<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended: August 3, 1996
-------------------------------------------------
Commission File Number: 0-17586
---------------------------------------------------------
STAPLES, INC.
(Exact name of registrant as specified in its charter)
Delaware 04-2896127
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Research Drive, Westborough, MA 01581
-----------------------------------------
(Address of principal executive office and zip code)
508-370-8500
-----------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- ------
The registrant had 160,772,891 shares of Common Stock, par value $.0006,
outstanding as of August 31, 1996.
<PAGE> 2
FORM 10-Q
STAPLES, INC.
AUGUST 3, 1996
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
----
<S> <C>
Consolidated Balance Sheets ...................................... 3
Consolidated Statements of Income ................................ 4
Consolidated Statements of Cash Flows ............................ 5
Notes to Consolidated Financial Statements ....................... 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations ....................... 7-11
Part II .......................................................... 12-13
Signature ........................................................ 14
</TABLE>
Page 2
<PAGE> 3
STAPLES, INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
August 3,
1996 February 3,
(Unaudited) 1996
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ............................. $45,190 $98,130
Short-term investments ................................ 2,540 12,685
Merchandise inventories ............................... 764,364 644,514
Receivables, net ...................................... 191,102 122,453
Prepaid expenses and other current assets ............. 65,901 48,089
---------- ----------
TOTAL CURRENT ASSETS ............................. 1,069,097 925,871
PROPERTY AND EQUIPMENT:
Land and buildings .................................... 32,695 24,364
Leasehold improvements ................................ 210,970 168,588
Equipment ............................................. 171,749 144,857
Furniture and fixtures ................................ 92,237 75,182
---------- ----------
TOTAL PROPERTY AND EQUIPMENT ..................... 507,651 412,991
Less accumulated depreciation and amortization ........ 151,846 120,496
---------- ----------
NET PROPERTY AND EQUIPMENT ....................... 355,805 292,495
OTHER ASSETS:
Lease acquisition costs, net of amortization .......... 42,648 40,338
Investment in affiliates .............................. 37,530 32,940
Goodwill, net of amortization ......................... 82,118 80,361
Other ................................................. 38,138 30,770
---------- ----------
TOTAL OTHER ASSETS ............................... 200,434 184,409
---------- ----------
$1,625,336 $1,402,775
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable ...................................... $388,324 $273,633
Accrued expenses and other current liabilities ........ 132,742 139,641
Debt maturing within one year ......................... 7,414 8,267
---------- ----------
TOTAL CURRENT LIABILITIES ........................ 528,480 421,541
LONG-TERM DEBT .............................................. 113,521 43,647
OTHER LONG-TERM OBLIGATIONS ................................. 31,556 26,171
CONVERTIBLE DEBENTURES ...................................... 300,000 300,000
STOCKHOLDERS' EQUITY:
Preferred stock, $ 01 par value-authorized
5,000,000 shares; no shares issued .................... 0 0
Common stock, $ 0006 par value-authorized
500,000,000 shares; issued
160,485,634 shares at August 3, 1996 and
158,366,604 shares at February 3, 1996 ................ 96 95
Additional paid-in capital ............................ 479,233 466,684
Cumulative foreign currency translation adjustments ... (1,607) (2,054)
Unrealized gain on short-term investments ............. 22 32
Retained earnings ..................................... 174,381 147,005
Less: 37,398 shares of treasury stock, at cost ........ (346) (346)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY ................... 651,779 611,416
---------- ----------
$1,625,336 $1,402,775
========== ==========
</TABLE>
See notes to consolidated financial statements.
Page 3
<PAGE> 4
STAPLES, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
13 Weeks Ended 26 Weeks Ended
--------------------------- ---------------------------
August 3, July 29, August 3, July 29,
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales ................................................. $808,056 $604,975 $1,724,856 $1,273,770
Cost of goods sold and occupancy costs ................ 616,985 465,501 1,325,212 983,914
----------- ----------- ----------- -----------
GROSS PROFIT ...................................... 191,071 139,474 399,644 289,856
Operating expenses:
Operating and selling ............................... 125,401 92,889 272,098 199,006
Pre-opening ......................................... 3,302 1,094 5,090 2,056
General and administrative .......................... 28,851 23,198 59,480 46,479
Amortization of goodwill ............................ 576 472 1,136 844
----------- ----------- ----------- -----------
TOTAL OPERATING EXPENSES .......................... 158,130 117,653 337,804 248,385
----------- ----------- ----------- -----------
OPERATING INCOME .................................. 32,941 21,821 61,840 41,471
Interest and other expense, net ..................... (5,165) (4,689) (9,193) (8,675)
----------- ----------- ----------- -----------
INCOME BEFORE EQUITY IN LOSS OF
AFFILIATES AND INCOME TAXES ..................... 27,776 17,132 52,647 32,796
Equity in loss of affiliates ......................... (4,028) (2,572) (7,742) (5,324)
----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAXES ......................... 23,748 14,560 44,905 27,472
Income tax expense .................................... 9,143 5,541 17,288 10,576
----------- ----------- ----------- -----------
NET INCOME ......................................... $14,605 $9,019 $27,617 $16,896
=========== =========== =========== ===========
Net income per common share ........................... $0.09 $0.06 $0.17 $0.11
=========== =========== =========== ===========
Number of shares used in computing net
income per common share .......................... 166,407,289 152,040,668 165,922,915 149,639,963
=========== =========== =========== ===========
</TABLE>
See notes to consolidated financial statements
Page 4
<PAGE> 5
STAPLES, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
(Unaudited)
26 Weeks Ended
-----------------------
August 3, July 29,
1996 1995
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income .......................................................... $27,617 $16,896
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization .................................... 34,093 24,521
Equity in loss of affiliates ..................................... 7,742 5,324
Increase in assets:
Merchandise inventories ....................................... (119,763) (105,542)
Receivables ................................................... (68,637) (33,179)
Deferred tax assets ........................................... (19,712) (6,499)
Prepaid expenses and other assets ............................. (8,359) (2,997)
Increase in accounts payable, accrued
expenses and other current liabilities ........................ 107,648 26,771
Increase in other long-term obligations .......................... 5,378 1,940
------- -------
(61,610) (89,661)
------- -------
NET CASH USED IN OPERATING ACTIVITIES ............................... (33,993) (72,765)
INVESTING ACTIVITIES:
Acquisition of property and equipment ............................... (94,599) (49,680)
Proceeds from sales and maturities of short-term investments ........ 10,144 8,135
Purchase of short-term investments .................................. 0 (349)
Investment in affiliates ............................................ (11,887) (9,634)
Acquisition of lease rights ......................................... (3,922) (805)
Other ............................................................... 1,578 2,657
------- -------
NET CASH USED IN INVESTING ACTIVITIES ............................... (98,686) (49,676)
FINANCING ACTIVITIES:
Proceeds from sale of capital stock ................................. 10,726 19,193
Proceeds from borrowings ............................................ 112,496 972,500
Payments on borrowings .............................................. (43,480) (881,222)
------- -------
NET CASH PROVIDED BY FINANCING ACTIVITIES ........................... 79,742 110,471
Effect of exchange rate changes on cash ............................. (3) 82
NET DECREASE IN CASH AND CASH EQUIVALENTS ............................... (52,940) (11,888)
Cash and cash equivalents at beginning of period ........................ 98,130 41,810
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD .............................. $45,190 $29,922
======= =======
</TABLE>
See notes to consolidated financial statements.
Page 5
<PAGE> 6
STAPLES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Basis of Presentation
- --------------------------------
The accompanying interim unaudited consolidated financial statements include the
accounts of Staples, Inc. and its wholly owned subsidiaries (the "Company"). All
intercompany accounts and transactions are eliminated in consolidation.
These financial statements have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, such interim statements reflect all adjustments (consisting of
normal recurring accruals) necessary to present fairly the financial position
and the results of operations and cash flows for the interim periods presented.
The results of operations for the interim periods are not necessarily indicative
of the results to be expected for the full year. These financial statements
should be read in conjunction with the audited consolidated financial statements
and footnotes included in the Company's Annual Report on Form 10-K dated April
11, 1996 for the year ended February 3, 1996.
Note 2 - Computation of Earnings Per Share
- ------------------------------------------
On March 5, 1996 the Board of Directors approved a three-for-two stock split of
the Company's common stock to be effected in the form of a 50% dividend. This
distribution was made on March 25, 1996 and was payable to shareholders of
record as of March 15, 1996. The number of shares used in the earnings per share
computation for the three and six months ended July 29, 1995, as previously
reported, has been retroactively adjusted to reflect the three-for-two split of
the Company's common stock in March, 1996.
Average common and common equivalent shares used in computing earnings per share
include approximately 6,554,000 and 4,955,000 shares for the quarters ended
August 3, 1996 and July 29, 1995, respectively, as a result of applying the
treasury stock method to outstanding stock options.
Note 3 - Subsequent Event
- -------------------------
On September 4, 1996, the Company entered into an Agreement and Plan of Merger
with Office Depot, Inc. ("Office Depot"). Office Depot operates over 500 retail
office supply stores in the US and Canada, a national delivery and contract
stationer business, and joint ventures or licensed operations in seven
countries, and had revenues of $5.3 billion for the year ended December 30,
1995. The transaction is intended to be a tax-free exchange of shares pursuant
to which the stockholders of Office Depot will receive 1.14 shares of the
Company's common stock for each outstanding share they own. The merger will be
accounted for as a pooling of interests and is subject to various closing
conditions, including the approval of the stockholders of both companies and
required regulatory approvals. In connection with the merger, the Company
granted to Office Depot, and Office Depot granted to the Company mutual options
to purchase up to 19.9% of the outstanding stock of the other company under
certain conditions.
Page 6
<PAGE> 7
STAPLES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- ---------------------
SALES. Sales increased 34% to $808,056,000 in the quarter ended August 3, 1996
from $604,975,000 in the quarter ended July 29, 1995 and increased 35% to
$1,724,856,000 for the six months ended August 3, 1996 compared to
$1,273,770,000 for the six months ended July 29, 1995. This growth is
attributable to an increase in the number of open stores, increased sales in
existing stores and increased sales through both internal growth and
acquisitions in the delivery and contract stationer segments. In addition, the
three and six months ended August 3, 1996 includes the results of operations of
Macauley's Business Resources, Inc. ("Macauley's"), which was acquired under the
purchase method of accounting during the year ended February 3, 1996. Due to the
date of acquisition, only one month of Macauley's results of operations are
included in the consolidated results for the quarter ended July 29, 1995.
Comparable store and delivery hub sales (which represent a comparison of sales
between corresponding full months in the periods compared) for the quarter ended
August 3, 1996 increased 16% over the quarter ended July 29, 1995, and increased
17% for the six months ended August 3, 1996 versus the six months ended July 29,
1995. Comparable sales for the Company's contract stationer business segment
increased 18% for the quarter ended August 3, 1996 versus the quarter ended July
29, 1995 and increased 20% for the six months ended August 3, 1996 versus the
six months ended July 29, 1995. The Company had 511 stores open as of August 3,
1996 compared to 386 stores as of July 29,1995 and 443 stores open as of
February 3, 1996; this total includes 69 new stores opened and one store closed
during the six months ended August 3, 1996.
GROSS PROFIT. Gross profit as a percentage of sales was 23.6% and 23.2% for the
three and six months ended August 3, 1996 as compared to 23.1% and 22.8%
for the same periods in the prior year. The increase in gross profit rate for
the three and six months ended August 3, 1996 was primarily due to the
leveraging of fixed occupancy and distribution center costs over a larger sales
base, improved margins in the delivery business segment as well as lower product
costs from vendors as a result of increased purchase volume discounts. This was
partially offset by a decrease in merchandise margin rate in the retail segment,
as sales of computers and other capital goods items, which generate a lower
margin rate than other categories, increased as a percentage of total sales for
the three and six months ended August 3, 1996 versus the prior year. Total
computer sales constituted approximately 6% of total store and delivery hub
sales during the three months ended August 3, 1996 versus 5% of sales in the
same period of the prior year, and increased to 7% of total store and delivery
hub sales during the six months ended August 3, 1996 versus 6% in the prior year
period.
OPERATING AND SELLING EXPENSES. Operating and selling expenses, which consist of
payroll, advertising and other store operating costs, increased as a percentage
of sales in the three and six months ended August 3, 1996 to 15.5% and 15.8%,
respectively, as compared to 15.4% and 15.6% for the same periods in the prior
year. The increase is primarily due to increased advertising as well as
increased costs incurred for the Company's store remodel program in which
significant investments have been made in store layouts and signing to improve
shopability and enhance customer service. This increase was partially offset by
increased leveraging of fixed store payroll expenses and other fixed store
operating costs as store sales have increased.
Page 7
<PAGE> 8
While most store expenses vary proportionately with sales, there is a fixed cost
component. Because new stores typically generate lower sales than the Company
average, the fixed cost component results in higher store operating and selling
expenses as a percentage of sales in these stores. During periods when new store
openings as a percentage of the base are higher, store operating and selling
expenses as a percentage of sales may increase. In addition, as the store base
matures, the fixed cost component of operating expenses is leveraged over an
increased level of sales, resulting in a decrease in store operating and selling
expenses as a percentage of sales. The Company's strategy of saturating markets
results in some new stores attracting sales away from existing stores. This also
has the effect of detracting from the expected leveraging of the fixed cost
component.
PRE-OPENING EXPENSES. Pre-opening expenses relating to new store openings, which
consist primarily of salaries, supplies, marketing and occupancy costs, are
expensed by the Company as incurred and, therefore, fluctuate from period to
period depending on the timing and number of new store openings. Pre-opening
expenses averaged $85,000 and $74,000 for the three and six months ended August
3, 1996, respectively, as compared to $53,000 and $52,000 per store for the same
periods in the prior year. The increase is due primarily to increased marketing
expenses as well as higher costs incurred in the initial shipment of product
from the distribution centers to new stores.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses for the
three and six months ended August 3, 1996 decreased as a percentage of sales to
3.6% and 3.4%, respectively, as compared to 3.8% and 3.7% for the same periods
in the prior year. This decrease was primarily due to the Company's ability to
increase sales without proportionately increasing overhead expenses in its core
retail business. The acquisitions of contract stationers, which historically
operated with much higher overhead as a percentage of sales, has partially
offset this leveraging. The Company has continued to make significant
investments in its information systems staffing and infrastructure, which the
Company believes will reduce costs in future years, without increasing total
general and administrative expenses as a percentage of sales. The Company
expects general and administrative expenses to decrease as a percentage of sales
in the future, as these expenses are expected to increase more slowly than
revenues.
INTEREST AND OTHER EXPENSE, NET. Net interest and other expense for the three
and six months ended August 3, 1996 was $5,165,000 and $9,193,000 as compared to
$4,689,000 and $8,675,000 for the same periods in the prior year. The increase
in net interest expense is primarily due to increased borrowings which funded
the increase in store inventories related to new store openings, expanded
product assortments, and improvements in in-stock levels; the acquisition of
fixed assets for new stores opened and remodeled; and additional investments in
joint venture affiliates.
EQUITY IN LOSS OF AFFILIATES. The Company's equity in loss of affiliates
increased to $4,028,000 and $7,742,000 for the three and six months ended August
3, 1996 as compared to $2,572,000 and $5,324,000 for the same periods in the
prior year. The increase in the equity in loss of affiliates is primarily due to
the increased losses generated by Staples UK, the Company's joint venture in
England, as sales and profitability have been lower than projected. The
Company's joint ventures in Europe are at an early stage of development and
there can be no assurance that they will become profitable.
Page 8
<PAGE> 9
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
During the six months ended August 3, 1996, cash and cash equivalents decreased
by $52,940,000. This decrease was attributable to cash used in investing
activities of $98,686,000, which includes capital expenditures of $94,599,000
primarily incurred in connection with the opening of 69 new stores, and cash
used in operating activities of $33,993,000, which primarily reflects increases
in merchandise inventories (related to new store openings, expanded product
assortments, improvements in in-stock levels, and the increased stocking to
prepare for the expected sales to be generated by the back to school season) and
increased accounts receivable. This was partially offset by cash flow from
financing activities of $79,742,000 which primarily represents borrowing under
the existing revolving credit and term loan facility.
The Company opened 39 and 69 stores in North America during the three and six
months ended August 3, 1996, and expects to open approximately 50 additional
stores in the last two quarters of fiscal 1996. Management estimates that the
Company's cash requirements, including pre-opening expenses, will be
approximately $1,400,000 for each new store (excluding the cost of any
acquisitions of lease rights). Accordingly, the Company expects to use in excess
of $70,000,000 for store openings during this period. In addition, the Company
will continue to make investments in information systems, distribution centers
and store remodels to improve operational efficiencies and customer service, and
may expend additional funds to acquire businesses or lease rights from tenants
occupying retail space that is suitable for a Staples store.
On July 10, 1996, the Company amended and restated its commitment on its
five-year revolving credit facility with a syndicate of banks, originally
established on May 25, 1994, from $225,000,000 to $350,000,000. Borrowings made
pursuant to this facility bear interest at either the lead bank's prime rate,
the federal funds rate plus 0.50%, the LIBOR rate plus a percentage spread based
on certain defined ratios, or a competitive bid rate. This agreement, among
other conditions, contains certain restrictive covenants including net worth
maintenance, minimum interest coverage and limitations on indebtedness, sales of
assets, and dividends. As of August 3, 1996, borrowing availability under the
revolving credit facility totaled $273,500,000; total cash, short-term
investments, available revolving credit amounts, and uncommitted facilities
totaled $351,200,000.
The Company expects that its current cash and cash equivalents, funds
anticipated to be generated from operations, and funds available under its
revolving credit and term loan facility will be sufficient to fund its planned
store openings and other recurring operational cash needs for at least the
remainder of the fiscal year. The Company is actively exploring implementation
of an asset-backed borrowing facility, which the Company expects will fund a
portion of its recurring operational cash needs through the end of fiscal 1997.
The Company is continually evaluating financing possibilities, and it may seek
to raise additional funds through any one or a combination of public or private
debt offerings, dependent upon market conditions, or through additional
commercial bank debt arrangements.
Page 9
<PAGE> 10
FUTURE OPERATING RESULTS
- ------------------------
This quarterly report on Form 10-Q contains a number of forward-looking
statements. There are a number of important factors that could cause the
Company's results to differ materially from those indicated by such
forward-looking statements. These factors include, without limitation, the
following:
The Company operates in a highly competitive marketplace, in which it competes
with a variety of retailers, dealers and distributors. The Company competes in
most of its geographic markets with other high-volume office supply chains that
are similar in concept to the Company in terms of store format, pricing strategy
and product selection, such as Office Depot and OfficeMax. The Company also
competes with mail order stationers, wholesale clubs, mass merchandisers and
consumer electronics retailers. Some of the Company's current and potential
competitors in the office products industry are larger than the Company and have
substantially greater financial resources. No assurance can be given that
competition will not have an adverse effect on the Company's business. In
addition, if any of the Company's major competitors were to seek to gain or
retain market share by reducing prices, the Company may be compelled to reduce
its prices and thereby reduce its gross margin and profitability.
An important part of the Company's business plan is an aggressive store growth
strategy. The Company opened 94 stores in the United States and Canada in fiscal
1995 and plans to open approximately 120 new stores in fiscal 1996. There can be
no assurance that the Company will be able to identify and lease favorable store
sites, hire, train and integrate employees, and adapt its management and
operational systems to the extent necessary to fulfill its expansion plans. The
failure to open new stores in accordance with its growth plans could have a
material adverse impact on the Company's future sales and profits. Moreover, the
Company's expansion strategy is based in part on the saturation of its suburban
store network in existing markets to take advantage of economies of scale in
marketing, distribution and supervision costs; however, this can result in the
"cannibalization" of sales of existing stores. In addition, there can be no
assurance that the new stores opened by the Company will achieve sales or profit
levels commensurate with those of the Company's existing stores, particularly as
the Company enters new markets in which it has less experience or faces more
competition.
The Company has experienced and may experience in the future fluctuations in its
quarterly operating results. Factors such as the number of new store openings
(pre-opening expenses are expensed as incurred, and newer stores are less
profitable than mature stores), the extent to which new stores "cannibalize"
sales of existing stores, the mix of products sold, pricing actions of
competitors, the level of advertising and promotional expenses, seasonality, and
one-time charges associated with acquisitions or other events could contribute
to this quarterly variability. In addition, the Company's expense levels are
based in part on expectations of future sales levels, and a shortfall in
expected sales could therefore result in a disproportionate decrease in the
Company's net income.
The Company's business, including sales, number of stores and number of
employees, has grown dramatically over the past several years. In addition, the
Company has consummated a number of significant acquisitions in the last few
years, and may make additional acquisitions in the future. This internal growth,
together with the acquisitions made by the Company, have placed significant
demand on the management and operational systems of the Company. To manage its
growth effectively, the Company will be required to continue to upgrade its
operational and financial systems, expand its management team and increase and
manage its employee base.
Page 10
<PAGE> 11
The Company has a presence in international markets through joint ventures with
locally-based companies in Germany and the United Kingdom, and may seek to
expand into other international markets in the future. The Company's operations
in foreign markets are subject to risks similar to those affecting its North
American stores in addition to a number of risks inherent to these joint
ventures, including lack of complete operating control and foreign currency
fluctuations.
The Company currently expects that its current cash and cash equivalents and
funds available under its revolving credit and term loan facility will be
sufficient to fund its planned store openings and other operating cash needs for
at least the remainder of the fiscal year. However, there can be no assurance
that the Company will not require additional sources of financing prior to such
time, as a result of unanticipated cash needs or opportunities, an expanded
growth strategy or disappointing operating results. There also can be no
assurance that the additional funds required by the Company, whether within the
next twelve months or thereafter, will be available to the Company on
satisfactory terms.
Page 11
<PAGE> 12
PART II -- OTHER INFORMATION
Items 1-3, 5 - Not applicable.
- -----------------------------
Item 4 - Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
At the 1996 Annual Meeting of Stockholders (the "Annual Meeting") held on May
23, 1996, the following matters were acted upon by the stockholders of the
Company:
1. The election of Mary E. Burton, Rowland T. Moriarty, W. Mitt Romney, and
Martin E. Hanaka as directors of the Company.
2. The approval of amendments to the Company's Restated Certificate of
Incorporation increasing the number of authorized shares of common stock of
the Company to 500,000,000.
3. The approval of amendments to the 1994 Employee Stock Purchase Plan to
increase the number of shares of common stock covered by the Purchase Plan
to 3,937,500 and to increase the number of six-month offerings under the
Purchase Plan to eight, the last of which would expire on October 31, 1998.
4. The ratification of the selection of Ernst & Young as the Company's
independent auditors for the current fiscal year.
<TABLE>
The number of shares of common stock outstanding and entitled to a vote at the
Annual Meeting was 159,243,287. The results of the voting on each of the matters
presented to stockholders' at the Annual Meeting are presented below:
<CAPTION>
Number of Shares of Common Stock Represented By
-----------------------------------------------
Broker
Votes For Votes Against Abstentions Non-Votes
--------- ------------- ----------- ---------
<S> <C> <C> <C> <C>
1. Election of directors:
Mary E. Burton 134,479,753 N/A N/A N/A
Rowland T. Moriarty 133,629,831 N/A N/A N/A
W. Mitt Romney 134,576,897 N/A N/A N/A
Martin E. Hanaka 134,514,769 N/A N/A N/A
2. Approval of Amendments
to Certificate of Incorporation 108,308,722 29,720,793 121,710 0
3. Approval of Amendments
to 1994 Employee Stock
Purchase Plan 134,589,162 2,890,847 242,822 428,394
4. Ratification of Independent
Auditors 137,218,372 844,474 88,379 N/A
</TABLE>
A description of the matters voted on by stockholders is contained in the
Company's definitive Proxy Statement for the Annual Meeting, which is on file
with the Securities and Exchange Commission.
Page 12
<PAGE> 13
Item 6 - Exhibits and Reports on Form 8-K.
- -----------------------------------------
A. Exhibits.
10.1 Staples, Inc. Second Amended and Restated Revolving Credit Agreement
dated as of May 25, 1994 and amended and restated as of July 10, 1996.
B. Reports on Form 8K.
None.
Page 13
<PAGE> 14
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: September 13, 1996 /s/ Thomas G. Stemberg
------------------ --------------------------
Thomas G. Stemberg
Chairman of the Board and
Chief Executive Officer
Page 14
<PAGE> 1
EXHIBIT 10.1
- --------------------------------------------------------------------------------
SECOND AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
dated as of May 25, 1994
and
amended and restated as of July 10, 1996
among
STAPLES, INC.
THE BANKS NAMED HEREIN,
and
THE FIRST NATIONAL BANK OF BOSTON,
AS AGENT
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TABLE OF CONTENTS
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[SECTION]1. DEFINITIONS AND RULES OF INTERPRETATION
[Section]1.1 Definitions .......................................... 1
[Section]1.2 Rules of Interpretation .............................. 17
[SECTION]2. THE REVOLVING CREDIT FACILITY
[Section]2.1 Commitment to Lend Syndicated Loans .................. 17
[Section]2.2 Requests for Syndicated Loans ........................ 18
[Section]2.3 Competitive Bid Loans ................................ 19
[Section]2.3.1 Competitive Bid Borrowings ........................... 19
[Section]2.3.2 Maximum Competitive Bid Loans; Funding Losses ........ 23
[Section]2.3.3 Repayment of Competitive Bid Loans ................... 23
[Section]2.4 Funds for Revolving Credit Loans ..................... 23
[Section]2.4.1 Funding Procedures ................................... 23
[Section]2.4.2 Advances by Agent .................................... 24
[Section]2.5 The Notes ............................................ 24
[Section]2.6 Reduction of Total Commitment ........................ 25
[Section]2.7 [Intentionally Omitted] .............................. 25
[Section]2.8 Mandatory Repayments of Revolving Credit Loans ....... 26
[Section]2.9 Optional Repayments of Syndicated Loans .............. 26
[Section]2.10 Interest on Revolving Credit Loans ................... 26
[Section]2.11 Conversion Options ................................... 27
[Section]2.11.1 Conversion to Different Type of Syndicated Loan ...... 27
[Section]2.11.2 Continuation of Type of Syndicated Loan .............. 27
[Section]2.11.3 Eurodollar Rate Loans ................................ 28
[SECTION]3. [Intentionally Omitted] ............................................ 28
[SECTION]4. CERTAIN GENERAL PROVISIONS; FEES
[Section]4.1 [Intentionally Omitted] .............................. 28
[Section]4.2 Agent's Fee .......................................... 28
[Section]4.3 Commitment Fee ....................................... 28
[Section]4.4 Funds for Payments ................................... 29
[Section]4.4.1 Payments to Agent .................................... 29
[Section]4.4.2 No Offset, Etc. ...................................... 29
[Section]4.4.3 Withholding .......................................... 29
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[Section]4.5 Computations ......................................... 30
[Section]4.6 Inability to Determine Eurodollar Rate ............... 30
[Section]4.7 Illegality ........................................... 30
[Section]4.8 Additional Costs, Etc. ............................... 31
[Section]4.9 Capital Adequacy ..................................... 32
[Section]4.10 Certificate .......................................... 33
[Section]4.11 Indemnity ............................................ 33
[Section]4.12 Interest on Overdue Amounts .......................... 33
[Section]4.13 Replacement of Individual Banks ...................... 33
[Section]4.14 Guaranties ........................................... 34
[SECTION]5. REPRESENTATIONS AND WARRANTIES
[Section]5.1 Corporate Authority .................................. 35
[Section]5.1.1 Incorporation; Good Standing ......................... 35
[Section]5.1.2 Authorization ........................................ 35
[Section]5.1.3 Enforceability ....................................... 35
[Section]5.2 Governmental Approvals ............................... 36
[Section]5.3 Title to Properties; Leases .......................... 36
[Section]5.4 Financial Statements ................................. 36
[Section]5.5 No Material Changes, Etc. ............................ 37
[Section]5.6 Franchises, Patents, Copyrights, Etc. ................ 37
[Section]5.7 Litigation ........................................... 37
[Section]5.8 Compliance with Other Instruments, Laws, Etc. ........ 37
[Section]5.9 Tax Status ........................................... 37
[Section]5.10 No Event of Default .................................. 38
[Section]5.11 Holding Company and Investment Company Acts .......... 38
[Section]5.12 Employee Benefit Plans ............................... 38
[Section]5.12.1 In General ........................................... 38
[Section]5.12.2 Terminability of Welfare Plans ....................... 38
[Section]5.12.3 Guaranteed Pension Plans ............................. 38
[Section]5.12.4 Multiemployer Plans .................................. 39
[Section]5.13 Regulations U and X .................................. 39
[Section]5.14 Environmental Compliance ............................. 39
[Section]5.15 Subsidiaries, Etc .................................... 40
[SECTION]6. AFFIRMATIVE COVENANTS OF THE BORROWER
[Section]6.1 Punctual Payment ..................................... 41
[Section]6.2 Maintenance of Office ................................ 41
[Section]6.3 Records and Accounts ................................. 41
[Section]6.4 Financial Statements, Certificates and Information ... 41
[Section]6.5 Notices .............................................. 42
[Section]6.6 Corporate Existence; Maintenance of Properties ....... 43
[Section]6.7 Insurance ............................................ 43
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[Section]6.8 Taxes ................................................ 43
[Section]6.9 Inspection of Properties and Books, Etc. ............. 44
[Section]6.10 Compliance with Laws, Contracts, Licenses and Permits 44
[Section]6.11 Employee Benefit Plans ............................... 45
[Section]6.12 Use of Proceeds ...................................... 45
[Section]6.13 Licenses and Permits ................................. 45
[Section]6.14 Further Assurances ................................... 45
[SECTION]7. CERTAIN NEGATIVE COVENANTS OF THE BORROWER
[Section]7.1 Restrictions on Indebtedness ......................... 46
[Section]7.2 Restrictions on Liens ................................ 48
[Section]7.3 Restrictions on Investments .......................... 50
[Section]7.4 Distributions ........................................ 52
[Section]7.5 Employee Benefit Plans ............................... 52
[Section]7.6 Merger and Consolidation ............................. 53
[Section]7.7 Disposition of Assets and Sale - Leaseback
Transactions ...................................... 53
[Section]7.8. Subordinated Debt .................................... 54
[SECTION]8. FINANCIAL COVENANTS OF THE BORROWER
[Section]8.1 Fixed Charge Coverage Ratio .......................... 55
[Section]8.2 Debt to Capital Ratio ................................ 55
[Section]8.3 Minimum Consolidated Tangible Net Worth .............. 56
[SECTION]9. CLOSING CONDITIONS
[Section]9.1 Loan Documents ....................................... 56
[Section]9.2 Certified Copies of Charter Documents ................ 56
[Section]9.3 Corporate Action ..................................... 56
[Section]9.4 Incumbency Certificate ............................... 56
[Section]9.5 Opinion of Counsel ................................... 57
[Section]9.6 Payment of Fees ...................................... 57
[Section]9.7 Outstanding Fees ..................................... 57
[Section]9.8 Receipt and Acceptance of Commitments ................ 57
[Section]9.9 Compliance Certificate ............................... 57
[SECTION]10. CONDITIONS TO ALL BORROWINGS
[Section]10.1 Representations True; No Event of Default ............ 57
[Section]10.2 No Legal Impediment .................................. 58
[Section]10.3 Governmental Regulation .............................. 58
[Section]10.4 Proceedings and Documents ............................ 58
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[SECTION]11 EVENTS OF DEFAULT; ACCELERATION; ETC
[Section]11.1 Events of Default and Acceleration ................... 58
[Section]11.2 Termination of Commitments ........................... 62
[Section]11.3 Remedies ............................................. 62
[SECTION]12. SETOFF ............................................................. 62
[SECTION]13. THE AGENT
[Section]13.1 Authorization ........................................ 63
[Section]13.2 Employees and Agents ................................. 63
[Section]13.3 No Liability ......................................... 63
[Section]13.4 No Representations ................................... 64
[Section]13.5 Payments ............................................. 64
[Section]13.5.1 Payments to Agent .................................... 64
[Section]13.5.2 Distribution by Agent ................................ 64
[Section]13.5.3 Delinquent Banks ..................................... 65
[Section]13.6 Holders of Notes ..................................... 65
[Section]13.7 Indemnity ............................................ 65
[Section]13.8 Agent as Bank ........................................ 66
[Section]13.9 Resignation .......................................... 66
[Section]13.10 Notification of Defaults and Events of Default ....... 66
[SECTION]14. EXPENSES ........................................................... 66
[SECTION]15. INDEMNIFICATION .................................................... 67
[SECTION]16. SURVIVAL OF COVENANTS, ETC. ........................................ 68
[SECTION]17. ASSIGNMENT AND PARTICIPATION
[Section]17.1 Conditions to Assignment by Banks .................... 68
[Section]17.2 Certain Representations and Warranties; Limitations;
Covenants .......................................... 69
[Section]17.3 Register ............................................. 70
[Section]17.4 New Notes ............................................ 70
[Section]17.5 Participations ....................................... 70
[Section]17.6 Disclosure ........................................... 71
[Section]17.7 Assignee or Participant Affiliated with the
Borrower ........................................... 71
[Section]17.8 Miscellaneous Assignment Provisions .................. 71
[Section]17.9 Assignment by Borrower ............................... 72
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[Section]18. NOTICES, ETC ....................................................... 72
[Section]19. GOVERNING LAW ...................................................... 73
[Section]20. HEADINGS ........................................................... 73
[Section]21. COUNTERPARTS ....................................................... 73
[Section]22. ENTIRE AGREEMENT, ETC. ............................................. 73
[Section]23. WAIVER OF JURY TRIAL ............................................... 73
[Section]24. CONSENTS, AMENDMENTS, WAIVERS, ETC. ................................ 74
[Section]25. SEVERABILITY ....................................................... 75
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EXHIBITS AND SCHEDULES
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Exhibit A Form of Loan Request
Exhibit B Form of Competitive Bid Quote Request
Exhibit C Form of Invitation for Competitive Bid Quotes
Exhibit D-1 Form of Competitive Bid Quote
Exhibit D-2 Form of Notice of Competitive Bid Borrowing
Exhibit D-3 Form of Notice of Competitive Bid Loans
Exhibit E-1 Form of Syndicated Note
Exhibit E-2 Form of Competitive Bid Note
Exhibit F Form of Second Amendment to the Guaranty
Exhibit G Form of Compliance Certificate
Exhibit H Form of Assignment and Acceptance
Schedule 1 Banks
Schedule 2 Guarantors
Schedule 2.3.1 Existing Competitive Bid Loans
Schedule 5.3 Title to Properties, Leases
Schedule 5.7 Litigation
Schedule 5.9 Taxes
Schedule 5.12 Pension Liabilities
Schedule 5.14 Environmental Compliance
Schedule 5.15(a) Subsidiaries
Schedule 5.15(b) Joint Ventures and Partnerships
Schedule 7.1(o) Existing Indebtedness
Schedule 7.2 Existing Liens
Schedule 7.3 Existing Investments
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SECOND AMENDED AND RESTATED
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REVOLVING CREDIT AGREEMENT
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This SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT dated as of the
25th day of May, 1994 and amended and restated as of the 10th day of July, 1996
is by and among STAPLES, INC. (the "Borrower"), a Delaware corporation having
its principal place of business at One Research Drive, Westborough,
Massachusetts 01581, THE FIRST NATIONAL BANK OF BOSTON, the other lending
institutions listed on SCHEDULE 1 attached hereto and THE FIRST NATIONAL BANK OF
BOSTON as agent (the "Agent").
WHEREAS, pursuant to that certain Revolving Credit and Term Loan Agreement
dated as of May 25, 1994, as amended and restated as of February 14, 1995, (the
"Original Credit Agreement") by and among the Borrower, certain of the Banks
(the "Original Banks") which are parties to this Credit Agreement and the Agent,
the Original Banks made loans to the Borrower for the purposes described
therein, and
WHEREAS, the Agent, the Banks and the Borrower wish to amend and restate
the Original Credit Agreement in order to provide additional financing to the
Borrower, to add certain lending institutions as additional Banks and to make
certain changes to the terms and provisions of the Original Credit Agreement;
NOW THEREFORE, the Agent, the Banks and the Borrower hereby agree that on
and as of the Closing Date the Original Credit Agreement shall be amended and
restated in its entirety as set forth herein and shall remain in full force and
effect only as provided herein.
[Section]1. DEFINITIONS AND RULES OF INTERPRETATION.
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[Section]1.1. DEFINITIONS. The following terms shall have the meanings set
forth in this [Section]1 or elsewhere in the provisions of this Credit Agreement
referred to below:
ADJUSTMENT DATE. The first day of the month immediately following the month
in which a Compliance Certificate is or is to be delivered by the Borrower
pursuant to [Section]6.4(c) hereof.
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AFFILIATE. Any Person that would be considered to be an affiliate of the
Borrower under Rule 144(a) of the Rules and Regulations of the Securities and
Exchange Commission, as in effect on the Closing Date, if the Borrower were
issuing securities.
AGENT. As defined in the preamble hereto.
AGENT'S FEE. See [Section]4.2 hereof.
AGENT'S FEE LETTER. See [Section]4.2 hereof.
AGENT'S HEAD OFFICE. The Agent's head office located at 100 Federal Street,
Boston, Massachusetts 02110, or at such other location as the Agent may
designate from time to time.
AGENT'S SPECIAL COUNSEL. Bingham, Dana & Gould LLP or such other counsel as
may be approved by the Agent.
<TABLE>
APPLICABLE MARGIN. For each period commencing on an Adjustment Date through
the date immediately preceding the next Adjustment Date (each a "Rate Adjustment
Period"), the Applicable Margin shall be the applicable percentage set forth
below with respect to the Fixed Charge Coverage Ratio, as determined at the end
of the fiscal quarter ending immediately prior to the applicable Rate Adjustment
Period PROVIDED THAT, if the Senior Debt of the Borrower shall have received an
actual or implied rating of "Baa1" or better by Moody's Investors Services, Inc.
or "BBB+" or better by S&P, (applicable as of the last Business Day of the
fiscal quarter ending immediately prior to the applicable Rate Adjustment
Period) then the Applicable Margin shall be 0.375%:
<CAPTION>
Fixed Charge Applicable Margin for
Coverage Ratio Eurodollar Rate Loans
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Less than 1.60:1 0.750%
Greater than or equal 0.625%
to 1.60:1 and less than
1.75:1
Greater than or equal 0.500%
to 1.75:1 and less than 2.30:1
Greater than or equal to 2.30:1 0.375%
</TABLE>
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Notwithstanding the foregoing, (a) for the period commencing on the Closing
Date through the date immediately preceding the first Adjustment Date to occur
after the Closing Date, the Applicable Margin shall be determined based upon the
Compliance Certificate delivered on the Closing Date pursuant to [Section]9.9
hereof and (b) if the Borrower fails to deliver any Compliance Certificate
pursuant to [Section]6.4(c) hereof then, for the period commencing on the next
Adjustment Date to occur subsequent to such failure through the date immediately
preceding the Adjustment Date that occurs immediately following the date on
which such Compliance Certificate is delivered, the Applicable Margin shall be
the highest Applicable Margin set forth above.
ASSIGNMENT AND ACCEPTANCE. See [Section]17.1 hereof.
BALANCE SHEET DATE. February 3, 1996.
BANKS. FNBB, the other lending institutions listed on SCHEDULE 1 attached
hereto, any other Person who becomes an assignee of any rights and obligations
of a Bank pursuant to [Section]17 hereof.
BASE RATE. The higher of (a) the annual rate of interest announced from
time to time by FNBB at its head office in Boston, Massachusetts, as its "base
rate" and (b) one-half of one percent (1/2%) per annum above the Federal Funds
Effective Rate. For the purposes of this definition, "Federal Funds Effective
Rate" shall mean for any day, the rate per annum equal to the weighted average
of the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the 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 average of the quotations for such day on such
transactions received by the Agent from three funds brokers of recognized
standing selected by the Agent.
BASE RATE LOANS. Any Syndicated Loans bearing interest calculated by
reference to the Base Rate.
BORROWER. As defined in the preamble hereto.
BUSINESS DAY. Any day on which banking institutions in Boston,
Massachusetts, are open for the transaction of banking business and, in the case
of Eurodollar Rate Loans, also a day which is a Eurodollar Business Day.
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CAPITAL STOCK. With respect to any corporation, partnership, trust,
unincorporated association, joint venture, limited liability company, or other
legal or business entity, any and all shares, interests, participations or other
equivalent (however designated) of capital stock of such entity, any and all
limited or general partnership interests and equivalent ownership interests in
such entity, any and all warrants and options to purchase any of the foregoing,
and any securities convertible into any of the foregoing.
CAPITALIZED LEASES. Leases under which the Borrower or any of its
Subsidiaries is the lessee or obligor, the discounted future rental payment
obligations under which are required to be capitalized on the balance sheet of
the lessee or obligor in accordance with generally accepted accounting
principles.
CERCLA. The Comprehensive Environmental Response, Compensation and
Liability Act of 1980.
CLOSING DATE. The first date on which the conditions set forth in
[Section]9 hereof have been satisfied, which shall be no later than July 31,
1996.
CODE. The Internal Revenue Code of 1986.
COMMITMENT. The agreement of each Bank, subject to the terms and conditions
of this Credit Agreement, to make Syndicated Loans to the Borrower hereunder.
COMMITMENT AMOUNT. With respect to each Bank, the amount of such Bank's
Commitment set forth on SCHEDULE 1 attached hereto, as the same may be reduced
from time to time; or if such Commitment is terminated pursuant to the
provisions hereof, zero. The Competitive Bid Loans of such Bank Outstanding at
any time shall not affect such Bank's Commitment Amount.
COMMITMENT FEE. See [Section]4.3 hereof.
COMMITMENT FEE RATE. For each Rate Adjustment Period, the Commitment
Fee Rate shall be the applicable percentage set forth below with respect to the
Fixed Charge Coverage Ratio, as determined at the end of the fiscal quarter
ending immediately prior to the applicable Rate Adjustment Period PROVIDED that
if the Senior Debt of the Borrower shall have received an actual or implied
rating of "Baa1" or better by Moody's Investors Services, Inc. or "BBB+" or
better by S&P, (applicable as of the last Business Day of the fiscal quarter
ending immediately prior to the applicable Rate Adjustment Period) then the
Commitment Fee Rate shall be 0.125%:
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<CAPTION>
Fixed Charge Commitment Fee Rate
Coverage Ratio -------------------
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Less than 1.60:1 0.250%
Greater than or equal
to 1.60:1 and less than
1.75:1 0.200%
Greater than or equal
to 1.75:1 and less than
2.30:1 0.150%
Greater than or equal
to 2.30:1 0.125%
</TABLE>
Notwithstanding the foregoing, (a) for the period commencing on the Closing
Date through the end of the month in which the first quarterly Compliance
Certificate is to be delivered, the Commitment Fee Rate shall be determined
based upon the Compliance Certificate delivered on the Closing Date pursuant to
[Section]9.9 hereof, and (b) if the Borrower fails to deliver any Compliance
Certificate pursuant to [Section]6.4(c) hereof then, for the period commencing
on the next Adjustment Date to occur subsequent to such failure through the date
immediately preceding the Adjustment Date that occurs immediately following the
date on which such Compliance Certificate is delivered, the Commitment Fee Rate
shall be the highest Commitment Fee Rate set forth above.
COMMITMENT PERCENTAGE. With respect to each Bank, the percentage set forth
on SCHEDULE 1 attached hereto as such Bank's percentage of the Total Commitment.
The Competitive Bid Loans of such Bank outstanding at any time shall not affect
such Bank's Commitment Percentage.
COMPETITIVE BID LOAN(S). A borrowing hereunder consisting of one or more
revolving credit loans made by any of the Banks whose offer to make a revolving
credit loan as part of such borrowing has been accepted by the Borrower under
the auction bidding procedure described in [Section]2.3 hereof.
COMPETITIVE BID NOTE. See [Section]2.5(b) hereof.
COMPETITIVE BID QUOTE. An offer by a Bank to make a Competitive Bid Loan in
accordance with [Section]2.3 hereof.
COMPETITIVE BID QUOTE REQUEST. See [Section]2.3.1(b) hereof.
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COMPETITIVE BID RATE. See [Section]2.3.1(d)(ii)(C) hereof.
COMPLIANCE CERTIFICATE. See [Section]6.4(c) hereof.
CONFIDENTIAL INFORMATION. All information relating to the Borrower or any
of its Subsidiaries that is labeled by the Borrower or such Subsidiary as
confidential at the time such information is supplied by the Borrower or such
Subsidiary to a Bank, other than information which (a) is public knowledge or
generally available to the public, or (b) is obtained by any of the Banks,
whether prior to or after disclosure to such Bank by the Borrower or any of its
Subsidiaries, from a source other than the Borrower or any of its Subsidiaries,
PROVIDED THAT such information is not known by such Bank to have been disclosed
by any party in violation of a confidentiality agreement with the Borrower or
any of its Subsidiaries, any other obligation of nondisclosure with respect to
the Borrower or any of its Subsidiaries or any applicable statutory or
regulatory limitation imposed on the disclosure of such information.
CONSOLIDATED OR CONSOLIDATED. With reference to any term defined herein,
shall mean that term as applied to the accounts of the Borrower and its
Subsidiaries, consolidated in accordance with generally accepted accounting
principles.
CONSOLIDATED NET INCOME (OR DEFICIT). The consolidated net income (or
deficit) of the Borrower and its Subsidiaries, after deduction of all expenses,
interest, taxes, and other proper charges, determined in accordance with
generally accepted accounting principles.
CONSOLIDATED TANGIBLE NET WORTH. The excess of Consolidated Total Assets
over Consolidated Total Liabilities, and less the sum of:
(a) the total book value of all assets of the Borrower and its
Subsidiaries properly classified as intangible assets under generally accepted
accounting principles, including such items as lease acquisition costs, deferred
charges, goodwill, the purchase price of acquired assets in excess of the fair
market value thereof, trademarks, trade names, service marks, brand names,
copyrights, patents and licenses, and rights with respect to the foregoing; PLUS
(b) all amounts representing any write-up in the book value of any
assets of the Borrower or its Subsidiaries resulting from a revaluation thereof
subsequent to the Balance Sheet Date, excluding adjustments to translate foreign
assets and liabilities for changes in foreign exchange rates made in accordance
with generally accepted accounting principles.
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CONSOLIDATED TOTAL ASSETS. All assets of the Borrower and its Subsidiaries
determined on a consolidated basis in accordance with generally accepted
accounting principles.
CONSOLIDATED TOTAL INTEREST EXPENSE. For any period, the aggregate amount
of interest required to be paid or accrued by the Borrower and its Subsidiaries
during such period on all Indebtedness of the Borrower and its Subsidiaries
outstanding during all or any part of such period, whether such interest was or
is required to be reflected as an item of expense or capitalized, including
payments consisting of interest in respect of Capitalized Leases and including
facility fees, commitment fees, usage fees, agency fees, balance deficiency
fees, and similar fees or expenses in connection with the borrowing of money, as
determined in accordance with generally accepted accounting principles.
CONSOLIDATED TOTAL LIABILITIES. All liabilities of the Borrower and its
Subsidiaries determined on a consolidated basis in accordance with generally
accepted accounting principles.
CONTINGENT LIABILITIES. Any guaranties, endorsements, agreements to
purchase or provide funds for the payment of obligations of others, or other
liabilities which would be classified as contingent in accordance with generally
accepted accounting principles consistently applied, excluding, however, (a)
product warranties given in the ordinary course of business, (b) endorsements of
checks or other negotiable instruments for deposit or collection in the ordinary
course of business, and (c) reimbursement obligations in respect of documentary
trade letters of credit.
CONVERSION REQUEST. A notice given by the Borrower to the Agent of the
Borrower's election to convert or continue a Loan in accordance with
[Section]2.11 hereof.
CREDIT AGREEMENT. This Second Amended and Restated Revolving Credit
Agreement, including the Schedules and Exhibits hereto.
DEFAULT. See [Section]11.1 hereof.
DELINQUENT BANK. See [Section]13.5.3 hereof.
DISTRIBUTION. The declaration or payment of any dividend on or in respect
of any shares of any class of Capital Stock of the Borrower, other than
dividends payable solely in shares of common stock of the Borrower; the
purchase, redemption, or other retirement of any shares of any class of Capital
Stock of the Borrower, directly or indirectly through a Subsidiary of the
Borrower or
<PAGE> 15
otherwise; the return of capital by the Borrower to its shareholders as such; or
any other distribution on or in respect of any shares of any class of Capital
Stock of the Borrower.
DOLLARS or $. Dollars in lawful currency of the United States of America.
DOMESTIC LENDING OFFICE. Initially, the office of each Bank designated as
such in SCHEDULE 1 attached hereto; thereafter, such other office of such Bank,
if any, located within the United States that will be making or maintaining Base
Rate Loans.
DRAWDOWN DATE. The date on which any Loan is made or is to be made, and the
date on which any Loan is converted or continued in accordance with
[Section]2.11 hereof.
EARNINGS BEFORE INTEREST AND TAXES. Consolidated earnings (or deficit) from
the operations of the Borrower and its Subsidiaries, after deducting all
expenses and other proper charges other than interest expense and taxes, and
excluding all extraordinary and nonrecurring items of income or loss, as
determined in accordance with generally accepted accounting principles.
ELIGIBLE ASSIGNEE. Any of (a) a commercial bank or finance company
organized under the laws of the United States, or any State thereof or the
District of Columbia, and having total assets in excess of $1,000,000,000; (b) a
savings and loan association or savings bank organized under the laws of the
United States, or any State thereof or the District of Columbia, and having a
net worth of at least $100,000,000, calculated in accordance with generally
accepted accounting principles; (c) a commercial bank organized under the laws
of any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any such
country, and having total assets in excess of $1,000,000,000, or the central
bank of any country which is a member of the OECD, PROVIDED, in each case, that
such bank (i) is acting through a branch or agency located in the country in
which it is organized or another country which is also a member of the OECD and
(ii) has delivered to the Agent, on the date on which the Assignment and
Acceptance to which such Eligible Assignee is a party becomes effective, the
forms referred to in [Section]4.4.3 hereof; and (d) if, but only if, any Event
of Default has occurred and is continuing, any other bank, insurance company,
commercial finance company or other financial institution or other Person
approved by the Agent, such approval not to be unreasonably withheld.
EMPLOYEE BENEFIT PLAN. Any employee benefit plan within the meaning of
[Section]3(3) of ERISA maintained or contributed to by the Borrower or any ERISA
Affiliate, other than a Multiemployer Plan.
<PAGE> 16
ENVIRONMENTAL LAWS. Any judgment, decree, order, law, license, rule or
regulation pertaining to environmental matters, including without limitation,
those arising under the Resource Conservation and Recovery Act ("RCRA"), CERCLA,
the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), the Federal
Clean Water Act, the Federal Clean Air Act, the Toxic Substances Control Act, or
any state or local statute, regulation, ordinance, order or decree relating to
health, safety or the environment.
ENVIRONMENTAL NOTICE. Any notice to the Borrower or any of its Subsidiaries
from any third party including, without limitation: any federal, state or local
governmental authority, (a) that it has been identified by the United States
Environmental Protection Agency as a potentially responsible party under CERCLA
with respect to a site listed on the National Priorities List, 40 C.F.R. Part
300 Appendix B; (b) that any Hazardous Substances which it has generated,
transported or disposed of has been found at any site at which a federal, state
or local agency or other third party has conducted or has ordered that the
Borrower or any of its Subsidiaries conduct a remedial investigation, removal or
other response action pursuant to any Environmental Law; or (c) that it is or
shall be a named party to any claim, action, cause of action, complaint, or
legal or administrative proceeding in connection with the release of Hazardous
Substances.
ERISA. The Employee Retirement Income Security Act of 1974.
ERISA AFFILIATE. Any Person which is treated as a single employer with the
Borrower under [Section]414 of the Code.
ERISA REPORTABLE EVENT. A reportable event with respect to a Guaranteed
Pension Plan within the meaning of [Section]4043 of ERISA and the regulations
promulgated thereunder as to which the requirement of notice has not been
waived.
EUROCURRENCY RESERVE RATE. For any day with respect to a Eurodollar Rate
Loan, the maximum rate (expressed as a decimal) at which any lender subject
thereto would be required to maintain reserves under Regulation D of the Board
of Governors of the Federal Reserve System (or any successor or similar
regulations relating to such reserve requirements) against "Eurocurrency
liabilities" (as that term is used in Regulation D), if such liabilities were
outstanding. The Eurocurrency Reserve Rate shall be adjusted automatically on
and as of the effective date of any change in the Eurocurrency Reserve Rate.
<PAGE> 17
EURODOLLAR BUSINESS DAY. Any day on which commercial banks are open for
international business (including dealings in Dollar deposits) in London or such
other interbank market as may be selected by the Agent in its sole discretion
acting in good faith.
EURODOLLAR LENDING OFFICE. Initially, the office of each Bank designated as
such in SCHEDULE 1 attached hereto; thereafter, such other office of such Bank,
if any, that shall be making or maintaining Eurodollar Rate Loans.
EURODOLLAR RATE. For any Interest Period with respect to a Eurodollar Rate
Loan, the rate of interest equal to (a) the rate (rounded upwards to the nearest
1/16 of one percent) per annum at which the Reference Bank's Eurodollar Lending
Office is offered Dollar deposits two (2) Eurodollar Business Days prior to the
beginning of such Interest Period in the interbank eurodollar market where the
eurodollar and foreign currency and exchange operations of such Eurodollar
Lending Office are customarily conducted, for delivery on the first day of such
Interest Period for the number of days comprised therein and in an amount
comparable to the amount of the Eurodollar Rate Loan to which such Interest
Period applies, divided by (b) a number equal to 1.00 minus the Eurocurrency
Reserve Rate.
EURODOLLAR RATE LOANS. Any Syndicated Loans bearing interest calculated by
reference to the Eurodollar Rate.
EVENT OF DEFAULT. See [Section]11.1 hereof.
EXISTING COMPETITIVE BID LOANS. See [Section]2.3.1(i) hereof.
FIXED CHARGE COVERAGE RATIO. See [Section]8.1 hereof.
FNBB. The First National Bank of Boston, a national banking association, in
its individual capacity.
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES OR GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES. (a) When used in [Section]8 hereof, whether directly or indirectly
through reference to a capitalized term used therein, means (i) principles that
are consistent with the principles promulgated or adopted by the Financial
Accounting Standards Board and its predecessors, in effect for the fiscal year
ended on the Balance Sheet Date, and (ii) to the extent consistent with such
principles, the accounting practice of the Borrower reflected in its financial
statements for the year ended on the Balance Sheet Date, and (b) when used in
general, other than as provided above, means principles that are (i) consistent
with the principles promulgated or adopted by the Financial Accounting Standards
Board and its predecessors, as in effect from time to time, and (ii)
<PAGE> 18
consistently applied with past financial statements of the Borrower adopting the
same principles, provided that in each case referred to in this definition of
"generally accepted accounting principles" a certified public accountant would,
insofar as the use of such accounting principles is pertinent, be in a position
to deliver an unqualified opinion (other than a qualification regarding changes
in generally accepted accounting principles) as to financial statements in which
such principles have been properly applied.
GUARANTEED PENSION PLAN. Any employee pension benefit plan within the
meaning of [Section]3(2) of ERISA maintained or contributed to by the Borrower
or any ERISA Affiliate the benefits of which are guaranteed on termination in
full or in part by the PBGC pursuant to Title IV of ERISA, other than a
Multiemployer Plan.
GUARANTIES. The Guaranty of each Guarantor in favor of the Agent for the
benefit of the Banks executed in connection with the Original Credit Agreement,
as amended or restated and in effect from time to time.
GUARANTY AMENDMENTS. Collectively, the Amendments to the respective
Guaranties of each Guarantor, each substantially in the form of EXHIBIT F
attached hereto.
GUARANTORS. Those Subsidiaries of the Borrower listed on SCHEDULE 2
attached hereto, as such schedule may be modified from time to time in
accordance with [Section]4.14 hereof.
HAZARDOUS SUBSTANCES. Any hazardous waste, as defined by 42 U.S.C.
[Section]6903(5), any hazardous substances as defined by 42 U.S.C. [Section]
9601(14), any pollutant or contaminant as defined by 42 U.S.C. [Section]9601(33)
and any toxic substances, oil or hazardous materials or other chemicals or
substances regulated by any Environmental Laws.
INDEBTEDNESS. All obligations, contingent and otherwise, that in accordance
with generally accepted accounting principles should be classified upon the
obligor's balance sheet as liabilities, or to which reference should be made by
footnotes thereto, including in any event and whether or not so classified: (a)
all debt and similar monetary obligations, whether direct or indirect; (b) all
liabilities secured by any mortgage, pledge, security interest, lien, charge or
other encumbrance existing on property owned or acquired subject thereto,
whether or not the liability secured thereby shall have been assumed; (c) all
obligations in respect of interest rate protection arrangements and exchange
rate protection arrangements; and (d) all guarantees, endorsements and other
contingent obligations whether direct or indirect in respect of indebtedness of
others, including any obligation to supply funds to or
<PAGE> 19
in any manner to invest in, directly or indirectly, the debtor, to purchase
indebtedness, or to assure the owner of indebtedness against loss, through an
agreement to purchase goods, supplies, or services for the purpose of enabling
the debtor to make payment of the indebtedness held by such owner or otherwise,
and the obligations to reimburse the issuer in respect of any letters of credit.
INDENTURE. The Indenture by and between the Borrower and Marine Midland
Bank, as trustee, with respect to the Subordinated Debentures.
INTEREST PAYMENT DATE. (a) As to any Base Rate Loan, the last day of the
calendar quarter which includes the Drawdown Date thereof; (b) as to any
Eurodollar Rate Loan in respect of which the Interest Period is (i) 3 months or
less, the last day of such Interest Period and (ii) more than 3 months, the date
that is 3 months from the first day of such Interest Period, the last day of
each 3 month period thereafter, and, in addition, the last day of such Interest
Period; and (c) as to any Competitive Bid Loan, on the last day of the Interest
Period applicable thereto.
INTEREST PERIOD. With respect to each Loan (a) initially, the period
commencing on the Drawdown Date of such Loan and ending on the last day of one
of the periods set forth below, as selected by the Borrower in a Loan Request
(i) for any Base Rate Loan, the last day of the calendar quarter; (ii) for any
Eurodollar Rate Loan, 1, 2, 3, 6 or (if available) 12 months; and (iii) for any
Competitive Bid Loan, from 7 through 180 days; and (b) thereafter, each period
commencing on the last day of the next preceding Interest Period applicable to
such Loan and ending on the last day of one of the periods set forth above, as
selected by the Borrower in a Conversion Request; PROVIDED that all of the
foregoing provisions relating to Interest Periods are subject to the following:
(A) if any Interest Period with respect to a Eurodollar Rate Loan
would otherwise end on a day that is not a Eurodollar Business Day, that
Interest Period shall be extended to the next succeeding Eurodollar
Business Day unless the result of such extension would be to carry such
Interest Period into another calendar month, in which event such Interest
Period shall end on the immediately preceding Eurodollar Business Day;
(B) if any Interest Period with respect to a Base Rate Loan would end
on a day that is not a Business Day, that Interest Period shall end on the
next succeeding Business Day;
(C) if the Borrower shall fail to give notice as provided in
[Section]2.11 hereof, the Borrower shall be deemed to have requested a
conversion of the affected Eurodollar Rate Loan to a Base Rate Loan and the
<PAGE> 20
continuance of all Base Rate Loans as Base Rate Loans on the last day of
the then current Interest Period with respect thereto;
(D) any Interest Period relating to any Eurodollar Rate Loan that
begins on the last Eurodollar Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall end on the last Eurodollar
Business Day of a calendar month; and
(E) any Interest Period relating to any Revolving Credit Loan that
would otherwise extend beyond the Maturity Date shall end on the Maturity
Date.
INVESTMENTS. All expenditures made and all liabilities incurred
(contingently or otherwise) for the acquisition of stock or Indebtedness of, or
for loans, advances, capital contributions or transfers of property to, or in
respect of any guaranties (or other commitments as described under
Indebtedness), or obligations of, any Person. In determining the aggregate
amount of Investments outstanding at any particular time: (a) the amount of any
Investment represented by a guaranty shall be taken at not less than the
principal amount of the obligations guaranteed and still outstanding; (b) there
shall be included as an Investment all interest accrued with respect to
Indebtedness constituting an Investment unless and until such interest is paid;
(c) there shall be deducted in respect of each such Investment any amount
received as a return of capital (but only by repurchase, redemption, retirement,
repayment, liquidating dividend or liquidating distribution); (d) there shall
not be deducted in respect of any Investment any amounts received as earnings on
such Investment, whether as dividends, interest or otherwise, except that
accrued interest included as provided in the foregoing clause (b) may be
deducted when paid; and (e) there shall not be deducted from the aggregate
amount of Investments any decrease in the value thereof.
INVITATION FOR COMPETITIVE BID QUOTES. See [Section]2.3.1(c) hereof.
LOAN DOCUMENTS. This Credit Agreement, the Notes, the Guaranties, the
Guaranty Amendments, the Agent's Fee Letter and any other documents delivered
pursuant to this Credit Agreement.
LOAN REQUEST. See [Section]2.2 hereof.
LOANS. Revolving Credit Loans made or to be made by the Banks to the
Borrower pursuant to [Section]2 hereof, whether Syndicated Loans or Competitive
Bid Loans.
<PAGE> 21
MAJORITY BANKS. As of any date, except as otherwise provided below, the
Banks holding at least 66.67% of the outstanding principal amount of the
Syndicated Notes on such date; and if no such principal is outstanding, the
Banks whose aggregate Commitment Amounts constitutes at least 66.67% of the
Total Commitment.
MARGIN REGULATIONS. See [Section]5.13 hereof.
MATURITY DATE. July 10, 2001.
MEASUREMENT PERIOD. See [Section]8.1 hereof.
MULTIEMPLOYER PLAN. Any multiemployer plan within the meaning of
[Section]3(37) of ERISA maintained or contributed to by the Borrower or any
ERISA Affiliate.
NOTES. The Syndicated Notes and the Competitive Bid Notes, or, when used in
the singular, any of such Notes.
NOTICE OF COMPETITIVE BID BORROWING. See [Section]2.3.1(f) hereof.
NROs. See [Section]7.3(o) hereof.
OBLIGATIONS. All indebtedness, obligations and liabilities of any of the
Borrower and its Subsidiaries to any of the Banks and the Agent, individually or
collectively, existing on the date of this Credit Agreement or arising
thereafter, direct or indirect, joint or several, absolute or contingent,
matured or unmatured, liquidated or unliquidated, secured or unsecured, arising
by contract, operation of law or otherwise, arising or incurred under this
Credit Agreement or any of the other Loan Documents or in respect of any of the
Loans made or any of the Notes, or other instruments at any time evidencing any
thereof.
ORIGINAL BANKS. See preamble.
ORIGINAL CREDIT AGREEMENT. See preamble.
OUTSTANDING or OUTSTANDING. With respect to the Loans, the aggregate unpaid
principal thereof as of any date of determination.
PBGC. The Pension Benefit Guaranty Corporation created by [Section]4002 of
ERISA and any successor entity or entities having similar responsibilities.
<PAGE> 22
PERMITTED LIENS. Liens, security interests and other encumbrances permitted
under [Section]7.2 hereof.
PERSON. Any individual, corporation, partnership, trust, unincorporated
association, business, or other legal entity, and any government or any
governmental agency or political subdivision thereof.
RATE ADJUSTMENT PERIOD. See definition of Applicable Margin.
REAL ESTATE. All real property at any time owned or leased (as lessee or
sublessee) by the Borrower or any of its Subsidiaries.
RECORD. The grid attached to a Note, or the continuation of such grid, or
any other similar record, including computer records, maintained by any Bank
with respect to any Loan referred to in such Note.
REFERENCE BANK. FNBB.
RENTAL EXPENSE. All obligations of the Borrower or any of its Subsidiaries
under any rental agreements or leases of real property, other than (a)
obligations that can be terminated by the giving of notice without liability to
the Borrower or such Subsidiary in excess of the liability for rent due as of
the date on which such notice is given and under which no penalty or premium is
paid as a result of any such termination, and (b) obligations in respect of
Capitalized Leases.
REPLACEMENT BANK. See [Section]4.13 hereof.
REVOLVER PERIOD. The period beginning on the Closing Date to and including
the day immediately preceding the Maturity Date.
REVOLVING CREDIT LOANS. Collectively, the Syndicated Loans and the
Competitive Bid Loans.
SENIOR DEBT. Indebtedness for borrowed money of the Borrower and its
Subsidiaries other than Subordinated Debt.
S&P. Standard & Poor's Ratings Group, a division of McGraw-Hill, Inc.
STOCKHOLDERS' EQUITY. As at any date of determination, the sum of (a) the
capital accounts including common stock and preferred stock, but excluding
treasury stock of the Borrower PLUS (b) the earned surplus and capital surplus
of the Borrower (excluding adjustments to translate foreign assets and
liabilities for changes in foreign exchange rates made in accordance with
Financial
<PAGE> 23
Accounting Standards Board Statement No. 52), as determined in accordance with
generally accepted accounting principles.
SUBORDINATED DEBT. Indebtedness represented by the Subordinated Debentures
and permitted refinancings thereof, and all other unsecured Indebtedness of the
Borrower or any of its Subsidiaries that is expressly subordinated and made
junior to the payment and performance of the Obligations, and evidenced as such
by a written instrument containing subordination provisions in form and
substance approved by the Banks in writing.
SUBORDINATED DEBENTURES. The 4-1/2% Convertible Subordinated Debentures due
October 1, 2000 issued by the Borrower pursuant to the terms of the Indenture.
SUBSIDIARY. Any corporation, association, trust, or other business entity
of which the designated parent shall at any time own directly or indirectly
through a Subsidiary or Subsidiaries at least a majority (by number of votes) of
the outstanding Voting Stock and the accounts of which are consolidated with the
Borrower in accordance with GAAP.
SUBSTITUTED BANK. See [Section]4.13 hereof.
SYNDICATED LOAN(S). One or more revolving credit loans funded by the Banks
in accordance with their respective Commitment Percentages.
SYNDICATED NOTE. See [Section]2.5(a) hereof.
TOTAL COMMITMENT. The sum of the Commitment Amounts of the Banks, as in
effect from time to time. The Total Commitment as of the Closing Date is
$350,000,000.
TOTAL FUNDED INDEBTEDNESS. As at any date of determination, the
aggregate (without duplication) of (a) all outstanding Indebtedness of the
Borrower and its Subsidiaries relating to the borrowing of money or the
obtaining of credit, PLUS (b) all obligations of the Borrower and its
Subsidiaries as lessees under Capitalized Leases.
TYPE. As to any Syndicated Loan, its nature as a Base Rate Loan or a
Eurodollar Rate Loan.
VOTING STOCK. Stock or similar interests, of any class or classes (however
designated), the holders of which are at the time entitled, as such holders, to
vote for the election of a majority of the directors (or persons performing
similar
<PAGE> 24
functions) of the corporation, association, trust or other business entity
involved, whether or not the right so to vote exists by reason of the happening
of a contingency.
[Section]1.2. RULES OF INTERPRETATION.
(a) A reference to any document or agreement shall include such
document or agreement as amended, modified or supplemented from time to time in
accordance with its terms and the terms of this Credit Agreement.
(b) The singular includes the plural and the plural includes the
singular.
(c) A reference to any law includes any amendment or modification to
such law.
(d) A reference to any Person includes its permitted successors and
permitted assigns.
(e) Accounting terms not otherwise defined herein have the meanings
assigned to them by generally accepted accounting principles applied on a
consistent basis by the accounting entity to which they refer.
(f) The words "include", "includes" and "including" are not limiting.
(g) All terms not specifically defined herein or by generally accepted
accounting principles, which terms are defined in the Uniform Commercial Code as
in effect in the Commonwealth of Massachusetts, have the meanings assigned to
them therein.
(h) Reference to a particular "[Section]" refers to that section of
this Credit Agreement unless otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and words of like import
shall refer to this Credit Agreement as a whole and not to any particular
section or subdivision of this Credit Agreement.
[Section]2. THE REVOLVING CREDIT FACILITY.
[Section]2.1. COMMITMENT TO LEND SYNDICATED LOANS. Subject to the terms and
conditions set forth in this Credit Agreement, each of the Banks severally
agrees (a) on the Closing Date, to convert and reallocate the Syndicated Loans
(as defined in the Original Credit Agreement) outstanding under the Original
<PAGE> 25
Credit Agreement to Revolving Credit Loans under this Credit Agreement, and (b)
from time to time during the Revolver Period to make Syndicated Loans to the
Borrower in such amounts as are requested by the Borrower, PROVIDED, that the
sum of the aggregate principal amount of Syndicated Loans made by each Bank
(after giving effect to all amounts requested) shall not at any time exceed
such Bank's Commitment Amount (without regard to any Competitive Bid Loans of
such Bank outstanding at such time), and PROVIDED, FURTHER, that (i) at no time
shall the sum of (A) the outstanding aggregate principal amount of all
Syndicated Loans made by all Banks PLUS (B) the outstanding aggregate principal
amount of all Competitive Bid Loans made by all Banks exceed the Total
Commitment, and (ii) at all times the outstanding aggregate principal amount of
all Syndicated Loans made by each Bank shall equal such Bank's Commitment
Percentage of the outstanding aggregate principal amount of all Syndicated
Loans made pursuant to the terms of this Credit Agreement. Subject to the terms
and conditions set forth in this Credit Agreement, the Borrower may borrow,
repay and reborrow Syndicated Loans from time to time during the Revolver
Period upon notice by the Borrower to the Agent given in accordance with
[Section]2.2 hereof. Each request for a Syndicated Loan hereunder shall
constitute a representation and warranty by the Borrower that the conditions
set forth in [Sections]9 and 10 hereof, in the case of the initial Syndicated
Loans to be made or converted on the Closing Date, and [Section]10 hereof, in
the case of all other Syndicated Loans have been satisfied on the date
of such request.
[Section]2.2. REQUESTS FOR SYNDICATED LOANS. The Borrower shall give to the
Agent written notice in the form of EXHIBIT A attached hereto (or telephonic
notice confirmed in a writing in the form of EXHIBIT A attached hereto) of each
Syndicated Loan requested hereunder (a "Loan Request") not later than (a) 12:00
noon (Boston time) on the proposed Drawdown Date of any Base Rate Loan and (b)
12:00 noon (Boston time) three (3) Eurodollar Business Days prior to the
proposed Drawdown Date of any Eurodollar Rate Loan. Each such notice shall
specify (i) the principal amount of the Syndicated Loan requested, (ii) the
proposed Drawdown Date of such Syndicated Loan, (iii) the Interest Period for
such Syndicated Loan and (iv) the Type of such Syndicated Loan. Promptly upon
receipt of any such notice, the Agent shall notify each of the Banks thereof.
Each Loan Request shall be irrevocable and binding on the Borrower and shall
obligate the Borrower to accept the Syndicated Loan requested from the Banks on
the proposed Drawdown Date. Each Loan Request shall be (A) in a minimum
aggregate amount of $1,000,000 or an integral multiple thereof with respect to
Base Rate Loans and (B) in a minimum aggregate amount of $2,000,000 or an
integral multiple of $l,000,000 with respect to Eurodollar Rate Loans.
<PAGE> 26
[Section]2.3. COMPETITIVE BID LOANS.
[Section]2.3.1. COMPETITIVE BID BORROWINGS.
(a) THE COMPETITIVE BID OPTION. In addition to the Syndicated Loans
permitted to be made hereunder pursuant to [Section]2.1 hereof, the Borrower
may, from time to time during the Revolver Period pursuant to the terms of this
[Section]2.3, cause the Agent to request the Banks to make offers to fund
Competitive Bid Loans to the Borrower from time to time prior to the Maturity
Date. The Banks may, but shall have no obligation to, make such offers and the
Borrower may, but shall have no obligation to, accept such offers in the manner
set forth in this [Section]2.3. Each Bank may make Competitive Bid Loans in an
aggregate amount (after giving effect to all amounts requested) not to exceed
the Total Commitment, PROVIDED that the aggregate amount of all outstanding
Syndicated Loans PLUS the aggregate amount of all outstanding Competitive Bid
Loans (after giving effect to all amounts requested) shall at no time exceed the
Total Commitment.
(b) COMPETITIVE BID QUOTE REQUEST. When the Borrower wishes to request
offers to make Competitive Bid Loans under this [Section]2.3, it shall transmit
to the Agent by telex or facsimile a Competitive Bid Quote Request substantially
in the form of Exhibit B attached hereto (a "Competitive Bid Quote Request") so
as to be received no later than 1:00 p.m. (Boston time) on the second Business
Day prior to the requested Drawdown Date, specifying (i) the requested Drawdown
Date (which must be a Business Day), (ii) the amount of such Competitive Bid
Loan (which must be a minimum of $2,000,000 or any greater integral multiple of
$1,000,000 and may not exceed the Total Commitment), and (iii) the Interest
Period of such Competitive Bid Loan (which may not extend beyond the Maturity
Date). A Competitive Bid fee of $750 shall be payable by the Borrower to the
Agent with respect to each Competitive Bid Quote Request on the last day of the
calendar quarter in which such Competitive Bid Quote Request was made. The
Borrower may request offers to make Competitive Bid Loans for one amount and
three Interest Periods in a single Competitive Bid Quote Request.
(c) INVITATION FOR COMPETITIVE BID QUOTES; ALTERNATIVE MANNER OF
AUCTION. Subsequent to timely receipt of a Competitive Bid Quote Request, the
Agent shall send to the Banks by telex or facsimile an Invitation for
Competitive Bid Quotes substantially in the form of EXHIBIT C attached hereto
(an "Invitation for Competitive Bid Quotes"), as promptly as possible but not
later than 3:00 p.m. (Boston time) on the second Business Day prior to the
requested Drawdown Date which shall constitute an invitation by the Borrower to
each Bank to submit Competitive Bid Quotes offering to make Competitive Bid
Loans to which such Competitive Bid Quote Request relates in accordance with
this
<PAGE> 27
[Section]2.3. If, after receipt by the Agent of a Competitive Bid Quote Request
from the Borrower in accordance with subsection (b) of this [Section]2.3.1, the
Agent or any Bank shall be unable to complete any procedure of the auction
process described in subsections (c) through (f) (inclusive) of this
[Section]2.3.1 due to the inability of such Person to transmit or receive
communications through the means specified therein, such Person may rely on
telephonic notice for the transmission or receipt of such communications. In any
case where such Person shall rely on telephone transmission or receipt, any
communication made by telephone shall, as soon as possible thereafter, be
followed by written confirmation thereof.
(d) SUBMISSION AND CONTENTS OF COMPETITIVE BID QUOTES.
(i) Each Bank may submit a Competitive Bid Quote containing an
offer or offers to make Competitive Bid Loans in response to any Invitation for
Competitive Bid Quotes. Each Competitive Bid Quote must comply with the
requirements of this subsection (d) and must be submitted to the Agent by telex
or facsimile not later than 10:00 a.m. (Boston time) on the requested Drawdown
Date, PROVIDED, that Competitive Bid Quotes may be made by the Agent in its
capacity as a Bank only if it notifies the Borrower of the terms of its
Competitive Bid Quote no later than 9:30 a.m. (Boston time) on the requested
Drawdown Date. Subject to the provisions of [Sections]9, 10 and 11 hereof, any
Competitive Bid Quote so made shall be irrevocable except with the written
consent of the Agent given on the instructions of the Borrower.
(ii) Each Competitive Bid Quote shall be in substantially the
form of EXHIBIT D-1 attached hereto (a "Competitive Bid Quote") and shall in any
case specify:
(A) the requested Drawdown Date and Interest Periods,
(B) the principal amount of the Competitive Bid Loan for
which each such offer is being made, which principal amount (X) may be greater
than the Commitment Amount of the quoting Bank but may not exceed the Total
Commitment, (Y) must be $2,000,000 or a larger multiple of $1,000,000 and (Z)
may not exceed the aggregate principal amount of Competitive Bid Loans for which
offers were requested,
(C) the rate of interest per annum (rounded to the nearest
1/1000th of 1%) (the "Competitive Bid Rate") offered for each such Competitive
Bid Loan, and
(D) the identity of the quoting Bank.
<PAGE> 28
(iii) Any Competitive Bid Quote shall be disregarded if it:
(A) is not substantially in the form of EXHIBIT D-1 attached
hereto or does not specify all of the information required by subsection (d)(ii)
of this [Section]2.3.1;
(B) contains qualifying, conditional or similar language
(except that it may, in the case of a quote relating to more than one Interest
Period, contain the condition that the Bank will fund any one, but not more, of
the Competitive Bid Loans offered in such Competitive Bid Quote);
(C) proposes terms other than or in addition to those set
forth in the applicable Invitation for Competitive Bid Quotes; or
(D) arrives after the time set forth in subsection (d)(i) of
this [Section]2.3.1.
(e) NOTICE TO BORROWER. Not later than 10:30 a.m. (Boston time) on the
requested Drawdown Date, the Agent shall notify the Borrower of the terms of all
Competitive Bid Quotes submitted by the Banks in accordance with subsection (d)
of this [Section]2.3.1. The Agent's notice to the Borrower shall specify (i) the
aggregate principal amount of Competitive Bid Loans for which offers have been
received for each Interest Period specified in the related Competitive Bid Quote
Request, and (ii) the respective principal amounts and Competitive Bid Rates so
offered.
(f) ACCEPTANCE AND NOTICE BY BORROWER. Not later than 11:00 a.m.
(Boston time) on the requested Drawdown Date, the Borrower shall notify the
Agent, and the Agent shall promptly notify each Bank with respect to its offer,
of the Borrower's acceptance or non-acceptance of the offers of which it was
notified pursuant to subsection (e) of this [Section]2.3.1. In the case of an
acceptance, such notice shall (i) be substantially in the form of EXHIBIT D-2
attached hereto (a "Notice of Competitive Bid Borrowing"), (ii) be irrevocable
by the Borrower, and (iii) specify the aggregate principal amount of offers for
each Interest Period that are accepted. Each acceptance by the Borrower of
Competitive Bid Loans hereunder shall constitute a representation and warranty
by the Borrower that the conditions set forth in [Sections]9 and 10 hereof have
been satisfied on the date of such acceptance. The Borrower may accept any
Competitive Bid Quote in whole or in part; PROVIDED THAT:
(A) the aggregate principal amount of each Competitive Bid
Loan may not exceed the applicable amount set forth in the related Competitive
Bid Quote Request,
<PAGE> 29
(B) the aggregate principal amount of each Competitive Bid
Loan must be $2,000,000 or a larger multiple of $1,000,000, and
(C) acceptance of offers may only be made on the basis of
ascending Competitive Bid Rates.
(g) ALLOCATION BY AGENT; USAGE OF COMMITMENTS. If offers are made by
two or more Banks with the same Competitive Bid Rates, for a greater aggregate
principal amount than the amount in respect of which offers are accepted for the
related Interest Period, the principal amount of Competitive Bid Loans in
respect of which such offers are accepted shall be allocated by the Agent among
such Banks as nearly as possible (in such multiples, not less than $100,000 as
the Agent may deem appropriate) in proportion to the aggregate principal amounts
of such offers. If any such Bank has indicated a minimum acceptable Competitive
Bid Loan in its Competitive Bid Request, and under the procedures of this
subsection (g), the Agent would have allocated to it an amount less than such
minimum, such Competitive Bid Quote will instead be deemed to have been
withdrawn. Determination by the Agent of the amounts of Competitive Bid Loans
and the allocation thereof shall be conclusive in the absence of manifest error.
The Agent shall, promptly after the funding of any Competitive Bid Loan, notify
the Banks thereof pursuant to a notice substantially in the form of EXHIBIT D-3
attached hereto.
(h) FUNDING OF COMPETITIVE BID LOANS. If, on or prior to the Drawdown
Date of any Competitive Bid Loan, the Total Commitment has not terminated in
full and if, on such Drawdown Date, the applicable conditions of
[Sections]9 and 10 hereof are satisfied, the Bank or Banks whose offers the
Borrower has accepted will fund each Competitive Bid Loan so accepted as
provided in [Section]2.4.1 hereof.
(i) CONCERNING THE EXISTING COMPETITIVE BID LOANS. Pursuant to the
Original Credit Agreement, certain of the Original Banks have made certain
Competitive Bid Loans (as defined in the Original Credit Agreement) to the
Borrower listed on SCHEDULE 2.3.1 attached hereto (the "Existing Competitive Bid
Loans") which are outstanding on the Closing Date. Subject to the terms and
conditions set forth in this Credit Agreement, on the Closing Date such Banks
shall convert the Existing Competitive Bid Loans to Competitive Bid Loans of
such Banks hereunder, payable under and governed by the provisions of this
Credit Agreement.
<PAGE> 30
[Section]2.3.2. MAXIMUM COMPETITIVE BID LOANS; FUNDING LOSSES.
(a) Notwithstanding any other provision herein to the contrary, at no
time shall the aggregate principal amount of Competitive Bid Loans outstanding
at any time exceed the Total Commitment MINUS the aggregate principal amount of
Syndicated Loans outstanding at such time.
(b) If after acceptance of any Competitive Bid Quote pursuant to
[Section]2.3.1(f) hereof, the Borrower fails to borrow any Competitive Bid Loan
so accepted on the date specified therefor, the Borrower shall indemnify the
Bank funding such Loan against any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such Bank to
fund or maintain such unborrowed Competitive Bid Loans, including, without
limitation, compensation as provided in [Section]4.11 hereof.
[Section]2.3.3. REPAYMENT OF COMPETITIVE BID LOANS. The principal of
each Competitive Bid Loan shall become absolutely due and payable by the
Borrower on the last day of the Interest Period relating thereto, and the
Borrower hereby absolutely and unconditionally promises to pay to the Agent, for
the accounts of the relevant Banks, on the last day of the Interest Period
relating thereto the principal amount of all such Competitive Bid Loans PLUS
interest thereon at the applicable Competitive Bid Rate. Subject to the terms of
this Credit Agreement, the Borrower may reborrow any amounts so repaid from time
to time prior to the Maturity Date.
[Section]2.4. FUNDS FOR REVOLVING CREDIT LOANS.
[Section]2.4.1. FUNDING PROCEDURES. Not later than 1:30 p.m. (Boston
time) on the proposed Drawdown Date of any Syndicated Loans or Competitive Bid
Loans, as applicable, each of the relevant Banks will make available to the
Agent, at the Agent's Head Office, in immediately available funds, the amount of
such Bank's Commitment Percentage of the amount of the requested Syndicated
Loans or the amount of such Bank's Competitive Bid Loan, as applicable. Upon
receipt from each Bank of such amount, and upon receipt of the documents
required by [Sections]9 and 10 hereof and the satisfaction of the other
conditions set forth therein, to the extent applicable, the Agent will make
available to the Borrower the aggregate amount of such Revolving Credit Loans
made available to the Agent by the relevant Banks. The failure or refusal of any
Bank to make available to the Agent its Commitment Percentage of the requested
Syndicated Loans on any Drawdown Date shall not excuse any other Bank from
making available to the Agent the amount of such other Bank's Commitment
Percentage of any requested Syndicated Loans.
<PAGE> 31
[Section]2.4.2. ADVANCES BY AGENT. The Agent may, unless notified to
the contrary by any Bank prior to a Drawdown Date, assume that such Bank has
made available to the Agent on such Drawdown Date the amount of such Bank's
Commitment Percentage of the Syndicated Loans (or, in the case of Competitive
Bid Loans, the amount of such Bank's accepted offers of Competitive Bid Loans,
if any) to be made on such Drawdown Date, and the Agent may (but it shall not be
required to), in reliance upon such assumption, make available to the Borrower a
corresponding amount. If any Bank makes available to the Agent such amount on a
date after such Drawdown Date, such Bank shall pay to the Agent on demand an
amount equal to the product of (a) the average computed for the period referred
to in clause (c) below, of the weighted average interest rate paid by the Agent
for federal funds acquired by the Agent during each day included in such period,
TIMES (b) the amount of such Bank's Commitment Percentage of such Syndicated
Loans (or accepted offers of Competitive Bid Loans, as applicable), TIMES (c) a
fraction, the numerator of which is the number of days that elapse from and
including such Drawdown Date to the date on which the amount of such Bank's
Syndicated Loans or Competitive Bid Loans, as applicable, shall become
immediately available to the Agent, and the denominator of which is 365. A
statement of the Agent submitted to such Bank with respect to any amounts owing
under this [Section]2.4.2 shall be PRIMA FACIE evidence of the amount due and
owing to the Agent by such Bank. If the amount of such Bank's Syndicated Loans
or Competitive Bid Loans, as applicable, is not made available to the Agent by
such Bank within three (3) Business Days following such Drawdown Date, the Agent
shall be entitled to recover such amount from the Borrower on demand, with
interest thereon at the rate per annum applicable to the Syndicated Loans or
Competitive Bid Loans, as applicable, made on such Drawdown Date and the
Borrower may take the actions permitted under [Section]4.13 hereof to replace
such Bank. Any payment by the Borrower to the Agent of any Syndicated Loans or
Competitive Bid Loans pursuant to this [Section]2.4.2 shall be deemed to be a
payment of the Loans that were to be made by the Bank that failed to make such
Syndicated Loans or Competitive Bid Loans, as applicable.
[Section]2.5. THE NOTES. (a) The Syndicated Loans shall be evidenced
by separate amended and restated promissory notes of the Borrower in
substantially the form of EXHIBIT E-1 attached hereto (each a "Syndicated
Note"), dated as of the Closing Date and completed with appropriate insertions.
A Syndicated Note shall be payable to the order of each Bank in a principal
amount equal to such Bank's Commitment Amount or, if less, the outstanding
amount of all Syndicated Loans made by such Bank, PLUS interest accrued thereon,
as set forth below. The Borrower irrevocably authorizes each Bank to make, at or
about the time of the Drawdown Date of any Syndicated Loan or at the time of
receipt of any payment of principal on such Bank's Syndicated Note, an
appropriate notation on the Record attached to such Bank's Syndicated Note
<PAGE> 32
reflecting the making of such Syndicated Loan or (as the case may be) the
receipt of such payment. The outstanding amount of the Syndicated Loans set
forth on such Bank's Record shall be PRIMA FACIE evidence of the principal
amount thereof owing and unpaid to such Bank, but the failure to record, or any
error in so recording, any such amount on such Bank's Record shall not limit or
otherwise affect the obligations of the Borrower hereunder or under any
Syndicated Note to make payments of principal of or interest on any Syndicated
Note when due.
(b) The Competitive Bid Loans shall be evidenced by separate
promissory notes of the Borrower in substantially the form of EXHIBIT E-2
attached hereto (each a "Competitive Bid Note"), dated as of the Closing Date
and completed with appropriate insertions. A Competitive Bid Note shall be
payable to the order of each Bank in a principal amount equal to the Total
Commitment or, if less, the outstanding amount of all Competitive Bid Loans made
by such Bank to the Borrower hereunder, as set forth in [Section]2.3 hereof,
PLUS interest accrued thereon, as set forth below. The Borrower irrevocably
authorizes each Bank to make, at or about the time of the Drawdown Date of any
Competitive Bid Loan made by such Bank or at the time of receipt of the payment
of principal of such Competitive Bid Loan, an appropriate notation on the Record
attached to such Bank's Competitive Bid Note reflecting the making of such
Competitive Bid Loan and repayments thereof. All such notations shall constitute
PRIMA FACIE evidence of the amount of such Competitive Bid Loans and the
repayments thereof, but the failure to record, or any error in so recording such
amount on such Bank's Record shall not limit or otherwise affect the obligations
of the Borrower hereunder or under any Competitive Bid Note to make payments of
principal or interest on any Competitive Bid Note when due.
[Section]2.6. REDUCTION OF TOTAL COMMITMENT. The Borrower shall have the
right at any time and from time to time prior to the Maturity Date upon five (5)
Business Days' prior written notice to the Agent to reduce by $5,000,000 or an
integral multiple thereof or terminate entirely the Total Commitment, whereupon
the Commitment Amount of each Bank shall be reduced PRO RATA in accordance with
its Commitment Percentage by the amount specified in such notice or, as the case
may be, terminated. Promptly after receiving any notice of the Borrower
delivered pursuant to this [Section]2.6, the Agent will notify the Banks of the
substance thereof. Upon the effective date of any such reduction or termination,
the Borrower shall pay to the Agent for the respective accounts of the Banks the
full amount of the Commitment Fee then accrued on the amount of the reduction.
No reduction or termination of the Total Commitment may be reinstated.
[Section]2.7. [Intentionally Omitted].
<PAGE> 33
[Section]2.8. MANDATORY REPAYMENTS OF REVOLVING CREDIT LOANS. If at any
time the outstanding amount of the Revolving Credit Loans exceeds the Total
Commitment, then the Borrower shall immediately pay the amount of such excess to
the Agent for application to the Revolving Credit Loans for the respective
accounts of the Banks. Each prepayment of Revolving Credit Loans shall be
allocated among the Banks, in proportion, as nearly as practicable to the
respective unpaid principal amount of each Bank's Syndicated Note, with
adjustments to the extent practicable to equalize any prior payments or
repayments not exactly in proportion, and if no Syndicated Loans are
outstanding, to the Competitive Bid Loans, in proportion, as nearly as
practicable, to the unpaid principal amount of each Bank's Competitive Bid Note.
[Section]2.9. OPTIONAL REPAYMENTS OF SYNDICATED LOANS. The Borrower shall
have the right, at its election, to repay the outstanding amount of the
Syndicated Loans, as a whole or in part, at any time without penalty or premium,
PROVIDED that any full or partial repayment of the outstanding amount of any
Eurodollar Rate Loans pursuant to this [Section]2.9 may be made only on the last
day of the Interest Period relating thereto. The Borrower shall give the Agent,
prior written notice no later than 10:00 a. m., Boston time, on the date of any
proposed repayment pursuant to this [Section]2.9 of Base Rate Loans, and three
(3) Eurodollar Business Days' notice of any proposed repayment pursuant to this
[Section]2.9 of Eurodollar Rate Loans, in each case specifying the proposed date
of repayment of such Syndicated Loans and, the principal amount to be repaid.
Each such partial repayment of the Syndicated Loans shall be in an integral
multiple of $5,000,000, shall be accompanied by the payment of accrued interest
on the principal repaid to the date of repayment and shall be applied, in the
absence of instruction by the Borrower, first to the principal of Base Rate
Loans and then to the principal of Eurodollar Rate Loans. Each partial repayment
shall be allocated among the Banks, in proportion, as nearly as practicable, to
the respective unpaid principal amount of each Bank's applicable Syndicated Note
being repaid, with adjustments to the extent practicable to equalize any prior
repayments not exactly in proportion.
[Section]2.10. INTEREST ON REVOLVING CREDIT LOANS. (a) During the Revolver
Period, except as otherwise provided in [Section]4.12 hereof,
(i) each Base Rate Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the last day of the
Interest Period with respect thereto at the rate per annum equal to the Base
Rate;
(ii) each Eurodollar Rate Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the last day of the
<PAGE> 34
Interest Period with respect thereto at the rate per annum equal to the
Eurodollar Rate determined for such Interest Period plus the Applicable Margin;
and
(iii) each Competitive Bid Loan shall bear interest at the rate
per annum specified in the applicable Competitive Bid Quote with respect to such
Competitive Bid Loan.
(b) The Borrower promises to pay interest on each Revolving Credit Loan
in arrears on each Interest Payment Date applicable with respect thereto.
[Section]2.11. CONVERSION OPTIONS.
[Section]2.11.1. CONVERSION TO DIFFERENT TYPE OF SYNDICATED LOAN. The
Borrower may elect from time to time to convert any outstanding Syndicated Loan
to a Syndicated Loan of another Type, PROVIDED that (a) with respect to any such
conversion of a Eurodollar Rate Loan to a Base Rate Loan, the Borrower shall
give the Agent at least one (1) Business Day's prior written notice of such
election; (b) with respect to any such conversion of a Base Rate Loan to a
Eurodollar Rate Loan, the Borrower shall give the Agent at least three (3)
Eurodollar Business Days' prior written notice of such election; (c) with
respect to any such conversion of a Eurodollar Rate Loan into a Base Rate Loan,
such conversion shall only be made on the last day of the Interest Period with
respect thereto; and (d) no Base Rate Loan may be converted into a Eurodollar
Rate Loan when any Default or Event of Default has occurred and is continuing.
On the date on which such conversion is being made each Bank shall take such
action as is necessary to transfer its Commitment Percentage of such Syndicated
Loans to its Domestic Lending Office or its Eurodollar Lending Office, as the
case may be. All or any part of outstanding Syndicated Loans of any Type may be
converted into a Syndicated Loan of another Type as provided herein, PROVIDED
that any partial conversion shall be in an aggregate principal amount of
$2,000,000 or a whole multiple of $1,000,000 in excess thereof. Each Conversion
Request relating to the conversion of a Syndicated Loan to a Eurodollar Rate
Loan shall be irrevocable by the Borrower.
[Section]2.11.2. CONTINUATION OF TYPE OF SYNDICATED LOAN. Any
Syndicated Loan of any Type may be continued as a Syndicated Loan of the same
Type upon the expiration of an Interest Period with respect thereto by
compliance by the Borrower with the notice provisions contained in
[Section]2.11.1 hereof; PROVIDED that no Eurodollar Rate Loan may be continued
as such when any Default or Event of Default has occurred and is continuing, but
shall be automatically converted to a Base Rate Loan on the last day of the
first Interest Period relating thereto ending during the continuance of any
Default or Event of Default of which officers of the Agent active upon the
Borrower's account have
<PAGE> 35
actual knowledge. The Agent shall notify the Banks promptly when any such
automatic conversion contemplated by this [Section]2.11.2 is scheduled to occur.
[Section]2.11.3. EURODOLLAR RATE LOANS. Any conversion to or from
Eurodollar Rate Loans shall be in such amounts and be made pursuant to such
elections so that, after giving effect thereto, the aggregate principal amount
of all Eurodollar Rate Loans having the same Interest Period shall not be less
than $2,000,000 or a whole multiple of $1,000,000 in excess thereof.
[Section]3. [Intentionally Omitted].
[Section]4. CERTAIN GENERAL PROVISIONS; FEES.
[Section]4.1. [Intentionally Omitted].
[Section]4.2. AGENT'S FEE. The Borrower shall pay to the Agent for the
Agent's own account, certain fees to the Agent (the "Agent's Fee") as provided
in a letter agreement dated July 10, 1996 (as such agreement may be amended and
in effect from time to time, the "Agent's Fee Letter") by and between the
Borrower and the Agent.
[Section]4.3. COMMITMENT FEE. During the Revolver Period, the Borrower
agrees to pay to the Agent for the accounts of the Banks in accordance with
their respective Commitment Percentages (except to the extent otherwise provided
below) a commitment fee (the "Commitment Fee"), which shall be calculated for
each day at a per annum rate equal to the Commitment Fee Rate in effect at such
time on the daily amount during each calendar quarter or portion thereof by
which the Total Commitment exceeds the aggregate amount of the Syndicated Loans.
Notwithstanding the foregoing, during the period from the Closing Date until
repayment in full of all Existing Competitive Bid Loans, the amount of the
Commitment Fee payable by the Borrower shall be reduced by an amount calculated
for each day at a per annum rate equal to the Commitment Fee Rate in effect at
such time on the aggregate outstanding principal amount of Existing Competitive
Bid Loans. Such reduction in the Commitment Fee shall be borne solely by the
Banks which have outstanding Existing Competitive Bid Loans at such time, PRO
RATA in accordance with the respective outstanding principal amounts of the
Existing Competitive Bid Loans. The Commitment Fee shall be payable quarterly in
arrears on the last day of each calendar quarter for the calendar quarter then
ended commencing on the first such date following the Closing Date, with a final
payment on the Maturity Date or any earlier date on which the Total Commitment
shall terminate.
<PAGE> 36
[Section]4.4. FUNDS FOR PAYMENTS.
[Section]4.4.1. PAYMENTS TO AGENT. All payments of principal,
interest, Commitment Fees and any other amounts due hereunder or under any of
the other Loan Documents shall be made to the Agent, for the respective accounts
of the Banks and the Agent, at the Agent's Head Office or at such other location
in the Boston, Massachusetts, area that the Agent may from time to time
designate, in each case in immediately available funds.
[Section]4.4.2. NO OFFSET, ETC. All payments by the Borrower hereunder
and under any of the other Loan Documents shall be made without setoff or
counterclaim and free and clear of and without deduction for any taxes, levies,
imposts, duties, charges, fees, deductions, withholdings, compulsory loans,
restrictions or conditions of any nature now or hereafter imposed or levied by
any jurisdiction or any political subdivision thereof or taxing or other
authority therein unless the Borrower is compelled by law to make such deduction
or withholding. If any such obligation is imposed upon the Borrower with respect
to any amount payable by it hereunder or under any of the other Loan Documents,
other than (a) with respect to taxes based upon the Agent's or any Bank's net
income, or (b) with respect to amounts owing to a Bank that (i) is not
incorporated under the laws of the United States of America or a state thereof
and (ii) has not delivered to the Agent the forms referred to in [Section]4.4.3
hereof, the Borrower will pay to the Agent, for the account of the Banks or (as
the case may be) the Agent, on the date on which such amount is due and payable
hereunder or under such other Loan Document, such additional amount in Dollars
as shall be necessary to enable the Banks or the Agent to receive the same net
amount which the Banks or the Agent would have received on such due date had no
such obligation been imposed upon the Borrower. The Borrower will deliver
promptly to the Agent certificates or other valid vouchers for all taxes or
other charges deducted from or paid with respect to payments made by the
Borrower hereunder or under such other Loan Document.
[Section]4.4.3. WITHHOLDING. Each Bank that is a party to this Credit
Agreement and that is not incorporated under the laws of the United States of
America or a state thereof agrees that it will deliver to the Agent, within
seven (7) Business Days of the Closing Date, or, in the case of a Bank which
becomes a Bank pursuant to an Assignment and Acceptance, on the date which such
Assignment and Acceptance becomes effective, a copy of United States Internal
Revenue Service form 1001 or 4224 (or other applicable form prescribed by the
United States Internal Revenue Service), in each case certifying that such Bank
is entitled to receive payments under this Credit Agreement and the Notes
without deduction or withholding of any United States federal income taxes.
<PAGE> 37
[Section]4.5. COMPUTATIONS. All computations of interest on Base Rate Loans
shall be based on a 365-day or 366-day year, as applicable, and all computations
of interest on Eurodollar Rate Loans, Competitive Bid Loans and of Commitment
Fees and other fees shall be based on a 360-day year, and, in each case, paid
for the actual number of days elapsed. Except as otherwise provided in the
definition of the term "Interest Period" with respect to Eurodollar Rate Loans,
whenever a payment hereunder or under any of the other Loan Documents becomes
due on a day that is not a Business Day, the due date for such payment shall be
extended to the next succeeding Business Day, and interest shall accrue during
such extension.
[Section]4.6. INABILITY TO DETERMINE EURODOLLAR RATE. In the event, prior
to the commencement of any Interest Period relating to any Eurodollar Rate Loan,
the Agent shall determine or be notified by the Majority Banks that adequate and
reasonable methods do not exist for ascertaining the Eurodollar Rate that would
otherwise determine the rate of interest to be applicable to any Eurodollar Rate
Loan during any Interest Period, the Agent shall forthwith give notice of such
determination (which shall be conclusive and binding on the Borrower and the
Banks) to the Borrower and the Banks. In such event (a) any Loan Request or
Conversion Request with respect to Eurodollar Rate Loans shall be automatically
withdrawn and shall be deemed a request for Base Rate Loans, (b) each Eurodollar
Rate Loan will automatically, on the last day of the then current Interest
Period relating thereto, become a Base Rate Loan, and (c) the obligations of the
Banks to make Eurodollar Rate Loans shall be suspended until the Agent or the
Majority Banks, as applicable, determine that the circumstances giving rise to
such suspension no longer exist, whereupon the Agent or, as the case may be, the
Agent upon the instruction of the Majority Banks, shall so notify the Borrower
and the Banks.
[Section]4.7. ILLEGALITY. Notwithstanding any other provisions herein, if
any present or future law, regulation, treaty or directive or in the
interpretation or application thereof shall make it unlawful for any Bank to
make or maintain Eurodollar Rate Loans, such Bank shall forthwith give notice of
such circumstances to the Borrower and the other Banks and thereupon the
commitment of such Bank to make Eurodollar Rate Loans or convert Loans of
another Type to Eurodollar Rate Loans shall forthwith be suspended and such
Bank's Loans then outstanding as Eurodollar Rate Loans, if any, shall be
converted automatically to Base Rate Loans on the last day of each Interest
Period applicable to such Eurodollar Rate Loans or within such earlier period as
may be required by law. The Borrower hereby agrees promptly to pay the Agent for
the account of such Bank, upon demand by such Bank, any additional amounts
necessary to compensate such Bank for any costs incurred by such Bank in making
any conversion in accordance with this [Section]4.7, including any
<PAGE> 38
interest or fees payable by such Bank to lenders of funds obtained by it in
order to make or maintain its Eurodollar Loans hereunder.
[Section]4.8. ADDITIONAL COSTS, ETC. If any present or future applicable
law, which expression, as used herein, includes statutes, rules and regulations
thereunder and interpretations thereof by any competent court or by any
governmental or other regulatory body or official charged with the
administration or the interpretation thereof and requests, directives,
instructions and notices at any time or from time to time hereafter made upon or
otherwise issued to any Bank or the Agent by any central bank or other fiscal,
monetary or other authority (whether or not having the force of law), shall:
(a) subject any Bank or the Agent to any tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature with respect to this Credit
Agreement, the other Loan Documents, such Bank's Commitment or the Loans (other
than taxes based upon or measured by the income or profits of such Bank or the
Agent), or
(b) materially change the basis of taxation (except for changes in
taxes on income or profits) of payments to any Bank of the principal of or the
interest on any Loans or any other amounts payable to any Bank or the Agent
under this Credit Agreement or any of the other Loan Documents, or
(c) impose or increase or render applicable (other than to the extent
specifically provided for elsewhere in this Credit Agreement) any special
deposit, reserve, assessment, liquidity, capital adequacy or other similar
requirements (whether or not having the force of law) against assets held by, or
deposits in or for the account of, or loans by, or letters of credit issued by,
or commitments of an office of any Bank, or
(d) impose on any Bank or the Agent any other conditions or
requirements with respect to this Credit Agreement, the other Loan Documents,
the Loans, such Bank's Commitment, or any class of loans, letters of credit or
commitments of which any of the Loans or such Bank's Commitment forms a part,
and the result of any of the foregoing is:
(i) to increase the cost to any Bank of making, funding, issuing,
renewing, extending or maintaining any of the Loans or such Bank's Commitment,
or
<PAGE> 39
(ii) to reduce the amount of principal, interest, or other amount
payable to such Bank or the Agent hereunder on account of such Bank's
Commitment, or any of the Loans, or
(iii) to require such Bank or the Agent to make any payment or to
forego any interest or other sum payable hereunder, the amount of which payment
or foregone interest or other sum is calculated by reference to the gross amount
of any sum receivable or deemed received by such Bank or the Agent from the
Borrower hereunder,
then, in each such case and to the extent that the amount such additional cost,
reduction, payment, foregone interest or other sum is not reflected in the Base
Rate or the Eurodollar Rate, the Borrower will, upon demand made by such Bank or
(as the case may be) the Agent at any time and from time to time and as often as
the occasion therefor may arise, pay to such Bank or the Agent such additional
amounts as will be sufficient to compensate such Bank or the Agent for such
additional cost, reduction, payment or foregone interest or other sum (without
duplication for recovery of such amounts under any other provision hereof),
PROVIDED that the Borrower shall not be liable to any Bank or the Agent for
costs incurred more than sixty (60) days prior to receipt by the Borrower of
such demand for payment from such Bank or (as the case may be) the Agent unless
such costs were incurred prior to such 60-day period solely as a result of such
present or future applicable law being retroactive to a date which occurred
prior to such 60-day period.
[Section]4.9. CAPITAL ADEQUACY. If after the Closing Date any Bank or the
Agent determines that the adoption of or change in any law, governmental rule,
regulation, policy, guideline or directive (whether or not having the force of
law) regarding capital requirements for banks or bank holding companies or any
change in the interpretation or application thereof by a court or governmental
authority with appropriate jurisdiction has the effect of reducing the return on
such Bank's or the Agent's commitment with respect to any Loans to a level below
that which such Bank or the Agent could have achieved but for such adoption,
change or compliance (taking into consideration such Bank's or the Agent's then
existing policies with respect to capital adequacy and assuming full utilization
of such entity's capital) by any amount deemed by such Bank or (as the case may
be) the Agent to be material, then such Bank or the Agent may notify the
Borrower of such fact. To the extent that the amount of such reduction in the
return on capital is not reflected in the Base Rate or the Eurodollar Rate then
the Borrower agrees to pay such Bank or (as the case may be) the Agent for the
amount of such reduction in the return on capital as and when such reduction is
determined upon presentation by such Bank or (as the case may be) the Agent of a
certificate in accordance with [Section]4.10 hereof, PROVIDED that the Borrower
shall not be liable to any Bank or the Agent for costs incurred
<PAGE> 40
more than sixty (60) days prior to receipt by the Borrower of the notice
referred to in the immediately preceding sentence from such Bank or (as the case
may be) the Agent. Each Bank shall allocate such cost increases among its
customers in good faith and on an equitable basis.
[Section]4.10. CERTIFICATE. A certificate setting forth any additional
amounts payable pursuant to [Sections]4.8 or 4.9 hereof and a brief
explanation of such amounts which are due, submitted by any Bank or the Agent to
the Borrower, shall be conclusive, absent manifest error, that such amounts are
due and owing. If the Borrower is required to pay any additional amounts
pursuant to [Sections]4.8 or 4.9 hereof with respect to any Bank, the Borrower
may, following payment in full of the amount or amounts due set forth in such
certificate, take the actions permitted by [Section]4.13 hereof to replace such
Bank.
[Section]4.11. INDEMNITY. The Borrower agrees to indemnify each Bank and to
hold each Bank harmless from and against all redeployment costs and expenses
that such Bank may sustain or incur as a consequence of (a) default by the
Borrower in payment of the principal amount of or any interest on any Eurodollar
Rate Loans or Competitive Bid Loans as and when due and payable, including any
such cost or expense arising from interest or fees payable by such Bank to
lenders of funds obtained by it in order to maintain its Eurodollar Rate Loans
or Competitive Bid Loans, (b) default by the Borrower in making a borrowing or
conversion after the Borrower has given (or is deemed to have given) a Loan
Request or a Conversion Request relating thereto in accordance with
[Sections]2.2 or 2.11 hereof or a Notice of Competitive Bid Borrowing in
accordance with [Section]2.3.1(f) hereof, or (c) the making of any payment of a
Eurodollar Rate Loan or Competitive Bid Loan or the making of any conversion of
any such Loan to a Base Rate Loan on a day that is not the last day of the
applicable Interest Period with respect thereto, including interest or fees
payable by such Bank to lenders of funds obtained by it in order to maintain any
such Loans.
[Section]4.12. INTEREST ON OVERDUE AMOUNTS. Overdue principal and (to the
extent permitted by applicable law) interest on the Loans and all other overdue
amounts payable hereunder or under any of the other Loan Documents, if not
repaid on or before the fifth calendar day following the day such payment was
due, shall bear interest from the due date thereof, compounded monthly and
payable on demand at any time from and after the fifth calendar day following
the day such payment was due, at a rate per annum equal to two percent (2%)
above the Base Rate until such amount shall be paid in full (after as well as
before judgment).
[Section]4.13. REPLACEMENT OF INDIVIDUAL BANKS. Upon the happening of any
of the events set forth in [Sections]2.4.2, 4.7, 4.8, or 4.9, the Borrower may
(PROVIDED that at the time no Default or Event of Default exists or would
result after
<PAGE> 41
giving effect to the Borrower's action) prepay in full all Loans and other
obligations owing by the Borrower to each affected Bank (a "Substituted Bank"),
together with all amounts payable by the Borrower under [Section]4.11 hereof
with respect to such prepayment, and terminate the Commitment(s) of such Bank(s)
subject to the following conditions:
(a) the Borrower shall have delivered to the Agent not less than ten
(10) Business Days prior to the exercise of its rights under this [Section]4.13
a written commitment in form and substance satisfactory to the Agent and each of
the Banks from a banking institution (the "Replacement Bank") reasonably
acceptable to the Agent and each of the remaining Banks (other than the
Substituted Bank) in which such Replacement Bank agrees to become a "Bank" under
this Credit Agreement, having a Commitment Amount in the amount of the
Substituted Bank's Commitment Amount;
(b) the Borrower shall have given appropriate notice of any prepayment
under this [Section]4.13 as required by [Section]2.9 and subject to all other
provisions of this Credit Agreement; and
(c) simultaneously with any prepayment of all Syndicated Loans and
other obligations owing by the Borrower to a Substituted Bank under this
[Section]4.13, the Agent shall have assigned pursuant to [Section]17 hereof of
this Credit Agreement the Commitment of such Substituted Bank to the Replacement
Bank and such Replacement Bank shall have become a Bank under this Credit
Agreement, having a Commitment Amount in the amount of such Substituted Bank's
Commitment Amount and such Replacement Bank shall have simultaneously funded all
such Loans prepaid hereunder.
[Section]4.14. GUARANTIES. The payment and performance of the Obligations
shall be guaranteed by each Guarantor pursuant to the Guaranties, each of which
shall be amended as of the Closing Date pursuant to Guaranty Amendments in the
form of EXHIBIT F hereto. The Agent and the Banks hereby agree that they shall,
upon the written request of the Borrower and at the cost and expense of the
Borrower, release any Guarantor from its obligations to the Agent and the Banks
under the Guaranty to which such Guarantor is a party if, and only if, (a) such
Guarantor is no longer a Subsidiary of the Borrower, (b) no Default or Event of
Default shall have occurred and be continuing on the date of such release, and
(c) the Borrower shall have delivered to the Agent and the Banks on the date of
such release a certificate signed by an authorized officer of the Borrower and
evidence satisfactory to the Agent and the Banks showing compliance with the
provisions of clauses (a) and (b) hereof. The Borrower shall deliver to the
Banks an updated SCHEDULE 2 upon the release of any Guarantor of its obligations
as provided in this [Section]4.14.
<PAGE> 42
[Section]5. REPRESENTATIONS AND WARRANTIES. The Borrower represents and
warrants to the Banks and the Agent as follows:
[Section]5.1. CORPORATE AUTHORITY.
[Section]5.1.1. INCORPORATION; GOOD STANDING. The Borrower and each
Guarantor (a) is a corporation or, as the case may be, a Massachusetts Business
Trust duly organized, validly existing and in good standing under the laws of
its state of incorporation or organization, (b) has all requisite corporate or,
as the case may be, trust power to own its property and conduct its business as
now conducted and as presently contemplated, and (c) is in good standing as a
foreign corporation and is duly authorized to do business in each jurisdiction
where such qualification is necessary except where a failure to be so qualified
would not have a materially adverse effect on the business, assets or financial
condition of the Borrower.
[Section]5.1.2. AUTHORIZATION. The execution, delivery and performance
of this Credit Agreement and the other Loan Documents by the Borrower and each
Guarantor which is or is to become a party thereto, and the transactions
contemplated hereby and thereby (a) are within the corporate or, as the case may
be, trust authority of such Person, (b) have been duly authorized by all
necessary corporate or, as the case may be, trust proceedings, (c) do not
conflict with or result in any breach or contravention of any provision of law,
statute, rule or regulation to which such Person is subject which would have a
material adverse effect either individually or in the aggregate on the Borrower
and its Subsidiaries taken as a whole or on the ability of such Person to
fulfill its obligations under this Credit Agreement and the other Loan Documents
to which it is a party, (d) do not conflict with or result in any breach or
contravention of any judgment, order, writ, injunction, license or permit
applicable to the Borrower or any Guarantor and (e) do not conflict with any
provision of the corporate charter or bylaws or, as the case may be, the
Agreement and Declaration of Trust of, or any agreement or other instrument
binding upon, the Borrower or any Guarantor.
[Section]5.1.3. ENFORCEABILITY. The execution and delivery of this
Credit Agreement and the other Loan Documents to which the Borrower or any
Guarantor is or is to become a party will result in valid and legally binding
obligations of such Person enforceable against it in accordance with the
respective terms and provisions hereof and thereof, except as enforceability is
limited by bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or affecting generally the enforcement of creditors' rights and
except to the extent that availability of the remedy of specific performance or
injunctive relief is subject to the discretion of the court before which any
proceeding therefor may be brought.
<PAGE> 43
[Section]5.2. GOVERNMENTAL APPROVALS. The execution, delivery and
performance by the Borrower and the Guarantors of this Credit Agreement and the
other Loan Documents to which the Borrower or any Guarantor is or is to become a
party and the transactions contemplated hereby and thereby do not require the
approval or consent of, or filing with, any governmental agency or authority
other than those already obtained.
[Section]5.3. TITLE TO PROPERTIES; LEASES. Except as indicated on SCHEDULE
5.3 hereto, the Borrower and its Subsidiaries own all of the assets reflected in
the consolidated balance sheet of the Borrower as at the Balance Sheet Date or
acquired since that date (except property and assets sold or otherwise disposed
of in the ordinary course of business since that date), subject to no rights of
others, including any mortgages, leases, conditional sales agreements, title
retention agreements, liens or other encumbrances except Permitted Liens.
[Section]5.4. FINANCIAL STATEMENTS. (a) There has been furnished to each of
the Banks a consolidated balance sheet of the Borrower and its Subsidiaries as
at the Balance Sheet Date, and consolidated statements of income and cash flow
of the Borrower and its Subsidiaries for the fiscal year then ended, certified
by Ernst & Young. Such balance sheet and statements of income and cash flows
have been prepared in accordance with generally accepted accounting principles
and fairly present the financial condition of the Borrower and its Subsidiaries
as at the close of business on the date thereof and the results of operations
for the fiscal year then ended. There are no contingent liabilities of the
Borrower or any of its Subsidiaries as of such date involving material amounts,
known to the officers of the Borrower, which were not disclosed in such balance
sheet and the notes related thereto.
(b) There has been furnished to each of the Banks an unaudited consolidated
balance sheet of the Borrower and its Subsidiaries as at May 4, 1996, and
unaudited consolidated statements of income and cash flow of the Borrower and
its Subsidiaries for the fiscal quarter then ended. Such balance sheet and
statements of income and cash flows have been prepared in accordance with
generally accepted accounting principles and fairly present the financial
condition of the Borrower and its Subsidiaries as at the close of business on
the date thereof and the results of operations for the fiscal quarter then ended
(subject to year-end adjustments). There are no contingent liabilities of the
Borrower or any of its Subsidiaries as of such date involving material amounts,
known to the officers of the Borrower, which were not disclosed in such balance
sheet and the notes related thereto.
<PAGE> 44
[Section]5.5. NO MATERIAL CHANGES, ETC. Since the Balance Sheet Date there
has occurred no change in the operations, business, properties, assets or
financial condition of the Borrower and its Subsidiaries as shown on or
reflected in the consolidated balance sheet of the Borrower and its Subsidiaries
as at the Balance Sheet Date, or the consolidated statements of income and cash
flows for the fiscal year then ended, other than changes in the ordinary course
of business that have not had any materially adverse effect either individually
or in the aggregate on the business, assets or financial condition of the
Borrower and its Subsidiaries taken as a whole. Since the Balance Sheet Date,
the Borrower has not made any Distributions except Distributions made in
compliance with [Section]7.4 hereof.
[Section]5.6. FRANCHISES, PATENTS, COPYRIGHTS, ETC. The Borrower and each
of its Subsidiaries possesses all franchises, patents, copyrights, trademarks,
trade names, licenses and permits, and rights in respect of the foregoing,
adequate for the conduct of its business substantially as now conducted without
known conflict with any rights of others.
[Section]5.7. LITIGATION. Except as set forth in SCHEDULE 5.7 hereto, there
are no actions, suits, proceedings or investigations of any kind pending or, to
the best of the Borrower's knowledge, threatened against the Borrower or any of
its Subsidiaries before any court, tribunal or administrative agency or board
that, if adversely determined, might, either in any case or in the aggregate,
materially adversely affect the properties, assets, financial condition or
business of the Borrower and its Subsidiaries taken as a whole, or materially
impair the right of the Borrower and each of its Subsidiaries to carry on
business substantially as now conducted by it, or result in any substantial
liability not adequately covered by insurance, or for which adequate reserves
are not maintained on the consolidated balance sheet of the Borrower and its
Subsidiaries or which question the validity of this Credit Agreement or any of
the other Loan Documents, or any action taken or to be taken pursuant hereto or
thereto.
[Section]5.8. COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC. Neither the
Borrower nor any of its Subsidiaries is in violation of any provision of its
charter documents, bylaws, or any agreement or instrument to which it may be
subject or by which it or any of its properties may be bound or any decree,
order, judgment, statute, license, rule or regulation, in any of the foregoing
cases in a manner that could result in the imposition of substantial penalties
or materially and adversely affect the financial condition, properties or
business of the Borrower and its Subsidiaries taken as a whole.
[Section]5.9. TAX STATUS. The Borrower and each of its Subsidiaries (a) has
made or filed all applicable federal and state income and all other tax returns,
reports and declarations required by any jurisdiction to which it is subject,
(b)
<PAGE> 45
has paid all taxes and other governmental assessments and charges shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and by appropriate proceedings and (c) has set
aside on its books provisions reasonably adequate for the payment of all taxes
for periods subsequent to the periods to which such returns, reports or
declarations apply. Except as set forth on SCHEDULE 5.9 attached hereto, there
are no unpaid taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and the officers of the Borrower know of no basis
for any such claim.
[Section]5.10. NO EVENT OF DEFAULT. No Default or Event of Default has
occurred and is continuing.
[Section]5.11. HOLDING COMPANY AND INVESTMENT COMPANY ACTS. Neither the
Borrower nor any of its Subsidiaries is a "holding company", or a "subsidiary
company" of a "holding company", or an affiliate" of a "holding company", as
such terms are defined in the Public Utility Holding Company Act of 1935; nor is
such Person a "registered investment company", or a "principal underwriter" of a
"registered investment company", or a company controlled by a "registered
investment company", as such terms are defined in the Investment Company Act of
1940.
[Section]5.12. EMPLOYEE BENEFIT PLANS.
[Section]5.12.1. IN GENERAL. Each Employee Benefit Plan has been
maintained and operated in compliance in all material respects with the
provisions of ERISA and, to the extent applicable, the Code, including but not
limited to the provisions thereunder respecting prohibited transactions.
[Section]5.12.2. TERMINABILITY OF WELFARE PLANS. Under each Employee
Benefit Plan which is an employee welfare benefit plan within the meaning of
[Section]3(1) or [Section]3(2)(B) of ERISA, no benefits are due unless the event
giving rise to the benefit entitlement occurs prior to plan termination (except
as required by Title I, Part 6 of ERISA). The Borrower or an ERISA Affiliate, as
appropriate, may terminate each such Plan at any time (or at any time subsequent
to the expiration of any applicable bargaining agreement) in the discretion of
the Borrower or such ERISA Affiliate without liability to any Person.
[Section]5.12.3. GUARANTEED PENSION PLANS. Each contribution required
to be made to a Guaranteed Pension Plan, whether required to be made to avoid
the incurrence of an accumulated funding deficiency, the notice or lien
provisions of [Section]302(f) of ERISA, or otherwise, has been timely made. No
waiver of an accumulated funding deficiency or extension of amortization periods
has been received with respect to any Guaranteed Pension Plan. No liability to
the
<PAGE> 46
PBGC (other than required insurance premiums, all of which have been paid) has
been incurred by the Borrower or any ERISA Affiliate with respect to any
Guaranteed Pension Plan and there has not been any ERISA Reportable Event, or
any other event or condition which presents a material risk of termination of
any Guaranteed Pension Plan by the PBGC. Based on the latest valuation of each
Guaranteed Pension Plan (which in each case occurred within twelve months of the
date of this representation), and on the actuarial methods and assumptions
employed for that valuation, except as set forth on SCHEDULE 5.12 attached
hereto, the aggregate benefit liabilities of all such Guaranteed Pension Plans
within the meaning of [Section]4001 of ERISA did not exceed the aggregate value
of the assets of all such Guaranteed Pension Plans, disregarding for this
purpose the benefit liabilities and assets of any Guaranteed Pension Plan with
assets in excess of benefit liabilities.
[Section]5.12.4. MULTIEMPLOYER PLANS. Neither the Borrower nor any
ERISA Affiliate has incurred any material liability (including secondary
liability) to any Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan under [Section]4201 of ERISA or as a
result of a sale of assets described in [Section]4204 of ERISA. Neither the
Borrower nor any ERISA Affiliate has been notified that any Multiemployer Plan
is in reorganization or insolvent under and within the meaning of [Section]4241
or [Section]4245 of ERISA or that any Multiemployer Plan intends to terminate or
has been terminated under [Section]4041A of ERISA.
[Section]5.13. REGULATIONS U AND X. The proceeds of the Loans shall be used
for the purposes described in [Section]6.12 hereof. No portion of any Loan is to
be used for the purpose of purchasing or carrying any "margin security" or
"margin stock" (as such terms are used in Regulations U and X of the Board of
Governors of the Federal Reserve System, 12 C.F.R. Parts 221 and 224 (the
"Margin Regulations")) in violation of the Margin Regulations.
[Section]5.14. ENVIRONMENTAL COMPLIANCE. The Borrower has taken all
reasonably necessary steps to investigate the past and present condition and
usage of the Real Estate and the operations conducted thereon and, based upon
such diligent investigation, has determined that:
(a) none of the Borrower, its Subsidiaries nor any operator of the
Real Estate or any operations thereon is in violation, or alleged violation, of
any Environmental Laws, which violation would have a material adverse effect on
the business, assets or financial condition of the Borrower and its Subsidiaries
taken as a whole;
<PAGE> 47
(b) neither the Borrower nor any of its Subsidiaries has received any
Environmental Notice during the last five (5) years that has the potential to
materially affect the assets, liabilities, financial condition or operations of
the Borrower and its Subsidiaries taken as a whole, except as set forth on
SCHEDULE 5.14 hereto;,
(c) except as set forth on SCHEDULE 5.14 attached hereto: (i) no
portion of the Real Estate has been used for the handling, processing, storage
or disposal of Hazardous Substances; and no underground tank or other
underground storage receptacle for Hazardous Substances is located on any
portion of the Real Estate; in each case except in accordance with applicable
Environmental Laws the noncompliance with which would have a material adverse
effect on the business, assets or financial condition of the Borrower and its
Subsidiaries, taken as a whole; (ii) in the course of any activities conducted
by the Borrower or operators of its properties, no Hazardous Substances have
been generated or are being used on the Real Estate except in accordance with
applicable Environmental Laws the noncompliance with which would have a material
adverse effect on the business, assets or financial condition of the Borrower
and its Subsidiaries, taken as a whole; (iii) there have been no releases or
threatened releases of Hazardous Substances on, upon, into or from the
properties of the Borrower or any of its Subsidiaries, which releases would have
a material adverse effect on the business, assets or financial condition of the
Borrower and its Subsidiaries, taken as a whole; (iv) to the best of the
Borrower's knowledge, there have been no releases on, upon, from or into any
real property in the vicinity of any of the Real Estate which, through soil or
groundwater contamination, may have come to be located on the Real Estate and
which would have a material adverse effect on the Borrower and its Subsidiaries,
taken as a whole; and (v) in addition, any Hazardous Substances that have been
generated on any of the Real Estate have, to the best of the Borrower's
knowledge, been transported offsite only as required under and in compliance
with applicable Environmental Laws.
[Section]5.15. SUBSIDIARIES, ETC. As of the Closing Date, other than those
Subsidiaries of the Borrower described on SCHEDULE 5.15(a) attached hereto, the
Borrower has no other Subsidiaries. As of the Closing Date, except as set forth
on SCHEDULE 5.15(b) attached hereto, neither the Borrower nor any Subsidiary of
the Borrower is engaged in any joint venture or partnership with any other
Person. The Borrower hereby agrees to deliver to the Banks an updated SCHEDULE
5.15(a) or SCHEDULE 5.15(b), as applicable, upon the acquisition or formation by
the Borrower of any Subsidiary or the formation of any joint venture or
partnership by the Borrower or any of its Subsidiaries with any other Person, in
each case in accordance with the provisions of this Credit Agreement.
<PAGE> 48
[Section]6. AFFIRMATIVE COVENANTS OF THE BORROWER. The Borrower covenants
and agrees that, so long as any Loan or Note is outstanding or any Bank has any
obligation to make any Loans:
[Section]6.1. PUNCTUAL PAYMENT. The Borrower will duly and punctually pay
or cause to be paid the principal and interest on the Loans, the Commitment Fee,
the Agent's Fee and all other amounts provided for in this Credit Agreement and
the other Loan Documents to which the Borrower is a party, all in accordance
with the terms of this Credit Agreement and such other Loan Documents.
[Section]6.2. MAINTENANCE OF OFFICE. The Borrower will maintain its chief
executive office in Westborough, Massachusetts, or at such other place in the
United States of America as the Borrower shall designate upon written notice to
the Agent, where notices, presentations and demands to or upon the Borrower in
respect of the Loan Documents to which the Borrower is a party may be given or
made.
[Section]6.3. RECORDS AND ACCOUNTS. The Borrower will (a) keep, and cause
each of its Subsidiaries to keep, true and accurate records and books of account
in which full, true and correct entries will be made in accordance with
generally accepted accounting principles and (b) maintain adequate accounts and
reserves for all taxes, depreciation, depletion, obsolescence and amortization
of its properties and the properties of its Subsidiaries, contingencies, and
other reserves.
[Section]6.4. FINANCIAL STATEMENTS, CERTIFICATES AND INFORMATION. The
Borrower will deliver to the Agent (and the Agent will promptly, after receipt
thereof, deliver to the Banks):
(a) as soon as practicable, but in any event not later than one
hundred ten (110) days after the end of each fiscal year of the Borrower, the
consolidated balance sheet of the Borrower and its Subsidiaries as at the end of
such year, and the related consolidated statement of income and consolidated
statement of cash flow for such year, each setting forth in comparative form the
figures for the previous fiscal year and all such consolidated statements to be
in reasonable detail, prepared in accordance with generally accepted accounting
principles, and certified without qualification by Ernst & Young or by other
independent certified public accountants reasonably satisfactory to the Agent;
(b) as soon as practicable, but in any event not later than sixty-five
(65) days after the end of each of the first three fiscal quarters of the
Borrower, copies of the unaudited consolidated balance sheet of the Borrower and
its Subsidiaries as at the end of such quarter, and the related consolidated
statement of income and consolidated statement of cash flow for the portion of
<PAGE> 49
the Borrower's fiscal year then elapsed, all in reasonable detail and prepared
in accordance with generally accepted accounting principles, together with a
certification by the chief financial officer or the treasurer of the Borrower
that to the best of the Borrower's knowledge, the information contained in such
financial statements fairly presents the financial position of the Borrower and
its Subsidiaries on the date thereof (subject to year-end adjustments);
(c) simultaneously with the delivery of the financial statements
referred to in subsections (a) and (b) above, a statement certified by the chief
financial officer or the treasurer of the Borrower in substantially the form of
EXHIBIT G attached hereto (a "Compliance Certificate") and setting forth in
reasonable detail computations evidencing compliance with the covenants
contained in [Section]8 hereof and (if applicable) reconciliations to reflect
changes in generally accepted accounting principles since the Balance Sheet
Date; and
(d) from time to time such other financial data and information as the
Agent or any Bank may reasonably request.
All Confidential Information concerning the Borrower supplied by the Borrower to
the Banks pursuant to the terms hereof will be held in confidence by the Banks
and the Banks shall not disclose such Confidential Information except that the
Borrower authorizes each Bank to disclose any Confidential Information obtained
pursuant to this Credit Agreement or any other Loan Document (i) to any bank
regulatory authority, (ii) to any independent auditor or counsel or participant
or potential assignee or potential participant of such Bank, PROVIDED that such
independent auditor or counsel or participant or potential assignee or potential
participant enters into a confidentiality agreement with the Borrower
substantially similar to such Bank's agreement with the Borrower, and (iii) to
all other appropriate governmental regulatory authorities to the extent required
by such Bank by law or subpoena, but only to the extent permitted by applicable
laws and regulations, including those applying to classified material.
[Section]6.5. NOTICES. The Borrower will promptly notify the Agent for the
benefit of the Banks in writing of the occurrence of any Default or Event of
Default. The Borrower will promptly give notice to the Agent for the benefit of
the Banks (a) of any material violation of any Environmental Law that the
Borrower or any of its Subsidiaries reports in writing or is reportable by such
Person in writing (or for which any written report supplemental to any oral
report is made) to any federal, state or local environmental agency and (b) upon
becoming aware thereof, of any inquiry, proceeding, investigation, or other
action, including a notice from any agency of potential environmental liability,
or any federal, state or local environmental agency or board, that has the
potential to materially affect the assets, liabilities, financial conditions or
<PAGE> 50
operations of the Borrower. The Borrower will give notice to the Agent for the
benefit of the Banks in writing within fifteen (15) days of becoming aware of
any litigation or proceedings threatened in writing or any pending litigation
and proceedings affecting the Borrower or any of its Subsidiaries or to which
the Borrower or any of its Subsidiaries is or becomes a party involving an
uninsured claim against the Borrower or any of its Subsidiaries that could
reasonably be expected to have a materially adverse effect on the Borrower and
its Subsidiaries taken as a whole and stating the nature and status of such
litigation or proceedings. The Borrower will, and will cause each of its
Subsidiaries to, give notice to the Agent for the benefit of the Banks, in
writing, in form and detail satisfactory to the Agent, within ten (10) days of
any judgment not covered by insurance, final or otherwise, against the Borrower
or any of its Subsidiaries in an amount in excess of $1,000,000.
[Section]6.6. CORPORATE EXISTENCE; MAINTENANCE OF PROPERTIES. The Borrower
will do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence, rights and franchises and those of its
Subsidiaries. It (a) will cause all of its properties and those of its
Subsidiaries used or useful in the conduct of its business or the business of
its Subsidiaries to be maintained and kept in good condition, repair and working
order and supplied with all necessary equipment, (b) will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in the judgment of the Borrower may be necessary so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times, and (c) will, and will cause each of its Subsidiaries to, continue
to engage primarily in the businesses now conducted by them and in related
businesses; PROVIDED that nothing in this [Section]6.6 shall prevent the
Borrower from discontinuing the operation and maintenance of any of its
properties or any of those of its Subsidiaries if such discontinuance is, in the
judgment of the Borrower, desirable in the conduct of its or their business and
does not in the aggregate materially adversely affect the business of the
Borrower and its Subsidiaries on a consolidated basis.
[Section]6.7. INSURANCE. The Borrower will, and will cause each of its
Subsidiaries to, maintain with financially sound and reputable insurers
insurance with respect to its properties and business against such casualties
and contingencies as shall be in accordance with the general practices of
businesses engaged in similar activities in similar geographic areas and in
amounts, containing such terms, in such forms and for such periods as may be
reasonable and prudent.
[Section]6.8. TAXES. The Borrower will, and will cause each of its
Subsidiaries to, duly pay and discharge, or cause to be paid and discharged,
before the same shall become overdue, all taxes, assessments and other
governmental charges
<PAGE> 51
imposed upon it and its real properties, sales and activities, or any part
thereof, or upon the income or profits therefrom, as well as all claims for
labor, materials, or supplies that if unpaid might by law become a lien or
charge upon any of its property; PROVIDED that any such tax, assessment, charge,
levy or claim need not be paid if the validity or amount thereof shall currently
be contested in good faith by appropriate proceedings and if the Borrower or
such Subsidiary shall have set aside on its books adequate reserves with respect
thereto; and PROVIDED FURTHER that the Borrower and each Subsidiary of the
Borrower will pay all such taxes, assessments, charges, levies or claims
forthwith upon the commencement of proceedings to foreclose any lien that may
have attached as security therefor or shall have obtained such bonding as may be
required to release such lien.
[Section]6.9. INSPECTION OF PROPERTIES AND BOOKS, ETC. The Borrower shall
permit the Banks, through the Agent or any of the Banks' other designated
representatives, no more frequently than once each calendar year, or more
frequently as determined by the Banks upon the occurrence and during the
continuance of an Event of Default, to visit and inspect any of the properties
of the Borrower or any of its Subsidiaries, and each such inspection, if no
Event of Default has occurred and is continuing, shall be at the Banks' expense.
The Borrower shall also permit the Banks, through the Agent or any of the Banks'
other designated representatives, to examine the books of account of the
Borrower and its Subsidiaries (and to make copies thereof and extracts
therefrom), and to discuss the affairs, finances and accounts of the Borrower
and its Subsidiaries with, and to be advised as to the same by, its and their
officers, all at such reasonable times and intervals as the Agent or any Bank
may reasonably request. The Borrower authorizes the Agent and, if accompanied by
the Agent, the Banks to communicate directly with the Borrower's independent
certified public accountants and authorizes such accountants to disclose to the
Agent and the Banks any and all financial statements and other supporting
financial documents and schedules with respect to the business, financial
condition and other affairs of the Borrower or any of its Subsidiaries.
[Section]6.10. COMPLIANCE WITH LAWS, CONTRACTS, LICENSES, AND PERMITS. The
Borrower will, and will cause each of its Subsidiaries to, comply with (a) the
applicable laws and regulations wherever its business is conducted, including
all Environmental Laws, (b) the provisions of its charter documents and by-laws,
(c) all agreements and instruments by which it or any of its properties may be
bound and (d) all applicable decrees, orders, and judgments, in each case if
noncompliance with which would have a material adverse effect on the business,
assets or financial condition of the Borrower and its Subsidiaries, taken as a
whole, or on the ability of the Borrower or any of the Guarantors to fulfill its
obligations under this Credit Agreement or any of the other Loan Documents to
which such Person is a party. If any authorization, consent, approval, permit or
<PAGE> 52
license from any officer, agency or instrumentality of any government shall
become necessary or required in order that the Borrower may fulfill any of its
obligations hereunder or any of the other Loan Documents to which the Borrower
is a party, the Borrower will, or (as the case may be) will cause such
Subsidiary to, immediately take or cause to be taken all reasonable steps within
the power of the Borrower or such Subsidiary to obtain such authorization,
consent, approval, permit or license and furnish the Agent and the Banks with
evidence thereof.
[Section]6.11. EMPLOYEE BENEFIT PLANS. The Borrower will (i) promptly upon
request of the Agent, furnish to the Agent a copy of the most recent actuarial
statement required to be submitted under [Section]103(d) of ERISA and Annual
Report, Form 5500, with all required attachments, in respect of each Guaranteed
Pension Plan and (ii) promptly upon receipt or dispatch, furnish to the Agent
any notice, report or demand sent or received in respect of a Guaranteed Pension
Plan under [Sections]302, 4041, 4042, 4043, 4063, 4065, 4066 and 4068 of ERISA,
or in respect of a Multiemployer Plan, under [Sections]4041A, 4202, 4219, 4242,
or 4245 of ERISA.
[Section]6.12. USE OF PROCEEDS. The Borrower will use the proceeds of the
Loans solely for repayment of existing Indebtedness (unless repayment or
prepayment thereof is otherwise prohibited hereunder), working capital and
general corporate purposes, including, without limitation, for the acquisition
of assets and or Capital Stock of Persons in the same line of business as the
Borrower or any Subsidiary of the Borrower, to the extent permitted under this
Credit Agreement.
[Section]6.13. LICENSES AND PERMITS. The Borrower will maintain and renew
any and all licenses or permits now held or hereafter acquired by the Borrower
or any of its Subsidiaries unless the loss, suspension, revocation or failure to
renew any such licenses or permits would not have a material adverse effect on
the business or financial condition of the Borrower and such Subsidiary.
[Section]6.14. FURTHER ASSURANCES. The Borrower will, and will cause each
of the Guarantors to, cooperate with the Banks and the Agent and execute such
further instruments and documents as the Banks or the Agent shall reasonably
request to carry out to their satisfaction the transactions contemplated by this
Credit Agreement and the other Loan Documents.
[Section]7. CERTAIN NEGATIVE COVENANTS OF THE BORROWER. The Borrower
covenants and agrees that, so long as any Loan or Note is outstanding or any
Bank has any obligation to make any Loans:
<PAGE> 53
[Section]7.1. RESTRICTIONS ON INDEBTEDNESS. The Borrower will not,
and will not permit any of its Subsidiaries to, create, incur, assume, guarantee
or become or remain liable, contingently or otherwise, with respect to
Indebtedness other than:
(a) Indebtedness to the Banks and the Agent arising under any of the
Loan Documents;
(b) current liabilities of the Borrower or such Subsidiary incurred in
the ordinary course of business not incurred through (i) the borrowing of money,
or (ii) the obtaining of credit except for credit on an open account basis
customarily extended and in fact extended in connection with normal purchases of
goods and services;
(c) Indebtedness in respect of taxes, assessments, governmental
charges or levies and claims for labor, materials and supplies to the extent
that payment therefor shall not at the time be required to be made in accordance
with the provisions of [Section]6.8 hereof;
(d) Indebtedness in respect of judgments or awards that have been in
force for less than the applicable period for taking an appeal so long as
execution is not levied thereunder or in respect of which the Borrower or such
Subsidiary shall at the time in good faith be prosecuting an appeal or
proceedings for review and in respect of which a stay of execution shall have
been obtained pending such appeal or review;
(e) endorsements for collection, deposit or negotiation and warranties
of products or services, in each case incurred in the ordinary course of
business;
(f) Indebtedness in respect of documentary letters of credit issued in
the ordinary course of business;
(g) Indebtedness of the Borrower in respect of interest rate
protection arrangements and exchange rate protection arrangements;
(h) Subordinated Debt;
(i) obligations under Capitalized Leases;
(j) Indebtedness arising under an accounts receivable financing
facility entered into by the Borrower or a Subsidiary of the Borrower on terms
and conditions and pursuant to documentation in form and substance reasonably
satisfactory to the Banks, PROVIDED that the maximum facility
<PAGE> 54
amount of such accounts receivable financing facility shall not exceed
$125,000,000;
(k) [Intentionally Omitted];
(l) Indebtedness in respect of (i) intercompany loans and guaranties
from the Borrower to any of its Subsidiaries or of any of its Subsidiaries'
obligations or (ii) intercompany loans and guaranties between Subsidiaries of
the Borrower or (iii) intercompany loans and guaranties from any Guarantor to
the Borrower or of any of the Borrower's obligations or (iv) guaranties from any
Subsidiary of the Borrower of any of the Borrower's obligations, PROVIDED in
each case that (A) the aggregate amount of intercompany loans to and guaranties
of the obligations of each such Subsidiary which is not a Guarantor shall at no
time exceed $35,000,000 and (B) the aggregate amount of all such Indebtedness of
the Borrower's Subsidiaries which are not Guarantors shall at no time exceed 25%
of the Stockholder's Equity of the Borrower;
(m) other Indebtedness of the Borrower and its Subsidiaries (whether
or not such Subsidiaries are Guarantors), including in respect of guaranties,
standby letters of credit and other Contingent Liabilities but excluding
documentary letters of credit, which (i) with respect to Indebtedness incurred
by the Borrower, contains covenants that are no more restrictive on the Borrower
than the covenants contained in this Credit Agreement, (ii) does not at any time
exceed, in the aggregate, 45% of the Stockholders' Equity of the Borrower, and
(iii) does not result in a Default or Event of Default, PROVIDED that the
aggregate amount of Indebtedness of the Subsidiaries of the Borrower (whether or
not such Subsidiaries are Guarantors) under this clause (m) shall at no time
exceed 25% of the Stockholders' Equity of the Borrower;
(n) Indebtedness incurred in connection with the acquisition after the
Closing Date of any real or personal property by the Borrower or any Subsidiary
of the Borrower as contemplated by [Section]7.2(ix) hereof;
(o) Indebtedness existing on the Closing Date and listed and described
on SCHEDULE 7.1(o) hereto or any refinancing thereof on substantially similar
terms as the Indebtedness being refinanced;
(p) Indebtedness of the Borrower and its Subsidiaries in respect of
Investments in and contingent obligations to make Investments in The Business
Depot, Ltd., Staples U.K. and MAXI-Papier-Markt GmbH in each case solely to the
extent that such Investments are permitted under [Section]7.3(n) or (o) hereof;
and
<PAGE> 55
(q) Indebtedness secured by a lien on Real Estate of the Borrower or
its Subsidiaries; PROVIDED that the aggregate amount of Indebtedness permitted
pursuant to this [Section]7.1(q) shall not, at any time, exceed the fair market
value of the Real Estate securing such Indebtedness.
[Section]7.2. RESTRICTIONS ON LIENS. The Borrower will not, and will not
permit any of its Subsidiaries to, (a) create or incur or suffer to be created
or incurred or to exist any lien, encumbrance, mortgage, pledge, charge,
restriction or other security interest of any kind upon any of its property or
assets of any character whether now owned or hereafter acquired, or upon the
income or profits therefrom; (b) transfer any of such property or assets or the
income or profits therefrom for the purpose of subjecting the same to the
payment of Indebtedness or performance of any other obligation in priority to
payment of its general creditors; (c) acquire, or agree or have an option to
acquire, any property or assets upon conditional sale or other title retention
or purchase money security agreement, device or arrangement; (d) suffer to exist
for a period of more than thirty (30) days after the same shall have been
incurred any Indebtedness or claim or demand against it that if unpaid might by
law or upon bankruptcy or insolvency under the laws of the United States of
America or any state thereof, or otherwise, be given any priority whatsoever
over its general creditors; or (e) sell, assign, pledge or otherwise transfer
any accounts, contract rights, general intangibles, chattel paper or
instruments, with or without recourse; PROVIDED that the Borrower and any
Subsidiary of the Borrower may create or incur or suffer to be created or
incurred or to exist:
(i) liens in favor of the Borrower on all or part of the assets
of Subsidiaries of the Borrower securing Indebtedness owing by Subsidiaries of
the Borrower to the Borrower;
(ii) liens to secure taxes, assessments and other government
charges and liens to secure claims for labor, material or supplies, in each case
in respect of obligations not overdue or which are being contested in good faith
and by appropriate proceedings and for which the Borrower or such Subsidiary has
set aside on its books adequate reserves with respect thereto;
(iii) deposits or pledges made in connection with, or to secure
payment of, worker's compensation, unemployment insurance, old age pensions or
other social security obligations;
(iv) liens in respect of judgments or awards that have been in
force for less than the applicable period for taking an appeal so long as
execution is not levied thereunder or in respect of
<PAGE> 56
which the Borrower or such Subsidiary is at the time in good faith prosecuting
an appeal and in respect of which a stay of execution shall have been obtained
pending such appeal or shall have obtained an unsecured bond sufficient to
release such lien;
(v) liens of carriers, warehousemen, mechanics and materialmen,
and other like liens, in respect of obligations not overdue or, if such
obligations are overdue, being contested in good faith by appropriate
proceedings and for which the Borrower or such Subsidiary shall have set aside
on its books adequate reserves with respect thereto, PROVIDED that no proceeding
to foreclose any such lien shall have been commenced;
(vi) encumbrances on Real Estate consisting of easements, rights
of way, zoning restrictions, restrictions on the use of real property and
defects and irregularities in the title thereto, landlord's or lessor's liens
under Capitalized Leases to which the Borrower or a Subsidiary of the Borrower
is a party, and other minor liens or encumbrances none of which in the opinion
of the Borrower interferes materially with the use of the property affected in
the ordinary conduct of the business of the Borrower and its Subsidiaries, which
defects do not individually or in the aggregate have a materially adverse effect
on the business of the Borrower individually or of the Borrower and its
Subsidiaries on a consolidated basis;
(vii) liens existing on the Closing Date and listed on SCHEDULE
7.2 attached hereto or liens on the same assets in connection with the
refinancing of such existing liens;
(viii) liens arising in the ordinary course of business of the
Borrower or a Subsidiary of the Borrower none of which in the opinion of the
Borrower interferes materially with the use of the property affected in the
ordinary course of business of the Borrower and its Subsidiaries and which do
not, individually or in the aggregate, have a materially adverse effect on the
business of the Borrower or such Subsidiary individually or of the Borrower and
its Subsidiaries on a consolidated basis;
(ix) purchase money security interests in or purchase money
mortgages on real or personal property acquired after the Closing Date to secure
purchase money Indebtedness of the type permitted by [Section]7.1(n) hereof,
incurred in connection with the acquisition of such property, which security
interests or mortgages cover only the real or personal property so acquired;
(x) liens on accounts receivable of the Borrower and/or its
Subsidiaries that are the subject of and secure the accounts receivable
financing facility permitted under [Section]7.1(j) hereof;
<PAGE> 57
(xi) liens securing other permitted Indebtedness that does not
exceed $10,000,000 in the aggregate;
(xii) liens in respect of the interests of lessors under
Capitalized Leases; and
(xiii) liens on Real Estate securing Indebtedness permitted under
[Section]7.1(q) hereof.
[Section]7.3. RESTRICTIONS ON INVESTMENTS. The Borrower will not, and will
not permit any of its Subsidiaries to, make or permit to exist or to remain
outstanding any Investment except Investments in:
(a) marketable direct or guaranteed obligations of the United States
of America that mature within three (3) years from the date of purchase by the
Borrower or any Subsidiary;
(b) demand deposits, certificates of deposit, bankers acceptances and
time deposits of (i) United States or Canadian banks having total assets in
excess of $1,000,000,000 or (ii) a commercial bank organized under the laws of
any other country which is a member of the Organization for Economic Cooperation
and Development (the "OECD"), or a political subdivision of such country, and
having total assets in excess of $1,000,000,000, PROVIDED THAT such bank is
acting through a branch or agency located in the country in which its is
organized or another country which is a member of the OECD;
(c) (i) securities commonly known as "commercial paper" denominated in
Dollars which at the time of purchase have been rated and the ratings for which
are not less than "P 1" if rated by Moody's Investor Services, Inc., and not
less than "A 1" if rated by S&P; and (ii) securities commonly known as
"short-term bank notes" issued by any Bank denominated in Dollars which at the
time of purchase have been rated and the ratings for which are not less than "P
2" if rated by Moody's Investors Services, Inc., and not less than "A 2" if
rated by S&P;
(d) Investments existing on the Closing Date and listed on SCHEDULE
7.3 attached hereto;
(e) Investments with respect to Indebtedness permitted by
[Section]7.1(j) and [Section]7.1(l) hereof so long as such entities remain
Subsidiaries of the Borrower;
(f) taxable or tax-exempt securities which at the time of purchase
have been rated and the ratings for which are not less than A 3 if rated by
Moody's Investors Services, Inc., and not less than A- if rated by S&P;
<PAGE> 58
(g) Investments consisting of loans and advances to employees of the
Borrower or any Subsidiary of the Borrower, not exceeding $1,000,000 in the
aggregate at any one time outstanding;
(h) options to invest in or to lease real property to be used in the
operations of the Borrower or any Subsidiary of the Borrower;
(i) guaranties by endorsement of negotiable instruments for deposit or
collection or similar transactions effected in the ordinary course of business;
(j) the Borrower's or any Subsidiary's guaranty of the Indebtedness of
any Guarantor or the Borrower or any other Investments by the Borrower or any
Guarantor in any Guarantor or the Borrower or any Investments (other than loans)
by any Subsidiary of the Borrower in any Guarantor or the Borrower;
(k) Investments by the Borrower or any Subsidiary of the Borrower in
any of the Borrower's Subsidiaries (other than the Guarantors, any NRO, The
Business Depot, Ltd., Staples U.K. or MAXI-Papier-Markt GmbH), PROVIDED that (i)
the aggregate amount of Investments in, intercompany loans to and guaranties of,
the obligations of each such Subsidiary shall not exceed $35,000,000 at any time
and (ii) the aggregate amount of such Investments in, intercompany loans to and
guaranties of, the obligations of such Subsidiaries shall at no time exceed 25%
of the Stockholders' Equity of the Borrower;
(l) Investments by the Borrower or any Subsidiary of the Borrower to
acquire any Person, PROVIDED that such acquisition is permitted under
[Section]7.6 hereof;
(m) Investments by the Borrower or any Subsidiary of the Borrower to
acquire up to a fifty percent (50%) interest in another Person, PROVIDED that
(i) such Person is in the same line of business as the Borrower or such
Subsidiary, as applicable, and (ii) the consideration for such interest shall be
the exchange by the Borrower or such Subsidiary as applicable, of a certain
number of shares of its common stock for equity securities of the other Person
and/or the payment in cash in an aggregate cash amount for any such Investment
not in excess of $35,000,000;
(n) Investments by the Borrower or any Subsidiary of the Borrower in
MAXI-Papier-Markt GmbH and Staples U.K., PROVIDED that (i) the aggregate amount
of all such Investments in Staples, U.K. under this clause (n) shall at no time
exceed 17.5% of the Stockholders' Equity of the Borrower, (ii)
<PAGE> 59
the aggregate amount of all such Investments in MAXI-Papier-Markt GmbH under
this clause (n) shall at no time exceed 7.5% of the Stockholders' Equity of the
Borrower, and (iii) in each case, no Default or Event of Default has occurred
and is continuing or would occur after giving effect to such Investment; and
(o) Investments by the Borrower or any Subsidiary in The Business
Depot, Ltd. or in respect of the acquisition by the Borrower or such Subsidiary
of capital stock of nonresident-owned investment corporation Subsidiaries of the
Borrower which may now exist or be formed hereafter (each, an "NRO") and
Investments by NROs in The Business Depot, Ltd., PROVIDED that (i) the aggregate
amount of all such Investments made by such NROs in respect of the purchase of
Indebtedness owed by The Business Depot, Ltd. to lenders PLUS related
transaction expenses is not less than (A) the aggregate amount of Investments
made by the Borrower and its Subsidiaries in NROs in accordance with this clause
(o) LESS (B) $100,000 per NRO, (ii) the aggregate amount of all such Investments
in respect of the purchase of Indebtedness owed by The Business Depot, Ltd. made
by NROs PLUS the aggregate amount of Investments made by the Borrower and its
Subsidiaries (other than NROs) in The Business Depot, Ltd. does not exceed 27.5%
of the Stockholders' Equity of the Borrower at any time, and (iii) no Default or
Event of Default has occurred and is continuing or would occur after giving
effect to any such Investments.
[Section]7.4. DISTRIBUTIONS. The Borrower will not declare any dividend or
make any Distribution; PROVIDED that the Borrower may make Distributions if (a)
no Default or Event of Default has occurred and is continuing or would result
after giving effect to such Distribution and (b) the aggregate amount of all
Distributions made in any fiscal year of the Borrower does not exceed
twenty-five percent (25%) of the Consolidated Net Income of the Borrower and its
Subsidiaries for such fiscal year.
[Section]7.5. EMPLOYEE BENEFIT PLANS. Neither the Borrower nor any ERISA
Affiliate will engage in any "prohibited transaction" within the meaning of
[Section]406 of ERISA or [Section]4975 of the Code which could result in a
material liability for the Borrower or any of its Subsidiaries; or permit any
Guaranteed Pension Plan to incur an "accumulated funding deficiency", as such
term is defined in [Section]302 of ERISA, whether or not such deficiency is or
may be waived; or fail to contribute to any Guaranteed Pension Plan to an extent
which, or terminate any Guaranteed Pension Plan in a manner which, could result
in the imposition of a lien or encumbrance on the assets of the Borrower or any
of its Subsidiaries pursuant to [Section]302(f) or [Section]4068 of ERISA; or
permit or take any action which would result in the aggregate benefit
liabilities (with the meaning of [Section]4001 of ERISA) of all Guaranteed
Pension Plans exceeding the value of the aggregate assets of such Plans,
disregarding for this purpose the benefit liabilities and assets of any such
Plan with assets in excess of benefit liabilities.
<PAGE> 60
[Section]7.6. MERGER AND CONSOLIDATION. The Borrower will not, and will not
permit any of its Subsidiaries to, merge or consolidate with any other Person;
enter into any stock or asset acquisitions (other than the acquisition of assets
in the ordinary course of such Person's business and other than the acquisition
of stock permitted under [Section]7.3(o) hereof); enter into any joint venture
or partnerships (except to the extent permitted under [Section]7.3 hereof); or
enter into any new lines of business or otherwise change the conduct of the
Borrower's or such Subsidiary's business as presently conducted; other than (a)
the merger or consolidation of one or more Subsidiaries of the Borrower with and
into the Borrower, PROVIDED that the Borrower is the surviving entity, (b) the
merger or consolidation of two or more Subsidiaries of the Borrower, PROVIDED
that, if one of the Subsidiaries is a Guarantor, that the Guarantor is the
surviving entity, or (c) the acquisition (whether of stock or assets or by means
of a merger) of any other Person, PROVIDED that (i) no Default or Event of
Default shall exist at the time of, or after giving effect to such acquisition,
(ii) the board of directors and the shareholders (if required by applicable
law), or the equivalent, of such other Person has approved such acquisition,
(iii) such other Person is in the business of selling office products and/or
supplies, (iv) in connection with any such acquisition involving an aggregate
consideration (including assumption of Indebtedness) in excess of $15,000,000,
the Borrower shall have delivered to the Agent and the Banks prior written
notice of the proposed acquisition, and (v) if the Borrower and such other
Person merge, the Borrower is the surviving entity.
[Section]7.7. DISPOSITION OF ASSETS AND SALE-LEASEBACK TRANSACTIONS. The
Borrower will not, and will not permit any of its Subsidiaries to, dispose of or
sell assets other than:
(a) the disposition of assets in the ordinary course of business,
(b) sale-leaseback transactions and other dispositions of assets that
do not have a materially adverse effect on the business, assets or financial
condition of the Borrower or any of its Subsidiaries, PROVIDED that (i) the
aggregate net book value of the assets to be sold PLUS the net book value of all
other assets of the Borrower and its Subsidiaries sold under this clause (b)
during the period of time from the Closing Date through the date of such sale
does not, at the time of such sale, exceed 25% of the Consolidated Total Assets
of the Borrower and its Subsidiaries, (ii) such assets are sold in an arm's
length transaction for fair market value (after giving effect to all tax
benefits, if any, associated with such sale), and (iii) the Borrower shall, if
an Event of Default exists or would result from such sale, prepay the Syndicated
Loans by an amount equal to (A) 50% of the amount by which the aggregate net
sale proceeds of all assets sold pursuant to this clause (b) exceeds $20,000,000
but is less than or equal to $50,000,000 PLUS (B) 100% of the amount by which
the aggregate net
<PAGE> 61
sale proceeds of all assets sold pursuant to this clause (b) exceeds
$50,000,000, and
(c) the sale of accounts receivable of the Borrower and/or its
Subsidiaries pursuant to an accounts receivable financing or securitization
facility entered into by the Borrower and/or a Subsidiary of the Borrower on
terms and conditions and pursuant to documentation in form and substance
reasonably satisfactory to the Banks, PROVIDED that the maximum facility amount
of such facility shall not exceed $125,000,000.
[Section]7.8. SUBORDINATED DEBT. The Borrower will not effect or permit any
change in or amendment to any document or instrument pertaining to the
subordination, covenants, events of default, terms of payment or required
prepayments of any Subordinated Debt, give any notice of redemption or
prepayment or offer to repurchase under any such document or instrument or,
directly or indirectly, make any payment of principal of or interest on or in
redemption, retirement or repurchase of any Subordinated Debt, except that (a)
the Borrower may make regularly scheduled payments when required by the terms of
the Subordinated Debt, (b) the Borrower may give any notice of redemption under
the Subordinated Debentures and redeem any such Subordinated Debentures,
PROVIDED that (i) the Borrower has obtained a commitment from one or more
underwriters to purchase common stock of the Borrower, with the proceeds of such
sale being used to pay some or all of the redemption price of the Subordinated
Debentures in the event that some or all of the holders of such Subordinated
Debentures do not elect to convert such Subordinated Debentures into common
stock of the Borrower, and (ii) the aggregate redemption price of all
Subordinated Debentures redeemed by the Borrower, in cash, after the Closing
Date, in excess of the proceeds of the sale of common stock described in
subclause (i) hereof, does not exceed $10,000,000, and (iii) no Default or Event
of Default has occurred and is continuing or would result after giving effect to
any such redemption, (c) if the Borrower determines, based on a written opinion
of counsel that, as a result of any change in or amendment to the laws affecting
taxation (including regulations or rulings promulgated thereunder) of the United
States or any political subdivision or taxing authority thereof or therein, or
any change in or amendment to the application or official interpretation of such
laws, regulations or rulings, any payment made outside of the United States by
the Borrower or its agent of the full amount of principal, premium, if any, or
interest due with respect of any outstanding Subordinated Debenture in bearer
form (a "Bearer Debenture") or coupon appertaining thereto would be subject to
any certification, identification or other information reporting requirement of
any kind, the effect of which is the disclosure of the nationality, residence or
identity of the beneficial owner of such Bearer Debenture or coupon who is not a
U.S. person (as defined in the Indenture) to the Borrower, any agent of the
Borrower or any governmental
<PAGE> 62
authority, then the Borrower may give notice of redemption and redeem such
Bearer Debenture at par together with accrued interest, PROVIDED that (i) the
aggregate redemption price of all such Bearer Debentures so redeemed by the
Borrower does not exceed $50,000,000, and (ii) no Default or Event of Default
has occurred and is continuing or would result after giving effect to such
redemption, (d) if the holders of the Subordinated Debentures shall require the
Borrower to repurchase Subordinated Debentures from such holders upon the
occurrence of a Change in Control (as defined in the Indenture for the purpose
of this [Section]7.8(d) only), then subject to the subordination and turnover
provisions of the Indenture the Borrower may repurchase such Subordinated
Debentures at par together with accrued interest, and (e) the Borrower may
refinance all or a portion of the Subordinated Debt so long as such refinancing
Subordinated Debt (i) has a maturity that is no earlier than the Subordinated
Debt being refinanced and (ii) is subordinated to the Obligations on terms at
least as favorable to the Agent and the Banks, in the opinion of the Agent and
the Majority Banks, as the Subordinated Debt being refinanced. The terms of
[Section]7.8(d) shall not, by implication or otherwise, limit, impair, alter,
modify, amend, constitute a waiver of or in any other way affect any of the
other terms, obligations, covenants, Defaults or Events of Default contained in
this Credit Agreement, including without limitation the Events of Default set
forth in [Section]11.1(m) of this Credit Agreement.
[Section]8. FINANCIAL COVENANTS OF THE BORROWER. The Borrower covenants and
agrees that, so long as any Loan or Note is outstanding or any Bank has any
obligation to make any Loans:
[Section]8.1. FIXED CHARGE COVERAGE RATIO. As at the end of each
fiscal quarter of the Borrower during the periods described in the table below,
the Borrower will not permit the ratio (the "Fixed Charge Coverage Ratio") of
(a) the sum of (i) Earnings Before Interest and Taxes for the period of the four
consecutive fiscal quarters (the "Measurement Period") ending on such date PLUS
(ii) the Rental Expense for such Measurement Period, to (b) the sum of (i) the
Consolidated Total Interest Expense for such Measurement Period PLUS (ii) the
sum of all scheduled payments of principal on Total Funded Indebtedness for the
four consecutive fiscal quarters following the last day of such Measurement
Period PLUS (iii) the Rental Expense for such Measurement Period, to be less
than 1.50 to 1.00.
[Section]8.2. DEBT TO CAPITAL RATIO. As at the end of each fiscal
quarter of the Borrower, the Borrower will not permit the ratio of (a) the sum
of (i) Total Funded Indebtedness as at such date, PLUS (ii) the Rental Expense
for the four fiscal quarters ended on such date multiplied by 8, to (b) the sum
of (i) Total Funded Indebtedness as at such date, PLUS (ii) the Rental Expense
for the four
<PAGE> 63
fiscal quarters ended on such date multiplied by 8, PLUS (iii) the Stockholders'
Equity as at such date, to be more than 0.76 to 1.0
[Section]8.3. MINIMUM CONSOLIDATED TANGIBLE NET WORTH. The Borrower will
not permit Consolidated Tangible Net Worth to be, as at the end of any fiscal
quarter, less than the sum of (a) $128,149,000, PLUS (b) 50% of the cumulative
positive Consolidated Net Income (calculated as at the end of each of the fiscal
quarters beginning with the fiscal quarter ending April 30, 1994), with no
deductions for losses, PLUS (c) 50% of the aggregate book value of all
additional Capital Stock issued by the Borrower since January 29, 1994.
[Section]9. CLOSING CONDITIONS. The obligations of the Banks to make the
initial Loans shall be subject to the satisfaction of the following conditions
precedent:
[Section]9.1. LOAN DOCUMENTS. Each of the Loan Documents shall have been
duly executed and delivered by the respective parties thereto, shall be in full
force and effect and shall be in form and substance satisfactory to each of the
Banks. The Agent shall have received a fully executed copy of each such
document.
[Section]9.2. CERTIFIED COPIES OF CHARTER DOCUMENTS. The Agent shall have
received from the Borrower and each of the Guarantors a copy, certified by a
duly authorized officer of such Person to be true and complete on the Closing
Date, of each of (a) its charter or other incorporation documents as in effect
on such date of certification, and (b) its by-laws as in effect on such date.
[Section]9.3. CORPORATE ACTION. All corporate action necessary for the
valid execution, delivery and performance by the Borrower and each of the
Guarantors of this Credit Agreement and the other Loan Documents to which it is
or is to become a party shall have been duly and effectively taken, and evidence
thereof satisfactory to the Banks shall have been provided to the Agent.
[Section]9.4. INCUMBENCY CERTIFICATE. The Agent shall have received from
the Borrower and each of the Guarantors an incumbency certificate, dated as of
the Closing Date, signed by a duly authorized officer of the Borrower and each
Guarantor, as applicable, and giving the name and bearing a specimen signature
of each individual who shall be authorized: (a) to sign, in the name and to the
benefit of each of the Borrower and the Guarantors, each of the Loan Documents;
(b) with respect to the Borrower, to make Loan Requests and Conversion Requests;
and (c) to give notices and to take other action on its behalf under the Loan
Documents.
<PAGE> 64
[Section]9.5. OPINION OF COUNSEL. The Agent shall have received favorable
legal opinions addressed to the Banks and the Agent, dated as of the Closing
Date, in form and substance satisfactory to the Banks and the Agent, from (a)
Peter Schwarzenbach, Esq., general counsel to the Borrower and the Guarantors,
and (b) Hale and Dorr, special counsel to the Borrower and the Guarantors.
[Section]9.6. PAYMENT OF FEES. The Borrower shall have paid to the Agent
and the Banks, as appropriate, the Agent's Fee and all other fees and expenses
required to be paid by it.
[Section]9.7. OUTSTANDING FEES. The Borrower shall have paid to the Agent
all interest on Syndicated Loans, fees and expenses, owing or accrued under or
in respect of the Original Credit Agreement through the Closing Date, calculated
as of the Closing Date and prorated in the case of any fractional periods.
[Section]9.8. RECEIPT AND ACCEPTANCE OF COMMITMENTS. The Banks and the
Agent shall have received and accepted binding commitments from financial
institutions for the amount of the Total Commitment (including FNBB's share
thereof).
[Section]9.9. COMPLIANCE CERTIFICATE. The Borrower shall have delivered to
the Banks a Compliance Certificate dated as of May 4, 1996 for the fiscal
quarter of the Borrower ended on such date.
[Section]10. CONDITIONS TO ALL BORROWINGS. The obligations of the Banks to
make any Loan, in each case whether on or after the Closing Date, shall also be
subject to the satisfaction of the following conditions precedent:
[Section]10.1. REPRESENTATIONS TRUE; NO EVENT OF DEFAULT. Each of the
representations and warranties of any of the Borrower and its Subsidiaries
contained in this Credit Agreement, the other Loan Documents or in any document
or instrument delivered pursuant to or in connection with this Credit Agreement
shall be true as of the date as of which they were made and shall also be true
at and as of the time of the making of such Loan, with the same effect as if
made at and as of that time (except to the extent of changes resulting from
transactions contemplated or permitted by this Credit Agreement and the other
Loan Documents and changes occurring in the ordinary course of business that
singly or in the aggregate are not materially adverse, and to the extent that
such representations and warranties relate expressly to an earlier date) and no
Default or Event of Default shall have occurred and be continuing.
<PAGE> 65
[Section]10.2. NO LEGAL IMPEDIMENT. No change shall have occurred in any
law or regulations thereunder or interpretations thereof that in the reasonable
opinion of any Bank would make it illegal for such Bank to make such Loan.
[Section]10.3. GOVERNMENTAL REGULATION. Each Bank shall have received such
statements in substance and form reasonably satisfactory to such Bank as such
Bank shall require for the purpose of compliance with any applicable regulations
of the Comptroller of the Currency or the Board of Governors of the Federal
Reserve System.
[Section]10.4. PROCEEDINGS AND DOCUMENTS. All proceedings in connection
with the transactions contemplated by this Credit Agreement, the other Loan
Documents and all other documents incident thereto shall be reasonably
satisfactory in substance and in form to the Banks and to the Agent and the
Agent's Special Counsel, and the Banks, the Agent and such counsel shall have
received all information and such counterpart originals or certified or other
copies of such documents as the Agent may reasonably request.
[Section]11. EVENTS OF DEFAULT; ACCELERATION; ETC.
------ -- -------- ------------- ----
[Section]11.1. EVENTS OF DEFAULT AND ACCELERATION. If any of the following
events ("Events of Default" or, if the giving of notice or the lapse of time or
both is required, then, prior to such notice or lapse of time, "Defaults") shall
occur and be continuing:
(a) the Borrower shall fail to pay any principal of the Loans when the
same shall become due and payable, whether at the stated date of maturity or any
accelerated date of maturity or at any other date fixed for payment;
(b) the Borrower or any Guarantor shall fail to pay any interest on
the Loans, the Commitment Fee, the Agent's Fee or other sums due hereunder or
under any of the other Loan Documents, within five (5) Business Days of the date
when the same shall become due and payable, whether at the stated date of
maturity or any accelerated date of maturity or at any other date fixed for
payment;
(c) the Borrower (i) shall fail to comply with any of its covenants
contained in [Sections]6.4, 6.5, 6.10, 7 or 8 hereof, or (ii) shall fail
to comply with its covenant contained in [Section]6.6 hereof and such failure
shall continue for thirty (30) days;
(d) the Borrower or any of its Subsidiaries shall fail to perform any
term, covenant or agreement contained herein or in any of the other Loan
Documents (other than those specified elsewhere in this [Section]11.1) for
thirty (30)
<PAGE> 66
days after written notice of such failure has been given to the Borrower by the
Agent;
(e) any material representation or warranty of the Borrower or any of
its Subsidiaries in this Credit Agreement or any of the other Loan Documents or
in any other document or instrument delivered pursuant to or in connection with
this Credit Agreement shall prove to have been false in any material respect
upon the date when made or deemed to have been made or repeated;
(f) the Borrower or any of its Subsidiaries shall fail to pay at
maturity, or within any applicable period of grace, any obligation for borrowed
money or credit received or in respect of any Capitalized Leases or any
obligations with respect to interest rate protection arrangements or exchange
rate protection arrangements which, in the aggregate, represents Indebtedness
(calculated, with respect to interest rate protection arrangements and exchange
rate protection arrangements based on the notional principal amount thereof) of
$2,000,000 or more, or fail to observe or perform any material term, covenant or
agreement contained in any agreement by which it is bound, evidencing or
securing borrowed money or credit received or in respect of any Capitalized
Leases or evidencing any interest rate protection arrangement or exchange rate
protection arrangement which in the aggregate represents Indebtedness
(calculated, with respect to interest rate protection arrangements and exchange
rate protection arrangements based on the notional principal amount thereof) of
$2,000,000 or more, and for such period of time as would permit (assuming the
giving of appropriate notice if required) the holder or holders thereof or of
any obligations issued thereunder to accelerate the maturity thereof;
(g) the Borrower or any of its Subsidiaries shall make an assignment
for the benefit of creditors, or admit in writing its inability to pay or
generally fail to pay its debts as they mature or become due, or shall petition
or apply for the appointment of a trustee or other custodian, liquidator or
receiver of the Borrower or any of its Subsidiaries or of any substantial part
of the assets of the Borrower or any of its Subsidiaries or shall commence any
case or other proceeding relating to the Borrower or any of its Subsidiaries
under any bankruptcy, reorganization, arrangement, insolvency, readjustment of
debt, dissolution or liquidation or similar law of any jurisdiction, now or
hereafter in effect, or shall take any action to authorize or in furtherance of
any of the foregoing, or if any such petition or application shall be filed or
any such case or other proceeding shall be commenced against the Borrower or any
of its Subsidiaries and shall not have been dismissed within sixty (60) days, or
the Borrower or any of its Subsidiaries shall indicate its approval thereof,
consent thereto or acquiescence therein;
<PAGE> 67
(h) a decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating the Borrower or any of its
Subsidiaries bankrupt or insolvent, or approving a petition in any such case or
other proceeding, or a decree or order for relief is entered in respect of the
Borrower or any Subsidiary of the Borrower in an involuntary case under federal
bankruptcy laws as now or hereafter constituted;
(i) there shall remain in force, undischarged, unsatisfied and
unstayed, for more than thirty (30) days, whether or not consecutive, any final
judgment against the Borrower or any of its Subsidiaries that, with other
outstanding final judgments, undischarged, against the Borrower or any of its
Subsidiaries exceeds in the aggregate $1,000,000;
(j) with respect to any Guaranteed Pension Plan, an ERISA Reportable
Event shall have occurred and the Majority Banks shall have determined in their
reasonable discretion that such event reasonably could be expected to result in
liability of the Borrower or any of its Subsidiaries to the PBGC or such
Guaranteed Pension Plan in an aggregate amount exceeding $1,000,000 and such
event in the circumstances occurring reasonably could constitute grounds for the
termination of such Guaranteed Pension Plan by the PBGC or for the appointment
by the appropriate United States District Court of a trustee to administer such
Guaranteed Pension Plan; or a trustee shall have been appointed by the United
States District Court to administer such Plan; or the PBGC shall have instituted
proceedings to terminate such Guaranteed Pension Plan;
(k) the holders of all or any part of the Subordinated Debt shall
accelerate the maturity of all or any part of the Subordinated Debt or the
Subordinated Debt shall be prepaid, redeemed or repurchased in whole or in part,
in each case in violation of the provisions of this Credit Agreement;
(l) if any of the Loan Documents shall be canceled, terminated,
revoked or rescinded, in each case otherwise than in accordance with the terms
thereof or with the express prior written agreement, consent or approval of the
Banks, or any action at law, suit or in equity or other legal proceeding to
cancel, revoke or rescind any of the Loan Documents shall be commenced by or on
behalf of the Borrower or any of its Subsidiaries party thereto or any of their
respective stockholders, or any court or any other governmental or regulatory
authority or agency of competent jurisdiction shall make a determination that,
or issue a judgment, order, decree or ruling to the effect that, any one or more
of the Loan Documents is illegal, invalid or unenforceable in accordance with
the terms thereof; or
<PAGE> 68
(m) a "Change in Control" shall have occurred (which for the purposes
of this subsection (m) shall mean the occurrence of any of the following
events):
(i) the acquisition by any Person (including any syndicate or
group deemed to be a "person" under Section 13(d)(3) of the Securities and
Exchange Act of 1934, as amended) of beneficial ownership, directly or
indirectly, through a purchase, merger or other acquisition transaction or
series of transactions, of shares of Capital Stock of the Borrower entitling
such Person to exercise 50% or more of the total voting power of all shares of
Capital Stock of the Borrower entitled to vote generally in the elections of
directors (any shares of voting stock of which such person or group is the
beneficial owner that are not then outstanding being deemed outstanding for
purposes of calculating such percentage);
(ii) any consolidation of the Borrower with, or merger of the
Borrower into, any other Person, any merger of another Person into the Borrower,
or any sale or transfer of all or substantially all of the assets of the
Borrower to another Person (other than a merger (A) which does not result in any
reclassification, conversion, exchange or cancellation of outstanding shares of
Capital Stock of the Borrower or (B) which is effected solely to change the
jurisdiction of incorporation of the Borrower); or
(iii) during any consecutive two-year period, individuals who at
the beginning of such period constituted the Board of Directors of the Borrower
(together with any new directors whose election by such Board of Directors or
whose nomination for election by the stockholders of the Borrower was approved
by a vote of 66-2/3% of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of the Borrower then in office;
then, and in any such event, so long as the same may be continuing, the Agent
may, and upon the request of the Majority Banks shall, by notice in writing to
the Borrower declare all amounts owing with respect to this Credit Agreement,
the Notes and the other Loan Documents to be, and they shall thereupon forthwith
become, immediately due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby expressly waived by the
Borrower; PROVIDED that in the event of any Event of Default specified in
[Sections]11.1(g) or 11.1(h) hereof, all such amounts shall become immediately
due and payable automatically and without any requirement of notice from the
Agent or any Bank.
<PAGE> 69
[Section]11.2. TERMINATION OF COMMITMENTS. If any one or more of the Events
of Default specified in [Sections]11.1(g) or 11.1(h) hereof shall occur, any
unused portion of the credit hereunder shall forthwith terminate and each of
the Banks shall be relieved of all further obligations to make Loans to the
Borrower. If any other Event of Default shall have occurred and be continuing,
the Agent may and, upon the request of the Majority Banks, shall, by notice to
the Borrower, terminate the unused portion of the credit hereunder, and upon
such notice being given such unused portion of the credit hereunder shall
terminate immediately and each of the Banks shall be relieved of all further
obligations to make Loans. No termination of the credit hereunder shall relieve
the Borrower of any of the Obligations.
[Section]11.3. REMEDIES. In case any one or more of the Events of Default
shall have occurred and be continuing, and whether or not the Banks shall have
accelerated the maturity of the Loans pursuant to [Section]11.1 hereof, each
Bank, if owed any amount with respect to the Loans and upon the consent of the
Majority Banks, may proceed to protect and enforce its rights by suit in equity,
action at law or other appropriate proceeding, whether for the specific
performance of any covenant or agreement contained in this Credit Agreement and
the other Loan Documents or any instrument pursuant to which the Obligations to
such Bank are evidenced, 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 such Bank. No remedy herein conferred upon any
Bank or the Agent or the holder of any Note is intended to be exclusive of any
other remedy and each and every remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter existing at
law or in equity or by statute or any other provision of law.
[Section]12. SETOFF. Regardless of the adequacy of any collateral, during
the continuance of any Event of Default, any deposits or other sums credited by
or due from any of the Banks to the Borrower and any securities or other
property of the Borrower in the possession of such Bank may be applied to or set
off by such Bank against the payment of Obligations and any and all other
liabilities, direct, or indirect, absolute or contingent, due or to become due,
now existing or hereafter arising, of the Borrower to such Bank. Each of the
Banks agrees with each other Bank that (a) if an amount to be set off is to be
applied to Indebtedness of the Borrower to such Bank, other than Indebtedness
evidenced by the Notes held by such Bank, such amount shall be applied ratably
to such other Indebtedness (except that no amounts shall be applied to
documentary letters of credit) and to the Indebtedness evidenced by all such
Notes held by such Bank, and (b) if such Bank shall receive from the Borrower,
whether by voluntary payment, exercise of the right of setoff, counterclaim,
cross action,
<PAGE> 70
enforcement of the claim evidenced by the Notes held by such Bank by proceedings
against the Borrower at law or in equity or by proof thereof in bankruptcy,
reorganization, liquidation, receivership or similar proceedings, or otherwise,
and shall retain and apply to the payment of the Note or Notes held by such Bank
any amount in excess of its ratable portion of the payments received by all of
the Banks with respect to the Syndicated Notes held by all of the Banks, such
Bank will make such disposition and arrangements with the other Banks with
respect to such excess, either by way of distribution, PRO TANTO assignment of
claims, subrogation or otherwise as shall result in each Bank receiving in
respect of the Syndicated Notes held by it, its proportionate payment as
contemplated by this Credit Agreement; PROVIDED that if all or any part of such
excess payment is thereafter recovered from such Bank, such disposition and
arrangements shall be rescinded and the amount restored to the extent of such
recovery, but without interest.
[Section]13. THE AGENT.
--- -----
[Section]13.1. AUTHORIZATION. The Agent is authorized to take such action
on behalf of each of the Banks and to exercise all such powers as are hereunder
and under any of the other Loan Documents and any related documents delegated to
the Agent, together with such powers as are reasonably incident thereto,
PROVIDED that no duties or responsibilities not expressly assumed herein or
therein shall be implied to have been assumed by the Agent. The relationship
between the Agent and the Banks is and shall be that of agent and principal
only, and nothing contained in this Credit Agreement or any of the other Loan
Documents shall be construed to constitute the Agent as a trustee for any Bank.
[Section]13.2. EMPLOYEES AND AGENTS. The Agent may exercise its powers and
execute its duties by or through employees or agents and shall be entitled to
take, and to rely on, advice of counsel concerning all matters pertaining to its
rights and duties under this Credit Agreement and the other Loan Documents. The
Agent may utilize the services of such Persons as the Agent in its sole
discretion may reasonably determine, and all reasonable fees and expenses of any
such Persons shall be paid by the Borrower.
[Section]13.3. NO LIABILITY. Neither the Agent nor any of its shareholders,
directors, officers or employees nor any other Person assisting them in their
duties nor any agent or employee thereof, shall be liable for any waiver,
consent or approval given or any action taken, or omitted to be taken, in good
faith by it or them hereunder or under any of the other Loan Documents, or in
connection herewith or therewith, or be responsible for the consequences of any
oversight or error of judgment whatsoever, except that the Agent or such other
Person, as the case may be, may be liable for losses due to its willful
misconduct or gross negligence.
<PAGE> 71
[Section]13.4. NO REPRESENTATIONS. The Agent shall not be responsible for
the execution or validity or enforceability of this Credit Agreement, the Notes,
any of the other Loan Documents or any instrument at any time constituting, or
intended to constitute, collateral security for the Notes, or for the value of
any such collateral security or for the validity, enforceability or
collectability of any such amounts owing with respect to the Notes, or for any
recitals or statements, warranties or representations made herein or in any of
the other Loan Documents or in any certificate or instrument hereafter furnished
to it by or on behalf of the Borrower or any of its Subsidiaries, or be bound to
ascertain or inquire as to the performance or observance of any of the terms,
conditions, covenants or agreements herein or in any instrument at any time
constituting, or intended to constitute, collateral security for the Notes or to
inspect any of the properties, books or records of the Borrower or any of its
Subsidiaries. The Agent shall not be bound to ascertain whether any notice,
consent, waiver or request delivered to it by the Borrower or any holder of any
of the Notes shall have been duly authorized or is true, accurate and complete.
The Agent has not made nor does it now make any representations or warranties,
express or implied, nor does it assume any liability to the Banks, with respect
to the creditworthiness or financial conditions of the Borrower or any of its
Subsidiaries. Each Bank acknowledges that it has, independently and without
reliance upon the Agent or any other Bank, and based upon such information and
documents as it has deemed appropriate, made its own credit analysis and
decision to enter into this Credit Agreement.
[Section]13.5. PAYMENTS.
--------
[Section]13.5.1. PAYMENTS TO AGENT. A payment by the Borrower to the
Agent hereunder or any of the other Loan Documents for the account of any Bank
shall constitute a payment to such Bank. The Agent agrees promptly to distribute
to each Bank such Bank's PRO RATA share of payments received by the Agent for
the account of the Banks except as otherwise expressly provided herein or in any
of the other Loan Documents.
[Section]13.5.2. DISTRIBUTION BY AGENT. If in the opinion of the Agent
the distribution of any amount received by it in such capacity hereunder, under
the Notes or under any of the other Loan Documents might involve it in
liability, it may refrain from making distribution until its right to make
distribution shall have been adjudicated by a court of competent jurisdiction.
If a court of competent jurisdiction shall adjudge that any amount received and
distributed by the Agent is to be repaid, each Person to whom any such
distribution shall have been made shall either repay to the Agent its
proportionate share of the amount so adjudged to be repaid or shall pay over the
same in such manner and to such Persons as shall be determined by such court.
<PAGE> 72
[Section]13.5.3. DELINQUENT BANKS. Notwithstanding anything to the
contrary contained in this Credit Agreement or any of the other Loan Documents,
any Bank that fails (a) to make available to the Agent its PRO RATA share of any
Loan or (b) to comply with the provisions of [Section]12 hereof with respect to
making dispositions and arrangements with the other Banks, where such Bank's
share of any payment received, whether by setoff or otherwise, is in excess of
its PRO RATA share of such payments due and payable to all of the Banks, in each
case as, when and to the full extent required by the provisions of this Credit
Agreement, shall be deemed delinquent (a "Delinquent Bank") and shall be deemed
a Delinquent Bank until such time as such delinquency is satisfied. A Delinquent
Bank shall be deemed to have assigned any and all payments due to it from the
Borrower, whether on account of outstanding Loans, interest, fees or otherwise,
to the remaining nondelinquent Banks for application to, and reduction of, their
respective PRO RATA shares of all outstanding Syndicated Loans. The Delinquent
Bank hereby authorizes the Agent to distribute such payments to the
nondelinquent Banks in proportion to their respective PRO RATA shares of all
outstanding Syndicated Loans. A Delinquent Bank shall be deemed to have
satisfied in full a delinquency when and if, as a result of application of the
assigned payments to all outstanding Syndicated Loans of the nondelinquent
Banks, the Banks' respective PRO RATA shares of all outstanding Syndicated Loans
have returned to those in effect immediately prior to such delinquency and
without giving effect to the nonpayment causing such delinquency.
[Section]13.6. HOLDERS OF NOTES. The Agent may deem and treat the payee of
any Note as the absolute owner or purchaser thereof for all purposes hereof
until it shall have been furnished in writing with a different name by such
payee or by a subsequent holder, assignee or transferee.
[Section]13.7. INDEMNITY. The Banks ratably agree hereby to indemnify and
hold harmless the Agent from and against any and all claims, actions and suits
(whether groundless or otherwise), losses, damages, costs, expenses (including
any expenses for which the Agent has not been reimbursed by the Borrower as
required by [Section]14 hereof), and liabilities of every nature and character
arising out of or related to this Credit Agreement, the Notes, or any of the
other Loan Documents or the transactions contemplated or evidenced hereby or
thereby, or the Agent's actions taken hereunder or thereunder, except to the
extent that any of the same shall be directly caused by the Agent's willful
misconduct or gross negligence.
<PAGE> 73
[Section]13.8. AGENT AS BANK. In its individual capacity, FNBB shall have
the same obligations and the same rights, powers and privileges in respect to
its Commitment and the Loans made by it, and as the holder of any of the Notes,
as it would have were it not also the Agent.
[Section]13.9. RESIGNATION. The Agent may resign at any time by giving
sixty (60) days' prior written notice thereof to the Banks and the Borrower.
Upon any such resignation, the Majority Banks shall have the right to appoint a
successor Agent. Unless a Default or Event of Default shall have occurred and be
continuing, such successor Agent shall be reasonably acceptable to the Borrower.
If no successor Agent shall have been so appointed by the Majority Banks and
shall have accepted such appointment within thirty (30) days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on behalf
of the Banks, appoint a successor Agent reasonably acceptable to the Borrower,
which shall be a financial institution having a rating of not less than A or its
equivalent by S&P. Upon the acceptance of any appointment as Agent hereunder by
a successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations
hereunder. After any retiring Agent's resignation, the provisions of this Credit
Agreement and the other Loan Documents shall continue in effect for its benefit
in respect of any actions taken or omitted to be taken by it while it was acting
as Agent.
[Section]13.10. NOTIFICATION OF DEFAULTS AND EVENTS OF DEFAULT. Each Bank
hereby agrees that, upon learning of the existence of a Default or an Event of
Default, it shall promptly notify the Agent thereof. The Agent hereby agrees
that upon receipt of any notice under this [Section]13.10 it shall promptly
notify the other Banks and the Borrower of the existence of such Default or
Event of Default.
[Section]14. EXPENSES. The Borrower agrees to pay (a) the Agent's
reasonable costs of producing and reproducing this Credit Agreement, the other
Loan Documents and the other agreements and instruments mentioned herein, (b)
any taxes (including any interest and penalties in respect thereto) payable by
the Agent or any of the Banks (other than taxes based upon the Agent's or any
Bank's net income or taxes not payable by the Borrower pursuant to the
provisions of this Credit Agreement) on the transactions contemplated by this
Credit Agreement (the Borrower hereby agreeing to indemnify the Agent and each
Bank with respect thereto), (c) the reasonable fees, expenses and disbursements
of the Agent's Special Counsel or any local counsel to the Agent incurred in
connection with the preparation, administration or interpretation of the Loan
Documents and other instruments mentioned herein, each closing hereunder, and
amendments, modifications, approvals, consents or waivers
<PAGE> 74
hereto or hereunder, (d) the reasonable fees, expenses and disbursements of the
Agent incurred by the Agent in connection with the preparation, administration
or interpretation of the Loan Documents and other instruments mentioned herein,
including all insurance premiums and surveyor, engineering and appraisal
charges, (e) all reasonable out-of-pocket expenses (including, without
limitation, reasonable attorneys' fees (including the allocated costs of
in-house counsel) and costs and reasonable accounting, appraisal, investment
banking and similar professional fees and charges) incurred by the Agent or any
Bank in connection with (i) the enforcement of or preservation of rights under
any of the Loan Documents against the Borrower or any of its Subsidiaries or the
administration thereof after the occurrence of an Event of Default and (ii) any
other litigation, proceeding or dispute whether arising hereunder or otherwise,
in any way related to any Bank's or the Agent's relationship with the Borrower
or any of its Subsidiaries (other than any litigation, proceeding or dispute
referred to in [Section]15 hereof) but only if such Bank or the Agent is the
prevailing party in such litigation, proceeding or dispute, and (f) all
reasonable fees, expenses and disbursements of the Agent incurred in connection
with UCC searches. The Borrower shall not pay the fees, expenses and
disbursements incurred by any Bank other than the Agent in connection with the
review and preparation of this Credit Agreement, the other Loan Documents and
the other agreements and instruments mentioned herein. The covenants of this
[Section]14 shall survive payment or satisfaction of all other Obligations.
[Section]15. INDEMNIFICATION. The Borrower agrees to indemnify and hold
harmless the Agent and the Banks from and against any and all claims, actions
and suits whether groundless or otherwise, and from and against any and all
liabilities, losses, damages and expenses of every nature and character arising
out of this Credit Agreement or any of the other Loan Documents or the
transactions contemplated hereby including, without limitation, (a) any actual
or proposed use by the Borrower or any of its Subsidiaries of the proceeds of
any of the Loans, (b) the Borrower or any of its Subsidiaries entering into or
performing this Credit Agreement or any of the other Loan Documents or (c) with
respect to the Borrower and its Subsidiaries and their respective properties and
assets, the violation of any Environmental Law, the presence, disposal, escape,
seepage, leakage, spillage, discharge, emission, release or threatened release
of any Hazardous Substances or any action, suit, proceeding or investigation
brought or threatened with respect to any Hazardous Substances (including, but
not limited to, claims with respect to wrongful death, personal injury or damage
to property), in each case including, without limitation, the reasonable fees
and disbursements of counsel incurred in connection with any such investigation,
litigation or other proceeding. In litigation, or the preparation therefor, the
Banks and the Agent shall be entitled to select their own counsel and, in
addition to the foregoing indemnity, the Borrower agrees to pay promptly the
reasonable fees and expenses of such counsel. If, and to the
<PAGE> 75
extent that the obligations of the Borrower under this [Section]15 are
unenforceable for any reason, the Borrower hereby agrees to make the maximum
contribution to the payment in satisfaction of such obligations which is
permissible under applicable law. The covenants contained in this [Section]15
shall survive payment or satisfaction in full of all other Obligations.
[Section]16. SURVIVAL OF COVENANTS, ETC. All covenants, agreements,
representations and warranties made herein, in the Notes, in any of the other
Loan Documents or in any documents or other papers delivered by or on behalf of
the Borrower or any of its Subsidiaries pursuant hereto shall be deemed to have
been relied upon by the Banks and the Agent, notwithstanding any investigation
heretofore or hereafter made by any of them, and shall survive the making by the
Banks of any of the Loans, as herein contemplated, and shall continue in full
force and effect so long as any amount due under this Credit Agreement or the
Notes or any of the other Loan Documents remains outstanding or any Bank has any
obligation to make any Loans, and for such further time as may be otherwise
expressly specified in this Credit Agreement. All statements contained in any
certificate or other paper delivered to any Bank or the Agent at any time by or
on behalf of the Borrower or any of its Subsidiaries pursuant hereto or in
connection with the transactions contemplated hereby shall constitute
representations and warranties by the Borrower or such Subsidiary hereunder.
[Section]17. ASSIGNMENT AND PARTICIPATION.
---------- --- -------------
[Section]17.1. CONDITIONS TO ASSIGNMENT BY BANKS. Except as provided
herein, each Bank may assign to one or more Eligible Assignees all or a portion
of its interests, rights and obligations under this Credit Agreement (including
all or a portion of its Commitment Percentage and Commitment and the same
portion of the Loans at the time owing to it and the Notes held by it); PROVIDED
that (a) each of the Agent and the Borrower shall have given its prior written
consent to such assignment, which consent, in each case, will not be
unreasonably withheld, (b) each such assignment shall be of a constant, and not
a varying, percentage of all the assigning Bank's rights and obligations under
this Credit Agreement, (c) each assignment shall be in an amount that is a
minimum of $10,000,000 or integral multiples of $1,000,000 in excess thereof,
and (d) the parties to such assignment shall execute and deliver to the Agent,
for recording in the Register (as hereinafter defined), an Assignment and
Acceptance, substantially in the form of EXHIBIT H attached hereto (an
"Assignment and Acceptance"), together with any Notes subject to such
assignment. Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in each Assignment and Acceptance, which
effective date shall be at least five (5) Business Days after the execution
thereof, (i) the assignee thereunder shall be a party hereto and, to the extent
provided in
<PAGE> 76
such Assignment and Acceptance, have the rights and obligations of a Bank
hereunder, and (ii) the assigning Bank shall, to the extent provided in such
assignment and upon payment to the Agent of the registration fee referred to in
[Section]17.3 hereof, be released from its obligations under this Credit
Agreement.
[Section]17.2. CERTAIN REPRESENTATIONS AND WARRANTIES; LIMITATIONS;
COVENANTS. By executing and delivering an Assignment and Acceptance, the parties
to the assignment thereunder confirm to and agree with each other and the other
parties hereto as follows: (a) other than the representation and warranty that
it is the legal and beneficial owner of the interest being assigned thereby free
and clear of any adverse claim, the assigning Bank makes no representation or
warranty, express or implied, and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Credit Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Credit Agreement, the other Loan
Documents or any other instrument or document furnished pursuant hereto or the
attachment, perfection or priority of any security interest or mortgage; (b) the
assigning Bank makes no representation or warranty and assumes no responsibility
with respect to the financial condition of the Borrower and its Subsidiaries or
any other Person primarily or secondarily liable in respect of any of the
Obligations, or the performance or observance by the Borrower and its
Subsidiaries or any other Person primarily or secondarily liable in respect of
any of the Obligations of any of their obligations under this Credit Agreement
or any of the other Loan Documents or any other instrument or document furnished
pursuant hereto or thereto; (c) such assignee confirms that it has received a
copy of this Credit Agreement, together with copies of the most recent financial
statements referred to in [Sections]5.4 and 6.4 hereof 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; (d) such assignee
will, independently and without reliance upon the assigning Bank, the Agent or
any other Bank and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Credit Agreement; (e) such assignee represents and
warrants that it is an Eligible Assignee; (f) such assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Credit Agreement and the other Loan Documents as are
delegated to the Agent by the terms hereof or thereof, together with such
powers as are reasonably incidental thereto; (g) such assignee agrees that it
will perform in accordance with their terms all of the obligations that by the
terms of this Credit Agreement are required to be performed by it as a Bank;
and (h) such assignee represents and warrants that it is legally authorized to
enter into such Assignment and Acceptance.
<PAGE> 77
[Section]17.3. REGISTER. The Agent shall maintain a copy of each Assignment
and Acceptance delivered to it and a register or similar list (the "Register")
for the recordation of the names and addresses of the Banks and the Commitment
Percentage of, and principal amount of the Loans owing to the Banks from time to
time. The entries in the Register shall be conclusive, in the absence of
manifest error, and the Borrower, the Agent and the Banks may treat each Person
whose name is recorded in the Register as a Bank hereunder for all purposes of
this Credit Agreement. The Register shall be available for inspection by the
Borrower and the Banks at any reasonable time and from time to time upon
reasonable prior notice. Upon each such recordation, other than with respect to
assignments by any Bank to (a) any Affiliate of such Bank, (b) any of the twelve
Federal Reserve Banks as provided in [Section]17.8 hereof or (c) any other Bank
hereunder, the assigning Bank agrees to pay to the Agent a registration fee in
the sum of $2500.
[Section]17.4. NEW NOTES. Upon its receipt of an Assignment and Acceptance
executed by the parties to such assignment, together with each Note subject to
such assignment, the Agent shall (a) record the information contained therein in
the Register, and (b) give prompt notice thereof to the Borrower and the Banks
(other than the assigning Bank). Within five (5) Business Days after receipt of
such notice, the Borrower, at its own expense, shall execute and deliver to the
Agent, in exchange for each surrendered Note, a new Note to the order of such
Eligible Assignee in an amount equal to the amount assumed by such Eligible
Assignee pursuant to such Assignment and Acceptance and, if the assigning Bank
has retained some portion of its obligations hereunder, a new Note to the order
of the assigning Bank in an amount equal to the amount retained by it hereunder.
Such new Notes shall provide that they are replacements for the surrendered
Notes, shall be in an aggregate principal amount equal to the aggregate
principal amount of the surrendered Notes, shall be dated the effective date of
such Assignment and Acceptance and shall otherwise be substantially the form of
the assigned Notes. The surrendered Notes shall be canceled and returned to the
Borrower.
[Section]17.5. PARTICIPATIONS. Each Bank may sell participations to one or
more banks or other entities in all or a portion of such Bank's rights and
obligations under this Credit Agreement and the other Loan Documents; PROVIDED
that (a) each such participation shall be in an amount of not less than
$5,000,000, (b) any such sale or participation shall not affect the rights and
duties of the selling Bank hereunder to the Borrower and (c) the only rights
granted to the participant pursuant to such participation arrangements with
respect to waivers, amendments or modifications of the Loan Documents shall be
the rights to approve waivers, amendments or modifications that would (i) reduce
the principal of or the interest rate on any Loans, (ii) extend the term or
increase the amount of the Commitment of such Bank as it relates to such
<PAGE> 78
participant, (iii) reduce the amount of any Commitment Fees to which such
participant is entitled, (iv) extend any regularly scheduled payment date for
principal or interest or (v) release any collateral for the Obligations.
[Section]17.6. DISCLOSURE. The Borrower agrees that in addition to
disclosures made in accordance with standard and customary banking practices any
Bank may disclose information obtained by such Bank pursuant to this Credit
Agreement to assignees or participants and with the written consent of the
Borrower, such consent not to be unreasonably withheld, potential assignees or
participants hereunder; PROVIDED that such assignees or participants or
potential assignees or participants shall agree (a) to treat in confidence such
information unless such information otherwise becomes public knowledge, (b) not
to disclose such information to a third party, except as required by law or
legal process, (c) not to make use of such information for purposes of
transactions unrelated to such contemplated assignment or participation and (d)
to enter into a confidentiality agreement with the Borrower evidencing the
foregoing.
[Section]17.7. ASSIGNEE OR PARTICIPANT AFFILIATED WITH THE BORROWER. If any
assignee Bank is an Affiliate of the Borrower, then any such assignee Bank shall
have no right to vote as a Bank hereunder or under any of the other Loan
Documents for purposes of granting consents or waivers or for purposes of
agreeing to amendments or other modifications to any of the Loan Documents or
for purposes of making requests to the Agent pursuant to [Sections]11.1 or 11.2
hereof, and the determination of the Majority Banks shall for all purposes of
this Credit Agreement and the other Loan Documents be made without regard to
such assignee Bank's interest in any of the Loans. If any Bank sells a
participating interest in any of the Loans to a participant, and such
participant is the Borrower or an Affiliate of the Borrower, then such
transferor Bank shall promptly notify the Agent of the sale of such
participation. A transferor Bank shall have no right to vote as a Bank
hereunder or under any of the other Loan Documents for purposes of granting
consents or waivers or for purposes of agreeing to amendments or modifications
to any of the Loan Documents or for purposes of making requests to the Agent
pursuant to [Sections]11.1 or 11.2 hereof to the extent that such
participation is beneficially owned by the Borrower or any Affiliate of the
Borrower, and the determination of the Majority Banks shall for all purposes of
this Credit Agreement and the other Loan Documents be made without regard to
the interest of such transferor Bank in the Loans to the extent of such
participation.
[Section]17.8. MISCELLANEOUS ASSIGNMENT PROVISIONS. Any assigning Bank
shall retain its rights to be indemnified pursuant to [Section]15 hereof with
respect to any claims or actions arising prior to the date of such assignment.
If any assignee Bank is not incorporated under the laws of the United States of
America or any state thereof, it shall, prior to the date on which any interest
or
<PAGE> 79
fees are payable hereunder or under any of the other Loan Documents for its
account, deliver to the Borrower and the Agent certification as to its exemption
from deduction or withholding of any United States federal income taxes.
Anything contained in this [Section]17 to the contrary notwithstanding, any Bank
may at any time pledge all or any portion of its interest and rights under this
Credit Agreement (including all or any portion of its Notes) to any of the
twelve Federal Reserve Banks organized under [Section]4 of the Federal Reserve
Act, 12 U.S.C. [Section]341 and may at any time assign all or any portion of its
interest and rights under this Credit Agreement (including all or any portion of
its Notes) to any Affiliate of such Bank, in each case without payment to the
Agent of the registration fee as provided in [Section]17.3 hereof. No such
pledge or assignment or the enforcement thereof shall release the Pledgor or
Assignor Bank from its obligations hereunder or under any of the other Loan
Documents.
[Section]17.9. ASSIGNMENT BY BORROWER. The Borrower shall not assign or
transfer any of its rights or obligations under any of the Loan Documents
without the prior written consent of each of the Banks.
[Section]18. NOTICES, ETC. Except as otherwise expressly provided in this
Credit Agreement, all notices and other communications made or required by this
Credit Agreement or the Notes shall be in writing and shall be delivered in
hand, mailed by United States registered or certified first class mail, postage
prepaid, sent by overnight courier, or sent by telegraph, telecopy, facsimile or
telex and confirmed by delivery via courier or postal service, addressed as
follows:
(a) if to the Borrower, at 100 Pennsylvania Ave., Framingham,
Massachusetts 01701, Attention: Mr. L. Jamison Hudson, or at such other address
for notice as the Borrower shall last have furnished in writing to the Person
giving the notice, with a copy to Peter Schwarzenbach, Vice President and
General Counsel;
(b) if to the Agent, at 100 Federal Street, Boston, Massachusetts
02110, USA, Attention: Mitchell B. Feldman, Managing Director, or such other
address for notice as the Agent shall last have furnished in writing to the
Person giving the notice; and
(c) if to any Bank, at such Bank's address set forth on SCHEDULE 1
hereto, or such other address for notice as such Bank shall have last furnished
in writing to the Person giving the notice.
Any such notice or demand shall be deemed to have been duly given or made
and to have become effective (i) if delivered by hand, overnight courier or
facsimile to a responsible officer of the party to which it is directed, at the
time
<PAGE> 80
of the receipt thereof by such officer and (ii) if sent by registered or
certified first-class mail return receipt requested, postage prepaid, on the
third Business Day following the mailing thereof.
[Section]19. GOVERNING LAW. THIS CREDIT AGREEMENT AND, EXCEPT AS OTHERWISE
SPECIFICALLY PROVIDED THEREIN, EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS
UNDER THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES
BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID COMMONWEALTH
(EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE BORROWER
AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS CREDIT AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF
MASSACHUSETTS OR ANY FEDERAL COURT SITTING IN SUCH STATE AND CONSENTS TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT
BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN [Section]18
HEREOF. THE BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS
BROUGHT IN AN INCONVENIENT COURT.
[Section]20. HEADINGS. The captions in this Credit Agreement are for
convenience of reference only and shalL not define or limit the provisions
hereof.
[Section]21. COUNTERPARTS. This Credit Agreement and any amendment hereof
may be executed in severaL counterparts and by each party on a separate
counterpart, each of which when executed and delivered shall be an original, and
all of which together shall constitute one instrument. In proving this Credit
Agreement it shall not be necessary to produce or account for more than one such
counterpart signed by the party against whom enforcement is sought.
[Section]22. ENTIRE AGREEMENT, ETC. The Loan Documents and any other
documents executed in connection herewith or therewith express the entire
understanding of the parties with respect to the transactions contemplated
hereby. Neither this Credit Agreement nor any term hereof may be changed,
waived, discharged or terminated, except as provided in [Section]24 hereof.
[Section]23. WAIVER OF JURY TRIAL. The Borrower hereby waives its right to
a jury trial with respect to anY action or claim arising out of any dispute in
connection with this Credit Agreement, the Notes or any of the other Loan
Documents, any rights or obligations hereunder or thereunder or the performance
of which rights and obligations. Except as prohibited by law, the
<PAGE> 81
Borrower hereby waives any right it may have to claim or recover in any
litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages. The Borrower (a) certifies that no representative, agent or
attorney of any Bank or the Agent has represented, expressly or otherwise, that
such Bank or the Agent would not, in the event of litigation, seek to enforce
the foregoing waivers and (b) acknowledges that the Agent and the Banks have
been induced to enter into this Credit Agreement, the other Loan Documents to
which it is a party by, among other things, the waivers and certifications
contained herein.
[Section]24. CONSENTS, AMENDMENTS, WAIVERS, ETC. Any consent or approval
required or permitted by this CrediT Agreement to be given by the Banks may be
given, and any term of this Credit Agreement, the other Loan Documents or any
other instrument related hereto or mentioned herein may be amended, and the
performance or observance by the Borrower or any of its Subsidiaries of any
terms of this Credit Agreement, the other Loan Documents or such other
instrument or the continuance of any Default or Event of Default may be waived
(either generally or in a particular instance and either retroactively or
prospectively) with, but only with, the written consent of the Borrower and the
written consent of the Majority Banks. Notwithstanding the foregoing, the rate
of interest on the Notes, the term of the Notes, the regularly scheduled payment
date for principal or interest on the Notes, the Commitment Amounts of the
Banks, and the amount of any Commitment Fees hereunder may not be changed
without the written consent of the Borrower and the written consent of each Bank
affected thereby; this [Section]24 may not bE changed without the written
consent of the Borrower and the written consent of all of the Banks; the
definition of Majority Banks may not be amended without the written consent of
all of the Banks; the Agent may not release any guaranty for the Obligations
(except as provided in [Section]4.14 hereof) without the written consent of all
thE Banks; and the amount of the Agent's Fee payable for the Agent's account and
[Section]13 hereof may not be amendeD without the written consent of the Agent.
No waiver shall extend to or affect any obligation not expressly waived or
impair any right consequent thereon. No course of dealing or delay or omission
on the part of the Agent or any Bank in exercising any right shall operate as a
waiver thereof or otherwise be prejudicial thereto. No notice to or demand upon
the Borrower shall entitle the Borrower to other or further notice or demand in
similar or other circumstances.
<PAGE> 82
[Section]25. SEVERABILITY. The provisions of this Credit Agreement are
severable and if any one clause or provision hereof shall be held invalid or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect only such clause or provision, or part thereof, in
such jurisdiction, and shall not in any manner affect such clause or provision
in any other jurisdiction, or any other clause or provision of this Credit
Agreement in any jurisdiction.
<PAGE> 83
IN WITNESS WHEREOF, the undersigned have duly executed this Credit
Agreement as a sealed instrument as of the date first set forth above.
STAPLES, INC.
By:
------------------------------------
Title:
THE FIRST NATIONAL BANK OF
BOSTON, individually and as
Agent
By:
------------------------------------
Title:
CORESTATES BANK, N. A.
By:
------------------------------------
Title:
THE BANK OF NOVA SCOTIA
By:
------------------------------------
Title:
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By:
------------------------------------
Title:
<PAGE> 84
FLEET NATIONAL BANK
By:
------------------------------------
Title:
MARINE MIDLAND BANK
By:
------------------------------------
Title:
THE CHASE MANHATTAN BANK, N.A.
By:
------------------------------------
Title:
THE FIRST NATIONAL BANK OF CHICAGO
By:
------------------------------------
Title:
SWISS BANK CORPORATION
By:
------------------------------------
Title:
By:
------------------------------------
Title:
<PAGE> 85
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By:
------------------------------------
Title:
COMMERZBANK
By:
------------------------------------
Title:
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF STAPLES, INC. FOR THE SIX MONTHS ENDED AUGUST 3, 1996
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-03-1996
<PERIOD-END> AUG-03-1996
<CASH> 45,190
<SECURITIES> 2,540
<RECEIVABLES> 192,591
<ALLOWANCES> 1,489
<INVENTORY> 764,364
<CURRENT-ASSETS> 1,069,097
<PP&E> 507,651
<DEPRECIATION> 151,846
<TOTAL-ASSETS> 1,625,336
<CURRENT-LIABILITIES> 528,480
<BONDS> 413,521
<COMMON> 96
0
0
<OTHER-SE> 651,683
<TOTAL-LIABILITY-AND-EQUITY> 1,625,336
<SALES> 1,724,856
<TOTAL-REVENUES> 1,724,856
<CGS> 1,325,212
<TOTAL-COSTS> 1,597,310
<OTHER-EXPENSES> 73,448
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,193
<INCOME-PRETAX> 44,905
<INCOME-TAX> 17,288
<INCOME-CONTINUING> 27,617
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 27,617
<EPS-PRIMARY> .17
<EPS-DILUTED> .17
</TABLE>
