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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: November 1, 1997
------------------------------------------------
Commission File Number: 0-17586
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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 166,747,813 shares of Common Stock, par value $.0006,
outstanding as of November 29, 1997.
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FORM 10-Q
STAPLES, INC.
NOVEMBER 1, 1997
TABLE OF CONTENTS
-----------------
PAGE
Consolidated Balance Sheets .......................................... 3
Consolidated Statements of Income .................................... 4
Consolidated Statements of Cash Flows ................................ 5
Notes to Consolidated Financial Statements ........................... 6-7
Management's Discussion and Analysis of Financial
Condition and Results of Operations ........................... 8-12
Part II .............................................................. 13
Signature ............................................................ 14
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STAPLES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
November 1,
1997 February 1,
(Unaudited) 1997
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ......................... $ 227,603 $ 98,143
Short-term investments ............................ 761 7,986
Merchandise inventories ........................... 1,050,205 813,661
Receivables, net .................................. 216,139 167,072
Prepaid expenses and other current assets ......... 63,087 64,486
----------- -----------
TOTAL CURRENT ASSETS ......................... 1,557,795 1,151,348
PROPERTY AND EQUIPMENT:
Land and buildings ................................ 113,163 73,070
Leasehold improvements ............................ 276,052 231,604
Equipment ......................................... 245,079 197,258
Furniture and fixtures ............................ 158,222 111,967
----------- -----------
TOTAL PROPERTY AND EQUIPMENT ................. 792,516 613,899
Less accumulated depreciation and amortization .... 241,109 171,042
----------- -----------
NET PROPERTY AND EQUIPMENT ................... 551,407 442,857
OTHER ASSETS:
Lease acquisition costs, net of amortization ...... 44,212 42,552
Investment in affiliates .......................... 0 40,542
Goodwill, net of amortization ..................... 139,860 81,306
Other ............................................. 39,600 29,147
----------- -----------
TOTAL OTHER ASSETS ........................... 223,672 193,547
----------- -----------
$ 2,332,874 $ 1,787,752
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable .................................. $ 626,818 $ 421,051
Accrued expenses and other current liabilities .... 253,317 174,284
Debt maturing within one year ..................... 43,096 7,220
----------- -----------
TOTAL CURRENT LIABILITIES .................... 923,231 602,555
LONG-TERM DEBT .......................................... 210,174 91,342
OTHER LONG-TERM OBLIGATIONS ............................. 37,139 32,169
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
166,553,799 shares at November 2, 1997 and
162,277,375 shares at February 1, 1997 ............ 102 98
Additional paid-in capital ........................ 547,166 508,868
Cumulative foreign currency translation adjustments (4,611) (128)
Unrealized gain/(loss) on short-term investments .. 9 11
Retained earnings ................................. 319,852 253,183
Less: 39,433 shares of treasury stock, at cost .... (346) (346)
Minority interest ................................. 158 0
----------- -----------
TOTAL STOCKHOLDERS' EQUITY ............... 862,330 761,686
----------- -----------
$ 2,332,874 $ 1,787,752
=========== ===========
</TABLE>
See notes to consolidated financial statements.
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STAPLES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
13 Weeks Ended 39 Weeks Ended
------------------------------ ------------------------------
November 1, November 2, November 1, November 2,
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales .................................... $ 1,414,224 $ 1,078,820 $ 3,631,085 $ 2,803,676
Cost of goods sold and occupancy costs ... 1,070,402 821,378 2,762,996 2,146,590
----------- ----------- ----------- -----------
GROSS PROFIT ......................... 343,822 257,442 868,089 657,086
Operating expenses:
Operating and selling .................. 214,464 158,663 567,622 430,761
Pre-opening ............................ 2,773 2,700 7,951 7,790
General and administrative ............. 48,468 34,693 129,076 94,173
Amortization of goodwill ............... 1,008 577 2,629 1,713
----------- ----------- ----------- -----------
TOTAL OPERATING EXPENSES ............. 266,713 196,633 707,278 534,437
----------- ----------- ----------- -----------
OPERATING INCOME ..................... 77,109 60,809 160,811 122,649
Other income (expense):
Interest and other expense, net ........ (6,466) (5,384) (16,902) (14,577)
Merger-related costs ................... 0 0 (29,665) 0
----------- ----------- ----------- -----------
TOTAL OTHER INCOME (EXPENSE) ......... (6,466) (5,384) (46,567) (14,577)
INCOME BEFORE EQUITY IN LOSS OF
AFFILIATES AND INCOME TAXES ........ 70,643 55,425 114,244 108,072
Equity in gain/(loss) of affiliates ..... 0 (3,520) (5,953) (11,262)
----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAXES ............ 70,643 51,905 108,291 96,810
Income tax expense ....................... 27,198 19,984 41,692 37,272
----------- ----------- ----------- -----------
NET INCOME BEFORE MINORITY INTEREST 43,445 31,921 66,599 59,538
Minority interest ...................... 15 0 70 0
----------- ----------- ----------- -----------
NET INCOME ............................ $ 43,460 $ 31,921 $ 66,669 $ 59,538
=========== =========== =========== ===========
Net income per common share .............. $ 0.26 $ 0.19 $ 0.39 $ 0.36
=========== =========== =========== ===========
Number of shares used in computing net
income per common share ............. 170,412,000 167,374,906 169,089,000 166,406,912
=========== =========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
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STAPLES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
(Unaudited)
39 Weeks Ended
----------------------------
November 1, November 2,
1997 1996
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income ................................................. $ 66,669 $ 59,538
Adjustments to reconcile net income to net cash provided by/
(used in) operating activities:
Minority interest ....................................... (66) 0
Depreciation and amortization ........................... 63,526 51,288
Equity in loss of affiliates ............................ 5,953 11,262
Net increase in deferred tax assets ..................... (8,025) (21,977)
(Increase)/decrease in assets:
Merchandise inventories .............................. (179,470) (170,394)
Receivables .......................................... (39,454) (96,662)
Prepaid expenses and other assets .................... (694) (11,986)
Increase in accounts payable, accrued
expenses and other current liabilities ............... 259,293 191,618
Increase in other long-term obligations ................. 5,294 4,091
--------- ---------
106,357 (42,760)
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES .................. 173,026 16,778
INVESTING ACTIVITIES:
Acquisition of property and equipment ...................... (139,826) (152,497)
Proceeds from sales and maturities of short-term
investments .............................................. 12,570 10,144
Purchase of short-term investments.......................... (5,345) (4,607)
Acquisition of businesses, net of cash acquired............. (77,808) 0
Investment in affiliates ................................... (1,140) (10,368)
Acquisition of lease rights ................................ (2,533) (3,734)
Other ...................................................... 5,682 4,321
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES ...................... (208,400) (156,741)
FINANCING ACTIVITIES:
Proceeds from sale of capital stock ........................ 28,242 14,227
Proceeds from borrowings ................................... 798,394 316,476
Payments on borrowings ..................................... (659,719) (221,395)
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES .................. 166,917 109,308
Effect of exchange rate changes on cash .................... (2,083) 795
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS ........... 129,460 (29,860)
Cash and cash equivalents at beginning of period ............... 98,143 98,130
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ..................... $ 227,603 $ 68,270
========= =========
</TABLE>
See notes to consolidated financial statements.
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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
25, 1997 for the year ended February 1, 1997.
NOTE 2 - COMPUTATION OF EARNINGS PER SHARE
Average common and common equivalent shares used in computing earnings per share
include approximately 5,481,000 and 6,626,000 shares for the quarters ended
November 1, 1997 and November 2, 1996, respectively, as a result of applying the
treasury stock method to outstanding stock options.
In February 1997, the Financial Accounting Standards Board issued Statement No.
128, "Earnings per Share" ("Statement 128"), which must be adopted in the fourth
quarter ending January 31, 1998. At that time, the Company will change the
method currently used to compute earnings per share and restate all prior
periods. Under the new requirements for calculating primary earnings per share,
the dilutive effect of stock options will be excluded. The impact of Statement
128 on the calculation of primary and fully diluted earnings per share for the
quarters ending November 1, 1997 and November 2, 1996 is not material.
NOTE 3 - ACQUISITIONS
On May 6, 1997 and May 7, 1997, the Company acquired from Kingfisher PLC its
interests in Staples UK and MAXI-Papier-Markt-GmbH ("Maxi"). As a result of the
acquisitions, the Company's ownership interest of Staples UK increased to 100%
and its ownership of Maxi increased to approximately 93%. Staples UK and Maxi
operate a chain of office products superstores in the UK and Germany,
respectively. The aggregate cash purchase price of approximately $57 million was
generated through additional borrowings under the Company's existing revolving
credit. The transactions were accounted for in accordance with the purchase
method of accounting and accordingly, the results of operations of Staples UK
and Maxi have been included in the Company's consolidated financial statements
from May 6, 1997
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and May 7, 1997, respectively. Unaudited pro forma net income and earnings per
share, assuming the acquisitions had been consummated as of the beginning of
fiscal year 1996, were $63,008,000 and $0.37, respectively, for the nine months
ended November 1, 1997, and $52,612,000 and $0.32, respectively, for the nine
months ended November 2, 1996. The excess of the purchase price over the fair
market value of the acquired assets has been recorded as goodwill and is being
amortized on a straight line basis over 40 years.
NOTE 4 - RECENT DEVELOPMENTS
On July 2, 1997, after an unfavorable ruling by the United States District
Court, Staples announced that it had terminated its Agreement and Plan of Merger
with Office Depot, Inc. ("Office Depot").
The Company charged to expense merger costs of $29,665,000 for the nine months
ended November 1, 1997. These costs relate primarily to legal, accounting,
transaction related costs, such as filing fees, and consulting fees incurred in
connection with the proposed merger with Office Depot. Excluding the merger
costs, earnings per share would have been $0.50 for the nine months ended
November 1, 1997.
NOTE 5 - SUBSEQUENT EVENT
On November 13, 1997, the Company entered into a new $350,000,000 five-year
revolving credit agreement with a syndicate of banks. Borrowings made pursuant
to this facility will bear interest at either the lead bank's prime rate,
one-half of one percent (1/2%) per annum above the Federal Funds Effective Rate,
or the LIBOR rate plus a percentage spread based upon certain defined ratios and
the Company's debt rating.
NOTE 6 - NEW ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued Statement No. 130,
"Reporting Comprehensive Income" ("Statement 130") and Statement No. 131,
"Disclosure about Segments of an Enterprise and Related Information" ("Statement
131") effective fiscal year 1998. Statement 130 requires comprehensive income
items recorded in stockholders' equity to be shown in a separate financial
statement. Statement 131 supersedes FASB Statement No. 14, "Financial Reporting
for Segments of a Business Enterprise". Statement 131 establishes standards for
the way that public companies report selected information about operating
segments in annual financial statements and requires that those companies report
selected information about segments in interim financial reports issued to
shareholders. The Company has not determined the effects, if any, that Statement
130 and Statement 131 will have on its consolidated financial statements.
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STAPLES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
SALES. Sales increased 31% to $1,414,224,000 in the quarter ended November 1,
1997 from $1,078,820,000 in the quarter ended November 2, 1996 and increased 30%
to $3,631,085,000 for the nine months ended November 1, 1997 compared to
$2,803,676,000 for the nine months ended November 2, 1996. This growth is
attributable to an increase in the number of open stores, increased sales in
existing stores and in the delivery and contract stationer segments, and the
consolidation of the sales of Staples UK and Maxi. Comparable store and delivery
hub sales for the quarter ended November 1, 1997 increased 10% over the quarter
ended November 2, 1996, and increased 10% for the nine months ended November 1,
1997 versus the nine months ended November 2, 1996. Comparable sales in the
contract stationer segment increased 13% for the quarter ended November 1, 1997
versus the quarter ended November 2, 1996 and increased 13% for the nine months
ended November 1, 1997 versus the nine months ended November 2, 1996. The
Company had 720 stores open as of November 1, 1997 compared to 550 stores as of
November 2, 1996 and 557 stores open as of February 1, 1997. The November 1,
1997 total includes 38 stores opened during the three months ended November 1,
1997 and 108 stores opened and one store closed during the nine months ended
November 1, 1997; and 56 stores that were acquired in the UK and Germany as a
result of the acquisitions of Staples UK and Maxi, in the nine months ended
November 1, 1997.
GROSS PROFIT. Gross profit as a percentage of sales was 24.3% and 23.9% for the
three and nine months ended November 1, 1997, respectively, as compared to 23.9%
and 23.4%, respectively, for the same periods in the prior year. The increase in
gross profit rate for the three and nine months ended November 1, 1997 was
primarily due to improved margins in the retail and delivery business segments
due to lower product costs from vendors as a result of increased purchase
discounts and changes in product mix as well as the leveraging of distribution
center and delivery costs over a larger sales base. This was partially offset by
decreases in the margin rates in the retail store segment, due to price
reductions as well as an increase in the sales of computer hardware (which
generate a lower margin rate than other categories) from 7.9% and 7.5% of sales
for the three and nine months ended November 2, 1996, to 9.9% and 7.7% of sales
for the three and nine months ended November 1, 1997, respectively.
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 nine months ended November 1, 1997 to 15.2% and 15.6%
respectively, as compared to 14.7% and 15.4% for the same periods in the prior
year. The increase is primarily due to the acquisitions of Staples UK and Maxi,
which have higher costs as a percentage of sales, as well as planned increases
in advertising and circulars. This increase was partially offset by increased
leveraging of fixed store payroll expenses and other fixed store operating costs
as store sales have increased.
Staples UK and Maxi store expenses are higher as a result of their earlier stage
of development. While most store expenses vary proportionately with sales, there
is a fixed cost component. Because new stores
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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 their start-up period. 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.
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 $73,000 and $74,000, respectively, per store for the three and
nine months ended November 1, 1997, respectively, as compared to $69,000 and
$72,000 per store for the same periods in the prior year.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses for the
three and nine months ended November 1, 1997 increased as a percentage of sales
to 3.4% and 3.6%, respectively, as compared to 3.2% and 3.4%, respectively, for
the same periods in the prior year. This increase was primarily due to the
acquisitions of Staples UK and Maxi, which have higher costs as a percentage of
sales; as their store base matures overhead expenses should decrease as a
percentage of sales. This increase was partially offset by the Company's ability
to increase sales without proportionately increasing overhead expenses in its
core retail business. In addition, the Company has made investments in the
Company's information systems staffing and infrastructure, which the Company
believes will reduce costs as a percentage of sales in future years.
INTEREST AND OTHER EXPENSE, NET. Net interest and other expense for the three
and nine months ended November 1, 1997 was $6,466,000 and $16,902,000 as
compared to $5,384,000 and $14,577,000, respectively, for the same periods in
the prior year. The interest expense relates primarily to increased borrowings
which funded the increase in store inventories related to new store openings,
expanded product assortment, and improvements in in-stock levels; the
acquisition of fixed assets for new stores opened and remodeled; and continued
investments in the information systems and distribution center infrastructure.
MERGER-RELATED COSTS. The Company charged to expense in the nine months ended
November 1, 1997 certain non-recurring costs consisting primarily of legal,
accounting, transaction related costs, such as filing fees, and consulting fees
incurred in connection with the proposed merger with Office Depot, Inc.
EQUITY IN LOSS OF AFFILIATES. The Company's equity in loss of affiliates was
$5,953,000 for the nine months ended November 1, 1997 as compared to $3,520,000
and $11,262,000, respectively, for the three and nine months ended November 2,
1996. The Company recorded no equity in loss of affiliates for the three months
ended November 1, 1997, due to the acquisition of Staples UK and Maxi on May 6,
1997 and May 7, 1997. As a result of the acquisitions, the Company's ownership
interest of Staples UK increased to 100% and its ownership of Maxi increased to
approximately 93%. The transactions were accounted for as purchases and the
consolidated results of these entities are reflected in the Company's financial
statements since the date of acquisitions. Prior to the acquisitions, Staples UK
and Maxi were accounted for under the equity method which resulted in the
Company's share of losses from operations being included in Equity in Loss of
Affiliates. As of November 1, 1997, Staples UK and Maxi operated 40 and 17
stores, respectively.
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LIQUIDITY AND CAPITAL RESOURCES
During the nine months ended November 1, 1997, cash and cash equivalents
increased by $129,460,000. The principal sources of cash consisted of cash
provided by financing activities of $166,917,000, which primarily represents an
increase in the borrowings under the existing revolving credit facility and cash
provided by operations of $173,026,000. The borrowings were primarily for the
acquisitions of Staples UK and Maxi for a total of $57,000,000 on May 6 and 7,
1997, respectively. The increase in accounts payable and accrued expenses
financed the increase in merchandise inventory related to new store openings and
expanded product assortments, while the remaining cash was generated from
operations. This was offset by cash used in investing activities of
$208,400,000, which includes capital expenditures of $139,826,000 primarily
incurred in connection with the opening of 108 new stores and cash used in the
acquisition of Staples UK and Maxi, net of cash acquired, of $77,808,000.
The Company expects to open approximately twenty-two stores in the last quarter
of fiscal 1997. Management estimates that the Company's cash requirements,
including pre-opening expenses, leasehold improvements and fixtures (net of
store inventory financed under vendor trade terms), 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 $30,800,000 for
store openings during this period. In addition, the Company plans to 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. The Company expects to meet
these cash requirements through a combination of available cash, operating cash
flow and borrowings from its existing revolving line of credit.
The Company issued $200,000,000 of senior notes (the "Notes") on August 12, 1997
with an interest rate of 7.125% payable semi-annually on February 15 and August
15 of each year commencing on February 15, 1998. Net proceeds of approximately
$198,000,000 from the sale of the Company's Notes were used for repayment of
indebtedness under the Company's revolving credit agreement and for general
working capital purposes, including the financing of new store openings,
distribution facilities and corporate offices.
Effective November 13, 1997, the Company entered into a new revolving credit
facility, effective through November 2002, with a syndicate of banks which
provides up to $350,000,000 of borrowings. This agreement includes, among other
conditions and covenants, certain restrictive covenants including net worth
maintenance, minimum interest coverage and limitations on indebtedness, sales of
assets, and dividends. As of November 1, 1997, borrowings under the prior
revolving credit facility totaled $10,435,000. Total cash, short-term
investments and available revolving credit amounts totaled $612,422,000 as of
November 1, 1997.
The Company expects that its current cash and cash equivalents and funds
available under its revolving credit will be sufficient to fund its planned
store openings and other recurring operational cash needs for the next twelve to
eighteen months. 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 or equity-related offerings, depending upon market
conditions, or through additional commercial bank debt arrangements.
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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 independent dealers, contract stationers, mail order stationers,
warehouse clubs, mass merchandisers, consumer electronics retailers, computer
superstores and manufacturers, and other discount 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.
An important part of the Company's business plan is an aggressive store growth
strategy. The Company opened 115 stores in the United States and Canada in
fiscal 1996 and 108 stores in the first nine months of fiscal year 1997 and
plans to continue this aggressive store opening schedule in fiscal year 1998.
There can be no assurance that the Company will be able to identify and lease
favorable store sites, hire and train 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 continued addition of new
stores to its 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.
The Company has experienced and may experience in the future fluctuations in its
quarterly operating results. Moreover, there can be no assurance that Staples
will continue to realize the earnings growth experienced over recent years, or
that earnings in any particular quarter will not fall short of either a prior
fiscal quarter or investors' expectations. 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.
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The Company has a presence in international markets through its recently
acquired operations 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 US stores,
in addition to a number of risks inherent in foreign operations, including local
customs and competitive conditions, and foreign currency fluctuations. Staples'
foreign operations are currently unprofitable, and there can be no assurance
that they will become profitable.
The Company currently expects that its current cash and cash equivalents and
funds available under its revolving credit and will be sufficient to fund its
planned store openings and other operating cash needs for the next twelve to
eighteen months. 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 eighteen
months or thereafter, will be available to the Company on satisfactory terms.
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PART II -- OTHER INFORMATION
ITEMS 1-3, 5 - NOT APPLICABLE.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the 1997 Annual Meeting of Stockholders (the "Annual Meeting") held on August
26, 1997, the following matters were acted upon by the stockholders of the
Company:
1. The election of Basil L. Anderson, Robert C. Nakasone and Thomas G.
Stemberg as directors of the Company.
2. The ratification of the selection of Ernst & Young LLP as the Company's
independent auditors for the current fiscal year.
The number of shares of common stock outstanding and entitled to a vote at the
Annual Meeting was 163,396,187. The results of the voting on each of the matters
presented to the stockholders at the Annual Meeting are presented below:
<TABLE>
<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:
Basil L. Anderson 147,269,583 N/A N/A N/A
Robert C. Nakasone 147,252,590 N/A N/A N/A
Thomas G. Stemberg 147,275,680 N/A N/A N/A
2. Ratification of
Independent Auditors 147,098,625 161,339 711,792 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.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K.
A. Exhibits
10.1 Revolving Credit Agreement dated November 13, 1997.
12.1 Computation of Ratio of Earnings to Fixed Charges.
27 Financial Data Schedule.
B. Reports on Form 8-K.
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: December 12, 1997 /s/ John J. Mahoney
-------------------- -------------------
John J. Mahoney
Executive Vice President and
Chief Administrative Officer
Page 14
<PAGE> 1
- -------------------------------------------------------------------------------
REVOLVING CREDIT AGREEMENT
dated as of November 13, 1997
STAPLES, INC.
THE BANKS NAMED HEREIN,
BANKBOSTON, N.A.,
AS ADMINISTRATIVE AGENT
THE CHASE MANHATTAN BANK,
AS SYNDICATION AGENT
FLEET NATIONAL BANK,
AS DOCUMENTATION AGENT
and
THE CO-AGENTS NAMED HEREIN
WITH
BANCBOSTON SECURITIES INC.
HAVING ACTED AS ARRANGER
- -------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
ss.1. DEFINITIONS AND RULES OF INTERPRETATION........................ 1
ss.1.1 Definitions............................................ 1
ss.1.2 Rules of Interpretation................................ 18
ss.2. THE REVOLVING CREDIT FACILITY.................................. 19
ss.2.1 Commitment to Lend Syndicated Loans.................... 19
ss.2.2 Requests for Syndicated Loans.......................... 20
ss.2.3 Competitive Bid Loans.................................. 20
ss.2.3.1 Competitive Bid Borrowings............................. 20
ss.2.3.2 Maximum Competitive Bid Loans; Funding Losses.......... 24
ss.2.3.3 Repayment of Competitive Bid Loans..................... 24
ss.2.4 Funds for Revolving Credit Loans....................... 24
ss.2.4.1 Funding Procedures..................................... 24
ss.2.4.2 Advances by Agent...................................... 25
ss.2.5 The Notes.............................................. 25
ss.2.6 Reduction of Total Commitment.......................... 26
ss.2.7 Mandatory Repayments of Revolving Credit Loans......... 27
ss.2.8 Optional Repayments of Syndicated Loans................ 27
ss.2.9 Interest on Revolving Credit Loans..................... 28
ss.2.10 Conversion Options..................................... 28
ss.2.10.1 Conversion to Different Type of Syndicated Loan........ 28
ss.2.10.2 Continuation of Type of Syndicated Loan................ 29
ss.2.10.3 Eurodollar Rate Loans.................................. 29
ss.2.11 The Swing Line......................................... 29
ss.3. LETTERS OF CREDIT.............................................. 32
ss.3.1 Letters of Credit...................................... 32
ss.3.2 Reimbursement Obligation of the Borrower............... 33
ss.3.3 Letter of Credit Loan Obligations Absolute............. 33
ss.3.4 Obligations of the Banks............................... 34
ss.3.5 Letter of Credit Fee................................... 35
ss.4. CERTAIN GENERAL PROVISIONS; FEES............................... 36
ss.4.1 Agent's Fee............................................ 36
ss.4.2 Facility Fee........................................... 36
ss.4.3 Funds for Payment...................................... 36
ss.4.3.1 Payments to Agent...................................... 36
ss.4.3.2 No Offset, Etc......................................... 36
ss.4.3.3 Withholding............................................ 37
ss.4.4 Computations........................................... 37
ss.4.5 Inability to Determine Eurodollar Rate................. 37
<PAGE> 3
-2-
ss.4.6 Illegality............................................. 38
ss.4.7 Additional Costs, Etc. ................................ 38
ss.4.8 Capital Adequacy....................................... 40
ss.4.9 Certificate............................................ 40
ss.4.10 Indemnity.............................................. 40
ss.4.11 Interest on Overdue Amounts............................ 41
ss.4.12 Replacement of Individual Banks........................ 41
ss.4.13 Guaranties............................................. 42
ss.5. REPRESENTATIONS AND WARRANTIES................................. 42
ss.5.1 Corporate Authority.................................... 42
ss.5.1.1. Incorporation; Good Standing........................... 42
ss.5.1.2 Authorization.......................................... 42
ss.5.1.3 Enforceability......................................... 43
ss.5.2 Governmental Approvals................................. 43
ss.5.3 Title to Properties; Leases............................ 43
ss.5.4 Financial Statements................................... 43
ss.5.5 No Material Changes, Etc. ............................. 44
ss.5.6 Franchises, Patents, Copyrights, Etc................... 44
ss.5.7 Litigation............................................. 44
ss.5.8 Compliance with Other Instruments, Laws, Etc. ......... 45
ss.5.9 Tax Status............................................. 45
ss.5.10 No Event of Default.................................... 45
ss.5.11 Holding Company and Investment Company Acts............ 45
ss.5.12 Employee Benefit Plans................................. 46
ss.5.12.1 In General............................................. 46
ss.5.12.2 Terminability of Welfare Plans......................... 46
ss.5.12.3 Guaranteed Pension Plans............................... 46
ss.5.12.4 Multiemployer Plans.................................... 46
ss.5.13 Regulations U and X; Etc............................... 47
ss.5.14 Environmental Compliance............................... 47
ss.5.15. Subsidiaries, Etc...................................... 48
ss.6. AFFIRMATIVE COVENANTS OF THE BORROWER.......................... 48
ss.6.1 Punctual Payment....................................... 48
ss.6.2 Maintenance of Office.................................. 48
ss.6.3 Records and Accounts................................... 48
ss.6.4 Financial Statements, Certificates and Information..... 49
ss.6.5 Notices................................................ 50
ss.6.6 Corporate Existence; Maintenance of Properties......... 50
ss.6.7 Insurance.............................................. 51
ss.6.8 Taxes.................................................. 51
ss.6.9 Inspection of Properties and Books, Etc................ 51
ss.6.10 Compliance with Laws, Contracts, Licenses and Permits.. 52
ss.6.11 Employee Benefit Plans................................. 52
<PAGE> 4
-3-
ss.6.12 Use of Proceeds........................................ 53
ss.6.13 Licenses and Permits................................... 53
ss.6.14 Further Assurances..................................... 53
ss.7. CERTAIN NEGATIVE COVENANTS OF THE BORROWER..................... 53
ss.7.1 Restrictions on Indebtedness........................... 53
ss.7.2 Restrictions on Liens.................................. 55
ss.7.3 Restrictions on Investments............................ 57
ss.7.4 Distributions.......................................... 60
ss.7.5 Employee Benefit Plans................................. 60
ss.7.6 Merger and Consolidation............................... 60
ss.7.7 Disposition of Assets and Sale - Leaseback
Transactions........................................... 61
ss.7.8 Subordinated Debt...................................... 62
ss.8. FINANCIAL COVENANTS OF THE BORROWER............................ 63
ss.8.1 Fixed Charge Coverage Ratio............................ 63
ss.8.2 Funded Debt to EBITDA Ratio............................ 63
ss.8.3 Minimum Consolidated Tangible Net Worth................ 63
ss.9. CLOSING CONDITIONS............................................. 64
ss.9.1 Loan Documents......................................... 64
ss.9.2 Certified Copies of Charter Documents.................. 64
ss.9.3 Corporate Action....................................... 64
ss.9.4 Incumbency Certificate................................. 64
ss.9.5 Opinion of Counsel..................................... 64
ss.9.6 Payment of Fees........................................ 64
ss.9.7 Termination of Existing Credit Agreement............... 65
ss.9.8 Compliance Certificate................................. 65
ss.9.9 No Material Adverse Change............................. 65
ss.10. CONDITIONS TO ALL BORROWINGS................................... 65
ss.10.1 Representations True; No Event of Default.............. 65
ss.10.2 No Legal Impediment.................................... 65
ss.10.3 Governmental Regulation................................ 65
ss.10.4 Proceedings and Documents.............................. 66
ss.11. EVENTS OF DEFAULT; ACCELERATION; ETC........................... 66
ss.11.1 Events of Default and Acceleration..................... 66
ss.11.2 Termination of Commitments............................. 69
ss.11.3 Remedies............................................... 70
ss.12. SETOFF ...................................................... 70
<PAGE> 5
-4-
ss.13. THE AGENT...................................................... 71
ss.13.1 Authorization.......................................... 71
ss.13.2 Employees and Agents................................... 72
ss.13.3 No Liability........................................... 72
ss.13.4 No Representations..................................... 72
ss.13.5 Payments............................................... 73
ss.13.5.1 Payments to Agent...................................... 73
ss.13.5.2 Distribution by Agent.................................. 73
ss.13.5.3 Delinquent Banks....................................... 73
ss.13.6 Holders of Notes....................................... 74
ss.13.7 Indemnity.............................................. 74
ss.13.8 Agent as Bank; Etc. ................................... 74
ss.13.9 Resignation............................................ 74
ss.13.10 Notification of Defaults and Events of Default......... 75
ss.14. EXPENSES ...................................................... 75
ss.15. INDEMNIFICATION................................................ 76
ss.16. SURVIVAL OF COVENANTS, ETC..................................... 76
ss.17. ASSIGNMENT AND PARTICIPATION................................... 77
ss.17.1 Conditions to Assignment by Banks.................. 77
ss.17.2 Certain Representations and Warranties; Limitations;
Covenants.......................................... 77
ss.17.3 Register............................................... 78
ss.17.4 New Notes.............................................. 79
ss.17.5 Participations......................................... 79
ss.17.6 Disclosure............................................. 79
ss.17.7 Assignee or Participant Affiliated with the Borrower... 80
ss.17.8 Miscellaneous Assignment Provisions.................... 80
ss.17.9 Assignment by Borrower................................. 81
ss.18. NOTICES, ETC................................................... 81
ss.19. GOVERNING LAW.................................................. 81
ss.20. HEADINGS ...................................................... 82
ss.21. COUNTERPARTS................................................... 82
ss.22. ENTIRE AGREEMENT, ETC.......................................... 82
ss.23. WAIVER OF JURY TRIAL........................................... 82
<PAGE> 6
-5-
ss.24. CONSENTS, AMENDMENTS, WAIVERS, ETC............................. 83
ss.25. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION.................. 83
ss.25.1 Sharing of Information with Section 20 Subsidiary...... 83
ss.25.2 Confidentiality ............................. 84
ss.25.3 Prior Notification ............................. 84
ss.25.4. Other ............................. 84
ss.26. SEVERABILITY ............................ 85
<PAGE> 7
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EXHIBITS AND SCHEDULES
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 E-3 Form of Swing Line Note
Exhibit F Form of Guaranty
Exhibit G Form of Compliance Certificate
Exhibit H Form of Assignment and Acceptance
Exhibit I Form of Swing Line Loan Request
Schedule 1 Banks
Schedule 2 Guarantors
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(h) Existing Indebtedness
Schedule 7.2 Existing Liens
Schedule 7.3 Existing Investments
<PAGE> 8
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT dated as of November 13, 1997 is by and
among STAPLES, INC. (the "Borrower"), a Delaware corporation having its
principal place of business at One Research Drive, Westborough, Massachusetts
01581, BANKBOSTON, N.A. and the other lending institutions listed on SCHEDULE 1
attached hereto (the "Banks"), BANKBOSTON, N.A. as administrative agent (the
"Agent"), THE CHASE MANHATTAN BANK, as syndication agent (the "Syndication
Agent"), FLEET NATIONAL BANK, as Documentation Agent (the "Documentation Agent")
and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION ("BofA"), THE BANK OF
NOVA SCOTIA ("BNS"), and MORGAN GUARANTY TRUST COMPANY OF NEW YORK (together
with BofA and BNS, individually a "Co-Agent" and collectively, the "Co-Agents").
ss.1. DEFINITIONS AND RULES OF INTERPRETATION.
ss.1.1. DEFINITIONS. The following terms shall have the meanings set forth
in this ss.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 delivered by the Borrower pursuant to
ss.6.4(c) hereof.
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 ss.4.1 hereof.
AGENT'S FEE LETTER. See ss.4.1 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 LLP or such other counsel as may be
approved by the Agent.
<PAGE> 9
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APPLICABLE MARGIN. The Applicable Margin shall be in effect for each period
commencing on an Adjustment Date through the date immediately preceding the next
Adjustment Date (each a "Rate Adjustment Period") based on a determination of
the Fixed Charge Coverage Ratio and the Senior Debt Rating. The Fixed Charge
Coverage Ratio shall be determined as at the end of the fiscal period for which
financial statements and a Compliance Certificate have most recently been
delivered to the Agent pursuant to ss.6.4 and the Senior Debt Rating shall be
determined as of the last day of the preceding Rate Adjustment Period. The
Applicable Margin shall be the applicable rate PER ANNUM, expressed in Basis
Points, corresponding to the lower of the Levels set forth in the table below
(with Level I being the lowest level and Level VI being the highest level)
corresponding to the Fixed Charge Coverage Ratio or the Senior Debt Rating,
PROVIDED THAT if the Fixed Charge Coverage Ratio and Senior Debt Rating are more
than one Level apart, the Applicable Margin shall be one Level below the higher
of the two applicable Levels. In the event that the Senior Debt Ratings assigned
by Moody's and S&P are not equivalent, the following criteria shall determine
which Level shall be applicable to the Senior Debt Rating: (i) if the Senior
Debt Ratings are one Level apart, the Level applicable to the Senior Debt Rating
shall be the lower of the two Levels and (ii) if the Senior Debt Ratings are
more than one Level apart, the Level applicable to the Senior Debt Rating shall
be one Level below the higher of the two Levels. For purposes of clarity, the
parties hereto acknowledge that the Applicable Margin with respect to (i)
Eurodollar Rate Loans and Letter of Credit Fees shall be the rate per annum set
forth in column D in the table below and (ii) the Facility Fee shall be the rate
per annum set forth in column E in the table below.
<TABLE>
<CAPTION>
========================================================================================================
A B C D E
========================================================================================================
LEVEL FIXED CHARGE SENIOR DEBT EURODOLLAR RATE FACILITY FEE
COVERAGE RATIO RATING LOANS AND
LETTER OF CREDIT
FEES 1/
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
I [GREATER 2.50:1 S&P: A- 15.0 7.0
THAN OR Moody's: A3 or
EQUAL TO] better
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
_______1/ As provided in ss.3.5, Letter of Credit Fees with respect to
documentary Letters of Credit shall be calculated at one-half (1/2) the
Applicable Margin set forth below.
<PAGE> 10
-3-
<TABLE>
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
II [GREATER 2.25:1 S&P: BBB+ 16.0 9.0
THAN OR Moody's: Baa1 or
EQUAL TO] better
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
III [GREATER 2.00:1 S&P: BBB 17.5 10.5
THAN OR Moody's: Baa2 or
EQUAL TO] better
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
IV [GREATER 1.85:1 S&P: BBB- 24.5 13.0
THAN OR Moody's: Baa3 or
EQUAL TO] better
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
V [GREATER 1.75:1 S&P: BB+ 37.5 18.5
THAN OR Moody's: Ba1 or
EQUAL TO] better
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
VI [LESS THAN 1.75:1 lower than 47.5 22.5
OR S&P: BB+
EQUAL TO] Moody's: Ba1 or
unrated
--------------------------------------------------------------------------------------------------------
</TABLE>
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 that corresponding to Level III
in the table above and (b) if the Borrower fails to deliver any Compliance
Certificate pursuant to ss.6.4(c) hereof then, for the period commencing on the
date such Compliance Certificate was due 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
Applicable Margin corresponding to Level VI above.
ASSIGNMENT AND ACCEPTANCE. See ss.17.1 hereof.
BALANCE SHEET DATE. February 1, 1997.
BANKS. As defined in the preamble hereto, which term shall include any
other Person who becomes an assignee of any rights and obligations of a Bank
pursuant to ss.17 hereof and the Letter of Credit Bank.
BASE RATE. The higher of (a) the annual rate of interest announced from
time to time by BKB 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
<PAGE> 11
-4-
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.
BASIS POINT. One one-hundredth of one percent (0.01%).
BKB. BankBoston, N.A., a national banking association.
BORROWER. As defined in the preamble hereto.
BUSINESS DAY. Any day on which banking institutions in Boston,
Massachusetts and New York, New York, 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.
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 ss.9
hereof have been satisfied, which shall be no later than November 13, 1997.
CO-AGENT(S). As defined in the preamble hereto.
CODE. The Internal Revenue Code of 1986.
<PAGE> 12
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COMMITMENT. The agreement of each Bank, subject to the terms and conditions
of this Credit Agreement, to make Syndicated Loans to the Borrower and to
participate in the risk associated with Letters of Credit 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 in accordance with the terms of this Credit Agreement; or if
the Total 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 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 ss.2.3 hereof.
COMPETITIVE BID NOTE. See ss.2.5(b) hereof.
COMPETITIVE BID QUOTE. An offer by a Bank to make a Competitive Bid Loan in
accordance with ss.2.3 hereof.
COMPETITIVE BID QUOTE REQUEST. See ss.2.3.1(b) hereof.
COMPETITIVE BID RATE. See ss.2.3.1(d)(ii)(C) hereof.
COMPLIANCE CERTIFICATE. See ss.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.
<PAGE> 13
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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 EBITDA. For any fiscal period of the Borrower, the
consolidated Earnings Before Interest and Taxes of the Borrower and its
Subsidiaries for such period PLUS, to the extent deducted in the calculation
thereof, and without duplication, the aggregate amount of depreciation and
amortization of the Borrower and its Subsidiaries for such period, determined on
a consolidated basis for such Persons 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.
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,
<PAGE> 14
-7-
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, obligations to
reimburse the issuer in respect of any letters of credit, 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 ss.2.10
hereof.
CREDIT AGREEMENT. This Revolving Credit Agreement, including the Schedules
and Exhibits hereto.
DEFAULT. See ss.11.1 hereof.
DELINQUENT BANK. See ss.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 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.
DOCUMENTATION AGENT. As defined in the preamble hereto.
DOLLARS or $. Dollars in lawful currency of the United States of America.
<PAGE> 15
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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 ss.2.10
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 ss.4.3.3 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
ss.3(3) of ERISA maintained or contributed to by the Borrower or any ERISA
Affiliate, other than a Multiemployer Plan.
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
<PAGE> 16
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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 ss.414 of the Code.
ERISA REPORTABLE EVENT. A reportable event with respect to a Guaranteed
Pension Plan within the meaning of ss.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.
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.
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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 ss.11.1 hereof.
EXISTING CREDIT AGREEMENT. The Amended and Restated Revolving Credit and
Term Loan Agreement, dated as of May 25, 1994, as amended and restated as of
February 14, 1995 and as further amended and restated pursuant to the Second
Amended and Restated Revolving Credit Agreement, amended and restated as of July
10, 1996, among the Borrower, the Agent and the lending institutions party
thereto.
FACILITY FEE. See ss.4.2 hereof.
FIXED CHARGE COVERAGE RATIO. See ss.8.1 hereof.
FIXED RATE LOAN. A Swing Line Loan bearing interest at a fixed rate for a
period of time agreed to by the Borrower and the Agent pursuant to ss.2.11(c).
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES or GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES. (a) When used in ss.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
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with the principles promulgated or adopted by the Financial Accounting Standards
Board and its predecessors, as in effect from time to time, and (ii)
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 ss.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 by each Guarantor in favor of the Agent for the
benefit of the Banks, dated as of the date hereof and each additional guaranty
executed by a Subsidiary acquired or formed after the date hereof.
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 ss.4.13 hereof.
HAZARDOUS SUBSTANCES. Any hazardous waste, as defined by 42 U.S.C.
ss.6903(5), any hazardous substances as defined by 42 U.S.C. ss. 9601(14), any
pollutant or contaminant as defined by 42 U.S.C. ss.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 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
<PAGE> 19
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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.
INELIGIBLE SECURITIES. Securities which may not be underwritten or dealt in
by member banks of the Federal Reserve System under Section 16 of the Bank Act
of 1993 (12 U.S.C. ss.24, Seventh), as amended.
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; (iii) for any
Competitive Bid Loan, from 7 through 360 days; and (iv) for any Fixed Rate Loan,
the period requested by the Borrower and agreed to by the Agent pursuant to
ss.2.11(c), 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;
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(C) if the Borrower shall fail to give notice as provided in ss.2.10
hereof, the Borrower shall be deemed to have requested a conversion of the
affected Eurodollar Rate Loan to a Base Rate Loan and the 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;
(E) any Interest Period relating to any Revolving Credit Loan that
would otherwise extend beyond the Maturity Date shall end on the Maturity
Date; and
(F) if the Borrower shall fail to give notice to the Agent of its
intention to continue a Fixed Rate Loan as provided in ss.2.11(c), the
Borrower shall be deemed to have requested a conversion of the affected
Fixed Rate Loan to a Swing Line Loan which is not a Fixed Rate Loan on the
last day of the then current Interest Period with respect thereto.
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 ss.2.3.1(c) hereof.
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LETTER(S) OF CREDIT. Standby and documentary letters of credit issued by
the Letter of Credit Bank from time to time for the account of the Borrower.
LETTER OF CREDIT BANK. BKB or such other Bank as may be selected by the
Borrower, with the consent of the Agent (such consent not to be unreasonably
withheld), to issue Letters of Credit hereunder.
LETTER OF CREDIT FEE. See ss.3.5 hereof.
LOAN DOCUMENTS. This Credit Agreement, the Notes, the Guaranties, the
Letters of Credit, the Agent's Fee Letter and any other documents delivered
pursuant to this Credit Agreement.
LOAN REQUEST. See ss.2.2 hereof.
LOANS. Revolving Credit Loans made or to be made by the Banks to the
Borrower pursuant to ss.2 hereof, whether Syndicated Loans or Competitive Bid
Loans and Swing Line Loans.
MAJORITY BANKS. As of any date, except as otherwise provided below, the
Banks holding at least fifty-one percent (51%) 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 constitute at least
fifty-one percent (51%) of the Total Commitment.
MARGIN REGULATIONS. See ss.5.13 hereof.
MATURITY DATE. November 13, 2002.
MAXIMUM DRAWING AMOUNT. On the date as of which the maximum drawing amount
is to be determined, the aggregate maximum amount which the beneficiaries may
draw from time to time under Letters of Credit issued for the account of the
Borrower pursuant to ss.3.1 hereof.
MEASUREMENT PERIOD. See ss.8.1 hereof.
MONEY MARKET RATE. With respect to any Swing Line Loan, the lesser of (a)
the Base Rate and (b) such other rate per annum as is quoted by the Agent from
time to time for Swing Line Loans.
MOODY'S. Moody's Investors Service, Inc.
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MULTIEMPLOYER PLAN. Any multiemployer plan within the meaning of ss.3(37)
of ERISA maintained or contributed to by the Borrower or any ERISA Affiliate.
NOTES. The Syndicated Notes, the Competitive Bid Notes and the Swing Line
Note, or, when used in the singular, any of such Notes.
NOTICE OF COMPETITIVE BID BORROWING. See ss.2.3.1(f) hereof.
NROS. See ss.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, Letters of Credit issued, or any of the Notes, or other instruments
at any time evidencing any thereof.
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 ss.4002 of ERISA
and any successor entity or entities having similar responsibilities.
PERMITTED LIENS. Liens, security interests and other encumbrances permitted
under ss.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. BKB.
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REIMBURSEMENT AGREEMENTS. The applications made and agreements entered into
between the Letter of Credit Bank and the Borrower relating to Letters of Credit
in form and substance satisfactory to the Letter of Credit Bank.
REIMBURSEMENT OBLIGATION. The Borrower's obligation to reimburse the Letter
of Credit Bank on account of any drawing under any Letter of Credit.
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 ss.4.12 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.
S&P. Standard & Poor's Ratings Group, a division of McGraw-Hill, Inc.
SECTION 20 SUBSIDIARY. A Subsidiary of the bank holding company controlling
any Bank, which Subsidiary has been granted authority by the Federal Reserve
Board to underwrite and deal in certain Ineligible Securities.
SENIOR DEBT RATING. The rating issued by S&P or Moody's with respect to
unsecured Indebtedness of the Borrower not maturing within twelve months, issued
without third-party credit enhancement, and not subordinated by its term in
right of payment to other Indebtedness of the Borrower. In the event that no
such ratings are available on such unsecured Indebtedness of the Borrower, the
Senior Debt Rating shall be the rating implied, in the reasonable discretion of
the Agent, to such unsecured Indebtedness by reference to the Subordinated
Debentures or such other Indebtedness of the Borrower as shall be so rated.
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
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the Borrower (excluding adjustments to translate foreign assets and liabilities
for changes in foreign exchange rates made in accordance with Financial
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 Majority 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 Generally Accepted Accounting Principles.
SUBSTITUTED BANK. See ss.4.12 hereof.
SWING LINE LOAN MATURITY DATE. With respect to any Swing Line Loan, the
date specified by the Borrower in the Swing Line Loan Request relating thereto
as the maturity date of such Swing Line Loan, which in no event shall be later
than the earlier to occur of (i) ten (10) days after the Drawdown Date of such
Swing Line Loan and (ii) the Maturity Date.
SWING LINE LOAN REQUEST. See ss.2.11(a).
SWING LINE LOANS. See ss.2.11(a) hereof.
SWING LINE NOTE. See ss.2.11(e) hereof.
SYNDICATED LOAN(S). One or more revolving credit loans funded by the Banks
in accordance with their respective Commitment Percentages.
SYNDICATED NOTE. See ss.2.5(a) hereof.
SYNDICATION AGENT. As defined in the preamble hereto.
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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, on a
consolidated basis, 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 (including, without limitation, standby letters
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.
UNPAID REIMBURSEMENT OBLIGATION. Any Reimbursement Obligation for which the
Borrower does not reimburse the Letter of Credit Bank.
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 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.
ss.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.
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(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 "ss." 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.
ss.2. THE REVOLVING CREDIT FACILITY.
ss.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 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, without duplication, (A) the outstanding aggregate principal amount
of all Syndicated Loans made by all Banks PLUS (B) the outstanding aggregate
principal amount of Swing Line Loans PLUS (C) the Maximum Drawing Amount PLUS
(D) all Unpaid Reimbursement Obligations PLUS (E) 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 ss.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 ss.ss.9 and 10 hereof,
in the case of the initial Syndicated Loans to be made on the Closing Date, and
ss.10 hereof, in the case of all other Syndicated Loans, shall have been
satisfied on the date of such request.
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ss.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.
ss.2.3. COMPETITIVE BID LOANS.
ss.2.3.1. COMPETITIVE BID BORROWINGS.
(a) THE COMPETITIVE BID OPTION. In addition to the Syndicated Loans
permitted to be made hereunder pursuant to ss.2.1 hereof, the Borrower may, from
time to time during the Revolver Period pursuant to the terms of this ss.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
ss.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 sum of (A) the aggregate amount of all outstanding Syndicated
Loans PLUS (B) the aggregate amount of all outstanding Swing Line Loans PLUS (C)
the Maximum Drawing Amount PLUS (D) all Unpaid Reimbursement Obligations PLUS
(E) 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 ss.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
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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 ss.2.3. If, after receipt by the Agent of a Competitive Bid Quote Request
from the Borrower in accordance with subsection (b) of this ss.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 ss.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 ss.ss.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.
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(ii) Each Competitive Bid Quote shall be in substantially the
form of EXHIBIT D-1 attached hereto 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.
(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 ss.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 ss.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 ss.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.
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(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 ss.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 ss.ss.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,
(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
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terminated in full and if, on such Drawdown Date, the applicable conditions of
ss.ss.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
ss.2.4.1 hereof.
ss.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 sum of (A) the
aggregate principal amount of Syndicated Loans outstanding at such time PLUS (B)
the aggregate principal amount of Swing Line Loans outstanding at such time PLUS
(C) the Maximum Drawing Amount PLUS (D) all Unpaid Reimbursement Obligations.
(b) If after acceptance of any Competitive Bid Quote pursuant to
ss.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 ss.4.10 hereof.
ss.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.
ss.2.4. FUNDS FOR REVOLVING CREDIT LOANS.
ss.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 ss.ss.9 and 10 hereof and the satisfaction of the other conditions
set forth therein, to the extent applicable, the Agent will make
<PAGE> 32
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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.
ss.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 ss.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 ss.4.12 hereof to replace such
Bank. Any payment by the Borrower to the Agent of any Syndicated Loans or
Competitive Bid Loans pursuant to this ss.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.
ss.2.5. THE NOTES. (a) The Syndicated Loans shall be evidenced by
separate 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
<PAGE> 33
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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 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 ss.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.
ss.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 three
(3) 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 ss.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
<PAGE> 34
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the Banks the full amount of the Facility Fee then accrued on the amount of the
reduction. No reduction or termination of the Total Commitment may be
reinstated.
ss.2.7. MANDATORY REPAYMENTS OF REVOLVING CREDIT LOANS. If at any
time the sum, without duplication, of (A) the outstanding aggregate principal
amount of the Revolving Credit Loans PLUS (B) the outstanding aggregate
principal amount of Swing Line Loans PLUS (C) the Maximum Drawing Amount PLUS
(D) all Unpaid Reimbursement Obligations PLUS (E) the aggregate outstanding
principal amount of Competitive Bid 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 or Unpaid Reimbursement Obligations
for the respective accounts of the Banks or to be held as cash collateral for
the Reimbursement Obligations. 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.
ss.2.8. 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 ss.2.8 may be made only on the last day
of the Interest Period relating thereto unless the Borrower pays each Bank, in
accordance with ss.4.10, the costs and expenses incurred by such Bank as a
result of the repayment of such Eurodollar Rate Loan on a day other than 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 ss.2.8 of Base Rate Loans, and three
(3) Eurodollar Business Days' notice of any proposed repayment pursuant to this
ss.2.8 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
<PAGE> 35
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Note being repaid, with adjustments to the extent practicable to equalize any
prior repayments not exactly in proportion.
ss.2.9. INTEREST ON REVOLVING CREDIT LOANS. (a) During the Revolver
Period, except as otherwise provided in ss.4.11 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 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.
ss.2.10. CONVERSION OPTIONS.
ss.2.10.1. 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
<PAGE> 36
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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.
ss.2.10.2. 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 ss.2.10.1
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 actual knowledge. The Agent shall notify the Banks and the Borrower
promptly when any such automatic conversion contemplated by this ss.2.10.2 is
scheduled to occur.
ss.2.10.3. 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.
ss.2.11. THE SWING LINE.
(a) THE SWING LINE LOANS. Subject to the terms and conditions
hereinafter set forth, upon notice by the Borrower to the Agent in accordance
with this ss.2.11, the Agent agrees to make loans to the Borrower (the "Swing
Line Loans") on any Business Day prior to the Maturity Date in an aggregate
principal amount not to exceed $20,000,000 at any one time outstanding. Each
Swing Line Loan shall be in a minimum amount equal to $500,000 or an integral
multiple thereof. Notwithstanding any other provisions of this Credit Agreement
and in addition to the limit set forth above, at no time shall the aggregate
principal amount of all outstanding Swing Line Loans exceed the remainder of (i)
the Total Commitment then in effect MINUS (ii) the sum of, without duplication,
(A) the aggregate principal amount of all Syndicated Loans outstanding, PLUS (B)
the aggregate amount of Competitive Bid Loans outstanding at such time, PLUS (C)
the Maximum Drawing Amount, PLUS (D) all Unpaid Reimbursement Obligations.
(b) NOTICE OF BORROWING. When the Borrower desires the Agent to
make a Swing Line Loan, it shall send to the Agent written notice in the form of
EXHIBIT I hereto (or telephonic notice confirmed in a writing in the form of
EXHIBIT I hereto) of each Swing Line Loan requested hereunder (a " Swing Line
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Loan Request") not later than 2:00 p.m. (Boston time) on the proposed Drawdown
Date of any Swing Line Loan. Each such Swing Line Loan Request shall set forth
the principal amount of the proposed Swing Line Loan and the Swing Line Loan
Maturity Date relating to such Swing Line Loan, which shall in no event be later
than Maturity Date. Each Swing Line Loan Request shall be irrevocable and
binding on the Borrower and shall obligate the Borrower to borrow the Swing Line
Loan from the Agent on the proposed Drawdown Date thereof. Upon satisfaction of
the applicable conditions set forth in this Credit Agreement, on the proposed
Drawdown Date the Agent shall make the Swing Line Loan available to the Borrower
no later than 3:00 p.m. (Boston time) on the proposed Drawdown Date by crediting
the amount of the Swing Line Loan to the account specified by the Borrower;
PROVIDED that the Agent shall not advance any Swing Line Loans after it has
received notice from any Bank that a Default or Event of Default has occurred
and stating that no new Swing Line Loans are to be made until such Default or
Event of Default has been cured or waived in accordance with the provisions of
this Credit Agreement.
(c) INTEREST ON SWING LINE LOANS. Each Swing Line Loan shall,
except as otherwise provided in ss.4.11 hereof, bear interest from the Drawdown
Date thereof until repaid in full at the rate per annum equal to the Money
Market Rate, which shall be paid on each Interest Payment Date for Base Rate
Loans. The Borrower may elect from time to time that a Swing Line Loan bear
interest at a fixed rate for a period of one week or such other period of time
as may be agreed to by the Agent, in which case, the interest rate on such Swing
Line Loan shall be the fixed rate of interest quoted by the Agent for such Swing
Line Loan for such Interest Period. The Borrower shall give the Agent notice no
later than 12:00 noon on the last day of the Interest Period relating to a Swing
Line Loan that is a Fixed Rate Loan of its intention to continue such Swing Line
Loan as a Fixed Rate Loan. In the event that the Borrower fails to give such
notice, such Swing Line Loan shall, on the last day of such Interest Period,
cease to be a Fixed Rate Loan.
(d) REPAYMENT OF SWING LINE LOANS. The Borrower shall repay each
outstanding Swing Line Loan on or prior to the Swing Line Loan Maturity Date
relating thereto. Upon notice by the Agent on any Business Day following the
Swing Line Loan Maturity Date relating to each Swing Line Loan, in the event
that the Borrower has not repaid such Swing Line Loan, each of the Banks hereby
agrees to make Syndicated Loans to the Borrower constituting Base Rate Loans, on
the next succeeding Business Day following such notice, in an amount equal to
such Bank's Commitment Percentage of the aggregate amount of all Swing Line
Loans outstanding and overdue. The proceeds thereof shall be applied directly by
the Agent to repay outstanding Swing Line Loans. Each Bank hereby absolutely,
unconditionally and irrevocably agrees to make such Syndicated Loans upon one
Business Day's notice as set forth above,
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notwithstanding (i) that the amount of such Syndicated Loan may not comply with
the applicable minimums set forth herein, (ii) the failure of the Borrower to
meet the applicable conditions set forth herein, (iii) the occurrence or
continuance of a Default or an Event of Default hereunder, and (iv) the Total
Commitment in effect at such time. In the event that it is impracticable for
such Syndicated Loan to be made for any reason on the date otherwise required
above, then each Bank hereby agrees that it shall forthwith purchase (as of the
date such Syndicated Loan would have been made, but adjusted for any payments
received from the Borrower on or after such date and prior to such purchase)
from the Agent, and the Agent shall sell to each Bank, such participations in
the Swing Line Loans (including all accrued and unpaid interest thereon)
outstanding as shall be necessary to cause the Banks to share in such Swing Line
Loans PRO RATA based on their respective Commitment Percentages (without regard
to any termination of the Total Commitment hereunder) by making available to the
Agent an amount equal to such Bank's participation in the Swing Line Loans;
PROVIDED that (x) all interest payable on the Swing Line Loans (other than
interest received by the Agent pursuant to clause (y)) shall be for the account
of the Agent as a funding and administrative fee until the date as of which the
respective participation is purchased, and (y) at the time any purchase of such
participation is actually made, the purchasing Bank shall be required to pay the
Agent interest on the principal amount of the participation so purchased for
each day from and including the date such Loan would otherwise have been made
until the date of payment for such participation at the rate of interest then
applicable to such Swing Line Loans during such period. The Borrower shall have
the right, at its election, to repay the outstanding amount of a Swing Line
Loan, 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 Swing Line
that is a Fixed Rate Loan may be made only on the last day of the Interest
Period relating thereto unless the Borrower pays, in accordance with ss.4.10,
the Agent the costs and expenses incurred by the Agent as a result of the
repayment of such Swing Line Loan on a day other than the last day of such
Interest Period relating thereto.
(e) THE SWING LINE NOTE. The obligation of the Borrower to repay
the Swing Line Loans made pursuant to this Agreement and to pay interest thereon
as set forth in this Agreement shall be evidenced by a promissory note of the
Borrower substantially in the form of EXHIBIT E-3 attached hereto (the "Swing
Line Note"), dated the Closing Date and payable to the order of the Agent in a
principal amount stated to be the lesser of (i) $20,000,000 and (ii) the
aggregate principal amount of Swing Line Loans at any time advanced by the Agent
and outstanding hereunder. The Borrower irrevocably authorizes the Agent to make
or cause to be made, at or about the time of the Drawdown Date of any Swing Line
Loan or at the time of receipt of any payment of principal on the Swing Line
Note, an appropriate notation on the grid attached to such Note
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or the Agent's records reflecting the making of such Swing Line Loan or (as the
case may be) the receipt of such payment. The outstanding amount of the Swing
Line Loans set forth on such grid or such records shall be PRIMA FACIE evidence
of the principal amount thereof owing and unpaid to the Agent, but the failure
to record, or any error in so recording, any such amount on such Note or such
records shall not limit or otherwise affect the actual amount of the obligations
of the Borrower hereunder or under the Swing Line Note to make payments of
principal of or interest on the Swing Line Note when due.
ss.3. LETTERS OF CREDIT.
ss.3.1. LETTERS OF CREDIT. Subject to the terms and conditions set
forth in this Credit Agreement, upon written request of the Borrower delivered
to the Letter of Credit Bank and upon the execution and delivery by the Borrower
of Reimbursement Agreements with the Letter of Credit Bank (with a copy to the
Agent), the Letter of Credit Bank shall issue, extend and renew at any time from
the Closing Date until the Maturity Date, and subject to the satisfaction of the
conditions precedent set forth in ss.ss.9 and 10 hereof, Letters of Credit in
such form as the Borrower and the Letter of Credit Bank may agree for the
account of the Borrower or any of its Subsidiaries, PROVIDED that at no time
shall the Maximum Drawing Amount of all Letters of Credit outstanding exceed
$50,000,000 or, if less, the Total Commitment, and PROVIDED FURTHER that at no
time shall the SUM of (a) the aggregate principal amount of all Syndicated Loans
outstanding, PLUS (b) the aggregate principal amount of all Swing Line Loans
outstanding, PLUS (c) the aggregate principal amount of all Competitive Bid
Loans outstanding, PLUS (d) the aggregate Maximum Drawing Amount of all Letters
of Credit outstanding and all Unpaid Reimbursement Obligations exceed the Total
Commitment then in effect. Each written request for the issuance of a Letter of
Credit hereunder shall be received by the Letter of Credit Bank at least ten
(10) Business Days prior to the proposed date of issuance, PROVIDED that the
Letter of Credit Bank shall use its best efforts to issue such Letter of Credit
within five (5) Business Days following its receipt of any written request
therefor. The expiry dates, amounts and beneficiaries of the Letters of Credit
will be as agreed by the Borrower and the Letter of Credit Bank in the
applicable Reimbursement Agreement. In the event of any conflict between the
terms of this Credit Agreement and such Reimbursement Agreement, the terms of
this Credit Agreement shall control. The Borrower may request, and the Letter of
Credit Bank upon terms and conditions approved by the Borrower shall issue,
substitute Letters of Credit for the Letters of Credit to reflect reductions in
the amount of the Borrower's obligations supported by such Letters of Credit.
Each Letter of Credit issued by the Letter of Credit Bank hereunder shall
identify: (i) the dates of issuance and expiry of such Letter of Credit, (ii)
the amount of such Letter of Credit (which shall be a sum certain), (iii) the
beneficiary and account party of such Letter of Credit, and (iv) the drafts and
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other documents necessary to be presented to the issuing bank upon drawing
thereunder. Each Letter of Credit issued hereunder shall expire no later than
one year after its date of issuance unless renewed by the Letter of Credit Bank
in accordance with the terms of such Letter of Credit. In no event shall any
Letter of Credit issued hereunder expire after the date that is ten (10) days
prior to the Maturity Date. The Letter of Credit Bank shall notify the Agent on
the date of each issuance, amendment, extension, renewal or drawing of a Letter
of Credit, such notice to include details as to the expiration date, the face
amount of such Letter of Credit, the amount drawn under such Letter of Credit
and such other information as the Agent may reasonably request.
ss.3.2. REIMBURSEMENT OBLIGATION OF THE BORROWER. If any draft
shall be presented or other demand for payment shall be made under any Letter of
Credit, the Letter of Credit Bank shall notify the Borrower of the date and
amount of the draft presented or demand for payment and of the date and time
when it expects to pay such draft or honor such demand for payment. Upon the
payment by the Letter of Credit Bank in respect of each drawing under a Letter
of Credit, the Borrower shall immediately pay the Letter of Credit Bank the
amount of such drawing (it being understood that the Borrower may, subject to
the conditions set forth herein, make such payment with the proceeds of a
Syndicated Loan requested pursuant to ss.2.2).
ss.3.3. LETTER OF CREDIT LOAN OBLIGATIONS ABSOLUTE. (a) The
obligations of the Borrower to repay the Letter of Credit Bank and the Banks as
provided hereunder in respect of drawings under Letters of Credit shall rank
PARI PASSU with the obligations of the Borrower to repay the Loans hereunder,
and shall be absolute and unconditional under any and all circumstances. Without
limiting the generality of the foregoing, the Borrower's obligation to repay the
Borrower's obligations in respect of drawings under Letters of Credit, or any
renewals or extensions thereof, shall not be subject to any defense based on the
non-application or misapplication by the beneficiary of the proceeds of any such
payment or the legality, validity, regularity or enforceability of the Letter of
Credit, or any renewal or extension thereof, or any other document whatsoever.
Subject to the limitations of the following sentence, the Letter of Credit Bank
may accept or pay any draft presented to it under any Letter of Credit, or any
renewal or extension thereof, regardless of when drawn or made and whether or
not negotiated, if such draft, accompanying certificate or documents and any
transmittal advice are presented on or before the expiry date of the Letter of
Credit, or the renewal or extension thereof then in effect. Furthermore, neither
the Letter of Credit Bank nor any of its correspondents shall be responsible, as
to any document presented under a Letter of Credit or any renewal or extension
thereof which appears to be regular on its face, and appears on its face to
conform to the terms of the Letter of Credit and to make reasonable reference
thereto, for the validity or sufficiency of any signature or endorsement, for
delay
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in giving any notice or failure of any instrument to bear adequate reference to
the Letter of Credit or to any renewal or extension thereof, or failure of
documents not clearly specified in the Letter of Credit to accompany any
instrument at negotiation, or for failure of any person to note the amount of
any draft on the reverse of the Letter of Credit or on any renewal or extension
thereof.
(b) The Letter of Credit Bank, upon receipt of any draft drawn
under a Letter of Credit, shall promptly examine such draft and any accompanying
certificate or other document in accordance with this ss.3 and with its
customary procedures for conformity to the requirements of such Letter of
Credit. Any action, inaction or omission on the part of the Letter of Credit
Bank or any of its correspondents under or in connection with any Letter of
Credit, or any renewal or extension thereof, or the related instruments,
documents or property, if in good faith and in conformity with such laws,
regulations or customs as are applicable and the terms of this ss.3.3, shall be
binding upon the Borrower and shall not place the Letter of Credit Bank or any
of its correspondents under any liability to the Borrower, in the absence of
gross negligence or willful misconduct by the Letter of Credit Bank or its
correspondents. The Letter of Credit Bank's rights, powers, privileges and
immunities specified in or arising under this Agreement are in addition to any
heretofore or at any time hereafter otherwise created or arising, whether by
statute or rule of law or contract. All Letters of Credit issued hereunder will,
except to the extent otherwise expressly provided hereunder, be governed by the
Uniform Customs and Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce, Publication No. 500, and any subsequent
revisions thereof.
ss.3.4. OBLIGATIONS OF THE BANKS. (a) Each Bank and the Borrower
hereby acknowledge that each Letter of Credit issued by the Letter of Credit
Bank pursuant to this Agreement is issued by the Letter of Credit Bank on behalf
of all of the Banks. In the event that the Letter of Credit Bank is not
reimbursed on the date of a drawing under a Letter of Credit, each Bank (other
than the Letter of Credit Bank) absolutely, unconditionally and irrevocably
agrees to reimburse the Letter of Credit Bank in an amount equal to such Bank's
Commitment Percentage of such Unpaid Reimbursement Obligation and to be
responsible for its Commitment Percentage of all liabilities incurred by the
Letter of Credit Bank in respect of each Letter of Credit opened or extended by
the Letter of Credit Bank for the account of the Borrower pursuant to this
Agreement. In the event that for any reason (including without limitation as a
result of the commencement of any proceedings under any bankruptcy,
reorganization, insolvency or other similar law with respect to the Borrower) it
is impracticable for any Bank to reimburse the Letter of Credit Bank in an
amount equal to such Bank's Commitment Percentage of any drawing under any
Letter of Credit, then each such Bank agrees that at the option of the Letter of
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Credit Bank it shall purchase a participation in, or take an assignment from the
Letter of Credit Bank of, the Borrower's obligation to repay the Letter of
Credit Bank in respect of such drawing under such Letter of Credit in an amount
equal to such Bank's Commitment Percentage of such Unpaid Reimbursement
Obligation. The obligations of the Banks hereunder are several and the failure
of any Bank to fulfill its obligations shall not result in any Bank becoming
obligated to advance more than its Commitment Percentage of such Unpaid
Reimbursement Obligation.
(b) Each Bank agrees with the Letter of Credit Bank and the other
Banks (other than the Letter of Credit Bank) that its obligations to provide to
the Letter of Credit Bank its Commitment Percentage of the amount of any Unpaid
Reimbursement Obligation shall be absolute, irrevocable and unconditional and
further agrees that such obligations shall not be affected in any way by any
intervening circumstances occurring before or after the making of such payment
by the Letter of Credit Bank pursuant to any Letter of Credit, including without
limitation:
(i) any modification or amendment of, or any consent,
waiver, release or forbearance with respect to, any of the terms
of this Credit Agreement or any other instrument or document
referred to herein;
(ii) any other act or omission to act of any kind by the
Letter of Credit Bank;
(iii) the existence of any Default or Event of Default; or
(iv) any change of any kind whatsoever in the financial
position or creditworthiness of the Borrower or any of its
Subsidiaries or any other Person.
ss.3.5. LETTER OF CREDIT FEE. The Borrower shall pay to the Letter
of Credit Bank a fee (the "LETTER OF CREDIT FEE") for each Letter of Credit
issued or renewed by the Letter of Credit Bank at a rate per annum equal to (a)
with respect to each standby Letter of Credit, the Applicable Margin with
respect to Eurodollar Rate Loans in effect from time to time and (b) with
respect to documentary Letters of Credit, one-half (1/2) the Applicable Margin
with respect to Eurodollar Rate Loans in effect from time to time, in each case,
on the Maximum Drawing Amount of such Letter of Credit for the period such
Letter of Credit is outstanding. The Letter of Credit Bank shall, in turn, remit
to each Bank (including BKB) such Bank's Commitment Percentage of the Letter of
Credit Fee. In addition, the Borrower will pay the Letter of Credit Bank a
Fronting Fee (the "Fronting Fee") equal to one-tenth of one percent (0.10%) per
annum on the Maximum Drawing Amount of such Letter of Credit for the period
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such Letter of Credit is outstanding, which shall be retained by the Letter of
Credit Bank for its own account. The Letter of Credit Fee and the Fronting Fee
shall be payable quarterly in arrears on the last day of each calendar quarter.
In respect of each Letter of Credit, the Borrower shall also pay to the Letter
of Credit Bank, for its own account, the Letter of Credit Bank's customary
issuance, amendment, negotiation or document examination and other
administrative fees as in effect from time to time.
ss.4. CERTAIN GENERAL PROVISIONS; FEES.
ss.4.1. 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 November 13, 1997 (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.
ss.4.2. FACILITY 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 facility fee (the "Facility Fee"), which shall be calculated for each
day at a per annum rate as set forth in the definition of Applicable Margin with
respect to the Facility Fee in effect at such time on the Total Commitment. The
Facility 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.
ss.4.3. FUNDS FOR PAYMENTS.
ss.4.3.1. PAYMENTS TO AGENT. All payments of principal,
interest, Facility Fees, Letter of Credit 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.
ss.4.3.2. 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
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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 ss.4.3.3
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.
ss.4.3.3. 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.
ss.4.4. 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
Facility Fees, Letter of Credit 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.
ss.4.5. 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
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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.
ss.4.6. 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 ss.4.6, including any interest or fees
payable by such Bank to lenders of funds obtained by it in order to make or
maintain its Eurodollar Loans hereunder.
ss.4.7. ADDITIONAL COSTS, ETC. If any change after the Closing Date
to any present applicable law or if any 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, the Loans or the
Letters of Credit (other than taxes based upon or measured by the income or
profits of such Bank or the Agent), or
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(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, the Letters of Credit 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, the Letters of
Credit or such Bank's Commitment, or
(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 Letters of Credit, 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
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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.
ss.4.8. 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 or Letters of
Credit 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 ss.4.9 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 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.
ss.4.9. CERTIFICATE. A certificate setting forth any additional
amounts payable pursuant to ss.ss.4.7 or 4.8 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 ss.ss.4.7
or 4.8 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 ss.4.12 hereof to replace such Bank.
ss.4.10. 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, Competitive Bid Loans or Swing Line Loans which are Fixed Rate Loans
as and when due and payable, including any such cost or
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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, Competitive Bid
Loans or such Swing Line 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 ss.ss.2.2 or 2.10 hereof or a Notice of Competitive Bid Borrowing in
accordance with ss.2.3.1(f) hereof, or (c) the making of any payment of a
Eurodollar Rate Loan, Competitive Bid Loan or Swing Line Loan which is a Fixed
Rate 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.
ss.4.11. 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).
ss.4.12. REPLACEMENT OF INDIVIDUAL BANKS. Upon the happening of any
of the events set forth in ss.ss.2.4.2, 4.6, 4.7, or 4.8, the Borrower may
(PROVIDED that at the time no Default or Event of Default exists or would result
after 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 ss.4.10 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
ss.4.12 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 ss.4.12 as required by ss.2.8 and subject to all other
provisions of this Credit Agreement; and
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(c) simultaneously with any prepayment of all Syndicated Loans
and other obligations owing by the Borrower to a Substituted Bank under this
ss.4.12, the Substituted Bank shall have assigned pursuant to ss.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.
ss.4.13. GUARANTIES. The payment and performance of the Obligations
shall be guaranteed by each Guarantor pursuant to the Guaranties, each of which
shall be 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 or addition of any Guarantor of
its obligations as provided in this ss.4.13.
ss.5. REPRESENTATIONS AND WARRANTIES. The Borrower represents and
warrants to the Banks and the Agent as follows:
ss.5.1. CORPORATE AUTHORITY.
ss.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.
ss.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
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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.
ss.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.
ss.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.
ss.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.
ss.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
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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 August 2,
1997, 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.
ss.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 ss.7.4 hereof.
ss.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.
ss.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
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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.
ss.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.
ss.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) 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.
ss.5.10. NO EVENT OF DEFAULT. No Default or Event of Default has
occurred and is continuing.
ss.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.
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ss.5.12. EMPLOYEE BENEFIT PLANS.
ss.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.
ss.5.12.2. TERMINABILITY OF WELFARE PLANS. Under each Employee
Benefit Plan which is an employee welfare benefit plan within the meaning of
ss.3(1) or ss.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.
ss.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 ss.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
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 ss.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.
ss.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 ss.4201 of ERISA or as a result of
a sale of assets described in ss.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 ss.4241 or ss.4245
of
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ERISA or that any multiemployer Plan intends to terminate or has been terminated
under ss.4041A of ERISA.
ss.5.13. REGULATIONS U AND X; ETC. The proceeds of the Loans and the
Letters of Credit shall be used for the purposes described in ss.6.12 hereof. No
portion of any Loan or any Letter of Credit 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.
ss.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;
(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
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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.
ss.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.
ss.6. AFFIRMATIVE COVENANTS OF THE BORROWER. The Borrower covenants
and agrees that, so long as any Loan, Note or Letter of Credit is outstanding or
any Bank has any obligation to make any Loans or the Letter of Credit Bank has
any obligation to issue, extend or renew any Letters of Credit:
ss.6.1. PUNCTUAL PAYMENT. The Borrower will duly and punctually pay or
cause to be paid the principal and interest on the Loans, the Facility Fee, the
Letter of Credit Fees, 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.
ss.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.
ss.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
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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.
ss.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
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 ss.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
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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.
ss.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
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.
ss.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
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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 ss.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.
ss.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.
ss.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 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.
ss.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
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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.
ss.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
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.
ss.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 ss.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 ss.ss.302, 4041, 4042, 4043, 4063, 4065, 4066 and 4068 of ERISA, or
in respect of a Multiemployer Plan, under ss.ss.4041A, 4202, 4219, 4242, or 4245
of ERISA.
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ss.6.12. USE OF PROCEEDS. The Borrower will use the proceeds of the
Loans and the Letters of Credit 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.
ss.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.
ss.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.
ss.7. CERTAIN NEGATIVE COVENANTS OF THE BORROWER. The Borrower
covenants and agrees that, so long as any Loan, Note or Letter of Credit is
outstanding or any Bank has any obligation to make any Loans or the Letter of
Credit Bank has any obligation to issue, extend or renew any Letter of Credit:
ss.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 ss.6.8 hereof;
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(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) Indebtedness existing on the Closing Date and listed and
described on SCHEDULE 7.1(h) hereto or any refinancing thereof on substantially
similar terms as the Indebtedness being refinanced;
(i) Subordinated Debt;
(j) obligations under Capitalized Leases;
(k) 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 amount
of such accounts receivable financing facility shall not exceed $125,000,000;
(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 that the Investments corresponding to such Indebtedness
are permitted under secs.7.3(j) or 7.3(k) hereof;
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(m) 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 ss.7.2(ix) hereof;
(n) 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 ss.7.3(n) or (o)
hereof;
(o) 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 ss.7.1(o) shall not, at any time, exceed the fair
market value of the Real Estate securing such Indebtedness; and
(p) other Indebtedness of the Borrower and its Subsidiaries
(whether or not such Subsidiaries are Guarantors), provided that (i) with
respect to Indebtedness incurred by the Borrower or a Guarantor, such
Indebtedness contains covenants that are no more restrictive on the Borrower or
such Guarantor than the covenants contained in this Credit Agreement and (ii)
immediately after such incurrence of Indebtedness, and after giving effect
thereto on a pro forma basis, no Default or Event of Default shall then exist.
Notwithstanding the foregoing, at no time shall the aggregate amount of
Indebtedness of the Borrower and its Subsidiaries consisting of guaranties and
other Contingent Liabilities (excluding (i) Indebtedness permitted pursuant to
ss.7.1 to the extent such Indebtedness (or if such Indebtedness is a Contingent
Liability of the Borrower and/or its Subsidiaries, the underlying Indebtedness
relating to such Contingent Liability) is included in the calculation of Total
Funded Indebtedness) and (ii) obligations in respect of documentary letters of
credit) exceed, in the aggregate, 15% of the Stockholders' Equity of the
Borrower at such time. For purposes of this Section, the amount of Contingent
Liabilities in respect of interest rate protection arrangements and exchange
rate protection arrangements permitted under ss.7.1(g) at any time shall be the
net liability of the Borrower and its Subsidiaries under such arrangements at
such time, calculated on a basis satisfactory to the Agent in accordance with
accepted practice.
ss.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
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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 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
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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 ss.7.1(m) 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 ss.7.1(k) hereof;
(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 ss.7.1(o) hereof.
SS.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:
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(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, 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, 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
ss.7.1(k) 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, and not less than A- if rated by S&P;
(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) (i) the Borrower's or any Subsidiary's guaranty of the
Indebtedness of any Guarantor or the Borrower, (ii) any other Investments by
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the Borrower or any Guarantor in any Guarantor or the Borrower, and (iii) 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 ss.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 by the Borrower and the Guarantors in
Staples, U.K. under this clause (n) shall at no time exceed 20.0% of the
Stockholders' Equity of the Borrower, (ii) the aggregate amount of all such
Investments in MAXI-Papier-Markt GmbH under this clause (n) shall at no time
exceed 10.0% 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
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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 22.5% 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.
ss.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.
ss.7.5. EMPLOYEE BENEFIT PLANS. Neither the Borrower nor any ERISA
Affiliate will engage in any "prohibited transaction" within the meaning of
ss.406 of ERISA or ss.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 ss.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 ss.302(f) or ss.4068 of ERISA; or permit or take any
action which would result in the aggregate benefit liabilities (with the meaning
of ss.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.
ss.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 ss.7.3(o) hereof); enter into any joint venture or
partnerships (except to the extent permitted under ss.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
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(c) the acquisition (whether of stock or assets or by means of a merger) of any
other Person, PROVIDED that (i) immediately after such acquisition, and after
giving effect thereto on a pro forma basis, no Default or Event of Default shall
then exist, (ii) if required by applicable law, the board of directors and the
shareholders 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 an amount
greater than ten percent (10%) of the Consolidated Tangible Net Worth of the
Borrower and its Subsidiaries, determined immediately prior to such acquisition,
the Borrower shall have delivered to the Agent and the Banks prior written
notice of the proposed acquisition, (v) if the Borrower or a Guarantor and such
other Person merge, the Borrower or such Guarantor is the surviving entity, and
(vi) contemporaneously with such acquisition, the requirements of ss.6.14, if
applicable, shall have been satisfied.
ss.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 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
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reasonably satisfactory to the Banks, PROVIDED that the maximum facility amount
of such facility shall not exceed $125,000,000.
ss.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 entered into an agreement with one or more
financial institutions with regard to the issuance and/or sale of its equity
securities to such institutions, whereby the proceeds from any sale of such
equity securities will be 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 any sale of equity securities 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 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
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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 ss.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
ss.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
ss.11.1(k) of this Credit Agreement.
ss.8. FINANCIAL COVENANTS OF THE BORROWER. The Borrower covenants and
agrees that, so long as any Loan, Note or Letter of Credit is outstanding or any
Bank has any obligation to make any Loans or the Letter of Credit Bank has any
obligation to issue, extend or renew any Letter of Credit:
ss.8.1. FIXED CHARGE COVERAGE RATIO. As at the end of each
fiscal quarter of the Borrower, 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 Rental Expense for such
Measurement Period, to be less than 1.50 to 1.00.
ss.8.2. FUNDED DEBT TO EBITDA RATIO. As at the end of each fiscal
quarter of the Borrower, the Borrower will not permit the ratio of (a) Total
Funded Indebtedness as at such date to (b) Consolidated EBITDA for the period of
four consecutive fiscal quarters then ending, to be greater than 3.0:1.
ss.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) $485,000,000, 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 November 1, 1997), with no
deductions for losses, PLUS (c) 50% of the aggregate book value of all
additional Capital Stock issued by the Borrower since August 2, 1997.
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SS.9. CLOSING CONDITIONS. The obligations of the Banks to make the
initial Loans and the Letter of Credit Bank to issue the initial Letter of
Credit (if issued on the Closing Date) shall be subject to the satisfaction of
the following conditions precedent:
SS.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.
SS.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.
SS.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.
SS.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.
SS.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.
SS.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.
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SS.9.7. TERMINATION OF EXISTING CREDIT AGREEMENT. The Borrower shall
have repaid all principal, interest and fees owing, and shall have terminated
the commitments under, the Existing Credit Agreement and the Agent shall have
received evidence thereof in the form and substance satisfactory to it.
SS.9.8. COMPLIANCE CERTIFICATE. The Borrower shall have delivered to the
Banks a Compliance Certificate, dated as of the Closing Date, and based on the
financial statements of the Borrower for the fiscal quarter ended August 2,
1997.
SS.9.9. NO MATERIAL ADVERSE CHANGE. The Agent shall be satisfied that
there shall have occurred no material adverse change in the business,
operations, assets, properties or condition of the Borrower or its Subsidiaries
since the Balance Sheet Date.
SS.10. CONDITIONS TO ALL BORROWINGS. The obligations of the Banks to
make any Loan and the Letter of Credit Bank to issue any Letter of Credit, in
each case whether on or after the Closing Date, shall also be subject to the
satisfaction of the following conditions precedent:
SS.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 or the issuance of such Letter
of Credit, 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.
SS.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 or for
the Letter of Credit Bank to issue such Letter of Credit.
ss.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
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of the Comptroller of the Currency or the Board of Governors of the Federal
Reserve System.
SS.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.
SS.11. EVENTS OF DEFAULT; ACCELERATION; ETC.
SS.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 Facility Fee, the Letter of Credit Fees, 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 secs.6.4, 6.5, 6.10, 7 or 8 hereof, or (ii) shall fail
to comply with its covenant contained in ss.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 ss.11.1) for thirty
(30) 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
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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
$10,000,000 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
$10,000,000 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;
(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;
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(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 $10,000,000;
(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
$10,000,000 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
(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
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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 transfer of assets to one or
more Guarantors or 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, the Letters of Credit and the other Loan Documents and all
Reimbursement Obligations 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 secs.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.
SS.11.2. TERMINATION OF COMMITMENTS. If any one or more of the Events of
Default specified in secs.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 and
the Letter of Credit Bank shall be relieved of all further obligations to issue
Letters of Credit. 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
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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 and the Letter of Credit Bank shall be relieved of all further
obligations to issue Letters of Credit. In the event of any termination of the
Commitments hereunder, the Borrower shall immediately deposit with the Agent
cash collateral in an amount equal to the Maximum Drawing Amount, pursuant to a
cash collateral agreement as shall be in form and substance satisfactory to the
Agent. No termination of the credit hereunder shall relieve the Borrower of any
of the Obligations.
SS.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 ss.11.1 hereof, each Bank, if
owed any amount with respect to the Loans or Letters of Credit 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.
SS.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,
enforcement of the claim evidenced by the Notes held by such Bank by
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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.
SS.13. THE AGENT.
SS.13.1. AUTHORIZATION.
(a) 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.
(b) The relationship between the Agent and the Banks is and shall be
that of an independent contractor. The use of the term "Agent" herein is for
convenience only and is used to describe, as a form of convention, the
independent contractual relationship between the Agent and each of the Banks.
Nothing contained in this Agreement or any of the other Loan Documents shall be
construed to create an agency, trust or other fiduciary relationship between the
Agent and any of the Banks.
(c) As an independent contractor empowered by the Banks to exercise
certain rights and perform certain duties and responsibilities hereunder and
under the other Loan Documents, the Agent is nevertheless a "representative" of
the Banks, as that term is defined in Article 1 of the Uniform Commercial Code,
for purposes of actions for the benefit of the Banks with respect to all
collateral security and guaranties contemplated by the Loan Documents. Such
actions include the designation of the Agent as "secured party", "mortgagee",
"lienholder" or the like on all financing statements, motor vehicle titles and
other documents and instruments, whether recorded or otherwise, relating to the
attachment, perfection, priority or enforcement of any security interests,
mortgages, liens or deeds of trust in collateral security intended to secure the
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payment or performance of any of the Obligations, all for the benefit of the
Banks and the Agent.
SS.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.
SS.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 to the Banks 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.
SS.13.4. NO REPRESENTATIONS. The Agent shall not be responsible for the
execution or validity or enforceability of this Credit Agreement, the Notes, the
Letters of Credit, 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.
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SS.13.5. PAYMENTS.
SS.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.
SS.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.
SS.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 fails to make available to the Letter of Credit Bank its PRO RATA share
of each drawing under any Letter of Credit or (b) to comply with the provisions
of ss.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
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those in effect immediately prior to such delinquency and without giving effect
to the nonpayment causing such delinquency.
SS.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.
SS.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 ss.14 hereof), and liabilities of every nature and character arising
out of or related to this Credit Agreement, the Notes, the Letters of Credit, 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.
SS.13.8. AGENT AS BANK; ETC. In its individual capacity, BKB 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. None of the Documentation Agent,
the Syndication Agent or any Co-Agent shall have any obligation, liability,
responsibility or duty under this Credit Agreement other than as a Bank
hereunder.
SS.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
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its benefit in respect of any actions taken or omitted to be taken by it while
it was acting as Agent.
SS.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 ss.13.10 it shall promptly notify the
other Banks and the Borrower of the existence of such Default or Event of
Default.
SS.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 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 ss.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
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agreements and instruments mentioned herein. The covenants of this ss.14 shall
survive payment or satisfaction of all other Obligations.
SS.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 or the Letters of Credit, (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 extent that the obligations of the Borrower
under this ss.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 ss.15
shall survive payment or satisfaction in full of all other Obligations.
SS.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 or the issuance of any Letters of Credit, 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 Letter of Credit of the
other Loan Documents remains outstanding or any Bank has any obligation to make
any Loans or the Letter of Credit Bank has any obligation to issue, renew or
extend Letters of Credit, 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
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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.
SS.17. ASSIGNMENT AND PARTICIPATION.
SS.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, the Notes held by it and its risk associated
with the Letters of Credit); 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 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 ss.17.3 hereof, be released from its
obligations under this Credit Agreement.
SS.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
<PAGE> 85
-78-
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 secs.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; (h)
such assignee represents and warrants that it is legally authorized to enter
into such Assignment and Acceptance; and (i) such assignee acknowledges that it
has made satisfactory arrangements with the assigning Bank with respect to its
PRO RATA share of Letter of Credit Fees in respect of outstanding Letters of
Credit.
SS.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 ss.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.
<PAGE> 86
-79-
SS.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.
SS.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
participant, (iii) reduce the amount of any Facility Fees or Letter of Credit
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.
SS.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
<PAGE> 87
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such contemplated assignment or participation and (d) to enter into a
confidentiality agreement with the Borrower evidencing the foregoing.
SS.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 secs.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
secs.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.
SS.17.8. MISCELLANEOUS ASSIGNMENT PROVISIONS. Any assigning Bank shall
retain its rights to be indemnified pursuant to ss.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 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 ss.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 ss.4 of the Federal Reserve Act, 12 U.S.C.
ss.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 (provided that such assignment to such Affiliate does not
impose any additional tax liabilities on the Borrower), in each case without
payment to the Agent of the registration fee as provided in ss.17.3 hereof. No
such pledge or assignment or the enforcement thereof shall release the Pledgor
<PAGE> 88
-81-
or Assignor Bank from its obligations hereunder or under any of the other Loan
Documents.
SS.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.
SS.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 8 Technology Drive, Westborough,
Massachusetts 01581, 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: Linda H. Thomas, 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 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.
SS.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
<PAGE> 89
-82-
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 SS.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.
SS.20. HEADINGS. The captions in this Credit Agreement are for
convenience of reference only and shalL not define or limit the provisions
hereof.
SS.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.
SS.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 ss.24 hereof.
SS.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 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.
<PAGE> 90
-83-
SS.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 Facility Fees or Letter of Credit Fees hereunder
may not be changed without the written consent of the Borrower and the written
consent of each Bank affected thereby; this ss.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 ss.4.13 hereof) without the written consent of all the
Banks; and the amount of the Agent's Fee payable for the Agent's account and
ss.3 or ss.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.
SS.25. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION.
SS.25.1. SHARING OF INFORMATION WITH SECTION 20 SUBSIDIARY. The
Borrower, for itself and each of its Subsidiaries, in connection with any
financial advisory or investment banking services provided from time to time by
a Section 20 Subsidiary to the Borrower or one or more of its Subsidiaries,
hereby authorizes (a) such Section 20 Subsidiary to share with the Agent and
each Bank any information delivered to such Section 20 Subsidiary by the
Borrower or any of its Subsidiaries, and (b) the Agent and each Bank to share
with such Section 20 Subsidiary any information delivered to the Agent or such
Bank by the Borrower or any of its Subsidiaries pursuant to this Credit
Agreement, or in connection with the decision of such Bank to enter into this
Credit Agreement; it being understood, in each case, that any such Section 20
Subsidiary receiving such information shall be bound by the confidentiality
provisions of this Credit
<PAGE> 91
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Agreement. Such authorization shall survive the payment and satisfaction in full
of all of Obligations.
SS.25.2. CONFIDENTIALITY. Each of the Banks and the Agent agrees, on
behalf of itself and each of its affiliates, directors, officers, employees and
representatives, to use reasonable precautions to keep confidential, in
accordance with their customary procedures for handling confidential information
of the same nature and in accordance with safe and sound banking practices, any
non-public information supplied to it by the Borrower or any of its Subsidiaries
pursuant to this Credit Agreement that is identified by such Person as being
confidential at the time the same is delivered to the Banks or the Agent,
provided that nothing herein shall limit the disclosure of any such information
(a) after such information shall have become public other than through a
violation of this ss.25, (b) to the extent required by statute, rule, regulation
or judicial process, (c) to counsel for any of the Banks or the Agent, (d) to
bank examiners or any other regulatory authority having jurisdiction over any
Bank or the Agent, or to auditors or accountants, (e) to the Agent, any Bank or,
subject to ss.25.1, any Section 20 Subsidiary, (f) in connection with any
litigation to which any one or more of the Banks, the Agent or any Section 20
Subsidiary is a party, or in connection with the enforcement of rights or
remedies hereunder or under any other Loan Document, (g) to a Subsidiary or
affiliate of such Bank as provided in ss.17 or (h) to any assignee or
participant (or prospective assignee or participant) so long as such assignee or
participant agrees to be bound by the provisions of ss.17.6.
SS.25.3. PRIOR NOTIFICATION. Unless specifically prohibited by
applicable law or court order, each of the Banks and the Agent shall, prior to
disclosure thereof, notify the Borrower of any request for disclosure of any
such non-public information by any governmental agency or representative thereof
(other than any such request in connection with an examination of the financial
condition of such Bank by such governmental agency) or pursuant to legal
process.
SS.25.4. OTHER. In no event shall any Bank or the Agent be obligated or
required to return any materials furnished to it or any Section 20 Subsidiary by
the Borrower or any of its Subsidiaries. The obligations of each Bank under this
ss.25 shall supersede and replace the obligations of such Bank under any
confidentiality letter in respect of this financing signed and delivered by such
Bank to the Borrower prior to the date hereof and shall be binding upon any
assignee of, or purchaser of any participation in, any interest in any of the
Loans or Reimbursement Obligations from any Bank.
<PAGE> 92
-85-
SS.26. 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> 93
-86-
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:
BANKBOSTON, N.A., individually and as Agent
By:
----------------------------------------
Title:
THE CHASE MANHATTAN BANK,
individually and as Syndication Agent
By:
----------------------------------------
Title:
FLEET NATIONAL BANK,
individually and as Documentation Agent
By:
----------------------------------------
Title:
<PAGE> 94
-87-
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION, as Co-Agent
By:
----------------------------------------
Title:
THE BANK OF NOVA SCOTIA,
as Co-Agent
By:
----------------------------------------
Title:
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Co-Agent
By:
----------------------------------------
Title:
BAYERISCHE VEREINSBANK AG
NEW YORK BRANCH
By:
----------------------------------------
Title:
By:
----------------------------------------
Title:
<PAGE> 95
-88-
CORESTATES BANK, N. A.
By:
----------------------------------------
Title:
THE FIRST NATIONAL BANK OF CHICAGO
By:
----------------------------------------
Title:
FIRST UNION NATIONAL BANK
By:
----------------------------------------
Title:
MARINE MIDLAND BANK
By:
----------------------------------------
Title:
MELLON BANK
By:
----------------------------------------
Title:
<PAGE> 1
STAPLES, INC. AND SUBSIDIARIES
EXHIBIT 12.1
STATEMENT RE: COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
FISCAL YEAR ENDED 9 MONTHS ENDED
1/30/93 1/29/94 1/28/95 2/3/96 2/1/97 11/2/96 11/1/97
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated pre-tax income prior to $31,218 $32,352 $63,905 $119,845 $ 173,041 $ 96,810 $ 108,291
extraordinary items
Interest portion of rental expense 13,058 16,529 23,569 31,538 40,815 31,527 40,128
Net interest expense, including amortization
of deferred issuance costs 5,092 7,093 11,037 31,353 53,458 39,476 24,155
Less: interest capitalized (611) (189) (818)
----------------------------------------------------- -----------------------
Earnings $49,368 $55,974 $98,511 $182,736 $ 266,703 $ 167,624 $ 171,756
===================================================== =======================
Interest portion of rental expense $13,058 $16,529 $23,569 $ 31,538 $ 40,815 $ 31,527 $ 40,128
Net interest expense, including amortization
of deferred issuance costs 5,092 7,093 11,037 31,353 53,458 39,476 24,155
----------------------------------------------------- -----------------------
Fixed Charges $18,150 $23,622 $34,606 $ 62,891 $ 94,273 $ 71,003 $ 64,283
===================================================== =======================
Ratio of Earnings to Fixed Charges 2.72 2.37 2.85 2.91 2.83 2.36 2.67
===================================================== =======================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENT OF STAPLES, INC. FOR THE NINE MONTHS ENDED NOVEMBER 1, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-START> FEB-01-1997
<PERIOD-END> NOV-01-1997
<CASH> 227,603
<SECURITIES> 761
<RECEIVABLES> 218,468
<ALLOWANCES> 2,329
<INVENTORY> 1,050,205
<CURRENT-ASSETS> 1,557,795
<PP&E> 792,516
<DEPRECIATION> 241,109
<TOTAL-ASSETS> 2,332,874
<CURRENT-LIABILITIES> 923,231
<BONDS> 510,174
0
0
<COMMON> 102
<OTHER-SE> 862,228
<TOTAL-LIABILITY-AND-EQUITY> 2,332,874
<SALES> 3,631,085
<TOTAL-REVENUES> 3,631,085
<CGS> 2,762,996
<TOTAL-COSTS> 3,330,618
<OTHER-EXPENSES> 175,274
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 16,902
<INCOME-PRETAX> 108,291
<INCOME-TAX> 41,692
<INCOME-CONTINUING> 66,669
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 66,669
<EPS-PRIMARY> .39
<EPS-DILUTED> .39
<FN>
<F1>INCOME-BEFORE MINORITY INTEREST 66,599
<MINORITY INTEREST> 70
</FN>
</TABLE>
