to take any action that
exposes the Agent to personal liability or that is contrary to this Agreement or
applicable law. The Agent agrees to give to each Lender prompt notice of each
notice given to it by the Borrower pursuant to the terms of this Agreement.
Section 7.02. Agent's Reliance, Etc. Neither the Agent nor any
of its directors, officers, agents or employees shall be liable for any action
taken or omitted to be taken by it or them under or in connection with the Loan
Documents, except for its or their own gross negligence or willful misconduct.
Without limitation of the generality of the foregoing, the Agent: (i) may treat
the payee of any Note as the holder thereof until the Agent receives and accepts
an Assignment and Acceptance entered into by the Lender that is the payee of
such Note, as assignor, and an Eligible Assignee, as assignee, as provided in
Section 9.08; (ii) may consult with legal counsel (including counsel for the
Borrower), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants or experts; (iii)
makes no warranty or representation to any Lender and shall not be responsible
to any Lender for any statements, warranties or representations (whether written
or oral) made in or in connection with the Loan Documents; (iv) shall not have
any duty to ascertain or to inquire as to the performance or observance of any
of the terms, covenants or conditions of any Loan Document on the part of the
Borrower or to inspect the property (including the books and records) of the
Borrower; (v) shall not be responsible to any Lender for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of any
Loan Document or any other instrument or document furnished pursuant hereto; and
(vi) shall incur no liability under or in respect of any Loan Document by acting
upon any notice, consent, certificate or other instrument or writing (which may
be by telecopier, telegram or telex) believed by it to be genuine and signed or
sent by the proper party or parties.
Exhibit 10(c) Page 50
<PAGE> 56
Section 7.03. MLCC and Affiliates. With respect to its Commitment, the
portion of the Loan made by it and the Notes issued to it, MLCC shall have the
same rights and powers under the Loan Documents as any other Lender and may
exercise the same as though it were not the Agent; and the term "Lender" or
"Lenders" shall, unless otherwise expressly indicated, include MLCC in its
individual capacity. MLCC and its Affiliates may accept deposits from, lend
money to, act as trustee under indentures of, accept investment banking
engagements from and generally engage in any kind of business with, the
Borrower, any of its Subsidiaries and any Person who may do business with or own
securities of the Borrower or any such Subsidiary, all as if MLCC were not the
Agent and without any duty to account therefor to the Lenders.
Section 7.04. Lender Credit Decision. Each Lender acknowledges that it
has, independently and without reliance upon the Agent or any other Lender and
based on the financial statements referred to in Section 4.01 and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the Agent or
any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.
Section 7.05. Indemnification. The Lenders agree to indemnify the Agent
(to the extent not reimbursed by the Borrower), ratably according to the
respective principal amounts of the Notes then held by each of them (or if no
Notes are at the time outstanding or if any Notes are held by Persons that are
not Lenders, ratably according to the respective amounts of their Commitments),
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever that may be imposed on, incurred by, or asserted
against the Agent in any way relating to or arising out of the Loan Documents or
any action taken or omitted by the Agent under the Loan Documents, provided that
no Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Agent's gross negligence or willful misconduct.
Without limitation of the foregoing, each Lender agrees to reimburse the Agent
promptly upon demand for its ratable share of any out-of-pocket expenses
(including counsel fees) incurred by the Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, the Loan
Documents, to the extent that the Agent is not reimbursed for such expenses by
the Borrower.
Exhibit 10(c) Page 51
<PAGE> 57
Section 7.06. Successor Agent. The Agent may resign at any time by
giving written notice thereof to the Lenders and the Borrower and may be removed
at any time with or without cause by the Required Lenders. Upon any such
resignation or removal, the Required Lenders shall have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by the
Required Lenders, and shall have accepted such appointment, within 30 days after
the retiring Agent's giving of notice of resignation or the Required Lenders'
removal of the retiring Agent, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent, which shall be a commercial bank organized
under the laws of the United States of America or of any State thereof and
having a combined capital and surplus of at least $50,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent and, so
long as no Default or Event of Default shall have occurred and be continuing,
subject to the approval of the Borrower, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, discretion, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations under the Loan Documents. After any retiring
Agent's resignation or removal hereunder as Agent, the provisions of this
Article VII shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement.
ARTICLE VIII
TERMS OF SUBORDINATION
Section 8.01. Subordinated Debt Subordinate to Senior Indebtedness. The
Borrower agrees, and each Lender and holder of any Note, by its acceptance
thereof, also agrees, that the Subordinated Debt is and shall be subordinate, to
the extent and in the manner hereinafter set forth, to the prior payment in full
in cash of all Senior Indebtedness.
Section 8.02. Events of Subordination. (a) In the event of any
dissolution, winding up, liquidation, arrangement, reorganization, adjustment,
protection, relief or composition of the Borrower or its debts, whether
voluntary or involuntary, in any bankruptcy, insolvency, arrangement,
reorganization, receivership, relief or other similar case or proceeding under
any Federal or State bankruptcy or similar law or upon an assignment for the
benefit of creditors or any other marshalling of the assets and liabilities of
the Borrower or otherwise, Senior Indebtedness shall first be paid in full
before the Lenders or other holders of any Subordinated Debt shall be entitled
to receive any payment of all or any of the Subordinated Debt, and any payment
that otherwise would be payable upon or with respect to the Subordinated Debt in
any such case, proceeding, assignment, marshalling or otherwise (including any
payment that may be payable by reason of any other indebtedness of the Borrower
being subordinated to payment of the Subordinated Debt) shall be paid or
delivered directly to the Bank Agent for the account of the Banks for
application to the payment or prepayment of the Senior Indebtedness until the
Senior Indebtedness shall have been paid in full.
Exhibit 10(c) Page 52
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(b) In the event that any Bank Event of Default described in Section
8.1.1 of the Bank Credit Agreement shall have occurred and be continuing, then
no payment (including any payment that may be payable by reason of any other
indebtedness of the Borrower being subordinated to payment of the Subordinated
Debt) shall be made by or on behalf of the Borrower for or on account of any
Subordinated Debt, and neither the Agent nor any Lender or other holder of any
Subordinated Debt shall take or receive from the Borrower, directly or
indirectly, in cash or other property or by set-off or in any other manner,
including, without limitation, from or by way of collateral, payment of all or
any of the Subordinated Debt.
(c) In the event that any Bank Event of Default (other than a Bank
Event of Default described in Section 8.1.1 of the Bank Credit Agreement) shall
have occurred and be continuing and the Bank Agent gives written notice thereof
to the Agent, then no payment (including any payment that may be payable by
reason of any other indebtedness of the Borrower being subordinated to payment
of the Subordinated Debt) shall be made by or on behalf of the Borrower for or
on account of any Subordinated Debt, and neither the Agent nor any Lender or
other holder of any Subordinated Debt shall take or receive from the Borrower,
directly or indirectly, in cash or other property or by set-off or in any other
manner, including, without limitation, from or by way of collateral, payment of
all or any of the Subordinated Debt, during a period (the "Payment Blockage
Period") commencing on the date of receipt of such notice and ending on the
earlier of (i) the date such Bank Event of Default shall have been cured or
waived in writing and (ii) the date 179 days from the date of receipt of such
notice. Any number of such notices may be given by the Agent; provided, however,
that during any 360-day period the aggregate number of days during which a
Payment Blockage Period shall be in effect shall not exceed 179 days and there
shall be a period of at least 181 consecutive days in each 360-day period when
no Payment Blockage Period is in effect.
Section 8.03. In Furtherance of Subordination.
(a) Each Lender or other holder of any Notes by its acceptance thereof
authorizes and directs the Agent on its behalf to take such action as may be
necessary or appropriate to effectuate, as between the Bank Agent and the Banks
and the Lenders and other holders of Subordinated Debt, the subordination as
provided in this Article VIII and appoints the Agent his attorney-in-fact for
any and all such purposes.
(b) If any proceeding referred to in Section 8.02(a) above is commenced
by or against the Borrower, the Lenders and other holders of the Subordinated
Debt and the Agent shall duly and promptly take such action as the Bank Agent
may reasonably request (A) to collect the Subordinated Debt and to file
appropriate claims or proofs of claim in respect of the Subordinated Debt and
(B) to collect and receive any and all payments which may be payable upon or
with respect to the Subordinated Debt.
(c) All payments upon or with respect to the Subordinated Debt which
are received by the Agent or any Lender or other holder of any Subordinated Debt
contrary to the
Exhibit 10(c) Page 53
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provisions of this Article shall be received in trust for the benefit
of the Banks, shall be segregated from other funds and property held by the
Agent or such Lender or other holder of Subordinated Debt and shall be forthwith
paid over to the Bank Agent for the account of the Banks in the same form as so
received (with any necessary indorsement) to be applied to the payment or
prepayment of the Senior Indebtedness in accordance with the terms of the Bank
Credit Agreement.
(d) The Bank Agent is hereby authorized to demand specific performance
of the provisions of this Article, whether or not the Borrower shall have
complied with any of the provisions hereof applicable to it, at any time when
any Lender or other holder of Subordinated Debt or the Agent shall have failed
to comply with any of the provisions of this Article applicable to it. The
Lenders and other holders of the Subordinated Debt and the Agent hereby
irrevocably waive any defense based on the adequacy of a remedy at law, which
might be asserted as a bar to such remedy of specific performance.
Section 8.04. Rights of Subrogation. No payment or distribution to the
Bank Agent or the Banks pursuant to the provisions of this Article shall entitle
any Lender or other holder of Subordinated Debt to exercise any right of
subrogation in respect thereof until the Senior Indebtedness shall have been
paid in full.
Section 8.05. Further Assurances. The Lenders and other holders of the
Subordinated Debt, the Agent and the Borrower each will, at the Borrower's
expense and at any time and from time to time, promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary or desirable, or that the Bank Agent may reasonably request, in order
to protect any right or interest granted or purported to be granted hereby or to
enable the Bank Agent or any Bank to exercise and enforce its rights and
remedies hereunder.
Section 8.06. Agreements in Respect of Subordinated Debt. (a) No
amendment, waiver or other modification of this Agreement may adversely affect
the rights or interests of the Bank Agent or any Bank hereunder.
(b) The Agent shall promptly notify the Bank Agent of the occurrence of
any Event of Default.
Exhibit 10(c) Page 54
<PAGE> 60
Section 8.07. Agreement by the Borrower. The Borrower agrees that it
will not make, nor permit any of its Subsidiaries to make, any payment of any of
the Subordinated Debt, or take any other action, in contravention of the
provisions of this Article.
Section 8.08. Waiver. The Lenders and other holders of the Subordinated
Debt, the Agent and the Borrower each hereby waives promptness, diligence,
notice of acceptance and any other notice with respect to any of the Senior
Indebtedness and this Article and any requirement that the Bank Agent or any
Bank protect, secure, perfect or insure any security interest or lien or any
property subject thereto or exhaust any right or take any action against the
Borrower or any other person or entity or any collateral.
Section 8.09. No Waiver; Remedies. No failure on the part of the Bank
Agent or any Bank to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
ARTICLE IX
MISCELLANEOUS
Section 9.01. Amendments, Etc. Except as otherwise specifically
provided in Section 2.04(b)(iv), no amendment or waiver of any provision of any
Loan Document, nor consent to any departure by the Borrower therefrom, shall in
any event be effective unless the same shall be in writing and signed by the
Required Lenders, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
however, that no amendment, waiver or consent shall, unless in writing and
signed by all the Lenders, do any of the following: (a) waive any of the
conditions specified in Section 3.01 or 3.02, (b) increase the Commitments of
the Lenders or subject the Lenders to any additional obligations, (c) reduce the
principal of, or interest on, the Notes or any fees or other amounts payable
hereunder, (d) postpone any date fixed for any payment of principal of, or
interest on, the Notes or any fees or other amounts payable hereunder, (e)
change the percentage of the Commitments or of the aggregate unpaid principal
amount of the Notes, or the number of Lenders, that shall be required for the
Lenders or any of them to take any action hereunder, (f) amend this Section
9.01; and provided further that no amendment, waiver or consent shall, unless in
writing and signed by the Agent in addition to the Lenders required above to
take such action, affect the rights or duties of the Agent under this Agreement
or any Note.
Exhibit 10(c) Page 55
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Section 9.02. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including telegraphic, telecopy,
telex or cable communication) and mailed, telegraphed, telecopied, telexed,
cabled or delivered, if to the Borrower, at its address at 300 Phillipi Road,
P.O. Box 28512, Columbus, Ohio 43228-0512, Attention: James A. McGrady,
Telecopier No. (614) 464-6666; with a copy to Benesch, Friedlander, Coplan &
Aronoff P.L.L., 2300 B.P. America Building, 200 Public Square, Cleveland, Ohio
44114-2378, Attention: Michael Wager, Telecopier No. (216) 363-4588; if to the
Agent, at its address at Merrill Lynch World Headquarters, North Tower, World
Financial Center, New York, New York 10281, Attention: Christopher Birosak, with
a copy to William R. Giusti, Esq., Shearman & Sterling, 599 Lexington Avenue,
New York, New York 10022 and a copy to MLPF&S at its address at Merrill Lynch
World Headquarters, North Tower, World Financial Center, New York, New York
10281-1201, Attention: Christopher Birosak; if to any Initial Lender, at its
Lending Office specified below its name on the signature pages hereto; if to any
other Lender, at its Lending Office specified in the Assignment and Acceptance
pursuant to which it became a Lender; or, as to each party, at such other
address as shall be designated by such party in a written notice to the other
party. All such notices and communications shall, when mailed, telecopied,
telegraphed, telexed or cabled, be effective when deposited in the mails,
telecopied, delivered to the telegraph company, confirmed by telex answerback or
delivered to the cable company, respectively, addressed as aforesaid, except
that notices to the Agent or any Lender pursuant to the provisions of Article II
shall not be effective until received by the Agent or such Lender, as the case
may be.
Section 9.03. No Waiver; Remedies. No failure on the part of the Agent
or any Lender to exercise, and no delay in exercising, any right hereunder or
under any Loan Document shall operate as a waiver thereof; nor shall any single
or partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
Section 9.04. Costs and Expenses. The Borrower agrees to pay on demand
all costs and expenses of the Agent in connection with the preparation,
execution, delivery, administration, modification and amendment of the Loan
Documents and the other documents to be delivered under the Loan Documents
(including, without limitation, (i) all due diligence, syndication (including
printing, distribution and bank meetings); transportation, computer,
duplication, appraisal, audit, insurance, consultant, search, filing and
recording fees and expenses and (ii) the reasonable fees and expenses of counsel
for the Agent with respect thereto, with respect to advising the Agent as to its
rights and responsibilities, or the protection or preservation of rights and
interests, under the Loan Documents, with respect to negotiations with the
Borrower or with other creditors of the Borrower or any of its Subsidiaries
arising out of any Default or any events or circumstances which may give rise to
a Default and with respect to presenting claims in or otherwise participating in
or monitoring any bankruptcy, insolvency or other similar proceeding involving
creditors' rights generally and any proceeding ancillary thereto). The Borrower
further agrees to pay on demand all costs and expenses, if any
Exhibit 10(c) Page 56
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(including, without limitation, reasonable counsel fees and expenses),
of the Agent and the Lenders in connection with the enforcement (whether through
negotiations or in any action, suit or litigation, any bankruptcy, insolvency or
other similar proceeding affecting creditors' rights generally or otherwise) of
Loan Documents and the other documents to be delivered under the Loan Documents,
including, without limitation, reasonable counsel fees and expenses in
connection, with the enforcement of rights under this Section 9.04.
Section 9.05. Binding Effect. This Agreement shall become effective
when it shall have been executed by the Borrower, the Initial Lenders and the
Agent and thereafter shall be binding upon and inure to the benefit of the
Borrower, the Borrower, each Lender and the Agent and their respective
successors and assigns, except that the Borrower shall not have the right to
assign or otherwise transfer all or any part of its rights or obligations
hereunder or any interest herein without the prior written consent of the
Lenders.
Section 9.06. Indemnity. (a) The Borrower agrees to indemnify and hold
harmless the Agent and each Lender and each of their Affiliates and their
respective directors, officers, employees, agents and controlling persons (each,
an "Indemnified Party") from and against any and all losses, claims, damages,
expenses and liabilities (including counsel fees and expenses), joint or
several, to which such Indemnified Party may become subject under any applicable
federal or state law and related to or arising out of (i) any transaction
contemplated by the Loan Documents or the execution, delivery and performance of
the Loan Documents or any other document in any way relating to the Loan and the
other transactions contemplated by the Loan Documents, or (ii) the actual or
alleged presence of Hazardous Materials on any property of the Borrower or any
of its Subsidiaries or any Environmental Action relating in any way to the
Borrower or any of its Subsidiaries. In the case of a claim, action or
proceeding to which the indemnity in this Section 9.06(a) otherwise applies, the
indemnity shall be effective whether or not such Indemnified Party is a party
and whether or not such claim, action or proceeding is initiated or brought by
or on behalf of the Borrower or any of its Subsidiaries. The Borrower will not
be liable under the foregoing indemnification provision to an Indemnified Party
to the extent that any loss, claim, damage, liability or expense is found in a
final, nonappealable judgment by a court of competent jurisdiction to have
resulted from such Indemnified Party's bad faith or gross negligence. The
Borrower also agrees that no Indemnified Party shall have any liability (whether
direct or indirect, in contract or tort or otherwise) to the Borrower or any of
its Subsidiaries, or any security holders or creditors thereof related to or
arising out of the execution, delivery and performance of any Loan Document or
any other document in any way relating to any of the Loans or the other
transactions contemplated by the Loan Documents except to the extent that any
loss, claim, damage or liability is found in a final, non-appealable judgment by
a court to have resulted from such Indemnified Party's bad faith or gross
negligence.
(b) If the indemnification of an Indemnified Party provided for in
Section 9.06(a) is for any reason held unenforceable, the Borrower agrees to
contribute to the losses, claims,
Exhibit 10(c) Page 57
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damages and liabilities for which such indemnification is held
unenforceable (i) in such proportion as is appropriate to reflect the relative
benefits to the Borrower and its Subsidiaries, on the one hand, and such
Indemnified Party, on the other hand, of the transactions contemplated by the
Loan Documents, including, without limitation, the Loans and the other
transactions contemplated by any other document in any way relating to any of
the Loans (whether or not any of such transaction is consummated) or (ii) if
(but only if) the allocation provided for in clause (i) is for any reason held
unenforceable, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) but also the relative fault of the
Borrower and its Subsidiaries, on the one hand, and such Indemnified Party, on
the other hand, as well as any other relevant equitable considerations. The
Borrower agrees that for the purposes of this paragraph the relative benefits to
the Borrower and its Subsidiaries and the Indemnified Parties of the
transactions contemplated by this Agreement, including, without limitation, the
Loan, and the other transactions contemplated by any other document in any way
relating to the Loan, shall be deemed to be in the same proportion that the
proceeds of the Loan paid or to be paid to the Borrower bears to the interest
and fees paid or to be paid to such Indemnified Party in connection with the
Loans; provided, however, that, to the extent permitted by applicable law, in no
event shall any Indemnified Party be required to contribute an aggregate amount
in excess of the aggregate interest and fees actually paid to such Indemnified
Party in connection with the Loan.
(c) The Borrower agrees that, without the Lenders' prior written
consent, neither it nor any of its Subsidiaries will settle, compromise or
consent to the entry of any judgment in any pending or threatened claim, action
or proceeding in respect of which indemnification could be sought under this
Section 9.06 (whether or not MLCC or any other Indemnified Party is an actual or
potential party to such claim, action or proceeding), unless such settlement,
compromise or consent includes any unconditional release of each Indemnified
Party from all liability arising out of such claim, action or proceeding.
(d) In the event that an Indemnified Party is requested or required to
appear as a witness in any action brought by or on behalf of or against the
Borrower or any of its Subsidiaries or any Affiliate thereof in which such
Indemnified Party is not named as a defendant, the Borrower agrees to reimburse
such Indemnified Party for all reasonable expenses incurred by it in connection
with such Indemnified Party's appearing and preparing to appear as such a
witness, including, without limitation, the reasonable fees and disbursements of
its legal counsel.
(e) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 9.06 shall survive the payment in full of all amounts payable
hereunder and under the Notes.
Section 9.07. Right of Set-off. Upon (a) the occurrence and during the
continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 6.01 to authorize the Agent to
declare the Notes due and payable pursuant to the provisions of Section 6.01,
each Lender and each of its Affiliates is
Exhibit 10(c) Page 58
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hereby authorized at any time and from time to time, to the fullest
extent permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Lender or such Affiliate to or for the
credit or the account of the Borrower against any and all of the obligations of
the Borrower now or hereafter existing under this Agreement and the Note held by
such Lender, whether or not such Lender shall have made any demand under this
Agreement or such Note and although such obligations may be unmatured. Each
Lender agrees promptly to notify the Borrower after any such set-off and
application, provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Lender and its
Affiliates under this Section are in addition to other rights and remedies
(including, without limitation, other rights of set-off) that such Lender and
its Affiliates may have.
Section 9.08. Assignments and Participations. (a) Each Lender may
assign to one or more Persons all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of its
Commitment and the Note held by it); provided, however, that (i) each such
assignment shall be of a constant, and not a varying, percentage of all rights
and obligations under this Agreement, (ii) each such assignment shall be to an
Eligible Assignee, and (iii) the parties to each such assignment shall execute
and deliver to the Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance, together with any Note subject to such assignment and
a processing and recordation fee of $3,000. Upon such execution, delivery,
acceptance and recording, from and after the effective date specified in each
Assignment and Acceptance, (x) the assignee thereunder shall be a party hereto
and, to the extent that rights and obligations hereunder have been assigned to
it pursuant to such Assignment and Acceptance, have the rights and obligations
of a Lender hereunder and (y) the Lender assignor thereunder shall, to the
extent that rights and obligations hereunder have been assigned by it pursuant
to such Assignment and Acceptance, relinquish its rights and be released from
its 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). The Agent intends to consult with PNC Bank, Ohio, National Association,
as agent under the Bank Credit Agreement with respect to the syndication of the
Loan and to reach mutual agreement with such agent with respect to such
syndication to any commercial banks.
(b) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as provided
in such Assignment and Acceptance, 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
any other Loan Document or the execution, legality, validity, enforceability,
genuineness, sufficiency or value this Agreement or any other Loan Document or
any other instrument or document furnished pursuant hereto; (ii) such assigning
Lender makes no representation or warranty and assumes
Exhibit 10(c) Page 59
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no responsibility with respect to the financial condition of the
Borrower or the performance or observance by the Borrower of any of its
obligations under any Loan Document or any other instrument or document
furnished pursuant hereto; (iii) such assignee confirms that it has received a
copy of this Agreement, together with copies of the financial statements
referred to in Section 4.01 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; (iv) 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 Agreement; (v) such assignee confirms that it is an Eligible
Assignee; (vi) such assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers and discretion under
the Loan Documents as are delegated to the Agent by the terms hereof, together
with such powers and discretion as are reasonably incidental thereto; and (vii)
such assignee agrees that it will perform in accordance with their terms all of
the obligations that by the terms of this Agreement are required to be performed
by it as a Lender.
(c) The Agent shall maintain at its address referred to in Section 9.02
a copy of each Assignment and Acceptance delivered to and accepted by it and a
register for the recordation of the names and addresses of the Lenders and the
Commitment of, and the principal amount of the portion of the Loan owing to each
Lender from time to time (the "Register"). The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and the
Borrower, the Agent and the Lenders may treat each Person whose name is recorded
in the Register as a Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection by the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee representing that it is an Eligible Assignee,
together with any Note or Notes subject to such assignment, the Agent shall, if
such Assignment and Acceptance has been completed and is in substantially the
form of Exhibit C hereto, (i) accept such Assignment and Acceptance, (ii) record
the information contained therein in the Register and (iii) give prompt notice
thereof to the Borrower. Within five Business Days after its receipt of such
notice, the Borrower, at its own expense, shall execute and deliver to the Agent
in exchange for the surrendered Note a new Note to the order of such Eligible
Assignee in an amount equal to the Commitment assumed by it pursuant to such
Assignment and Acceptance and, if the assigning Lender has retained a Commitment
hereunder, a new Note to the order of the assigning Lender in an amount equal to
the Commitment retained by it hereunder. Such new Note or Notes shall be in an
aggregate principal amount equal to the aggregate principal amount of such
surrendered Note, shall be dated the effective date of such Assignment and
Acceptance and shall otherwise be in substantially the form of Exhibit A-1 or
A-2 hereto, as the case may be.
Exhibit 10(c) Page 60
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(e) Each Lender may sell participations to one or more banks or other
entities (other than the Borrower or any of its Affiliates) in or to all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment and the Note held by it);
provided, however, that (i) such Lender's obligations under this Agreement
(including, without limitation, its Commitment to the Borrower hereunder) shall
remain unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) such Lender shall
remain the holder of any such Note for all purposes of this Agreement, (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 (v) no participant under any such
participation shall have any right to approve any amendment or waiver of any
provision of any Loan Documents, or any consent to any departure by the Borrower
therefrom, except to the extent that such amendment, waiver or consent would
reduce the principal of, or interest on, the Notes or any fees or other amounts
payable hereunder, in each case to the extent subject to such participation, or
postpone any date fixed for any payment of principal of, or interest on, the
Notes or any fees or other amounts payable hereunder, in each case to the extent
subject to such participation.
(f) Any Lender may, in connection with any assignment or participation
or proposed assignment or participation pursuant to this Section 9.08, disclose
to the assignee or participant or proposed assignee or participant, any
information relating to the Borrower furnished to such Lender by or on behalf of
the Borrower.
(g) Notwithstanding any other provision set forth in this Agreement,
any Lender may at any time create a security interest in all or any portion of
its rights under this Agreement (including, without limitation, the Note held by
it) in favor of any Federal Reserve Bank in accordance with Regulation A of the
Board of Governors of the Federal Reserve System.
Exhibit 10(c) Page 61
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Section 9.09. Governing Law. This Agreement and each Note shall be
governed by, and construed in accordance with, the laws of the State of New
York.
Section 9.10. Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by different parties thereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Section 9.11. Consent to Jurisdiction. (a) The Borrower hereby
irrevocably submits to the jurisdiction of any New York State or Federal court
sitting in the City of New York, New York County, in any action or proceeding
arising out of or relating to this Agreement or any other Loan Document, and the
Borrower hereby irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such New York State court or such
Federal court. The Borrower hereby irrevocably waives, to the fullest extent it
may effectively do so, the defense of an inconvenient forum to the maintenance
of such action or proceeding. The Borrower hereby irrevocably consents to the
service of copies of any summons and complaint and any other process which may
be served in any such action or proceeding by certified mail, return receipt
requested, or by delivering a copy of such process to the Borrower, at its
address specified in Section 9.02 or by any other method permitted by law. The
Borrower agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
by any other manner provided by law.
(b) Nothing in this Section 9.11 shall affect the right of the Agent or
any Lender to serve legal process in any other manner permitted by law or affect
the right of the Agent or any Lender to bring any action or proceeding against
the Borrower or their property in the courts of other jurisdictions.
SECTION 9.12. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE LENDERS
AND THE AGENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS, ANY DOCUMENT
DELIVERED UNDER THE LOAN DOCUMENTS, THE LOAN OR THE ACTIONS OF THE AGENT OR ANY
LENDER IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.
Exhibit 10(c) Page 62
<PAGE> 68
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
CONSOLIDATED STORES CORPORATION,
as Borrower
By
Name:
Title:
MERRILL LYNCH CAPITAL CORPORATION
as Agent
By
Name:
Title:
INITIAL LENDERS
Commitment
$100,000,000 MERRILL LYNCH CAPITAL CORPORATION
By
Name:
Title:
$100,000,000 Total of the Commitments
============
Exhibit 10(c) Page 63
<PAGE> 1
EXHIBIT 10(c)(i)
----------------
PARENT GUARANTY
Dated as of May 3, 1996
From
CONSOLIDATED STORES CORPORATION,
as Guarantor
in favor of
THE LENDERS PARTY TO THE SHORT TERM LOAN AGREEMENT
REFERRED TO HEREIN,
and
MERRILL LYNCH CAPITAL CORPORATION,
as Agent
<PAGE> 2
<TABLE>
<CAPTION>
EXHIBIT 10(c)(i)
----------------
TABLE OF CONTENTS
SECTION PAGE
----
<S> <C>
1. Guaranty 1
2. Guaranty Absolute 1
3. Waivers 3
4. Subrogation 3
5. Payments Free and Clear of Taxes, Etc. 4
6. Representations and Warranties 6
7. Terms of Subordination 8
8. Undertaking 11
9. Amendments, Etc. 14
10. Notices, Etc. 14
11. No Waiver; Remedies 14
12. Right of Set-off 15
13. Indemnificatio 15
14. Continuing Guaranty; Assignments Under the
Short Term Loan Agreement 15
15. Governing Law; Jurisdiction;
Waiver of Jury Trial, Etc. 16
</TABLE>
<PAGE> 3
PARENT GUARANTY
GUARANTY dated May 3, 1996 made by Consolidated Stores Corporation, a
Delaware corporation (the "GUARANTOR"), in favor of the banks, financial
institutions and other institutional lenders (the "LENDERS") party to the Short
Term Loan Agreement (as defined below), and MERRILL LYNCH CAPITAL CORPORATION, a
Delaware corporation ("MLCC") as agent (the "AGENT") for the Lenders.
PRELIMINARY STATEMENT. The Lenders and the Agent are parties to a Short
Term Loan Agreement dated as of May 3, 1996 (said Agreement, as it may hereafter
be amended, supplemented or otherwise modified from time to time, being the
"SHORT TERM LOAN AGREEMENT"; the terms defined therein and not otherwise defined
herein being used herein as therein defined) with Consolidated Stores
Corporation, an Ohio corporation (the "BORROWER"). The Guarantor is the Parent
of the Borrower and will derive substantial direct and indirect benefit from the
transactions contemplated by the Short Term Loan Agreement. It is a condition
precedent to the making of Advances by the Lenders under the Short Term Loan
Agreement that the Guarantor shall have executed and delivered this Guaranty.
NOW, THEREFORE, in consideration of the premises and in order to induce the
Lenders to make Advances to the Borrower under the Short Term Loan Agreement,
the Guarantor hereby agrees as follows:
SECTION 1. GUARANTY. The Guarantor hereby unconditionally and irrevocably
guarantees the punctual payment when due, whether at stated maturity, by
acceleration or otherwise, of all Obligations of each other Loan Party now or
hereafter existing under the Loan Documents, whether for principal, interest,
fees, expenses or otherwise (such Obligations being the "GUARANTEED
OBLIGATIONS"), and agrees to pay any and all expenses (including counsel fees
and expenses) incurred by the Agent or any Lender in enforcing any rights under
this Guaranty. Without limiting the generality of the foregoing, the Guarantor's
liability shall extend to all amounts that constitute part of the Guaranteed
Obligations and would be owed by any other Loan Party to the Agent or any other
Party under the Loan Documents but for the fact that they are unenforceable or
not allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving such Loan Party.
SECTION 2. GUARANTY ABSOLUTE. The Guarantor guarantees that the Guaranteed
Obligations will be paid strictly in accordance with the terms of the Loan
Documents, regardless of any law, regulation or order now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of the Agent or
the Lenders with respect thereto. The Obligations of the Guarantor under this
Guaranty are independent of the Guaranteed Obligations or any other Obligations
of any other Loan Party under the Loan Documents, and a separate action or
actions may be brought and prosecuted against the Guarantor to enforce this
Guaranty, irrespective of whether any action is brought against the Borrower or
any other Loan Party or whether the Borrower or any
Exhibit 10(c)(i) Page 1
<PAGE> 4
other Loan Party is joined in any such action or actions. The liability of the
Guarantor under this Guaranty shall be irrevocable, absolute and unconditional
irrespective of, and the Guarantor hereby irrevocably waives any defenses it may
now or hereafter have in any way relating to, any or all of the following:
(a) any lack of validity or enforceability of any Loan Document or any
agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Guaranteed Obligations or any other
Obligations of any other Loan Party under the Loan Documents, or any other
amendment or waiver of or any consent to departure from any Loan Document,
including, without limitation, any increase in the Guaranteed Obligations
resulting from the extension of additional credit to the Borrower or any of
its Subsidiaries or otherwise;
(c) any taking, exchange, release or non-perfection of any collateral,
or any taking, release or amendment or waiver of or consent to departure
from any other guaranty, for all or any of the Guaranteed Obligations;
(d) any manner of application of any collateral, or proceeds thereof,
to all or any of the Guaranteed Obligations, or any manner of sale or other
disposition of any collateral for all or any of the Guaranteed Obligations
or any other Obligations of any other Loan Party under the Loan Documents
or any other assets of the Borrower or any of its Subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of the Borrower or any of its Subsidiaries;
(f) any failure of the Agent or any Lender to disclose to the Borrower
or the Guarantor any information relating to the financial condition,
operations, properties or prospects of any other Loan Party now or in the
future known to the Agent or such Lender (the Guarantor waiving any duty on
the part of the Parties to disclose such information); or
(g) any other circumstance (including, without limitation, any statute
of limitations or any existence of or reliance on any representation by the
Agent or any Lender that might otherwise constitute a defense available to,
or a discharge of, the Borrower or any other guarantor or surety.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by the Agent or any Lender or by any other Person
upon the insolvency, bankruptcy or reorganization of the Borrower or any other
Loan Party or otherwise, all as though such payment had not been made.
Exhibit 10(c)(i) Page 2
<PAGE> 5
SECTION 3. WAIVERS. (a) The Guarantor hereby waives promptness, diligence,
notice of acceptance and any other notice with respect to any of the Guaranteed
Obligations and this Guaranty and any requirement that the Agent or any Lender
protect, secure, perfect or insure any Lien or any property subject thereto or
exhaust any right or take any action against the Borrower or any other Person or
any collateral.
(b) The Guarantor hereby waives any right to revoke this Guaranty, and
acknowledges that this Guaranty is continuing in nature and applies to all
Guaranteed Obligations, whether existing now or in the future.
(c) The Guarantor acknowledges that it will receive substantial direct and
indirect benefits from the financing arrangements contemplated by the Loan
Documents and that the waivers set forth in this Section 3 are knowingly made in
contemplation of such benefits.
SECTION 4. SUBROGATION. The Guarantor will not exercise any rights that it
may now or hereafter acquire against the Borrower or any other insider guarantor
that arise from the existence, payment, performance or enforcement of the
Guarantor's Obligations under this Guaranty or any other Loan Document,
including, without limitation, any right of subrogation, reimbursement,
exoneration, contribution or indemnification and any right to participate in any
claim or remedy of the Agent or any Lender against the Borrower or any other
insider guarantor or any collateral, whether or not such claim, remedy or right
arises in equity or under contract, statute or common law, including, without
limitation, the right to take or receive from the Borrower or any other insider
guarantor, directly or indirectly, in cash or other property or by set-off or in
any other manner, payment or security on account of such claim, remedy or right,
until all of the Obligations and all other amounts payable under this Guaranty
shall have been paid in full and the Commitments shall have expired or
terminated. If any amount shall be paid to the Guarantor in violation of the
preceding sentence at any time prior to the later of the cash payment in full of
the Guaranteed Obligations and all other amounts payable under this Guaranty and
the Termination Date, such amount shall be held in trust for the benefit of the
Agent and the Lenders and shall forthwith be paid to the Agent to be credited
and applied to the Guaranteed Obligations and all other amounts payable under
this Guaranty, whether matured or unmatured, in accordance with the terms of the
Loan Documents, or to be held as collateral for any Guaranteed Obligations or
other amounts payable under this Guaranty thereafter arising. If (i) the
Guarantor shall make payment to the Agent or any Lender of all or any part of
the Guaranteed Obligations, (ii) all the Guaranteed Obligations and all other
amounts payable under this Guaranty shall be paid in full and (iii) the
Termination Date shall have occurred, the Agent and the Lenders will, at the
Guarantor's request and expense, execute and deliver to the Guarantor
appropriate documents, without recourse and without representation or warranty,
necessary to evidence the transfer by subrogation to the Guarantor of an
interest in the Guaranteed Obligations resulting from such payment by the
Guarantor.
Exhibit 10(c)(i) Page 3
<PAGE> 6
SECTION 5. PAYMENTS FREE AND CLEAR OF TAXES, ETC. (a) Any and all payments
made by the Guarantor hereunder shall be made, in accordance with Section 2.08
of the Short Term Loan Agreement, free and clear of and without deduction for
any and all present or future Taxes. If the Guarantor shall be required by law
to deduct any Taxes from or in respect of any sum payable hereunder to the Agent
or any Lender, (i) the sum payable shall be increased as may be necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section 5) the Agent or such Lender (as the
case may be) receives an amount equal to the sum it would have received had no
such deductions been made, (ii) the Guarantor shall make such deductions and
(iii) the Guarantor shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law.
(b) In addition, the Guarantor agrees to pay any present or future Other
Taxes.
(c) The Guarantor will indemnify the Agent and each Lender for the full
amount of Taxes or Other Taxes (including, without limitation, any taxes imposed
by any jurisdiction on amounts payable under this Section 5) imposed on or paid
by the Agent or such Lender (as the case may be) and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto.
This indemnification shall be made within 30 days from the date the Agent or
such Lender (as the case may be) makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes by or on behalf
of the Guarantor, the Guarantor will furnish to the Agent, at its address
referred to in Section 9.02 of the Short Term Loan Agreement, the original or a
certified copy of a receipt evidencing payment thereof. In the case of any
payment hereunder by or on behalf of the Guarantor through an account or branch
outside the United States or by or on behalf of the Guarantor by a payor that is
not a United States person, if the Guarantor determines that no Taxes are
payable in respect thereof, the Guarantor shall furnish, or shall cause such
payor to furnish, to the Agent, at such address, an opinion of counsel
acceptable to the Agent stating that such payment is exempt from Taxes. For
purposes of this subsection (d) and subsection (e), the terms "UNITED STATES"
and "UNITED STATES PERSON" shall have the meanings specified in Section 7701 of
the Internal Revenue Code.
(e) Upon the reasonable request in writing of the Guarantor, each Lender
organized under the laws of a jurisdiction outside the United States shall, on
or prior to the date of its execution and delivery of the Short Term Loan
Agreement in the case of each Initial Lender, and on the date of the Assignment
and Acceptance pursuant to which it became a Lender in the case of each other
Lender, and from time to time thereafter upon the reasonable request in writing
by the Guarantor (but only so long thereafter as such Lender remains lawfully
able to do so), provide each of the Agent and the Guarantor with two original
Internal Revenue Service forms 1001 or 4224, as
Exhibit 10(c)(i) Page 4
<PAGE> 7
appropriate, or any successor or other form prescribed by the Internal Revenue
Service, certifying that such Lender is exempt from or is entitled to a reduced
rate of United States withholding tax on payments under the Short Term Loan
Agreement or the Notes. If the forms provided by a Lender at the time such
Lender first becomes a party to the Short Term Loan Agreement indicates a United
States interest withholding tax rate in excess of zero, withholding tax at such
rate shall be considered excluded from Taxes unless and until such Lender
provides the appropriate forms certifying that a lesser rate applies, whereupon
withholding tax at such lesser rate only shall be considered excluded from Taxes
for periods governed by such form; PROVIDED, HOWEVER, that, if at the date of
the Assignment and Acceptance pursuant to which a Lender assignee becomes a
party to the Short Term Loan Agreement, the Lender assignor was entitled to
payments under subsection (a) in respect of United States withholding tax with
respect to interest paid at such date, then, to such extent, the term Taxes
shall include (in addition to withholding taxes that may be imposed in the
future or other amounts otherwise includable in Taxes) United States withholding
tax, if any, applicable with respect to the Lender Party assignee on such date.
If any form or document referred to in this subsection (e) and requested by the
Guarantor pursuant to this subsection (e) requires the disclosure of
information, other than information necessary to compute the tax payable and
information required on the date hereof by Internal Revenue Service form 1001 or
4224, that the Lender reasonably considers to be confidential, the Lender shall
give notice thereof to the Guarantor and shall not be obligated to include in
such form or document such confidential information.
(f) For any period with respect to which a Lender has failed to provide the
Guarantor following the Guarantor's request therefor pursuant to subsection (e)
above with the appropriate form described in subsection (e) (OTHER THAN if such
failure is due to a change in law occurring after the date on which a form
originally was required to be provided or if such form otherwise is not required
under subsection (e)), such Lender shall not be entitled to indemnification
under subsection (a) or (c) with respect to Taxes imposed by the United States
by reason of such failure; PROVIDED, HOWEVER, that should a Lender become
subject to Taxes because of its failure to deliver a form required hereunder,
the Guarantor shall take such steps as such Lender shall reasonably request to
assist such Lender to recover such Taxes.
(g) Without prejudice to the survival of any other agreement of any Loan
Party hereunder or under any other Loan Document, the agreements and obligations
of the Guarantor contained in this Section 5 shall survive the payment in full
of the Guaranteed Obligations and all other amounts payable under this Guaranty.
Exhibit 10(c)(i) Page 5
<PAGE> 8
SECTION 6. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby represents
and warrants as of the date hereof as follows:
(a) The Guarantor and each of its Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all requisite corporate power and
authority to own or lease and operate its properties and to carry on its
business as now conducted. The Guarantor and each of its Subsidiaries
listed on Schedule 4.01(j) is duly qualified or licensed to do business as
a foreign corporation in good standing in all jurisdictions in which it
owns or leases property or proposes to own or lease property or in which
the conduct of its business requires it to so qualify or be licensed,
except for such jurisdictions where the failure to so qualify or be
licensed would not have a Material Adverse Effect. All of the outstanding
capital stock of the Guarantor and each of its Subsidiaries has been
validly issued, is fully paid and non-assessable.
(b) The Guarantor has full corporate power and authority to enter
into, deliver and perform its obligations under each Loan Document and each
Material Contract to which it is or will be a party and to consummate each
of the transactions contemplated by each such Loan Document and Material
Contract and has taken all necessary corporate action to authorize the
execution, delivery and performance by it of each Loan Document to which it
is or will be a party and to authorize the Acquisition; and each Loan
Document to which it is a party constitutes, and each Material Contract to
which it is or will be a party when delivered pursuant to the Short Term
Loan Agreement will constitute, the legal, valid and binding obligation of
the Guarantor, enforceable against the Guarantor in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect
affecting the enforcement of creditors' rights generally.
(c) Neither the execution and delivery of any Loan Document, any
Material Contract to which the Guarantor is or is to be a party nor the
performance by the Guarantor of its obligations thereunder, nor the
consummation of the transactions contemplated thereby including, without
limitation, the Acquisition will, (i) conflict with the charter or by-laws
of the Guarantor or (ii) conflict with or result in a breach of, or
constitute a default under, or result in the creation or imposition of any
Lien upon any of the property or assets of the Guarantor or any Subsidiary
of the Guarantor, as the case may be, under, (A) any applicable laws
(including, without limitation, Regulation X issued by the Board of
Governors of the Federal Reserve System), (B) any loan agreement, indenture
or similar instrument or agreement, or (C) any material mortgage, deed of
trust or other similar instrument or agreement, in each case, to which the
Guarantor or any Subsidiary of the Guarantor, as the case may be, may be or
become a party or by which it may be or become bound or to which any of the
property or assets of
Exhibit 10(c)(i) Page 6
<PAGE> 9
the Guarantor or any Subsidiary of the Guarantor, as the case may be, may
be subject.
(d) No consent, approval, exemption, order or authorization of, or a
registration or filing with, any Official Body or any other Person is
required by any law, constitution, statute, treaty, regulation, rule,
ordinance, opinion, release, ruling, order, injunction, writ, decree or
award of any Official Body or any agreement in connection with the
execution, delivery and carrying out of this Guaranty, the other Loan
Documents or the Material Contracts by the Guarantor, except as listed in
Schedule 4.01(d), all of which shall have been obtained or made on or prior
to the Closing Date.
(e) There are no actions, suits, proceedings or investigations pending
or, to the knowledge of the Guarantor, threatened against the Guarantor or
any Subsidiary of the Guarantor at law or equity before any Official Body
which individually or in the aggregate (A) would restrain, prohibit or
impose adverse conditions on the ability of the Lenders to make the Loan,
(B) could be reasonably expected to have a Material Adverse Effect, (C)
would impair the ability of MLPF&S to sell debt or equity securities as
contemplated by Section 8 hereof or (D) could purport to affect the
legality, validity or enforceability of this Guaranty, any other Loan
Document or the consummation of the transactions contemplated thereby,
including, without limitation, the Acquisition and the Offering, and, in
each case there is a reasonable probability that such action, suit,
investigation, litigation or proceeding would be successful on the merits.
(f) No event has occurred and is continuing and no condition exists
now or will exist after the execution of the Loan Documents or the Material
Contracts which constitutes a Default. Neither the Guarantor nor any
Subsidiaries of the Guarantor is in violation of (i) any term of its
certificate of incorporation, bylaws, or other organizational documents or
(ii) any material agreement or instrument to which it is a party or by
which it or any of its properties may be subject or bound where such
violation would reasonably be expected to have a Material Adverse Effect.
(g) There are no conditions precedent to the effectiveness of this
Guaranty that have not been satisfied or waived.
(h) The Guarantor has, independently and without reliance upon the
Agent or any Lender and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into
this Guaranty, and the Guarantor has established adequate means of
obtaining from any other Loan Parties on a continuing basis information
pertaining to, and is now and on a continuing basis will be completely
familiar with, the financial condition, operations, properties and
prospects of such other Loan Parties.
Exhibit 10(c)(i) Page 7
<PAGE> 10
(i) The breach of any of the foregoing representations and warranties
with respect to a Subsidiary of the Guarantor other than the Borrower or a
Material Subsidiary shall not be deemed to breach such representation or
warranty unless such breach has a Material Adverse Effect.
SECTION 7. TERMS OF SUBORDINATION. (a) SUBORDINATED DEBT SUBORDINATE TO
SENIOR INDEBTEDNESS. The Guarantor agrees, and each Lender and holder of any
Note, by its acceptance thereof, also agrees, that the Subordinated Debt (as
defined below) is and shall be subordinate, to the extent and in the manner
hereinafter set forth, to the prior payment in full in cash of all Senior
Indebtedness (as defined below).
(b) EVENTS OF SUBORDINATION. (i) In the event of any dissolution,
winding up, liquidation, arrangement, reorganization, adjustment,
protection, relief or composition of the Guarantor or its debts, whether
voluntary or involuntary, in any bankruptcy, insolvency, arrangement,
reorganization, receivership, relief or other similar case or proceeding
under any Federal or State bankruptcy or similar law or upon an assignment
for the benefit of creditors or any other marshalling of the assets and
liabilities of the Guarantor or otherwise, Senior Indebtedness shall first
be paid in full before the Lenders or other holders of any Subordinated
Debt shall be entitled to receive any payment of all or any of the
Subordinated Debt, and any payment that otherwise would be payable upon or
with respect to the Subordinated Debt in any such case, proceeding,
assignment, marshalling or otherwise (including any payment that may be
payable by reason of any other indebtedness of the Guarantor being
subordinated to payment of the Subordinated Debt) shall be paid or
delivered directly to the Bank Agent for the account of the Banks for
application to the payment of the Senior Indebtedness until the Senior
Indebtedness shall have been paid in full.
(ii) In the event that any Bank Event of Default described in
Section 8.1.1 of the Bank Credit Agreement shall have occurred and be
continuing with respect to the Guarantor, then no payment (including
any payment that may be payable by reason of any other indebtedness of
the Guarantor being subordinated to payment of the Subordinated Debt)
shall be made by or on behalf of the Guarantor for or on account of
any Subordinated Debt, and neither the Agent nor any Lender or other
holder of any Subordinated Debt shall take or receive from the
Guarantor, directly or indirectly, in cash or other property or by
set-off or in any other manner, including, without limitation, from or
by way of collateral, payment of all or any of the Subordinated Debt.
(iii) In the event that any Bank Event of Default (other
than a Bank Event of Default described in Section 8.1.1 of the
Bank Credit Agreement) shall have occurred and be continuing with
respect to the Guarantor and the Bank Agent gives written notice
thereof to the Agent, then no payment (including any payment that
may be payable by reason
Exhibit 10(c)(i) Page 8
<PAGE> 11
of any other indebtedness of the Guarantor being subordinated to
payment of the Subordinated Debt) shall be made by or on behalf
of the Guarantor for or on account of any Subordinated Debt, and
neither the Agent nor any Lender or other holder of any
Subordinated Debt shall take or receive from the Guarantor,
directly or indirectly, in cash or other property or by set-off
or in any other manner, including, without limitation, from or by
way of collateral, payment of all or any of the Subordinated
Debt, during a period (the "PAYMENT BLOCKAGE PERIOD") commencing
on the date of receipt of such notice and ending on the earlier
of (i) the date such Bank Event of Default shall have been cured
or waived in writing and (ii) the date 179 days from the date of
receipt of such notice. Any number of such notices may be given
by the Agent; PROVIDED, HOWEVER, that during any 360-day period
the aggregate number of days during which a Payment Blockage
Period shall be in effect shall not exceed 179 days and there
shall be a period of at least 181 consecutive days in each
360-day period when no Payment Blockage Period is in effect.
(c) IN FURTHERANCE OF SUBORDINATION. (i) Each Lender or other holder of any
Notes by its acceptance thereof authorizes and directs the Agent on its behalf
to take such action as may be necessary or appropriate to effectuate, as between
the Bank Agent and the Banks and the Lenders and other holders of Subordinated
Debt, the subordination as provided in this Section 7 and appoints the Agent his
attorney-in-fact for any and all such purposes.
(ii) If any proceeding referred to in Section 7(b)(i) above
is commenced by or against the Guarantor, the Lenders and other
holders of the Subordinated Debt and the Agent shall duly and
promptly take such action as the Bank Agent may reasonably
request (A) to collect the Subordinated Debt and to file
appropriate claims or proofs of claim in respect of the
Subordinated Debt and (B) to collect and receive any and all
payments which may be payable upon or with respect to the
Subordinated Debt.
(iii) All payments upon or with respect to the Subordinated
Debt which are received by the Agent or any Lender or other
holder of any Subordinated Debt contrary to the provisions of
this Section shall be received in trust for the benefit of the
Banks, shall be segregated from other funds and property held by
the Agent or such Lender or other holder of Subordinated Debt and
shall be forthwith paid over to the Bank Agent for the account of
the Banks in the same form as so received (with any necessary
indorsement) to be applied to the payment or prepayment of the
Senior Indebtedness in accordance with the terms of the Bank
Credit Agreement.
Exhibit 10(c)(i) Page 9
<PAGE> 12
(iv) The Bank Agent is hereby authorized to demand specific
performance of the provisions of this Section, whether or not the
Guarantor shall have complied with any of the provisions hereof
applicable to it, at any time when any Lender or other holder of
Subordinated Debt or the Agent shall have failed to comply with
any of the provisions of this Section applicable to it. The
Lenders and other holders of the Subordinated Debt and the Agent
hereby irrevocably waive any defense based on the adequacy of a
remedy at law, which might be asserted as a bar to such remedy of
specific performance.
(d) RIGHTS OF SUBROGATION. No payment or distribution to the Bank Agent or
the Banks pursuant to the provisions of this Section shall entitle any Lender or
other holder of Subordinated Debt to exercise any right of subrogation in
respect thereof until the Senior Indebtedness shall have been paid in full.
(e) FURTHER ASSURANCES. The Lenders and other holders of the Subordinated
Debt, the Agent and the Guarantor each will, at the Guarantor's expense and at
any time and from time to time, promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary or
desirable, or that the Bank Agent may reasonably request, in order to protect
any right or interest granted or purported to be granted hereby or to enable the
Bank Agent or any Bank to exercise and enforce its rights and remedies
hereunder.
(f) AGREEMENTS IN RESPECT OF SUBORDINATED DEBT. (i) No amendment, waiver or
other modification of this Guaranty may adversely affect the rights or interests
of the Bank Agent or any Bank hereunder.
(ii) The Agent shall promptly notify the Bank Agent of the occurrence
of any Event of Default.
(g) AGREEMENT BY THE GUARANTOR. The Guarantor agrees that it will not make,
nor permit any of its Subsidiaries to make, any payment of any of the
Subordinated Debt, or take any other action, in contravention of the provisions
of this Section.
(h) WAIVER. The Lenders and other holders of the Subordinated Debt, the
Agent and the Guarantor each hereby waives promptness, diligence, notice of
acceptance and any other notice with respect to any of the Senior Indebtedness
and this Section and any requirement that the Bank Agent or any Bank protect,
secure, perfect or insure any security interest or lien or any property subject
thereto or exhaust any right or take any action against the Guarantor or any
other person or entity or any collateral.
(i) NO WAIVER; REMEDIES. No failure on the part of the Bank Agent or
any Bank to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial
Exhibit 10(c)(i) Page 10
<PAGE> 13
exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided
are cumulative and not exclusive of any remedies provided by law.
(j) Certain Terms. For purposes of this Guaranty, the following terms shall
have the following meanings:
"SUBORDINATED DEBT" means all Obligations of the Guarantor now or
hereafter existing under this Guaranty (whether created directly or
acquired by assignment or otherwise) consisting of principal, interest
(including, without limitation, interest accruing after the filing of a
petition initiating any proceeding referred to in Section 8.02(a) of the
Short Term Loan Agreement, whether or not such interest accrues after the
filing of such petition for purposes of the Federal Bankruptcy Code or is
an allowed claim in such proceeding) or fees, including, without
limitation, the fees referred to in Section 2.02(b) or 2.07(c) of the Short
Term Loan Agreement.
"SENIOR INDEBTEDNESS" means, as to the Guarantor, (i) all Obligations
of the Guarantor now or hereafter existing under the Master Guaranty
Agreement (as defined in the Bank Credit Agreement) (whether created
directly or acquired by assignment or otherwise) consisting of principal,
interest (including, without limitation, interest accruing after the filing
of a petition initiating any proceeding referred to in Section 8.02(a) of
the Short Term Loan Agreement, whether or not such interest accrues after
the filing of such petition for purposes of the Federal Bankruptcy Code or
is an allowed claim in such proceeding) or fees and (ii) the obligations of
the Guarantor in a principal amount not to exceed $35,000,000 under the
Note Purchase Agreement dated as of August 1, 1987 among the Borrower, the
Guarantor and the Purchasers named therein.
SECTION 8. UNDERTAKING. In consideration of the Agent and Lenders entering
into the Credit Agreement, the Guarantor hereby agrees with the Agent and the
Lenders as follows:
(a) The Guarantor will use its best efforts to cause Registration Statement
No. 333-2545 relating to 4,025,000 shares of the Guarantor's Common Stock (the
"Offering") filed on April 16, 1996 with the Securities and Exchange Commission
(the "Registration Statement") to become effective under the Securities Act of
1933, as amended (the "Securities Act") prior to June 30, 1996. In connection
with the Offering the Guarantor hereby agrees to perform its undertakings set
forth in Section (b)(ii), (iii), (iv), (vii), (viii), (ix), (x ) and (xi) to the
same extent as required in the case of a Refinancing.
(b) In the event the Registration Statement does not so become effective by
the date specified in Section 1 above, the Guarantor will use its best efforts
to
Exhibit 10(c)(i) Page 11
<PAGE> 14
effectuate an offering and sale of equity securities of the Guarantor to Persons
other than the Borrower or any of its Subsidiaries, or to effectuate such other
financing transactions, in each case reasonably acceptable in form and substance
to MLPF&S, in an amount to be agreed upon between the Guarantor and MLCC (a
"Refinancing") (which amount, in the event any unpaid amounts are outstanding
under the Credit Agreement, shall be sufficient to provide the Borrower Net
Proceeds sufficient to refinance the principal amount of the Loan and pay
interest accrued thereon and all fees, expenses, commissions and other amounts
payable by the Borrower and the Subsidiary Guarantors under the Credit
Agreement, the Short Term Notes and the Subsidiary Guaranties (the "Subject
Documents")), including, but not limited to:
(i) preparing as soon as possible, but in no event later than July 31,
1996, an offering memorandum or a registration statement under the
Securities Act for a private offering or an underwritten primary public
offering, as the case may be, of the Guarantor's securities and containing
such disclosure as may be appropriate and customary for such documents and
using its best efforts to cause any such registration statement to become
effective under the Securities Act or consummating such Refinancing prior
to September 30, 1996;
(ii) cooperating fully with MLPF&S and providing all information
reasonably requested by MLPF&S in connection with any Refinancing,
including, without limitation, providing all information reasonably
requested by MLPF&S to effect the sale or placement of any securities to be
offered;
(iii) in the event any securities are offered publicly, executing
underwriting agreements to reflect the terms of the Refinancing, and
containing such covenants, representations and warranties, indemnities as
shall be mutually acceptable to the Guarantor and MLPF&S in their
reasonable judgment and delivering such legal opinions, officers'
certificates and accountants' comfort letters as may be required by, and in
form and substance satisfactory to, MLPF&S in its reasonable judgment;
(iv) in connection with any public offering or private placement of
securities, offering such securities on terms, including but not limited
to, interest and/or dividend rates, maturities, preferences, covenants and
redemption dates and prices, as may be mutually acceptable to the Guarantor
MLPF&S in their reasonable judgment in light of prevailing circumstances
and current market conditions and the Guarantor's financial condition and
prospects;
(v) in the event any securities are sold in a private placement,
causing the securities held by the purchasers (including MLCC and MLPF&S)
in such a private placement to be registered pursuant to such number of
registration statements over such period of time as MLPF&S
Exhibit 10(c)(i) Page 12
<PAGE> 15
and the Guarantor may mutually agree in their reasonable judgment prior to
such private placement;
(vi) paying all reasonable costs and expenses of engaging a qualified
independent underwriter in connection with any public offering and, to the
extent necessary, a private placement of securities;
(vii) in the event any securities are offered publicly or sold in a
private placement, upon a request made by MLPF&S in its sole discretion,
making available for sale, and selling with any such sale of securities,
warrants to purchase capital stock, the terms of which will be determined
by MLPF&S in its reasonable judgment in light of prevailing circumstances
and current market conditions and the Guarantor's financial condition and
prospects;
(viii) assisting MLPF&S in connection with the marketing of any
securities to be offered publicly or placed privately;
(ix) providing such other cooperation and assistance as is customarily
provided by issuers in connection with the private placement and/or public
sale of securities;
(x) cooperating fully with MLPF&S, and providing all information
reasonably requested by MLPF&S, in connection with other financing
transactions comprising part of a Refinancing on terms which will be
mutually acceptable to the Guarantor and MLPF&S in their reasonable
judgment in light of prevailing circumstances and current market conditions
and the Guarantor's financial condition and prospects;
(xi) engaging MLPF&S as an underwriter or placement agent for any
offering or placement of securities in connection with the Offering or any
Refinancing, such engagement to be on terms mutually acceptable to the
Guarantor and MLPF&S; and
(xii) in the event of any such other financing transaction, executing
such documentation as may be necessary, and containing such covenants,
representations, warranties and indemnities as shall be mutually acceptable
to the Guarantor and MLPF&S in their reasonable judgment and delivering
such legal opinions, officers' certificates and accountants' comfort
letters as may be required by, and in form and substance satisfactory to,
MLPF&S in its reasonable judgment.
Exhibit 10(c)(i) Page 13
<PAGE> 16
SECTION 9. AMENDMENTS, ETC. No amendment or waiver of any provision of this
Guaranty and no consent to any departure by the Guarantor therefrom shall in any
event be effective unless the same shall be in writing and signed by the Agent
and the Required Lenders, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given;
PROVIDED, HOWEVER, that no amendment, waiver or consent shall, unless in writing
and signed by all of the Lenders, (a) release or limit the liability of the
Guarantor hereunder, (b) postpone any date fixed for payment hereunder or (c)
change the number of Lenders required to take any action hereunder.
SECTION 10. NOTICES, ETC. All notices and other communications provided for
hereunder shall be in writing (including telegraphic, telecopy or telex
communication) and mailed, telegraphed, telecopied, telexed or delivered to it,
if to the Guarantor, addressed to it at the address 300 Phillipi Road, P.O. Box
28512, Columbus, Ohio 43228-0512, Attention: James A. McGrady, Telecopier No.
(614) 464-6666; with a copy to Benesch, Friedlander, Coplan & Aronoff P.L.L.,
2300 B.P. America Building, 200 Public Square, Cleveland, Ohio 44114-2378,
Attention: Michael Wager, Telecopier No. (216) 363-4588, if to the Agent or any
Lender, at its address specified in the Short Term Loan Agreement, or as to any
party at such other address as shall be designated by such party in a written
notice to each other party. All such notices and other communications shall,
when mailed, telegraphed, telecopied or telexed, be effective when deposited in
the mails, delivered to the telegraph company, transmitted by telecopier or
confirmed by telex answerback, respectively.
SECTION 11. NO WAIVER; REMEDIES. No failure on the part of the Agent or any
Lender to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
Exhibit 10(c)(i) Page 14
<PAGE> 17
SECTION 12. RIGHT OF SET-OFF. Upon (a) the occurrence and during the
continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 6.01 of the Short Term Loan
Agreement to authorize the Agent to declare the Notes due and payable pursuant
to the provisions of said Section 6.01, each Lender and each of its Affiliates
is hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by such Lender or such Affiliate to or for the credit or the
account of the Guarantor against any and all of the Obligations of the Guarantor
now or hereafter existing under this Guaranty, whether or not such Lender shall
have made any demand under this Guaranty and although such Obligations may be
unmatured. Each Lender agrees promptly to notify the Guarantor after any such
set-off and application; PROVIDED, HOWEVER, that the failure to give such notice
shall not affect the validity of such set-off and application. The rights of
each Lender and its Affiliates under this Section 11 are in addition to other
rights and remedies (including, without limitation, other rights of set-off)
that such Lender and its Affiliates may have.
SECTION 13. INDEMNIFICATION. Without limitation on any other Obligations of
the Guarantor or remedies of the Agent and the Lenders under this Guaranty, the
Guarantor shall, to the fullest extent permitted by law, indemnify, defend and
save and hold harmless the Agent and each Lender from and against, and shall pay
on demand, any and all losses, liabilities, damages, costs, expenses and charges
(including the fees and disbursements of such the Agent's and the each Lender's
legal counsel) suffered or incurred by such Agent or such Lender, as the case
may be, as a result of any failure of any Guaranteed Obligations to be the
legal, valid and binding obligations of the Borrower enforceable against the
Borrower in accordance with its terms.
SECTION 14. CONTINUING GUARANTY; ASSIGNMENTS UNDER THE SHORT TERM LOAN
AGREEMENT. This Guaranty is a continuing guaranty and shall (a) remain in full
force and effect until the later of the payment in full in cash of the
Guaranteed Obligations and all other amounts payable under this Guaranty and the
Termination Date, (b) be binding upon the Guarantor, its successors and assigns
and (c) inure to the benefit of and be enforceable by the Agent and the Lenders
and their successors, transferees and assigns. Without limiting the generality
of the foregoing clause (c), any Lender may assign or otherwise transfer all or
any portion of its rights and obligations under the Short Term Loan Agreement
(including, without limitation, all or any portion of its Commitment and the
Note or Notes held by it) to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to such
Party herein or otherwise, in each case as and to the extent provided in Section
9.08 of the Short Term Loan Agreement.
Exhibit 10(c)(i) Page 15
<PAGE> 18
SECTION 15. GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL, ETC. (a)
This Guaranty shall be governed by, and construed in accordance with, the laws
of the State of New York.
(b) The Guarantor hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of any New York State
court or federal court of the United States of America sitting in New York City,
and any appellate court from any thereof, in any action or proceeding arising
out of or relating to this Guaranty or any of the other Loan Documents to which
it is or is to be a party, or for recognition or enforcement of any judgment,
and the Guarantor hereby irrevocably and unconditionally agrees that all claims
in respect of any such action or proceeding may be heard and determined in any
such New York State court or, to the extent permitted by law, in such federal
court. The Guarantor agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Guaranty shall affect any right that any party may otherwise have to bring any
action or proceeding relating to this Guaranty or any of the other Loan
Documents to which it is or is to be a party in the courts of any jurisdiction.
(c) The Guarantor irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection that it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Guaranty or any of the other Loan Documents to which
it is or is to be a party in any New York State or federal court. The Guarantor
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.
(d) The Guarantor hereby irrevocably waives all right to trial by jury in
any action, proceeding or counterclaim (whether based on contract, tort or
otherwise) arising out of or relating to any of the Loan Documents, the
transactions contemplated thereby or the actions of the Agent or any other
Lender in the negotiation, administration, performance or enforcement thereof.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
CONSOLIDATED STORES CORPORATION
By _____________________________
Title:
Exhibit 10(c)(i) Page 16
<PAGE> 1
EXHIBIT 10(c)(ii)
-----------------
SUBSIDIARY GUARANTY
Dated as of May 3, 1996
From
THE GUARANTORS NAMED HEREIN
as Guarantors
in favor of
THE LENDERS PARTY TO THE SHORT TERM LOAN AGREEMENT
REFERRED TO HEREIN,
and
MERRILL LYNCH CAPITAL CORPORATION,
as Agent
<PAGE> 2
<TABLE>
<CAPTION>
EXHIBIT 10(c)(ii)
-----------------
TABLE OF CONTENTS
SECTION PAGE
<S> <C>
1. Guaranty; Limitation of Li1bility 1
2. Guaranty Absolute 2
3. Waivers 3
4. Subrogation 3
5. Payments Free and Clear of Taxes, Etc. 4
6. Representations and Warranties 4
7. Terms of Subordination 8
8. Amendments, Etc. 12
9. Notices, Etc. 12
10. No Waiver; Remedies 12
11. Right of Set-off 12
12. Indemnification 13
13. Continuing Guaranty; Assignments Under the Short
Term Loan Agreement 13
14. Governing Law; Jurisdiction; Waiver of Jury Trial, Etc. 13
</TABLE>
<PAGE> 3
SUBSIDIARY GUARANTY
GUARANTY dated May 3, 1996 made by the Persons listed on Schedule I hereto
(each, a "GUARANTOR"), in favor of the banks, financial institutions and other
institutional lenders (the "LENDERS") party to the Short Term Loan Agreement (as
defined below), and MERRILL LYNCH CAPITAL CORPORATION, a Delaware corporation
("MLCC") as agent (the "AGENT") for the Lenders.
PRELIMINARY STATEMENT. The Lenders and the Agent are parties to a Short
Term Loan Agreement dated as of May 3, 1996 (said Agreement, as it may hereafter
be amended, supplemented or otherwise modified from time to time, being the
"SHORT TERM LOAN AGREEMENT"; the terms defined therein and not otherwise defined
herein being used herein as therein defined) with Consolidated Stores
Corporation, an Ohio corporation (the "BORROWER"). Each Guarantor is a
Subsidiary of the Borrower and may receive a portion of the proceeds of the
Advances under the Short Term Loan Agreement and will derive substantial direct
and indirect benefit from the transactions contemplated by the Short Term Loan
Agreement. It is a condition precedent to the making of Advances by the Lenders
under the Short Term Loan Agreement that each Guarantor shall have executed and
delivered this Guaranty.
NOW, THEREFORE, in consideration of the premises and in order to induce the
Lenders to make Advances to the Borrower under the Short Term Loan Agreement,
each Guarantor hereby agrees as follows:
SECTION 1. GUARANTY; LIMITATION OF LIABILITY. (a) Each Guarantor hereby
unconditionally and irrevocably guarantees the punctual payment when due,
whether at stated maturity, by acceleration or otherwise, of all Obligations of
each other Loan Party now or hereafter existing under the Loan Documents,
whether for principal, interest, fees, expenses or otherwise (such Obligations
being the "GUARANTEED OBLIGATIONS"), and agrees to pay any and all expenses
(including counsel fees and expenses) incurred by the Agent or any Lender in
enforcing any rights under this Guaranty. Without limiting the generality of the
foregoing, each Guarantor's liability shall extend to all amounts that
constitute part of the Guaranteed Obligations and would be owed by any other
Loan Party to the Agent or any other Party under the Loan Documents but for the
fact that they are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving such Loan Party.
(b) The liability of each Guarantor under this Guaranty shall not exceed
the greater of (i) the net benefit realized by such Guarantor from the proceeds
of the Term Advances made from time to time by the Borrower to such Guarantor or
any Subsidiary of such Guarantor and (ii) the greater of (A) 95% of the Adjusted
Net Assets of such Guarantor on the date of delivery hereof and (B) 95% of the
Adjusted Net Assets of such Guarantor on the date of any payment hereunder. "
ADJUSTED NET ASSETS" of any Guarantor at any date means the lesser of (x) the
amount by which the fair value of the property of such Guarantor exceeds the
total amount of liabilities, including,
Exhibit 10(c)(ii) Page 1
<PAGE> 4
without limitation, contingent liabilities, but excluding liabilities under this
Guaranty, of such Guarantor at such date and (y) the amount by which the present
fair salable value of the assets of such Guarantor at such date exceeds the
amount that will be required to pay the probable liability of such Guarantor on
its debts, excluding debt in respect of this Guaranty, as they become absolute
and matured.
SECTION 2. GUARANTY ABSOLUTE. Each Guarantor guarantees that the Guaranteed
Obligations will be paid strictly in accordance with the terms of the Loan
Documents, regardless of any law, regulation or order now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of the Agent or
the Lenders with respect thereto. The Obligations of each Guarantor under this
Guaranty are independent of the Guaranteed Obligations or any other Obligations
of any other Loan Party under the Loan Documents, and a separate action or
actions may be brought and prosecuted against each Guarantor to enforce this
Guaranty, irrespective of whether any action is brought against the Borrower or
any other Loan Party or whether the Borrower or any other Loan Party is joined
in any such action or actions. The liability of each Guarantor under this
Guaranty shall be irrevocable, absolute and unconditional irrespective of, and
each Guarantor hereby irrevocably waives any defenses it may now or hereafter
have in any way relating to, any or all of the following:
(a) any lack of validity or enforceability of any Loan Document or any
agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Guaranteed Obligations or any other
Obligations of any other Loan Party under the Loan Documents, or any other
amendment or waiver of or any consent to departure from any Loan Document,
including, without limitation, any increase in the Guaranteed Obligations
resulting from the extension of additional credit to the Borrower or any of
its Subsidiaries or otherwise;
(c) any taking, exchange, release or non-perfection of any collateral,
or any taking, release or amendment or waiver of or consent to departure
from any other guaranty, for all or any of the Guaranteed Obligations;
(d) any manner of application of any collateral, or proceeds thereof,
to all or any of the Guaranteed Obligations, or any manner of sale or other
disposition of any collateral for all or any of the Guaranteed Obligations
or any other Obligations of any other Loan Party under the Loan Documents
or any other assets of the Borrower or any of its Subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of the Borrower or any of its Subsidiaries;
(f) any failure of the Agent or any Lender to disclose to the Borrower
or any Guarantor any information relating to the financial condition,
operations,
Exhibit 10(c)(ii) Page 2
<PAGE> 5
properties or prospects of any other Loan Party now or in the future known
to the Agent or such Lender (each Guarantor waiving any duty on the part of
the Parties to disclose such information); or
(g) any other circumstance (including, without limitation, any statute
of limitations or any existence of or reliance on any representation by the
Agent or any Lender that might otherwise constitute a defense available to,
or a discharge of, the Borrower or any other guarantor or surety.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by the Agent or any Lender or by any other Person
upon the insolvency, bankruptcy or reorganization of the Borrower or any other
Loan Party or otherwise, all as though such payment had not been made.
SECTION 3. WAIVERS. (a) Each Guarantor hereby waives promptness, diligence,
notice of acceptance and any other notice with respect to any of the Guaranteed
Obligations and this Guaranty and any requirement that the Agent or any Lender
protect, secure, perfect or insure any Lien or any property subject thereto or
exhaust any right or take any action against the Borrower or any other Person or
any collateral.
(b) Each Guarantor hereby waives any right to revoke this Guaranty, and
acknowledges that this Guaranty is continuing in nature and applies to all
Guaranteed Obligations, whether
existing now or in the future.
(c) Each Guarantor acknowledges that it will receive substantial direct and
indirect benefits from the financing arrangements contemplated by the Loan
Documents and that the waivers set forth in this Section 3 are knowingly made in
contemplation of such benefits.
SECTION 4. SUBROGATION. No Guarantor will exercise any rights that it may
now or hereafter acquire against the Borrower or any other insider guarantor
that arise from the existence, payment, performance or enforcement of such
Guarantor's Obligations under this Guaranty or any other Loan Document,
including, without limitation, any right of subrogation, reimbursement,
exoneration, contribution or indemnification and any right to participate in any
claim or remedy of the Agent or any Lender against the Borrower or any other
insider guarantor or any Collateral, whether or not such claim, remedy or right
arises in equity or under contract, statute or common law, including, without
limitation, the right to take or receive from the Borrower or any other insider
guarantor, directly or indirectly, in cash or other property or by set-off or in
any other manner, payment or security on account of such claim, remedy or right,
until all of the Obligations and all other amounts payable under this Guaranty
shall have been paid in full and the Commitments shall have expired or
terminated. If any amount shall be paid to any Guarantor in violation of the
preceding sentence at any time prior to the later of the cash payment in full
of the Guaranteed Obligations and all other amounts
Exhibit 10(c)(ii) Page 3
<PAGE> 6
payable under this Guaranty and the Termination Date, such amount shall be held
in trust for the benefit of the Agent and the Lenders and shall forthwith be
paid to the Agent to be credited and applied to the Guaranteed Obligations and
all other amounts payable under this Guaranty, whether matured or unmatured, in
accordance with the terms of the Loan Documents, or to be held as collateral
for any Guaranteed Obligations or other amounts payable under this Guaranty
thereafter arising. If (i) such Guarantor shall make payment to the Agent or
any Lender of all or any part of the Guaranteed Obligations, (ii) all the
Guaranteed Obligations and all other amounts payable under this Guaranty shall
be paid in full and (iii) the Termination Date shall have occurred, the Agent
and the Lenders will, at such Guarantor's request and expense, execute and
deliver to such Guarantor appropriate documents, without recourse and without
representation or warranty, necessary to evidence the transfer by subrogation
to such Guarantor of an interest in the Guaranteed Obligations resulting from
such payment by such Guarantor.
SECTION 5. PAYMENTS FREE AND CLEAR OF TAXES, ETC. (a) Any and all payments
made by any Guarantor hereunder shall be made, in accordance with Section 2.08
of the Short Term Loan Agreement, free and clear of and without deduction for
any and all present or future Taxes. If any Guarantor shall be required by law
to deduct any Taxes from or in respect of any sum payable hereunder to the Agent
or any Lender, (i) the sum payable shall be increased as may be necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section 5) the Agent or such Lender (as the
case may be) receives an amount equal to the sum it would have received had no
such deductions been made, (ii) such Guarantor shall make such deductions and
(iii) such Guarantor shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law.
(b) In addition, each Guarantor agrees to pay any present or future Other
Taxes.
(c) Each Guarantor will indemnify the Agent and each Lender for the full
amount of Taxes or Other Taxes (including, without limitation, any taxes imposed
by any jurisdiction on amounts payable under this Section 5) imposed on or paid
by the Agent or such Lender (as the case may be) and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto.
This indemnification shall be made within 30 days from the date the Agent or
such Lender (as the case may be) makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes by or on behalf
of any Guarantor, such Guarantor will furnish to the Agent, at its address
referred to in Section 9.02 of the Short Term Loan Agreement, the original or a
certified copy of a receipt evidencing payment thereof. In the case of any
payment hereunder by or on behalf of any Guarantor through an account or branch
outside the United States or by or on behalf of such Guarantor by a payor that
is not a United States person, if such
Exhibit 10(c)(ii) Page 4
<PAGE> 7
Guarantor determines that no Taxes are payable in respect thereof, such
Guarantor shall furnish, or shall cause such payor to furnish, to the Agent, at
such address, an opinion of counsel acceptable to the Agent stating that such
payment is exempt from Taxes. For purposes of this subsection (d) and subsection
(e), the terms "UNITED STATES" and "UNITED STATES PERSON" shall have the
meanings specified in Section 7701 of the Internal Revenue Code.
(e) Upon the reasonable request in writing of any Guarantor, each Lender
organized under the laws of a jurisdiction outside the United States shall, on
or prior to the date of its execution and delivery of the Short Term Loan
Agreement in the case of each Initial Lender, and on the date of the Assignment
and Acceptance pursuant to which it became a Lender in the case of each other
Lender, and from time to time thereafter upon the reasonable request in writing
by such Guarantor (but only so long thereafter as such Lender remains lawfully
able to do so), provide each of the Agent and such Guarantor with two original
Internal Revenue Service forms 1001 or 4224, as appropriate, or any successor or
other form prescribed by the Internal Revenue Service, certifying that such
Lender is exempt from or is entitled to a reduced rate of United States
withholding tax on payments under the Short Term Loan Agreement or the Notes. If
the forms provided by a Lender at the time such Lender first becomes a party to
the Short Term Loan Agreement indicates a United States interest withholding tax
rate in excess of zero, withholding tax at such rate shall be considered
excluded from Taxes unless and until such Lender provides the appropriate forms
certifying that a lesser rate applies, whereupon withholding tax at such lesser
rate only shall be considered excluded from Taxes for periods governed by such
form; PROVIDED, HOWEVER, that, if at the date of the Assignment and Acceptance
pursuant to which a Lender assignee becomes a party to the Short Term Loan
Agreement, the Lender assignor was entitled to payments under subsection (a) in
respect of United States withholding tax with respect to interest paid at such
date, then, to such extent, the term Taxes shall include (in addition to
withholding taxes that may be imposed in the future or other amounts otherwise
includable in Taxes) United States withholding tax, if any, applicable with
respect to the Lender Party assignee on such date. If any form or document
referred to in this subsection (e) and requested by any Guarantor pursuant to
this subsection (e) requires the disclosure of information, other than
information necessary to compute the tax payable and information required on the
date hereof by Internal Revenue Service form 1001 or 4224, that the Lender
reasonably considers to be confidential, the Lender shall give notice thereof to
such Guarantor and shall not be obligated to include in such form or document
such confidential information.
(f) For any period with respect to which a Lender has failed to provide any
Guarantor following such Guarantor's request therefor pursuant to subsection (e)
above with the appropriate form described in subsection (e) (OTHER THAN if such
failure is due to a change in law occurring after the date on which a form
originally was required to be provided or if such form otherwise is not required
under subsection (e)), such Lender shall not be entitled to indemnification
under subsection (a) or (c) with respect to Taxes imposed by the United States
by reason of such failure; PROVIDED, HOWEVER, that
Exhibit 10(c)(ii) Page 5
<PAGE> 8
should a Lender become subject to Taxes because of its failure to deliver a form
required hereunder, such Guarantor shall take such steps as such Lender shall
reasonably request to assist such Lender to recover such Taxes.
(g) Without prejudice to the survival of any other agreement of any Loan
Party hereunder or under any other Loan Document, the agreements and obligations
of each Guarantor contained in this Section 5 shall survive the payment in full
of the Guaranteed Obligations and all other amounts payable under this Guaranty.
SECTION 6. REPRESENTATIONS AND WARRANTIES. Each Guarantor hereby represents
and warrants as follows:
(a) Such Guarantor is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation
and has all requisite corporate power and authority to own or lease and
operate its properties and to carry on its business as now conducted. Such
Guarantor and each of its Subsidiaries listed on Schedule 4.01(j) of the
Short Term Loan Agreement is duly qualified or licensed to do business as a
foreign corporation in good standing in all jurisdictions in which it owns
or leases property or proposes to own or lease property or in which the
conduct of its business requires it to so qualify or be licensed, except
for such jurisdictions where the failure to so qualify or be licensed would
not have a Material Adverse Effect. All of the outstanding capital stock of
such Guarantor and each of its Subsidiaries has been validly issued, is
fully paid and non-assessable and is owned by the Borrower, another Loan
Party or a Subsidiary of a Loan Party.
(b) Such Guarantor has full corporate power and authority to enter
into, deliver and perform its obligations under each Loan Document and each
Material Contract to which it is or will be a party and to consummate each
of the transactions contemplated by each such Loan Document and Material
Contract and has taken all necessary corporate action to authorize the
execution, delivery and performance by it of each Loan Document and each
Material Contract to which it is or will be a party; and each Loan Document
to which it is a party constitutes, and each Material Contract to which it
is or will be a party when delivered pursuant to the Short Term Loan
Agreement will constitute, the legal, valid and binding obligation of such
Guarantor, enforceable against such Guarantor in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect
affecting the enforcement of creditors' rights generally.
(c) Neither the execution and delivery of any Loan Document or any
Material Contract to which such Guarantor is or is to be a party nor the
performance by such Guarantor of its obligations thereunder, nor the
consummation of the transactions contemplated thereby including, without
limitation, the Acquisition will (i) conflict with the charter or by-laws
of such Guarantor or (ii) conflict
Exhibit 10(c)(ii) Page 6
<PAGE> 9
with or result in a breach of, or constitute a default under, or result in
the creation or imposition of any Lien upon any of the property or assets
of such Guarantor or any Subsidiary of such Guarantor, as the case may be,
under, (A) any applicable laws (including, without limitation, Regulation X
issued by the Board of Governors of the Federal Reserve System), (B) any
loan agreement, indenture or similar instrument or agreement, or (C) any
material mortgage, deed of trust or other similar instrument or agreement,
in each case, to which such Guarantor or any Subsidiary of such Guarantor,
as the case may be, may be or become a party or by which it may be or
become bound or to which any of the property or assets of such Guarantor or
any Subsidiary of such Guarantor, as the case may be, may be subject.
(d) No consent, approval, exemption, order or authorization of, or a
registration or filing with, any Official Body or any other Person is
required by any law, constitution, statute, treaty, regulation, rule,
ordinance, opinion, release, ruling, order, injunction, writ, decree or
award of any Official Body or any agreement in connection with the
execution, delivery and carrying out of the Short Term Loan Agreement, the
other Loan Documents or the Material Contracts by any Loan Party, except as
listed on Schedule 4.01(d) to the Short Term Loan Agreement, all of which
shall have been obtained or made on or prior to the Closing Date.
(e) There are no actions, suits, proceedings or investigations pending
or, to the knowledge of such Guarantor, threatened against such Guarantor
or any Subsidiary of such Guarantor at law or equity before any Official
Body which individually or in the aggregate (A) would restrain, prohibit or
impose adverse conditions on the ability of the Lenders to make the Loan,
(B) could be reasonably expected to have a Material Adverse Effect, (C)
would impair the ability of MLPF&S to sell debt or equity securities as
contemplated by Section 8 of the Parent Guaranty or (D) could purport to
affect the legality, validity or enforceability of this Guaranty, any other
Loan Document or the consummation of the transactions contemplated thereby,
including, without limitation, the Acquisition and the Offering, and, in
each case there is a reasonable probability that such action, suit,
investigation, litigation or proceeding would be successful on the merits.
(f) No event has occurred and is continuing and no condition exists
now or will exist after the execution of the Loan Documents or Material
Contracts which constitutes a Default. Neither such Guarantor nor any of
its Subsidiaries is in violation of (i) any term of its certificate of
incorporation, by-laws, or other organizational documents, or (ii) any
material agreement or instrument to which it is a party or by which it or
any of its properties may be subject or bound where such violation would
reasonably be expected to have a Material Adverse Effect.
(g) There are no conditions precedent to the effectiveness of this
Guaranty that have not been satisfied or waived.
Exhibit 10(c)(ii) Page 7
<PAGE> 10
(h) Each Guarantor has, independently and without reliance upon the
Agent or any Lender and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into
this Guaranty, and such Guarantor has established adequate means of
obtaining from any other Loan Parties on a continuing basis information
pertaining to, and is now and on a continuing basis will be completely
familiar with, the financial condition, operations, properties and
prospects of such other Loan Parties.
(i) The breach of any of the foregoing representations and warranties
with respect to a Subsidiary of each Guarantor other than the Borrower or a
Material Subsidiary shall not be deemed to breach such representation or
warranty unless such breach has a Material Adverse Effect.
SECTION 7. TERMS OF SUBORDINATION. (a) SUBORDINATED DEBT SUBORDINATE TO
SENIOR INDEBTEDNESS. Each Guarantor agrees, and each Lender and holder of any
Note, by its acceptance thereof, also agrees, that the Subordinated Debt (as
defined below) of such Guarantor is and shall be subordinate, to the extent and
in the manner hereinafter set forth, to the prior payment in full in cash of all
Senior Indebtedness (as defined below) of such Guarantor.
(b) EVENTS OF SUBORDINATION. (i) In the event of any dissolution, winding
up, liquidation, arrangement, reorganization, adjustment, protection, relief or
composition of any Guarantor or its debts, whether voluntary or involuntary, in
any bankruptcy, insolvency, arrangement, reorganization, receivership, relief or
other similar case or proceeding under any Federal or State bankruptcy or
similar law or upon an assignment for the benefit of creditors or any other
marshalling of the assets and liabilities of such Guarantor or otherwise, Senior
Indebtedness of such Guarantor shall first be paid in full before the Lenders or
other holders of any Subordinated Debt of such Guarantor shall be entitled to
receive any payment of all or any of the Subordinated Debt of such Guarantor,
and any payment that otherwise would be payable upon or with respect to the
Subordinated Debt of such Guarantor in any such case, proceeding, assignment,
marshalling or otherwise (including any payment that may be payable by reason of
any other indebtedness of such Guarantor being subordinated to payment of the
Subordinated Debt of such Guarantor) shall be paid or delivered directly to the
Bank Agent for the account of the Banks for application to the payment of the
Senior Indebtedness of such Guarantor until the Senior Indebtedness of such
Guarantor shall have been paid in full.
(ii) In the event that any Bank Event of Default described in Section
8.1.1 of the Bank Credit Agreement shall have occurred and be continuing
with respect to any Guarantor, then no payment (including any payment that
may be payable by reason of any other indebtedness of such Guarantor being
subordinated to payment of the Subordinated Debt of such Guarantor) shall
be made by or on behalf of such Guarantor for or on account of any
Subordinated
Exhibit 10(c)(ii) Page 8
<PAGE> 11
Debt of such Guarantor, and neither the Agent nor any Lender or other
holder of any Subordinated Debt of such Guarantor shall take or receive
from such Guarantor, directly or indirectly, in cash or other property
or by set-off or in any other manner, including, without limitation,
from or by way of collateral, payment of all or any of the Subordinated
Debt of such Guarantor.
(iii) In the event that any Bank Event of Default (other than a Bank
Event of Default described in Section 8.1.1 of the Bank Credit Agreement)
shall have occurred and be continuing with respect to any Guarantor and the
Bank Agent gives written notice thereof to the Agent, then no payment
(including any payment that may be payable by reason of any other
indebtedness of such Guarantor being subordinated to payment of the
Subordinated Debt of such Guarantor) shall be made by or on behalf of such
Guarantor for or on account of any Subordinated Debt of such Guarantor, and
neither the Agent nor any Lender or other holder of any Subordinated Debt
of such Guarantor shall take or receive from such Guarantor, directly or
indirectly, in cash or other property or by set-off or in any other manner,
including, without limitation, from or by way of collateral, payment of all
or any of the Subordinated Debt of such Guarantor, during a period (the
"PAYMENT BLOCKAGE PERIOD") commencing on the date of receipt of such notice
and ending on the earlier of (i) the date such Bank Event of Default shall
have been cured or waived in writing and (ii) the date 179 days from the
date of receipt of such notice. Any number of such notices may be given by
the Agent with respect to any Guarantor; PROVIDED, HOWEVER, that during any
360-day period the aggregate number of days during which a Payment Blockage
Period shall be in effect with respect to any Guarantor shall not exceed
179 days and there shall be a period of at least 181 consecutive days in
each 360-day period when no Payment Blockage Period is in effect with
respect to such Guarantor.
(c) IN FURTHERANCE OF SUBORDINATION. (i) Each Lender or other holder of any
Notes by its acceptance thereof authorizes and directs the Agent on its behalf
to take such action as may be necessary or appropriate to effectuate, as between
the Bank Agent and the Banks and the Lenders and other holders of Subordinated
Debt, the subordination as provided in this Section 7 and appoints the Agent his
attorney-in-fact for any and all such purposes.
(ii) If any proceeding referred to in Section 7(b)(i) above is
commenced by or against any Guarantor, the Lenders and other holders of the
Subordinated Debt of such Guarantor and the Agent shall duly and promptly
take such action as the Bank Agent may reasonably request (A) to collect
the Subordinated Debt of such Guarantor and to file appropriate claims or
proofs of claim in respect of the Subordinated Debt of such Guarantor and
(B) to collect and receive any and all payments which may be payable upon
or with respect to the Subordinated Debt of such Guarantor.
Exhibit 10(c)(ii) Page 9
<PAGE> 12
(iii) All payments upon or with respect to the Subordinated Debt which
are received by the Agent or any Lender or other holder of any Subordinated
Debt contrary to the provisions of this Section shall be received in trust
for the benefit of the Banks, shall be segregated from other funds and
property held by the Agent or such Lender or other holder of Subordinated
Debt and shall be forthwith paid over to the Bank Agent for the account of
the Banks in the same form as so received (with any necessary indorsement)
to be applied to the payment or prepayment of the Senior Indebtedness in
accordance with the terms of the Bank Credit Agreement.
(iv) The Bank Agent is hereby authorized to demand specific
performance of the provisions of this Section, whether or not any Guarantor
shall have complied with any of the provisions hereof applicable to it, at
any time when any Lender or other holder of Subordinated Debt or the Agent
shall have failed to comply with any of the provisions of this Section
applicable to it. The Lenders and other holders of the Subordinated Debt
and the Agent hereby irrevocably waive any defense based on the adequacy of
a remedy at law, which might be asserted as a bar to such remedy of
specific performance.
(d) RIGHTS OF SUBROGATION. No payment or distribution to the Bank Agent or
the Banks pursuant to the provisions of this Section shall entitle any Lender or
other holder of Subordinated Debt to exercise any right of subrogation in
respect thereof until the Senior Indebtedness shall have been paid in full.
(e) FURTHER ASSURANCES. The Lenders and other holders of the Subordinated
Debt, the Agent and the Borrower each will, at each Guarantor's expense and at
any time and from time to time, promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary or
desirable, or that the Bank Agent may reasonably request, in order to protect
any right or interest granted or purported to be granted hereby or to enable the
Bank Agent or any Bank to exercise and enforce its rights and remedies
hereunder.
(f) AGREEMENTS IN RESPECT OF SUBORDINATED DEBT. (i) No amendment, waiver or
other modification of this Guaranty may adversely affect the rights or interests
of the Bank Agent or any Bank hereunder.
(ii) The Agent shall promptly notify the Bank Agent of the occurrence
of any Event of Default.
(g) AGREEMENT BY EACH GUARANTOR. Each Guarantor agrees that it will not
make, nor permit any of its Subsidiaries to make, any payment of any of the
Subordinated Debt of such Guarantor, or take any other action, in contravention
of the provisions of this Section.
Exhibit 10(c)(ii) Page 10
<PAGE> 13
(h) WAIVER. The Lenders and other holders of the Subordinated Debt, the
Agent and each Guarantor hereby waives promptness, diligence, notice of
acceptance and any other notice with respect to any of the Senior Indebtedness
and this Section and any requirement that the Bank Agent or any Bank protect,
secure, perfect or insure any security interest or lien or any property subject
thereto or exhaust any right or take any action against any Guarantor or any
other person or entity or any collateral.
(i) NO WAIVER; REMEDIES. No failure on the part of the Bank Agent or any
Bank to exercise, and no delay in exercising, any right hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise of any right
hereunder preclude any other or further exercise thereof or the exercise of any
other right. The remedies herein provided are cumulative and not exclusive of
any remedies provided by law.
(j) CERTAIN TERMS. For purposes of this Guaranty, the following terms shall
have the following meanings:
"SUBORDINATED DEBT" means, with respect to any Guarantor, all
Obligations of such Guarantor now or hereafter existing under this Guaranty
(whether created directly or acquired by assignment or otherwise)
consisting of principal, interest (including, without limitation, interest
accruing after the filing of a petition initiating any proceeding referred
to in Section 8.02(a) of the Short Term Loan Agreement, whether or not such
interest accrues after the filing of such petition for purposes of the
Federal Bankruptcy Code or is an allowed claim in such proceeding) or fees,
including, without limitation, the fees referred to in Section 2.02(b) or
2.07(c) of the Short Term Loan Agreement.
"SENIOR INDEBTEDNESS" means, as to each Guarantor, all Obligations of
such Guarantor now or hereafter existing under the Master Guaranty
Agreement (as defined in the Bank Credit Agreement) (whether created
directly or acquired by assignment or otherwise) consisting of principal,
interest (including, without limitation, interest accruing after the filing
of a petition initiating any proceeding referred to in Section 8.02(a) of
the Short Term Loan Agreement, whether or not such interest accrues after
the filing of such petition for purposes of the Federal Bankruptcy Code or
is an allowed claim in such proceeding) or fees.
Exhibit 10(c)(ii) Page 11
<PAGE> 14
SECTION 8. AMENDMENTS, ETC. No amendment or waiver of any provision of this
Guaranty and no consent to any departure by any Guarantor therefrom shall in any
event be effective unless the same shall be in writing and signed by the Agent
and the Required Lenders, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given;
PROVIDED, HOWEVER, that no amendment, waiver or consent shall, unless in writing
and signed by all of the Lenders, (a) release or limit the liability of such
Guarantor hereunder, (b) postpone any date fixed for payment hereunder or (c)
change the number of Lenders required to take any action hereunder.
SECTION 9. NOTICES, ETC. All notices and other communications provided for
hereunder shall be in writing (including telegraphic, telecopy or telex
communication) and mailed, telegraphed, telecopied, telexed or delivered to it,
if to any Guarantor, addressed to it c/o Consolidated Stores Corporation, at 300
Phillipi Road, P.O. Box 28512, Columbus, Ohio 43228-0512, Attention: James A.
McGrady, Telecopier No. (614) 464-6666; with a copy to Benesch, Friedlander,
Coplan & Aronoff P.L.L., 2300 B.P. America Building, 200 Public Square,
Cleveland, Ohio 44114-2378, Attention: Michael Wager, Telecopier No. (216)
363-4588, if to the Agent or any Lender, at its address specified in the Short
Term Loan Agreement, or as to any party at such other address as shall be
designated by such party in a written notice to each other party. All such
notices and other communications shall, when mailed, telegraphed, telecopied or
telexed, be effective when deposited in the mails, delivered to the telegraph
company, transmitted by telecopier or confirmed by telex answerback,
respectively.
SECTION 10. NO WAIVER; REMEDIES. No failure on the part of the Agent or any
Lender to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 11. RIGHT OF SET-OFF. Upon (a) the occurrence and during the
continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 6.01 of the Short Term Loan
Agreement to authorize the Agent to declare the Notes due and payable pursuant
to the provisions of said Section 6.01, each Lender and each of its Affiliates
is hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by such Lender or such Affiliate to or for the credit or the
account of any Guarantor against any and all of the Obligations of such
Guarantor now or hereafter existing under this Guaranty, whether or not such
Lender shall have made any demand under this Guaranty and although such
Obligations may be unmatured. Each Lender agrees promptly to notify such
Guarantor after any such set-off and application; PROVIDED, HOWEVER, that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of each Lender and its
Exhibit 10(c)(ii) Page 12
<PAGE> 15
Affiliates under this Section 11 are in addition to other rights and remedies
(including, without limitation, other rights of set-off) that such Lender and
its Affiliates may have.
SECTION 12. INDEMNIFICATION. Without limitation on any other Obligations of
any Guarantor or remedies of the Agent and the Lenders under this Guaranty, each
Guarantor shall, to the fullest extent permitted by law, indemnify, defend and
save and hold harmless the Agent and each Lender from and against, and shall pay
on demand, any and all losses, liabilities, damages, costs, expenses and charges
(including the fees and disbursements of such the Agent's and the each Lender's
legal counsel) suffered or incurred by such Agent or such Lender, as the case
may be, as a result of any failure of any Guaranteed Obligations to be the
legal, valid and binding obligations of the Borrower enforceable against the
Borrower in accordance with its terms.
SECTION 13. CONTINUING GUARANTY; ASSIGNMENTS UNDER THE SHORT TERM LOAN
AGREEMENT. This Guaranty is a continuing guaranty and shall (a) remain in full
force and effect until the later of the payment in full in cash of the
Guaranteed Obligations and all other amounts payable under this Guaranty and the
Termination Date, (b) be binding upon each Guarantor, its successors and assigns
and (c) inure to the benefit of and be enforceable by the Agent and the Lenders
and their successors, transferees and assigns. Without limiting the generality
of the foregoing clause (c), any Lender may assign or otherwise transfer all or
any portion of its rights and obligations under the Short Term Loan Agreement
(including, without limitation, all or any portion of its Commitment and the
Note or Notes held by it) to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to such
Party herein or otherwise, in each case as and to the extent provided in Section
9.08 of the Short Term Loan Agreement.
SECTION 14. GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL, ETC. (a)
This Guaranty shall be governed by, and construed in accordance with, the laws
of the State of New York.
(b) Each Guarantor hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of any New York State
court or federal court of the United States of America sitting in New York City,
and any appellate court from any thereof, in any action or proceeding arising
out of or relating to this Guaranty or any of the other Loan Documents to which
it is or is to be a party, or for recognition or enforcement of any judgment,
and each Guarantor hereby irrevocably and unconditionally agrees that all claims
in respect of any such action or proceeding may be heard and determined in any
such New York State court or, to the extent permitted by law, in such federal
court. Each Guarantor agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Guaranty shall affect any right that any party may otherwise have to bring any
action or proceeding relating to this Guaranty or any of the other Loan
Documents to which it is or is to be a party in the courts of any jurisdiction.
Exhibit 10(c)(ii) Page 13
<PAGE> 16
(c) Each Guarantor irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection that it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Guaranty or any of the other Loan Documents to which
it is or is to be a party in any New York State or federal court. Each Guarantor
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.
(d) Each Guarantor hereby irrevocably waives all right to trial by jury in
any action, proceeding or counterclaim (whether based on contract, tort or
otherwise) arising out of or relating to any of the Loan Documents, the
transactions contemplated thereby or the actions of the Agent or any other
Lender in the negotiation, administration, performance or enforcement thereof.
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
GUARANTORS LISTED ON SCHEDULE I
By ____________________________
Name:
Title:
Exhibit 10(c)(ii) Page 14
