SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] Quarterly Report Under Section 13 or 15(d) of the
Securities
Exchange Act of 1934
For the quarterly period ended: March 25, 1995
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of
the Securities
Exchange Act of 1934
For the transition period from to
Commission file No.: 33-48862
HOMELAND HOLDING CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 73-1311075
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) dentification No.)
400 N.E. 36th Street
Oklahoma City, Oklahoma 73l25
(Address of principal executive offices) (Zip Code)
(405) 557-5500
(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
Indicate the number of shares outstanding of each of the
issuer's classes of common stock as of May 1, 1995.
Class A Common Stock, including redeemable common stock: 32,86
4,112 shares
Class B Common Stock: None
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
HOMELAND HOLDING CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
ASSETS
March 25, December 31,
1995 1994
(Unaudited)
Current assets:
Cash and cash equivalents $ 2,644 $ 339
Receivables, net of allowance for uncollectible
accounts of $2,216 and $2,690 7,992 12,235
Receivables for taxes 1,551 2,270
Inventories 79,968 89,850
Prepaid expenses and other current assets 4,699 6,384
Total current assets 96,854 111,078
Property, plant and equipment:
Land 10,997 10,997
Buildings 29,276 29,276
Fixtures and equipment 61,373 61,360
Land and leasehold improvements 32,410 32,410
Software 17,876 17,876
Leased assets under capital leases 46,015 46,015
Construction in progress 2,133 2,048
200,080 199,982
Less accumulated depreciation
and amortization 85,927 82,603
Net property, plant and equipment 114,153 117,379
Excess of purchase price over fair
value of net assets acquired, net
of amortization of $856 and $830 2,449 2,475
Other assets and deferred charges 7,761 8,202
Total assets $221,217 $239,134
Continued
The accompanying notes are an integral part
of these financial statements.
HOMELAND HOLDING CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS, Continued
(In thousands, except share and per share amounts)
LIABILITIES AND STOCKHOLDERS' EQUITY
March 25, December 31,
1995 1994
(Unaudited)
Current liabilities:
Accounts payable - trade $ 25,694 $ 30,317
Salaries and wages 2,401 1,925
Taxes 6,992 6,492
Accrued interest payable 1,401 3,313
Other current liabilities 13,711 15,050
Current portion of long-term debt 1,525 2,250
Current portion of obligations under capital
leases 7,834 7,828
Total current liabilities 59,558 67,175
Long-term obligations:
Long-term debt 140,027 145,000
Obligations under capital leases 10,208 11,472
Other noncurrent liabilities 4,595 5,176
Noncurrent restructuring reserve 3,546 5,005
Total long-term obligations 158,376 166,653
Commitments and contingencies - -
Redeemable common stock, Class A, $.01 par value,
3,409,211 shares at March 25, 1995 and 3,864,211
shares at December 31, 1994, at redemption value
1,068 1,235
Stockholders' equity:
Common stock
Class A, $.01 par value, authorized - 40,500,000
shares, issued - 32,059,989 shares at March 25,
1995 and 31,604,989 shares at December 31, 1994
outstanding - 30,878,989 shares 321 316
Additional paid-in capital 54,120 53,896
Accumulated deficit (50,254) (48,398)
Treasury stock, 1,181,000 shares at March 25, 1995
and 726,000 shares at December 31, 1994, at cost (1,972) (1,743)
Total stockholders' equity 2,215 4,071
Total liabilities and stockholders' equity $221,217 $239,134
The accompanying notes are an integral part
of these financial statements.
HOMELAND HOLDING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
(Unaudited)
12 weeks 12 weeks
ended ended
March 25, March 26,
1995 1994
Sales, net $178,009 $184,837
Cost of sales 135,485 137,699
Gross profit 42,524 47,138
Selling and administrative 39,969 42,017
Operating profit 2,555 5,121
Interest expense 4,411 4,007
Income (loss) before income taxes (1,856) 1,114
Income tax expense - 707
Net income (loss) $ (1,856) $ 407
Net income (loss) per common share $ (.05) $ .01
Weighted average shares outstanding 34,651,117 34,783,617
The accompanying notes are an integral part
of these financial statements.
<TABLE>
HOMELAND HOLDING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except share and per share amounts)
(Unaudited)
<CAPTION>
Minimum
Class A Additional Pension
Total
Common Stock Paid-in Accumulated Liability Treasury
Stock Stockholders'
Shares Amount Capital Deficit Adjustment Shares
Amount Equity
<S> <C> <C> <C> <C>
<C> <C> <C> <C>
Balance, January 1, 199431,498,989 $315$46,358$(7,753)$(572) 620,000
$(1,488) $36,860
Purchase of treasury stock106,000 1 254 - - 106,000
(255) -
Adjustment to reduce
minimum liability - - - - 572 - - 572
Net income - - - 407 - - -
407
Balance, March 26, 199431,604,989 $316$46,612$(7,346)$ - 726,000
$(1,743) $37,839
Balance, December 31, 199431,604,989$316$53,896$(48,398)$ - 726,000
$(1,743) $ 4,071
Purchase of treasury stock455,000 5 224 - - 455,000
(229) -
Net loss - - - (1,856) - - -
(1,856)
Balance, March 25, 199532,059,989 $321$54,120$(50,254)$ - 1,181,000
$(1,972) $ 2,215
</TABLE>
The accompanying notes are an integral part
of these financial statements.
<TABLE>
HOMELAND HOLDING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, except share and per share amounts)
(Unaudited)
<CAPTION>
12 weeks 12 weeks
ended ended
March 25, March 26,
1995 1994
<S>
<C> <C>
Cash flows from operating activities:
Net income (loss) $(1,856) $ 407
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 3,681 3,791
Amortization of financing costs 334 331
(Gain) on disposal of assets (27) (27)
Amortization of beneficial interest in operating
leases 60 60
Change in assets and liabilities:
Decrease in receivables 4,305 72
Decrease in receivable for taxes 719 -
Decrease in inventories 9,649 865
(Increase) decrease in prepaid expenses and other current
assets 1,685 (75)
(Increase) decrease in other assets and deferred charges
(51) 203
Decrease in accounts payable - trade (4,623) (909)
Increase (decrease) in salaries and wages 476
(596)
Increase in taxes 500 1,004
Decrease in accrued interest payable (1,912) (2,220)
Increase (decrease) in other current liabilities (1,339)
381
Decrease in noncurrent restructuring reserve (1,459)
- -
Increase (decrease) in other noncurrent liabilities
(554) 53
Net cash provided by operating activities 9,588
3,340
Cash flows used in investing activities:
Capital expenditures (98) (895)
Net cash used in investing activities (98) (895)
Cash flows used by financing activities:
Borrowings under revolving credit loans 20,440 9,000
Payments under revolving credit loans (25,413) (7,000)
Net borrowings (payments) under swing loans 25 (4,250)
Principal payments under notes payable (750) (1,000)
Principal payments under capital lease obligations (1,258)
(868)
Payments to acquire treasury stock (229) (255)
Net cash used by financing activities (7,185) (4,373)
Net increase (decrease) in cash and cash equivalents 2,305
(1,928)
Cash and cash equivalents at beginning of period 339
2,194
Cash and cash equivalents at end of period $ 2,644 $ 266
Supplemental information:
Cash paid during the period for interest $ 5,990 $ 5,856
</TABLE>
The accompanying notes are an integral part
of these financial statements.
HOMELAND HOLDING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Preparation of Consolidated Financial
Statements.
The accompanying unaudited consolidated financial
statements of Homeland Holding Corporation and
Subsidiary (the "Company") reflect all adjustments
consisting only of normal and recurring adjustments
which are, in the opinion of management, necessary to
present fairly the consolidated financial position and
the consolidated results of operations and cash flows
for the periods presented. These unaudited
consolidated financial statements should be read in
conjunction with the consolidated financial statements
of the Company for the period ended December 31, 1994
and the notes thereto.
2. Accounting Policies.
The policies of the Company are summarized in the
consolidated financial statements of the Company for
the 52 weeks ended December 31, 1994 and the notes
thereto.
3. Restructuring:
In accordance with a strategic plan approved by the
Board of Directors in December 1994, the Company
entered into an agreement with Associated Wholesale
Grocers, Inc. ("AWG") on February 6, 1995, pursuant to
which the Company sold 29 of its stores and its
warehouse and distribution center to AWG. In
connection with this strategic plan, the Company also
plans to close fifteen under-performing stores during
1995, seven of which were closed during the first
quarter of 1995. During the first quarter of 1995, the
Company paid $1,459 of costs associated with the
operational restructuring as follows:
Operational
Operational restructuring Operational
restructuring costs paid in restructuring
reserve at the 12 weeks endedreserve
at
December 31, 1994 March 25, 1995 March 25,
1995
Expenses associated with the
planned store closings,
primarily occupancy costs
from closing date to lease
termination or sublease date $8,319 $(393) $
7,926
Expenses associated with the AWG
Transaction, primarily service
and equipment contract
cancellation fees 5,649 - 5
,649
Estimated severance costs
associated with the AWG
Transaction 5,624 (678) 4
,946
Legal and consulting fees
associated with the
AWG Transaction 4,905 (388) 4
,517
Net gain on sale of property,
plant and equipment to AWG (19,492) - (
19,492)
Operational restructuring
reserve $ 5,005 $(1,459) $
3,546
The separately identifiable revenue and store contribution
to operating profit related to the stores being sold to
AWG or closed and expenses related to the warehouse
facility are as follows:
12 weeks 12 weeks
ended ended
March 25, March 26,
1995 1994
Sales, net $54,722 $60,029
Store contribution to
operating profit before
allocation of administrative
and advertising expenses 2,002 2,574
Warehouse expenses 2,945 2,767
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Comparison of Twelve Weeks Ended March 25, 1995 with
Twelve Weeks Ended March 26, 1994.
Sales. Net sales for the 12 weeks ended March 25,
1995 decreased 3.7% over the net sales of the corresponding
period of 1994. The decrease in net sales was due in part to
the closing of five stores which occurred in the first week of
February 1995. These stores were closed pursuant to the
Company's plan to close certain underperforming stores. The
decrease in net sales was also due to increased competition in
the Company's market area resulting from additional store
openings of Wal-Mart Stores, Inc. ("Wal-Mart") supercenter
stores and Albertson's Inc. stores during 1994. There were 11
new Wal-Mart supercenter stores opened in the Company's market
area during 1994.
Net sales for the 12 weeks ended March 25, 1995 for
the Company's comparable stores decreased 1.8% over the
corresponding prior period due primarily to competitors' store
openings in the Company's market area.
Cost and Expenses. Gross profit as a percentage of
sales for the 12 weeks ended March 25, 1995 decreased to 23.9%
compared to 25.5% for the corresponding period of 1994. The
decrease in gross profit margin is due to increased
promotional pricing in response to the increased competition
in the Company's market area in an effort to remain price
competitive and retain market share. The decrease was also
due to lower vendor retail allowances than in the
corresponding period of 1994. During the first quarter of
1994, additional emphasis was placed on obtaining vendor
retail allowances, which resulted in the Company's receiving
more such allowances during such period than in the first
quarter of 1995. In addition, the availability of vendor
allowances in the first quarter of 1995 was adversely affected
by the pending sale of the Company's warehouse and certain
stores (see Part II-Item 5 "Other Information").
Selling and administrative expenses as a percentage of
sales decreased to 22.5% for the 12 weeks ended March 25, 1995
from 22.7% for the comparable prior period. This decrease was
due in part to a decrease in advertising expenses during the
first quarter of 1995 as compared to the prior year. In the
first quarter of 1994 a special game promotion was run which
resulted in additional advertising cost which did not recur in
1995. The decrease is also due to a reduction in consulting
fees during the first quarter of 1995 compared to the prior
year. Consulting fees were higher during 1994 due to the work
being performed to pursue the Company's strategic plan to sell
certain of its assets (see Part II-Item 5 "Other
Information").
Operating Income. Operating income for the 12 weeks
ended March 25, 1995 decreased to $2.6 million compared to
$5.1 million in the corresponding period of 1994. This
decrease was the result of the decrease in sales and gross
profit margin offset in part by the decrease in selling and
administrative expenses.
Interest Expense. Interest expense for the 12 weeks
ended March 25, 1995 increased to $4.4 million from $4.0
million in the corresponding period of 1994, due to higher
interest rates in the first quarter of 1995 compared to the
first quarter of 1994.
Income Tax Provision. No income tax provision was
recorded for the 12 weeks ended March 25, 1995 as the Company
is projecting a taxable loss for fiscal 1995. The income tax
provision for the 12 weeks ended March 26, 1994 was $707,000.
Income or Loss. The Company recorded a net loss of
$1.9 million for the 12 weeks ended March 25, 1995, compared
to net income of $407,000 for the comparable prior period, due
to the decrease in sales and gross profit margin and the
increase in interest expense, offset in part by the decrease
in selling and administrative expenses.
Liquidity and Capital Resources
The major sources of liquidity for the Company's
operations and expansion have been internally generated funds
and borrowings under credit facilities. In March 1992, the
Company refinanced its indebtedness by entering into an
Indenture with United States Trust Company of New York, as
trustee (the "Senior Note Indenture"), pursuant to which the
Company issued $45 million in aggregate principal amount of
Series A Senior Secured Floating Rate Notes due 1997, bearing
interest at a floating rate of 3% over LIBOR (the "Old
Floating Rate Notes"), and $75 million in aggregate principal
amount of Series B Senior Secured Fixed Rate Notes due 1999,
bearing interest at 11-3/4% per annum (the "Old Fixed Rate
Notes," and together with the Old Floating Rate Notes, the
"Old Notes"). The Old Fixed Rate Notes were not redeemable by
the Company until on or after March 1, 1997.
In October and November 1992, the Company conducted an
offer to exchange its Series D Senior Secured Floating Rate
Notes due 1997 (the "New Floating Rate Notes") for an equal
principal amount of its outstanding Old Floating Rate Notes,
and Series C Senior Secured Fixed Rate Notes due 1999 (the
"New Fixed Rate Notes," and together with the New Floating
Rate Notes, the "New Notes") for an equal principal amount of
its Old Fixed Rate Notes. The Old Notes and the New Notes are
collectively referred to herein as the "Senior Notes". The
New Notes are substantially identical to the Old Notes, except
that the offering of the New Notes was registered with the
Securities and Exchange Commission. Holders of the New Notes
are not entitled to certain rights of holders of the Old
Notes, as described in the prospectus relating to the exchange
offer. At May 1, 1995, $75 million of New Fixed Rate Notes,
$33 million of New Floating Rate Notes and $12 million of Old
Floating Rate Notes are outstanding.
For information regarding recent amendments to the
Senior Note Indenture, see Part II-Item 2 "Changes in
Securities."
In March 1992, the Company entered into a Revolving
Credit Agreement (the "Revolving Credit Agreement") with Union
Bank of Switzerland, New York Branch ("UBS"), as agent and as
lender, and any other lenders and other financial institutions
thereafter parties thereto. The Revolving Credit Agreement
provided a commitment of up to $50 million in secured
revolving credit loans, including a swing loan and certain
letters of credit (the "Revolving Credit Facility").
Borrowings under the Revolving Credit Agreement bore interest
at the UBS Base Rate plus 1.5% or at an adjusted Eurodollar
Rate plus 2.5%, which rates were subject to increase upon
certain conditions. All borrowings under the Revolving Credit
Agreement were subject to a borrowing base and matured no
later than February 25, 1997.
On April 21, 1995, the Company replaced its Revolving
Credit Agreement with a revised revolving facility (the
"Amended and Restated Revolving Credit Agreement"). The
Amended and Restated Revolving Credit Agreement is with
National Bank of Canada ("NBC"), as agent and as lender,
Heller Financial, Inc. and any other lenders thereafter
parties thereto. The Amended and Restated Revolving Credit
Agreement provides a commitment of up to $25 million in
secured revolving credit loans and letters of credit. The
Amended and Restated Revolving Credit Agreement permits (a)
borrowings to refinance the existing Revolving Credit
Agreement and for working capital needs and (b) the issuance
of standby letters of credit and documentary letters of
credit. Borrowings under the Amended and Restated Revolving
Credit Agreement bear interest at the NBC Base Rate plus 1.5%
for the first year. Subsequent year's interest rates will be
dependent upon the Company's earnings but will not exceed the
NBC Base Rate plus 2.0%. All borrowings under the Amended and
Restated Revolving Credit Agreement are subject to certain
borrowing base requirements and mature no later than February
27, 1997, with the possibility of extending the maturity date
to March 31, 1998 at the lenders' sole discretion.
PART II - OTHER INFORMATION
Item 2. Changes in Securities
On April 13, 1995, the Company received consents for
certain amendments to the Senior Note Indenture and certain
related agreements from holders of Senior Notes. The
amendments (a) increased the interest rate on each series of
Notes by one-half of one percent (0.5%) per annum; (b)
amended, added and deleted certain financial covenants and
related definitions under the Senior Note Indenture (including
modifying the Consolidated Fixed Charge Coverage Ratio
covenant, adding a new Debt-to-EBITDA ratio and a new Capital
Expenditures covenant, deleting the Adjusted Consolidated Net
Worth covenant) to reflect the Company's size, operations and
financial position following the AWG Transaction (as hereafter
defined under "Other Information"); (c) amended certain
provisions of the Senior Note Indenture to permit the Company
to incur certain liens and indebtedness and to make an
investment in certain membership stock and receive or earn
patronage certificates or other equity in connection with the
supply agreement to be entered into with Associated Wholesale
Grocers, Inc. ("AWG"); (d) amended certain provisions of a
security agreement securing the Senior Note to provide that
AWG will have a first lien on certain collateral to be
acquired by the Company in connection with the AWG supply
agreement; (e) amended certain other provisions of the Senior
Note Indenture to, among other things, limit the Company's
ability to incur certain future indebtedness and guarantees,
and to provide that a certain amount of net proceeds from
future asset sales must be applied to an offer to redeem the
Senior Notes; and (f) amended a mortgage securing the Senior
Notes to provide that defaults under, or modifications or
terminations of, a certain lease related to a store to be
closed, will not constitute a default or event of default
under the mortgage. On April 21, 1995, the Company and United
States Trust Company of New York, as trustee for the holders
of the Senior Notes, entered into a supplemental indenture
effecting these amendments.
Item 5. Other Information
On April 21, 1995, the Company sold 29 of its stores
and its warehouse and distribution center to AWG pursuant to
an Asset Purchase Agreement dated as of February 6, 1995 (the
"Purchase Agreement") for a cash purchase price of $45 million
plus $27.6 million for the value of inventory in the stores
and the warehouse. The Purchase Agreement required AWG to
assume, or provide certain undertakings with respect to,
certain contracts and lease obligations and pension
liabilities of the Company. At the closing, the Company and
AWG also entered into a seven-year supply agreement, whereby
the Company became a retail member of the AWG cooperative and
AWG became the Company's primary supplier. The transactions
between the Company and AWG are referred to herein as the "AWG
Transaction."
AWG is a buying cooperative which sells groceries on a
wholesale basis to its retail member stores. AWG has 716
member stores located in a nine-state region and is the
nation's fifth largest wholesale distributor, with
approximately $2.6 billion in revenues in 1994.
The Company estimates that net proceeds from the AWG
Transaction will be approximately $37.2 million, approximately
$25.0 million of which will be allocated to the Senior Notes
and approximately $12.2 million of which will be allocated to
indebtedness under the Amended and Restated Revolving Credit
Agreement. The remaining proceeds from the AWG Transaction
will be (i) used to pay certain costs, expenses and
liabilities required to be paid in connection with the AWG
Transaction or (ii) deposited into escrow pending reinvestment
by the Company or application against a subsequent offer to
redeem additional Senior Notes in either case within 180 days
of the closing of the AWG Transaction. Under the Senior Note
Indenture, the Company is required to apply the net proceeds
allocable to the Senior Notes to an offer to redeem the Senior
Notes on a pro rata basis.
The purposes of the AWG Transaction are: (i) to reduce
the Company's borrowed money indebtedness in respect of the
Senior Notes and under the Amended and Restated Revolving
Credit Agreement by approximately $37.2 million in the
aggregate; (ii) to have AWG assume, or provide certain
undertakings with respect to, certain contracts and leases and
certain pension liabilities of the Company; (iii) to sell the
Company's warehouse and distribution center, which will
eliminate the high fixed overhead costs associated with the
operation of the warehouse and distribution center and thereby
permit the Company to close marginal and unprofitable stores;
and (iv) to obtain the benefits of becoming a member of the
AWG cooperative, including increased purchases of private
label products, special product purchases, dedicated support
programs and access to AWG's store systems.
The Company plans to close certain marginal and
unprofitable stores. Such a plan is now financially feasible
because of the sale of the warehouse and the elimination of
the high fixed costs associated with the warehouse operation.
The Company closed seven stores during the first quarter of
1995 and expects to close an additional eight stores by the
end of 1995.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: The following exhibits are
filed as part of this report:
Exhibit No. Description
10y.2
Second Supplement to Indenture,
dated as of April 21, 1995,
among Homeland, Holding and
United States Trust Company of
New York, as Trustee.
10y.3
Amendment No. 2 to the Company
Security Agreement, dated as of
April 21, 1995, between Homeland
and United States Trust Company
of New York as Collateral
Trustee.
10y.4
Amendment No. 1 to the
Intercreditor Agreement, dated
as of April 21, 1995, among
National Bank of Canada, United
States Trust Company of New York
and such other persons as may
become parties to the
Intercreditor Agreement as
provided therein.
10y.5
Amendment No. 1 to the Mortgage
Security Agreement and Financing
Statement, dated as of April 21,
1995, from Homeland to United
States Trust Company of New York
as Collateral Trustee.
10uu
Amended and Restated Revolving
Credit Agreement, dated as of
April 21, 1995, among Homeland,
Holding, National Bank of
Canada, as Agent and lender,
Heller Financial, Inc. and any
other lenders thereafter parties
thereto.
27
Financial Data Schedule.
(b) Reports on Form 8-K: No reports on Form 8-
K were filed during the quarter ended March 25,
1995.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned thereunto
duly authorized.
HOMELAND HOLDING CORPORATION
Date: May 9, 1995 By: /s/ James
A. Demme James A.
Demme, President, Chief
Executive Officer and
Director (Principal
Executive Officer)
Date: May 9, 1995 By: /s/ Larry
W. Kordisch Larry W.
Kordisch, Executive Vice
President/Finance,
Treasurer, Chief Financial
Officer and Secretary
(Principal Financial
Officer)
Date: May 9, 1995 By: /s/ Terry
M. Marczewski Terry M.
Marczewski, Chief
Accounting Officer,
Assistant Treasurer and
Assistant Secretary
(Principal Accounting
Officer)
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SECOND SUPPLEMENT TO INDENTURE, dated as of April 21, 1995, among
HOMELAND STORES, INC., a Delaware corporation (the "Company"),
HOMELAND HOLDING CORPORATION, a Delaware corporation (the
"Guarantor") and UNITED STATES TRUST COMPANY OF NEW YORK, a New
York banking association, as Trustee (the "Trustee").
RECITALS
WHEREAS, the Company, the Guarantor and the
Trustee have heretofore entered into an Indenture (the
"Indenture"), dated as of March 4, 1992, as supplemented by
the First Supplement to Indenture, dated as of June 17,
1992, providing for the issuance of up to $45 million
aggregate principal amount of Series A Senior Secured
Floating Rate Notes Due 1997 ("Series A Notes") and $75
million aggregate principal amount of Series B Senior
Secured Fixed Rate Notes Due 1999 ("Series B Notes");
WHEREAS, the Company has heretofore conducted an
exchange offer, pursuant to which it exchanged (i) $33
million of Series A Notes for an equal principal amount of
its Series D Notes Senior Secured Floating Rate Notes Due
1997 (leaving $12 million of Series A Notes outstanding) and
(ii) $75 million of Series B Notes for an equal principal
amount of its Series C Senior Secured Fixed Rate Notes Due
1999 (leaving no Series B Notes outstanding);
WHEREAS, Section 9.02 of the Indenture provides,
among other things, that the Company and the Trustee may
from time to time enter into indentures supplemental thereto
with the consent of the Securityholders of at least a
majority in principal amount of the Securities then
outstanding (other than Securities owned by the Company or
any of its affiliates) for the purposes of amending certain
provisions of the Indenture;
WHEREAS, the Company wishes to supplement the
Indenture by deleting, modifying or adding certain
provisions thereto or thereof;
WHEREAS, Securityholders of at least a majority in
principal amount of the Securities then outstanding (other
than Securities owned by the Company or any of its
affiliates) have consented to the amendments to the
Indenture set forth herein;
WHEREAS, pursuant to Section 9.02 of the
Indenture, the Company has furnished the Trustee with an
Officers' Certificate certifying that the aforesaid consent
of the Securityholders has been obtained; and
WHEREAS, all things necessary to make this
Supplemental Indenture a valid agreement of the Company and
the Trustee, and a valid amendment of and supplement to the
Indenture, have been done.
NOW, THEREFORE, in consideration of the premises,
the Company and the Guarantor agree with the Trustee as
follows:
ARTICLE I
RELATIONS TO INDENTURE
Section 1.01. Integration. This Second
Supplement to Indenture constitutes an integral part of the
Indenture.
Section 1.02. Capitalized Terms. Capitalized
terms used herein without definition shall have the meanings
specified in the Indenture.
Section 1.03. Conditions to Effectiveness. This
Second Supplement to Indenture shall become effective on the
first date (the "Effective Date"), on or prior to June 1,
1995, on which all of the following conditions shall have
been satisfied: (i) the Trustee shall have received
executed counterparts of this Second Supplement to
Indenture, signed by each of the Company and Holding, and
the Trustee shall have executed this Second Supplement to
Indenture; (ii) the Trustee shall have received the
Officers' Certificate required to be delivered pursuant to
Section 9.02 of the Indenture; (ii) the Trustee shall have
received an Officers' Certificate certifying that the
conditions identified in the Company's Solicitation
Statement, dated April 4, 1995 (the "Solicitation
Statement"), under "The Solicitation -- Conditions of the
Solicitation," have been satisfied; and (iv) the Trustee
shall have received any other Officers' Certificates or
Opinions of Counsel as the Trustee may reasonably request.
ARTICLE II
AMENDMENTS TO ARTICLE I OF INDENTURE
Section 2.01. Amendments of Existing Definitions.
Section 1.01 of the Indenture is amended as follows:
(a) The definition of "Capital Expenditures" is
amended to read in its entirety as follows:
"Capital Expenditures" means, for any
period, the capital expenditures made by the
Company and its Subsidiaries during such period
(including capital expenditures funded from
Note Net Proceeds which are reinvested in
accordance with Section 4.10) less (i) all
capital expenditures, in an amount not
exceeding $6,500,000 in the aggregate, relating
to (a) assets to be purchased by the Company,
and thereafter sold to AWG, in connection with
the AWG Purchase Agreement and (b) assets to be
purchased in connection with stores closed or
to be closed and (ii) capital expenditures in
respect of capital leases entered into in 1994
in an amount equal to $1,500,000."
(b) The definition of "Consolidated Fixed Charge
Coverage Ratio" is amended to read in its entirety as
follows:
"Consolidated Fixed Charge Coverage
Ratio" means, with respect to any period for
which it is to be determined, the ratio
obtained by dividing (i) the aggregate amount
of EBITDA of the Company and its Subsidiaries
on a consolidated basis for such period, less
(a) in the case of periods ending on each of
September 30, 1995 and December 30, 1995, Net
Capital Expenditures for such period, (b) in
the case of periods ending on each of March 23,
1996, June 15, 1996 and September 7, 1996, the
greater of (x) the Minimum Amount for such
period and (y) Net Capital Expenditures for
such period and (c) in the case of periods
ending on and after December 28, 1996, the
greater of (x) $3,000,000 and (y) Net Capital
Expenditures for such period, by (ii) the
Consolidated Interest Expense for such period.
(c) The definition of "Permitted Transactions" is
amended in the manner set forth below.
(i) Subclause (B)(3) of clause (i) of the
definition of "Permitted Transactions" is amended to read in
its entirety as follows:
"(3) loans or advances incurred prior to the
Reference Date and maturing in a period of one
year of less, to officers, directors or
employees to make principal payments of up to
$50,000 at any time that are due under the
indebtedness of such officer, director or
employee in connection with the Management
Subscription Agreements or Stock Subscription
Agreements, and any extension, renewal,
replacement, refunding or refinancing of such
loans or advances, or"
(ii) Clause (ii) of the definition of "Permitted
Transactions" is amended to read in its entirety as follows:
"(ii) guarantees incurred prior to the
Reference Date of Indebtedness of officers,
employees and directors in connection with the
Management Subscription Agreements or Stock
Subscription Agreements and payments in
discharge of such guarantees, and any
extension, renewal, replacement, refunding or
refinancing of such loans or advances;"
(iii) Clause (iii) of the definition of
"Permitted Transactions" is amended by deleting the figure
"$750,000" after the phrase "not to exceed" in the third
line thereof and inserting in lieu thereof "$150,000".
(iv) The definition of "Permitted Transactions"
is further amended by adding the following new subclause
"(D)" at the end of clause (i) thereof:
"(D) to repurchase shares of its common stock
owned by officers and employees of the Company
at a cash purchase price of $0.50 per share,
provided that such repurchases shall not exceed
$600,000 in the aggregate (net of amounts to be
repaid in respect of loans from the Company or
Holding);"
Section 2.02. Addition of New Definitions.
Section 1.01 of the Indenture is amended to insert, in the
appropriate alphabetical sequence, the following
definitions:
(a) "AWG" means Associated Wholesale Grocers,
Inc., a Missouri corporation.
(b) "AWG Equity" means all equity, deposits,
credits, sums and indebtedness of any kind or description
whatsoever, at any time owed by AWG to the Company or at any
time standing in the name of or to the credit of the Company
on the books and/or records of AWG, including, without
limitation, AWG Membership Stock, members deposit
certificates, patronage refund certificates, members
savings, direct patronage or year-end patronage,
concentrated purchase allowance, quarterly payments and any
other amounts due from AWG to the Company under the Supply
Agreement.
(c) "AWG Membership Stock" means the Class A
Common Stock, par value $100 per share, of AWG.
(d) "AWG Purchase Agreement" means the Asset
Purchase Agreement, dated as of February 6, 1995, between
the Company and AWG.
(e) "AWG Sale" means the sale of certain assets
of the Company pursuant to the AWG Purchase Agreement.
(f) "Conversion Expenses" means expenses in
respect of (i) the conversion of the Company from an entity
which buys inventory directly from manufacturers to one that
buys inventory from a wholesaler and (ii) the closure of
stores.
(g) "Debt-to-EBITDA Ratio" means, for any period,
the ratio obtained by dividing (i) the Indebtedness
of the Company and its Subsidiaries on a
consolidated basis as of the last day of such
period, by (ii) the aggregate amount of EBITDA of
the Company and its Subsidiaries on a consolidated
basis for such period.
(h) "EBITDA" of any Person for any period means
the sum of (i) the net income (or net loss) from operations
of such Person and its Subsidiaries on a consolidated basis
(determined in accordance with generally accepted accounting
principles) for such period, without giving effect to any
extraordinary or unusual gains (losses) or gains (losses)
from the sale of assets (other than the sale of Inventory in
the ordinary course of business), plus (ii) to the extent
that any of the items referred to in any of clauses (a)
through (c) below were deducted in calculating such net
income: (a) Consolidated Interest Expense of such Person for
such period; (b) income tax expense of such Person and its
Subsidiaries with respect to their operations for such
period; and (c) the amount of all non-cash charges
(including, without limitation, depreciation and
amortization) of such Person and its Subsidiaries for such
period; provided, however, that in calculating EBITDA of the
Company and its Subsidiaries (x) the non-cash reserve taken
in fiscal 1994 in respect of workers compensation in an
amount not exceeding $5,000,000 and (y) Conversion Expenses
in an amount not exceeding in the aggregate $3,000,000,
consisting of up to $2,800,000 in such expenses during 1995
and up to $400,000 in such expenses in 1996, shall be added
back to net income (or net loss) from operations to the
extent deducted in calculating such net income (or net
loss).
(i) "First Offer Rights" mean (i) AWG's right of
first offer with respect to the stores owned or operated by
the Company listed on Exhibit B of the Supply Agreement, as
such agreement may be amended from time to time and (ii) any
public recordation of such first offer rights, provided that
any such public recordation shall be terminable from time to
time as set forth in Section 7(f) of the Supply Agreement.
(j) "Major Remodel" means capital expenditures
made in respect of one of the Company's stores in an amount
exceeding, or expected to exceed, $400,000.
(k) "Membership Sign-Up Documents" means (i) the
Application for Membership by Homeland Stores, Inc.,
between the Company and AWG and (ii) the Stock Power
of Attorney granted to AWG by the Company with
respect to the AWG Membership Stock owned by the
Company;
(l) "Minimum Amount" means, for the fiscal
quarter period ending on each of the dates set forth
below, the amount specified opposite such date:
Date Amount
3/23/96 $ 750,000
6/15/96 $1,500,000
9 7/96 $2,250,000
(m) "Net Capital Expenditures" means, for any
period, the capital expenditures made by the Company and its
Subsidiaries in such period less (i) net cash proceeds from
the sale of assets which are reinvested pursuant to the
Indenture during such period, (ii) capital expenditures, in
an amount not exceeding $6,500,000 in the aggregate,
relating to (a) assets to be purchased by the Company, and
thereafter sold to AWG, in connection with the AWG Purchase
Agreement and (b) assets to be purchased by the Company in
connection with stores closed or to be closed and (iii)
capital expenditures in respect of capital leases entered
into in 1994 in an amount equal to $1,500,000.
(n) "Post-AWG Note Net Proceeds" means all Note
Net Proceeds received by the Company or its
Restricted Subsidiaries from Asset Sales occurring
after the closing date of AWG Sale.
(o) "Reference Date" means March 30, 1995.
(p) "Supply Agreement" means the Supply
Agreement, dated as of closing date of the AWG Sale,
between the Company and AWG.
(q) "Use Restrictions" means (i) the Company's
agreement under Section 8(b) of the Supply Agreement to
dedicate (to the extent of its interest therein (including
leasehold interests)) certain real property and the
improvements thereon to the exclusive use of a retail
grocery facility (including all activities which from time
to time are commonly associated with the operation of a
grocery facility) which is owned by a retail member of AWG
and (ii) any public recordation of such agreement, provided
that any such public recordation shall be terminable from
time to time as set forth in Section 8(b) of the Supply
Agreement.
Section 2.03. Deletion of Certain Definition.
Section 1.01 of the Indenture is amended by deleting the
definition of "Cash Flow" in its entirety.
ARTICLE III
AMENDMENTS TO ARTICLE IV OF INDENTURE
Section 3.01. Amendment to Section 4.05 of the
Indenture. Section 4.05 of the Indenture is amended by
adding the following new subsection (i):
"(i) Within 60 days after the end of
each fiscal quarter of the Company and within
120 days after the end of each fiscal year of
the Company an Officers' Certificate,
conforming to the requirements set forth in
Sections 12.04 and 12.05 hereof, stating that
Conversion Expenses included in the Company's
calculation of EBITDA for the previous fiscal
quarter were consistent with the definition of
the Conversion Expenses set forth in Section
1.01 of the Indenture and such Conversion
Expenses were determined in accordance with
generally accepted accounting principles."
Section 3.02. Amendment to Section 4.09 of the
Indenture. Section 4.09 of the Indenture is amended in the
manner set forth below.
(a) Clause (i) of subsection (c) of the Section
4.09 is amended to delete the figure "50,000,000" contained
therein and inserting in lieu thereof $"25,000,000".
(b) Clause (ii) of subsection (c) of Section 4.09
is amended to read in its entirety as follows:
"(ii) The Company may guarantee the principal
amount of borrowings by officers, employees and
directors in connection with the Management
Subscription Agreements and Stock Subscription
Agreements, provided that any such guarantee
was incurred prior to the Reference Date."
(c) Clause (i)(A) of subsection (d) of
Section 4.09 is amended to delete the figure "$50,000,000"
and inserting in lieu thereof "$25,000,000."
(d) Section 4.09 is further amended by adding the
following new subsection (f):
"(f) Notwithstanding anything to the
contrary in this Section 4.09, the Company may
incur Indebtedness in respect of the
obligations owed to AWG under the Supply
Agreement and the Membership Sign-Up
Documents."
Section 3.03. Amendment to Section 4.10 of the
Indenture. Section 4.10 of the Indenture is amended in the
manner set forth below.
(a) Clause (ii) of subsection (a) of Section 4.10
is amended to read in its entirety as follows:
"The Company and any Restricted
Subsidiaries of the Company may consummate an
Asset Sale for cash consideration at not less
than the fair market value thereof (as
determined in good faith by the Company's Board
of Directors), provided that (A) (1) the
Company may, within 180 days of the closing
date of the AWG Sale, reinvest, or commit to
reinvest, up to $5 million of the Note Net
Proceeds from the AWG Sale in Collateral
consisting of capital expenditures and (2) the
remaining Note Net Proceeds from the AWG Sale,
plus any Note Net Proceeds which were committed
to be reinvested under clause (1) above but
which are not subsequently reinvested, shall be
applied by the Company to an offer to redeem
the Notes in accordance with Article 3 hereof,
(B) following the date on which the Company and
its Restricted Subsidiaries have received Post-
AWG Note Net Proceeds in an amount equal to
$2,000,000, the Company shall make an offer to
redeem $2,000,000 in aggregate principal amount
of Notes in accordance with Article 3 hereof,
(C) following the date on which the Company and
its Restricted Subsidiaries have received Post-
AWG Note Net Proceeds in an amount equal to the
sum (the "Aggregate Special Redemption Amount")
of (1) $3,800,000 plus (2) the excess (if any)
of $25,500,000 over the aggregate principal
amount of Notes redeemed by the Company in
connection with the AWG Sale, the Company shall
make an offer to redeem the Notes in an amount
equal to the excess of the Aggregate Special
Redemption Amount over $2,000,000 in accordance
with Article 3 hereof and (D) all Post-AWG Note
Net Proceeds received by the Company and its
Restricted Subsidiaries in excess of the
Aggregate Special Redemption Amount shall be
either (1) applied by the Company to an offer
to redeem the Notes in accordance with
Article 3 hereof or (2) reinvested, or
committed to be reinvested, within 180 days of
the closing date of the Asset Sale relating to
such proceeds, in Collateral consisting of
capital expenditures, or if such proceeds that
were committed to be reinvested are not
subsequently reinvested, such proceeds shall be
applied by the Company to an offer to redeem
the Notes in accordance with Article 3 hereof
(provided that the Company will not be
obligated to make an offer pursuant to this
clause (D) until such time as the excess of the
Post-AWG Note Net Proceeds not invested, or
committed to be reinvested, in accordance with
this Section 4.10, over the Aggregate Special
Redemption Amount aggregates at least
$1,000,000)."
(b) Clause (v) of subsection (a) of Section 4.10
is amended to read in its entirety as follows:
"(v) the Company and any Restricted
Subsidiary of the Company may make sales of
real property (including leasehold interests
therein and fixtures related thereto) which in
the good faith opinion of the Company's Board
of Directors are immaterial to the business or
operations of the Company and its Subsidiaries
in the aggregate, provided that any such sale
resulting in Net Proceeds of $500,000 or more
shall be required to be applied in accordance
with the provisions of the preceding clauses
(a)(ii)(B), (C) and (D).
(c) Clause (vi) of subsection (a) of Section 4.10
is amended to read in its entirety as follows:
"(vi) The Company and any Restricted
Subsidiary of the Company may make sales of
assets and/or property in order to comply with
any applicable law, provided that any such sale
resulting in Net Proceeds of $500,000 or more
shall be required to be applied in accordance
with the provisions of the preceding clauses
(a)(ii)(B), (C) and (D).
(d) Subsection (b) of Section 4.10 is hereby
amended by deleting the phrase "clauses (a)(ii)(x) and
(a)(ii)(y)" contained therein and inserting in lieu thereof
the phrase "clauses (a)(ii)(B), (C) and (D)".
Section 3.04. Amendment to Section 4.11 of the
Indenture. Section 4.11 of the Indenture is amended in the
manner set forth below.
(a) Subsection (c) of Section 4.11 is amended by
deleting the text contained in such subsection and inserting
in lieu thereof the words "[Intentionally Omitted]".
(b) Subsection (g) of Section 4.11 is amended by
deleting the word "and" after the phrase "Section 4.10
hereof;".
(c) Section 4.11 is further amended by adding the
following new subsection (i):
"(i) investments consisting of (a) the
purchase by the Company of 15 shares of AWG
Membership Stock and (b) AWG members deposit
certificates, patronage refund certificates or
similar types of AWG Equity received or earned
by the Company from time to time based on the
Company's gross purchases from AWG pursuant to
the Supply Agreement or in lieu of receiving
cash rebates or refunds from AWG; and"
(d) Section 4.11 is further amended by adding the
following new subsection (j):
"(j) investments consisting of
(i) purchases of capital stock, in an aggregate
amount not exceeding $25,000, of retail
purchasing cooperatives (including, without
limitation, Farm Fresh, Inc., an Oklahoma
retail dairy cooperative ("Farm Fresh")) in
connection with becoming a member of such
cooperatives and (ii) additional capital stock
of such cooperatives which is received or
earned by the Company, in an aggregate amount
not exceeding $600,000 in the case of Farm
Fresh and $150,000 in the case of all other
cooperatives, based on the Company's gross
purchases from such cooperatives or in lieu of
receiving cash rebates or refunds from such
cooperatives, provided that, in each case, such
stock is purchased, received or earned in
connection with a supply agreement or
arrangement between the Company and such
cooperative which is on terms at least as
favorable to the Company as the terms that
could be obtained by the Company in a
comparable transaction made on an arms' length
basis with another cooperative, wholesaler or
supplier."
Section 3.05. Amendment to Section 4.12 of the
Indenture. Section 4.12 is amended by amending subsection
(a) thereof to read in its entirety as follows:
"(a) transactions the terms of which
are, in the good faith determination of the
Board of Directors, at least as favorable as
the terms that could be obtained by the Company
or such Restricted Subsidiary, as the case may
be, in a comparable transaction made on an
arms' length basis by the Company or such
Restricted Subsidiary with an unrelated
Person;"
Section 3.06. Amendment to Section 4.13 of the
Indenture. Section 4.13 of the Indenture is amended in the
manner set forth below.
(a) Subsection (h) of Section 4.13 is amended by
deleting the figure "$20,000,000" and inserting in lieu
thereof "$1,000,000".
(b) Section 4.13 is further amended by deleting
subsection (i) thereof and inserting in lieu thereof the
following new subsections (i), (j), (k) and (l):
"(i) Liens on AWG Equity owned or hereafter
acquired by the Company to secure the Company's
obligations to AWG under the Supply Agreement
and the Membership Sign-Up Documents; (j) Liens
consisting of the Use Restrictions; (k) Liens
consisting of the First Offer Rights; and (l)
any extension, renewal, or replacement (or
successive extensions, renewals or
replacements), in whole or in part, of Liens
permitted pursuant to subsections (a) through
(k) above".
Section 3.07. Amendment to Section 4.16 of the
Indenture. Section 4.16 of the Indenture is amended by
deleting the text contained in such section and inserting in
lieu thereof the words "[Intentionally Omitted]."
Section 3.08. Amendment to Section 4.21 of the
Indenture. Section 4.21 of the Indenture is amended to read
in its entirety as follows:
"Section 4.21. Maintenance of Consolidated
Fixed Charge Coverage Ratio.
The Company shall not permit its
Consolidated Fixed Charge Coverage Ratio for
the four fiscal quarter period ending on each
date set forth below to be less than the amount
set forth opposite such date:
Date Ratio
9/9/95 1.00:1
12/30/95 1.00:1
3/23/96 1.10:1
6/15/96 1.10:1
9/7/96 1.10:1
12/28/96 1.10:1
3/22/97 1.25:1
6/14/97 1.30:1
9/6/97 1:30:1
1/3/98 1:35:1
3/28/98 1:35:1
6/20/98 1:35:1
9/12/98 1:35:1
1/2/99 1:50:1
and each fiscal
quarter end
thereafter"
Section 3.09. Addition of Section 4.27 to the
Indenture. Article IV of the Indenture amended by adding
the following new Section 4.27:
"Section 4.27. Maintenance of Debt-to-EBITDA
Ratio.
The Company shall not permit its Debt-to-
EBITDA Ratio for the four fiscal quarter period
ending on each date set forth below to be
greater
than the amount set forth opposite such date:
Date Ratio
9/9/95 6.60:1
12/30/95 6.60:1
3/23/96 6.60:1
6/15/96 6.25:1
9/7/96 6.00:1
12/28/96 5.50:1
3/22/97 5.35:1
6/14/97 5.00:1
9/6/97 5:00:1
1/3/98 5:00:1
3/28/98 5:00:1
6/20/98 5:00:1
9/12/98 5:00:1
1/2/99 4:50:1
and each fiscal
quarter end
thereafter"
Section 3.10. Addition of Section 4.28 to the
Indenture. Article IV of the Indenture is amended by adding
the following new Section 4.28:
"Section 4.28. Capital Expenditures.
The Company shall not suffer or permit
Capital Expenditures of the Company and its
Subsidiaries to exceed, in any fiscal year, the
amount set forth below opposite such fiscal
year:
Period Amount
1995 $6,000,000
1996 $6,000,000
1997 $6,000,000
1998 $6,000,000
; provided that the Company may make up to
$4,000,000 in additional Capital Expenditures
for Major Remodels (i) during the four-quarter
period beginning on the day following the first
fiscal quarter in which the Company's
Consolidated Fixed Charge Coverage Ratio is
1.30:1 or greater (the "First Qualifying
Period") and (ii) during the four-quarter
period beginning on the day following the first
fiscal quarter in which the Company's
Consolidated Fixed Charge Coverage Ratio is
1.50:1 or greater (the "Second Qualifying
Period") (which fiscal quarter must be at least
four quarters after the fiscal quarter referred
to in clause (i) of this proviso); provided,
further, that the Company may make additional
Capital Expenditures in any period in any
amount equal to the amount of Capital
Expenditures permitted during any prior period
and not made; provided further that no portion
of the amount permitted to be used for Capital
Expenditures during the First Qualifying Period
or the Second Qualifying Period may be used for
Capital Expenditures in any subsequent period
unless (i) as of the last day of the First
Qualifying Period or the Second Qualifying
Period, as the case may be, the Company's
Consolidated Fixed Charge Coverage Ratio is at
least 1.30:1 or 1.50:1, respectively, or (ii)
on or prior to the last day of the First
Qualifying Period or the Second Qualifying
Period, as the case may be, the Company has
entered into commitments to use any such
portion for Capital Expenditures."
ARTICLE IV
AMENDMENTS TO ARTICLE V OF INDENTURE
Section 4.01. Amendment of Section 5.01 of the
Indenture. Section 5.01 is amended as follows:
(a) Subsection (2) of Section 5.01 is amended to
add the following words after the phrase "under the Purchase
Agreement" in the last line thereof:
"and the perfection and priority of the
security interest in and Liens on the
Collateral are maintained unimpaired and in
full force and effect;"
(b) The second full paragraph of subsection (5)
of Section 5.01 is amended by inserting the words "at least
ten (10) days" after the phrase "each Securityholder" in the
first line thereof.
ARTICLE V
AMENDMENTS TO FORMS OF SECURITIES
Section 5.01. Amendment to Exhibit B. The
definition of "Applicable LIBOR Rate" in the fourth
paragraph of Section 1 of Exhibit B is amended by deleting
the phrase "300 basis points" contained therein and
inserting in lieu thereof the phrase "350 basis points".
Section 5.02. Amendment to Exhibit M. The first
paragraph of Section 1 of Exhibit M is amended by deleting
the phrase "at a rate per annum equal to 11-3/4%" contained
therein and inserting in lieu thereof the phrase "at a rate
per annum equal to 12-1/4%".
Section 5.03. Amendment to Exhibit N. The
definition of "Applicable LIBOR Rate" in the fourth
paragraph of Section 1 of Exhibit N is amended by deleting
the phrase "300 basis points" contained therein and
inserting in lieu thereof the phrase "350 basis points".
Section 5.04. Deemed Amendments. Each
outstanding Security issued prior to the Effective Date
shall be deemed to be amended, as of the Effective Date, to
reflect the amendments relating to such Security set forth
in this Second Supplement to Indenture.
ARTICLE VI
AMENDMENTS TO CERTAIN RELATED DOCUMENTS
Section 6.01. Amendment to Company Security
Agreement. On the Effective Date, the Trustee is authorized
to execute and deliver Amendment No. 1 to the Company
Security Agreement, in the form attached hereto as Annex A
(the "Amended Security Agreement"). As of the Effective
Date, Exhibit E to the Indenture shall be deemed to be
amended to reflect the amendments set forth in Amended
Security Agreement.
Section 6.02. Amendment to Mortgage. On the
Effective Date, the Trustee is authorized to execute and
deliver Amendment No. 1 to the Mortgage, in the form
attached hereto as Annex B (the "Amended Mortgage"). As of
the Effective Date, Exhibit G to the Indenture shall be
deemed to be amended to reflect the amendments set forth in
the Amended Mortgage.
Section 6.03. Amendment to Intercreditor
Agreement. On the Effective Date, the Trustee is authorized
to execute and deliver Amendment No. 1 to the Intercreditor
Agreement, in the form attached hereto as Annex C (the
"Amended Intercreditor Agreement"). As of the Effective
Date, Exhibit L to the Indenture shall be deemed to be
amended to reflect the amendments set forth in the Amended
Intercreditor Agreement.
ARTICLE VII
CONSENT FEE
Section 7.01. Payment of Consent Fee. As
promptly as practicable after the Effective Date, the
Company shall pay to each Securityholder who, prior to the
expiration date set forth in the Solicitation Statement,
delivered (and did not revoke) a consent in respect of the
amendments set forth in this Second Supplement to Indenture,
a consent fee in an amount equal to $5.00 for each $1,000
principal amount of Notes in respect of which such consent
has been delivered.
ARTICLE VIII
MISCELLANEOUS
Section 8.01 Ratification. The Indenture, as
supplemented and amended by this Second Supplement to
Indenture is in all respects hereby adopted, ratified and
confirmed.
Section 8.02. Governing Law. This Second
Supplement to Indenture shall be governed by and construed
in accordance with the laws of the State of New York.
Section 8.03. Counterparts. This Second
Supplement to Indenture may be executed in any number of
counterparts, each of which so executed shall be an
original, but such counterparts shall together constitute
but one and the same instrument.
Section 8.04. Headings. The article and section
headings of this Second Supplement to Indenture are for
convenience only and shall not affect the construction
hereof.
IN WITNESS WHEREOF, the parties hereto have
executed this Second Supplement to Indenture as of the date
first above written.
HOMELAND STORES, INC.,
as Issuer
By: /s/ Mark S. Sellers
Executive Vice President -
Finance
UNITED STATES TRUST COMPANY OF
NEW YORK, as Trustee
By: /s/ Robert E. Patterson, III
Asst. Vice President
HOMELAND HOLDING CORPORATION,
as Guarantor
By: /s/ Mark S. Sellers
Executive Vice President -
Finance
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SECOND SUPPLEMENT TO INDENTURE
among
HOMELAND STORES, INC.,
HOMELAND HOLDING CORPORATION
and
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
Dated as of April 21, 1995
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Page
ARTICLE I
RELATIONS TO INDENTURE; EFFECTIVE DATE 2
Section 1.01. Integration 2
Section 1.02. Capitalized Terms 2
Section 1.03.Conditions to Effectiveness 2
ARTICLE II
AMENDMENTS TO ARTICLE I OF INDENTURE 3
Section 2.01.Amendments of Existing Definitions 3
Section 2.02.Addition of New Definitions 4
Section 2.03.Deletion of Certain Definition 7
ARTICLE III
AMENDMENTS TO ARTICLE IV OF INDENTURE 8
Section 3.01.Amendment to Section 4.05 of the Indenture
8
Section 3.02.Amendment to Section 4.09 of the Indenture
8
Section 3.03.Amendment to Section 4.10 of the Indenture
9
Section 3.04.Amendment to Section 4.11 of the Indenture
11
Section 3.05.Amendment to Section 4.12 of the Indenture
12
Section 3.06.Amendment to Section 4.13 of the Indenture
12
Section 3.07.Amendment to Section 4.16 of the Indenture
12
Section 3.08.Amendment to Section 4.21 of the Indenture
13
Section 3.09.Addition of Section 4.27 to the Indenture 13
Section 3.10.Addition of Section 4.28 to the Indenture 14
ARTICLE IV
AMENDMENTS TO ARTICLE V OF INDENTURE 15
Section 4.01.Amendment of Section 5.01 of the Indenture
15
ARTICLE V
AMENDMENTS TO FORMS OF SECURITIES 16
Section 5.01. Amendment to Exhibit B 16
Section 5.02. Amendment to Exhibit M 16
Section 5.03. Amendment to Exhibit N 16
Section 5.04. Deemed Amendments 16
ARTICLE VI
AMENDMENTS TO CERTAIN RELATED DOCUMENTS 16
Section 6.01.Amendment to Company Security Agreement 16
Section 6.02. Amendment to Mortgage 16
Section 6.03.Amendment to Intercreditor Agreement 17
ARTICLE VII
CONSENT FEE 17
Section 7.01. Payment of Consent Fee 17
ARTICLE VIII
MISCELLANEOUS 17
Section 8.01 Ratification 17
Section 8.02. Governing Law 17
Section 8.03. Counterparts 17
Section 8.04. Headings 17
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11127989
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AMENDMENT NO. 2 TO THE COMPANY SECURITY AGREEMENT
AMENDMENT NO. 2, dated as of April 21, 1995, to
the Company Security Agreement, dated as of March 4, 1992
(the "Security Agreement"), between Homeland Stores, Inc., a
Delaware corporation (the "Company"), and United States
Trust Company of New York, a New York banking corporation,
as collateral trustee (the "Collateral Trustee") for the
holders of the Senior Secured Notes (as hereinafter defined)
(the "Securityholders"). Capitalized terms used herein and
not otherwise defined herein shall have the meaning given to
such terms in the Indenture.
RECITALS
WHEREAS, the Company, Homeland Holding Corporation
("Holding"), and the Collateral Trustee have heretofore
entered into an Indenture, dated as of March 4, 1992, as
supplemented by First Supplement to Indenture, dated as of
June 17, 1992 (the "Indenture"), providing for the issuance
of up to $120,000,000 in aggregate principal amount of the
Company's senior secured notes (together with any securities
issued in replacement thereof or in exchange or substitution
thereof, the "Senior Secured Notes");
WHEREAS, pursuant to the terms of the Indenture,
to secure the payment and performance by the Company of the
Obligations, the Company and the Collateral Trustee have
heretofore entered into the Security Agreement, whereby the
Company has granted to the Collateral Trustee for the
ratable benefit of the Securityholders a security interest
in and to the Collateral; and
WHEREAS, Securityholders of at least a majority in
principal amount of the Senior Secured Notes then
outstanding (other than Senior Secured Notes owned by the
Company or any of its affiliates) have consented to the
amendments to the Security Agreement set forth herein.
NOW, THEREFORE, in consideration of the foregoing
and for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and
the Collateral Trustee (for the ratable benefit of the
Securityholders) agree as follows:
Section 1. Amendment to Section 2(b) of the
Security Agreement. Section 2(b) of the Security Agreement
is amended by adding the following proviso at the end
thereof:
"; provided, however, that the
Collateral Trustee's security interest
in Collateral consisting of AWG Equity
shall be subordinate and junior to AWG's
first priority security interest in the
AWG Equity under the Supply Agreement
and the Membership Sign-Up Documents."
Section 2. Amendment to Section 3(c) of the
Security Agreement. Section 3(c) of the Security Agreement
is amended to read in its entirety as follows:
"The Company is (or, to the extent
that this Security Agreement states that
the Collateral is to be acquired after
the date hereof, will be) the sole owner
of the Collateral; the security interest
created hereby in Collateral is a valid,
enforceable, perfected and first
priority security interest in the
Collateral securing the payment of the
Obligations (provided, however, that the
security interest granted hereby in
Collateral consisting of AWG Equity
shall be valid, enforceable and
perfected and prior to all other
security interests in such Collateral
other than the security interest in
favor of AWG under the Supply Agreement
and the Membership Sign-Up Documents)
and there are no other security
interests in, Liens on, adverse claims
of title to, or any other interests
whatsoever in, the Collateral or any
portion thereof except (i) Liens
permitted to be incurred pursuant to
Section 4.13 of the Senior Secured Note
Indenture ("Authorized Liens") and (ii)
to the extent that proceeds from certain
sales of assets may be applied to
certain other indebtedness of the
Company as provided in Section 4.10 of
the Senior Secured Note Indenture; and
no financing statement, notice of Lien,
assignment or collateral assignment,
mortgage or deed of trust covering the
Collateral or any portion thereof ("Lien
Notice") exists or is on file in any
public office, except with respect to
Authorized Liens;"
Section 3. Ratification. The Security Agreement,
as amended by this Amendment No. 2 is hereby in all respects
ratified and confirmed.
Section 4. Governing Law. This Amendment No. 2
shall be governed by, and construed in accordance with, the
laws of the State of New York, without regard to conflicts
of laws principles.
Section 5. Counterparts. This Amendment No. 2
may be executed in any number of counterparts, each of which
shall, when executed, be deemed to be an original and all of
which shall be deemed to be one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have
executed this Amendment No. 2 as of the date first above
written.
HOMELAND
STORES, INC., a Delaware
corporation
By: /s/ Mark S. Sellers
Name: Mark S. Sellers
Title: Executive Vice
President - Finance
UNITED STATES
TRUST COMPANY OF NEW
YORK, as Trustee under the
Indenture
By: /s/ Robert E. Patterson, III
Name: Robert E. Patterson, III
Title: Asst. Vice President
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11127996
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AMENDMENT NO. 1 TO THE INTERCREDITOR AGREEMENT
AMENDMENT NO. 1, dated as of April 21, 1995, to
the Intercreditor Agreement, dated as of March 4, 1992 (the
"Intercreditor Agreement"), among National Bank of Canada
("NBC"), as Credit Agreement Agent under the Current Credit
Agreement, United States Trust Company of New York, as
Trustee under the Senior Note Indenture ("U.S. Trust") and
such other persons as may become parties to the
Intercreditor Agreement as provided therein. All
capitalized terms used herein and not otherwise defined
herein shall have the meaning given to such terms in the
Intercreditor Agreement.
RECITALS
WHEREAS, Homeland Stores, Inc., a Delaware
corporation (the "Company"), Union Bank of Switzerland, New
York Branch ("UBS"), and certain lenders and financial
institutions have heretofore entered into the Current Credit
Agreement pursuant to which the Company has granted a
security interest in certain assets of the Company;
WHEREAS, the Current Credit Agreement has been
amended and restated, pursuant to which, among other things,
NBC has replaced UBS as Credit Agreement Agent;
WHEREAS, the Company, Homeland Holding
Corporation, a Delaware corporation ("Holding"), and the
Trustee have heretofore entered into the Senior Note
Indenture and a related security agreement pursuant to which
the Company and Holding have granted security interests in
certain of their respective assets;
WHEREAS, holders of majority in principal amount
of the securities issued pursuant to the Senior Note
Indenture then outstanding (other than such securities owned
by the Company or any of its affiliates) have consented to
the amendments to the Intercreditor Agreement set forth
herein; and
WHEREAS, pursuant to Section 7 of the
Intercreditor Agreement, the Parties wish to enter into this
Amendment No. 1 in order to effect certain amendments to the
Intercreditor Agreement.
NOW, THEREFORE, in consideration of the foregoing
and for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties
agree as follows:
Section 1. Amendment to Section 2(b) of the
Intercreditor Agreement. Section 2(b) of the Intercreditor
Agreement is amended to read in its entirety as follows:
"(b) Notwithstanding any other provision
of any Security Document, until the Senior
Note Indenture has been discharged or
satisfied, any and all amounts actually
received by the Credit Agreement Agent or
lender under any Credit Agreement (i) in
connection with the enforcement of any
Security Document relating to Joint
Collateral or (ii) in connection with a
distribution in a bankruptcy, insolvency or
similar proceeding, constituting the proceeds
of any collection, sale or other disposition
thereof, shall be transmitted by such Party
to the Trustee for the benefit of the holders
of the Senior Notes."
Section 2. Ratification. The Intercreditor
Agreement, as amended by this Amendment No. 1, is hereby in
all respects ratified and confirmed.
Section 3. Governing Law. This Amendment No. 1
shall be governed by, and construed in accordance with, the
laws of the State of New York, without regard to conflicts
of laws principles.
Section 4. Trust Indenture Act. To the extent
applicable, if any provision of this Amendment No. 1 limits,
qualifies or conflicts with the duties imposed by the
Trustee by the Trust Indenture Act of 1939, as amended (the
"TIA"), the TIA shall control. Any action required to be
taken in order to comply with the TIA shall be taken by the
Trustee.
Section 5. Counterparts. This Amendment No. 1
may be executed in any number of counterparts, each of which
shall, when executed, be deemed to be an original and all of
which shall be deemed to be one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have
executed this Amendment No. 1 as of the date first above
written.
NATIONAL BANK OF CANADA, as Agent
under the Current Credit
Agreement
By: /s/ Larry L. Sears
Larry L. Sears
Group Vice President
By: /s/
David Schreiber
David Schreiber
Assistant Vice President
UNITED STATES TRUST COMPANY OF NEW
YORK, as Trustee under the Senior
Note Indenture
By: /s/ Robert E. Patterson, III
Robert E. Patterson, III
Assistant Vice President
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11127999
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AMENDMENT NO. 1 TO THE MORTGAGE,
SECURITY AGREEMENT AND FINANCIAL STATEMENT
AMENDMENT NO. 1, dated as of April 21, 1995, to
the Mortgage, Security Agreement and Financing Statement,
dated as of March 4, 1992 (the "Mortgage"), from Homeland
Stores, Inc., a Delaware corporation (the "Mortgagor"), to
United States Trust Company of New York, a New York banking
corporation, as collateral trustee (the "Collateral Trust
ee") for the ratable benefit of the holders of the Senior
Secured Notes (as hereinafter defined) (the "Noteholders").
Capitalized terms used herein and not otherwise defined
herein shall have the meaning given to such terms in the
Mortgage.
RECITALS
WHEREAS, Mortgagor is the owner of a fee estate in
all buildings, structures and improvements (the
"Improvements") and the real property underlying and
adjacent to said Improvements described on Schedule A with
respect to those properties set forth on Schedule 1 and
Mortgagor is the owner of a leasehold estate in all
Improvements located on the land described in Schedule A
(and the holder of a leasehold estate in and to all or a
portion of the underlying land) with respect to those
properties set forth on Schedule 2;
WHEREAS, Mortgagor, Homeland Holding Corporation
("Holding"), and the Collateral Trustee have heretofore
entered into an Indenture, dated as of March 4, 1992, as
supplemented (the "Indenture"), providing for the issuance
of up to $120,000,000 in aggregate principal amount of the
Company's senior secured notes (together with any securities
issued in replacement thereof or in exchange or substitution
thereof, the "Senior Secured Notes");
WHEREAS, pursuant to the terms of the Indenture,
to secure the payment and performance by the Company of the
Obligations, the Company and the Collateral Trustee have
heretofore entered into the Mortgage, whereby the Company
has granted to the Collateral Trustee for the ratable bene
fit of the Noteholders a security interest in the Mortgaged
Property; and
WHEREAS, Noteholders of at least a majority in
principal amount of the Senior Secured Notes then outstand
ing (other than Senior Secured Notes owned by the Company or
any of its affiliates) have consented to the amendments to
the Mortgage set forth herein.
NOW, THEREFORE, in consideration of the foregoing
and for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and
the Collateral Trustee (for the ratable benefit of the
Noteholders) agree as follows:
Section 1. Amendment to Section 15 of the Mort
gage. Section 15 of the Mortgage is amended by adding the
following new subsection (h) at the end thereof:
"(h) Notwithstanding anything in this Mortgage to
the contrary (including, without limitation,
Sections 3(a), 4, 15(b)(2) and 15(b)(5) hereof), no
default under, modification or termination of, or
any action or inaction with regard to, the Lease
Contract, dated July 19, 1991, as supplemented,
between Mortgagor and Weingarten/Oklahoma, Inc.
(including any agreement relating thereto), relating
to Homeland Store No. 106 - Max Saver Foods, Reno
and Air Depot, Midwest City, Oklahoma, shall
constitute a default or event of default hereunder".
Section 3. Ratification. The Mortgage, as amend
ed by this Amendment No. 1, is hereby in all respects rat
ified and confirmed.
Section 4. Governing Law. This Amendment No. 1
shall be governed by, and construed in accordance with, the
laws of the State of New York, without regard to conflicts
of laws principles.
Section 5. Counterparts. This Amendment No. 1
may be executed in any number of counterparts, each of which
shall, when executed, be deemed to be an original and all of
which shall be deemed to be one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have ex
ecuted this Amendment No. 1 as of the date first above writ
ten.
HOMELAND
STORES, INC.
By:/s/ Mark S. Sellers
Name: Mark S. Sellers
Title: Executive Vice
President-Finance
ATTEST:
By:/s/ James A. Demme
Name: James A. Demme
Title: President and Chief
Executive Officer
3 0015204.wpf
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT, dated
as of April 21, 1995 among HOMELAND STORES, INC., a Delaware
corporation (the "Borrower"), HOMELAND HOLDING CORPORATION, a
Delaware corporation ("Parent"), the lenders and other financial
institutions which are now or may hereafter become parties hereto
(such lenders and other financial institutions and their
respective successors and assigns, individually, a "Lender" and
collectively, the "Lenders"), and NATIONAL BANK OF CANADA,
individually ("NBC") and as agent for the Lenders (in such
capacity, the "Agent").
WHEREAS, Borrower is a party to that certain Revolving
Credit Agreement, dated as of March 4, 1992 (as amended, the
"Existing Agreement"), by and among Borrower, Parent, the lenders
and other financial institutions parties thereto (the "Existing
Lenders"), and Union Bank of Switzerland, New York Branch
("UBS"), individually and as agent for the Existing Lenders;
WHEREAS, Borrower, Lenders and the Agent desire to
enter into this Agreement to amend, restate and modify (but not
extinguish) in its entirety the Existing Agreement through the
execution of this Agreement, which will supersede and control all
prior agreements among the parties hereto;
WHEREAS, Lenders desire to amend the Existing Agreement
to, among other things, appoint NBC as the Agent for the Lenders
and to replace UBS as agent;
WHEREAS, Borrower desires to borrow from the Lenders
hereunder from time to time certain sums on a revolving credit
basis, the proceeds of which shall be applied to its working
capital needs and for other general corporate purposes consistent
with the terms of this Agreement;
WHEREAS, Borrower desires to cause each Issuing Lender
(as hereinafter defined) to issue one or more letters of credit
(each a "Letter of Credit") for the account of Borrower to secure
the performance of certain obligations which Borrower may have
from time to time to third parties in the normal conduct of its
business; and
WHEREAS, the Lenders are willing, subject to and upon
the terms and conditions herein set forth, to extend such
financial accommodations to Borrower;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. DEFINITIONS AND ACCOUNTING TERMS.
1.1. CERTAIN DEFINED TERMS. For all purposes of
this Agreement, unless the context otherwise requires (the
following meanings to be equally applicable to both the singular
and plural forms of the terms defined):
"Additional Indebtedness" shall mean all Lender Debt
other than principal of the Revolving Loan.
"Additional Lenders" shall have the meaning set forth
in Section 13.14 hereof.
"Adjusted Eurodollar Rate" shall mean, with respect to
each Interest Period for a Eurodollar Advance, the rate obtained
by dividing (i) the Eurodollar Rate for such Interest Period by
(ii) a percentage equal to 1 minus the stated maximum rate
(stated as a decimal) of all reserves required to be maintained
against "Eurocurrency liabilities" as specified in Regulation D
(or against any other category of liabilities which includes
deposits by reference to which the interest rate on Eurodollar
Advances is determined or any category of extensions of credit or
other assets which includes loans by a non-United States office
of any Lender to United States residents).
"Advance" shall have the meaning set forth in Section
2.1(a) hereof.
"Affiliate" of any specified Person shall mean any
other Person directly or indirectly controlling or controlled by
or under direct or indirect common control with such specified
Person or which is a director, officer or partner (limited or
general) of such specified Person. For the purposes of this
definition, (i) "control," when used with respect to any
specified Person, means the possession, direct or indirect, of
the power to vote five percent (5%) or more of the securities
having ordinary voting power for the election of directors or the
power to direct or cause the direction of the management and
policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and
the terms "controlling" and "controlled" have meanings
correlative to the foregoing and (ii) any full time employee of
Borrower shall not, solely by virtue of such employment, be
deemed to be an Affiliate of C & D or of Borrower, although the
degree of "control" possessed by such employee as a consequence
of such employment or otherwise can be taken into account in
determining whether such employee is an Affiliate of C & D or of
Borrower.
"Agent" shall have the meaning set forth in the
preamble to this Agreement and in Section 13.13(j) hereof.
"Agreement" shall mean this Amended and Restated
Revolving Credit Agreement, as amended, modified or supplemented
from time to time.
"Approved Delegate" shall have the meaning set forth in
Section 13.13(n) hereof.
"Asset Sale" shall mean any sale, lease, conveyance,
transfer or other disposition (including by way of merger or
consolidation of a Subsidiary or sale-leaseback transaction),
whether in a single transaction or in a group of transactions
that are part of a common plan, other than any sale, transfer or
other disposition under paragraphs (a), (b), (c), (e) or (f) of
Section 10.5 hereof and other than any exchange of assets leased
pursuant to Capital Leases for other assets to be leased pursuant
to such leases (or other leases on substantially the same terms)
to the extent such exchange is permitted under paragraph (g) of
Section 10.5 hereof.
"Asset Sale Account" shall mean a deposit account of
Borrower, established pursuant to Section 6.18(d) hereof, into
which only Gross Proceeds of Asset Sales (excluding Gross
Proceeds of property which is not Collateral and in respect of
which no prepayment is required under Section 3.1(b) hereof)
shall be deposited, all amounts deposited in which and all claims
arising under which have been pledged to the Agent in a manner
and pursuant to documents satisfactory to the Agent.
"Asset Sale Account Agreement" shall have the meaning
set forth in Section 6.18(d) hereof.
"Authorized Representative" shall mean each Person
designated from time to time, as appropriate, in a Written Notice
to the Agent for the purposes of giving notices of borrowing,
conversion or renewal of, Advances, or request Letters of Credit,
which designation shall continue in force and effect until
terminated in a Written Notice to the Agent.
"AWG" shall mean Associated Wholesale Grocers, Inc., a
Missouri corporation.
"AWG Equity" shall mean all equity, deposits, credits,
sums and indebtedness of any kind or description, whatsoever, at
any time owed by AWG to Borrower or at any time standing in the
name of or to the credit of Borrower on the books and/or records
of AWG, including, without limitation, AWG Membership Stock,
members deposit certificates, patronage refund certificates,
members savings, direct patronage or year-end patronage,
concentrated purchase allowance, quarterly payments and any other
amounts due from AWG to Borrower under the Supply Agreement.
"AWG Membership Stock" shall mean the Class A common
Stock, par value $100 per share, of AWG.
"AWG Purchase Agreement" shall mean that certain Asset
Purchase Agreement, dated as of February 6, 1995, by and between
the Borrower and AWG.
"AWG Sale" shall mean the sale of assets pursuant to
the AWG Purchase Agreement.
"Base Rate" shall mean a fluctuating interest rate per
annum as shall be in effect from time to time, which rate per
annum shall at all times be equal to the sum of (i) the rate of
interest announced publicly by NBC in New York, New York from
time to time as its prime rate for U.S. dollar loans, such rate
to change when and as such announced rate changes, plus (ii) the
Base Rate Margin.
"Base Rate Advance" shall mean any portion of an
Advance which is not a Eurodollar Advance.
"Base Rate Margin" shall mean (i) for the period from
the Closing Date until the first anniversary of the Closing Date,
one and one-half percent (1.50%), (ii) for the period from the
first anniversary of the Closing Date until the Maturity Date,
(A) one and one-half percent (1.50%), if Borrower's EBITDA for
Fiscal Year 1995 is equal to or greater than $16,758,000 and (B)
two percent (2.0%), if Borrower's EBITDA for Fiscal Year 1995 is
less than $16,758,000, and (iii) if the Maturity Date is extended
pursuant to Section 13.8(a) hereof, for the period from the
second anniversary of the Closing Date until the Maturity Date as
so extended, (A) one percent (1.0%), if Borrower's EBITDA for
Fiscal Year 1996 is equal to or greater than $23,997,000, (B) one
and one-half percent (1.5%), if Borrower's EBITDA for Fiscal Year
1996 is less than $23,997,000, but equal to or greater than
$16,758,000, and (C) two percent (2.0%), if Borrower's EBITDA for
Fiscal Year 1996 is less than $16,758,000.
"Board" shall mean the Board of Governors of the
Federal Reserve System or any successor agency or entity
performing substantially the same functions.
"Borrower" has the meaning set forth in the preamble to
this Agreement.
"Borrower's Certificate" shall have the meaning set
forth in Section 2.4 hereof.
"Borrowing Base" shall mean, as of any time, an amount
equal to the sum of sixty-five percent (65%) of the Net Amount of
Eligible Inventory, as determined by reference to and as set
forth in the last Borrowing Base Certificate delivered to the
Agent and each Lender prior to such time pursuant to Section
9.1(k) hereof.
"Borrowing Base Certificate" shall have the meaning set
forth in Section 9.1(k) hereof.
"Borrowing Limit" shall have the meaning set forth in
Section 2.2(a) hereof.
"Business Day" shall mean:
(i) for Base Rate Advances and in any event for the
purposes of Section 11.1(b) hereof, any day other than a
Saturday, Sunday or other day on which banks in New York,
New York are authorized or required to close, and
(ii) for Eurodollar Advances on which interest accrues
based upon the Eurodollar Rate but in no event for the
purposes of Section 11.1(b) hereof, the days described in
the immediately preceding subclause (i) for the definition
of Business Day, but excluding therefrom any day on which
commercial banks are not open for dealings in U.S. Dollar
deposits in the London (England, U.K.) interbank market.
"C & D" shall mean Clayton, Dubilier & Rice, Inc.
"C & D Fund" shall mean (i) The Clayton & Dubilier
Private Equity Fund III Limited Partnership, a Connecticut
limited partnership, (ii) The Clayton & Dubilier Private Equity
Fund IV Limited Partnership, a Connecticut limited partnership,
or (iii) any other fund managed by C & D.
"Calendar Month" or "calendar month" shall mean (i)
except in the case of Section 9.1 hereof, a calendar month, and
(ii) for the purposes of Section 9.1, one of Borrower's four-week
or five-week accounting periods of which there are 13 in each
Fiscal Year.
"Capital Expenditures" shall mean, for any period, the
capital expenditures (including Capital Leases) made by the
Borrower and its Subsidiaries during such period, less to the
extent included in the calculation (i) capital expenditures, in
an amount not exceeding $6,500,000 in the aggregate, relating to
(A) assets to be purchased by the Borrower, and thereafter sold
to AWG, in connection with the AWG Purchase Agreement and (B)
assets to be purchased by the Borrower in connection with stores
closed or to be closed, and (ii) capital expenditures in respect
of Capital Leases entered into in Fiscal Year 1994 in an amount
equal to $1,500,000.
"Capital Lease" of any Person shall mean any lease of
any property (whether real, personal or mixed) by that Person as
lessee which, in conformity with GAAP, is, or is required to be,
accounted for as a capital lease on the balance sheet of such
Person.
"Capitalized Lease Obligations" of any Person shall
mean, at any time, all obligations under Capital Leases of such
Person in each case taken at the amount thereof accounted for as
liabilities at such time in accordance with GAAP.
"Certificate of Exemption" shall have the meaning set
forth in Section 3.4(b) hereof.
"Change of Control" shall mean such time as (i)
Borrower or Parent liquidates or dissolves; (ii) C&D Funds shall
cease to be the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act) of more than fifty percent (50%) of the
total voting power of the outstanding capital stock of Parent
entitled to vote for the election of directors or other managing
authority; or (iii) any "person" or "group" (within the meaning
of Sections 13(d) and 14(d)(2) of the Exchange Act) (other than
any C & D Fund) has the ability to designate a majority of the
Board of Directors of Parent, (iv) Parent shall cease to own and
control, beneficially and of record, 100% of all capital stock of
Borrower or (v) a "Change of Control", as defined in the
Indenture (as in effect from time to time), shall occur.
"Claims" shall have the meaning set forth in Section
2.12(c) hereof.
"Closing Date" shall mean April 21, 1995.
"Code" shall mean, at any date, the Internal Revenue
Code of 1986, as the same shall be in effect at such date.
"Collateral" shall mean all property and interests
therein (tangible and intangible) in which a Lien is now or
hereafter granted to the Agent or the Lenders by any Credit Party
or any Subsidiary thereof as security for the Lender Debt or any
guarantee thereof, including, without limitation, any cash
collateral for undrawn Letters of Credit required pursuant to
this Agreement or any other Loan Document.
"Collection Account" shall mean each deposit account of
Borrower established pursuant to Section 6.18(a) hereof (or as
otherwise established with the prior written consent of the
Agent), maintained at a bank, into which Borrower deposits cash
proceeds of Inventory and Pledged Accounts, and, to the extent
required by Section 9.17(b) hereof, as to which all amounts
deposited in which and all claims arising under which have been
pledged to the Agent for the benefit of the Agent and the Lenders
pursuant to a Collection Account Agreement.
"Collection Account Agreement" shall have the meaning
set forth in Section 9.17(b) hereof.
"Concentration Account" shall mean a deposit account of
Borrower, established pursuant to Section 6.18(b) hereof, into
which only cash proceeds of Inventory and Pledged Accounts and
funds in the Asset Sale Account shall be deposited, all amounts
deposited in which and all claims arising under which have been
pledged to the Agent for the benefit of the Agent and the Lenders
pursuant to a Concentration Account Agreement.
"Concentration Account Agreement" shall have the
meaning set forth in Section 6.18(b) hereof.
"Consolidated Fixed Charge Coverage Ratio" shall mean,
for any period, the ratio obtained by dividing (i) the aggregate
EBITDA of Borrower and its Subsidiaries on a consolidated basis
for such period, less (A) in the case of periods ending on each
of September 30, 1995 and December 30, 1995, Net Capital
Expenditures for such period, (B) in the case of periods ending
on each of March 23, 1996, June 15, 1996 and September 7, 1996,
the greater of (1) the Minimum Amount for such period and (2) Net
Capital Expenditures for such period, and (C) in the case of
periods ending on and after December 28, 1996, the greater of (1)
$3,000,000 and (2) Net Capital Expenditures for such period, by
(ii) the Consolidated Interest Expense for such period.
"Consolidated Interest Expense" of any Person for any
period shall mean the amount by which (i) the aggregate amount of
interest expense in respect of Indebtedness of such Person and
its Subsidiaries for such period, on a consolidated basis,
determined in accordance with GAAP (including, without
limitation, all net payments and receipts in respect of Hedge
Agreements and the interest component of Capitalized Lease
Obligations, excluding non-cash interest expense (other than for
Covenant Indebtedness) and amortization of financing costs),
exceeds (ii) the aggregate interest income of such Person
(excluding any non-cash interest from securities which do not
have a rating of at least A-2 from Standard & Poor's Corporation
or at least P-2 from Moody's Investor Service, Inc.) for such
period, all as determined in accordance with GAAP.
"Contingent Obligations" of any Person shall mean any
direct or indirect liability, contingent or otherwise, of such
Person:
(i) with respect to any indebtedness, lease,
dividend, letter of credit or other obligation of another if
the primary purpose or intent in creating such liability is
to provide assurance to the obligee of such obligation of
another that such obligation of another will be paid or
discharged, or that any agreements relating thereto will be
complied with, or that the holders of such obligation will
be protected (in whole or in part) against loss in respect
thereof;
(ii) under any letter of credit issued for the
account of such Person or for which such Person is otherwise
liable for reimbursement thereof;
(iii) under any Hedge Agreement; or
(iv) to advance or supply funds or otherwise to
assure or hold harmless the owner of such primary obligation
against loss in respect thereof.
Contingent Obligations shall include, without limitation:
(A) the direct or indirect guarantee, endorsement
(otherwise than for collection or deposit in the ordinary
course of business), co-making, discounting with recourse or
sale with recourse by such Person of the obligation of
another, and
(B) any liability of such Person for the obligations
of another through any agreement (contingent or otherwise):
(1) to purchase, repurchase or otherwise acquire
such obligation or any security therefor, or to provide
funds for the payment or discharge of such obligation
(whether in the form of loans, advances, stock purchases,
capital contributions or otherwise);
(2) to maintain the Solvency or any balance sheet
item, level of income or financial condition of another; or
(3) to make take-or-pay or similar payments if
required regardless of non-performance by any other party or
parties to an agreement,
if in the case of any agreement described under subclauses (1) or
(2) of this sentence the primary purpose or intent thereof is as
described in the immediately preceding sentence. The amount of
any Contingent Obligation shall be equal to the amount of the
obligation so guaranteed or otherwise supported.
"Conversion Expenses" shall mean expenses of the
Borrower in respect of (i) the conversion of Borrower from an
entity which buys inventory directly from manufacturers to one
that buys inventory from a wholesaler and (ii) the closure of
stores.
"Covenant Indebtedness" of any Person shall mean:
(i) all Indebtedness for Borrowed Money of such
Person;
(ii) Capitalized Lease Obligations of such Person;
(iii) notes payable and drafts accepted
representing extensions of credit of such Person whether or
not representing obligations for borrowed money (other than
any balance that constitutes an accrued expense or trade
payable);
(iv) any obligation owed by such Person for all
or any part of the deferred purchase price of property or
services which have been rendered which purchase price is
(y) due more than one year from the date of incurrence of
the obligation in respect thereof, or (z) evidenced by a
note or similar written instrument, in each case except any
such obligation that constitutes an accrued expense or trade
payable;
(v) all indebtedness of such Person secured by
any Lien on any property or asset owned or held by that
Person regardless of whether the indebtedness secured
thereby shall have been assumed by that Person or is non-
recourse to the credit of that Person;
(vi) all reimbursement obligations and other
liabilities of such Person with respect to letters of credit
issued for such Person's account; and
(vii) the guarantee or joint obligation of
that Person of items described in any of clauses (i)-(vi)
above guaranteed by such Person,
; provided, however, in the case of any of the foregoing items
(i) - (v), the term "Covenant Indebtedness" shall include any
such item only to the extent such item would appear as a
liability upon a balance sheet of such Person prepared on a
consolidated basis in accordance with GAAP.
"Credit Parties" shall mean and include Borrower and
each Guarantor.
"Current Assets" of any Person determined at any time,
shall mean all assets of such Person that would, in accordance
with GAAP, be classified as current assets of a company
conducting a business the same or similar to that of such Person,
after deducting adequate reserves in each case in which a reserve
is proper in accordance with GAAP.
"Current Liabilities" of any Person, determined at any
time, shall mean all liabilities of such Person which would, in
accordance with GAAP, be classified as current liabilities.
"Debt-to-EBITDA Ratio" shall mean, for any period, the
ratio obtained by dividing (i) the Covenant Indebtedness of the
Borrower and its Subsidiaries on a consolidated basis as of the
last day of such period, by (ii) the aggregate amount of EBITDA
of the Borrower and its Subsidiaries on a consolidated basis for
such period.
"Default" shall mean an event, act or condition which
with the giving of notice or the lapse of time, or both, would
constitute an Event of Default.
"Designated Stores" shall mean those stores listed on
Schedule 10.5(d)(ii) hereto, which Borrower intends to close, or
may close, after the Closing Date.
"EBITDA" of any Person for any period shall mean the
sum of:
(i) the net income (or net loss) from operations
of such Person and its Subsidiaries on a consolidated basis
(determined in accordance with GAAP) for such period,
without giving effect to any extraordinary or unusual gains
(losses) or gains (losses) from the sale of assets (other
than the sale of Inventory in the ordinary course of
business); plus
(ii) to the extent that any of the items referred
to in any of clauses (A) through (C) below were deducted in
calculating such net income:
(A) Consolidated Interest Expense of
such Person for such period;
(B) income tax expense of such Person
and its Subsidiaries with respect to their operations
for such period; and
(C) the amount of all non-cash charges
(including, without limitation, depreciation and
amortization) of such Person and its Subsidiaries for
such period.
provided, however, that in calculating EBITDA of the
Borrower and its Subsidiaries, (1) any (x) non-cash reserve
taken in Fiscal Year 1994 in respect of workers compensation
in an amount not exceeding $5,000,000 and (y) Conversion
Expenses in an amount not exceeding $3,000,000 in the
aggregate, consisting of up to $2,800,000 in such expenses
during Fiscal Year 1995 and up to $400,000 in such expenses
during Fiscal Year 1996, shall be added back to net income
(or net loss) from operations to the extent deducted in
calculating such net income (or net loss) and (2) any
extraordinary gain realized in any Fiscal Year as a result
of over-reserving for workers compensation in a prior Fiscal
Year shall be deducted from net income (net loss) from
operations to the extent included in calculating such net
income (or net loss).
"EFS" shall have the meaning set forth in Section
9.17(e) hereof.
"Eligible Inventory" shall mean only such Inventory of
Borrower as the Agent, in its reasonable discretion, shall from
time to time elect to consider Eligible Inventory for purposes of
this Agreement. The value of such Inventory (the "Net Amount of
Eligible Inventory") shall be determined at any time by reference
to the then most recent Borrowing Base Certificate delivered
under Section 9.1(k) hereof, which Borrowing Base Certificate
shall reflect the value of Inventory at its book value determined
in accordance with GAAP (on a basis consistent with the
accounting method used by Borrower as of the Closing Date, which
includes, without limitation, first-in, first-out inventory
reporting). Criteria for eligibility may be fixed and revised
from time to time by the Agent in its reasonable discretion. By
way of example only, and without limiting the discretion of the
Agent to consider any Inventory not to be Eligible Inventory, the
Agent may consider any of the following classes of Inventory not
to be Eligible Inventory:
(i) Inventory subject to any Lien (whether or not
any such Lien is permitted under this Agreement), other than
those granted in favor of the Agent;
(ii) Inventory financed by bankers' acceptances,
but only until the payment in full of the related bankers'
acceptances by such Person;
(iii) Inventory which is obsolete, damaged,
unsalable or otherwise unfit for use;
(iv) Inventory located on any premises not owned
or leased by Borrower;
(v) Inventory in respect of which the relevant
Security Agreement, after giving effect to the related
filings of financing statements that have then been made, if
any, does not or has ceased to create a valid and perfected
first priority Lien in favor of the Lenders securing the
Lender Debt;
(vi) Inventory on which a Lien has arisen or may
arise (A) in favor of agricultural producers under the
Perishable Agricultural Commodities Act of 1930, as amended
(7 U.S.C. 499(e)), and the regulations thereunder, or any
comparable state or local laws or (B) in favor of a seller
of livestock under the Packer and Stockyards Act (7 U.S.C.
196) and the regulations thereunder, or under any comparable
state or local laws;
(vii) Inventory comprised of dairy products,
eggs, perishable merchandise (excluding cheese), fresh meat,
prescription products, S & F Beverages, delicatessen
products, bakery products, produce and consigned Inventory;
and
(viii) Inventory at a location leased by
Borrower (A) for which Agent has not received, a waiver in
form and substance satisfactory to Agent, in its sole
discretion, duly executed by the landlord of such location
and (B) to the extent such Inventory is subject to a
contractual or statutory Lien (whether or not such Lien is
permitted under this Agreement) in favor of such landlord.
"Employee Plan" shall mean an "employee benefit plan"
as defined in Section 3(3) of ERISA which is maintained for
employees of any of the Credit Parties or any ERISA Affiliate,
other than a Multiemployer Plan.
"Environmental Law" shall mean the Comprehensive
Environmental Response, Compensation and Liability Act of 1980,
as amended, the Resource Conservation and Recovery Act of 1976,
as amended, any "Superfund" or "Superlien" law, the Hazardous
Materials Transportation Act, as amended, and any other Federal,
state, or local statute, rule, regulation, ordinance,
interpretation, order, judgment, or decree, as now or at any time
hereafter amended or in effect and applicable to Borrower and its
Subsidiaries, regulating, relating to or imposing liability or
standards of conduct concerning the manufacture, processing,
distribution, use, treatment, handling, storage, disposal, or
transportation of Hazardous Materials, or air emissions, water
discharges, noise emissions, or otherwise concerning the
protection of the outdoor or indoor environment, or health or
safety of persons or property.
"ERISA" shall mean, at any date, the Employee
Retirement Income Security Act of 1974 and the regulations
promulgated and rulings issued thereunder, all as the same shall
be in effect at such date.
"ERISA Affiliate" shall mean any Person that for
purposes of Title I or Title IV of ERISA is a member of any
Credit Party's controlled group, or under common control with any
Credit Party, within the meaning of Section 414(b), (c) or (m) of
the Code and the regulations promulgated and rulings issued
thereunder.
"Eurodollar Advance" shall mean that portion of any
Advance designated to bear interest based upon the Adjusted
Eurodollar Rate as provided in Section 2 hereof.
"Eurodollar Rate" shall mean, for any Interest Period
for any Eurodollar Advance, an interest rate per annum equal to
the offered quotation, if any, to first-class banks in the London
(England, U.K.) interbank market by three reference banks
selected by the Agent for U.S. Dollar deposits of amounts in
funds comparable to the principal amount of such Eurodollar
Advance requested by Borrower for which the Eurodollar Rate is
being determined with maturities comparable to the Interest
Period for which such Eurodollar Rate will apply as of
approximately 11:00 A.M. (London setting time) two (2) Business
Days prior to the commencement of such Interest Period, subject,
however, to the provisions of Section 2.11 hereof.
"Eurodollar Rate Margin" shall mean (i) for the period
from the first anniversary of the Closing Date to the Maturity
Date, three percent (3.0%), and (ii) if the Maturity Date is
extended pursuant to Section 13.8(a) hereof, for the period from
the second anniversary of the Closing Date to the Maturity Date
as so extended (A) two and one-half percent (2.5%), if Borrower's
EBITDA for Fiscal Year 1996 is equal to or greater than
$23,997,000, and (B) three percent (3.0%), if Borrower's EBITDA
for Fiscal Year 1996 is less than $23,997,000 but equal to or
greater than $16,758,000.
"Event of Default" shall have the meaning set forth in
Section 11.1 hereof.
"Excess Funds" shall have the meaning set forth in
Section 2.17 hereof.
"Excluded Claims" shall have the meaning set forth in
Section 2.12(c) hereof.
"Excluded Taxes" shall mean franchise taxes, taxes on
doing business or taxes measured by capital or net worth of any
Lender and taxes upon or determined by reference to any Lender's
net income, in each case, imposed:
(i) by the United States of America or any
political subdivision or taxing authority thereof or therein
(including, without limitation, branch taxes imposed by the
United States or similar taxes imposed by any subdivision
thereof);
(ii) by any jurisdiction in which the Initial
Eurodollar Office or other branch of any Lender is located
or in which any Lender is organized or has its principal or
registered office;
(iii) by reason of any connection, including,
without limitation, a present or former connection, between
the jurisdiction imposing such tax and such Lender other
than a connection arising solely from this Agreement or any
related agreements or any transaction contemplated hereby or
thereby; or
(iv) by reason of the failure of any Lender to
provide documentation required to be provided by such Lender
pursuant to Section 3.4(b) hereof.
"Existing Agreement" shall have the meaning set forth
in the recitals to this Agreement.
"Existing Lenders" shall have the meaning set forth in
the recitals to this Agreement.
"Federal Bankruptcy Code" means Title 11 of the United
States Code entitled "Bankruptcy," as now or hereafter in effect,
or any successor thereto.
"Federal Funds Rate" shall mean, for any day, the rate
per annum (rounded upwards, if necessary, to the nearest 1/100th
of 1%) 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 on such day, as
published by the Federal Reserve Bank of New York on the Business
Day next succeeding such day, provided that (i) if such day is
not a Business Day, the Federal Funds Rate for such day shall be
such rate on such transactions on the next preceding Business Day
as so published on the next succeeding Business Day, and (ii) if
no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average
rate quoted to the Agent on such day on such transactions as
determined by the Agent.
"Fee Letter" means the separate fee letter dated April
21, 1995, between Borrower and the Agent.
"First Offer Rights" shall mean (i) AWG's right of
first offer with respect to the stores owned or operated by
Borrower listed on Exhibit B to the Supply Agreement, as such
agreement may be amended from time to time and (ii) any public
recordation of such first offer rights, provided that any such
public recordation shall be terminable from time to time as set
forth in Section 7(f) of the Supply Agreement.
"First Qualifying Period" shall mean the four quarter
period beginning on the day following the first fiscal quarter in
which the Borrower's Consolidated Fixed Charge Coverage ratio is
1.30:1 or greater.
"Fiscal Year" shall mean, with respect to Borrower, a
period of fifty-two (52) or fifty-two (52) consecutive weeks
beginning on the first day after the last day of the preceding
"Fiscal Year" of such Person and ending on the Saturday on or
closest to the next December 31, beginning with the fifty-two
(52)-week period ending December 31, 1994.
"Foreign Lender" shall have the meaning set forth in
Section 3.4(b) hereof.
"GAAP" shall have the meaning specified in Section 1.4
hereof.
"Gross Proceeds" shall mean, as to any transaction, an
amount equal to the Net Proceeds, calculated, however, without
the deductions set forth in clauses (A) and (C) of clause (i) of
the definition of Net Proceeds.
"Guarantor" shall mean, at any time, the Parent and
each of Borrower's present or future Subsidiaries.
"Guaranty" shall mean any guaranty executed and
delivered pursuant to Section 5.4 hereof, as each may be amended,
supplemented or otherwise modified from time to time in
accordance with its terms.
"Hazardous Material" shall mean any pollutant,
contaminant, chemical, or industrial or hazardous, toxic or
dangerous waste, substance or material, defined or regulated as
such in (or for purposes of) any Environmental Law and any other
toxic, reactive, or flammable chemicals, including (without
limitation) any asbestos, any petroleum (including crude oil or
any fraction), any radioactive substance and any polychlorinated
biphenyls; provided, in the event that any Environmental Law is
amended so as to broaden the meaning of any term defined thereby,
such broader meaning shall apply subsequent to the effective date
of such amendment; and provided, further, to the extent that the
applicable laws of any state establish a meaning for "hazardous
material," "hazardous substance," "hazardous waste," "solid
waste" or "toxic substance" which is broader than that specified
in any Environmental Law, such broader meaning shall apply.
"Hedge Agreement" shall have the meaning specified in
clause (v) of the definition of Indebtedness.
"Indebtedness" of any Person shall mean all items
which, in accordance with GAAP, would be included in determining
total liabilities of such Person as shown on the liability side
of a balance sheet as at the date Indebtedness of such Person is
to be determined and, in any event, shall include (without
limitation and without duplication):
(i) all Indebtedness for Borrowed Money of such
Person;
(ii) any liability of such Person secured by any
Lien on property owned or acquired by such Person, whether
or not such liability shall have been assumed;
(iii) all Contingent Obligations of such
Person;
(iv) letters of credit and all obligations of such
Person relating thereto; and
(v) all obligations (other than obligations to
pay fees in connection therewith) of such Person in respect
of interest rate swap agreements, currency swap agreements
and other similar agreements designed to hedge against
fluctuations in interest rates or foreign exchange rates
(each, a "Hedge Agreement").
"Indebtedness for Borrowed Money" of any Person shall
mean all Indebtedness for borrowed money or evidenced by notes,
bonds, debentures or similar evidences of Indebtedness of such
Person, all obligations of such Person for the deferred and
unpaid purchase price of any property, service or business (other
than trade accounts payable and similar current accrued
liabilities incurred in the ordinary course of business and
constituting Current Liabilities), and all obligations of such
Person under Capitalized Lease Obligations.
"Indemnified Party" shall have the meaning set forth in
Section 2.12(c) hereof.
"Indenture" shall mean the indenture dated as of March
4, 1992 (as originally in effect or as amended in accordance with
the terms of this Agreement) among Borrower, as issuer, Parent,
as guarantor, and the Trustee, pursuant to which Borrower's
Series A Senior Secured Floating Rate Notes due 1997, Series C
Senior Secured Fixed Rate Notes due 1999, and Series D Senior
Secured Floating Rate Notes Due 1997 were issued (collectively,
the "Senior Notes").
"Initial Eurodollar Office" shall mean, for any Lender,
the branch or Affiliate of such Lender designated as the Initial
Eurodollar Office of such Lender in Schedule 1.1(A) hereto.
"Intercreditor Agreement" shall mean that certain
Intercreditor Agreement, dated as of March 4, 1992, by and
between the Trustee and the Agent, as amended by Amendment No. 1,
dated as of the Closing Date.
"Interest Payment Date" shall mean, with respect to
each Eurodollar Advance, the last day of the Interest Period for
such Eurodollar Advance; provided, however, that with respect to
each Interest Period for any Eurodollar Advance of a duration of
three or more months, the Interest Payment Date with respect to
such Eurodollar Advance shall include, in addition to the last
day of such Interest Period, each day which occurs every three
months after the initial date of such Interest Period.
"Interest Period" shall mean, with respect to each
Eurodollar Advance, initially, the period commencing on, as the
case may be, the borrowing or conversion date with respect to
such Eurodollar Advance and ending one, three or six months
thereafter, as selected by Borrower; and thereafter, each period
commencing on the last day of the next preceding Interest Period
applicable to such Eurodollar Advance and ending one, three or
six months thereafter, as selected by Borrower; provided,
however, that no Interest Period may be selected for a Eurodollar
Advance which expires later than the Maturity Date; and provided,
further, that any Interest Period in respect of a Eurodollar
Advance which begins on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall,
subject to the foregoing proviso, end on the last Business Day of
a calendar month. Notwithstanding the above, all Interest
Periods shall be adjusted in accordance with Section 13.11
hereof.
"Inventory" of any Person shall mean any and all
inventory, raw materials, work-in-process and finished products
of such Person, now or hereafter acquired, intended for sale or
lease or to be furnished under contracts of service in the
ordinary course of business of such Person, of every kind and
description.
"Investment" shall have the meaning set forth in
Section 10.4 hereof.
"Issuing Lender" shall have the meaning set forth in
Section 4.1 hereof.
"Latest Projections" shall have the meaning set forth
in Section 6.16 hereof.
"Lease" shall mean each lease or sublease of real
property existing on the Closing Date under which Parent,
Borrower or any of its Subsidiaries is the lessee or sublessee
and each future lease or sublease of real property under which
Borrower or any of its Subsidiaries is the lessee or sublessee.
"Lender" and "Lenders" shall have the meanings set
forth in the preamble to this Agreement.
"Lender Debt" shall mean and include all Advances, and
all other Indebtedness owing at any time by Borrower, any one or
more of its Subsidiaries or any other Credit Party to the Agent
or any one or more of the Lenders (including, without limitation,
all principal and interest including, without limitation,
interest arising after the commencement of any bankruptcy or
similar proceeding in which any Credit Party is a debtor, whether
or not such interest is an allowed claim in such proceeding,
Letter of Credit reimbursement obligations, fees, indemnities,
costs, charges and other amounts payable under the Letter of
Credit Agreements or in respect of the Letters of Credit or under
any of the other Loan Documents) arising under or in connection
with this Agreement, the Notes, any Security Document, any of the
other Loan Documents or any Guaranty in favor of the Agent or any
one or more of the Lenders, in each instance, whether absolute or
contingent, secured or unsecured, due or not, arising by
operation of law or otherwise, and all interest and other charges
thereon.
"Letter of Credit Agreement" shall mean an application
and agreement, as amended, modified or supplemented from time to
time, with respect to the issuance and reimbursement of and
otherwise with respect to a Letter of Credit, in form and
substance satisfactory to the Agent.
"Letter of Credit Cash Collateral" shall mean cash
deposited by Borrower with the Agent to secure obligations of
Borrower under Letters of Credit (contingent or otherwise)
pursuant to agreements in form and substance satisfactory to the
Agent.
"Letter of Credit Fee" shall mean (i) for the period
from the Closing Date until the first anniversary of the Closing
Date, two and three-fourths percent (2.75%) per annum, (ii) for
the period from the first anniversary of the Closing Date until
the Maturity Date, (A) two and three-fourths percent (2.75%) per
annum, if Borrower's EBITDA for Fiscal Year 1995 is equal to or
greater than $16,758,000, and (B) three and one-fourth percent
(3.25%) per annum, if Borrower's EBITDA for Fiscal Year 1995 is
less than $16,758,000, and (iii) if the Maturity Date is extended
pursuant to Section 13.8(a) hereof, for the period from the
second anniversary of the Closing Date until the Maturity Date as
so extended, (A) two and one-quarter percent (2.25%) per annum,
if Borrower's EBITDA for Fiscal Year 1996 is equal to or greater
than $23,997,000, (B) two and three-fourths percent (2.75%) per
annum, if Borrower's EBITDA for Fiscal Year 1996 is less than
$23,997,000, but equal to or greater than $16,758,000, and (C)
three and one-fourth percent (3.25%) per annum, if Borrower's
EBITDA for Fiscal Year 1996 is less than $16,758,000.
"Letter of Credit Sublimit" shall mean the lesser of
(i) $18,000,000, and (ii) the Borrowing Limit.
"Letter of Credit Usage" shall mean, at any time, (i)
the aggregate undrawn amount at such time of all outstanding
Letters of Credit, plus (ii) the aggregate amount of unreimbursed
drawings at such time under Letters of Credit.
"Letters of Credit" shall have the meaning set forth in
the preamble to this Agreement, and any extension, modification,
amendment, renewal or replacement thereof.
"Lien" shall mean any lien, mortgage, pledge, security
interest or other type of charge or encumbrance of any kind, or
any other type of preferential arrangement, including, without
limitation, the lien or retained security title of a conditional
vendor, any lien in favor of a landlord (whether or not perfected
and whether or not notice of any such lien has been filed) and
any easement, right of way or other encumbrance on title to real
property and any financing statement filed in respect of any of
the foregoing. For the purposes of this Agreement, a Credit
Party shall be deemed to be the owner of any property which it
has placed in trust for the benefit of the holder of Indebtedness
of such Credit Party which Indebtedness is deemed to be
extinguished under GAAP but for which such Credit Party remains
legally liable, and such trust shall be deemed to be a Lien.
"Loan Documents" shall mean this Agreement, each
Security Document, each Guaranty, the Notes, each Letter of
Credit Agreement, each Borrower's Certificate, each Borrowing
Base Certificate, each Landlord's Certificate, each Collection
Account Agreement, each Concentration Account Agreement, each
Lock-Box Agreement, each Asset Sale Account Agreement, the
Intercreditor Agreement and each other document or instrument now
or hereafter delivered to the Agent or any Lender by any Credit
Party pursuant to or in connection herewith or therewith.
"Local Bank Special Account" shall have the meaning set
forth in Section 9.17(d) hereof.
"Lock-Box Account" means an account maintained for the
purpose of receiving all cash collections and other cash proceeds
of Pledged Accounts.
"Lock-Box Agreement" means an agreement in
substantially the form of Exhibit 1.1 hereto.
"Major Remodels" shall mean Capital Expenditures made
in respect of one of the Borrower's stores in an amount
exceeding, or expected to exceed, $400,000.
"Management Subscription Agreements" shall mean those
certain Management Stock Subscription Agreements which have been
or may be entered into between Parent and certain officers,
employees and directors of Borrower and its Subsidiaries (or
trusts for the benefit of relatives of such officers, employees
and directors) including, without limitation, stock option
arrangements, with respect to up to 8,000,000 shares of Class A
Common Stock of Parent.
"Material Adverse Effect" shall mean a material adverse
effect on (i) the business, assets, prospects, operations or
financial or other condition of Parent, Borrower and Borrower's
Subsidiaries, taken as a whole, (ii) Borrower's ability to pay
the Lender Debt in accordance with the terms hereof, (iii) the
Collateral or (iv) the Agent's Liens on the Collateral or the
priority of any such Lien.
"Maturity Date" shall mean February 25, 1997; provided,
however, that if the term of this Agreement is extended pursuant
to Section 13.8(a) hereof beyond February 25, 1997, then the
Maturity Date shall be March 31, 1998.
"Maximum Lawful Rate" shall have the meaning set forth
in Section 2.20(a) hereof.
"Maximum Permissible Rate" shall have the meaning set
forth in Section 2.20(b) hereof.
"Membership Sign-Up Documents" shall mean (i) the
Application for Membership by Homeland Stores, Inc., between
Borrower and AWG and (ii) the Stock Power of Attorney granted to
AWG by Borrower with respect to the AWG Membership Stock owned by
Borrower.
"Minimum Amount" shall mean, for the four fiscal
quarter periods ending on each date set forth below, the amount
specified opposite such date below:
Date Amount
March 23, $750,000
1996
June 15, 1996 $1,500,0
00
September 7, $2,250,0
1996 00
"Multiemployer Plan" shall mean a "multiemployer plan"
as defined in Section 4001(a)(3) of ERISA to which any of the
Credit Parties or any ERISA Affiliate contributes.
"Net Amount of Eligible Inventory" shall have the
meaning set forth in the definition of Eligible Inventory.
"Net Capital Expenditures" shall mean for any period,
the Capital Expenditures made by Borrower and its Subsidiaries in
such period, less net cash proceeds from the sale of assets which
are reinvested pursuant to the Indenture during such period.
"Net Proceeds" shall mean, with respect to any
transaction,
(i) cash (freely convertible into U.S. dollars)
received by any Credit Party from such transaction
(including cash received as consideration for the assumption
or incurrence of liabilities incurred in connection with or
in anticipation of such transaction), after
(A) provision for all income, title,
recording or other taxes measured by or resulting from
such transaction after taking into account all
available deductions and credits,
(B) payment of all brokerage commissions,
reasonable investment banking and legal fees and other
fees and expenses related to such transaction,
(C) deduction of appropriate amounts to be
provided by such Credit Party as a reserve, in
accordance with GAAP, against any liabilities
associated with the assets sold or disposed of in such
transaction and retained by such Credit Party after
such transaction, including, without limitation,
pension and other post-employment benefit liabilities
and liabilities related to environmental matters or
against any indemnification obligations associated with
the assets sold or disposed of in such transaction,
(D) amounts paid to satisfy Indebtedness
(other than the Lender Debt and Senior Notes) which are
required to be repaid in connection with any such
transaction, and
(E) so long as no Default or Event of
Default is continuing, payment of trade payables
incurred as a result of the purchase of Inventory sold
in connection with such transaction; and
(ii) promissory notes received by such Credit Party
from such transaction or such other disposition upon the
liquidation or conversion of such notes into cash.
"Overadvance" shall have the meaning set forth in
Section 2.2(c) hereof.
"Parent" shall have the meaning set forth in the
preamble hereto.
"Payment Office" shall have the meaning set forth in
Section 2.4(c) hereof.
"PBGC" shall mean the Pension Benefit Guaranty
Corporation, or any successor thereof under ERISA.
"Pension Benefit Plan" shall mean an "employee pension
benefit plan" as defined in Section 3(2) of ERISA which is
maintained for employees of any of the Credit Parties or any
ERISA Affiliate, other than a Multiemployer Plan.
"Permitted Transaction" shall mean:
(i) distributions to Parent:
(A) to permit Parent to repurchase shares of
its common stock (1) pursuant to and as contemplated by
the Management Subscription Agreements and Stock
Subscription Agreements (including, without limitation,
repurchases of shares from trusts for the benefit of
relatives of managers of Borrower), so long as no
Default or Event of Default shall have occurred and be
continuing, or would result from such distribution and
repurchase and provided that distributions to Parent
under this clause (A) shall not exceed an aggregate
amount of $1,000,000 in Fiscal Year 1995 and $2,000,000
in any Fiscal Year thereafter (net of amounts to be
repaid in respect of loans from the Borrower or Parent)
and (2) owned by officers and employees of Borrower at
a cash purchase price of $0.50 per share, provided that
distributions to Parent under this clause (A)(2) shall
not exceed an aggregate amount of $600,000 (net of
amounts to be repaid in respect of loans from Borrower
or Parent),
(B) to permit Parent to pay reasonable and
necessary operating costs and taxes incurred in the
ordinary course of business including, without
limitation,
(1) the execution, delivery and
performance by Parent or Borrower of
indemnification and contribution agreements in
favor of C & D, any C & D Fund, Affiliates thereof
and each Person who becomes a director of Parent,
Borrower or any of their respective Subsidiaries
in respect of liabilities
(a) arising under the
Securities Act, the Securities Exchange Act,
and any other applicable securities laws or
otherwise in connection with any offering of
securities by Parent, Borrower or any of
their respective Subsidiaries,
(b) incurred to third
parties for any action or failure to act of
Parent, Borrower or any of their Subsidiaries
or successors,
(c) arising out of the
performance by C & D of management
consulting, monitoring or financial advisory
services to Parent, Borrower or any of their
respective Subsidiaries or by an Affiliate of
C & D acting as voting trustee of any
securities of Parent, Borrower or their
respective Subsidiaries,
(d) arising out of the
fact that any indemnitee was or is a director
of Holding, Borrower, or any of their
respective Subsidiaries, or is or was serving
at the request of any such corporation as
director, officer, employee or agent of
another corporation, partnership, joint
venture, trust or other enterprise, or
(e) to the fullest
extent permitted by Delaware law, out of any
breach or alleged breach by such an
indemnitee of his or her fiduciary duty as a
director of Parent, Borrower or any of their
respective Subsidiaries,
(2) loans and advances to officers
and directors of Parent, Borrower or any of their
respective Subsidiaries (or employees thereof, if
approved by an officer of Borrower) existing on
the Closing Date and set forth on Schedule 1.1(B)
hereto or made in the ordinary course of business
for reasonable travel, entertainment and
relocation expenses, or
(3) so long as no Default or Event
of Default is continuing or would occur as a
result thereof, loans or advances made on or prior
to the Closing Date, maturing in a period of one
year or less, to officers, directors or employees
to make principal payments of up to $50,000 (per
person) or $500,000 (in the aggregate, after
giving effect to the transactions described in
clause (i)(A)(2) of this definition) at any time
that are due under the indebtedness of such
officer, employee or director in connection with
the Management Subscription Agreements or Stock
Subscription Agreements and any extension or
renewal of such loans or advances, or
(4) customary compensation and
severance arrangements with officers, directors,
and employees of Parent, and
(C) to permit Parent to cover its expenses
(including all reasonable professional fees and
expenses) incurred in connection with (1) so long as no
Default or Event of Default in payment of principal of
or interest on Lender Debt has occurred and is
continuing, public offerings of its equity securities
or debt permitted by the Indenture, and its obligations
to register securities with the Securities and Exchange
Commission (and any government agency succeeding to its
functions) and similar state agencies or (2) to comply
with its reporting obligations under the federal and
state securities laws;
(ii) the issuance of guarantees of Indebtedness
incurred or owing by officers, employees and directors in
connection with the Management Subscription Agreements or
Stock Subscription Agreements of directors existing on the
Closing Date and set forth on Schedule 1.1(B) hereto or
making any payment under any such guarantee;
(iii) so long as no Default or Event of Default is
continuing or would occur as a result thereof, payments to C
& D or any Affiliate of C & D of reasonable and customary
management consulting, monitoring and financial advisory
fees in an aggregate amount not to exceed $150,000 in any
Fiscal Year (exclusive of any payments made in accordance
with clause (v) below) in connection with its performance of
management consulting, monitoring and financial advisory
services in the ordinary course with respect to Parent,
Borrower and their respective Subsidiaries;
(iv) payments to C & D or any Affiliate of reasonable
fees and reasonable expenses incurred by C & D or any such
Affiliate in connection with its performance of services to
Parent, Borrower and their respective Subsidiaries; and
(v) (A) so long as no Default or Event of Default is
continuing or would occur as a result thereof, payments to
employees or consultants that are Affiliates of C & D (other
than full-time employees of Borrower hired in the ordinary
course of business of Borrower and consultants who are
devoting substantially all of their time to the affairs of
Borrower) and (B) whether or not a Default or Event of
Default is continuing, payments to Affiliates of C & D who
are full time employees of Borrower hired in the ordinary
course of business of Borrower or consultants who are
devoting substantially all of their time to the affairs of
Borrower, in an aggregate amount for clauses (A) and (B)
above, not exceeding $200,000 in any Fiscal Year of Borrower
(exclusive of any payments made in accordance with clause
(iii) above).
"Person" shall mean an individual, a corporation, an
association, a joint stock company, a business trust, a
partnership, a trust, a joint venture, an unincorporated
organization or other entity, or a government or any agency or
political subdivision thereof.
"Pledged Accounts" shall have the meaning set forth in
Section 5.1(a) hereof.
"pro rata" shall mean, with respect to each Lender, a
percentage equal to the ratio that (x) the Revolving Commitment
of such Lender bears (y) to the Revolving Credit Facility
Commitment.
"Receivables" shall mean and include all accounts,
contract rights, instruments, documents, chattel paper and
general intangibles, whether secured or unsecured, now existing
or hereafter created, of the Credit Parties, and whether or not
specifically sold or assigned to the Agent or the Lenders.
"Records and Other Property" shall have the meaning set
forth in Section 5.1(a) hereof.
"Regulation D" shall mean Regulation D of the Board as
from time to time in effect and any successor to all or a portion
thereof establishing reserve requirements.
"Release" shall mean any releasing, spilling, escaping,
leaking, seepage, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, disposing or dumping.
The meaning of the term shall also include any threatened
Release.
"Reportable Event" shall mean any reportable event
described in Section 4043(b) of ERISA or the regulations
thereunder, as to which the PBGC has not by regulation waived the
notice requirement of Section 4043(a) of ERISA.
"Required Lenders" shall mean, at any time, Lenders
having more than sixty-six and two-thirds percent (66 2/3%) of
the sum of (i) the aggregate outstanding principal balance of the
Revolving Loan, (ii) the Letter of Credit Usage (which shall be
deemed to be held by the Lenders in accordance with their
exposure under Section 13.18 hereof), and (iii) the aggregate
amount of unutilized Revolving Commitments of the Lenders, in
each case, at such time.
"Revolving Commitment", as to any Lender, shall have
the meaning set forth in Section 2.2(b) hereof. For purposes of
Sections 2.9, 2.12 and 4.4 hereof, the Revolving Commitment of
any Lender shall include the participation interest of such
Lender in Letters of Credit as provided in Section 13.18 hereof.
"Revolving Credit Facility Commitment" shall mean
$25,000,000.
"Revolving Loan" shall have the meaning set forth in
Section 2.1(a) hereof.
"Revolving Note" and "Revolving Notes" shall have the
meanings set forth in Section 2.3(a) hereof.
"Second Supplement to Indenture" means the Second
Supplement to Indenture, dated as of April 21, l995, among
Borrower, Parent, as guarantor, and the Trustee, relating to the
Senior Notes.
"Second Qualifying Period" shall mean the four quarter
period beginning on the day following the first fiscal quarter in
which the Borrower's Consolidated Fixed Charge Coverage Ratio is
1.50:1 or greater, which fiscal quarter must be at least four (4)
quarters after the end of the fiscal quarter immediately
preceding the First Qualifying Period.
"Securities Act" shall mean the Securities Act of 1933,
as amended from time to time.
"Securities Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended from time to time.
"Security Agreement" shall have the meaning specified
in Section 5.1(a) hereof.
"Security Documents" shall have the meaning specified
in Section 5.1(a) hereof.
"Senior Note Documents" shall mean the Indenture and
each instrument, document and agreement evidencing, securing,
creating, guaranteeing or governing the Indebtedness evidenced by
the Senior Notes or entered into in connection therewith, in each
case as originally in effect or as amended in accordance with the
terms of this Agreement.
"Senior Notes" shall have the meaning specified in the
definition of the term "Indenture".
"Settlement Date" shall have the meaning set forth in
Section 2.4(c).
"Settlement Notice" shall have the meaning set forth in
Section 2.4(c).
"Sight Draft Special Account" shall have the meaning
set forth in Section 9.17(d) hereof.
"Solicitation Statement" shall mean Borrower's
Solicitation Statement, dated April 4, l994, soliciting consents
to certain amendments to the Senior Note Documents.
"Solvent" and "Solvency" shall mean, with respect to
any Person on a particular date, that on such date,
(i) the fair value of the property of such Person is
greater than the total amount of liabilities, including,
without limitation, contingent liabilities, of such Person;
and
(ii) the present fair salable value of the assets of
such Person is not less than the amount that will be
required to pay the probable liability of such Person on its
debts as they become absolute and matured; and
(iii) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities
mature; and
(iv) such Person is not engaged in business or a
transaction, and is not about to engage in business or a
transaction, for which such Person's property would
constitute an unreasonably small capital.
"Special Account" shall have the meaning set forth in
Section 9.17(d) hereof.
"Stock Subscription Agreements" shall mean those
certain Stock Subscription Agreements which have been or may be
entered into between Parent and certain directors of Borrower and
its Subsidiaries (or trusts for the benefit of relatives of such
directors) including, without limitation, stock option
arrangements, with respect to up to 8,000,000 shares of Class A
Common Stock of Parent.
"Store Deposit" shall have the meaning set forth in
Section 9.17(d) hereof.
"Subsidiary" of any Person shall mean (i) any
corporation of which more than fifty percent (50%) of the issued
and outstanding securities having ordinary voting power for the
election of directors is owned or controlled, directly or
indirectly, by such Person and/or one or more of its
Subsidiaries, and (ii) any partnership in which a Person and/or
one or more Subsidiaries of such Person shall have an interest
(whether in the form of voting or participation in profits or
capital contribution) of more than fifty percent (50%).
"Supply Agreement" shall mean the Supply Agreement,
dated as of the Closing Date, by and between AWG and Borrower.
"Trustee" shall mean United States Trust Company of New
York, as trustee under the Indenture, and any successor trustee
appointed pursuant to the applicable provisions of the Indenture.
"UCC" shall mean the Uniform Commercial Code (or any
successor statute) of the State of New York or of any other state
the laws of which are required by Section 9-103 of the UCC of New
York to be applied in connection with the perfection of a
security interest in favor of the Agent hereunder or under any
Security Document.
"U.S. Dollars" and "$" shall mean lawful currency of
the United States of America.
"Use Restrictions" shall mean (i) Borrower's agreement
under Section 8(b) of the Supply Agreement to dedicate (to the
extent of its interest therein (including leasehold interests))
certain real property and the improvements thereon to the
exclusive use of a retail grocery facility (including all
activities which from time to time are commonly associated with
the operation of a grocery facility) which is owned by a retail
member of AWG and (ii) any public recordations of such agreement,
provided that any such public recordation shall be terminable
from time to time as set forth in Section 8(b) of the Supply
Agreement.
"Weingarten Documents" shall mean, collectively, the
Weingarten Guaranty, the Weingarten Lease, the Weingarten Lease
Supplement and any other agreements between Parent or Borrower,
on the one hand, and Weingarten/Oklahoma, Inc., relating thereto.
"Weingarten Guaranty" shall mean the Contingent
Guaranty, dated July 19, 1991, made by the Parent in favor of
Weingarten/Oklahoma, Inc. in respect of the Weingarten Lease.
"Weingarten Lease" shall mean the Lease Contract, dated
May 20, 1991, as heretofore amended, between the Borrower and
Weingarten/Oklahoma, Inc., as lessor.
"Weingarten Lease Supplement" shall mean the
Supplemental Agreement to Lease Contract, dated July 19, 1991,
between the Borrower and Weingarten/Oklahoma, Inc.
"Written Notice" and "in writing" shall mean any form
of written communication or a communication by means of telex,
telecopier device, telegraph or cable.
1.2. TERMS DEFINED IN THE UNIFORM COMMERCIAL CODE.
Each term defined in the UCC of the State of New York and used
herein shall have the meaning given therein unless otherwise
defined herein.
1.3. COMPUTATION OF TIME PERIODS. In this
Agreement in the computation of periods of time from a specified
date to a later specified date, the word "from" shall mean "from
and including" and the words "to" and "until" each shall mean "to
but excluding."
1.4. ACCOUNTING TERMS. (a) All accounting terms
not specifically defined herein shall be construed, as to a
specified Person, in accordance with generally accepted
accounting principles in the United States, consistent with those
applied in the preparation of the financial statements of such
Person ("GAAP").
(b) If any change in accounting principles from those
used in the preparation of any financial statements previously
delivered to Lenders under the Existing Agreement are hereafter
occasioned by promulgation of rules, regulations, pronouncements
or opinions by or are otherwise required by the Financial
Accounting Standards Board or the American Institute of Certified
Public Accountants (or successors thereto or agencies with
similar functions), Borrower shall cause its independent auditors
promptly to report such change and the effect thereof on Borrower
(and Parent) and its financial reporting to the Agent in writing.
If Parent and Borrower do not adopt such change and the Agent
determines that such change is material to the Parent, Borrower
and their Subsidiaries and requests that Parent, Borrower and
their respective Subsidiaries adopt such change, then Parent,
Borrower and their Subsidiaries shall adopt such change (but not
prior to the date that such Credit Party is required to adopt
such change by such authorities). If such change results in a
change in the method of calculation of, or affects the results of
such calculation of, any of the financial covenants, standards or
terms found in any Loan Document, then the parties hereto agree
to enter into and diligently pursue negotiations in order to
amend such financial covenants, standards or terms so as to
equitably reflect such change, with the desired result that the
criteria for evaluating a Credit Party's financial condition and
results of operations shall be the same after such change as if
such change had not been made.
1.5. OTHER PROVISIONS REGARDING DEFINITIONS. (a)
The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement
as a whole and not to any particular provision of this Agreement.
(b) The terms defined in this Section 1, unless the
context requires otherwise, will have the meanings applied to
them in this Section 1, references to an "Exhibit," "exhibit,"
"Schedule" or "schedule" are, unless otherwise specified, to one
of the exhibits or schedules attached to this Agreement and
references to a "section" or "Section" are, unless otherwise
specified, to one of the sections of this Agreement.
(c) The term "or" is not exclusive.
SECTION 2. AMOUNT AND TERMS.
2.1. ADVANCES. (a) Each of the Lenders severally
agrees to lend to Borrower, subject to and upon the terms and
conditions herein set forth, at any time or from time to time on
or after the Closing Date and before the Maturity Date, such
Lender's pro rata share of such amounts as may be requested or be
deemed requested by Borrower in accordance with the terms of this
Agreement (each such borrowing, an "Advance" and the outstanding
principal balance of all Advances from time to time, the
"Revolving Loan"), subject to the limitations contained in
Section 2.2 hereof.
(b) Each Advance shall be made on the date specified
in the Written Notice or telephonic notice confirmed in writing
as described in Section 2.4; provided, however, that if Borrower
shall be deemed to request an Advance under Section 4.1(c)
hereof, no notice of a borrowing shall be necessary and such
Advance shall be in an amount equal to the reimbursement
obligation of Borrower for the drawing made under the Letter of
Credit for which such Advance is deemed requested. Subject to
the limitations of Section 2.1(c) hereof, each Advance shall be
either a Base Rate Advance or a Eurodollar Advance, or a
combination thereof, as Borrower shall request, subject to and in
accordance with the provisions of this Agreement.
(c) Borrower shall not be entitled to request, and the
Lenders shall not be obligated to make, any Eurodollar Advance
(i) during the period from the Closing Date until the first
anniversary of the Closing Date, and (ii) at any time thereafter
if the aggregate amount of EBITDA for Borrower and its
Subsidiaries for the Fiscal Year preceding such request is less
than $16,758,000.
2.2. REVOLVING CREDIT FACILITY COMMITMENT AND
BORROWING LIMIT. (a) The aggregate unpaid principal amount of
the Advances outstanding at any time shall not exceed an amount
equal to the lesser of (i) the Revolving Credit Facility
Commitment minus the Letter of Credit Usage at such time (after
giving effect to any concurrent reimbursement of a Letter of
Credit with the proceeds of an Advance pursuant to Section 4.1(c)
hereof), and (ii) the Borrowing Base as of such time minus the
Letter of Credit Usage at such time (after giving effect to any
concurrent reimbursement of a Letter of Credit with the proceeds
of an Advance pursuant to Section 4.1(c) hereof) (the lesser of
(i) and (ii) being the "Borrowing Limit").
(b) Subject to the limitations of Sections 2 and 3
hereof, Borrower may borrow, repay and reborrow the Revolving
Loan. The portion of the Revolving Loan to be funded by each
Lender shall not exceed in aggregate principal amount at any one
time outstanding, and no Lender shall have any obligation to make
its pro rata share of the Revolving Loan outstanding at any one
time in the aggregate in excess of, the revolving commitment
amount set forth opposite such Lender's name on Schedule 1.1(A)
hereto for the Revolving Credit Facility Commitment (for each
Lender its "Revolving Commitment").
(c) Insofar as Borrower may request and Lenders may be
willing in their sole and absolute discretion to make Advances to
Borrower at a time when the aggregate unpaid principal amount of
the Advances exceeds, or would exceed with the making of any such
Advance, the Borrowing Base minus the Letter of Credit Usage at
such time (but not exceed the Revolving Credit Facility
Commitment minus Letter of Credit Usage at such time) by no more
than ten percent (10%) of the Borrowing Base minus the Letter of
Credit Usage (any such Advance or Advances being herein referred
to individually as an "Overadvance" and collectively as
"Overadvances") Agent may, at the direction of all Lenders, make
such Overadvance or Overadvances. All Overadvances shall be
secured by the Collateral and shall bear interest at an annual
rate equal to the lesser of (i) the rate then applicable to such
Advance, plus one percent (1%) or (ii) the Maximum Lawful Rate.
The principal amount of all Overadvances shall be due and payable
on demand, and interest thereon shall be due and payable as
provided in Section 2.6 hereof.
2.3. NOTES. (a) The pro rata portion of the
Advances made by each Lender to Borrower shall be evidenced by,
and be repayable with interest in accordance with the terms of, a
promissory note issued by Borrower, in each case payable to the
order of such Lender, and in the maximum principal amount of such
Lender's Revolving Commitment, in the form of Exhibit 2.3 hereto
(together with any replacement, modification, renewal or
substitution thereof, individually, a "Note" and collectively,
the "Notes").
(b) Each Note shall be dated the Closing Date and be
duly completed, executed and delivered by Borrower.
(c) Each Lender shall endorse that portion of the
amount of each Advance which it has made to Borrower and the
amount of each payment or prepayment of principal thereon in the
appropriate space on the grid sheet attached to its Note (or so
note the same in its records); provided, however, that the
failure of any Lender to make any such endorsement or recordation
shall not in any manner affect the obligation of Borrower to
repay to such Lender the portion of the Advance advanced by such
Lender under the Note held by such Lender. Any such endorsement
or recordation shall represent conclusive evidence of the date
and amount of such Lender's pro rata share of any Advance or
payment or prepayment of principal thereon, absent manifest
error.
(d) Each of the Notes shall mature on the Maturity
Date (or earlier as hereinafter provided), and shall be subject
to payment and prepayment as provided in Sections 2 and 3 hereof.
2.4. NOTICE OF BORROWING; BORROWER'S CERTIFICATE.
(a) Except as provided in Section 4.1(c) hereof, whenever
Borrower desires to make a borrowing of an Advance, it shall give
the Agent, at its address set forth in Section 13.4 hereof, prior
Written Notice or telephonic notice from an Authorized
Representative confirmed promptly in writing (which notice shall
be irrevocable) of its desire to make a borrowing of an Advance
(i) not later than 12:00 noon (New York time) on the proposed
borrowing date of each Advance that is a Base Rate Advance and
(ii) not later than 11:00 a.m. (New York time) three (3) Business
Days prior to the proposed borrowing date of each Advance that is
a Eurodollar Advance. Each notice of borrowing under this
Section 2.4 shall be substantially in the form of Exhibit 2.4
hereto (each, together with each Written Notice delivered under
Section 4.1(a) hereto, a "Borrower's Certificate"), shall be
dated the date of such notice (which notice shall be deemed
repeated on the date of such borrowing), and specify the date on
which Borrower desires to make a borrowing of an Advance (which
in each instance shall be a Business Day), the amount of such
borrowing, whether such borrowing shall be a Base Rate Advance or
a Eurodollar Advance or a combination thereof, and, in the case
of the selection of a Eurodollar Advance, the proposed Interest
Period therefor, and shall refer to the most recent Borrowing
Base Certificate delivered by Borrower to the Agent and each
Lender pursuant to Section 9.1(k) hereof, and set forth the
Borrowing Base provided therein. If such notice shall be with
respect to a borrowing of a Eurodollar Advance but fails to state
an applicable Interest Period therefor, then such notice shall be
deemed to be a request for a one-month Interest Period. If (x)
Borrower shall fail to state in any such notice whether such
Advance shall be a Base Rate Advance or a Eurodollar Advance, or
(y) Borrower shall be deemed to have made a borrowing of an
Advance pursuant to Section 4.1(c) hereof, then Borrower shall be
deemed to have selected a Base Rate Advance. Subject to the
other provisions of this Agreement, Base Rate Advances and
Eurodollar Advances of more than one type may be outstanding at
the same time; provided, however, that Eurodollar Advances shall
be available for election by Borrower only for (1) advances of
$1,000,000 or any integral multiple of $100,000 in excess of
$1,000,000 and, (2) one, three and six month interest periods.
(b) Borrower shall not be permitted to select a
borrowing of a Eurodollar Advance in any Borrower's Certificate
(i) to the extent such selection would be prohibited by Section
2.1(c) hereof, Section 2.10 hereof or Section 2.11 hereof or (ii)
if a Default or an Event of Default shall be in existence as of
the date of selection of the applicable Interest Period.
(c) On or before 12:00 noon. (New York time) on
Wednesday of each week prior to the expiration of the Revolving
Credit Facility Commitment (or, if any such Wednesday is not a
Business Day, the next preceding Business Day (each a "Settlement
Date")), Agent shall notify each Lender by telephone (confirmed
immediately by Written Notice) of the terms of Advances
outstanding at the time of such notice and the amount of such
Lender's pro rata portion of such Advances (each a "Settlement
Notice"). If the Advances outstanding at the time of such
Settlement Notice exceed the Advances outstanding at the time of
the immediately preceding Settlement Notice, then each Lender
shall, before 3:00 p.m. (New York time) on such Settlement Date,
deposit with Agent the amount of such Lender's pro rata portion
of the increase to the Advances in U.S. dollars in immediately
available funds at the office of the Agent located at 125 West
55th, New York, New York 10019 or such other office as the Agent
may from time to time direct (the "Payment Office"). If the
Advances at the time of such Settlement Notice are less then the
Advances outstanding at the time of the immediately preceding
Settlement Notice, Agent will distribute to each Lender such
Lender's pro rata portion of such difference before 3:00 p.m.
(New York time) on such Settlement Date.
(d) Except for Advances made pursuant to Section
4.1(c) hereof (which Advances shall be applied to the
reimbursement of drawings under the Letter of Credit for which
such Advance was made in accordance with such Section 4.1(c)
hereof), subject to satisfaction of closing conditions, proceeds
of an Advance received by the Agent shall be made available to
Borrower by the Agent at its Payment Office (or such other office
of the Agent in New York State as Agent may from time to time
specify in writing to the Borrower).
2.5. TERMINATION OF REVOLVING CREDIT FACILITY
COMMITMENT. Borrower shall have the right, upon not less than
five (5) Business Days' prior Written Notice to the Agent (which
shall promptly notify each Lender thereof in writing or by
telephone confirmed promptly in writing), to terminate the
Revolving Credit Facility Commitment; provided, however, that any
such termination of the Revolving Credit Facility Commitment
shall be accompanied by prepayment in full of the Revolving Loan
then outstanding, together with the payment of any unpaid fees
owing with respect to the Revolving Credit Facility Commitment,
any fees, premiums, costs and charges required to be paid by
Borrower pursuant to Section 2.12 and Section 3.6 hereof, and
accrued interest on the amount so prepaid to the date of such
prepayment; provided, further, that Borrower may not cancel the
Revolving Credit Facility Commitment while any Letter of Credit
Usage is outstanding.
2.6. INTEREST. (a) Interest on Eurodollar
Advances. Except as provided in Section 2.6(c) hereof, Borrower
shall pay interest on the unpaid principal amount of each
Eurodollar Advance made to it which is outstanding from time to
time, on each Interest Payment Date with respect to such
Eurodollar Advance, at the date of conversion of such Eurodollar
Advance (or portion thereof) to a Base Rate Advance, at maturity
of such Eurodollar Advance and, after maturity of such Eurodollar
Advance (whether by acceleration or otherwise) upon demand, at an
interest rate per annum equal during the Interest Period for such
Eurodollar Advance to the Adjusted Eurodollar Rate for the
Interest Period in effect for such Eurodollar Advance plus the
applicable Eurodollar Rate Margin.
(b) Interest on Base Rate Advances. Except as
provided in Section 2.6(c) hereof, Borrower shall pay interest on
the unpaid principal amount of the Base Rate Advances made to it
hereunder, and, to the extent due and payable, Additional
Indebtedness incurred by it, in each case, which is outstanding
from time to time at an interest rate per annum equal to the Base
Rate in effect from time to time. Interest on Base Rate Advances
shall be payable quarterly in arrears on the last day of each
March, June, September and December of each calendar year
commencing with June 30, 1995, upon conversion thereof to a
Eurodollar Advance and at maturity (whether by acceleration or
otherwise) and thereafter on demand. Interest on Additional
Indebtedness shall be payable upon demand.
(c) Default Interest. Notwithstanding anything to the
contrary contained herein, while any Event of Default is
continuing, interest on the Base Rate Advances, Eurodollar
Advances, Additional Indebtedness and interest thereon (to the
extent such interest is in default) shall be payable at a rate
per annum equal to two percentage points (2%) in excess of the
rate then otherwise applicable thereto under this Agreement (or
in the case of interest in default, otherwise applicable to the
principal in respect of which such interest accrued).
(d) Eurodollar Rate Determination. The Agent, upon
determining the Eurodollar Rate and the Adjusted Eurodollar Rate
for any Interest Period, shall promptly notify by telephone
(confirmed promptly in writing) or in writing Borrower and the
Lenders of such rates. Such determination shall, in the absence
of manifest error, be conclusive and binding upon Borrower and
the Lenders.
(e) Changes in Base Rate. After each change in the
Base Rate, the Agent shall promptly notify Borrower and each
Lender of the date of such change and the new Base Rate;
provided, however, that the failure of the Agent to so notify
Borrower or any Lender shall not affect the effectiveness of such
change.
2.7. CONVERSION OF BORROWINGS; RENEWALS. (a)
Unless otherwise prohibited under Section 2.1(c), Section 2.10 or
Section 2.11 hereof, Borrower may, from time to time prior to the
Maturity Date, convert (i) all or a portion of outstanding Base
Rate Advances made to Borrower to one or more Eurodollar
Advances, except as provided in Section 2.10 or 2.11 hereof, and
only in aggregate amounts of $1,000,000 or any integral multiple
of $100,000 excess of $1,000,000 or (ii) all or a portion of
outstanding Eurodollar Advances made to Borrower to one or more
Base Rate Advances so long as the aggregate principal balance of
the portion of the Eurodollar Advances made to Borrower not being
converted, if any, is $1,000,000 or an integral multiple of
$100,000 in excess thereof; provided, however, that Borrower
shall not be entitled to convert any Base Rate Advance, or
portion thereof, to a Eurodollar Advance or any Eurodollar
Advance, or portion thereof, to a Base Rate Advance unless all
accrued interest on the Base Rate Advance, or portion thereof, or
Eurodollar Advance or portion thereof, as the case may be, to be
converted through the date of such conversion shall have been
paid in full. Each conversion by Borrower of any Advance or
portion thereof (other than a conversion pursuant to Section 2.10
or 2.11 hereof) shall be made on a Business Day on at least three
(3) Business Days' prior Written Notice or telephonic notice from
an Authorized Representative confirmed promptly in writing to the
Agent from Borrower. Each such notice (which notice shall be
irrevocable) shall specify (i) the date of the conversion and the
amount to be converted, (ii) the particular Advance, or portion
thereof, to be converted, and (iii) in the case of conversion of
any Advance, or portion thereof, to a Eurodollar Advance, the
duration of the Interest Period for such Eurodollar Advance.
Notwithstanding the above, Borrower shall not be entitled to
convert any Advance, or portion thereof, to a Eurodollar Advance
if a Default or Event of Default shall have occurred and be
continuing. Except as provided in Section 2.10, any conversion
of a Eurodollar Advance, or portion thereof, to a Base Rate
Advance shall be made only on the last day of the Interest Period
with respect to such Eurodollar Advance.
(b) Each renewal by Borrower of an outstanding
Eurodollar Advance or portion thereof shall be made on notice to
the Agent given not later than 11:00 a.m. (New York time) on the
third Business Day prior to the last day of the Interest Period
just ending for such Eurodollar Advance. Each notice (which
notice shall be irrevocable) by Borrower of the renewal of a
Eurodollar Advance or portion thereof, shall be in writing or by
telephone from an Authorized Representative confirmed promptly in
writing and shall specify (i) the amount of such renewal of the
Eurodollar Advance or portion thereof and (ii) the duration of
the Interest Period for such renewal; provided, however, that if
Borrower fails to select the duration of any Interest Period for
the renewal of such Eurodollar Advance or portion thereof, the
duration of such Interest Period shall be one month.
Notwithstanding the above, Borrower shall not be entitled to
renew a Eurodollar Advance or a portion thereof, (x) if at the
time of the selection of such renewal there shall exist a Default
or an Event of Default, or (y) to the extent such renewal would
be prohibited by Section 2.10 or 2.11 hereof.
(c) Any Eurodollar Advance or portion thereof as to
which the Agent shall not have received a proper notice of
conversion or renewal as provided in Section 2.7(a) or 2.7(b)
hereof or notice of payment or prepayment by 11:00 a.m. (New York
time) at least three (3) Business Days prior to the last day of
the Interest Period just ending for such Eurodollar Advance shall
(whether or not any Default or Event of Default has occurred)
automatically be converted to a Base Rate Advance on the last day
of the Interest Period for such Eurodollar Advance.
2.8. COMPUTATION OF INTEREST. Interest on the
Revolving Loan and fees and other amounts calculated on the basis
of a rate per annum shall be computed on the basis of actual days
elapsed over a (a) 360-day year for Eurodollar Advances, fees and
other amounts calculated on a per annum basis and (b) 360-day
year for Base Rate Advances. Any rate of interest on the
Revolving Loan and Additional Indebtedness which is computed on
the basis of the Base Rate shall change when and as the Base Rate
changes.
2.9. INCREASED COSTS. In the case of the pro rata
share of any Lender in any Eurodollar Advance, in the event of
any change in conditions or the introduction or change in any
applicable law, regulation, treaty, order or directive or
condition or interpretation thereof (including, without
limitation, any request, guideline or policy whether or not
having the force of law with which such Lender must reasonably
comply), including, without limitation, Regulation D, by any
authority charged with the administration or interpretation
thereof, shall occur, which:
(i) subjects such Lender or any branch or Affiliate of
such Lender to any tax, duty or other charge with respect to such
share of such Eurodollar Advance (other than Excluded Taxes); or
(ii) changes the basis of taxation of payments to
any Lender or any branch or Affiliate of such Lender of
principal of and/or interest on such share of such
Eurodollar Advance and/or other fees and amounts payable
hereunder with respect thereto (other than Excluded Taxes);
or
(iii) imposes, modifies or deems applicable
any reserve, deposit or similar requirement against any
assets held by, deposits with or for the account of, or
loans or commitments by, an office of any Lender or any
branch or Affiliate of such Lender; or
(iv) imposes upon such Lender or any branch or
Affiliate of such Lender any other condition with respect to
such share of such Eurodollar Advance or this Agreement;
and the result of any of the foregoing is to increase the actual
cost by an amount such Lender deems to be material to such Lender
or any branch or Affiliate of such Lender of making, funding or
maintaining such share of such Eurodollar Advance hereunder
(except to the extent such Lender has determined that such amount
has been already included in the determination of the applicable
Adjusted Eurodollar Rate for Eurodollar Advances), or to reduce
the amount of any payment (whether of principal, interest, or
otherwise) received or receivable by such Lender or any branch or
Affiliate of such Lender, or to require such Lender or any branch
or Affiliate of such Lender to make any payment, in each case by
or in an amount which such Lender in its sole judgment deems
material, then and in any such case:
(x) such Lender shall promptly notify Borrower,
the Agent and the other Lenders in writing of the happening
of such event;
(y) such Lender shall promptly deliver to
Borrower, the Agent and the other Lenders a certificate
stating the change which has occurred, or the reserve
requirements or other conditions which have been imposed on
such Lender or branch or Affiliate of such Lender, or the
request, directive or requirement with which it has
complied, together with the date thereof, the amount of such
increased cost, reduction or payment and the way in which
such amount has been calculated; and
(z) Borrower hereby agrees to pay such Lender
within five (5) Business Days following demand such an
amount or amounts as will compensate such Lender or its
branch or Affiliate for such additional cost, reduction or
payment.
The certificate of such Lender as to the additional amounts
payable pursuant to this Section 2.9 delivered to Borrower shall
in the absence of manifest error be conclusive of the amount
thereof. Each Lender agrees to use reasonable efforts to avoid or
minimize the payment by Borrower of any additional amounts under
this Section 2.9, including, without limitation, by the
designation of another branch or Affiliate of such Lender from
which such Lender could make such Lender's pro rata share of
Eurodollar Advances so long as such designation is not
disadvantageous to such Lender as reasonably determined by such
Lender. The protection of this Section 2.9 shall be available to
such Lender regardless of any possible contention of invalidity
or inapplicability of the law, regulation, treaty, order,
directive, interpretation or condition which has been imposed.
In the event that after Borrower shall have paid any additional
amount under this Section 2.9 a Lender shall have successfully
contested such law, regulation, treaty, order, directive,
interpretation or condition, then to the extent that such Lender
does not incur any increased cost or amount payable or reduction
in an amount receivable, such Lender shall refund, on an
after-tax basis, to Borrower such additional amount.
2.10. CHANGE IN LAW RENDERING EURODOLLAR ADVANCES
UNLAWFUL. (a) Notwithstanding anything to the contrary herein
contained, in the event that any new law, treaty, order,
directive, rule or regulation or any change in any existing law,
treaty, order, directive, rule or regulation or in the
interpretation thereof by any governmental or other regulatory
authority charged with the administration thereof, makes it
unlawful for any Lender to fund any portion of a Eurodollar
Advance or to give effect to its obligations as contemplated
hereby with respect to Eurodollar Advances, such Lender shall,
upon the happening of such event, notify the Agent, the other
Lenders and Borrower thereof in writing stating the reason
therefor, and the obligation of such Lender to allow conversion
to or selection or renewal with respect to its pro rata share of
any Eurodollar Advance by Borrower shall, upon the happening of
such event, forthwith be suspended for the duration of such
illegality and during such illegality such Lender shall fund its
share of all Advances as Base Rate Advances and there shall be no
renewal of, or conversion to, any share of such Lender in any
Eurodollar Advance. If and when such illegality ceases to exist,
such suspension shall cease and such affected Lender shall
similarly notify the Agent, the other Lenders and Borrower.
(b) Notwithstanding anything to the contrary contained
herein, in the event that any new law, treaty, order, directive,
rule or regulation or any change in any existing law, treaty,
order, directive, rule or regulation or in the interpretation
thereof by any governmental or other regulatory authority charged
with the administration thereof shall make it commercially
impracticable or unlawful for any Lender to continue in effect
the funding of any portion of a Eurodollar Advance previously
made by it hereunder and then outstanding, such Lender shall,
upon the happening of such event, notify the Agent, the other
Lenders and Borrower thereof in writing stating the reasons
therefor, and such Lender's pro rata share of such Eurodollar
Advance shall automatically be converted to a Base Rate Advance.
Borrower shall pay to the Agent for the benefit of such Lender
accrued interest owing on such converted portion of such
Eurodollar Advance made to Borrower through the date of such
conversion, together with any amounts payable under Section 2.12
hereof with respect to such prepayment. After such notice shall
have been given and until the circumstances giving rise to such
notice no longer exist, each request for such Lender's pro rata
share of a Eurodollar Advance or for conversion to or renewal of
such Lender's pro rata share of a Eurodollar Advance shall be
deemed a request by Borrower for a Base Rate Advance. If and
when such impracticability or illegality ceases to exist, such
suspension shall cease and such affected Lender shall similarly
notify the Agent, the other Lenders and Borrower.
2.11. EURODOLLAR AVAILABILITY. (a) In the event,
and on each occasion, that on the day two (2) Business Days prior
to the commencement of any Interest Period for a Eurodollar
Advance, the Agent shall have determined in good faith (which
determination shall, in the absence of manifest error, be
conclusive and binding upon Borrower) that dollar deposits in the
amount of the principal amount of such Eurodollar Advance are not
generally available in the London (England, U.K.) interbank
market, or that the rate at which such dollar deposits are being
offered will not accurately reflect the cost to one or more
Lenders of making or funding the principal amount of their
portions of such Eurodollar Advance during such Interest Period,
or that reasonable means do not exist for ascertaining the
Eurodollar Rate, the Agent shall, as soon as practicable
thereafter, give Written Notice or telephonic notice of such
determination to the Lenders and Borrower and any request by
Borrower for a Eurodollar Advance pursuant to Section 2.4 hereof
or for conversion to or renewal of a Eurodollar Advance pursuant
to Section 2.7 hereof shall thereupon, and until the
circumstances giving rise to such notice no longer exist (as
notified by the Agent to Borrower and the Lenders), be deemed a
request by Borrower for the making of or conversion to a Base
Rate Advance.
(b) If, at any time, the Agent shall have determined
(which determination shall, in the absence of manifest error, be
conclusive and binding upon Borrower) that any contingency has
occurred which adversely affects the London (England, U.K.)
interbank market or that any new law, treaty, order, directive,
rule or regulation or any change in any existing law, treaty,
order, directive, rule or regulation or in the interpretation
thereof or other circumstance affecting one or more Lenders, in
the London (England, U.K.) interbank market makes the funding of
any portion of a Eurodollar Advance impracticable, the Agent
shall, as soon as practicable thereafter, give Written Notice or
telephonic notice of such determination to the Lenders and
Borrower and any request by Borrower for a Eurodollar Advance
pursuant to Section 2.4 hereof or for conversion to or renewal of
a Eurodollar Advance pursuant to Section 2.7 hereof shall
thereupon, and until the circumstances giving rise to such notice
no longer exist (as notified by the Agent to Borrower and the
Lenders), be deemed a request by Borrower for the making of or
conversion to a Base Rate Advance.
2.12. INDEMNITIES. (a) Borrower hereby agrees to
indemnify each Lender on demand against any loss or expense which
such Lender or its branch or Affiliate may sustain or incur as a
consequence of:
(i) any default in payment or prepayment of the
principal amount of any Eurodollar Advance made to it or any
portion thereof or interest accrued thereon, as and when due
and payable (at the due date thereof, by irrevocable notice
of payment or prepayment, or otherwise),
(ii) the effect of the occurrence of any Event of
Default upon any Eurodollar Advance made to it,
(iii) the payment or prepayment of the
principal amount of any Eurodollar Advance made to it or any
portion thereof, pursuant to Section 2 or 3 hereof, or
otherwise, on any day other than the last day of an Interest
Period or the payment of any interest on any Eurodollar
Advance made to it, or portion thereof, on a day other than
an Interest Payment Date for such Eurodollar Advance, or
(iv) the failure by Borrower to accept or make a
borrowing of a Eurodollar Advance or a conversion to or
renewal of a Eurodollar Advance after it has requested such
borrowing, conversion or renewal,
in each case including, but not limited to, any loss or expense
sustained or incurred in liquidating or employing deposits from
third parties acquired to effect or maintain such Eurodollar
Advance or any portion thereof. Each Lender shall provide to
Borrower, the Agent and the other Lenders a statement, supported
where applicable by documentary evidence, explaining the amount
of any such loss or expense it incurs, which statement shall be
conclusive absent manifest error.
(b) If any law, regulation or change in any law or
regulation or in the interpretation thereof or any ruling,
decree, judgment or recommendation, or any guideline or directive
(whether or not giving the force of law) in any case adopted,
issued or effective after the Closing Date (and including in any
event all risk based capital guidelines heretofore adopted by the
Comptroller of the Currency, the Board or any other banking
regulatory agency, domestic or foreign, to the extent that any
provision contained therein does not have to be complied with as
of the Closing Date), by any regulatory body, court or any
administrative or governmental authority charged or claiming to
be charged with the administration thereof, shall:
(i) impose upon, modify, require, make or deem
applicable to any one or more Lenders, or any of their
Affiliates or branches, any reserve requirement, special
deposit requirement, insurance assessment or similar
requirement against or affecting the Revolving Commitment of
such Lender or Lenders or such Affiliates or branches, or
(ii) impose any condition upon or cause in any
manner the addition of, any supplement to or any increase of
any kind to the capital or cost base of such Lender or
Lenders, or such Affiliates or branches thereof, for
extending or maintaining the Revolving Commitment of such
Lender, which results in an increase in the capital
requirement supporting such Revolving Commitment, or
(iii) impose upon, modify, require, make or
deem applicable to such Lender or Lenders or any such
Affiliates or branches any capital requirement, increased
capital requirement or similar requirement, and the result
of any events referred to in clause (i), (ii) or (iii) above
shall be to (x) increase the amount of capital required or
expected to be required to be maintained by such Lender or
any such Affiliate or branch and such Lender determines that
the amount of such capital requirement is incurred by or
based on such Revolving Commitment or other commitments of
this type or (y) increase the costs or decrease the benefit
in any way to such Lender or Lenders, or any such Affiliate
or branch, of extending or maintaining such Revolving
Commitment or extending or maintaining such Lender's or
Lenders' portion of the Loans or holding any Collateral;
then and in such event Borrower shall, on or prior to the tenth
(10th) Business Day after the giving of Written Notice of such
increased costs and/or decreased benefits to Borrower and the
Agent by such Lender or Lenders (or any such Affiliate or
branch), pay to such Lender or Lenders all such additional
amounts (other than those which, in the reasonable and good faith
judgment of such Lender or Lenders, are reflected in the interest
rates charged on the Revolving Loan) which in the sole good faith
calculation of such Lender or Lenders are properly allocable to
the Revolving Commitment of such Lender, such Lender's or
Lenders' portion of the Revolving Loan and/or the Collateral, as
the case may be, and which:
(1) in the case of events referred to in clause
(i) above, shall be sufficient to compensate it for all such
increased costs and/or decreased benefits, and/or
(2) in the case of events referred to in clauses
(ii) and (iii) above, shall be an amount equal to the
reduction, as reasonably determined by such Lender, in the
after-tax rate of return on such Lender's capital resulting
from any such capital or increased capital or similar
requirement (including, without limitation, any such
Lender's or Lender's Affiliates' or branches' cost of taking
action in anticipation of the effectiveness of any event
described in clause (ii) or (iii) in order to enable such
Lender, Lenders, Affiliate or branch to be in compliance
therewith upon such effectiveness), all as certified by such
Lender or Lenders in said Written Notice to Borrower. Such
certification shall be conclusive and binding on Borrower
absent manifest error.
(c) Borrower hereby agrees to indemnify and hold
harmless the Agent and each Lender and their respective
Affiliates, directors, officers, agents, representatives, counsel
and employees and each other Person, if any, controlling them or
any of their Affiliates within the meaning of either Section 15
of the Securities Act or Section 20(a) of the Securities Exchange
Act (each an "Indemnified Party"), from and against any and all
losses, claims, damages, costs, expenses (including reasonable
counsel fees and disbursements) and liabilities which may be
incurred by or asserted against such Indemnified Party with
respect to or arising out of the commitments hereunder to make
the Advances or to issue Letters of Credit, or the financings
contemplated hereby, the other Loan Documents, the Collateral
(including, without limitation, the use thereof by any of such
Persons or any other Person, the exercise by the Agent or any
Lender of rights and remedies or any power of attorney with
respect thereto, and any action or inaction of the Agent or any
Lender under any Security Document), the use of proceeds of any
financial accommodations provided hereunder, any investigation,
litigation or other proceeding brought or threatened relating to
the role of any such Person or Persons in connection with the
foregoing whether or not they or any other Indemnified Party is
named as a party to any legal action or proceeding ("Claims").
Borrower will not, however, be responsible to any Indemnified
Party hereunder for any Claims to the extent that a court having
jurisdiction shall have determined by a final judgment that any
such Claim shall have arisen out of or resulted from actions
taken or omitted to be taken by such Indemnified Party which
constitute the gross negligence or willful misconduct of such
Indemnified Party ("Excluded Claims"). Further, should any of
the Agent's or any of the Lenders' employees be involved in any
legal action or proceeding in connection with the transactions
contemplated hereby (other than relating to an Excluded Claim),
Borrower hereby agrees to pay to the Agent and each Lender such
per diem compensation as the Agent or such Lender shall request
for each employee for each day or portion thereof that such
employee is involved in preparation and testimony pertaining to
any such legal action or proceeding. The Indemnified Party shall
give Borrower prompt Written Notice of any Claim setting forth a
description of those elements of the Claim of which such
Indemnified Party has knowledge. Borrower shall have the right
at any time during which a Claim is pending to select counsel to
defend and settle any Claims so long as in any such event
Borrower shall have stated in a writing delivered to the
applicable Indemnified Party that, as between Borrower and such
Indemnified Party, Borrower is responsible to such Indemnified
Party with respect to such Claim; provided, however, that
Borrower shall not be entitled to control the defense of any
Claim in the event that there are defenses available to the
Indemnified Party which are not available to Borrower. In any
other case, the Indemnified Party shall have the right to select
counsel and control the defense of any Claims; provided, however,
that no Indemnified Party shall settle any Claim as to which it
is controlling the defense without the consent of Borrower, which
consent shall not be unreasonably withheld or delayed. With
respect to any Claim for which Borrower is entitled to select
counsel, each Indemnified Party shall have the right, at its
expense, to participate in the defense of such Claim. In the
event that, with respect to any Claim, more than one Indemnified
Party shall be permitted hereunder to select counsel to defend
such Claim at the expense of Borrower and shall decide to do so,
then all such Indemnified Parties shall select the same counsel
to defend such Indemnified Parties with respect to such Claim;
provided, however, that if any such Indemnified Party shall in
its reasonable opinion consider that the retention of one joint
counsel as aforesaid shall result in a conflict of interest
adverse to it, such Indemnified Party may, at the expense of
Borrower, select its own counsel to defend such Indemnified Party
with respect to such Claim. The Indemnified Parties and Borrower
shall cooperate with each other in all reasonable respects and
their respective counsel in any investigation, trial and defense
of any such Claim and any appeal arising therefrom.
(d) If for any reason the foregoing indemnity is
unavailable to any Indemnified Party or insufficient to hold it
free and harmless as contemplated by the preceding paragraph (c),
then Borrower shall contribute to the amount paid or payable by
the Indemnified Party as a result of any Claim in such proportion
as is appropriate to reflect, not only the relative benefits
received by Borrower on the one hand and such Indemnified Party
on the other hand, but also the relative fault of Borrower and
such Indemnified Party, as well as any other relevant equitable
considerations.
2.13. DISBURSEMENT. Each Advance shall be
disbursed by the Agent from the Payment Office, shall be charged,
together with interest, fees and other amounts payable by
Borrower hereunder, to the account of Borrower on the books of
the Agent from time to time, and shall be payable at such office.
2.14. AGENT'S AVAILABILITY ASSUMPTION. (a) The
Agent may assume that each Lender will make such Lender's pro
rata portion of the Advances available to the Agent on the date
set forth in Section 2.4(c) hereof and the Agent may, in reliance
upon such assumption, make available to Borrower the amount of
each requested Advance. If Lender's pro rata portion of the
Advances is not in fact made available to the Agent by such
Lender in accordance with Section 2.4(c) hereof, the Agent shall
be entitled to recover such amount on demand from such Lender,
which demand shall be made in a reasonably prompt manner. If
such Lender does not pay such amount forthwith upon the Agent's
demand therefor, the Agent shall promptly notify the other
Lenders and Borrower, and Borrower shall pay such amount to the
Agent.
(b) The Agent shall also be entitled to recover from
such Lender or Borrower interest on such corresponding amount in
respect of each day from the date such corresponding amount was
made available by the Agent to Borrower to the date such
corresponding amount is recovered by the Agent, at a rate per
annum equal to (i) if paid by such Lender, the cost to the Agent
of funding such amount as notified in writing by the Agent to
such Lender, or (ii) if paid by Borrower, the applicable rate for
Base Rate Advances or Eurodollar Advances, as the case may be.
(c) In the event that any Lender shall fail to fund
its pro rata share of any Advance made pursuant to Section 4.1(c)
hereof or to purchase its letter of credit participation under
Section 13.18 hereof, the Agent on behalf of the relevant Issuing
Lender shall be entitled to recover such amount on demand from
such Lender. If such Lender does not pay such amount forthwith
upon the Agent's demand therefor, the Agent shall promptly notify
Borrower and the other Lenders thereof and Borrower shall pay
such amount to the Agent. The Agent on behalf of such Issuing
Lender shall also be entitled to recover from such Lender or
Borrower, as the case may be, interest on such amount in respect
of each day from the date such Advance was made or the date such
purchase was to have been made, as the case may be, to the date
such amount is recovered by the Agent, at a rate per annum equal
to (i) if paid by such Lender, the cost to the relevant Issuing
Lender of the payment of the drawing under the Letter of Credit
for which the Advance was (or was to have been) made in the case
of an Advance made pursuant to Section 4.1(c) hereof or a
participation under Section 13.18 hereof, as the case may be, or
(ii) if paid by Borrower, the applicable rate for Base Rate
Advances.
(d) Nothing herein shall be deemed to relieve any
Lender from its obligation to fund its pro rata share of any
Advance or purchase any participation as required hereunder, or
to prejudice any rights which Borrower may have against any
Lender as a result of any default by such Lender hereunder. No
Lender shall be responsible for any default of any other Lender
in respect of any other Lender's obligation to make its pro rata
share of any Advances hereunder nor shall the Revolving
Commitment of any Lender hereunder be increased as a result of
such default of any other Lender. Each Lender shall be obligated
to the extent provided herein regardless of the failure of any
other Lender to fulfill its obligations hereunder.
2.15. PRO RATA TREATMENT AND PAYMENTS. (a) Except
as contemplated by this Agreement, including, without limitation,
Sections 2.5, 2.9, 2.10, 2.12, 3.5, 4, 13.1, 13.5, 13.13(h) and
13.14 hereof, each borrowing by Borrower from the Lenders and
each payment (including each prepayment) on account of the
principal of and interest on the Advances and fees described in
this Agreement shall be made to or by, as the case may be, each
Lender according to their respective pro rata percentage. Other
than payments to be applied to principal, payment of which is
addressed in Section 2.4(c) hereof, the Agent will distribute
each payment to the Lenders promptly following receipt thereof
(and in any event on the same Business Day as the date when
received, if such payment is received at or prior to 12:00 noon
(New York time)). Unless Agent shall have received notice from
Borrower prior to the date on which any payment is due to Lenders
hereunder that Borrower will not make such payment in full, Agent
may assume that Borrower has made such payment in full to Agent
on such date and Agent may, in reliance upon such assumption,
cause to be distributed to each Lender on such date or any date
thereafter an amount equal to the amount then due such Lender.
If and to the extent Borrower shall not have so made such payment
in full to Agent, each Lender shall repay to Agent forthwith on
demand such amount distributed to such Lender, together with
interest thereon for each day from the date such amount is
distributed to such Lender until the date such Lender repays such
amount to Agent, at the Federal Funds Rate.
(b) Pursuant to the Concentration Account Agreement,
Borrower has agreed that all amounts deposited into the
Concentration Account shall be transferred to the Payment Office
or as otherwise directed by the Agent on a daily basis. Subject
to Section 11.5 hereof, all amounts so transferred shall be
applied to the Lender Debt as mandatory prepayments thereof as
follows: first, to Base Rate Advances until all Base Rate
Advances are paid in full; and second, to the payment of all
other Lender Debt that is then due and payable until such Lender
Debt is paid in full.
2.16. SHARING OF PAYMENTS, ETC. If any Lender
shall obtain any payment (whether voluntary, involuntary, through
the exercise of any right of set-off, or otherwise) in excess of
such Lender's percentage of payments shared pro rata by all
Lenders, such Lender shall forthwith purchase from the other
Lenders such participations in the Advances made by them as shall
be necessary to cause such purchasing Lender to share the excess
payment ratably with each of them; provided, however, if all or
any portion of such excess payment is thereafter recovered from
such purchasing Lender, such purchase from the other Lenders
shall be rescinded and each other Lender shall repay to the
purchasing Lender the purchase price to the extent of such
recovery together with an amount equal to such Lender's ratable
share (according to the proportion of (i) the amount of such
Lender's required repayment, to (ii) the total amount so
recovered from the purchasing Lender) of any interest or other
amount paid or payable by the purchasing Lender in respect of the
total amount recovered. Borrower agrees that any Lender
purchasing a participation from another Lender pursuant to this
Section 2.16 may, to the fullest extent permitted by law,
exercise all of its rights of payment (including the right of set-
off) with respect to such participation as fully as if such
Lender were the direct creditor of Borrower in the amount of such
participation.
2.17. EXCESS OPERATING FUNDS. If, at any time and
from time to time during the term hereof, the balance of the
Advances has been reduced to zero and Borrower then has funds in
its account at NBC in excess of the aggregate face amount of all
undrawn Letters of Credit ("Excess Funds"), Borrower may, if it
so elects, upon at least one (1) Business Day's notice to Agent
and NBC, invest such Excess Funds in an interest-bearing account
at NBC, or acquire with such Excess Funds certificates of deposit
maturing within one year from the date of acquisition and issued
by NBC.
2.18. EURODOLLAR OFFICES. Each Lender intends to
initially fulfill its commitment with respect to such Lender's
pro rata share of any Eurodollar Advance by causing the Initial
Eurodollar Office of such Lender to make such Lender's pro rata
share of such Eurodollar Advance; provided, however, that each
Lender may, at its option fulfill such commitment by causing
another branch or an Affiliate of such Lender to make such
Lender's pro rata share of such Eurodollar Advance; and provided,
further, that the selection by such Lender of the Initial
Eurodollar Office of such Lender or any other such branch or
Affiliate shall not affect the obligations of Borrower to repay
such Lender's pro rata share of the Eurodollar Advances in
accordance with the terms of this Agreement.
2.19. TELEPHONIC NOTICE. Without in any way
limiting Borrower's obligation to confirm in writing any
telephonic notice of a borrowing, conversion or renewal, the
Agent may act without liability upon the basis of telephonic
notice believed by the Agent in good faith to be from an
Authorized Representative of Borrower prior to receipt of written
confirmation.
2.20. MAXIMUM INTEREST. (a) No provision of this
Agreement or any Note shall require the payment to any Lender or
permit the collection by any Lender of interest in excess of the
maximum rate permitted by any applicable law (the "Maximum Lawful
Rate").
(b) If the amount of interest computed without giving
effect to this Section 2.20 and payable on any interest payment
date in respect of the preceding interest computation period
would exceed the amount of interest computed in respect of such
period at the maximum rate of interest from time to time
permitted (after taking into account all consideration which
constitute interest) by laws applicable to any Lender (such
maximum rate being such Lender's "Maximum Permissible Rate"), the
amount of interest payable to such Lender on such date in respect
of such period shall be computed at such Lender's Maximum
Permissible Rate.
(c) If at any time and from time to time (i) the
amount of interest payable to any Lender on any interest payment
date shall be computed at such Lender's Maximum Permissible Rate
pursuant to the preceding subsection (b) and (ii) in respect of
any subsequent interest computation period the amount of interest
otherwise payable to such Lender would be less than the amount of
interest payable to such Lender computed at such Lender's Maximum
Permissible Rate, then the amount of interest payable to such
Lender in respect of such subsequent interest computation period
shall continue to be computed at such Lender's Maximum
Permissible Rate until the amount of interest payable to such
Lender shall equal the total amount of interest which would have
been payable to such Lender if the total amount of interest had
been computed without giving effect to the preceding clause (b).
2.21. COMPOSITION AND APPLICATION OF PAYMENTS AND
COLLECTIONS. Subject to Section 11.5 hereof, Borrower does
hereby irrevocably agree that Agent shall have the continuing
exclusive right to apply and reapply any and all payments and
collections at any time or times hereafter received by Agent or
Lenders against the Lender Debt, in such manner as Agent may
determine.
SECTION 3. PAYMENTS, PREPAYMENTS AND REDUCTIONS.
3.1. MANDATORY PAYMENTS AND REDUCTIONS. (a)
Except as otherwise provided in Section 2.2(c) hereof, if at any
time the sum of the then aggregate outstanding principal amount
of the Revolving Loan plus the Letter of Credit Usage at such
time shall exceed the Borrowing Limit at such time, Borrower
shall immediately eliminate such excess by paying the Revolving
Loan until the Revolving Loan is paid in full and, to the extent
then necessary to eliminate any remaining excess after payment in
full of the Revolving Loan, by depositing cash in an amount equal
to the remaining excess in a cash collateral account established
with the Agent as security for outstanding Letters of Credit
pursuant to agreements in form, scope and substance satisfactory
to the Agent.
(b) Borrower shall, on each date that any Credit Party
receives Gross Proceeds of an Asset Sale (other than the AWG
Sale) by any Credit Party, prepay the outstanding principal of
the Advances and unreimbursed Letters of Credit (or, if no
Advance or unreimbursed Letter of Credit is then outstanding, to
provide Letter of Credit Cash Collateral until an amount equal to
the undrawn amount of all outstanding Letters of Credit has been
secured by Letter of Credit Cash Collateral, and thereafter to
Borrower) in an amount equal to 100% of the Net Proceeds of such
Asset Sale (other than the AWG Sale) (i) solely of Inventory or
Pledged Accounts, or (ii) of Inventory, Pledged Accounts and
other property, to the extent such Net Proceeds are allocable to
Inventory or Pledged Accounts, such Net Proceeds to be applied to
prepay the outstanding principal of the Advances and unreimbursed
Letters of Credit (or, if no Advance or unreimbursed Letter of
Credit is then outstanding, to provide Letter of Credit Cash
Collateral until an amount equal to the undrawn amount of all
outstanding Letters of Credit has been secured by Letter of
Credit Cash Collateral, and thereafter to Borrower), such
allocation to be made by Borrower's management in good faith,
provided, however, that the amount of the purchase price
allocated to Inventory shall not exceed the book value thereof
plus a reasonable mark-up determined by Borrower's management in
good faith, and provided, further, that the portion of the
purchase price allocated to Inventory shall not exceed the retail
price thereof.
(c) All Gross Proceeds of Asset Sales (excluding Gross
Proceeds of property which is not Collateral in respect of which
no prepayment is required under Section 3.1(b) hereof and Gross
Proceeds from the AWG Sale) shall be deposited by the applicable
Credit Party upon receipt into an Asset Sale Account.
(d) All prepayments under this Section 3.1 shall be
made together with accrued interest to the date of such
prepayment on the principal amount prepaid.
3.2. PAYMENT FROM INSURANCE PROCEEDS. Not later than
the fifteenth (15th) calendar day following the receipt by the
Agent or any Credit Party or Subsidiary of any Credit Party of
any proceeds of any insurance required to be maintained pursuant
to Section 9.3(a) on account of each separate loss, damage or
injury in excess of $250,000 (or, if there shall be continuing an
Event of Default, of any amount of Net Proceeds) to any
Collateral of such Credit Party or such Subsidiary, such Credit
Party or Subsidiary shall notify the Agent of such receipt in
writing or by telephone promptly confirmed in writing, and not
later than the fifteenth (15th) calendar day following receipt by
the Agent or such Credit Party or Subsidiary of $250,000 or more
of such Net Proceeds (or, if there shall be continuing an Event
of Default, of any amount of Net Proceeds), there shall become
due and payable a prepayment of principal in an amount equal to
such Net Proceeds. Prepayments from such Net Proceeds shall be
applied as follows:
FIRST, to the outstanding principal of the
Revolving Loan, until the Revolving Loan has been paid in
full,
SECOND, to repay the amount of all unreimbursed
Letters of Credit until reimbursed in full, and then to
provide cash collateral (on terms reasonably satisfactory to
the Agent) for any outstanding Letters of Credit, until
there shall have been provided cash collateral equal to the
undrawn amount of all Letters of Credit (which cash
collateral shall constitute part of the Collateral), and
THIRD, to the Credit Party or Subsidiary thereof,
as the case may be, whose property was lost, damaged or
injured or whoever else shall be legally entitled thereto.
Any such prepayment on the Revolving Loan shall be made
without penalty or premium but shall be subject to payment
of any applicable indemnity obligations pursuant to Section
2.12 hereof.
3.3. OPTIONAL PREPAYMENTS. (a) Upon not less
than three (3) Business Days' prior Written Notice to the Agent
with respect to Advances constituting Eurodollar Advances and
not less than one (1) Business Day's prior Written Notice to the
Agent with respect to Advances constituting Base Rate Advances,
Borrower shall have the right from time to time to prepay in
part, without premium, fee or charge (except as provided in
Section 2.12 hereof), any Advances, so long as each such
prepayment is in the amount of $1,000,000 or an integral multiple
of $100,000 in excess thereof or, if less, the then aggregate
outstanding principal balance of the Revolving Loan, and so long
as, concurrently with the making of any such prepayment, Borrower
pays any fees, premiums, charges or costs provided for under
Section 2.12 hereof.
(b) No Eurodollar Advance or portion thereof may be
prepaid under this Section 3.3 until the last day of the Interest
Period therefor. Upon the giving of notice of prepayment, the
amount therein specified to be prepaid shall be due and payable
on the date therein specified for such prepayment, together with
all accrued interest thereon to such date plus any fees,
premiums, charges or costs provided for under Section 2.12
hereof. The Agent shall, promptly after receipt of any notice of
prepayment of any Advance as provided in this Section 3.3, notify
each Lender in writing or by telephone confirmed promptly in
writing of Borrower's intention so to prepay all or part of such
Advance.
3.4. PROCEDURES FOR PAYMENT. (a) Each payment or
prepayment hereunder and under the Notes shall be made not later
than 12:00 noon (New York City time) on the day when due in
lawful money of the United States of America to the Agent at the
Payment Office in immediately available funds, without
counterclaim, offset, claim or recoupment of any kind. Each
payment or prepayment hereunder and under the Notes shall be made
without setoff or counterclaim and free and clear of, and without
deduction for, any present or future withholding or other taxes,
duties or charges of any nature imposed on such payments or
prepayments by or on behalf of any government or any political
subdivision or agency thereof or therein, except for Excluded
Taxes. If any such taxes, duties or charges (other than any
Excluded Taxes) are so levied or imposed on any payment or
prepayment to any Lender, Borrower will make additional payments
in such amounts as may be necessary so that the net amount
received by such Lender, after withholding or deduction for or on
account of all taxes, duties or charges, including deductions
applicable to additional sums payable under this Section 3.4(a)
(other than Excluded Taxes), will be equal to the amount provided
for herein or in such Lender's Note or Notes. Whenever any
taxes, duties or charges (other than Excluded Taxes) are payable
by Borrower with respect to any payments or prepayments hereunder
or under any of the Notes, Borrower shall furnish promptly to the
Agent for the account of the applicable Lender official receipts
(to the extent that the relevant governmental authority delivers
such receipts) evidencing payment of any such taxes, duties or
charges so withheld or deducted. If Borrower fails to pay any
such taxes, duties or charges when due to the appropriate taxing
authority or fails to remit to the Agent for the account of the
applicable Lender the required receipts evidencing payment of
any such taxes, duties or charges so withheld or deducted,
Borrower shall indemnify the affected Lender for any incremental
taxes, duties, charges, interest or penalties that may become
payable by such Lender as a result of any such failure.
(b) (i) Each Lender organized under the laws of a
jurisdiction outside of the United States (a "Foreign
Lender") shall provide to Borrower and the Agent a properly
completed and executed Internal Revenue Service Form 4224 or
Form 1001 or other applicable form, certificate or document
prescribed by the Internal Revenue Service of the United
States certifying as to such Foreign Lender's entitlement to
complete exemption from United States withholding tax (a
"Certificate of Exemption"). Each Foreign Lender, if a
party to this Agreement on the Closing Date, shall provide
such a Certificate of Exemption on or before the Closing
Date and, assuming that it is proper, under then existing
United States withholding tax statutes and applicable tax
treaties, to issue such Certificate of Exemption from time
to time thereafter upon the reasonable request of Borrower
or the Agent. Each Foreign Lender that becomes a Lender
pursuant to Section 13.14 or 13.15 hereof after the Closing
Date shall provide a Certificate of Exemption on or before
the date such Foreign Lender becomes a Lender and, assuming
that it is proper, under then existing United States
withholding tax statutes and applicable tax treaties, to
issue such Certificate of Exemption from time to time
thereafter upon the reasonable request of Borrower or the
Agent.
(ii) Each Foreign Lender shall provide to Borrower
(x) in the case of a Foreign Lender which is a party to this
Agreement on the Closing Date, on or before the Closing
Date, and (y) in the case of a Foreign Lender that becomes a
Lender pursuant to Section 13.14 or 13.15 hereof, on or
before such Foreign Lender becomes a Lender, a statement
describing all taxes, duties or charges that are in effect
and applicable on the Closing Date or the date that such
Foreign Lender becomes a Lender hereunder, as the case may
be, with respect to which Borrower would be required to make
additional payments to such Foreign Lender under the third
sentence of Section 3.4(a) hereof.
(iii) Within thirty (30) days after the
written reasonable request of Borrower, each Foreign Lender
shall execute and deliver to Borrower such certificates,
forms or other documents which can be furnished consistent
with the facts and which are reasonably necessary to assist
Borrower in applying for refunds of taxes paid by Borrower
hereunder or making payment of taxes hereunder; provided,
however, that no Foreign Lender shall be required to furnish
to Borrower any financial information with respect to itself
or other information which it considers confidential.
(iv) If a Foreign Lender that originally provided
a Certificate of Exemption indicating that such Foreign
Lender was exempt from United States withholding tax
thereafter ceases to qualify for such exemption, Borrower
shall have the right to require such Foreign Lender to
assign its Revolving Commitment and its pro rata share of
the Advances (including its pro rata share of the interest
accrued thereon) to one or more banks or financial
institutions identified by Borrower at a purchase price
equal to the principal of and accrued but unpaid interest
and fees (to the date of purchase) on such Foreign Lender's
pro rata share of the Advances.
(c) Notwithstanding anything contained in Section
3.1(b) or 3.2 hereof, the Agent shall not, to the extent
requested in writing by Borrower, apply any mandatory prepayment
under such Sections to any portion of the Revolving Loan which
constitutes a Eurodollar Advance until the last day of the
respective Interest Period therefor or the earlier maturity of
such portion of such Revolving Loan by acceleration or otherwise,
such mandatory prepayment, until it can be so applied, to be
applied to the prepayment of such portion of the Loan comprising
Base Rate Advances. If there shall remain any portion of such
mandatory prepayment after payment in full of such portion of the
Revolving Loan constituting Base Rate Advances, then until such
remaining portion of the mandatory prepayment can be applied to
the Eurodollar Advances as aforesaid, such remaining portion of
such mandatory prepayment shall be invested and reinvested by and
in the name of the Agent in investments of the type permitted
under Section 10.4(b) hereof with the type and maturity of such
investments to be mutually agreed to by the Agent and Borrower.
All interest earned on such investments shall be for the account
and risk of Borrower. Interest earned on any portion of
principal applied to a Eurodollar Advance shall be, so long as no
Default or Event of Default shall have occurred and be
continuing, and to the extent received by the Agent, turned over
to Borrower promptly following application of such principal to
such Eurodollar Advance. As additional collateral security for
the Lender Debt, Borrower hereby grants to the Agent a security
interest in (i) any such mandatory prepayments and any
investments thereof, including, without limitation, any
certificates or instruments evidencing any such investments, and
all claims and choses in action in respect of the foregoing, (ii)
any interest or other payment made in respect of such investments
and (iii) any and all proceeds of any of the above and all claims
and causes in action in respect of the foregoing (all of the
foregoing constituting part of the Collateral). To the extent
the Agent makes any such investments, Borrower hereby authorizes
the Agent to hold any certificate or instrument evidencing such
investments.
3.5. COMMITMENT FEE. Borrower shall pay to the
Agent for the account of the Lenders a fee which shall accrue
from and after the Closing Date until the date of the expiration,
termination or cancellation of the Revolving Credit Facility
Commitment payable quarterly in arrears beginning on the date
three months after the Closing Date, and on the same day of every
third month thereafter (and on the date of maturity or earlier
expiration, termination or cancellation of the Revolving Credit
Facility Commitment), of one-half of one percent (.5%) per annum
on the amount by which $25,000,000 (as such amount may be reduced
upon any permanent reduction in the Revolving Credit Facility
Commitment) exceeds the aggregate outstanding principal amount of
the Revolving Loan (plus the Letter of Credit Usage) (calculated
daily).
3.6. PREPAYMENT FEE. In the event the Revolving
Credit Facility Commitment is terminated pursuant to Section 2.5
hereof on or prior to the first anniversary of the Closing Date,
such termination shall be accompanied by a prepayment fee equal
to one and one-half percent (1.5%) of the amount of the Revolving
Credit Facility Commitment as of the date of such termination.
3.7. AGENCY FEE. On the Closing Date and
quarterly in advance on the first Business Day of each calendar
quarter thereafter, so long as any Advance, any portion of the
Revolving Credit Facility Commitment or any Letter of Credit
remains outstanding, Borrower shall pay to the Agent for its own
account an agency fee of $5,000 per quarter.
3.8. CLOSING FEE. Borrower shall pay to the Agent
(a) for the account of the Lenders, a closing fee equal to one
percent (1.0%) of the Revolving Credit Facility Commitment,
payable as follows: (i) an amount equal to one half of one
percent (0.50%) of the Revolving Credit Facility Commitment shall
be due and payable on the Closing Date; (ii) an amount equal to
one-fourth of one percent (0.25%) of the Revolving Credit
Facility Commitment shall be due and payable on the date six (6)
months after the Closing Date; and (iii) an amount equal to one
fourth of one percent (0.25%) of the Revolving Credit Facility
Commitment shall be due and payable on the first anniversary of
the Closing Date, and (b) for its own account, a separate closing
fee payable in the amount and as set forth in the Fee Letter.
3.9. PREPAYMENTS TO INCLUDE INTEREST. All
prepayments pursuant to this Section 3, except optional
prepayments on Advances, shall be made together with accrued
interest to the date of such prepayment on the principal amount
prepaid.
SECTION 4. LETTERS OF CREDIT.
4.1. LETTERS OF CREDIT. (a) Borrower may
request, subject to the terms and conditions herein set forth
(including, without limitation, the conditions set forth in
Section 7 hereof and the definitions contained in Section 1
hereof), from time to time prior to the termination of the
Revolving Credit Facility Commitment and upon five (5) Business
Days' Written Notice (which Written Notice shall be deemed
repeated on the date of issuance of each Letter of Credit issued
in response thereto), that NBC (or any other Lender approved by
NBC) issue, and NBC (or any such other Lender) shall, subject to
such conditions, issue (each such Lender, upon issuance of a
Letter of Credit, being an "Issuing Lender" in respect of such
Letter of Credit) Letters of Credit; provided, however, that (i)
the aggregate undrawn amount of all Letters of Credit at any time
outstanding, together with the amount of unreimbursed drawings
thereunder, shall not exceed the Letter of Credit Sublimit; and
(ii) the aggregate undrawn amount of all Letters of Credit at any
time outstanding, together with the amount of unreimbursed
drawings thereunder and the then aggregate unpaid principal
amount of the Revolving Loan, shall not exceed the Borrowing
Limit; provided, further, that in no event shall NBC or any other
Lender issue any Letter of Credit if the sum of the original
undrawn amount thereof (less amounts in respect of which any
Lender is obligated to NBC or such other Lender under Section
13.18 hereof), plus the aggregate undrawn and unreimbursed
amounts immediately prior to the time of such issuance of all
other Letters of Credit issued by such Lender (less amounts in
respect of which any Lender is obligated to NBC or such other
Lender under Section 13.18 hereof) plus such Lender's pro rata
portion of the aggregate unpaid principal amount of the Revolving
Loan, exceeds such Lender's Revolving Commitment. For purposes
of determining the aggregate amount of undrawn and unreimbursed
Letters of Credit as at any date, the undrawn and unreimbursed
amounts under Letters of Credit that are denominated in foreign
currency shall be converted into U.S. Dollars at the rate of
exchange for cable transfers (as determined by the Agent) in
effect on the date of determination.
(b) Each Letter of Credit shall be a standby Letter of
Credit or a documentary Letter of Credit, shall be in form, scope
and substance satisfactory to the Agent, and shall be issued
pursuant to a Letter of Credit Agreement. Each Letter of Credit
that is a standby Letter of Credit shall expire no later than the
earlier of the Maturity Date and the date one year following the
date of issuance thereof. Each Letter of Credit that is a
documentary Letter of Credit shall expire no later than the
earlier of the Maturity Date and the date ninety (90) days
following the date of issuance thereof.
(c) Borrower shall reimburse the Issuing Lender of
each Letter of Credit issued hereunder for any draft paid under
such Letter of Credit within one (1) Business Day following the
date of such payment. Borrower shall, to the extent of
availability under the Revolving Credit Facility Commitment,
effect such payment with the proceeds of an Advance (which shall
be entirely a Base Rate Advance) made to Borrower in the amount
of such payment (whether or not any request therefor has been
made by Borrower), which Advance shall at such time be made and
applied to payment of reimbursement of such drawing without any
notice by or consent of Borrower (except that no such Advance
shall be required to be made by the Lenders to the extent
prevented by applicable law or following any Event of Default of
the type described in Section 11.1(f) or 11.1(g) hereof), and
shall be repayable, together with interest thereon, in accordance
with the provisions of Section 2 hereof. The Issuing Lender
shall promptly notify the Agent, the other Lenders and Borrower
in writing or by telephone confirmed promptly in writing of any
such drawing under a Letter of Credit and the making of such
Advance. Any payments by an Issuing Lender of drawings under any
Letter of Credit in foreign currency shall be reimbursed by
Borrower in U.S. Dollars at the rate of exchange for cable
transfers in effect on the date of payment by such Issuing
Lender.
(d) Notwithstanding anything contained in Section
4.1(c) hereof, the obligation of Borrower to reimburse a drawing
under a Letter of Credit shall not be affected or impaired by any
failure of any Lender to fund an Advance under Section 4.1(c)
hereof unless Borrower shall have satisfied all conditions to the
making of such Advance (other than notice requirements and the
delivery of a Borrower's Certificate).
(e) Upon not less than one (1) Business Day's prior
Written Notice to the Agent, the Borrower may terminate or cause
to be terminated any Letter of Credit, provided that the Borrower
has obtained the prior written consent of each beneficiary of
such Letter of Credit to such termination.
4.2. LETTER OF CREDIT FEES. Borrower shall pay to
Agent, for the account of Lenders, a fee on the average face
amount of each standby and documentary Letter of Credit issued by
an Issuing Lender in an amount equal to the applicable Letter of
Credit Fee, payable quarterly in advance on the first Business
Day of each calendar quarter. In addition, Borrower shall pay to
each Issuing Lender, in respect of each standby and documentary
Letter of Credit issued by such Issuing Lender hereunder, on
demand, all standard fees and other charges charged by such
Issuing Lender with respect to the issuance and maintenance of
any Letter of Credit including, without limitation, in the case
of each standby Letter of Credit, an amount equal to one-fourth
of one percent (0.25%) of the face amount of such standby Letter
of Credit.
4.3. INDEMNITY. Borrower agrees to indemnify each
Issuing Lender, each of its correspondents and the Lenders and
hold them harmless from and against any and all claims, damages,
losses, liabilities, costs and expenses whatsoever which they may
incur or suffer by reason of or in connection with the execution
and delivery or assignment of or payment or presentation under or
in respect of any Letter of Credit issued by such Issuing Lender
or any action taken or omitted to be taken with respect to any
Letter of Credit issued by such Issuing Lender, except only if
and to the extent that any such claims, damages, losses,
liabilities, costs or expenses shall be caused by the willful
misconduct or gross negligence of such Issuing Lender or such
correspondent in making payment against any draft presented under
any Letter of Credit which does not substantially comply with the
terms thereof, or in failing to make payment against any such
draft which strictly complies with the terms of such Letter of
Credit, it being understood that (a) in making such payment, such
Issuing Lender's or such correspondent's exclusive reliance in
good faith on the documents presented to and believed to be
genuine by it in accordance with the terms of such Letter of
Credit as to any and all matters set forth therein, including,
without limitation, reliance in good faith on any affidavit
presented pursuant to such Letter of Credit and on the amount of
any sight draft presented pursuant to any Letter of Credit
whether or not any statement or any other document presented
pursuant to such Letter of Credit proves to be forged,
fraudulent, invalid or insufficient in any respect or any
statement therein proves to be untrue or inaccurate in any
respect whatsoever and (b) any such noncompliance in a
nonmaterial respect shall, in each case, not be deemed willful
misconduct or gross negligence of such Issuing Lender or such
correspondent. Upon demand by any Issuing Lender, such
correspondent or any Lender at any time, Borrower shall reimburse
such Issuing Lender, such correspondent or such Lender for any
legal or other expenses incurred in connection with investigating
or defending against any of the foregoing, except if the same is
due to such Issuing Lender's or such correspondent's gross
negligence or willful misconduct as aforesaid. The indemnities
contained herein shall survive the expiration or termination of
the Letters of Credit and this Agreement and shall be payable
upon demand.
4.4. REIMBURSEMENT OF CERTAIN COSTS. (a) Unless
at the time prohibited by an order of a court of competent
jurisdiction, the obligations of Borrower hereunder with regard
to Letters of Credit are absolute and unconditional under any and
all circumstances and irrespective of any setoff, counterclaim or
defense to payment which Borrower may have against any Person,
including, without limitation, the beneficiary of such Letter of
Credit and any Issuing Lender, and all sums payable by Borrower
hereunder with respect to any such Letter of Credit, whether of
principal, interest, fees, expenses or otherwise, shall be paid
in full, without any deduction or withholding whatsoever. In the
event that Borrower is compelled by applicable law to make any
such deduction or withholding, then, unless prohibited by
applicable law, it shall pay to each Issuing Lender such
additional amount as will result in the receipt by each Issuing
Lender of a net sum equal to the sum it would have received if no
such deduction or withholding had been required to be made.
(b) In the event that any change in conditions or the
adoption of any law, regulation or directive or any change in
applicable law, regulation or directive, or interpretation
thereof (including any request, guideline or policy whether or
not having the force of law and including, without limitation,
Regulation D promulgated by the Board as now and from time to
time hereafter in effect) by any authority charged with the
administration or interpretation thereof, occurs which:
(i) subjects any Issuing Lender to any tax with
respect to any amount paid or to be paid by such Issuing
Lender as the issuer of any Letter of Credit (other than any
Excluded Tax) or its commitment under any Letter of Credit;
or
(ii) changes the basis of taxation of payments to any
Issuing Lender with respect to any Letter of Credit or such
commitment (other than any Excluded Tax); or
(iii) imposes, modifies, requires, makes or deems
applicable any reserve, deposit, insurance assessment or
similar requirements against any assets held by, deposits
with or for the account of, or loans or commitments by, an
office of any Issuing Lender in connection with payments by
such Issuing Lender under any Letter of Credit or
commitments under any Letter of Credit; or
(iv) imposes any condition upon or causes in any manner
the addition of any supplement to or an increase of any kind
to any Issuing Lender's capital or cost base for issuing any
Letter of Credit which results in an increase in the capital
requirement supporting such Letter of Credit; or
(v) imposes, modifies, requires, makes or deems
applicable to any Issuing Lender any capital requirement,
increased capital requirement or similar requirement such
as, without limitation, the deeming of any Letter of Credit
to be an asset held by such Issuing Lender for capital
calculation or other purposes;
and the result of any of the foregoing is to reduce the after-tax
rate of return on such Issuing Lender's capital, increase the
cost to any Issuing Lender of making any payment under, or
maintaining its commitment under, any Letter of Credit, or to
reduce the amount of any payment (whether of principal, interest
or otherwise) or benefit received or receivable by such Issuing
Lender with respect to any Letter of Credit or to require such
Issuing Lender to make any payment on or calculated by reference
to the gross amount of any sum received by it with respect to any
Letter of Credit, in each case by an amount which such Issuing
Lender in its sole judgment deems material (including, without
limitation, such Issuing Lender's cost of taking action in
anticipation of the effectiveness of any event referred to above
in order to enable such Issuing Lender to be in compliance
therewith upon effectiveness), then and in any such case:
(x) such Issuing Lender shall promptly notify
Borrower, the Agent and the other Lenders in writing of the
happening of such event;
(y) such Issuing Lender shall promptly deliver to
Borrower, the Agent and the other Lenders a certificate
stating the change which has occurred or the reserve
requirements or other conditions which have been imposed on
such Issuing Lender or the request, directive or requirement
with which it has complied, together with the date thereof
and the amount of such increased cost, reduction or payment;
and
(z) Borrower shall pay to such Issuing Lender, upon
demand, after delivery of the notice referred to in clause
(x) above, such amount or amounts as will compensate for
such additional cost, reduction or payment, to the extent
permitted by law.
A certificate delivered by an Issuing Lender pursuant to clause
(y) above as to the additional amounts payable pursuant to this
paragraph shall, in the absence of manifest error, be conclusive
evidence of the amount thereof. The protection of this Section
4.4 shall be available to each Issuing Lender regardless of any
possible contention of invalidity or inapplicability of the law,
regulation, directive or condition which has been imposed. In
the event that after Borrower shall have paid any additional
amount under this Section 4.4 with respect to any Letter of
Credit, an Issuing Lender shall have successfully contested such
law, regulation, treaty, directive or condition then, to the
extent that such Issuing Lender does not incur any increased cost
or reduction in payment (as to which such Issuing Lender is
entitled to indemnification hereunder) with respect to any Letter
of Credit for which Borrower has paid such additional amount,
such Issuing Lender shall refund, on an after-tax basis, to
Borrower such additional amount.
4.5. PAYMENT OF DRAFTS. Delivery to the Agent,
any Issuing Lender or their correspondents of any documents
purporting to comply with the requirements of any Letter of
Credit shall be sufficient evidence of the validity, genuineness,
and sufficiency thereof and of the good faith and proper
performance of the drawers and/or users of any Letter of Credit,
their agents and assignees, and the Agent, such Issuing Lender
and their correspondents may rely and act thereon without
liability or responsibility with respect thereto or with respect
to the correctness or condition of any shipment of merchandise to
which the same may relate. Upon receipt by the Agent or any
Issuing Lender of written approval thereof from Borrower, the
Agent or any such Issuing Lender, as the case may be, may (but
shall not be required to) accept or pay overdrafts or irregular
drafts or drafts with irregular documents attached or with
respect to which time limits have been extended, and no such
acceptance or payment shall impair any rights of the Agent or any
Issuing Lender under this Agreement. In case of any variation
between the documents called for by any Letter of Credit and the
documents accepted by the Agent, an Issuing Lender or their
correspondents, Borrower shall be conclusively deemed to have
waived any right to object to such variation with respect to any
action of the Agent, such Issuing Lender or such correspondents
relating to such documents and to have ratified and approved such
action as having been taken on the direction of Borrower, unless
Borrower within ten (10) Business Days of the receipt of such
documents or acquisition of knowledge of such variation files an
objection with the Agent or such Issuing Lender in writing. No
Issuing Lender (nor the Agent) shall be liable for any delay in
giving, or failing to give, notice of the arrival of any goods or
any other notice, or for any error, neglect or default of any of
its correspondents; nor shall any Issuing Lender (or the Agent)
be responsible for the non-fulfillment of any requirement of any
Letter of Credit that (a) drafts bear appropriate reference to
any Letter of Credit, (b) the amount of any draft be noted on the
reverse of any Letter of Credit, (c) any Letter of Credit be
surrendered or taken up or (d) documents be forwarded apart from
any drafts, and the Agent, each Issuing Lender and their
correspondents may, if they see fit, waive any such requirements.
4.6. ISSUING LENDER'S ACTIONS. Any Letter of
Credit may, in the discretion of the Issuing Lender thereof or
such Issuing Lender's correspondents, be interpreted by it or any
such correspondent (to the extent not inconsistent with such
Letter of Credit) in accordance with the Uniform Customs and
Practice for Documentary Credits of the International Chamber of
Commerce, as adopted or amended from time to time, or any other
rules, regulations and customs prevailing at the place where any
Letter of Credit is available or the drafts are drawn or
negotiated. An Issuing Lender and its correspondents may accept
and act upon the name, signature or act of any party purporting
to be the executor, administrator, receiver, trustee in
bankruptcy or other legal representative of any party designated
in any Letter of Credit issued by such Issuing Lender in the
place of the name, signature or act of such party.
SECTION 5. SECURITY AND GUARANTY.
As security for the full and timely payment and
performance of the Lender Debt, whether now existing or hereafter
arising:
5.1. SECURITY AGREEMENTS. (a) Each of the Credit
Parties shall duly execute and deliver to the Agent one or more
security agreements, pledges or assignments, substantially in the
form of Exhibit 5.1(A) hereto (each as amended, supplemented or
otherwise modified from time to time in accordance with its
terms, a "Security Agreement" and, together with the Collection
Account Agreements, the Concentration Account Agreement, the
Lock-Box Agreements, the Asset Sale Account Agreements, the
Intercreditor Agreement and any other agreement now existing or
hereafter created providing collateral security for the payment
or performance of any Lender Debt, in each case, as amended,
modified or supplemented from time to time, collectively referred
to as the "Security Documents"), and all consents of third
parties necessary to permit the effective granting of the Liens
created in such security agreements, in form and substance
satisfactory to the Agent, as may be required by the Agent to
grant to the Agent for the benefit of the Agent and the Lenders,
except to the extent otherwise permitted under Section 10.2
hereof, a valid, perfected and enforceable first priority lien on
and security interest in all present and future Inventory,
accounts (to the extent arising from the sale or lease of
Inventory or the providing of services) ("Pledged Accounts"), in
each case, of such Credit Party or such Credit Party's
Subsidiaries, wherever located, and all proceeds thereof, and a
valid perfected second priority security interest in all cash
registers and scanning systems, and all books and records,
including, without limitation, computer records, disks, tapes and
other media in which any information relating to Inventory,
inventory control systems or such accounts is stored or recorded
and all computer software, management information systems and
other systems and copies of every kind thereof relating to
Inventory, inventory controls or such accounts and all customer
lists ("Records and Other Property"), in each case, of such
Credit Party or such Credit Party's Subsidiaries, wherever
located, and all proceeds thereof, in each case to the extent a
Lien therein is granted in such Security Documents, together
with:
(i) evidence of the completion of all recordings
and filings of or with respect to the Security Documents
that the Agent may deem necessary or desirable in order to
perfect and protect the Liens created thereby,
(ii) evidence of the insurance required by the
terms of any Security Document,
(iii) copies of each assigned agreement, if
any, referred to in any Security Document, together with a
consent to such assignment in form and substance
satisfactory to the Lenders, duly executed by each party to
such assigned agreements other than Borrower, and
(iv) evidence that all other action that the Agent
may deem necessary or desirable in order to perfect and
protect the Liens created by the Security Documents has been
taken.
(b) The Agent shall have received acknowledgment
copies or stamped receipt copies of proper financing statements,
duly filed on or before the day of the initial borrowing
hereunder under the UCC of all jurisdictions that the Agent may
deem necessary or desirable in order to perfect and protect the
Liens created by the Security Documents, covering the collateral
described in the Security Documents.
5.2. FILING AND RECORDING. (a) Borrower shall,
at its cost and expense, cause all instruments and documents
given as security pursuant to this Agreement to be duly recorded
and/or filed or otherwise perfected in all places necessary, in
the opinion of the Agent, to perfect and protect the Lien of the
Agent in the property covered thereby.
(b) Each of the Credit Parties hereby authorizes the
Agent to file one or more financing statements or continuation
statements or amendments thereto or assignments thereof in
respect of any Lien created pursuant to this Agreement and the
Security Documents which may at any time be required or which, in
the opinion of the Agent, may at any time be desirable without
the signature of such Credit Party where permitted by law.
(c) In the event that any re-recording or refiling of
any financing statement (or the filing of any statements of
continuation or amendment or assignment of any financing
statement) is required to protect and preserve such Lien,
Borrower shall, at its cost and expense, cause the same to be
recorded and/or refiled at the time and in the manner requested
by the Agent.
5.3. INTERPRETATION OF SECURITY DOCUMENTS. In the
case of any conflict between the terms and provisions of a
Security Document and this Agreement, the terms and provisions of
this Agreement shall control, unless the terms of such Security
Document expressly provide otherwise.
5.4. GUARANTEES. (a) On or prior to the Closing
Date, Parent and each Subsidiary of Borrower in existence on the
Closing Date shall execute and deliver to the Agent an amended
and restated guaranty, substantially in the form of Exhibit 5.4
hereto, of all present and future Lender Debt.
(b) Upon the formation or acquisition, after the
Closing Date, of any Subsidiary of Borrower, such Subsidiary
shall execute and deliver to the Agent a guaranty, substantially
in the form of Exhibit 5.4 hereto, of all then existing or
thereafter incurred Lender Debt. Nothing contained in this
Section 5.4 shall permit Borrower or any Subsidiary thereof to
form or acquire any Subsidiary which is otherwise prohibited by
this Agreement.
SECTION 6. CONDITIONS PRECEDENT TO
INITIAL BORROWING AND ISSUANCE OF LETTERS OF
CREDIT.
No Advance shall be made and no Letter of Credit shall
be issued hereunder until the fulfillment (or waiver in writing
by the Required Lenders) of the following conditions precedent on
or prior to the Closing Date:
6.1. OPINIONS OF COUNSEL. The Agent shall have
received on or before the day of such initial borrowing, from
Messrs. Debevoise & Plimpton, special counsel to the Credit
Parties, in sufficient copies for each Lender, opinions addressed
to the Lenders and the Agent and dated the Closing Date,
substantially in the form of Exhibit 6.1 hereto.
6.2. AUDIT RESULTS. The Agent shall have
performed such audits of Borrower's Receivables and Inventory as
the Agent shall have required, and the results thereof shall have
been satisfactory to the Agent.
6.3. MATERIAL ADVERSE CHANGE. In the judgment of
the Agent, (a) no material adverse change shall have occurred in
the business, operations, liabilities, assets, properties,
prospects or condition (financial or otherwise) of Borrower since
December 31, 1994, as reflected in the unaudited financial
information contained in the Solicitation Statement, and (b) the
Agent shall not have become aware of any previously undisclosed
materially adverse information with respect to Borrower and there
shall not have occurred any disruption or adverse change in the
financial or capital markets generally which the Agent, in its
reasonable discretion, deems material.
6.4. QUALIFICATION. Each Credit Party shall be
duly qualified and in good standing in each jurisdiction in which
it owns or leases property or in which the conduct of its
business requires it to so qualify, except where the failure to
so qualify could not reasonably be expected to have a Material
Adverse Effect.
6.5. SECURITY DOCUMENTS AND INSTRUMENTS. The
Agent shall have received, in sufficient copies for each Lender,
all the instruments and documents then required to be delivered
pursuant to Section 5 hereof or any other provision of this
Agreement or pursuant to the instruments and documents referred
to in Section 5 hereof and the same shall be in full force and
effect and shall grant, create or perfect the Liens, rights,
powers, priorities, remedies and benefits contemplated herein or
therein, as the case may be.
6.6. EVIDENCE OF INSURANCE. The Agent shall have
received, in sufficient copies for each Lender, evidence, in
form, scope and substance and with such insurance carriers
reasonably satisfactory to the Agent, of all insurance policies
required pursuant to Section 9.3(a) hereof. The Agent shall have
received a written report, satisfactory to it in form, scope and
substance, from an insurance broker acceptable to the Agent
confirming that the amount of insurance obtained under such
policies, and the terms and conditions thereof, are substantially
similar to policies customarily maintained by companies similarly
situated to Borrower and engaged in the same or similar business
as Borrower.
6.7. EXAMINATION OF BOOKS. The Agent and all
Lenders shall have had the opportunity to examine the material
contracts, properties, books of account, records, leases, Leases,
contracts, pension plans, insurance coverage and properties of
Borrower and of each Credit Party, and to perform such other due
diligence regarding Borrower and each Credit Party as the Agent
or any Lender shall have requested, the results of all of which
shall have been satisfactory to the Agent and all Lenders in all
material respects.
6.8. CORPORATE STRUCTURE. The Lenders shall be
satisfied with the corporate structure and capitalization of each
of the Credit Parties and all documentation relating thereto,
including without limitation, the ownership of assets thereby and
the terms and conditions of each charter, bylaws and each class
of capital stock of each Credit Party.
6.9. NOTES. Each Lender shall have received its
Note, each duly completed, executed and delivered in accordance
with Section 2.3 hereof.
6.10. FEES TO AGENT AND LENDERS. All fees payable
to the Agent and the Lenders with respect to the financing
hereunder, or under the Fee Letter on or prior to the Closing
Date shall have been paid in full in immediately available funds.
6.11. MANAGEMENT; OWNERSHIP. The Agent and all
Lenders shall be reasonably satisfied with the management and
board of directors of each of the Credit Parties, and the
arrangements and agreements by and among each of the Credit
Parties and such management. The Agent and all Lenders shall
have received evidence satisfactory to each of them in form and
substance that C & D Funds own and control a majority of the
issued and outstanding voting stock of Parent.
6.12. DISBURSEMENT AUTHORIZATION. The Agent shall
have received a disbursement authorization letter, substantially
in the form of Exhibit 6.12 hereto, duly executed and delivered
by Borrower as to the disbursement on the Closing Date of the
proceeds of the initial Advance.
6.13. LITIGATION. There shall be no pending or, to
the knowledge of any Credit Party, threatened litigation with
respect to any of the Credit Parties or any of their Subsidiaries
or (relating to the transactions contemplated herein) with
respect to the Agent or any of the Lenders, which challenges or
relates to the financing arrangements to be provided hereunder,
or to the business, operations, liabilities, assets, properties,
prospects or condition (financial or otherwise) of any of the
Credit Parties or their Subsidiaries, which pending or threatened
litigation could, in the Agent's reasonable judgment, be expected
to have a Material Adverse Effect. There shall exist no
judgment, order, injunction or other similar restraint
prohibiting any transaction contemplated hereby.
6.14. COMPLIANCE WITH LAW. The Agent shall be
satisfied that each Credit Party (a) has obtained all
authorizations and approvals of any governmental authority or
regulatory body required for the due execution, delivery and
performance by such Credit Party of each Loan Document to which
it is or will be a party and for the perfection of or the
exercise by the Agent, NBC and each Lender of their respective
rights and remedies under the Loan Documents and (b) shall be in
compliance with, and shall have obtained appropriate approvals
pertaining to, all applicable laws, rules, regulations and
orders, including, without limitation, all governmental,
environmental, ERISA and other requirements, regulations and
laws, the violation or failure to obtain approvals for which
could reasonably be expected to have a Material Adverse Effect.
6.15. PROCEEDINGS; RECEIPT OF DOCUMENTS. All
requisite corporate and/or partnership action and proceedings in
connection with the borrowings and the execution and delivery of
the Loan Documents and the issuance of the Letters of Credit
shall be satisfactory in form and substance to the Agent and the
Agent shall have received, on or before Closing Date, all
information and copies of all documents, including, without
limitation, records of requisite corporate and/or partnership
action and proceedings, which the Agent may have requested in
connection therewith, such documents where requested by the Agent
to be certified by appropriate corporate Persons or governmental
authorities. Without limiting the generality of the foregoing,
the Agent shall have received on or before the Closing Date the
following, each dated such day (unless otherwise specified), in
form and substance satisfactory to the Agent (unless otherwise
specified) and, except for the Notes, in sufficient copies for
each Lender:
(a) a copy of the certificate of incorporation of
Borrower, and all amendments thereto, certified (as of a
date reasonably near the date of the initial borrowing), by
the Secretary of State of the State of Delaware as being a
true and correct copy thereof;
(b) a copy of the articles or certificate of
incorporation, as the case may be, of each other Credit
Party and all amendments thereto, in each case certified (as
of a date reasonably near the date of the initial
borrowing), by the Secretary of State of the state of
formation or incorporation of each such Credit Party;
(c) certified copies of the resolutions of the
Board of Directors of each of Borrower and each Credit Party
approving this Agreement, the Notes, and each other Loan
Document to which it is a party or by which it is bound, and
of all documents evidencing other necessary corporate action
and governmental approvals, if any, with respect to this
Agreement, the Notes, and each other Loan Document;
(d) a copy of a certificate of the Secretary of
State of each State listed on Schedule 6.15 hereto, dated a
date reasonably near the date of the initial borrowing,
stating that Borrower and each Credit Party, as the case may
be, is duly qualified and in good standing as a foreign
entity in such State;
(e) a certificate of each Credit Party signed on
behalf of such Person by an appropriate officer of such
Person, certifying as to (i) the absence of any amendments
to the charter of such Person since the date of the
Secretary of State's certificate for such Person referred to
above, (ii) a true and correct copy of the bylaws of such
Person as in effect on the date of the initial borrowing;
(f) a certificate of the Secretary or an
Assistant Secretary of each Credit Party certifying the
names and true signatures of the officers of such Person
authorized to sign, on behalf of such Person, this
Agreement, the Notes and each other Loan Document, to which
such Person is a party or by which it is bound;
(g) copies of the amendments to the Senior Note
Documents to be entered into on or about the Closing Date,
which shall be satisfactory in form, scope and substance to
the Agent, which shall be certified by an appropriate
officer of Borrower to be true and complete in all respects;
(h) copies of the AWG Purchase
Agreement, the Supply Agreement and exhibits thereto
(including, without limitation, the Membership Sign-Up
Documents) which shall, in each case, be satisfactory
in form, scope and substance to the Agent, which shall
be certified by an appropriate officer of Borrower to
be true and complete in all respects, and to have been
duly executed and delivered by Borrower and all other
parties thereto; and
(i) copies of the Solicitation Statement, which
shall be certified by an appropriate officer of Borrower to
be true and complete in all respects.
6.16. PROJECTIONS, ETC. The Agent shall have
received the projections dated April 4, 1995, prepared and
provided by the Borrower (the "Latest Projections") and
reasonably adequate information as to Borrower and its
Subsidiaries. In the opinion of the Agent, there shall have
occurred no event or financial result materially inconsistent
with achieving the results contained in the Latest Projections or
which has impaired the Agent's continuing confidence in the
Latest Projections.
6.17. APPROVAL OF SENIOR NOTES; CAPITALIZATION,
ETC. (a) The Agent and all Lenders shall have approved (which
approval shall not be unreasonably withheld) all terms and
conditions of the Senior Notes and the Senior Note Documents,
including, without limitation, any and all amendments and other
modifications thereto entered into as of the Closing Date, and,
without in any way limiting the scope and generality of the
foregoing approval requirement (which applies to all terms and
conditions), in any event: (i) there shall be no prepayment
required under the terms of any Senior Note Document from cash
flow, excess cash flow or the like while any Advance or Letter of
Credit Usage (other than fully cash collateralized undrawn
Letters of Credit) is outstanding, provided that prepayment from
such sources may be required to effect a prepayment of Senior
Notes if on the date when notice of such prepayment is first
mailed to holders of the Senior Notes as contemplated by the
Indenture (so long as such notice is mailed within five (5)
Business Days following the earliest date that such notice can be
mailed under the Indenture and provides the earliest date for
prepayment which can be set under the Indenture, in each case as
such Indenture is in effect on the Closing Date) a prepayment
could be made in compliance with this Section 6.17(a)(i), and
(ii) "Excess Cash Flow" (or any comparable term utilized to
determine the annual prepayment from excess cash) shall be
defined under the Indenture in a manner acceptable to the Agent
and in any event in a manner such that there shall be no "Excess
Cash Flow" for any period if, at the last day of such period, any
Advance or Letter of Credit Usage (other than fully cash
collateralized undrawn Letters of Credit) is outstanding.
(b) Immediately after giving effect to (i) the Second
Supplement to Indenture, (ii) the transactions described in the
AWG Purchase Agreement and the transactions to occur on the
Closing Date under the Supply Agreement, and (iii) all Advances
outstanding hereunder, and after deducting an amount equal to all
fees, commissions and expenses paid or incurred in connection
with the transactions to occur on the Closing Date (whether or
not actually paid or actually billed), Borrower shall have
availability under the Borrowing Base of not less than
$5,000,000; and
(c) The Trustee (on behalf of itself and all present
and future holders of the Senior Notes) shall have entered into
the Intercreditor Agreement with the Agent on terms and
conditions satisfactory to the Agent.
6.18. COLLECTION AND CONCENTRATION ACCOUNTS;
LOCK-BOX ACCOUNTS; ASSET SALE ACCOUNTS; CASH MANAGEMENT
AGREEMENT. (a) within sixty (60) days of the Closing Date,
Borrower shall have established one or more Collection Accounts
into which the cash receipts for each store operated by Borrower
or a Subsidiary of Borrower (to the extent such cash receipts
constitute proceeds of any Collateral) shall be deposited.
(b) Borrower shall have established a Concentration
Account at NBC or another financial institution acceptable to the
Agent and shall have delivered to the Agent on or before the day
of such initial borrowing, with respect to such Concentration
Account, a concentration account agreement in the form of Exhibit
6.18(b) hereto (as amended, modified or supplemented from time to
time, a "Concentration Account Agreement"), duly executed and
delivered by Borrower and duly acknowledged by the bank at which
such Concentration Account is established.
(c) Borrower shall have established one or more
Lock-Box Accounts and shall have delivered to the Agent on or
before the day of such initial borrowing, with respect to each
such Lock-Box Account, an executed Lock-Box Agreement duly
executed and delivered by Borrower and duly acknowledged by the
bank at which such Lock-Box Account is established.
(d) Borrower shall have established one or more Asset
Sale Accounts and shall have delivered to the Agent on or before
the day of such initial borrowing, with respect to each such
Asset Sale Account, an executed asset sale account agreement in
the form of Exhibit 6.18(d) hereto (as amended, modified or
supplemented from time to time, an "Asset Sale Account
Agreement") duly executed and delivered by Borrower and duly
acknowledged by the bank at which such Asset Sale Account is
established.
6.19. NO MARKET DISRUPTION. There shall have
occurred no disruption or adverse change in the financial or
capital markets generally which the Agent, in its reasonable
discretion, deems material.
6.20. LANDLORDS' LIENS. None of the Collateral
shall be subject to any contractual or statutory Lien or Liens in
favor of any lessor under any Lease, except such Liens as the
Agent, in its sole discretion, shall deem not material.
6.21. UCC SEARCH RESULTS. The Agent shall have
received the completed requests for information referred to and
in compliance with the requirements of Section 9.20 hereof.
6.22. AWG PURCHASE. All transactions contemplated
by the AWG Purchase Agreement including, without limitation, the
execution and delivery of the AWG Purchase Agreement, the
Membership Sign-up Documents and the Supply Agreement, but
excluding those contemplated transactions which by their terms
are to be consummated at a future date, shall have been
consummated on terms and conditions satisfactory to the Agent and
Lenders in their sole discretion and the proposed disbursement of
the proceeds of such transaction shall be acceptable to the Agent
and Lenders in their sole discretion.
6.23. CLOSING DATE BORROWING BASE CERTIFICATE. The
Agent shall have received a completed Borrowing Base Certificate
dated as of the Closing Date (based on the Borrower's best
estimates from information available to Borrower at such date)
after giving effect to the AWG Purchase.
SECTION 7. CONDITIONS PRECEDENT TO
EACH BORROWING AND ISSUANCE OF LETTERS OF
CREDIT.
The obligation of the Lenders to make any Advance and
issue any Letter of Credit is subject to fulfillment (or prior
waiver in writing by the Required Lenders) of the following
conditions precedent to the satisfaction of the Agent:
7.1. BORROWER'S CERTIFICATE; OTHERS. (a) Except
in the case of Advances for reimbursement of Letters of Credit
described in Section 4.1(c) hereof, Borrower delivers to the
Agent a Borrower's Certificate.
(b) (i) All representations and warranties made by
each of the Credit Parties contained herein or otherwise
made in any Loan Document (including, without limitation,
each Borrower's Certificate), officer's certificate or any
agreement, instrument, certificate, document or other
writing delivered to the Agent or any Lender in connection
herewith or therewith, shall be true and correct in all
material respects with the same effect as though such
representations and warranties had been made on and as of
the date of such borrowing or issuance of such Letter of
Credit (unless any such representation or warranty speaks as
of a particular date, in which case it shall be deemed
repeated as of such date);
(ii) on the date of such borrowing or issuance
there shall exist no Default or Event of Default;
(iii) if Borrower is requesting a Letter of
Credit, the Agent on behalf of any Issuing Lender shall have
(to the extent requested by any Issuing Lender) received a
duly executed and delivered Letter of Credit Agreement with
respect thereto;
(iv) Borrower shall have complied with all
procedures and given all certificates, notices and other
documents required hereunder for such advance or issuance;
(v) the Agent shall have received such other
approvals, opinions or documents as any Lender through the
Agent may reasonably request; and
(vi) the making of such Advance or issuance of
such Letter of Credit shall not cause the Revolving Loan,
Letter of Credit Usage or any combination thereof to exceed
the Borrowing Limit, the Revolving Credit Facility
Commitment or any other limit on availability contained in
this Agreement.
7.2. WRITTEN NOTICE. Except as otherwise provided
in Section 4.1 hereof, prior to the time of each Advance or the
renewal or conversion of any Advance, or portion thereof, the
Agent shall have received Written Notice of such Advance or the
renewal or conversion of such Advance, or portion thereof, as the
case may be, in accordance with Section 2 hereof.
SECTION 8. USE OF PROCEEDS. Proceeds of all
Advances shall be used by Borrower solely (i) to fund its working
capital needs, and (ii) for other general corporate purposes
consistent with the terms of this Agreement.
SECTION 9. AFFIRMATIVE COVENANTS.
Each of Borrower and Parent hereby covenants and agrees
that, so long as any Advance or any Letter of Credit is
outstanding or any Lender has any Revolving Commitment hereunder,
unless specifically waived by the Required Lenders in writing:
9.1. FINANCIAL STATEMENTS AND OTHER INFORMATION.
Borrower shall furnish or cause to be furnished to the Agent and
each Lender:
(a) as soon as practicable and in any event within
forty-five (45) days after the close of each of the first
three quarters of each Fiscal Year of Borrower:
(i) a consolidated balance sheet of Parent
and its Subsidiaries;
(ii) from and after the formation of any
Subsidiary of Borrower, a consolidating balance sheet
of Parent and its Subsidiaries;
(iii) a consolidated statement of income
of Parent and its Subsidiaries;
(iv) from and after the formation of any
Subsidiary of Borrower, a consolidating statement of
income of Parent and its Subsidiaries;
(v) a consolidated statement of cash flows
of Parent and its Subsidiaries; and
(vi) from and after the formation of any
Subsidiary of Borrower, a consolidating statement of
cash flows of Parent and its Subsidiaries;
in each case, as at the end of and for the period
commencing at the end of the previous Fiscal Year and
ending with such quarter just closed and for the period
commencing at the end of the previous quarter and
ending with such quarter just closed, setting forth for
each such period in comparative form (x) the
corresponding figures for the applicable quarter and
year to date of the preceding Fiscal Year and (y) the
budgets of Parent and its Subsidiaries for such quarter
and year to date previously delivered under Section
9.1(m) hereof, all in reasonable detail and certified
by the chief executive or financial officer of Parent
to have been prepared in accordance with GAAP, subject
to normal recurring year-end audit adjustments,
together with (1) a schedule in form satisfactory to
the Agent setting forth Borrower's EBITDA for such
quarter, actual Net Capital Expenditures made by
Borrower and its Subsidiaries during such quarter and
indicating that such capital expenditures were made in
compliance with Section 10.1 hereof and (2) a schedule
in form satisfactory to the Agent of the computations
used by Parent in determining compliance with the
covenants contained in clauses (a) and (b) of Section
9.16 hereof;
(b) as soon as practicable and in any event within
thirty (30) days after the Closing Date, audited
consolidated financial statements of Parent and its
Subsidiaries as at and for the fiscal year ending December
31, 1994;
(c) as soon as practicable and in any event within
ninety (90) days after the close of each Fiscal Year of
Parent:
(i) an audited consolidated balance sheet of
Parent and its Subsidiaries;
(ii) from and after the formation of a
Subsidiary of Borrower, an audited consolidating
balance sheet of Parent and its Subsidiaries;
(iii) an audited consolidated statement
of income of Parent and its Subsidiaries;
(iv) from and after the formation of a
Subsidiary of Borrower, an audited consolidating
statement of income of Parent and its Subsidiaries;
(v) an audited consolidated statement of
cash flows of Parent and its Subsidiaries; and
(vi) from and after the formation of a
Subsidiary of Borrower, an audited consolidating
statement of cash flows of Parent and its Subsidiaries;
in each case, as at the end of and for the Fiscal
Year just closed, (x) setting forth in comparative form
the corresponding figures for the preceding Fiscal Year
and (y) accompanied by a separate report certified by
the chief financial officer of Parent, which shall not
be subject to the certification or statement of the
accountants set forth below, setting forth the budgets
of Parent and its Subsidiaries for such Fiscal Year
previously delivered under Section 9.1(m) hereof, all
in reasonable detail and (except for such budgets and
comparisons with such budgets) certified (without
qualification or exception deemed material by the
Agent) by independent public accountants selected by
Parent and satisfactory to the Agent; and concurrently
with such financial statements, a certificate signed by
such independent accountants (1) stating that in making
the examination necessary for their certification of
such financial statements, they have not obtained any
knowledge of the existence of any Default or Event of
Default or, if such independent accountants shall have
obtained from such examination any such knowledge, they
shall disclose in such written statement the Default or
Event of Default and the nature thereof, it being
understood that such independent accountants shall be
under no liability, directly or indirectly, to anyone
for failure to obtain knowledge of any such Default or
Event of Default and (2) showing in detail the
calculations supporting such certificate in respect of
compliance with the covenants set forth in Sections
9.16(a) and (b) and 10.1 hereof and setting forth the
calculations (in detail acceptable to the Agent)
underlying such compliance;
(d) as soon as practicable and in any event within
forty-five (45) days after the close of each calendar month:
(i) a consolidated balance sheet of Parent
and its Subsidiaries;
(ii) from and after the formation of a
Subsidiary of Borrower, a consolidating balance sheet
of Parent and its Subsidiaries;
(iii) a consolidated statement of income
of Parent and its Subsidiaries;
(iv) from and after the formation of a
Subsidiary of Borrower, a consolidating statement of
income of Parent and its Subsidiaries;
(v) a consolidated statement of cash flows
of Parent and its Subsidiaries; and
(vi) from and after the formation of a
Subsidiary of Borrower, a consolidating statement of
cash flows of Parent and its Subsidiaries as at the end
of and for the period commencing at the end of the
previous Fiscal Year and ending with such month just
closed and for the period commencing at the end of the
previous month and ending with such month just closed;
in each case prepared by management of Parent, setting forth
in comparative form (x) the corresponding figures for the
appropriate month and year to date of the previous Fiscal
Year and (y) the budgets of Parent and its Subsidiaries for
such month and year to date previously delivered under
Section 9.1(m) hereof, all in reasonable detail (including,
without limitation, stating the amount of interest expensed
on each of the Revolving Loan, the Letters of Credit and all
other Indebtedness for Borrowed Money of Parent and its
Subsidiaries for such calendar month and the depreciation
and amortization and the rental expense of Parent and its
Subsidiaries for such calendar month) and certified by the
chief executive or financial officer of Parent to have been
prepared in accordance with GAAP, subject to normal year-end
adjustments;
(e) as soon as practicable and in any event within
forty-five (45) days after the close of each calendar month,
a statement of cash balances for the Concentration Account
and the Asset Sale Accounts (unless any such account is
maintained at NBC) and, upon the request of the Agent, a
statement of cash balances for any one or more of the
Special Accounts permitted pursuant to Section 9.17(d)
hereof, together, in each case, if requested by the Agent,
with a copy of the bank statements in respect thereof and
all canceled checks and advices of credit and debits in
respect of the Concentration Account, the Asset Sale
Accounts or such Special Account (except to the extent that
any such account is maintained at NBC);
(f) promptly upon receipt thereof, copies of all
financial reports (including, without limitation, management
letters), if any, submitted to Parent or any of its
Subsidiaries by its auditors, in connection with each annual
or interim audit or review of its books by such auditors, to
the extent reasonably requested by the Agent;
(g) promptly upon the issuance thereof, copies of all
reports, if any, to or other documents filed by Parent or
any of its Subsidiaries with the Securities and Exchange
Commission under the Securities Act or the Securities
Exchange Act (other than on Form S-8 or 8-A or similar
forms), and all reports, notices or statements sent or
received by Parent or any of its Subsidiaries to or from the
holders of any Indebtedness for Borrowed Money of Parent or
any such Subsidiary or to or from the trustee under any
indenture under which the same is issued;
(h) (i) concurrently with the delivery of the
financial statements required to be furnished by Sections
9.1(a), 9.1(b), 9.1(c) and 9.1(d) hereof, a certificate
signed by the chief executive or financial officer of
Parent, (x) stating that a review of the activities of
Parent and its Subsidiaries during such quarter or Fiscal
Year, as the case may be, has been made under his immediate
supervision with a view to determining whether Parent and
its Subsidiaries have observed, performed and fulfilled all
of its respective obligations under each Loan Document to
which it is a party, and (y) demonstrating, in a format
satisfactory to the Agent, the compliance by Parent and its
Subsidiaries with the financial covenants contained herein
and stating that there existed during such quarter or Fiscal
Year no Default, or Event of Default or if any such Default
or Event of Default existed, specifying the nature thereof,
the period of existence thereof and what action Parent or
any of its Subsidiary proposes to take, or has taken, with
respect thereto, and (ii) promptly upon the occurrence of
any Event of Default, a certificate signed by the chief
executive or financial officer of Parent, specifying the
nature thereof and the action Parent or any of its
Subsidiaries proposes to take or has taken with respect
thereto;
(i) promptly upon the commencement thereof, Written
Notice of any litigation, including arbitrations, and of any
proceedings before any governmental agency which could, if
successful, reasonably be expected to have a Material
Adverse Effect or where the amount involved exceeds
$250,000;
(j) with reasonable promptness, such other information
respecting the business, operations and financial condition
of Parent or any of its Subsidiaries as any Lender may from
time to time reasonably request;
(k) not later than fifteen (15) Business Days after
(i) the 14th day of each such calendar month, and (ii) the
end of each such calendar month, a certificate dated the
14th day or the last day of such calendar month just ended,
as applicable, from Parent, in each case substantially in
the form of Exhibit 9.1(k) hereto (except that each
Borrowing Base Certificate dated as of the 14th day of any
calendar month may utilize (A) the total for exclusions of
milk, eggs and other perishable items in grocery, excluding
cheese, and (B) the calculation of month-end adjustments for
Eligible Inventory established in the Borrowing Base
Certificate dated as the last day of the immediately prior
calendar month) and signed by the chief executive officer,
chief financial officer or chief accounting officer of
Parent (each such certificate, a "Borrowing Base
Certificate"); provided, however, that notwithstanding the
foregoing, the Borrowing Base Certificate with respect to
the calendar month ending April 30, 1995, shall not be
required to be delivered until May 20, 1995;
(l) not later than fifteen (15) Business Days after
the end of each fiscal month, a certificate dated as of the
last day of such fiscal month just ended from Borrower
substantially in the form of Exhibit 9.1(l) hereto and
signed by the chief executive officer, chief financial
officer or chief accounting officer of Parent setting forth
(i) a schedule of Receivables and a detail aging of such
Receivables as of the date of such certificate, provided,
however, the first such detail aging will be due with the
certificate for the fiscal month ending July 8, 1995, (ii) a
schedule of Borrower's accounts payable and a detail aging
of such accounts payable, provided, however, the first such
detail aging will be due with the certificate for the fiscal
month ending July 8, 1995, and (iii) a listing of Inventory
as of the date of such certificate;
(m) not later than forty-five (45) days after the
commencement of each Fiscal Year of Parent beginning with
the Fiscal Year commencing on December 30, 1995, a one
Fiscal-Year budget of the financial condition and results of
operations of Parent and its Subsidiaries for such Fiscal
Year (covering in any event balance sheets, statements of
cash flow and of income for each quarter and calendar
month); in all instances, in form, scope and substance
reasonably satisfactory to the Agent;
(n) promptly, and in any event within ten (10)
Business Days of the date that Borrower obtains knowledge
thereof, notice of any of the following events, to the
extent that any of such events is reasonably expected to
cause cost and expense to Borrower and its Subsidiaries of
$500,000 or more:
(i) receipt by a Credit Party or any
Subsidiary thereof, or any tenant or other occupant of
any property of a Credit Party or Subsidiary thereof,
of any claim, complaint, charge or notice of a
violation or potential violation of any Environmental
Law;
(ii) the occurrence of a spill or other
Release of a Hazardous Material upon, under or about or
affecting any of the properties of a Credit Party or
Subsidiary thereof, or Hazardous Materials at levels or
in amounts that may have to be reported, remedied or
responded to under any Environmental Law are detected
on or in the soil or groundwater;
(iii) that a Credit Party or
Subsidiary thereof is or may be liable for any costs of
cleaning up or otherwise responding to a Release of
Hazardous Materials;
(iv) that any part of the properties of
a Credit Party or any Subsidiary thereof is or may be
subject to a Lien under any Environmental Law; and
(v) that a Credit Party or Subsidiary
will undertake or has undertaken any cleanup or other
response action with respect to any Hazardous Material;
and
(o) within ten (10) days following the occurrence
thereof, any loss, damage or other event which can
reasonably be expected to result in an insurance claim by
Borrower or any Subsidiary of $250,000 or more; and
(p) within ten (10) Business Days following the
Closing Date, a schedule of Borrower's accounts payable as
of the Closing Date after giving effect to the AWG Purchase,
such schedule to be in the form of Exhibit 9.1(p) hereto.
9.2. TAXES AND CLAIMS. Each of Parent and
Borrower shall, and shall cause each of Borrower's Subsidiaries,
to, pay and discharge when due (except to the extent that (a) any
such taxes, assessments, governmental charges or claims are
diligently contested in good faith by appropriate proceedings
and proper reserves are established on the books of Parent,
Borrower or any such Subsidiary, and (b) any Liens arising from
the non-payment thereof when due have not attached to any of the
Collateral in a manner which could have priority over the Lien of
the Agent thereon or risk the sale of or foreclosure on such
Collateral) (i) all taxes, assessments and governmental charges
upon or against it or its properties or assets prior to the date
on which penalties attach thereto and (ii) all lawful claims,
whether for labor, materials, supplies, services or anything
else, which might or could, if unpaid, become a Lien or charge
upon its properties or assets.
9.3. INSURANCE. (a) Borrower shall, and shall
cause each of its Subsidiaries to, (i) keep all its properties
adequately insured at all times with responsible insurance
carriers, in amounts and pursuant to insurance policies
reasonably acceptable to the Agent, against loss or damage by
fire and other hazards and, (ii) maintain adequate insurance at
all times with responsible insurance carriers, in amounts and
pursuant to insurance policies reasonably acceptable to the
Agent, against liability on account of damage to Persons and
property and under all applicable workers' compensation laws and
(iii) maintain adequate insurance covering such other risks as
the Agent may reasonably request. For purposes of complying with
this Section 9.3(a), adequate insurance shall in any event
prevent Borrower and its Subsidiaries from becoming a co-insurer
(excluding any deductibles thereunder reasonably acceptable to
the Agent).
(b) Except as otherwise agreed in writing by the
Agent, each liability policy and each hazard policy on Collateral
required pursuant to this Section 9.3 shall name the Agent and
each Lender as additional insured or first loss payee, as
appropriate, and shall be primary without right of contribution
from any other insurance which is carried by the Lenders or the
Agent to the extent that such other insurance provides it with
contingent and/or excess liability insurance with respect to its
interest as such in the Collateral and shall expressly provide
that all of the provisions thereof, except the limits of
liability (which shall be applicable to all insureds as a group)
and except liability for premiums (which shall be solely a
liability of Borrower or its Subsidiaries, as the case may be),
shall operate in the same manner as if there were a separate
policy covering each insured.
(c) Borrower shall, and shall cause each of its
Subsidiaries to, from time to time upon request of the Agent,
promptly furnish or cause to be furnished to the Agent evidence,
in form and substance reasonably satisfactory to the Agent, of
the maintenance of all insurance required to be maintained by
this Section 9.3, including, but not limited to, such copies as
the Agent may request of policies, certificates of insurance,
riders and endorsements relating to such insurance and proof of
premium payments.
9.4. BOOKS AND RESERVES. Each of Parent and
Borrower shall and shall cause each of Borrower's Subsidiaries
to:
(a) maintain, at all times, true and complete books,
records and accounts in which true and correct entries shall
be made of its transactions, all in accordance with GAAP;
and
(b) by means of appropriate entries, reflect in its
accounts and in all financial statements furnished pursuant
to Section 9.1 proper liabilities and reserves for all taxes
and proper provision for depreciation and amortization of
its properties and bad debts, all in accordance with GAAP.
9.5. PROPERTIES IN GOOD CONDITION. Borrower shall
keep, and shall cause each of its Subsidiaries to keep, its
properties in good repair, working order and condition, ordinary
wear and tear excepted, and, from time to time, make all
necessary and proper repairs, renewals, replacements, additions
and improvements thereto, so that the business carried on may be
properly and advantageously conducted at all times in accordance
with prudent business management.
9.6. MAINTENANCE OF EXISTENCE, ETC. Each of
Parent and Borrower shall preserve and maintain, and cause each
of Borrower's Subsidiaries, to preserve and maintain, their
respective statutory existence, rights and franchises.
9.7. INSPECTION BY THE AGENT. Each of Parent and
Borrower shall allow, and shall cause each of Borrower's
Subsidiaries to allow, any representative of the Agent or
Lenders, in conjunction with the Agent, at the Agent's and
Lender's expense, to visit and inspect any of Borrower's
properties, to examine its books of account and other records and
files, to make copies thereof and to discuss its affairs,
business, finances and accounts with its officers and employees
and independent accountants (and each of Parent and Borrower
hereby irrevocably authorizes its independent accountants to
discuss with the Agent the financial affairs of each of Parent
and Borrower and Borrower's Subsidiaries), all at such reasonable
times during normal business hours and as often as the Agent or
Lenders, in conjunction with Agent, may reasonably request upon
reasonable notice (or, during the continuance of a Default or
Event of Default, at such times and as often as the Agent or
Lenders, in conjunction with the Agent, may request).
9.8. PAY INDEBTEDNESS TO LENDERS AND PERFORM OTHER
COVENANTS. Borrower shall (a) make full and timely payment of
all payments required to be made by Borrower in respect of the
Lender Debt, including without limitation, the Revolving Loan,
whether now existing or hereafter arising, (b) strictly comply,
and cause each of its Subsidiaries to strictly comply, with all
the terms and covenants contained in each Loan Document to which
it is a party, all at the times and places and in the manner set
forth therein and (c) except for the filing of continuation
statements and the making of other filings by the Agent as
secured party or assignee, at all times take all action necessary
to maintain the Liens provided for under or pursuant to this
Agreement or any Security Document as valid and perfected Liens
on the property intended to be covered thereby (subject to no
other Liens except those liens expressly permitted under Section
10.2) and supply all information to the Agent or the Lenders
necessary for such maintenance.
9.9. NOTICE OF DEFAULT. Borrower shall promptly
(and in any event within five (5) Business Days) notify the Agent
in writing of any Default or Event of Default or a default under
any other agreement (other than any Capitalized Lease involving
an aggregate notional principal amount of less than $500,000) in
respect of Indebtedness for Borrowed Money to which Borrower or
any of its Subsidiaries is a party, in each case describing the
nature thereof and the action Borrower proposes to take with
respect thereto.
9.10. REPORTING OF MISREPRESENTATIONS. In the
event that Borrower or any Subsidiary of Borrower discovers that
any representation or warranty made in any Loan Document by any
Credit Party was incorrect in any material respect when made and
such incorrectness is continuing and remains material, Borrower
shall promptly report, or shall cause such Subsidiary promptly to
report, the same to the Agent and take, or cause to be taken, all
available steps to correct such misrepresentation or breach of
warranty.
9.11. COMPLIANCE WITH LAWS, ETC. Each of Parent
and Borrower shall comply, and shall cause each of Borrower's
Subsidiaries to comply, in all material respects, with all
applicable laws, rules, regulations and orders, and each of
Parent and Borrower shall duly observe, and cause each of
Borrower's Subsidiaries to duly observe, in all material
respects, all valid requirements of applicable governmental
authorities and all applicable statutes, rules and regulations,
including, without limitation, all applicable statutes, rules and
regulations relating to public and employee health and safety in
any case, the non-observance of which could reasonably be
expected to have a Material Adverse Effect, involves criminal
penalties or could expose the Agent or any Lender to any civil or
criminal penalties.
9.12. ERISA. (a) Each of Parent and Borrower
shall pay and discharge, and shall cause each of Borrower's
Subsidiaries to pay and discharge, when due any material
liability which is imposed upon it pursuant to the provisions of
Title IV of ERISA, unless the amount, applicability or validity
of such liability is being diligently contested in good faith by
appropriate proceedings and proper reserves are established on
its books in accordance with GAAP.
(b) Borrower shall deliver to the Agent promptly, and
in any event within ten (10) days in the case of clauses (ii),
(iii), (vi) and (viii) below, or twenty (20) days in the case of
clause (i), (iv), (v) and (vii) below, after
(i) Borrower knows, or has reason to know, of the
occurrence of any Reportable Event with respect to any
Pension Benefit Plan, a copy of the materials that are filed
by the applicable plan administrator with the PBGC;
(ii) a Credit Party or an ERISA Affiliate thereof
or an administrator of any Pension Benefit Plan files with
participants, beneficiaries or the PBGC a notice of intent
to terminate any Pension Benefit Plan under Section 4041 of
ERISA, a copy of any such notice;
(iii) the receipt of notice by a Credit Party
or any ERISA Affiliate thereof or an administrator of any
Pension Benefit Plan from the PBGC of the PBGC's intention
to terminate such Plan or to appoint a trustee to administer
such Plan, a copy of such notice;
(iv) the filing thereof with the Internal Revenue
Service, copies of each annual report that is filed on
Treasury Form 5500 with respect to any Pension Benefit Plan
subject to Title IV, together with any actuarial statements
on Schedule B to such Form 5500;
(v) a Credit Party or any ERISA Affiliate thereof
knows or has reason to know of any event or condition which
could reasonably be expected to constitute grounds under the
provisions of Section 4042 of ERISA for the termination of
(or the appointment of a trustee to administer) any Pension
Benefit Plan, an explanation of such event or condition;
(vi) the receipt by a Credit Party or any ERISA
Affiliate thereof of an assessment of withdrawal liability
under Section 4201 of ERISA from a Multiemployer Plan, a
copy of such assessment;
(vii) a Credit Party or any ERISA Affiliate
knows or has reason to know of the termination or insolvency
(under Sections 4241 or 4245 of ERISA) of any Multiemployer
Plan, a notice of such event; or
(viii) an application has been made to the
Secretary of the Treasury for a waiver of the minimum
funding standard under the provisions of Section 412 of the
Code with respect to any Pension Benefit Plan, a copy of
such application; and
in each case described above, together with a statement signed by
an appropriate officer of such Credit Party setting forth details
as to such reportable event, notice event or condition and the
action that will be taken with respect thereto.
9.13. FURTHER ASSURANCES. Each of Parent and
Borrower shall, and shall cause each of Borrower's Subsidiaries
to, at its cost and expense, upon request of the Agent, duly
execute and deliver, or cause to be duly executed and delivered,
to the Agent such further instruments and do and cause to be done
such further acts as may be necessary or proper in the reasonable
opinion of the Agent to carry out more effectually the provisions
and purposes of this Agreement or any other Loan Document.
9.14. AUDITS AND APPRAISALS. (a) Borrower shall,
at its expense, cause its auditors to supervise and review a
physical inventory of Inventory and Pledged Accounts of Borrower
and its Subsidiaries twice each Fiscal Year and shall deliver to
the Agent promptly, and in any event within twenty (20) days
after the same becomes available, the results of such audit
accompanied by a compliance letter from such auditors addressed
to the Agent in which such auditors (i) confirm and certify that
Inventory has been properly classified by Borrower into the
classifications set forth on Schedule 9.14(a) hereto and that the
values ascribed by Borrower to the Inventory in each such
classification are materially correct and that no proceeds of
Inventory have been commingled with any other funds (other than
proceeds of Pledged Accounts, miscellaneous income not arising
from Asset Sales, and as may be specified in a Collection Account
Agreement, funds from another Collection Account) and (ii)
confirm and certify that the Pledged Accounts have been properly
classified by Borrower into the classifications set forth on
Schedule 9.14(a) hereto and that the values ascribed by Borrower
to the Pledged Accounts in each such classification are
materially correct and that no proceeds of Pledged Accounts have
been commingled with any other funds (other than proceeds of
Inventory, miscellaneous income not arising from Asset Sales, and
as may be specified in a Collection Account Agreement, funds from
another Collection Account).
(b) In addition to audits referred to in paragraph (a)
of this Section 9.14, each of Parent and Borrower shall allow,
and shall cause each of Borrower's Subsidiaries to allow, the
Agent or Lenders, in conjunction with the Agent, or their
designees to enter any locations of Borrower, at any reasonable
time or times during regular business hours, to inspect the
Collateral and to inspect, audit and to make copies or
extractions from the books, records, journals, orders, receipts,
correspondence and other data relating to the Collateral.
(c) At Agent's request at any time, on no more than
one occasion per calendar year prior to the occurrence of a
Default and as frequently as Agent may desire so long as a
Default or an Event of Default has occurred and is continuing,
allow a third-party appraiser acceptable to Agent to perform an
appraisal of the Inventory, copies of which shall be made
available to Borrower, Agent and Lenders.
(d) Borrower agrees to bear the cost of, and reimburse
Agent and Lenders for any and all reasonable expenses incurred by
Agent and Lenders in connection with, the audits and appraisals
referred to in this Section 9.14. For informational purposes and
not in limitation thereof, Agent's and Lenders' auditor expenses
as of the Closing Date are $450.00 per auditor per day, plus any
and all out-of-pocket expenses.
9.15. ENVIRONMENTAL MATTERS, ETC. (a) Each of
Parent and Borrower shall, and shall cause each of Borrower's
Subsidiaries to, comply, in all material respects, with the
provisions of all Environmental Laws and all applicable Federal,
state and local occupational health, safety and sanitation laws,
ordinances, codes, rules and regulations, permits, licenses and
interpretations and orders of regulatory and administrative
authorities with respect thereto in any case, the non-compliance
with which could reasonably be expected to have a Material
Adverse Effect, involves criminal penalties or could expose the
Agent or any Lender to any civil or criminal penalties, and shall
keep its properties and the properties of its Subsidiaries free
of any Lien imposed pursuant to any Environmental Law other than
any Lien which will not attach to any of the Collateral in a
manner which would (or could) have priority over the Lien of the
Agent thereon or risk the sale or foreclosure on such Collateral
or is in an amount material to Borrower. Neither Parent nor
Borrower shall, nor shall Parent or Borrower suffer or permit,
any of Borrower's Subsidiaries to cause or suffer or permit, the
property of Parent, Borrower or such Subsidiary, to be used for
the generation, production, processing, handling, storage,
transporting or disposal of any Hazardous Material except the
removal or the taking of remedial action in response to Hazardous
Materials on or about the properties of Parent, Borrower or any
of Borrower's Subsidiaries and except in the ordinary course of
Borrower's business as conducted as of the Closing Date.
(b) Each of Parent and Borrower shall supply to the
Agent copies of all submissions by Parent or Borrower or any of
Borrower's Subsidiaries to any governmental authority and of the
reports of all environmental audits and of all other
environmental tests, studies or assessments (including the data
derived from any sampling or survey of asbestos, soil, or
subsurface or other materials or conditions) that may be
conducted or performed (by or on behalf of Parent, Borrower or
any of Borrower's Subsidiaries) on or regarding the properties of
Parent, Borrower or any of Borrower's Subsidiaries or regarding
any conditions that might have been affected by Hazardous
Materials on or Released or removed from such properties. Each
of Parent and Borrower shall also permit and authorize, and shall
cause Borrower's Subsidiaries to permit and authorize, the
consultants, attorneys or other persons that prepare such
submissions or reports or perform such audits, tests, studies or
assessments to discuss non-privileged portions of such
submissions or reports with the Agent and the Lenders.
(c) Borrower shall timely undertake and complete any
cleanup or other response actions required by (i) any
governmental authority, or (ii) any Environmental Law if, in the
case of this clause (ii) only, failure so to undertake or
complete could have a Material Adverse Effect, involves criminal
penalties or could expose the Agent or any Lender to any civil or
criminal penalties or is required under such Environmental Law to
safeguard the health of any persons.
(d) Without in any way limiting the scope of Section
2.12 hereof and in addition to any obligations thereunder,
Borrower hereby indemnifies and agrees to hold the Agent and the
Lenders harmless from and against any liability, loss, damage,
suit, action or proceeding arising out of its business or the
business of its Subsidiaries pertaining to Hazardous Materials,
including, but not limited to claims of any Federal, state or
municipal government or quasi-governmental agency or any third
person, whether arising under CERCLA, RCRA, or any other
Environmental Law, or tort, contract or common law.
9.16. FINANCIAL COVENANTS. Borrower covenants and
agrees that:
(a) Consolidated Fixed Charge Coverage Ratio.
Borrower shall not permit its Consolidated Fixed Charge Coverage
Ratio, for the four (4) fiscal quarter period ending on each date
set forth below, to be less than the amount set forth opposite
such date:
Period Ending Ratio
September 9, 1995 1.00:1
December 30, 1995 1.00:1
March 23, 1996 1.10:1
June 15, 1996 1.10:1
September 7, 1996 1.20:1
December 28, 1996 1.20:1
March 22, 1997 1.35:1
June 14, 1997 1.40:1
September 6, 1997 1.40:1
January 3, 1998 1.45:1
March 28, 1998 1.45:1
and thereafter
(b) Debt-to-EBITDA Ratio. Borrower shall not permit
its Debt-to-EBITDA Ratio, for the four (4) fiscal quarter period
ending on each date set forth below, to be greater than the
amount set forth opposite such date:
Period Ending Rati
o
September 9, 1995 6.60
:1
December 30, 1995 6.60
:1
March 23, 1996 6.60
:1
June 15, 1996 6.25
:1
September 7, 1996 5.90
:1
December 28, 1996 5.40
:1
March 22, 1997 5.25
:1
June 14, 1997 4.90
:1
September 6, 1997 4.90
:1
January 3, 1998 4.90
:1
March 28, 1998 4.90
:1
and thereafter
9.17. COLLECTION AND CONCENTRATION ACCOUNTS;
LOCK-BOX ACCOUNTS. (a) Borrower shall (i) cause all cash
proceeds (as defined in Article 9 of the UCC) of Pledged Accounts
to be deposited directly by the account debtor thereof into a
Lock-Box Account, (ii) except as otherwise permitted under
subsection (d) or subsection (e) of this Section 9.17, deposit or
cause to be deposited all cash proceeds (as defined in Article 9
of the UCC) of Inventory and Pledged Accounts into a Collection
Account, (iii) deposit or cause to be deposited all Gross
Proceeds of an Asset Sale (excluding Gross Proceeds of property
which is not Collateral in respect of which no prepayment is
required under Section 3.1(b) hereof) into an Asset Sale Account,
and (iv) on each Business Day, except as otherwise permitted
under subsection (f) of this Section 9.17, transfer all collected
balances from all Collection Accounts and Lock-Box Accounts to
the Concentration Account.
(b) On or before the date sixty (60) days from the
Closing Date, deliver to the Agent, with respect to each
Collection Account, a collection account agreement substantially
in the form of Exhibit 9.17(b) hereto (with such modifications as
are acceptable to the Agent and as amended, modified or
supplemented from time to time, a "Collection Account
Agreement"), duly executed and delivered by Borrower and duly
acknowledged by the bank at which such Collection Account is
established.
(c) Borrower shall, except as otherwise permitted
under subsection (d) or subsection (e) of this Section 9.17,
cause all cash receipts of all stores operated by Borrower and
its Subsidiaries (to the extent such cash receipts constitute
proceeds of any Collateral) to be deposited daily (except Sundays
and holidays) into a Collection Account; provided that the
failure to cause such cash receipts to be so deposited shall not
constitute a default hereunder if such late deposit results
solely from good faith human error and is made promptly following
discovery of such error.
(d) Notwithstanding the provisions of subsections
(a)(ii) and (c) of this Section 9.17, the Borrower may:
(i) cause a portion of the cash proceeds of
Pledged Accounts or of Inventory generated by one of
the stores listed on Schedule 9.17(d) hereto, as may be
amended from time to time with the prior written
consent of the Agent, to be deposited directly to a
deposit account maintained at a local bank for such
store which is not a Collection Account (each, a "Local
Bank Special Account"); provided that:
(A) except as permitted in this
Section 9.17(d), the Borrower shall not be
permitted to write checks or otherwise draw funds
from such Local Bank Special Account, except that
the Borrower may debit such Local Bank Special
Account for change orders and it may agree with
the bank at which such Local Bank Special Account
is maintained that such bank may debit the Local
Bank Special Account for such bank's servicing
fees,
(B) an amount (the "Store
Deposit") equal to the amount deposited in such
Local Bank Special Account (less change orders)
for each store's business day (as reasonably
determined by the Borrower) is transferred to a
Collection Account on the same day or the relevant
banks' next business day after such deposit,
(C) the failure to make a Store
Deposit for each store's business day shall not
constitute a default hereunder if such late Store
Deposit results solely from good faith human error
and is made promptly following discovery of such
error,
(D) the transfer of any Store
Deposit to a Collection Account on a day other
than the same day or the relevant banks' next
business day after such Store Deposit shall not
constitute a default hereunder if such late
transfer results solely from good faith human
error and is made promptly following discovery of
such error, and
(E) no more than $25,000 may be on
deposit in such Local Bank Special Account unless
an offsetting transfer on the same day or the
relevant banks' next business day is made or
unless any excess over $25,000 results solely from
good faith human error and an offsetting transfer
to a Collection Account is made promptly following
discovery of such excess;
(ii) cause a portion of the cash proceeds of
Pledged Accounts or of Inventory to be deposited
directly to a checking account at Liberty Bank and
Trust Company of Oklahoma City, N.A., or another
financial institution acceptable to the Agent, that is
not a Collection Account, for the sole purpose of
having access to funds for sight drafts to purchase
alcoholic beverages for resale or to cover returned
checks (each such checking account being a "Sight Draft
Special Account", and together with each Local Bank
Special Account, being a "Special Account"); provided
that no more than $70,000 may be on deposit in any
Sight Draft Special Account and no more than $70,000
may be on deposit in all Sight Draft Special Accounts
at the end of any relevant bank's business day (after
deducting all offsetting debits for sight drafts and
returned checks at the end of the relevant banks'
business day); and
(iii) permit such debits to a Collection
Account as may be specified in a Collection Account
Agreement.
The Borrower shall, at the request of the Agent,
use its best efforts to cause each bank at which one or
more Special Accounts are maintained to execute and
deliver to the Agent an agreement, in form and
substance satisfactory to the Agent, pursuant to which
such bank expressly waives any right of set-off such
bank may have against such account and covering such
other matters as may be required by the Agent;
provided, however, that the Agent and the Lenders agree
that such efforts shall not require the Borrower to
confer any economic benefit upon any such bank in order
to cause such bank to execute such agreement.
(e) Notwithstanding the provisions of subsections
(a)(ii) and (c) of this Section 9.17, the Borrower may make
payments to (i) EFS, Inc. ("EFS") pursuant to the Supermarket
Industry Merchant Agreement, Electronic Authorization and
Payment, dated as of May 1, 1992 between EFS and the Borrower,
and the related letter dated May 6, 1992 from the Borrower to Mr.
Ed Labry of EFS and (ii) one or more other credit or charge card
service providers in connection with arrangements enabling the
Borrower to accept payment for merchandise by credit or charge
card, including, without limitation, deductions by EFS or such
other credit or charge card service providers from amounts
otherwise payable to the Borrower under their servicing
arrangements with the Borrower; provided, that on and after the
Closing Date, all documentation with respect to such arrangements
mentioned in clause (ii) above shall be in form and substance
reasonably satisfactory to the Agent.
(f) Notwithstanding anything to the contrary in
subsection (a)(iv) of this Section 9.17, the Borrower shall be
permitted to exempt from the transfers required by such
subsection on any day a maximum of (i) $100,000 of collected
balances on deposit in the Collection Account maintained by the
Borrower with Liberty Bank and Trust Company of Oklahoma City,
N.A., or another financial institution acceptable to the Agent,
(ii) $5,000 of collected balances on deposit in the Collection
Account maintained by the Borrower with Bank of Oklahoma, N.A.,
or another financial institution acceptable to the Agent, (iii)
$5,000 of collected balances on deposit in the Collection Account
maintained by the Borrower with Amarillo National Bank, or
another financial institution acceptable to the Agent, and (iv)
$5,000 of collected balances on deposit in the Collection Account
maintained by the Borrower with Liberty Bank and Trust Company of
Tulsa, N.A., or another financial institution acceptable to the
Agent.
9.18. ENVIRONMENTAL REPORTS. If so requested,
Borrower shall deliver to the Agent an environmental report of a
qualified third party engineer in form and substance satisfactory
to the Agent (a) on any one or more of the stores listed on
Schedule 9.18 hereto or (b) with respect to any event for which
Borrower supplied a notice under Section 9.1(n) hereof.
9.19. SPECIAL COUNSEL FEES. Borrower shall pay in
full, within ten (10) days following the Closing Date, all
reasonable fees, costs and expenses of Hughes & Luce, L.L.P.,
special counsel to the Agent, billed on or prior to the Closing
Date.
9.20. VERIFICATION OF LIENS. Borrower shall
furnish to the Lender, as soon as practicable following the
Closing Date, completed requests for information listing the
financing statements referred to in Section 5.1(b) hereof and all
other effective financing statements filed in the jurisdictions
referred to in Section 5.1(b) hereof that name any Credit Party
as debtor, together with copies of such other financing
statements.
9.21. PROCEEDS FROM AWG SALE. Borrower shall (a)
apply proceeds received in connection with the transactions
contemplated in the AWG Purchase Agreement in a manner acceptable
to Agent, including without limitation, the application thereof
to trade payables relating to the assets sold, and (b) take all
actions requested by Agent to insure compliance with clause (a)
above.
SECTION 10. NEGATIVE COVENANTS.
Each of Parent and Borrower covenants and agrees that,
so long any Advance or any Letter of Credit or reimbursement
obligation for a Letter of Credit is outstanding or any Lender
has any Revolving Commitment hereunder, each of Parent and
Borrower shall not, and shall not suffer or permit any of
Borrower's Subsidiaries (and, in the case of Section 10.10
hereof, any ERISA Affiliate) to, without the prior written
consent of the Required Lenders:
10.1. CAPITAL EXPENDITURES. (a) The Borrower
shall not suffer or permit Capital Expenditures of the Borrower
and its Subsidiaries to exceed $6,000,000 in any fiscal year;
provided, however, that the Borrower may make up to $4,000,000 in
additional Capital Expenditures for Major Remodels (i) during the
First Qualifying Period and (ii) during the Second Qualifying
Period; provided further that the Borrower may make additional
Capital Expenditures in any period in an amount equal to the
amount of Capital Expenditures permitted during any prior period
and not made; provided further that no portion of the amount
permitted to be used for Capital Expenditures during the First
Qualifying Period or the Second Qualifying Period may be used for
Capital Expenditures in any subsequent period unless (x) as of
the last day of the First Qualifying Period or the Second
Qualifying Period, as the case may be, the Borrower's
Consolidated Fixed Charge Coverage Ratio is at least 1.30:1 or
1.50:1, respectively, or (y) on or prior to the last day of the
First Qualifying Period or the Second Qualifying Period, as the
case may be, the Borrower has entered into commitments to use any
such portion for Capital Expenditures.
(b) In no event shall Parent, Borrower or any
Subsidiary of Borrower assume or incur any Indebtedness in
connection with the acquisition of a fixed or capital asset
(including, without limitation, under a Capitalized Lease) if the
fair market value (as determined by an independent appraisal or
as determined in good faith by management of Borrower) of such
asset does not exceed the aggregate principal (or notional
principal, in the case of Capitalized Lease Obligations, which
notional principal amount shall be calculated in accordance with
GAAP but assuming an implicit interest rate of the higher of 15%
or the market rate of interest available to the Company, as
determined by the Company in its good faith judgment) amount of
such Indebtedness so incurred or assumed.
10.2. LIENS. Create, incur, assume or suffer to
exist any Lien upon or defect in title to or restriction upon the
use of any of its property or assets of any character, whether
owned at the Closing Date or hereafter acquired, or hold or
acquire any property or assets of any character under conditional
sales, finance lease or other title retention agreements, other
than:
(a) (i) Liens in favor of the Agent or the Lenders
pursuant to this Agreement or the Security Documents;
(ii) the lien on "Collateral" (as such term is
defined in the Senior Note Documents as in effect on the
Closing Date), in favor of the trustee of the Senior Notes
as security for the "Obligations" (as such term is defined
in the Senior Note Documents as in effect on the Closing
Date); and
(iii) Liens described in clause (vi) of the
definition of "Eligible Inventory";
(b) (i) Liens, other than in favor of the PBGC,
arising out of judgments or awards in respect of which
Borrower or any of its Subsidiaries shall in good faith be
prosecuting an appeal or proceedings for review and in
respect of which it shall have secured a subsisting stay of
execution pending such appeal or proceedings for review,
provided it shall have set aside on its books adequate
reserves, in accordance with GAAP, with respect to such
judgment or award;
(ii) Liens for taxes, assessments or governmental
charges or levies, provided payment thereof shall not at the
time be required in accordance with the provisions of
Section 9.2 hereof;
(iii) deposits, Liens or pledges to secure
payments of workmen's compensation and other payments,
unemployment and other insurance, old-age pensions or other
social security obligations, or the performance of bids,
tenders, leases, contracts (other than contracts for the
payment of money), public or statutory obligations, surety,
stay or appeal bonds, or other similar obligations arising
in the ordinary course of business;
(iv) mechanics', workmen's, repairmen's,
warehousemen's, vendors' or carriers' Liens, or other
similar Liens arising in the ordinary course of business and
securing sums which are not past due, or are being contested
in good faith (so long as there is no risk of the sale or
forfeiture of the property subject to such Lien or
enforcement of such Lien has been stayed), or deposits or
pledges to obtain the release of any such Liens;
(v) (i) Statutory landlord's Liens on property
located in Texas under Leases or of mortgagees of any such
landlord, in each case, to which Borrower or any of its
Subsidiaries is a party and (ii) Liens described in Section
6.20 hereof existing as of the date of the first Advance or
Letter of Credit issued hereunder and deemed not material by
the Agent under Section 6.20 hereof;
(vi) zoning restrictions, easements, licenses,
covenants, restrictions on the use of real property or minor
irregularities in title thereto, which do not materially
impair the use of such property in the normal operation of
the business of Borrower or any of its Subsidiaries; and
(vii) Liens permitted, as of the Closing Date,
under any of the "Mortgages" (as defined in the Indenture)
on the real property subject to such Mortgage;
(c) existing Liens set forth in Schedule 10.2(c)
hereto and any renewals thereof, but not any increase in
amount thereof and not any extension thereof to other
property;
(d) (i) purchase money mortgages or other purchase
money Liens (excluding Capital Leases) upon any fixed or
capital assets hereafter acquired, or purchase money
mortgages or other purchase money Liens (excluding Capital
Leases), on any such assets hereafter acquired or existing
at the time of acquisition of such assets, whether or not
the related Indebtedness is recourse to Borrower, in each
case, to the extent that any such Lien does not exist on the
Closing Date, so long as
(x) such Lien does not extend to or cover
any other asset of Borrower or any of its Subsidiaries,
(y) such Lien secures the obligation to pay
the purchase price of such asset and interest thereon
and other customary obligations relating thereto only,
and
(z) the principal amount of the aggregate
Indebtedness incurred from and after the Closing Date
and secured by all such purchase money Liens (excluding
Capital Leases) does not exceed $10,000,000 in the
aggregate, and
(ii) Liens consisting of Capital Leases (including
any such Capital Lease permitted by Section 10.5(f) hereof
and other than any Capital Lease outstanding on the Closing
Date), upon any fixed or capital assets now owned or
hereafter acquired, incurred in any Fiscal Year and not
exceeding, or $10,000,000 in aggregate notional principal
amount for any Fiscal Year;
(e) at any time, Liens covering consigned Inventory
received by Borrower as part of a consignment arrangement
between Borrower and the vendor of such Inventory so long as
the most recent Borrowing Base Certificate delivered to the
Agent under Section 9.1(k) hereof prior to such time has set
forth the total dollar value of consigned Inventory of
Borrower;
(f) Liens on any property or asset, other than the
Collateral, acquired by Borrower or any Subsidiary of
Borrower which are in existence on the date of acquisition
of such property or asset and, in the case of a Person which
becomes a Subsidiary of Borrower, Liens on its property or
capital stock in existence on the date such Person becomes a
Subsidiary of Borrower;
(g) Liens on AWG Equity owned or hereafter acquired by
Borrower to secure Borrower's obligations to AWG under the
Supply Agreement and the Membership Sign-Up Documents;
(h) Liens consisting of the Use Restrictions; and
(i) Liens consisting of the First Offer Rights.
10.3. INDEBTEDNESS. Create, incur, assume or
suffer to exist, contingently or otherwise, any Indebtedness,
other than:
(a) Indebtedness under the Loan Documents;
(b) unsecured Current Liabilities incurred in the
ordinary course of business other than unsecured Current
Liabilities for Indebtedness for Borrowed Money or which are
evidenced by bonds, debentures, notes or other similar
instruments;
(c) Indebtedness for Borrowed Money and Contingent
Obligations set forth on Schedule 10.3(c) hereto;
(d) Indebtedness (not overdue) secured by Liens
permitted by Section 10.2(d) hereof;
(e) Indebtedness under the Senior Note Documents not
exceeding $120,000,000 in aggregate principal amount, less
any repayments of principal or redemptions of Senior Notes,
and any replacement or refinancing of such Indebtedness on
terms acceptable to the Agent in its sole discretion;
(f) guaranties constituting Permitted Transactions;
and
(g) Indebtedness in respect of obligations owed to AWG
by Borrower under the Supply Agreement and the Membership
Sign-Up Documents.
10.4. LOANS, INVESTMENTS AND GUARANTEES. Lend or
advance money or credit to any Person, or invest in (by capital
contribution, creation of Subsidiaries or otherwise), or purchase
or repurchase the stock or Indebtedness, or all or a substantial
part of the assets or properties, of any Person, or enter into
any exchange of securities with any Person, or guarantee, assume,
endorse or otherwise become responsible for (directly or
indirectly or by any instrument having the effect of assuring any
Person's payment or performance or capability) the Indebtedness,
performance, obligations, stock or dividends of any Person (each
of the foregoing, an "Investment"), or agree to do any of the
foregoing, other than:
(a) endorsement of negotiable instruments for deposit
or collection in the ordinary course of business;
(b) (i) Investments in securities issued, or that are
directly and fully guaranteed or insured, by the United
States Government or any agency or instrumentality thereof
having maturities of not more than six months from the date
of acquisition, (ii) time deposits and certificates of
deposit having maturities of not more than six months from
the date of acquisition of (x) any Lender or (y) any other
domestic commercial bank having capital and surplus in
excess of $100,000,000, the holding company of which has
outstanding commercial paper meeting the requirements
specified in clause (iv) below, (iii) repurchase agreements
with a term of not more than seven (7) days for underlying
securities of the types described in clauses (i) and (ii)
above (provided that the underlying securities of the type
described in clause (i) may have maturities of more than six
months from the date of acquisition) entered into with any
Lender or any other bank meeting the qualifications
specified in clause (ii) above or with securities dealers of
recognized national standing, provided that the terms of
such agreements comply with the guidelines set forth in the
Federal Financial Institutions Examination Council
Supervisory Policy Repurchase Agreements of Depositary
Institutions With Securities Dealers and Others as adopted
by the Comptroller of the Currency on October 31, 1985 (the
"Supervisory Policy"), and provided, further, that
possession or control of the underlying securities is
established as provided in the Supervisory Policy, and (iv)
commercial paper rated (as of the date of acquisition
thereof) at least A-1 or the equivalent thereof by Standard
& Poor's Corporation and P-1 or the equivalent thereof by
Moody's Investors Service, Inc. and in either case maturing
within six (6) months after the date of its acquisition;
(c) Investments representing stock or obligations
issued to Borrower or any of its Subsidiaries in settlement
of claims against any other Person by reason of a
composition or readjustment of debt or a reorganization of
any debtor of Borrower or such Subsidiary;
(d) Investments representing the Indebtedness of any
Person owing as a result of the sale by Borrower or any of
its Subsidiaries in the ordinary course of business of
products or services (on customary trade terms);
(e) Investments in the stock of any present
Subsidiary, but not any additional investments therein;
(f) Guaranties in favor of the Agent or in favor of
any one or more Lenders, in each case, of all or any portion
of Lender Debt;
(g) Guaranties by Parent or any Subsidiaries of the
"Obligations" (as such term is defined in the Indenture as
of the Closing Date);
(h) Investments outstanding on the Closing Date and
described on Schedule 10.4 hereto;
(i) (i) Investments in the Collection Accounts, the
Lock-Box Accounts, the Asset Sale Accounts, the
Concentration Account and the Special Accounts permitted
pursuant to Section 9.17(d) hereof, so long as the same are
maintained in accordance with Sections 9.17 and 10.15 hereof
and (ii) other deposit accounts maintained by Borrower or
Parent;
(j) Investments in Indebtedness for Borrowed Money
arising from any sale or disposition permitted under Section
10.5(a), (b) or (d) hereof;
(k) Investments in interest rate caps purchased by
Borrower;
(l) Investments that are Permitted Transactions;
(m) Investments in the form of cash deposits to secure
payments described in Section 10.2(b)(iii); provided, that
no such cash deposit shall exceed an amount equal to 55% of
the face amount of any Letter of Credit that the Borrower is
permitted to cause to be issued to support the applicable
payment, and provided, further, that the aggregate
outstanding amount of all such cash deposits shall not at
any time exceed $3,500,000;
(n) Investments consisting of (i) the purchase by
Borrower of 15 shares of AWG Membership Stock and (ii) AWG
members deposit certificates, patronage refund certificates
or similar types of AWG Equity received or earned by
Borrower from time to time based on Borrower's gross
purchases from AWG pursuant to the Supply Agreement or in
lieu of receiving cash rebates or refunds from AWG; and
(o) Investments consisting of (i) purchases of capital
stock, in an aggregate amount not exceeding $25,000, of
retail purchasing cooperatives (including, without
limitation, Farm Fresh, Inc., an Oklahoma retail dairy
cooperative ("Farm Fresh") in connection with becoming a
member of such cooperatives and (ii) additional capital
stock of such cooperatives which is received or earned by
Borrower, in an aggregate amount not exceeding $600,000 in
the case of Farm Fresh and $150,000 in the case of all other
cooperatives, based on Borrower's gross purchases from such
cooperatives or in lieu of receiving cash rebates or refunds
from such cooperatives; provided that, in each case, such
stock is purchased, received or earned in connection with a
supply agreement or arrangement between Borrower and such
cooperative which is on terms at least as favorable to
Borrower as the terms that could be obtained by Borrower in
a comparable transaction made on an arms' length basis with
another cooperative, wholesaler or supplier.
10.5. MERGER, SALE OF ASSETS, DISSOLUTION, ETC.
Without the prior written consent of the Required Lenders, (i)
enter into any transaction of merger or consolidation, (ii)
change its name, (iii) acquire all or a substantial portion of
the assets of any Person, or (iv) transfer, sell, assign, lease,
or otherwise dispose of all or any part of its properties or
assets, or any of its notes or Receivables, or any stock of
Borrower or any of its Subsidiaries, or wind up, liquidate or
dissolve, or agree to do any of the foregoing, except:
(a) sales, not exceeding $1,000,000 in aggregate book
value, in the ordinary course of business of assets and
properties of Borrower or a Subsidiary of Borrower no longer
necessary for the proper conduct of its business;
(b) sales or other dispositions by Borrower, Guarantor
or any Subsidiary thereof of worn out or obsolete property
(including motor vehicles and inventory) in the ordinary
course of business;
(c) sales of Inventory in the ordinary course of
business;
(d) sales or other dispositions (including leases) of
(i) parcels of land described on Schedule 10.5(d)(i) hereto
at a price with respect to each such parcel at least equal
to its fair market value, as determined by the board of
directors of Borrower in good faith, and (ii) sales or other
dispositions (including leases) of property or assets in
connection with the closure of any Designated Store,
including, without limitation, sales or other dispositions
(including leases) of all improvements, equipment, fixtures
and Inventory located at, or associated with, each
Designated Store, provided that the aggregate sale price for
the properties or assets located at, or associated with,
each Designated Store, is at least equal to the fair market
value (taken as a whole) of such properties or assets, as
determined by the board of directors of Borrower in good
faith.
(e) the abandonment of any assets and properties of
Borrower or any Subsidiary thereof which are no longer
useful in its business and cannot be sold;
(f) the sale of any asset (other than any Collateral)
pursuant to a transaction in which such asset is,
concurrently with such sale, leased by Borrower as lessee
for use in the business of Borrower;
(g) the exchange of assets leased pursuant to Capital
Leases for other assets ("exchanged assets") to be leased
pursuant to such leases (or other leases on substantially
the same terms), provided, however, that such exchanged
assets are acquired within forty-five days of the
disposition of such leased assets; and
(h) the AWG Sale (excluding any sales of assets to AWG
pursuant to the First Offer Rights).
10.6. DIVIDENDS, REDEMPTIONS AND OTHER PAYMENTS.
(a) Declare or pay any distributions or dividends on
any of its shares of capital stock of any class, or
purchase, redeem, cancel or acquire any of its capital stock
or capital stock of any of its Subsidiaries or any option,
warrant, or other right to acquire such capital stock, or
apply or set apart any of its assets therefor, or make any
distribution (by reduction of capital or otherwise) in
respect of any such shares of capital stock or any such
option, warrant or other right, except that in any Fiscal
Year of Borrower any Subsidiary of Borrower may pay
dividends to its direct parent; or
(b) make any optional prepayment or optional
redemption of or purchase or repurchase any Indebtedness for
Borrowed Money or give any notice thereof (other than (i)
the Advances and the Covenant Indebtedness described in
Schedule 10.6(b) hereto, (ii) prepayments up to an aggregate
of $1,000,000 of Capitalized Lease Obligations solely in
connection with the exchange of assets leased pursuant to
Capital Leases for other assets ("exchanged assets") to be
leased pursuant to such leases (provided, however, that such
exchanged assets are acquired within forty-five days of the
disposition of such leased assets), (iii) prepayments,
optional redemptions, purchases or repurchases of
Indebtedness for Borrowed Money relating to assets to be
purchased by Borrower, and thereafter sold to AWG, in
connection with the AWG Purchase Agreement, or in connection
with stores to be closed and (iv) the portion of the
$25,000,000 redemption of the Senior Notes to be made in
connection with the sale of assets made in connection with
the AWG Purchase Agreement in excess of the Note Net
Proceeds (as such term is defined in the Indenture) from the
sale of assets made in connection with the AWG Purchase
Agreement;
provided, however, that nothing contained in this Section
10.6 shall prohibit any Permitted Transaction.
10.7. TRANSACTIONS WITH AFFILIATES. Except for
transactions specifically required or permitted by the terms of
this Agreement, enter into or perform any transaction, including,
without limitation, the purchase, leasing, sale or exchange of
property or assets or the rendering of any service, with any
Affiliate of Parent, Borrower or any Subsidiary thereof, except
for any transaction which is in the ordinary course of its
business, and which transaction is, in the good faith
determination of the board of directors of Borrower, upon fair
and reasonable terms no less favorable to it than it could obtain
in a comparable arm's length transaction with a Person not an
Affiliate of Parent, Borrower or a Subsidiary of Borrower;
provided, however, that nothing contained in this Section 10.7
shall prohibit any Permitted Transaction or any other transaction
specifically permitted under this Agreement.
10.8. MANAGEMENT FEES AND OTHER PAYMENTS. Pay,
directly or indirectly, during any Fiscal Year of Parent, any
management, consulting or similar fees to, or make any other
payments of any kind to (a) Parent or (b) in respect of
employment, management, consulting, servicing or similar services
or in respect of any non-competition or similar agreement, any
officers, directors, general or limited partners of, or other
management of, or any stockholders of, Parent, Borrower or any
Affiliate of Parent or Borrower, in each case, other than any
payment constituting a Permitted Transaction.
10.9. COMPROMISE OF PLEDGED ACCOUNTS. Compromise
or adjust any of the Pledged Accounts (or extend the time for
payment thereof) or grant any discounts, allowances or credits
thereon, other than discounts of Pledged Accounts in the ordinary
course of business.
10.10. NONCOMPLIANCE WITH ERISA. (a) Engage in any
transaction in connection with which a Credit Party or any of its
ERISA Affiliates could be subject to either a material civil
penalty assessed pursuant to the provisions of Section 502(i) of
ERISA or a material tax imposed under the provisions of Section
4975 of the Code;
(b) adopt an amendment to any Pension Benefit Plan
requiring the provision of security under Section 307 of ERISA or
Section 401(a)(29) of the Code;
(c) terminate any Pension Benefit Plan in a "distress
termination" under Section 4041(c) of ERISA; or
(d) fail to make payment when due of all material
amounts which, under the provisions of any Pension Benefit Plan
or Multiemployer Plan, it is required to pay as contributions
thereto or, with respect to any Pension Benefit Plan, permit to
exist any "accumulated funding deficiency" (within the meaning of
Section 302 of ERISA and Section 412 of the Code).
10.11. AMENDMENTS AND MODIFICATIONS. (a) Except for
the amendments to the Senior Note Documents described in the
Solicitation Statement, directly or indirectly, amend, modify,
supplement, waive compliance with, seek a waiver under, or assent
to noncompliance with (i) any of the Senior Note Documents or any
document relating thereto, including, without limitation, any
security agreement providing collateral security therefor, if the
effect of any such amendment, waiver, modification, supplement,
or assent is to (u) change the definition of the term "Excess
Cash Flow" or any provision relating to prepayment therefrom, (v)
increase the interest rate or increase or add any fee or other
amount payable thereunder, (w) advance to an earlier date any
payment of principal (by prepayment or redemption or otherwise)
thereunder (other than the advance in the payment date relating
to the mandatory redemption of the Senior Notes from the net
proceeds of the AWG Sale, as described in the Solicitation
Statement), (x) add any covenant, make any covenant as in effect
on the Closing Date thereunder more burdensome, more difficult to
achieve or comply with or otherwise more adverse to Borrower, (y)
add any event of default or change in a manner more adverse to
Borrower any event of default as in effect on the Closing Date or
(z) make any term or provision thereof more adverse to Borrower
than those in effect on the Closing Date or (ii) any instrument,
document or agreement evidencing, creating, guaranteeing or
governing any Indebtedness for Borrowed Money permitted under
Section 10.3(d) hereof or entered into in connection therewith,
other than amendments, modifications, supplements or waivers of
Capital Leases but solely to the extent that the Agent has
received prior written notice of such amendments, modifications,
supplements or waivers and such amendments, modifications,
supplements or waivers are not adverse to the Borrower.
(b) Amend, modify or supplement the charter or by-laws
of Borrower, Parent or any of Borrower's Subsidiaries.
10.12. FISCAL YEAR. Change for financial reporting
purposes hereunder its Fiscal Year from a period of fifty-two
(52) or fifty-three (53) consecutive weeks beginning on the first
day following the end of the previous Fiscal Year and ending on
the Saturday on or closest to the next December 31.
10.13. CHANGE OF BUSINESS. Alter the nature of its
business or engage in any business other than the supermarket
business, except as contemplated in connection with the AWG
Purchase Agreement and the Supply Agreement.
10.14. NO NEGATIVE PLEDGES. Except under the Senior
Note Documents as in effect on the Closing Date, the Weingarten
Guaranty as in effect on the Closing Date, the Weingarten Lease
Supplement as in effect on the Closing Date, the Supply Agreement
as in effect on the Closing Date, the Membership Sign-Up
Documents as in effect on the Closing Date and the Sublease,
dated as of April 21, 1995, between Borrower and AWG relating to
the Edmond, Oklahoma store, as in effect on the Closing Date,
enter into or become subject to, directly or indirectly,
including, without limitation, as a non-party Subsidiary of a
party to any agreement,
(a) any agreement prohibiting or restricting, in any
manner (including, without limitation, by way of covenant,
representation or event of default),
(i) the incurrence, creation or assumption of any
Indebtedness, or any Lien upon any property of any Credit
Party other than, in the case of an agreement for a purchase
money financing (including a Capitalized Lease Obligation),
the asset subject to such financing,
(ii) the sale, disposition or pledge of any asset
of any Credit Party other than, in the case of an agreement
for a purchase money financing (including a Capitalized
Lease Obligation), the asset subject to such financing,
(iii) the incurrence or existence of any
Contingent Obligations of any Credit Party,
(iv) any investments of any Credit Party,
(v) any capital expenditures by any Credit Party,
(vi) any acquisition, merger or consolidation
involving any Credit Party,
(vii) any change in control of any Credit
Party, or
(viii) any amendment or supplement to or waiver
under this Agreement or any other Loan Document or other
document relating to the Lender Debt, or
(b) which provides that any default by any Credit
Party which is not a party to such agreement of any
obligation not arising under such agreement is a default
under such agreement.
10.15. COLLECTION AND CONCENTRATION ACCOUNTS;
LOCK-BOX ACCOUNTS. (a) Deposit, or cause to be deposited, into
any Collection Account any funds other than funds constituting
proceeds of Inventory or Pledged Accounts, miscellaneous income
not arising from Asset Sales, and as may be specified in a
Collection Account Agreement, funds from another Collection
Account at the time of such deposit; or
(b) deposit, or cause to be deposited, into any
Lock-Box Account any funds other than funds constituting
proceeds of Pledged Accounts at the time of such deposit; or
(c) deposit, or cause to be deposited, into any
Asset Sale Account any funds other than funds constituting
Gross Proceeds of Asset Sales (excluding those Gross
Proceeds of property which is not Collateral in respect of
which no prepayment is required under Section 3.1(b) hereof)
at the time of such deposit; or
(d) deposit, or cause to be deposited, into the
Concentration Account any funds other than funds from a
Collection Account, the Asset Sale Account or a Lock-Box
Account; or
(e) (i) withdraw or transfer funds from any
Lock-Box Account or Collection Account except to the
Concentration Account or as may be specified in a Collection
Account Agreement or (ii) withdraw or transfer funds from
any Asset Sale Account other than to
(1) prepay the Revolving Loan, or if no
Revolving Loan is then outstanding, provide Letter of Credit
Cash Collateral, or
(2) to the extent not required to be applied
under (1) above, the Concentration Account (to the extent
representing proceeds of Collateral) and thereafter as
otherwise determined by Borrower; or
(f) make any change in its instructions to
account debtors regarding payments to be made to any
Lock-Box Account; or
(g) suffer or permit, except with the prior
written consent of the Agent, any Collection Account,
Lock-Box Account, Asset Sale Account or the Concentration
Account to be closed or terminated, or the Collection
Account Agreement, Lock-Box Agreement, Asset Sale Account
Agreement or Concentration Account Agreement relating
thereto, as the case may be, to be terminated or no longer
in full force and effect.
10.16. TAX SHARING AGREEMENTS. Enter into any tax
sharing agreement pursuant to which (a) Borrower's provision for
taxes would be greater than such provision would be in the
absence of such agreement or (b) Borrower would not be promptly
reimbursed in the amount of any refunds received by the
consolidated group which are attributable to Borrower.
10.17. COVENANT OF PARENT. Parent will not engage
in any type of business activity other than (in each case,
subject to any restriction contained herein):
(a) maintenance of its corporate existence and
compliance with applicable law;
(b) the issuance of equity securities to any Person;
(c) the issuance of debt securities unsecured by any
assets of Parent;
(d) any guarantee of any obligation of Borrower or any
of its Subsidiaries not otherwise prohibited by this
Agreement, including, without limitation, any guarantee of
the obligations under this Agreement, the Weingarten
Guaranty and the Indenture;
(e) the registration of any of its securities under
the Securities Act, the Securities Exchange Act or any state
or local securities law;
(f) the listing of any securities with any securities
exchange, any interdealer quotation system or the National
Association of Securities Dealers, Inc. or its successor;
(g) the ownership and disposition of the common stock
of Borrower;
(h) accounting, legal, public relations, investor
relations, financial or management activities (including the
employment of employees, counsel, accountants, consultants,
bankers, advisors or other professionals) in connection
with, or which are reasonably incidental to, any of the
foregoing activities;
(i) entering into, performing its obligations and
exercising its rights under (i) this Agreement, (ii) the
Management Subscription Agreements, (iii) the Stock
Subscription Agreements, and (iv) to the extent required to
do so under the Weingarten Guaranty, a lease agreement
between the Parent and Weingarten/Oklahoma, Inc., including
in the event of the insolvency or bankruptcy of Borrower; or
(j) activities in connection with, required by, or
reasonably incidental to, any of the foregoing.
SECTION 11. DEFAULTS AND REMEDIES.
11.1. EVENTS OF DEFAULT. If any one or more of the
following events (herein called "Events of Default") shall occur
for any reason whatsoever (and whether such occurrence shall be
voluntary or involuntary or come about or be effected by
operation of law or pursuant to or in compliance with any
judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a) default shall be made in the due and punctual
payment of the principal of any of the Revolving Loan or the
reimbursement of any drawings under Letters of Credit, when
and as the same shall become due and payable whether
pursuant to Section 2 hereof, at maturity, by acceleration
or otherwise (other than any failure to reimburse a Letter
of Credit drawing to the extent that such failure is caused
by the failure of any Lender to fund its pro rata share of a
Advance in respect of which Borrower shall have satisfied
all conditions to the making of such Advance (other than
notice requirements and the delivery of a Borrower's
Certificate)); or
(b) default shall be made in the due and punctual
payment of any amount of interest on the Revolving Loan or
other Lender Debt or of any fee owing to any Lender or the
Agent pursuant to any of the Loan Documents, when and as
such amount of interest or fee shall become due and payable
and such default shall continue unremedied for five (5)
Business Days; or
(c) default shall be made in the due and punctual
payment of any expense owing to any Lender or the Agent
pursuant to any of the Loan Documents, when and as such
expense shall become due and payable or default shall be
made by any Credit Party in the performance or observance
of, or shall occur under, any covenant, agreement or
provision (other than as described in clause (a) or (b)
above) contained in this Agreement or any other Loan
Document or in any instrument or document evidencing or
creating any obligation, guaranty or Lien in favor of the
Agent or delivered to the Lenders or the Agent in connection
with or pursuant to this Agreement or any Lender Debt, and,
except in the case of the agreements and covenants contained
in Sections 9.1(a), 9.1(b), 9.1(c), 9.1(d), 9.1(h)(i),
9.1(k), 9.1(l), 9.1(m), 9.6, 9.7, 9.8, 9.14, 9.16, 9.17 and
Section 10 (as to each of which no notice or grace period,
except as otherwise set forth in this Section 11.1, shall
apply), continuance of such default for a period of thirty
(30) days after there has been given Written Notice of such
default to any of the Credit Parties by the Agent, or if
this Agreement or any other Loan Document or any such other
instrument or document shall terminate, be terminable or be
terminated or become void or unenforceable for any reason
whatsoever without the written consent of the Agent; or
(d) (i) one or more defaults shall occur in the
payment of any principal, interest or premium with respect
to any Indebtedness for Borrowed Money or any obligation
which is the substantive equivalent of Indebtedness for
Borrowed Money (including, without limitation, obligations
under conditional sales contracts, finance leases and the
like but excluding trade payables incurred in the ordinary
course of business) of which any Credit Party is principal,
guarantor, or other surety, outstanding in a principal
amount of at least $1,000,000 in the aggregate, or (ii) one
or more defaults shall occur under any agreement or
instrument under or pursuant to which any such Indebtedness
for Borrowed Money or obligation may have been issued,
evidenced, created, assumed, guaranteed or secured by any
Credit Party and, in the case of either clause (i) or (ii)
of this Subsection 11.1(d), such default shall continue for
more than the period of grace, if any, therein specified or
any holder of any such Indebtedness for Borrowed Money (or
any agent or trustee therefor) shall be entitled to take any
action to realize upon any Lien on any property securing
same, or (iii) any such Indebtedness for Borrowed Money or
obligation shall be declared due and payable prior to the
stated maturity thereof, provided, however, that (a) neither
a default or event of default by the primary obligor under,
nor the acceleration of, Indebtedness for Borrowed Money of
officers, employees or directors which has been guaranteed
by the Borrower as contemplated by clause (ii) of the
definition of Permitted Transactions shall constitute an
Event of Default or Default under this Section 11.1(d) and
(b) no default or event of default under, modification
(other than modifications that are, in the sole discretion
of the Agent, adverse to the Lenders) or termination of any
Indebtedness for Borrowed Money under, the Weingarten
Documents shall constitute an Event of Default under this
Section 11.1(d); or
(e) any representation, warranty or other statement of
fact given herein or in any writing, certificate, report or
statement at any time furnished by or on behalf of any
Credit Party to any Lender or the Agent pursuant to or in
connection with this Agreement (including, without
limitation, any Borrower's Certificate) or any other Loan
Document, shall be false or misleading in any material
respect when given and shall remain false and misleading in
any material respect; or
(f) any Credit Party shall (i) be unable to pay its
debts generally as they become due or is generally not
paying its debts as they become due; (ii) file a petition to
take advantage of any insolvency act; (iii) make an
assignment for the benefit of its creditors; (iv) commence a
proceeding for the appointment of a receiver, trustee,
liquidator or conservator of itself or of a whole or any
substantial part of its property; (v) file a petition or
answer seeking reorganization or arrangement or similar
relief under the Federal Bankruptcy Code or any other
applicable law or statute of the United States of America or
any state; or (vi) by appropriate proceedings of the board
of directors of any Credit Party or other governing body,
authorize the filing of any such petition, making of such
assignment or commencement of such a proceeding; or
(g) a court of competent jurisdiction shall enter an
order, judgment or decree appointing a custodian, receiver,
trustee, liquidator or conservator of any Credit Party or of
the whole or any substantial part of its properties, or
approve a petition filed against any Credit Party seeking
reorganization or arrangement or similar relief under the
Federal Bankruptcy Code or any other applicable law or
statute of the United States of America or any state; or if,
under the provisions of any other law for the relief or aid
of debtors, a court of competent jurisdiction shall assume
custody or control of any Credit Party or of the whole or
any substantial part of its properties; or if there is
commenced against any Credit Party any proceeding for any of
the foregoing relief and such proceeding or petition remains
undismissed for a period of sixty (60) days; or if any
Credit Party by any act indicates its consent to or approval
of any such proceeding or petition; or
(h) (i) a final judgment shall be rendered against
any Credit Party which, with other outstanding final
judgments against such Credit Party, to the extent not
covered by insurance, by itself or together with all other
such judgments, exceeds in the aggregate $1,000,000 and if,
within thirty (30) days after entry thereof, such judgment
shall not have been discharged or execution thereof stayed
pending appeal, or if, within thirty (30) days after the
expiration of any such stay, such judgment shall not have
been discharged; or (ii) any of the assets of a Credit Party
or any Subsidiary thereof shall be attached, seized, levied
upon or subject to an injunction, execution, writ or
distress warrant and shall remain unstayed or undismissed
for a period of thirty (30) days, which by itself or
together with all other attachments, seizures, levies,
injunctions, executions, writs or distress warrants against
properties of such Credit Party or Subsidiary remaining
unstayed or undismissed for a period of thirty (30) days is
for an amount in excess of $1,000,000; or
(i) (i) a Reportable Event shall have occurred with
respect to a Pension Benefit Plan;
(ii) any Credit Party or any ERISA Affiliate
thereof, or an administrator of any Pension Benefit Plan,
shall have filed a notice of intent to terminate a Pension
Benefit Plan in a "distress termination" under the
provisions of Section 4041(c) of ERISA;
(iii) any Credit Party or any ERISA Affiliate
thereof, or an administrator of a Pension Benefit Plan shall
have received a notice that the PBGC has instituted
proceedings to terminate (or appoint a trustee to
administer) a Pension Benefit Plan;
(iv) any other event or condition exists which, in
the reasonable opinion of the Required Lenders, constitutes
grounds under the provisions of Section 4042 of ERISA for
the termination of (or the appointment of a trustee to
administer) any Pension Benefit Plan by the PBGC;
(v) any Credit Party or any ERISA Affiliate has
incurred a liability under the provisions of Section 4063,
4064 or 4201 of ERISA;
(vi) any Person shall engage in any transaction in
connection with which any Credit Party will, in the
reasonable opinion of the Required Lenders, be subject to
either a civil penalty assessed pursuant to the provisions
of Section 502(i) of ERISA or a tax imposed under the
provisions of Section 4975 of the Code; or
(vii) any Credit Party or any ERISA Affiliate
fails to pay the full amount of any installment due under
Section 412(m) of the Code or any "accumulated funding
deficiency" (within the meaning of Section 302 of ERISA and
Section 412 of the Code) shall exist with respect to any
Pension Benefit Plan;
and in each case in clauses (i) through (vii) above, in the
reasonable opinion of the Required Lenders, such event or
condition, together with all other such events or
conditions, if any, will subject a Credit Party to any tax,
penalty or other liability which, in the aggregate, after
giving effect to any available indemnity or bond, will be in
excess of $1,000,000;
(j) a Change of Control shall occur; or
(k) a default by any Credit Party under any provision
of any Lease which, together with other Leases in default,
involve annual base rent of $1,000,000 or more, shall occur
and continue beyond any applicable grace period which would
permit the lessor thereunder to (i) terminate the Lease or
(ii) exercise any other rights under such Lease which would
have an adverse effect on the Lenders' interest in any
Collateral located on the premises in respect of such Lease;
provided, however, that no default or event of default under
or in respect of the Weingarten Lease, as supplemented,
shall constitute an Event of Default under this Section
11.1(k);
then, and in any such event and at any time thereafter, if such
or any other Event of Default shall then be continuing:
(A) either or both of the following actions
may be taken: (i) the Agent shall, at the direction of all
Lenders, (x) declare any obligation to lend hereunder
terminated, and/or (y) declare any obligation to issue
Letters of Credit hereunder terminated, whereupon such
obligation to make further Advances or issue Letters of
Credit hereunder shall terminate immediately and (ii) the
Agent may, at its option, or, the Agent shall, upon the
direction of the Required Lenders, declare any or all of the
Lender Debt to be due and payable, and the same shall
forthwith become due and payable without presentment,
demand, protest or notice of any kind, all of which are
hereby expressly waived, anything contained herein or in any
instrument evidencing the Lender Debt to the contrary
notwithstanding; provided, however, that notwithstanding the
above, if there shall occur an Event of Default under clause
(f) (other than clause (f) (i)) or (g) above, then the
obligation of the Lenders to lend and issue Letters of
Credit hereunder shall automatically terminate and any and
all of the Lender Debt shall be immediately due and payable
without any action by the Agent or any Lender;
(B) the Agent, at the direction of all
Lenders, shall have and may exercise all rights and remedies
of a secured party under the UCC in effect in the State of
New York at such time, whether or not applicable to the
affected Collateral, and otherwise, including, without
limitation, the right to foreclose the Liens granted herein
or in any of the Security Documents by any available
judicial procedure and/or to take possession of any or all
of the Collateral, the other security for the Lender Debt
and the books and records relating thereto, with or without
judicial process; for the purposes of the preceding
sentence, the Agent may enter upon any or all of the
premises where any of the Collateral, such other security or
books or records may be situated and take possession and
remove the same therefrom; and
(C) the Agent, at the direction of all
Lenders, shall have the right, in its sole discretion, to
determine which rights, Liens or remedies it shall at any
time pursue, relinquish, subordinate, modify or take any
other action with respect thereto, without in any way
modifying or affecting any of them or any of the Lenders'
rights hereunder; and any moneys, deposits, Pledged
Accounts, balances or other property which may come into any
Lender's or the Agent's hands at any time or in any manner,
may be retained by such Lender or the Agent and applied to
any of the Indebtedness of the Credit Parties to the Agent
and the Lenders hereunder.
11.2. SUITS FOR ENFORCEMENT. In case any one or
more Events of Default shall occur and be continuing, the Agent,
at the direction of all Lenders, on behalf of the Agent and the
Lenders may proceed to protect and enforce their rights or
remedies either by suit in equity or by action at law, or both,
whether for the specific performance of any covenant, agreement
or other provision contained herein or in any document or
instrument delivered in connection with or pursuant to this
Agreement or any other Loan Document, or to enforce the payment
of the Lender Debt or any other legal or equitable right or
remedy.
11.3. RIGHTS AND REMEDIES CUMULATIVE. No right or
remedy herein conferred upon the Lenders or the Agent is intended
to be exclusive of any other right or remedy contained herein or
in any instrument or document delivered in connection with or
pursuant to this Agreement or any other Loan Document, and every
such right or remedy shall be cumulative and shall be in addition
to every other such right or remedy contained herein and therein
or now or hereafter existing at law or in equity or by statute,
or otherwise.
11.4. RIGHTS AND REMEDIES NOT WAIVED. No course of
dealing between any of the Credit Parties and any Lender or the
Agent or any failure or delay on the part of any Lender or the
Agent in exercising any rights or remedies hereunder shall
operate as a waiver of any rights or remedies of the Lenders or
the Agent and no single or partial exercise of any rights or
remedies hereunder shall operate as a waiver or preclude the
exercise of any other rights or remedies hereunder or of the same
right or remedy on a future occasion.
11.5. APPLICATION OF PROCEEDS. After the
occurrence of an Event of Default and acceleration of the Lender
Debt, the proceeds of the Collateral, other collections received
from the Credit Parties and proceeds of property of Persons other
than the Credit Parties securing the Lender Debt and collections
from each Guaranty shall be applied by the Agent to payment of
the Lender Debt in the following order, unless a court of
competent jurisdiction shall otherwise direct:
(a) FIRST, to payment of all costs and expenses
of the Agent and the Lenders incurred in connection with the
preservation, collection and enforcement of the Lender Debt
or any Guaranties, or of any of the Liens granted to the
Agent pursuant to the Security Documents or otherwise,
including, without limitation, any amounts advanced by the
Agent or the Lenders to protect or preserve the Collateral;
(b) SECOND, to payment of that portion of the
Lender Debt constituting accrued and unpaid interest and
fees and indemnities payable under Section 2 hereof, ratably
amongst the Agent and the Lenders in accordance with the
proportion which the accrued interest and fees and
indemnities payable under Section 2 hereof constituting the
Lender Debt owing to the Agent and each such Lender at
such time bears to the aggregate amount of accrued interest
and fees and indemnities payable under Section 2 hereof
constituting the Lender Debt owing to the Agent and all of
the Lenders at such time until such interest, fees and
indemnities shall be paid in full;
(c) THIRD, to each Issuing Lender to reimburse
the Issuing Lender for that portion of any payments made by
it with respect to Letters of Credit for which a Lender, as
a participant in such Letter of Credit, failed to pay its
pro rata share thereof as required pursuant to Section 13.18
hereof;
(d) FOURTH, to payment of the principal of the
Lender Debt (excluding the aggregate undrawn amount of any
then outstanding Letters of Credit), ratably amongst the
Lenders in accordance with the proportion which the
principal amount of the Lender Debt owing to each such
Lender bears to the aggregate principal amount of the Lender
Debt (excluding the aggregate undrawn amount of any then
outstanding Letters of Credit) owing to all of the Lenders
until such principal of the Lender Debt shall be paid in
full;
(e) FIFTH, to the extent, with respect to Letters
of Credit, that the collateral, if any, held by the Agent as
security for the Letters of Credit outstanding at the time
of distribution hereunder is insufficient, to the Agent to
be held by the Agent as additional collateral therefor;
(f) SIXTH, to the payment of all other Lender
Debt, ratably amongst the Lenders in accordance with the
proportion which the amount of such other Lender Debt owing
to each such Lender bears to the aggregate principal amount
of such other Lender Debt owing to all of the Lenders until
such other Lender Debt shall be paid in full; and
(g) SEVENTH, the balance, if any, after all of
the Lender Debt has been satisfied, shall, except as
otherwise provided in the Security Documents, be deposited
by the Agent in an operating account of Borrower with the
Agent designated by Borrower, or paid over to such other
Person or Persons as may be required by law.
The Credit Parties acknowledge and agree that they
shall remain liable to the extent of any deficiency between the
amount of the proceeds of the Collateral and collections under
the Guaranties and the aggregate amount of the sums referred to
in the first through sixth clauses above.
SECTION 12. REPRESENTATIONS AND WARRANTIES.
Each of Parent and Borrower hereby represents and
warrants as follows (which representations and warranties shall
survive the execution and delivery of this Agreement and shall be
deemed to be incorporated in each officer's certificate submitted
to the Agent pursuant to Section 7.1 hereof, and shall be deemed
repeated and confirmed with respect to, and as of the date of,
each borrowing and each issuance of a Letter of Credit hereunder,
provided that any representation or warranty which is made as of
a specified date shall be deemed repeated as of such date):
12.1. CORPORATE STATUS. (a) Each Credit Party is
a duly organized and validly existing corporation in good
standing under the laws of the state of its incorporation with
perpetual corporate existence, and has the corporate power and
authority to own its properties and to transact the business in
which it is engaged or presently proposes to engage.
(b) Each Credit Party is qualified as a foreign
corporation and in good standing in each other jurisdiction in
which it owns or leases property of a nature, or transacts
business of a type, that would make such qualification necessary,
except where the failure to so qualify could not reasonably be
expected to have a Material Adverse Effect.
(c) The capital stock of each Credit Party is owned as
set forth on Schedule 12.1 hereto (which shall be updated from
time to time upon the formation of any new Subsidiary of Borrower
and delivered to the Agent and each Lender), which Schedule 12.1
correctly sets forth all Liens encumbering such equity interests.
(d) None of the Credit Parties has any Subsidiaries
except as set forth in Schedule 12.1 hereto (which shall be
updated from time to time upon the formation of any new
Subsidiary of Borrower and delivered to the Agent and each
Lender), which Schedule 12.1 correctly sets forth the name of
each such Subsidiary, its jurisdiction of incorporation and a
statement of the outstanding capitalization of each such
Subsidiary as of the date of delivery of such Schedule 12.1.
12.2. POWER AND AUTHORITY. Each of the Credit
Parties has the corporate power and authority to execute, deliver
and perform the terms and provisions of this Agreement and the
other Loan Documents, in each case, to which it is a party, and
all instruments and documents delivered by it pursuant thereto
and hereto and each of the Credit Parties has duly taken or
caused to be duly taken all necessary corporate action
(including, without limitation, the obtaining of any consent of
stockholders required by law or its certificate of incorporation
or bylaw), to authorize the execution, delivery and performance
of this Agreement and each other Loan Document, in each case, to
which it is a party, and the instruments and documents delivered
by it pursuant thereto and hereto. Each of this Agreement and
the other Loan Documents, and each of the other instruments and
documents executed and delivered by any of the Credit Parties,
pursuant hereto and thereto to which it is a party constitute a
legal, valid and binding obligation of such Person, and is
enforceable in accordance with its terms.
12.3. NO VIOLATION OF AGREEMENTS. None of the
Credit Parties is in violation of any provision of its
certificate or articles of incorporation, as the case may be, or
its bylaws or is in default under any lease, indenture, mortgage,
deed of trust, agreement or other instrument, in any case,
involving total payments to or total payments by, Borrower or
Parent of $1,000,000 or more, to which any of them is a party or
by which any of them may be bound, other than the Weingarten
Documents. Neither the execution and delivery of this Agreement,
the other Loan Documents or any of the instruments and documents
to be delivered pursuant hereto or thereto, the consummation of
the transactions herein and therein contemplated, compliance with
the provisions hereof or thereof, nor the execution, delivery and
performance by any Credit Party of this Agreement, the other Loan
Documents or any of such instruments or documents, nor compliance
with the provisions hereof or thereof, will violate any provision
of the certificate of incorporation or bylaws of any Credit Party
or any law or regulation, or any order or decree of any court or
governmental instrumentality, or will (a) conflict with, or
result in the breach of, or constitute a default or permit
termination under, any lease, indenture, mortgage, deed of trust,
agreement or other instrument, in any case, involving total
payments to or total payments by Borrower of $1,000,000 or more,
to which any Credit Party is a party or by which any of them or
their respective properties may be bound, or (b) except as
contemplated under this Agreement or under any other Loan
Document, result in the creation or imposition of any Lien upon
any property of any Credit Party.
12.4. NO LITIGATION. (a) Except as set forth in
Schedule 12.4 hereto, there are no actions, suits or proceedings
pending or, to the best knowledge of Borrower, threatened against
any of the Credit Parties or any of their respective Subsidiaries
before any court, arbitrator or governmental or administrative
body or agency which challenge the validity or propriety of the
transactions contemplated under this Agreement, the other Loan
Documents or the documents, instruments and agreements executed
or delivered in connection herewith, therewith or related
thereto, or which, if adversely determined, could reasonably be
expected to have a Material Adverse Effect.
(b) No Credit Party or any Subsidiary thereof is in
default in any material respect under any applicable statute,
rule, order, decree or regulation of any court, arbitrator or
governmental body or agency having jurisdiction over such Credit
Party or Subsidiary.
(c) No judgment, order, injunction or other similar
restraint with respect to any Credit Party or any Subsidiary
thereof exists which prohibits any of the other transactions
contemplated hereby or in connection herewith.
12.5. GOOD TITLE TO PROPERTIES. (a) Each Credit
Party and its Subsidiaries has good and marketable title to all
the material properties and assets reflected on its balance sheet
and valid leasehold interests in the property it leases,
including, without limitation, the Collateral, subject to no
Liens, except such as would be permitted under Section 10.2 of
this Agreement. All real property owned by or leased to any
Credit Party or any Subsidiary thereof is described on Schedule
12.5 annexed hereto.
(b) Each Lease described on Schedule 12.5 hereto is in
full force and effect, is valid and binding and is enforceable in
accordance with its terms. There exists no default by any Credit
Party, or to the best knowledge of Borrower by any other Person,
under any provision of any Lease which would permit the lessor
thereunder to terminate the Lease or to exercise any other rights
under such Lease which would have an adverse effect on the
Lenders' interest in any Collateral located on the premises in
respect of any Lease.
12.6. FINANCIAL STATEMENTS AND CONDITION. (a) The
audited financial statements previously delivered to Lenders
under the Existing Agreement present fairly in accordance with
GAAP (i) the financial position of Borrower as of the date of
such financial statements and (ii) the results of operations of
Borrower for such period. Borrower had no direct or indirect
contingent liabilities as of the date of such financial
statements which are not reserved for therein or which in
accordance with GAAP would have to be included in footnotes
thereto, such financial statements have been prepared in
accordance with GAAP applied on a basis consistently maintained
throughout the period involved, and there has been no material
adverse change in the business, operations, liabilities, assets,
properties, prospects or condition (financial or otherwise) of
Borrower since December 31, 1994. There has been no material
adverse change in the business, operations, liabilities, assets,
properties, prospects or condition (financial or otherwise) of
any Credit Party since December 31, 1994.
(b) The Agent has been furnished projections of the
future performance of Borrower and its Subsidiaries. The
projections and pro forma financial information contained in such
materials are based upon good faith estimates and assumptions
believed by Borrower to be reasonable at the time made, it being
recognized by the Lenders that such projections as to future
events are not to be viewed as facts and that actual results
during the period or periods covered by such projections may
differ from the projected results. No fact is known to any
Credit Party which could reasonably be expected to have a
Material Adverse Effect, that has not been set forth in the
financial statements referred to in this Section 12.6 or
disclosed herein or otherwise disclosed to the Agent in writing
prior to the most recent date on which the representation
contained in this Section 12.6 is made or repeated.
12.7. TRADEMARKS, PATENTS, ETC. Each of the Credit
Parties possesses all the trademarks, trade names, copyrights,
patents, licenses or rights in any thereof adequate for the
conduct of its business, without conflict with the rights of
others.
12.8. TAX LIABILITY. Each of the Credit Parties
and their respective Subsidiaries has filed all tax returns which
are required to be filed, and, except as otherwise permitted by
Section 9.2 hereof, has paid all taxes which have become due
pursuant to such returns or pursuant to any assessment received
by it.
12.9. GOVERNMENTAL ACTION. No action of, or filing
with, any governmental or public body or authority (other than
normal reporting requirements or filing as to Collateral under
the provisions of Section 5 hereof) is required to authorize, or
is otherwise required in connection with, the execution, delivery
or performance of this Agreement, the Security Documents, the
Guaranties, the Notes, the other Loan Documents, or any of the
instruments or documents to be delivered pursuant hereto or
thereto, except such as have been made or will be made as
contemplated by such agreements.
12.10. DISCLOSURE. Neither the Schedules hereto, nor
the financial statements referred to in Section 12.6 hereof, nor
the certificates, statements, reports or other documents
furnished to any Lender or the Agent by or on behalf of any of
the Credit Parties in connection herewith or in connection with
any transaction contemplated hereby, nor this Agreement or any
other Loan Document, at the time furnished, contained any untrue
statement of a material fact or omitted to state any material
fact (known to any such Person in the case of any document not
furnished by it) necessary in order to make the statements
contained herein or therein not misleading in light of the
circumstances in which the same were made.
12.11. REGULATION U. None of the Credit Parties or
any of their respective Subsidiaries owns any "margin stock" as
such term is defined in Regulation U, as amended (12 C.F.R. Part
221), of the Board. The proceeds of the borrowings made
hereunder will be used only for the purposes set forth in Section
8 hereof. None of the proceeds will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin
stock or for the purpose of reducing or retiring any Indebtedness
which was originally incurred to purchase or carry margin stock
or for any other purpose which might constitute the Revolving
Loan under this Agreement a "purpose credit" within the meaning
of said Regulation U or Regulation X (12 C.F.R. Part 224) of the
Board. None of the Credit Parties or any of their respective
Subsidiaries or any agent acting in its behalf has taken or will
take any action which might cause this Agreement or any of the
documents or instruments delivered pursuant hereto to violate any
regulation of the Board or to violate the Securities Exchange Act
or any applicable state securities laws.
12.12. INVESTMENT COMPANY. None of the Credit
Parties or any of their respective Subsidiaries is an "investment
company," or an "Affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company," as such
terms are defined in the Investment Company Act of 1940, as
amended (15 U.S.C. 80a-1, et seq.). None of the transactions
contemplated by this Agreement, the other Loan Documents or the
Senior Note Documents will violate such Act.
12.13. EMPLOYEE BENEFIT PLANS. (a) Except as set
forth on Schedule 12.13(a) hereto, no Reportable Event has
occurred with respect to any Pension Benefit Plan.
(b) No Credit Party has engaged in, or has any
knowledge of, any non-exempt prohibited transaction (within the
meaning of Section 406 of ERISA or Section 4975 of the Code) with
respect to any Employee Plan.
(c) All of the Employee Plans comply currently both as
to form (to the extent required by Section 401(b) of the Code)
and operation, in all material respects, with their terms (to the
extent consistent with the currently applicable provisions of the
Code) and with the provisions of ERISA and the Code, and all
other applicable laws, rules and regulations. A favorable
determination as to the qualification under Section 401(a) of the
Code has been made by the Internal Revenue Service with respect
to each Pension Benefit Plan and, to the best knowledge of each
of the Credit Parties, nothing has occurred since the date of
such determination that would adversely affect such
qualification.
(d) The amount for which the Credit Parties or any of
their respective ERISA Affiliates would be liable pursuant to the
provisions of Sections 4062, 4063 or 4064 of ERISA if each
Pension Benefit Plan were terminated as described therein could
not reasonably be expected to have a Material Adverse Effect.
(e) Except as set forth on Schedule 12.13(e) hereto,
none of the Credit Parties nor any of their respective ERISA
Affiliates is now, or has been during the preceding five years, a
contributing employer to a Multiemployer Plan. None of the
Credit Parties nor any of their respective ERISA Affiliates has:
(i) ceased operations at a facility so as to
become subject to the provisions of Section 4062(e) of
ERISA,
(ii) withdrawn as a substantial employer so
as to become subject to the provisions of Section 4063
of ERISA,
(iii) ceased making contributions to any
Pension Benefit Plan subject to the provisions of
Section 4064(a) of ERISA to which any of the Credit
Parties or any of their respective ERISA Affiliates
made contributions,
(iv) incurred or caused to occur a "complete
withdrawal" (within the meaning of Section 4203 of
ERISA) or a "partial withdrawal" (within the meaning of
Section 4205 of ERISA) from a Multiemployer Plan so as
to incur withdrawal liability under Section 4201 of
ERISA (without regard to subsequent reduction or waiver
of such liability under Sections 4207 or 4208 of ERISA)
which could reasonably be expected to have a Material
Adverse Effect, or
(v) been a party to any transaction or
agreement under which the provisions of Section 4204 of
ERISA were applicable and which could reasonably be
expected to result in liability for any Credit Party.
(f) The potential withdrawal liability to the
Multiemployer Plans, in the aggregate, (i) as of December 31,
1994, did not exceed $3,471,000 based on the most recent estimate
of such liability provided to the Credit Parties by each such
Plan and (ii) at any time thereafter, will not exceed an amount
that would have a Material Adverse Effect if imposed.
(g) (i) No notice of intent to terminate a Pension
Benefit Plan under Section 4041(c) of ERISA has been filed by any
of the Credit Parties or any of their respective ERISA
Affiliates, (ii) no Pension Benefit Plan been terminated,
pursuant to the provisions of Section 4041(e) of ERISA and (iii)
no Credit Party has any outstanding liability as a result of any
other termination of a Pension Benefit Plan subject to Title IV
of ERISA which could reasonably be expected to have a Material
Adverse Effect.
(h) The PBGC has not instituted proceedings to
terminate (or appoint a trustee to administer) a Pension Benefit
Plan, and no event has occurred or condition exists which could
reasonably be expected to constitute grounds under the provisions
of Section 4042 of ERISA for the termination of (or the
appointment of a trustee to administer) any such Plan.
(i) None of the Credit Parties has any reason to
believe that, with respect to each Pension Benefit Plan that is
subject to the provisions of Title I, Subtitle B, Part 3 of
ERISA, the funding method used in connection with such Plan is
not acceptable under ERISA, and the actuarial assumptions and
methods used in connection with funding such Pension Benefit Plan
are not reasonable. No such Pension Benefit Plan has incurred
any "accumulated funding deficiency" (as defined in Section 412
of the Code), whether or not waived.
(j) There are no actions, suits or claims pending
(other than routine claims for benefits) or, to the knowledge of
any of the Credit Parties, which could reasonably be expected to
be asserted, against any Employee Plan maintained for employees
or the assets of any such Employee Plan. No civil or criminal
action brought pursuant to the provisions of Title I, Subtitle B,
Part 5 of ERISA is pending or, to the best knowledge of any
Credit Party, threatened against any fiduciary or any Employee
Plan.
12.14. PERMITS, ETC. (a) Except as set forth in
Schedule 12.14(a) hereto, each Credit Party and each Subsidiary
thereof possesses all permits, licenses, approvals and consents
of Federal, state and local governments and regulatory
authorities required to conduct properly its business as
presently conducted and proposed to be conducted, except to the
extent failure to have any such permit, license, approval or
consent could not be reasonably be expected to have a Material
Adverse Effect.
(b) Each such permit, license, approval and consent is
and will be in full force and effect, and no event has occurred
which permits (or with the passage of time would permit) the
revocation or termination of any such permit, license, approval
or consent or the imposition of any restriction thereon of such
nature as may materially limit the operation of the business
covered thereby.
(c) All approvals, applications, filings,
registrations, consents or other actions required of any local,
state or Federal authority to enable each Credit Party and the
Subsidiaries thereof to exploit any such permit, license,
approval or consent has been obtained or made.
(d) No Credit Party nor any Subsidiary of any Credit
Party (i) is in violation of any duty or obligation required by
law or any rule or regulation applicable to the operation of any
of its businesses, which violation could reasonably be expected
to have a Material Adverse Effect, or (ii) has received any
notice from the granting body or any other governmental authority
with respect to any material breach of any covenant under, or any
material default with respect to, any such permit, license,
approval or consent.
(e) Before and upon giving effect to this Agreement,
the Notes and the other Loan Documents, no material default shall
have occurred and be continuing under any such permit, license,
approval or consent.
(f) All consents and approvals of, filings and
registrations with, and all other actions in respect of, all
governmental agencies, authorities or instrumentalities required
to maintain any such permit, license, approval or consent in full
force and effect prior to the scheduled date of expiration
thereof has been, or, prior to the time when required, will have
been, obtained, given, filed or taken and are or will be in full
force and effect.
(g) There is not pending or, to the best knowledge of
any Credit Party or Subsidiary thereof, threatened, any action to
revoke, cancel, suspend, modify or refuse to renew any such
permit, license, approval or consent and each business covered by
each such permit, license, approval or consent is being operated
in compliance with such permit, license, approval or consent.
(h) There is not now issued or outstanding or, to the
best knowledge of any Credit Party or Subsidiary thereof,
threatened any notice of any hearing, violation or complaint
against such Credit Party or Subsidiary thereof with respect to
any such permit, license, approval or consent and no Credit Party
or Subsidiary thereof has any knowledge that any Person intends
to contest the renewal of any such permit, license, approval or
consent.
12.15. ENVIRONMENTAL STATUS. (a) Except as
described on Schedule 12.15 hereto, none of the Credit Parties or
any of their respective Subsidiaries is in violation of any
applicable Environmental Law, nor are any of the Credit Parties
or any of their respective Subsidiaries under investigation or
under review by any governmental agency or authority with respect
to compliance therewith or with respect to the generation, use,
treatment, storage or Release of any Hazardous Material in any
case, except as to any such violation, investigation or review
existing as of the Closing Date, which could reasonably be
expected to have a Material Adverse Effect, involve criminal
penalties or could expose the Agent or any Lender to civil or
criminal penalties.
(b) None of the Credit Parties nor any of their
respective Subsidiaries has any liability or contingent or
potential liability in connection with the past generation, use,
treatment, storage, or Release of any Hazardous Material in any
case, (i) which exists as of the Closing Date and which could
reasonably be expected to cause cost and expense to Borrower and
its Subsidiaries of in excess of $500,000 individually or in the
aggregate, except as set forth on Schedule 12.15 hereto, or (ii)
which does not exist on the Closing Date and which (x) was
required to be disclosed to the Agent under Section 9.1(n) hereof
and which has not been disclosed in writing to the Agent or (y)
could reasonably be expected to have a Material Adverse Effect,
involve criminal penalties or could expose the Agent or any
Lender to civil or criminal penalties.
(c) Except as described on Schedule 12.15 hereto,
there is no Hazardous Material that may pose any material risk to
safety, health, or the environment, or that is defined or
regulated as a hazardous, toxic or dangerous waste or other
substance under any Environmental Law on, under or about any
property owned, leased or operated by any Credit Party or any
Subsidiary thereof except any such Hazardous Material that is
required in the ordinary course of Borrower's business as
conducted as of the Closing Date and that is adequately protected
or contained in accordance with applicable Environmental Laws,
and there has been no Release of any such Hazardous Material on,
under or about such property in any case, (i) which exists as of
the Closing Date and which could reasonably be expected to cause
cost and expense to Borrower and its Subsidiaries of in excess of
$500,000 individually or in the aggregate, except as set forth on
Schedule 12.15 hereto, or (ii) which does not exist on the
Closing Date and which (x) was required to be disclosed to the
Agent under Section 9.1(n) hereof and which has not been
disclosed in writing to the Agent or (y) could reasonably be
expected to have a Material Adverse Effect, involve criminal
penalties or could expose the Agent or any Lender to civil or
criminal penalties.
12.16. SOLVENCY. Each Credit Party is, individually
and together with its Subsidiaries, Solvent.
12.17 VALIDITY OF RECEIVABLES. (a) Except with
respect to Receivables, the aggregate amount of which would not
constitute a material percentage of all Receivables at any given
time and Receivables the failure of which to satisfy the
following requirements, would not have a material adverse effect
on the value of the Collateral, each Receivable existing on the
Closing Date is, and each future Receivable will be, at the time
of its creation, a genuine obligation enforceable against the
account debtor thereof in accordance with its terms, and
represents an undisputed and bona fide indebtedness owing to
Borrower by an account debtor, without defense, setoff or
counterclaim, free and clear of all Liens other than the security
interest in favor of the Agent under the Security Documents; and
no payment has been received with respect to any Receivable and
no Receivable is subject to any credit or extension or agreement
therefor.
(b) No Receivable is evidenced by any note, draft,
trade acceptance or other instrument for the payment of money.
12.18. COLLECTION AND CONCENTRATION ACCOUNTS;
LOCK-BOX ACCOUNTS. (a) The names and addresses of all the banks
holding one or more Collection Accounts and/or Lock-Box Accounts
and/or Asset Sale Accounts, and the name and address of the bank
holding the Concentration Account, together with the account
numbers of the Collection Accounts, the Lock-Box Accounts, the
Asset Sale Accounts and the Concentration Account at such banks,
are specified in Schedule 12.18(a) hereto, as amended from time
to time with the prior written consent of the Agent.
(b) The names and addresses of all the banks holding
one or more Special Accounts, together with the account numbers
of such Special Accounts at such banks, are specified in Schedule
12.18(b) hereto, as amended from time to time with the prior
written consent of the Agent.
12.19. PARENT. Parent neither owns nor controls
access to (a) inventory or accounts or (b) books or records
relating to Collateral of Borrower.
SECTION 13. MISCELLANEOUS.
13.1. COLLECTION COSTS. If an Event of Default
occurs, the Credit Parties, jointly and severally, shall pay all
court costs and costs of collection, including, without
limitation, reasonable fees, expenses and disbursements of
counsel employed in connection with any and all collection
efforts. The attorney's fees arising from such services,
including those of any appellate proceedings, and all reasonable
out-of-pocket expenses, costs, charges and other fees incurred by
such counsel in any way or with respect to or arising out of or
in connection with or relating to any of the events or actions
described in this Section 13.1 shall be payable by the Credit
Parties to the Agent or the Lenders, as the case may be, on
demand, and shall be additional obligations under this Agreement.
Without limiting the generality of the foregoing, such expenses,
costs, charges and fees may include: recording costs, appraisal
costs, paralegal fees, costs and expenses; accountants' fees,
costs and expenses; court costs and expenses; photocopying and
duplicating expenses; court reporter fees, costs and expenses;
long distance telephone charges; air express charges; telegram
charges; telecopier charges; secretarial overtime charges; and
expenses for travel, lodging and food paid or incurred in
connection with the performance of such legal services.
13.2. AMENDMENT, MODIFICATION AND WAIVER. (a) No
amendment, modification or waiver of any provision of the Loan
Documents and no consent by the Agent or the Lenders to any
departure therefrom by any of the Credit Parties shall be
effective unless such amendment, modification or waiver shall be
in writing and signed by a duly authorized officer of the
appropriate Credit Party, the Agent, the Lenders or the Required
Lenders, as the case may be (as more fully described below), and
the same shall then be effective only for the period and on the
conditions and for the specific instances and purposes specified
in such writing.
(b) No notice to or demand on any of the Credit
Parties in any case shall entitle any of the Credit Parties to
any other or further notice or demand in similar or other
circumstances.
(c) Any term or provision of any Loan Document may be
amended or modified and the observance of any provision of any
Loan Document may be waived with the written consent of the
Credit Parties being a party to such Loan Document and the
Required Lenders; provided, however, that no such amendment,
modification or waiver shall, without the prior written consent
of the Agent, amend or waive any of the provisions of Section
2.12, 3.7, 13.13, 13.14 or 13.15 hereof, or otherwise change any
of the rights or obligations of the Agent under any of the Loan
Documents; provided, further, that no amendment, modification or
waiver of any of the provisions of Section 4, 13.14, 13.15 or
13.18 hereof shall be effective without the prior written consent
of the Agent and, in the case of any amendment to any of the
provisions of (x) Section 4 or Section 13.18 hereof or (y) any
other provision relating to Letters of Credit which adversely
affects any Issuing Lender, with the prior written consent of
such Issuing Lender; provided, further, that no such amendment,
modification or waiver shall, without the prior written consent
of all of the Lenders:
(i) extend the due date of the principal of or
interest on the Revolving Loan or any other amount payable
hereunder, or portion thereof, change the rate of interest
on the Revolving Loan, or portion thereof, or reduce the
amount of any principal payable on the Revolving Loan, or
portion thereof, or reduce the fees payable to the Lenders
hereunder or extend the time of payment thereof;
(ii) substitute, discharge, release or surrender
any material portion of the Collateral or use any portion of
the Collateral to secure any Indebtedness for Borrowed Money
other than Lender Debt, except as permitted in such Loan
Document (it being understood that a release of Collateral
under circumstances where the Net Proceeds of the
disposition of such Collateral are applied to Lender Debt
shall not require unanimous consent, but shall be governed
under Section 10.5 and Section 3.1(b) hereof) or amend the
terms of any Guaranty or release any such Guaranty;
(iii) except as provided in Section 13.14
hereof, change the dollar amount or percentage of the
Revolving Commitment of any Lender;
(iv) modify any provision of this Section 13.2 or
any other provision which expressly requires the consent of
all Lenders;
(v) amend the definition of "Required Lenders";
(vi) amend Section 11.5 hereof; or
(vii) amend or modify the definition of
"Borrowing Base" to increase the percentage advance rates
against the Net Amount of Eligible Inventory.
The Agent, the Lenders other than NBC, and the Credit Parties
hereby agree to cooperate with NBC to effectuate the provisions
of Section 13.14 hereof, including, without limitation, with
respect to the execution of one or more amendments of this
Agreement or any other Loan Document.
13.3. NEW YORK LAW. THIS AGREEMENT AND THE NOTES
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF
LAW PRINCIPLES THEREOF.
13.4. NOTICES. All notices, requests, demands or
other communications provided for herein shall be in writing
(unless otherwise expressly provided herein) and shall be deemed
to have been given (a) if by registered or certified mail, return
receipt requested, four (4) Business Days following the date when
sent, (b) if by telex, when sent and answerback received, (c) if
by overnight courier, when received, (d) if by telecopier, when
sent, or (e) if personally delivered or delivered by messenger,
when receipted for, in each case, addressed to the appropriate
Credit Party or to the Agent or any Lender, at its respective
office under its name on the signature pages of this Agreement
and to the attention of the Person so designated, or to such
Person or address as any party hereto shall designate to the
other from time to time in writing forwarded in like manner.
13.5. FEES AND EXPENSES. Whether or not any
Advances or other financial accommodations are made hereunder,
Borrower shall pay all expenses paid or incurred by the Agent in
connection with the transactions contemplated hereunder including
but not limited to appraisal fees, syndication fees, title
insurance fees, audit fees, recording fees, computer fees,
duplication fees, telephone and telecopier fees, travel and
transportation fees, search and filing fees, and the reasonable
fees and expenses of Hughes & Luce, L.L.P., special counsel to
the Agent, and all local counsel to the Agent. Borrower shall
also pay all reasonable costs and expenses paid or incurred by
the Agent, at any time, or any Lender, after the occurrence of a
Default, in connection with any waivers, amendments,
modifications, extensions, renewals, internal assessments,
renegotiations or "work-outs" of this Agreement or any instrument
or document delivered in connection herewith and any consents or
approvals provided hereunder or otherwise requested by any Credit
Party. Without limiting the generality of the foregoing, such
expenses, costs, charges and fees may include: recording costs,
appraisal costs, paralegal fees, costs and expenses; accountants'
or other consultants' fees, costs and expenses; photocopying and
duplicating expenses; long distance telephone charges; air
express charges; telegram charges; telecopier charges;
secretarial overtime charges; and expenses for travel, lodging
and food paid or incurred in connection with the performance of
such legal services.
13.6. STAMP OR OTHER TAX. Should any stamp or
excise tax become payable in respect of this Agreement, any Note,
any other Loan Document, the Lender Debt, the Collateral or any
modification hereof or thereof, each of the Credit Parties shall
pay, the liability of which is joint and several, the same
(including interest and penalties, if any) and shall hold the
Lenders and the Agent harmless with respect thereto.
13.7. WAIVER OF JURY TRIAL AND SET-OFF. IN ANY
LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR
ARISING OUT OF THIS AGREEMENT, ANY OF THE ADVANCES, ANY OF THE
NOTES OR OTHER LOAN DOCUMENTS, THE COLLATERAL, OR ANY INSTRUMENT
OR DOCUMENT DELIVERED PURSUANT TO THIS AGREEMENT, OR THE
VALIDITY, PROTECTION, INTERPRETATION, COLLECTION OR ENFORCEMENT
THEREOF, OR ANY OTHER CLAIM OR DISPUTE HOWSOEVER ARISING, BETWEEN
ANY CREDIT PARTIES AND THE LENDERS OR THE AGENT, EACH OF THE
CREDIT PARTIES HEREBY, TO THE FULLEST EXTENT IT MAY EFFECTIVELY
DO SO, (A) WAIVES THE RIGHT TO INTERPOSE ANY SETOFF, RECOUPMENT,
COUNTERCLAIM OR CROSS-CLAIM IN CONNECTION WITH ANY SUCH
LITIGATION, IRRESPECTIVE OF THE NATURE OF SUCH SETOFF,
RECOUPMENT, COUNTERCLAIM OR CROSS-CLAIM, UNLESS SUCH SETOFF,
RECOUPMENT, COUNTERCLAIM OR CROSS-CLAIM COULD NOT, BY REASON OF
ANY APPLICABLE FEDERAL OR STATE PROCEDURAL LAWS, BE INTERPOSED,
PLEADED OR ALLEGED IN ANY OTHER ACTION AND (B) WAIVES TRIAL BY
JURY IN CONNECTION WITH ANY SUCH LITIGATION. EACH OF THE CREDIT
PARTIES AGREES THAT THIS SECTION 13.7 IS A SPECIFIC AND MATERIAL
ASPECT OF THIS AGREEMENT AND ACKNOWLEDGES THAT THE LENDERS WOULD
NOT EXTEND TO BORROWER ANY FINANCIAL ACCOMMODATIONS HEREUNDER IF
THIS SECTION 13.7 WERE NOT PART OF THIS AGREEMENT.
13.8. TERMINATION OF AGREEMENT. (a) Subject to
the Agent's and Borrower's rights to terminate this Agreement
earlier as set forth below, Lender's commitment to make Advances
hereunder shall be for an original period extending from the
Closing Date through February 25, 1997; provided, however, all
Lenders, in their sole discretion, may extend this Agreement
through March 31, 1998, upon notice by Agent to Borrower by no
later January 15, 1997.
(b) The Agent on behalf of the Lenders shall have the
right to, upon the direction of the Required Lenders, terminate
this Agreement immediately, at any time, during the continuance
of an Event of Default under Section 11 hereof.
(c) Borrower may terminate this Agreement at any time
when no Letters of Credit are outstanding upon not less than five
(5) days' prior Written Notice (which shall be irrevocable) to
the Agent (which shall promptly notify each Lender thereof in
writing or by telephone confirming immediately in writing) of
termination and by prepaying the Revolving Loan in whole,
terminating the Revolving Credit Facility Commitment and paying
all other amounts payable hereunder and all applicable penalties,
fees, charges, premiums and costs, all as provided hereunder.
(d) The termination of this Agreement shall not affect
any rights of the Credit Parties, the Lenders or the Agent or any
obligation of any of the Credit Parties, the Lenders or the Agent
to the others, arising on or prior to the effective date of such
termination, and the provisions hereof shall continue to be fully
operative until all Lender Debt and obligations of the Credit
Parties and their Subsidiaries hereunder incurred on or prior to
such termination have been paid and performed in full.
(e) Upon the giving of notice of termination of this
Agreement, all Lender Debt shall be due and payable on the date
of termination specified in such notice.
(f) The Liens and rights granted to the Agent on
behalf of the Agent and the Lenders hereunder shall continue in
full force and effect, notwithstanding the termination of this
Agreement, until all of the Lender Debt has been paid in full.
(g) All representations, warranties, covenants,
waivers and agreements contained herein shall survive termination
hereof unless otherwise provided.
(h) Notwithstanding the foregoing, if after receipt of
any payment of all or any part of the Lender Debt, the Agent or
any Lender is for any reason compelled to surrender such payment
to any Person or entity because such payment is determined to be
void or voidable as a preference, an impermissible setoff, a
diversion of trust funds or for any other reason, this Agreement
shall continue in full force, and the Credit Parties, as
appropriate, shall be liable to, and shall indemnify and hold
such Lender or the Agent harmless for, the amount of such payment
surrendered until such Lender or the Agent, as the case may be,
shall have been finally and irrevocably paid in full. The
provisions of the foregoing sentence shall be and remain
effective notwithstanding any contrary action which may have been
taken by the Lenders or the Agent in reliance upon such payment,
and any such contrary action so taken shall be without prejudice
to the Lenders' or the Agent's rights under this Agreement and
shall be deemed to have been conditioned upon such payment having
become final and irrevocable.
(i) All indemnities provided for under this Agreement
and the other Loan Documents, including, without limitation,
under Sections 2.12 and 13.5, shall survive the termination of
this Agreement and the payment in full of the Lender Debt.
13.9. CAPTIONS. The captions of the various
sections and paragraphs of this Agreement have been inserted only
for the purposes of convenience; such captions are not a part of
this Agreement and shall not be deemed in any manner to modify,
explain, enlarge or restrict any of the provisions of this
Agreement.
13.10. LIEN; SETOFF BY LENDERS. Each of the Credit
Parties hereby grants to each Lender and the Agent a continuing
Lien for all Lender Debt upon any and all monies, securities and
other property of such Credit Party and the proceeds thereof, now
or hereafter held or received by, or in transit to, such Lender
or the Agent from or for such Credit Party, whether for
safekeeping, custody, pledge, transmission, collection or
otherwise, and also upon any and all deposits (general or
special) and credits of such Credit Party with, and any and all
claims of such Credit Party against, any Lender or the Agent, at
any time existing (which shall constitute part of the
Collateral). Upon the occurrence and during the continuance of
an Event of Default, each Lender and the Agent is hereby
authorized at any time and from time to time, without notice to
such Credit Party, to setoff, appropriate and apply any or all
items hereinabove referred to against all Lender Debt. After any
such setoff by the Agent or any Lender, the Agent or such Lender
shall notify the Credit Party against which it setoff of the
exercise by it of such right of setoff, provided that the failure
of the Agent or such Lender to so notify such Credit Party shall
not affect the validity of such setoff or create a cause of
action against the Agent or such Lender.
13.11. PAYMENT DUE ON NON-BUSINESS DAY. Whenever any
payment to be made hereunder or under any other Loan Document or
on the Revolving Loan shall be stated to be due and payable, or
whenever the last day of any Interest Period would otherwise
occur, on a day which is not a Business Day, such payment shall
be made and the last day of such Interest Period shall occur on
the next succeeding Business Day and such extension of time shall
in such case be included in computing interest on such payment;
provided, however, if such extension would cause a payment of a
Eurodollar Advance to be made, or the last day of such Interest
Period for a Eurodollar Advance to occur, in the next following
calendar month, such payment shall be made and the last day of
such Interest Period shall occur on the next preceding Business
Day.
13.12. SERVICE OF PROCESS. Each of the Credit
Parties hereby irrevocably consents to the jurisdiction of the
courts of the State of New York and of any Federal Court located
in the City of New York in connection with any action or
proceeding arising out of or relating to this Agreement, any
Guaranty, any of the Security Documents, all or any of the Lender
Debt, the Collateral, all or any of the Notes, any other Loan
Document or any document or instrument delivered pursuant to this
Agreement. In any such litigation, each of the Credit Parties
waives, to the fullest extent it may effectively do so, personal
service of any summons, complaint or other process and agrees
that the service thereof may be made by certified or registered
mail directed to any Credit Party at its address set forth in
Section 13.4 hereof. Within thirty (30) days after such mailing,
such Credit Party shall appear, answer or move in respect of such
summons, complaint or other process. Should such Credit Party
fail to appear or answer within said thirty (30)-day period, such
Credit Party shall be deemed in default and judgment may be
entered by the Agent on behalf of the Lenders against such Credit
Party for the amount as demanded in any summons, complaint or
other process so served. Each of the Credit Parties hereby
waives, to the fullest extent it may effectively do so, the
defenses of forum non conveniens and improper venue.
13.13. NATIONAL BANK OF CANADA, AS AGENT. (a) Each
Lender hereby irrevocably designates and appoints NBC as the
agent of such Lender under each of the Loan Documents in which
NBC is named as agent, and each such Lender hereby irrevocably
authorizes NBC, as the agent for such Lender, to take such action
on behalf of each Lender under the provisions of the Loan
Documents and to exercise such powers and perform such duties as
are expressly delegated to the Agent by the terms of the Loan
Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the
contrary elsewhere in the Loan Documents, the Agent shall not
have any duties or responsibilities except those expressly set
forth in the Loan Documents, nor any fiduciary relationship with
any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be
read into the Loan Documents or otherwise exist against the
Agent.
(b) The Agent may execute any of its duties under the
Loan Documents by or through agents or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters
pertaining to such duties. The Agent shall not be responsible
for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.
(c) Neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates
shall be (i) liable for any action lawfully taken or omitted to
be taken by it or such Person under or in connection with the
Loan Documents (except for its or such Person's own gross
negligence or willful misconduct), or (ii) responsible in any
manner to any Lender for any recitals, statements,
representations or warranties made by any of the Credit Parties
or any of their respective Subsidiaries or any officer thereof
contained in the Loan Documents or in any certificate, report,
statement or other document referred to or provided for in, or
received by the Agent under or in connection with the Loan
Documents, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of the Loan Documents
or for any failure of any of the Credit Parties or any of their
respective Subsidiaries to perform its obligations under the Loan
Documents. The Agent shall not be under any obligation to any
Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions
of, the Loan Documents, or to inspect the properties, books or
records of any of the Credit Parties or any of their respective
Subsidiaries.
(d) The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any Note, writing, resolution,
notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order
or other document or conversation reasonably believed by it to be
genuine and correct and to have been signed, sent or made by the
proper Person or Persons and upon advice and statements of legal
counsel (including, without limitation, counsel to the Credit
Parties), independent accountants and other experts selected by
the Agent. The Agent may deem and treat the payee of any Note as
the owner thereof for all purposes unless a Written Notice of
assignment, negotiation or transfer thereof shall have been filed
with the Agent.
(e) The Agent shall be fully justified in failing or
refusing to take any action under the Loan Documents unless it
shall first receive such advice or concurrence of the Required
Lenders as it deems appropriate or it shall first be indemnified
to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases
be fully protected in acting, or in refraining from acting, under
the Loan Documents in accordance with a request of the Required
Lenders (or where required by the terms of this Agreement, the
Lenders), and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders and all
future holders of the Notes.
(f) The Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default
hereunder unless the Agent shall have received notice from a
Lender or one of the Credit Parties referring to this Agreement,
describing such Default or Event of Default and stating that such
notice is a "notice of default". In the event that the Agent
receives such a notice, or if the Agent has actual knowledge of
the occurrence of any Default or Event of Default, the Agent
shall give prompt notice thereof to the Lenders. The Agent shall
take such action with respect to such Default or Event of Default
as shall be reasonably directed by the Required Lenders; provided
that, unless and until the Agent shall have received such
directions, the Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to
such Default or Event of Default as it shall deem advisable in
the best interests of the Lenders.
(g) Each Lender expressly acknowledges that neither
the Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates has made any representations or
warranties to it and that no act by the Agent hereinafter taken,
including any review of the affairs of any of the Credit Parties
or any of their respective Subsidiaries, shall be deemed to
constitute any representation or warranty by the Agent to any
Lender. Each Lender represents to the Agent that it has,
independently and without reliance upon the Agent or any other
Lender, and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation
into the business, operations, property, financial and other
condition and creditworthiness of each of the Credit Parties and
their respective Subsidiaries, and made its own decision to make
its loans hereunder and enter into this Agreement. Each Lender
also represents that it will, independently and without reliance
upon the Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and
decisions in taking or not taking action under this Agreement,
and to make such investigation as it deems necessary to inform
itself as to the business, operations, liabilities, assets,
properties and condition (financial or otherwise) and
creditworthiness of each of the Credit Parties and their
respective Subsidiaries. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by
the Agent hereunder, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other
information concerning the business, operations, property,
financial and other condition or creditworthiness of any of the
Credit Parties or any of their respective Subsidiaries which may
come into the possession of the Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates.
(h) Each Lender agrees to indemnify the Agent in its
capacity as such (to the extent not reimbursed by the Credit
Parties and without limiting the obligation of the Credit Parties
to do so), ratably according to such Lender's pro rata share of
the Revolving Credit Facility Commitment from and against any and
all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of
any kind whatsoever which may at any time (including without
limitation at any time following the payment of the Notes) be
imposed on, incurred by or asserted against the Agent in any way
relating to or arising out of the Loan Documents or the
transactions contemplated thereby or any action taken or omitted
by the Agent under or in connection with any of the foregoing;
provided that no Lender shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Agent's gross negligence or
willful misconduct. The agreements in this Section 13.13(h)
shall survive the payment of the Notes and the Lender Debt.
(i) The Agent and its Affiliates may make loans to,
accept deposits from and generally engage in any kind of business
with the Credit Parties as though the Agent were not the Agent
hereunder. With respect to its pro rata share of the Advances
made or renewed by it and any Note issued to it, the Agent shall
have the same rights and powers under this Agreement as any
Lender and may exercise the same as though it were not the Agent.
The terms "Lender" and "Lenders" shall include the Agent in its
individual capacity.
(j) The Agent may resign as Agent upon thirty (30)
days' Written Notice to the Lenders. In the event that the Agent
shall enter receivership, then the Lenders (other than the Lender
which is an acting as Agent, if applicable) may by unanimous
consent of such Lenders, remove the Agent under this Agreement.
If the Agent shall give a notice of its intention to resign as
Agent under this Agreement or the Agent shall be removed, then
the Required Lenders shall, within such thirty (30)-day period,
appoint a successor agent for the Lenders, whereupon such
successor agent shall succeed to the rights, powers and duties of
the Agent, and the term "Agent" shall mean such successor agent
effective upon its appointment, and the former Agent's rights,
powers and duties as Agent shall be terminated, without any other
or further act or deed on the part of such former Agent or any of
the parties to this Agreement or any holders of the Notes. After
any retiring Agent's resignation hereunder as Agent or any
Agent's removal, the provisions of this Section 13.13 shall inure
to its benefit as to any actions taken or omitted to be taken by
it while it was Agent under this Agreement.
(k) Each Lender agrees that (i) all obligations of the
Credit Parties to each Lender under this Agreement and under the
Notes rank pari passu in all respects with each other, and (ii)
if any Lender shall, through the exercise of a right of banker's
lien, setoff, counterclaim or otherwise, obtain payment with
respect to any portion of the Revolving Loan which results in its
receiving more than its pro rata share of the aggregate payments
in respect of the Revolving Loan, then (A) such Lender shall be
deemed to have simultaneously purchased from each of the other
Lenders a share in the portion of the Revolving Loan advanced by
the other Lenders so that the portion of the Revolving Loan
advanced by each Lender shall be pro rata and (B) such other
adjustments shall be made from time to time as shall be equitable
to ensure that all Lenders share such payments ratably. If all
or any portion of any such excess payment is thereafter recovered
from the Lender which received the same, the purchase provided in
this Section 13.13(k) shall be deemed to have been rescinded to
the extent of such recovery, without interest. Each of the
Credit Parties expressly consents to the foregoing arrangements
and agrees that each Lender so purchasing a portion of the
Revolving Loan advanced by another Lender may exercise all rights
of payment (including, without limitation, all rights of setoff,
banker's lien or counterclaim) with respect to such portion as
fully as if such Lender were the direct holder of such portion.
(l) The Agent agrees that it shall promptly deliver to
each Lender copies of all notices, demands, statements and
communications which the Agent receives from or gives to the
Credit Parties, except for routine notices of payments due under
the Loan Documents and other miscellaneous notices, demands,
statements and communications, which are not material to the
interests of any Lender. The Agent shall have no liability to
any Lender, nor shall a cause of action arise against the Agent,
as a result of the failure of the Agent to deliver to any Lender
any such notice, demand, statement or communication.
(m) The Agent shall endeavor to exercise the same care
in administering the Loan Documents as it exercises with respect
to similar transactions in which it is involved and where no
other co-lenders or participants are involved; provided that the
liability of the Agent for failing to do so shall be limited as
provided in the preceding paragraphs of this Section 13.13.
(n) (i) If at any time or times it shall be necessary
or prudent in order to conform to any law of any jurisdiction in
which any of the Collateral shall be located, or the Agent shall
be advised by counsel, that it is so necessary or prudent in the
interest of the Lenders, or the Agent shall deem it necessary for
its own protection in the performance of its duties hereunder,
the Agent and (to the extent required by the Agent) each Credit
Party shall execute and deliver all instruments and agreements
reasonably necessary or proper to constitute another bank or
trust company, or one or more individuals approved by the Agent
(to the extent necessary or requested by the Agent) (each an
"Approved Delegate"), either to act as co-agent or co-agents or
trustee of all or any of the Collateral, jointly with the Agent
originally named herein or any successor, or to act as separate
agent or agents or trustee of any such Collateral. In the event
that any of the Credit Parties shall not have joined in the
execution of such instruments or agreements with any Approved
Delegate within thirty (30) Business Days after the receipt of a
written request from the Agent to do so, or in case an Event of
Default shall have occurred and be continuing, each of the Credit
Parties hereby irrevocably appoints the Agent as its agent and
attorney to act for it under the foregoing provisions of this
Section 13.13(n) in such contingency.
(ii) Every separate agent and every co-agent and
every trustee, other than any agent which may be appointed
as successor to the Agent, shall, to the extent permitted by
applicable law, be appointed to act and be such, subject to
the following provisions and conditions, namely:
(A) except as otherwise provided
herein, all rights, remedies, powers, duties and
obligations conferred upon, reserved or imposed upon
the Agent in respect of the custody, control and
management of moneys, paper or securities shall be
exercised solely by the Agent hereunder;
(B) all rights, remedies, powers,
duties and obligations conferred upon, reserved to or
imposed upon the Agent hereunder shall be conferred,
reserved or imposed and exercised or performed by the
Agent except to the extent that the instrument
appointing such separate agent or separate agents or
co-agent or co-agents or trustee shall otherwise
provide, and except to the extent that under any law of
any jurisdiction in which any particular act or acts
are to be performed, the Agent shall be incompetent or
unqualified to perform such act or acts, in which event
such rights, remedies, powers, duties and obligations
shall be exercised and performed by such separate
agents or co-agent or co-agents to the extent
specifically directed in writing by the Agent;
(C) no power given hereby to, or which
it is provided hereby may be exercised by, any such
separate agent or separate agents or co-agent or
co-agents or trustee shall be exercised hereunder by
such separate agent or separate agents or co-agent or
co-agents or trustee except jointly with, or with the
consent in writing of, the Agent, anything herein
contained to the contrary notwithstanding;
(D) no separate agent or co-agent or
trustee constituted under this Section 13.13(n) shall
be personally liable by reason of any act or omission
of any other agent, separate agent, co-agent or trustee
hereunder; and
(E) the Agent, at any time by an
instrument in writing, executed by it, may accept the
resignation of or remove any such separate agent or
co-agent or trustee, and in that case, by an instrument
in writing executed by the Agent and the Credit Parties
(to the extent necessary or requested by the Agent)
jointly, may appoint a successor to such separate agent
or co-agent or trustee, as the case may be, anything
herein contained to the contrary notwithstanding. In
the event that any of the Credit Parties shall not have
joined in the execution of any such instrument with a
Person or entity within ten (10) days after the receipt
of a written request from the Agent to do so, or in the
case an Event of Default shall have occurred and be
continuing, the Agent, acting alone, may appoint a
successor and may execute any instrument in connection
therewith, and the Credit Parties hereby irrevocably
appoint the Agent its agent and attorney to act for it
in such connection in either or such contingencies.
13.14. SALE, ASSIGNMENT OR TRANSFER TO ADDITIONAL
LENDERS. (a) Without limiting any additional rights which NBC
may have as a Lender under Section 13.13 hereof, NBC may:
(i) in its individual capacity, from time to time
after consultation with Borrower, sell, assign or transfer
one or more portions of its pro rata share of any Advance
and/or the Revolving Credit Facility Commitment to any one
or more banks or other financial institutions of its
choosing, in its sole discretion (the "Additional Lenders")
without the consent of any other party; provided; however,
if Heller Financial, Inc. ("Heller") is a Lender at such
time hereunder, NBC must obtain the consent of Heller to any
sale, assignment or transfer by NBC of a portion of its pro
rata share of the Revolving Credit Facility Commitment if,
after giving effect thereto, NBC's pro rata share of the
Revolving Credit Facility Commitment would be less then
Heller's pro rata share of the Revolving Credit Facility
Commitment; and
(ii) in its capacity as Agent and in accordance
with Section 13.2 hereof, execute one or more amendments of
this Agreement or any other Loan Document so that each
Additional Lender shall be a named party thereof with all of
the rights and obligations of any Lender hereunder (to the
extent sold, assigned or transferred by NBC).
(b) Each Credit Party hereby agrees that it shall
execute and deliver, at the request of NBC:
(i) if part of NBC's pro rata share of any Revolving
Loan and/or the Revolving Credit Facility Commitment is sold,
assigned or transferred to any Lender or Additional Lender, to
the extent requested by NBC, one or more Notes to the order of
NBC and such Lender and/or Additional Lender to evidence the
portions of the Revolving Loan and/or the Revolving Credit
Facility Commitment retained and sold; and
(ii) any amendment to any Loan Document to
effectuate this Section 13.14 (without limiting the right of
the Agent as set forth in Section 13.2 to execute an
amendment in connection with this Section 13.14). The terms
"sale," "assignment" or "transfer" shall include a novation
or assumption by any Additional Lender of all or any portion
of the obligations and commitments of NBC hereunder.
13.15. BENEFIT OF AGREEMENT. (a) This Agreement
shall be binding upon and inure to the benefit of the parties
hereto, and their respective successors and assigns, except that
the obligation of the Lenders to make Advances and other
financial accommodations hereunder shall not inure to the benefit
of any successors and assigns of Borrower.
(b) No Credit Party may assign or transfer any of its
interest hereunder without the prior written consent of the
Lenders. Each of the Lenders may make, carry or transfer its pro
rata share of the Revolving Loan at, to or for the account of any
of its branch offices or the office of one or more of its
Affiliates.
(c) Each Lender may, with the prior written consent of
the Agent, which consent shall not be unreasonably withheld, and
after consultation with Borrower, assign its rights and delegate
its obligations under this Agreement and may, with the prior
written consent of the Agent, assign, sell, or without the
consent of the Agent grant participation in, all or any part of
its pro rata share of the Revolving Loan or its Revolving
Commitment or any other interest herein or in its Notes to
another bank or other entity, in which event:
(i) in the case of an assignment, upon notice
thereof by such Lender to Borrower, the assignee shall have,
to the extent of such assignment (unless otherwise provided
therein), the same rights and benefits as it would have if
it were such Lender hereunder and the holder of a Note, and
(ii) in the case of a participation, the
participant shall not have any rights under this Agreement
or any Note or any other Loan Document (the participant's
rights against such Lender in respect of such participation
to be those set forth in the agreement executed by such
Lender in favor of the participant relating thereto which
agreement shall not, in any event, grant to the participant
the right of consent as to any matter under the Loan
Documents other than those which require the consent of all
Lenders).
(d) Each Lender may furnish any information concerning
the Credit Parties and their respective Subsidiaries in the
possession of such Lender from time to time to assignees and
participants (including prospective assignees and participants).
(e) In the event that any Lender shall assign or sell
its Notes, such Lender shall at the time of such assignment or
sale give Written Notice to the Agent of the name and address of
the assignee (including the name of the account officer if
applicable), and shall make all endorsements to the grid schedule
attached thereto to make the information contained therein
accurate.
(f) Each Credit Party hereby agrees that it shall
execute and deliver, at the request of: any Lender if part of
such Lender's pro rata share of any Revolving Loan and/or the
Revolving Credit Facility Commitment is sold, assigned or
transferred, to the extent requested by such Lender, one or more
Notes to the order of such Lender and/or purchasers, assignees or
transferees to evidence the portions of the Revolving Loan and/or
the Revolving Credit Facility Commitment retained and sold.
13.16. COUNTERPARTS; FACSIMILE SIGNATURE. (a) This
Agreement may be executed by the parties hereto individually or
in any combination, in one or more counterparts, each of which
shall be an original and all of which shall together constitute
one and the same agreement.
(b) Delivery of an executed counterpart of a signature
page to this Agreement by telecopier shall be effective as
delivery of a manually executed counterpart of this Agreement.
13.17. INVALIDITY. Whenever possible, each provision
of this Agreement shall be interpreted in such manner as to be
effective and valid under all applicable laws and regulations.
If, however, any provision of this Agreement shall be prohibited
by or invalid under any such law or regulation, it shall be
deemed modified to conform to the minimum requirements of such
law or regulation, or, if for any reason it is not deemed so
modified, it shall be ineffective and invalid only to the extent
of such prohibition or invalidity without the remainder thereof
or any of the remaining provisions of this Agreement being
prohibited or invalid.
13.18. LETTER OF CREDIT PARTICIPATIONS AND CERTAIN
PAYMENTS. (a) Each Lender agrees that upon any acceleration of
the Lender Debt as provided in Section 11 hereof or upon the
occurrence of any Event of Default under clause (f) or (g) of
Section 11.1 hereof, each such Lender shall and hereby does,
without any further action, take as of the date of issuance of
each Letter of Credit an undivided participating interest from
each Issuing Lender in all Letters of Credit outstanding at such
time and the Letter of Credit Agreements relating thereto in a
percentage equal to such Lender's pro rata share of the Revolving
Credit Facility Commitment. Each Lender shall hold the relevant
Issuing Lender harmless and indemnify such Issuing Lender for
such Lender's pro rata share of any drawing under any Letter of
Credit in which it has taken such an undivided participating
interest under this Section 13.18.
(b) The obligation of each Lender to make payments to
an Issuing Lender with respect to any Letter of Credit after
having taken a participation therein as provided above shall be
irrevocable and shall not be subject to any qualification or
exception whatsoever and shall be made in accordance with the
terms and conditions of this Agreement under all circumstances,
including without limitation any of the following circumstances:
(i) any lack of validity or enforceability of
this Agreement, any of the Loan Documents, and all other
documents and instruments executed by any of the Credit
Parties or any Affiliate thereof and delivered to the Agent,
NBC, the Issuing Lender of a Letter of Credit or any other
Lender in connection with or related to the Revolving Loan,
the Letters of Credit or the Collateral, together with any
and all amendments, extensions, renewals and modifications
thereof;
(ii) the existence of any claim, set-off, defense
or other right which Borrower may have at any time against
NBC or any claim, set-off, defense or other right which any
Credit Party may have at any time against the beneficiary
named in any Letter of Credit or any transferee of any
Letter of Credit (or any person for whom any such transferee
may be acting), the Agent, NBC, the Issuing Lender of a
Letter of Credit, any other Lender or any other person,
whether in connection with this Agreement, a Letter of
Credit, the transactions contemplated herein or any
unrelated transactions (including any underlying
transactions between any Credit Party or any Subsidiary
thereof and the beneficiary named in a Letter of Credit);
(iii) any draft, certificate or any other
document presented under any Letter of Credit proving to be
forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any
respect;
(iv) the surrender or impairment of any security
for the performance or observance of any of the terms of any
of this Agreement or any of the Loan Documents; or
(v) the occurrence of any Default or Event of
Default.
13.19. DISCLOSURE OF FINANCIAL INFORMATION. Each
Lender shall hold all non-public information obtained pursuant to
the requirements of this Agreement which has been identified as
such by Borrower in writing in accordance with its customary
procedure for handling confidential information of this nature
and in accordance with safe and sound banking practices;
provided, however, that the Agent and each Lender are each hereby
authorized to deliver a copy of any financial statement or any
other information relating to the business, operations or
financial condition of Borrower and each of its Subsidiaries
which may be furnished to it hereunder or otherwise, to any other
Lender, any court, regulatory body or agency having jurisdiction
over the Agent or such Lender, to any Person which shall, or
shall have any right or obligation to, succeed to all or any part
of the Agent's or such Lender's interest in any of the Advances,
the Letters of Credit, this Agreement and any Collateral or to
any actual or prospective participant therein or assignee
thereof.
13.20. AMENDMENT AND RESTATEMENT. This Agreement is
given in amendment, restatement and renewal (and not in
extinguishment or satisfaction) of the Revolving Credit Agreement
dated as of March 4, 1990, made by and among Borrower, Parent,
the Existing Lenders and UBS, individually and as agent for the
Existing Lenders. With respect to matters relating to the period
prior to the Closing Date, all provisions of the Existing
Agreement are hereby satisfied and, except as modified herein,
confirmed and shall remain in full force and effect.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers
thereunto duly authorized as of the day and year first above
written.
HOMELAND STORES, INC.
By:
______________________________
_
Name:
_______________________________
Title:
_______________________________
Address:
400 N.E. 36th Street
Oklahoma City, Oklahoma 73125
Attention:
________________________
Telecopier No.: (405) 557-5559
HOMELAND HOLDING CORPORATION
By:
______________________________
_
Name:
_______________________________
Title:
_______________________________
Address:
400 N.E. 36th Street
Oklahoma City, Oklahoma 73125
Attention:
________________________
Telecopier No.: (405) 557-5559
NATIONAL BANK OF CANADA,
as Agent
By:
______________________________
_
Name:
Larry L. Sears
Title: Group Vice President
By:
_____________________________
Name: David Schreiber
Title: Assistant Vice President
Address:
2121 San Jacinto, Suite 1850
Dallas, Texas 75201
Attention: David Schreiber
Telecopier No. (214) 871-2015
Lenders:
NATIONAL BANK OF CANADA
By:
______________________________
_
Name:
Larry L. Sears
Title: Group Vice President
By:
_____________________________
Name:
David Schreiber
Title: Assistant Vice President
Address:
2121 San Jacinto, Suite 1850
Dallas, Texas 75201
Attention: David Schreiber
Telecopier No. (214) 871-2015
HELLER FINANCIAL, INC.
By:
______________________________
_
Name:
_______________________________
Title:
_______________________________
Address:
c/o Heller Business Credit-
Eastern Region
101 Park Avenue, 10th Floor
New York, New York 10178
Attention: HBC Portfolio
Manager
Telecopier No.: (212) 880-
2060
U.S. $25,000,000
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
Dated as of April 21 , 1995
Among
NATIONAL BANK OF CANADA,
individually, and in its capacity as agent,
CERTAIN OTHER LENDERS AND
FINANCIAL INSTITUTIONS PARTIES HERETO,
and
HOMELAND STORES, INC.
and
HOMELAND HOLDING CORPORATION
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS AND ACCOUNTING TERMS.
1.1. CERTAIN DEFINED TERMS 1
1.2. TERMS DEFINED IN THE UNIFORM COMMERCIAL CODE 25
1.3. COMPUTATION OF TIME PERIODS 25
1.4. ACCOUNTING TERMS 25
1.5. OTHER PROVISIONS REGARDING DEFINITIONS 26
SECTION 2. AMOUNT AND TERMS.
2.1. ADVANCES 26
2.2. REVOLVING CREDIT FACILITY COMMITMENT AND
BORROWING LIMIT 27
2.3. NOTES 27
2.4. NOTICE OF BORROWING; BORROWER'S CERTIFICATE 28
2.5. TERMINATION OF REVOLVING CREDIT
FACILITY COMMITMENT 29
2.6. INTEREST 29
2.7. CONVERSION OF BORROWINGS; RENEWALS 30
2.8. COMPUTATION OF INTEREST 31
2.9. INCREASED COSTS 31
2.10. CHANGE IN LAW RENDERING EURODOLLAR
ADVANCES UNLAWFUL 33
2.11. EURODOLLAR AVAILABILITY 34
2.12. INDEMNITIES 34
2.13. DISBURSEMENT 37
2.14. AGENT'S AVAILABILITY ASSUMPTION 37
2.15. PRO RATA TREATMENT AND PAYMENTS 38
2.16. SHARING OF PAYMENTS, ETC. 39
2.17. EXCESS OPERATING FUNDS 39
2.18. EURODOLLAR OFFICES 40
2.19. TELEPHONIC NOTICE . 40
2.20. MAXIMUM INTEREST 40
2.21. COMPOSITION AND APPLICATION OF
PAYMENTS AND COLLECTIONS 40
SECTION 3. PAYMENTS, PREPAYMENTS AND REDUCTIONS.
3.1. MANDATORY PAYMENTS AND REDUCTIONS 41
3.2. PAYMENT FROM INSURANCE PROCEEDS 41
3.3. OPTIONAL PREPAYMENTS 42
3.4. PROCEDURES FOR PAYMENT 42
3.5. COMMITMENT FEE 45
3.6. PREPAYMENT FEE 45
3.7. AGENCY FEE 45
3.8. CLOSING FEE 45
3.9. PREPAYMENTS TO INCLUDE INTEREST 45
SECTION 4. LETTERS OF CREDIT.
4.1. LETTERS OF CREDIT 45
4.2. LETTER OF CREDIT FEES 47
4.3. INDEMNITY 47
4.4. REIMBURSEMENT OF CERTAIN COSTS 48
4.5. PAYMENT OF DRAFTS 49
4.6. ISSUING LENDER'S ACTIONS 50
SECTION 5. SECURITY AND GUARANTY.
5.1. SECURITY AGREEMENTS 50
5.2. FILING AND RECORDING 51
5.3. INTERPRETATION OF SECURITY DOCUMENTS 52
5.4. GUARANTEES 52
SECTION 6. CONDITIONS PRECEDENT TO INITIAL
BORROWING AND ISSUANCE OF LETTERS
OF CREDIT.
6.1. OPINIONS OF COUNSEL 52
6.2. AUDIT RESULTS 53
6.3. MATERIAL ADVERSE CHANGE 53
6.4. QUALIFICATION 53
6.5. SECURITY DOCUMENTS AND INSTRUMENTS 53
6.6. EVIDENCE OF INSURANCE 53
6.7. EXAMINATION OF BOOKS 53
6.8. CORPORATE STRUCTURE 53
6.9. NOTES 53
6.10. FEES TO AGENT AND LENDERS 54
6.11. MANAGEMENT; OWNERSHIP 54
6.12. DISBURSEMENT AUTHORIZATION 54
6.13. LITIGATION 54
6.14. COMPLIANCE WITH LAW 54
6.15. PROCEEDINGS; RECEIPT OF DOCUMENTS 54
6.16. PROJECTIONS, ETC. 56
6.17. APPROVAL OF SENIOR NOTES;
CAPITALIZATION, ETC. 56
6.18. COLLECTION AND CONCENTRATION ACCOUNTS;
LOCK-BOX ACCOUNTS; ASSET SALE ACCOUNTS,
CASH MANAGEMENT AGREEMENT 57
6.19. NO MARKET DISRUPTION 57
6.20. LANDLORDS' LIENS 57
6.21. UCC SEARCH RESULTS 57
6.22. AWG PURCHASE 58
6.23. CLOSING DATE BORROWING BASE CERTIFICATE 58
SECTION 7. CONDITIONS PRECEDENT TO EACH BORROWING AND
ISSUANCE OF LETTERS OF CREDIT.
7.1. BORROWER'S CERTIFICATE; OTHERS . 58
7.2. WRITTEN NOTICE . 59
SECTION 8. USE OF PROCEEDS. 59
SECTION 9. AFFIRMATIVE COVENANTS.
9.1. FINANCIAL STATEMENTS AND OTHER INFORMATION . 59
9.2. TAXES AND CLAIMS 64
9.3. INSURANCE . 65
9.4. BOOKS AND RESERVES . 65
9.5. PROPERTIES IN GOOD CONDITION . 65
9.6. MAINTENANCE OF EXISTENCE, ETC. . 66
9.7. INSPECTION BY THE AGENT . 66
9.8. PAY INDEBTEDNESS TO LENDERS AND
PERFORM OTHER COVENANTS . 66
9.9. NOTICE OF DEFAULT . 66
9.10. REPORTING OF MISREPRESENTATIONS . 66
9.11. COMPLIANCE WITH LAWS, ETC. . 67
9.12. ERISA . 67
9.13. FURTHER ASSURANCES . 68
9.14. AUDITS AND APPRAISALS . 68
9.15. ENVIRONMENTAL MATTERS, ETC. . 69
9.16. FINANCIAL COVENANTS . 70
9.17. COLLECTION AND CONCENTRATION ACCOUNTS;
LOCK-BOX ACCOUNTS . 71
9.18. ENVIRONMENTAL REPORTS . 74
9.19. SPECIAL COUNSEL F . 74
9.20. VERIFICATION OF LIENS . 74
9.21. PROCEEDS FROM AWG SALE . 74
SECTION 10. NEGATIVE COVENANTS.
10.1. CAPITAL EXPENDITURES . 74
10.2. LIENS . 75
10.3. INDEBTEDNESS . 77
10.4. LOANS, INVESTMENTS AND GUARANTEES . 78
10.5. MERGER, SALE OF ASSETS, DISSOLUTION, ETC. 80
10.6. DIVIDENDS, REDEMPTIONS AND OTHER PAYMENTS 81
10.7. TRANSACTIONS WITH AFFILIATES 81
10.8. MANAGEMENT FEES AND OTHER PAYMENTS . 82
10.9. COMPROMISE OF PLEDGED ACCOUNTS . 82
10.10. NONCOMPLIANCE WITH ERISA 82
10.11. AMENDMENTS AND MODIFICATIONS . 82
10.12. FISCAL YEAR 83
10.13. CHANGE OF BUSINESS 83
10.14. NO NEGATIVE PLEDGES 83
10.15. COLLECTION AND CONCENTRATION ACCOUNTS;
LOCK-BOX ACCOUNTS 84
10.16. TAX SHARING AGREEMENTS 85
10.17. COVENANT OF PARENT 85
SECTION 11. DEFAULTS AND REMEDIES.
11.1. EVENTS OF DEFAULT 86
11.2. SUITS FOR ENFORCEMENT 90
11.3. RIGHTS AND REMEDIES CUMULATIVE . 90
11.4. RIGHTS AND REMEDIES NOT WAIVED . 91
11.5. APPLICATION OF PROCEEDS 91
SECTION 12. REPRESENTATIONS AND WARRANTIES.
12.1. CORPORATE STATUS 92
12.2. POWER AND AUTHORITY 93
12.3. NO VIOLATION OF AGREEMENTS 93
12.4. NO LITIGATION 93
12.5. GOOD TITLE TO PROPERTIES 94
12.6. FINANCIAL STATEMENTS AND CONDITION . 94
12.7. TRADEMARKS, PATENTS, ETC. . 95
12.8. TAX LIABILITY 95
12.9. GOVERNMENTAL ACTION 95
12.10. DISCLOSURE 95
12.11. REGULATION U 95
12.12. INVESTMENT COMPANY 96
12.13. EMPLOYEE BENEFIT PLANS 96
12.14. PERMITS, ETC. 97
12.15. ENVIRONMENTAL STATUS 98
12.16. SOLVENCY 99
12.17. VALIDITY OF RECEIVABLES 99
12.18. COLLECTION AND CONCENTRATION ACCOUNTS;
LOCK-BOX ACCOUNTS 100
12.19. PARENT 100
SECTION 13. MISCELLANEOUS.
13.1. COLLECTION COSTS 100
13.2. AMENDMENT, MODIFICATION AND WAIVER 100
13.3. NEW YORK LAW 102
13.4. NOTICES 102
13.5. FEES AND EXPENSES 102
13.6. STAMP OR OTHER TAX 103
13.7. WAIVER OF JURY TRIAL AND SET-OFF . 103
13.8. TERMINATION OF AGREEMENT 103
13.9. CAPTIONS 104
13.10. LIEN; SETOFF BY LENDERS 104
13.11. PAYMENT DUE ON NON-BUSINESS DAY . 105
13.12. SERVICE OF PROCESS 105
13.13. NATIONAL BANK OF CANADA, AS AGENT 105
13.14. SALE, ASSIGNMENT OR TRANSFER
TO ADDITIONAL LENDERS 110
13.15. BENEFIT OF AGREEMENT 111
13.16. COUNTERPARTS; FACSIMILE SIGNATURE . 112
13.17. INVALIDITY 112
13.18. LETTER OF CREDIT PARTICIPATIONS AND
CERTAIN PAYMENTS 112
13.19. DISCLOSURE OF FINANCIAL INFORMATION . 113
13.20. AMENDMENT AND RESTATEMENT . 114
SCHEDULES AND EXHIBITS
Schedule 1.1(A) - Lenders, Commitments, and Initial
Eurodollar Offices
Schedule 1.1(B) - Loans and Advances to Officers and
Directors
Schedule 6.15 - Jurisdictions
Schedule 6.20 - Prior Environmental Studies
Schedule 9.14(a) - Inventory Categories
Schedule 9.17(d) - Special Account Stores
Schedule 9.18 - Environmental Report Stores
Schedule 10.2(c) - Existing Liens
Schedule 10.3(c) - Existing Indebtedness for Borrowed Money
and Contingent Obligations
Schedule 10.4 - Existing Investments
Schedule 10.5(d)(i) - Permitted Sales of Parcels of Land
Schedule 10.5(d)(ii) - Designated Stores
Schedule 10.6(b) - Permitted Prepayments
Schedule 12.1 - Subsidiaries
Schedule 12.4 - Description of Overtly Threatened or Pending
Litigation
Schedule 12.5 - Real Property
Schedule 12.13(a) - Reportable Events
Schedule 12.13(e) - Multiemployer Plans; Section 4204 of
ERISA
Schedule 12.14(a) - Permits
Schedule 12.15 - Environmental Information
Schedule 12.18(a) - Collection Account Agreement;
Concentration Account
Agreement; Asset Sale Account;
Lock-Box Agreement
Schedule 12.18(b) - Special Accounts
Exhibit 1.1 - Form of Lock-Box Account Agreement
Exhibit 2.3 - Form of Revolving Note
Exhibit 2.4 - Form of Borrower's Certificate
Exhibit 5.1(A) - Form of Amended and Restated Security
Agreement
Exhibit 5.4 - Form of Amended and Restated Guarantee
Exhibit 6.1(a) - Form of Opinion of Special Counsel for the
Credit Parties
Exhibit 6.1(b) - Form of Reliance Letter from Counsel for
Purchasers of the Senior Notes
Exhibit 6.12 - Form of Disbursement Authorization
Letter
Exhibit 6.16 - Latest Projections
Exhibit 6.18(b) - Form of Amended and Restated
Concentration Account Agreement
Exhibit 6.18(d) - Form of Asset Sale Account Agreement
Exhibit 9.1(k) - Form of Borrowing Base Certificate
Exhibit 9.1(l) - Form of Schedule of Receivables,
Accounts Payable and
Inventory
Exhibit 9.1(p) - Form of Schedule of Accounts Payable
Exhibit 9.17(b) - Form of Collection Account Agreement
