UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended April 5, 1997 (fourteen weeks)
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 Number: 001-10252
SMITH'S FOOD & DRUG CENTERS, INC.
(Exact name of registrant as specified in its charter)
Delaware 87-0258768
(State of Incorporation) (I.R.S. Employer Identification No.)
1550 South Redwood Road, Salt Lake City, UT 84104
(Address of principal executive offices) (Zip Code)
(801) 974-1400
(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
Number of shares outstanding of each class of common stock as of May 2, 1997:
Class A: 3,852,600
Class B: 11,949,630
<PAGE>
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Statements of Income for the
fourteen weeks ended April 5, 1997 and
the thirteen weeks ended March 30, 1996................3
Consolidated Balance Sheets as of
April 5, 1997 and December 28, 1996....................4
Consolidated Statements of Cash Flows for
the fourteen weeks ended April 5, 1997 and
the thirteen weeks ended March 30, 1996................6
Notes to Consolidated Financial Statements.............7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.........11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.....................................14
Item 5. Other Information.....................................14
Item 6. Exhibits and Reports on Form 8-K......................15
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
SMITH'S FOOD & DRUG CENTERS, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollar amounts in thousands, except per share data)
Fourteen Thirteen
Weeks Ended Weeks Ended
Apr 5, 1997 Mar 30, 1996
----------- ------------
Net sales $831,821 $693,165
Cost of goods sold 645,995 546,606
-------- --------
185,826 146,559
Expenses:
Operating, selling
and administrative 116,028 111,353
Depreciation and
amortization 22,909 22,639
Interest 32,723 14,437
Amortization of deferred
financing costs 2,300 108
-------- --------
173,960 148,537
INCOME (LOSS) BEFORE
INCOME TAXES AND
EXTRAORDINARY CHARGE 11,866 (1,978)
Income taxes (benefit) 5,000 (800)
-------- --------
INCOME (LOSS) BEFORE
EXTRAORDINARY CHARGE 6,866 (1,178)
Extraordinary charge on
extinguishment of debt, net of
tax benefit 25,030
-------- --------
NET LOSS $(18,164) $ (1,178)
======== ========
Income (loss) per share of Common Stock:
Income (loss) before
extraordinary charge $ 0.42 $ (0.05)
Extraordinary charge (1.54)
-------- --------
Net loss $ (1.12) $ (0.05)
======== ========
Average number of common
shares outstanding
(In thousands) 16,195 25,072
======== ========
See notes to consolidated financial statements
<PAGE>
SMITH'S FOOD & DRUG CENTERS, INC.
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands)
Apr 5, Dec 28,
1997 1996
-------- ---------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 3,611 $ 48,466
Rebates and accounts receivable 21,374 23,624
Refundable income taxes 49,832
Inventories 374,585 371,912
Prepaid expenses and deposits 23,810 25,520
Deferred tax assets 59,700 60,679
Assets held for sale 28,277 40,348
---------- ----------
TOTAL CURRENT ASSETS 511,357 620,381
PROPERTY AND EQUIPMENT
Land 193,210 195,408
Buildings 589,394 591,075
Leasehold improvements 50,542 46,266
Property under capitalized leases 46,969 33,212
Fixtures and equipment 488,632 530,894
---------- ----------
1,368,747 1,396,855
Less allowances for depreciation
and amortization 408,926 440,811
---------- ----------
959,821 956,044
OTHER ASSETS
Goodwill, less accumulated amortization of
of $2,441 in 1997 and $1,684 in 1996 120,727 121,484
Deferred financing costs, net 32,972 72,364
Other 18,263 15,732
---------- ----------
171,962 209,580
---------- ----------
$1,643,140 $1,786,005
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable $ 292,467 $ 269,717
Accrued sales and other taxes 28,114 29,480
Accrued payroll and related benefits 76,814 78,950
Other accrued expenses 75,890 69,303
Current maturities of long-term debt 31,269 35,496
Current maturities of obligations under
Capital Leases 1,574 1,387
Accrued restructuring costs 17,402 25,678
---------- ----------
TOTAL CURRENT LIABILITIES 523,530 510,011
LONG-TERM DEBT, less current maturities 1,176,224 1,313,926
OBLIGATIONS UNDER CAPITAL LEASES, less
current portion 38,753 25,585
ACCRUED RESTRUCTURING COSTS, less
current portion 9,167 10,421
DEFERRED INCOME TAXES 1,950 13,330
OTHER LONG-TERM LIABILITIES 31,372 31,616
REDEEMABLE PREFERRED STOCK 3,319 3,319
COMMON STOCKHOLDERS' EQUITY
Convertible Class A Common Stock,
par value $.01 per share:
Authorized 20,000,000 shares; issued
and outstanding, 4,272,308 shares in
1997 and 5,117,144 shares in 1996 43 51
Class B Common Stock, par value $.01
per share: Authorized 100,000,000
shares; issued and outstanding 11,529,922
shares in 1997 and 10,685,086 shares in 1996 115 107
Additional paid-in capital 198,801 199,609
Retained deficit (340,134) (321,970)
---------- ----------
(141,175) (122,203)
---------- ----------
$1,643,140 $1,786,005
========== ==========
See notes to consolidated financial statements
<PAGE>
SMITH'S FOOD & DRUG CENTERS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollar amounts in thousands)
Fourteen Thirteen
Weeks Ended Weeks Ended
April 5, March 30,
1997 1996
OPERATING ACTIVITIES: ----------- -----------
Net loss $ (18,164) $ (1,178)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 22,909 22,639
Amortization of deferred financing costs 2,300 108
Deferred income taxes (benefit) (10,401) 9,600
Extraordinary charge 40,430
Other 305 177
Changes in operating assets and liabilities:
Rebates and accounts receivable 2,250 (4,206)
Refundable income taxes 49,832
Inventories (2,673) 97,008
Prepaid expenses and deposits 1,710 4,210
Trade accounts payable 22,750 (50,154)
Accrued sales and other taxes (1,366) 2,726
Accrued payroll and related benefits (2,136) (8,449)
Accrued other expenses 6,587 (23,110)
Accrued restructuring costs (9,530) (42,940)
--------- --------
CASH PROVIDED BY OPERATING ACTIVITIES 104,803 6,431
INVESTING ACTIVITIES:
Additions to property and equipment (21,017) (18,271)
Proceeds from sale of property and equipment 20,917 83,775
Other (2,531) 474
--------- --------
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (2,631) 65,978
FINANCING ACTIVITIES:
Additions to long-term debt 618,000
Payments on long-term debt (759,929) (73,411)
Purchases of Treasury Stock (2,845) (1,114)
Proceeds from sale of Treasury Stock 1,732 820
Payments of deferred financing costs (3,338)
Payment of dividends (3,761)
Other (647)
--------- --------
CASH USED IN FINANCING ACTIVITITES (147,027) (77,466)
--------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS (44,855) (5,057)
Cash and cash equivalents at beginning of year 48,466 16,079
--------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,611 $ 11,022
========= ========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Obligations under capital leases incurred $ 13,758
=========
See notes to consolidated financial statements
<PAGE>
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and in accordance with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and notes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the fourteen week
period ended April 5, 1997 are not necessarily indicative of the results that
may be expected for the year ending January 3, 1998. For further information,
refer to the consolidated financial statements and notes thereto included in
the Company's annual report on Form 10-K for the year ended December 28, 1996.
NOTE B -- SIGNIFICANT ACCOUNTING POLICIES
Inventories
Inventories are valued at the lower of cost, determined on the last-in, first-
out (LIFO) method, or market. The pretax LIFO charge for the first quarter was
$1.6 million in 1997 and $1.8 million in 1996.
Net Income per Share of Common Stock
Net income per share of Common Stock is computed by dividing net income by the
weighted average number of shares of Common Stock outstanding. The weighted
average number of common shares for 1996 excludes Common Stock equivalents in
the form of stock options due to the net loss.
Reclassifications
Certain reclassifications have been made to the 1996 financial statements to
conform with the 1997 presentation.
NOTE C -- MERGER AND RECAPITALIZATION
On May 23, 1996, the Company completed a merger (the "Merger") in which
Smitty's Supermarkets, Inc. ("Smitty's") became a wholly owned subsidiary of
the Company in a transaction accounted for as a purchase. Smitty's is a
regional supermarket company operating 28 stores (two stores were subsequently
leased to other retailers) in the Phoenix and Tucson, Arizona areas. The
Company issued 3,038,877 shares of the Company's Class B Common Stock for all
of Smitty's outstanding common stock. An additional 200,000 shares of the
Company's Class B Common Stock were issued in prepayment of certain management
fees. The financial statements reflect the preliminary allocation of the
purchase price and assumption of certain debt and include the results of
operations for Smitty's from May 23, 1996.
The Company also completed a self tender offer on May 23, 1996 pursuant to
which it purchased 50% of its outstanding Class A and Class B Common Stock for
$36 per share, excluding the shares issued in connection with the Smitty's
merger (together with the Merger, the "Recapitalization"). Debt consisting of
$575 million principal amount of 11 1/4% senior subordinated notes due 2007 and
$805 million principal amount of secured bank term loans at various interest
rates were used to finance the stock purchase, repay certain existing
indebtedness, and pay premiums related to early repayment of such indebtedness.
NOTE D -- RESTRUCTURING CHARGES
In December 1995, the Company recorded restructuring charges amounting to $140
million related to its decision to sell, lease or close all 34 stores and the
distribution center comprising its California Region. During 1996, the Company
sold or leased 23 of its California stores and related equipment and six non-
operating properties to various supermarket companies and others. During the
first fourteen weeks of 1997, the Company sold or leased three of its
California stores and related equipment and four non-operating properties. Of
the stores sold or leased, 16 owned stores were sold outright, two owned stores
were leased, three store leases were assigned and five leased stores were
subleased. The remaining California stores have been closed and it is
anticipated that these stores will be sold or leased.
Following the Merger and Recapitalization on May 23, 1996 (see Note C), the
Company adopted a strategy to accelerate the disposition of its remaining real
estate assets in California including its non-operating stores and excess land.
The Company intends to use the net cash proceeds from the sales of these assets
to either reinvest in the Company's business or reduce indebtedness.
Accordingly, the Company recorded in the second quarter of 1996 additional
restructuring charges amounting to $201.6 million relating to (i) the
difference between the anticipated cash proceeds from the accelerated
dispositions (based on appraisals obtained following the completion of the
Merger and Recapitalization) and the Company's existing book values and (ii)
other charges in connection with its decision to close the California Region.
The following table presents the components of the accrued restructuring costs
and actual activity for the first fourteen weeks of 1997 (dollar amounts in
thousands):
Costs Accrued
Balance at Incurred Restructuring Costs
December 28, during at April 5, 1997
1996 1997 Current Long-term
------- ------ ------- ------
Charges for lease obligations $21,865 $2,310 $11,733 $7,822
Termination costs 2,541 1,358 1,183
Property maintenance costs
and other 11,693 5,862 4,486 1,345
------- ------ ------- ------
$36,099 $9,530 $17,402 $9,167
======= ====== ======= ======
NOTE E -- LONG-TERM DEBT
Long-term debt consists of the following (dollar amounts in thousands):
April 5, December 28,
1997 1996
---------- ----------
Term loans, principal due quarterly through
2005, with interest at an average rate of
7.10% in 1997 and 8.57% in 1996 $ 600,000 $ 753,800
11 1/4% Senior Subordinated Notes, principal due
2007 with interest payable semi-annually 575,000 575,000
Revolving Credit Facility with interest at an
average rate of 7.24% in 1997 12,000
Sinking fund bonds, 10 1/2% interest,
semi-annual maturities to 2016 11,780 11,872
Mortgage notes, collateralized by property and
equipment with a cost of $2.8 million in 1997
and 1996, due in 2000 through 2005 with interest
at an average rate of 4.86% in 1997 and 5.11%
in 1996 2,741 2,742
Industrial revenue bonds, collateralized by
property and equipment with a cost of $9.1
million in 1997 and $9.0 million in 1996 due in
2000 through 2010 plus interest at an average
rate of 7.22% in 1997 and 1996 5,972 6,008
---------- ----------
1,207,493 1,349,422
Less current maturities 31,269 35,496
---------- ----------
$1,176,224 $1,313,926
========== ==========
On March 27, 1997, the Company entered into an amended and restated senior
credit facility (the "New Credit Facility") that provides term loans totaling
$600 million (the "New Term Loans") and a $150 million revolving credit
facility (the "New Revolving Facility") less amounts outstanding under letters
of credit. The proceeds from the New Credit Facility were used to repay the
old term bank loans and outstanding indebtedness under the Company's revolvers
and letters of credit. All indebtedness under the New Credit Facility is
secured by substantially all of the assets of the Company. A commitment fee
ranging from .25% to .50% is charged on the average daily unused portion of the
New Revolving Facility, payable quarterly. Interest on borrowings under the
New Credit Facility is at the bank's Base Rate plus a margin based on the
Company's leverage ratio ranging from 0% to 1.25% or the Adjusted Eurodollar
Rate plus a margin based on the Company's leverage ratio ranging from .50% to
2.25%. At April 5, 1997, $13.7 million of letters of credit were issued under
the New Revolving Facility.
Maturities of the Company's long-term debt for the five fiscal years succeeding
April 5, 1997 are approximately $15.8 million in 1997, $61.5 million in 1998,
$66.6 million in 1999, $74.3 million in 2000, and $76.5 in 2001.
The Credit Facility requires the Company to maintain minimum levels of net
worth and earnings, and to comply with certain ratios related to fixed charges,
capital expenditures and indebtedness. In addition, the Credit Facility limits
additional borrowings, dividends on and redemption of capital stock and the
acquisition and the disposition of assets.
The Company recorded an extraordinary charge of $40.4 million net of a $15.4
million income tax benefit which consisted of the write-off of debt issuance
costs related to the old credit facility which was refinanced.
NOTE F - SUBSEQUENT EVENT
On May 11, 1997, the Company entered into a definitive merger agreement with
Fred Meyer, Inc. ("Fred Meyer") in which Smith's and Fred Meyer will form a
holding company ("Holdings") with two subsidiaries. Subject to certain
conditions, one subsidiary will merge with and into Smith's and the other
subsidiary will merge with and into Fred Meyer (collectively, the "1997
Mergers"). The 1997 Mergers will be completed by converting each outstanding
share of Class A Common Stock and Class B Common Stock into the right to
receive 1.05 shares of Holdings Common Stock, each outstanding share of Series
I Preferred Stock into the right to receive $.33 1/3, and each outstanding
share of Fred Meyer Common Stock into the right to receive one share of
Holdings Common Stock. Completion of the 1997 Mergers is conditioned on
regulatory approvals and approval by the Company's shareholders and various
other conditions and is expected to be consummated during the third quarter of
1997.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Overview
On May 23, 1996, Smith's Food & Drug Centers, Inc. (the "Company") completed
its acquisition by merger (the "Merger") of Smitty's Supermarkets, Inc.
("Smitty's"), a 28-store Arizona supermarket chain (two stores were
subsequently leased to other retailers). Pursuant to the Merger, 3,038,877
shares of the Company's Class B Common Stock, $.01 par value ("Class B Common
Stock") were issued to the stockholders of Smitty's. The Merger has been
accounted for as a purchase of Smitty's by the Company. As a result, the
assets and liabilities of Smitty's have been recorded at their estimated fair
value as of the date the Merger was consummated. The purchase price in excess
of the fair value of Smitty's assets is recorded as goodwill and will be
amortized over a 40-year period. The purchase price allocation reflected at
April 5, 1997 is based on management's preliminary estimates. The actual
purchase accounting adjustments will be determined within one year following
the Merger and may vary from the amounts reflected at April 5, 1997.
The Company also completed a self tender offer on May 23, 1996 pursuant to
which it purchased 50% of its outstanding Class A Common Stock, $.01 par value
("Class A Common Stock") and Class B Common Stock for $36 per share, excluding
the shares issued in connection with the Smitty's merger. Of the total shares
of Class A Common Stock and Class B Common Stock outstanding prior to the
tender offer, the Company purchased 12.5 million shares for $451.3 million.
Stock options representing 805,750 shares were also purchased for $13.7 million
in conjunction with this tender offer. Additionally, the Company redeemed 3.0
million shares of Series I Preferred Stock for $1.0 million.
The Company used proceeds from the issuance of long-term debt to finance these
transactions and to repay substantially all of its indebtedness. The Company
entered into a senior credit facility (the "Credit Facility") which provided
term loans totaling $805 million (the "Term Loans") and a $190 million
revolving credit facility (the "Revolving Facility") less amounts outstanding
under letters of credit. The Company also issued $575 million principal amount
of 11 1/4% senior subordinated notes due 2007 (the "Notes"). As a result of
prepaying existing indebtedness, the Company incurred in 1996 an extraordinary
charge of $41.8 million consisting of fees incurred in the prepayment and the
write-off of debt issuance costs.
The Company also closed its California region comprised of 34 stores and a
large distribution center during the first quarter of 1996. As a result of the
closure of the California region and the Merger with Smitty's, comparisons of
quarter results to the prior year's comparable period are not meaningful.
Results of Operations
Net sales increased $138.6 million, or 20.0%, from $693.2 million in the first
quarter of 1996 to $831.8 million in the first quarter of 1997. If net sales
were adjusted to remove the additional week in the first quarter of 1997 (a
fourteen week period compared to a thirteen week period in the prior year), the
sales increase would have been approximately 11%. This sales increase was
primarily attributable to changes in the number of operating stores. During
the first quarter of 1996, the Company closed its 34 California stores and
since March 30, 1996, the Company has opened an additional five stores (net)
and acquired 26 stores (net) in the Merger. Excluding the Company's California
stores, net sales for the first quarter increased $211.7 million, or 34.1%,
from $620.1 million last year to $831.8 million in 1997. As adjusted to
exclude the Company's California stores and Smitty's stores, same store sales
for the first quarter of 1997 increased 1.1% reflecting the favorable consumer
response to the Company's initiatives for improving sales and customer service.
Gross profit increased $39.2 million, or 26.7%, from $146.6 million in the
first quarter of 1996 to $185.8 million in the first quarter of 1997. Gross
margins during the first quarter of 1997 were 22.3% compared to 21.1% a year
ago. Excluding the Company's California operations, gross profit increased
$46.4 million, or 33.3%, in the first quarter of 1997 compared to the
comparable period last year.
Operating, selling and administrative expense ("OS&A") increased $4.6 million,
or 4.1%, from $111.4 million in first quarter of 1996 to $116.0 million in the
first quarter of 1997. As a percent of net sales, OS&A decreased in the first
quarter from 16.1% last year to 14.0% this year. The decrease in OS&A as a
percent of net sales in the first quarter was primarily caused by synergies
resulting from the merger with Smitty's and the lack in 1997 of expenses
related to the closure of the Company's California stores.
Depreciation and amortization expense increased $.3 million, or 1.2%, from
$22.6 million in the first quarter last year to $22.9 million in the first
quarter this year. The decrease in depreciation and amortization expense
resulting from the closure of the California Region was offset by the addition
of Smitty's stores and new food and drug combination stores opened since the
first quarter of 1996.
Interest expense increased $18.3 million, or 126.7%, from $14.4 million in the
first quarter last year to $32.7 million for the first quarter of 1997. The
increase in interest expense was primarily due to the increased debt incurred
in conjunction with the Merger and Recapitalization. On March 27, 1997, the
Company completed the refinancing of its secured credit facilities financing
which effectively reduced the Company's interest rate on the bank term loans by
approximately 170 basis points.
The extraordinary charge of $25.0 million recorded in the first quarter of 1997
consists of the write-off of debt issuance costs related to the old credit
facilities which were refinanced.
Net loss for the first quarter of 1997 totaled $18.2 million or $1.12 per
common share compared to last year's net loss of $1.2 million or $.05 per
common share. The net loss in 1997 was primarily as a result of the
extraordinary charge noted above.
Liquidity and Capital Resources
During the first fourteen weeks of 1997, cash provided by operating activities
was $104.8 million compared to $6.4 million last year. This increase was
caused primarily by balance fluctuations in operating assets and liabilities
resulting from the closure of the California region, receipt of $49.8 million
from an income tax refund, and normal operations.
Cash used in investing activities was $2.6 million for the first fourteen weeks
of 1997 as a result of the Company's ongoing expansion program which was offset
by proceeds from the sale of assets in the California region. The Company is
actively pursuing opportunities to dispose of its remaining real estate assets
in California which consist of eight closed stores and excess land.
Cash used in financing activities totaled $147.0 million for the first fourteen
weeks of 1997 as a result of prepayments of the Credit Facility.
On March 27, 1997, the Company entered into an amended and restated senior
credit facility (the "New Credit Facility") that provided $600 million
aggregate principal amount of term loans (the "New Term Loans") and a $150
million revolving credit facility (the "New Revolving Facility") which is
available for working capital requirements and general corporate purposes. At
April 5, 1997, other than $13.7 million of letters of credit, $12.0 million was
outstanding under the New Revolving Facility. A portion of the New Revolving
Facility may be used to support letters of credit. The New Revolving Facility
is non-amortizing and has a six and one-quarter year term. The Company is
required to reduce loans outstanding under the New Revolving Facility to less
than $75 million for a period of not less than 30 consecutive days during each
consecutive 12-month period thereafter. The New Term Loans were issued in two
tranches: Tranche A, in the amount of $400 million, has a six and
three-quarter year term and Tranche B, in the amount of $200 million, has an
eight year term. The New Term Loans require quarterly amortization payments.
The New Credit Facility is guaranteed by each of the Company's subsidiaries and
secured by liens on substantially all of the unencumbered assets of the Company
and its subsidiaries and by a pledge of the Company's stock in such
subsidiaries. The New Credit Facility contains financial covenants which
require, among other things, the maintenance of specified levels of cash flow
and stockholders' equity.
The capital expenditures of the Company were $21.0 million for the first
fourteen weeks of 1997. The Company currently anticipates that its aggregate
capital expenditures for fiscal 1997 will be approximately $100 million. The
Company intends to finance these capital expenditures primarily with cash
provided by operations and other sources of liquidity including borrowings and
leases. No assurance can be given that sources of financing for capital
expenditures will be available or sufficient. However, the capital expenditure
program has substantial flexibility and is subject to revision based on various
factors. Management believes that if the Company were to substantially reduce
or postpone these programs, there would be no substantial impact on short-term
operating profitability. In the long term, however, if these programs were
substantially reduced, management believes its operating businesses, and
ultimately its cash flow, would be adversely affected.
The Company has discontinued the payment of cash dividends and payment of
future dividends is severely restricted by the terms of the New Credit Facility
and the Indenture governing the Notes.
The Company is highly leveraged. Based upon current levels of operations and
anticipated cost savings and future growth, the Company believes that its cash
flow from operations, together with available borrowings under the New
Revolving Facility and its other sources of liquidity (including leases), will
be adequate to meet its anticipated requirements for working capital, capital
expenditures, lease payments, interest payments and scheduled principal
payments. There can be no assurance, however, that the Company's business will
continue to generate cash flow at or above current levels or that estimated
cost savings or growth can be achieved.
In February 1997, the Financial Accounting Standards Board issued Statement No.
128, "Earnings per Share", which is required to be adopted for periods ending
after December 15, 1997. At that time, the Company will be required to change
the method currently used to compute earnings per share and to restate all
prior periods. Under the new requirements, basic earnings per share excludes
the effect of stock options and diluted earnings per share includes the effect
of stock options. For the quarter ended April 5, 1997, basic income per share
before extraordinary charge would be $.01 higher than reported and basic loss
per share would be $.03 higher than reported. Diluted earnings per share would
be the same as reported which included the effect of stock options. For the
quarter ended March 30, 1996, basic loss per share and diluted loss per share
would be the same as reported because of the immateriality of the effect of
stock options.
Cautionary Statement for Purposes of "Safe Harbor Provisions" of the Private
Securities Litigation Reform Act of 1995
When used in this report, the words "estimate," "believe," "expect," "project"
and similar expressions, together with other discussion of future trends or
results, are intended to identify forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended (the "Securities Act")
and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Such statements are subject to certain risks and
uncertainties, including those discussed below, that could cause actual results
to differ materially from those projected. These forward-looking statements
speak only as of the date hereof. All of these forward-looking statements are
based on estimates and assumptions made by management of the Company, which
although believed to be reasonable, are inherently uncertain and difficult to
predict, therefore, undue reliance should not be placed upon such estimates.
There can be no assurance that the savings or other benefits anticipated in
these forward-looking statements will be achieved. The following important
factors, among others, could cause the Company not to achieve the cost savings
or other benefits contemplated herein or otherwise cause the Company's results
of operations to be adversely affected in future periods: (i) continued or
increased competitive pressures from existing competitors and new entrants,
including price-cutting strategies; (ii) unanticipated costs related to the
Company's growth and operating strategies; (iii) loss or retirement of key
members of management; (iv) inability to negotiate more favorable terms with
suppliers or to improve working capital management; (v) increase in interest
rates of the Company's cost of borrowing or a default under any material debt
agreements; (vi) inability to develop new stores in advantageous locations or
to successfully convert existing stores; (vii) prolonged labor disruption;
(viii) deterioration in general of regional economic conditions; (ix) adverse
state or federal legislation or regulation that increases the cost of
compliance, or adverse finds by a regulator with respect to existing
operations; (x) loss of customers as result of the conversion of store formats;
(xi) adverse determinations in connection with pending or future litigation or
other material claims and judgments against the Company; (xii) inability to
achieve future sales; and (xiii) the unavailability of funds for capital
expenditures. Many of such factors are beyond the control of the Company.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
On May 22, 1996, Larry F. Klang ("Plaintiff") filed a purported class action
complaint against the Company in the Court of Chancery of the State of
Delaware, New Castle County. Plaintiff filed an amended complaint on May 30,
1996 (the "Klang Complaint") which named as defendants the Company, the
directors of the Company prior to the consummation of the Merger, The Yucaipa
Companies, a California general partnership ("Yucaipa"), Ronald Burkle, and
Smitty's. The Klang Complaint alleged, among other things, (i) that the
recapitalization transactions consummated by the Company on May 23, 1996,
violated Delaware law by impairing the capital of the Company in its repurchase
of its stock, (ii) that the directors and the Company violated fiduciary duties
of disclosure under Delaware law by making allegedly inaccurate and incomplete
disclosure in the Company's Offer to Purchase and Proxy Statement, and (iii)
that Mr. Burkle and Yucaipa aided and abetted these allegedly illegal actions.
The Klang Complaint sought, among other things, injunctive relief, rescission
of the recapitalization transactions, certification of the action as a class
action, and costs and fees. On June 28, 1996, the Company and the other
defendants filed their answer to the Klang Complaint, denying all material
allegations and asserting various defenses to the action. On October 15, 1996,
the Plaintiff filed a motion to rescind the recapitalization transactions and
the defendants filed their opposition to that motion on November 7, 1996.
Plaintiff filed his reply on November 15, 1996. Vice-Chancellor William
Chandler held oral argument on the motion on November 21, 1996 and on May 13,
1997, the Court denied the Plaintiff's motion to rescind the recapitalization
transactions and dismissed each of the Plaintiff's claims. On May 13, 1997,
Plaintiff filed a notice of appeal and on May 16, 1997, Plaintiff filed a
motion to expedite the appeal.
Item 5. Other Information
On May 11, 1997, the Company and Fred Meyer, Inc., a Delaware corporation
("Fred Meyer"), entered into an Agreement and Plan of Reorganization and Merger
(the "Merger Agreement"). Pursuant to the terms of the Merger Agreement, the
Company and Fred Meyer will form a Delaware holding company ("Holdings"),
Holdings will form two subsidiaries ("Smith's Sub" and "Fred Sub") and, subject
to certain conditions being satisfied or waived, Smith's Sub would merge with
and into the Company and Fred Sub would merge with and into Fred Meyer (the
"Smith's Merger" and the "Fred Merger," and collectively, the "1997 Mergers").
Pursuant to the 1997 Mergers, (i) each outstanding share of the Company's Class
A Common Stock and each outstanding share of the Company's Class B Common Stock
would be converted into the right to receive 1.05 shares of Holdings Common
Stock, $.01 par value ("Holdings Common Stock"), (ii) each outstanding share of
the Company's Series I Preferred Stock, $.01 par value, would be converted into
the right to receive $.33 1/3, and (iii) each outstanding share of Fred Meyer
Common Stock would be converted into the right to receive one share of Holdings
Common Stock. It is anticipated that the Holdings Common Stock would trade on
the New York Stock Exchange. Conditions to the consummation of the 1997
Mergers include the receipt of regulatory approvals and approval by the
shareholders of Fred Meyer and the Company.
In connection with the Merger Agreement, the Company and Fred Meyer have
entered into a stock option agreement (the "Option Agreement") pursuant to
which Fred Meyer has granted the Company an option to acquire under certain
circumstances related to the termination of the Merger Agreement, up to 19.9%
of Fred Meyer's outstanding Common Stock at a price per share equal to $45.00.
The option is exercisable only under certain circumstances and is subject to a
limitation on the total profit that may be realized thereunder. In the event
the Merger Agreement is terminated under certain circumstances, Fred Meyer has
agreed to reimburse the Company for its out-of-pocket expenses and to pay the
Company certain termination fees. Certain shareholders holding over 65% of the
voting power of the Company's outstanding capital stock have entered into
agreements to vote their shares in favor of the Smith's Merger.
Item 6. Exhibits and Reports on Form 8-K
(a) The exhibits listed in the accompanying index to exhibits are filed as
part of the Form 10-Q.
(b) There were no reports on Form 8-K filed during the first quarter.
INDEX TO EXHIBITS
Exhibit
Number Document
10.4 Credit Agreement dated as of March 27, 1997 by and among the
Company, the lenders named therein, The Chase Manhattan Bank,
as Administrative Agent, and Bankers Trust Company, as
Syndication Agent.
27 Financial Data Schedule
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.
SMITH'S FOOD & DRUG CENTERS, INC.
(Registrant)
Date: 5/20/97 /s/ Matthew G. Tezak
-------------------------------
Matthew G. Tezak, Senior Vice
President and Chief Financial
Officer (Principal Accounting
Officer)
Exhibit 10.4
$750,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF MARCH 27, 1997
AMONG
SMITH'S FOOD & DRUG CENTERS, INC.,
AS BORROWER,
THE LENDERS LISTED HEREIN,
AS LENDERS,
THE CHASE MANHATTAN BANK,
AS ADMINISTRATIVE AGENT,
AND
BANKERS TRUST COMPANY,
AS SYNDICATION AGENT
SMITH'S FOOD & DRUG CENTERS, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
TABLE OF CONTENTS
PAGE
Section 1. DEFINITIONS 2
1.1 Certain Defined Terms 2
1.2 Accounting Terms; Utilization of GAAP for Purposes of
Calculations Under Agreement 42
1.3 Other Definitional Provisions and Rules of Construction 42
Section 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS 43
2.1 Commitments; Making of Loans; the Register; Notes 43
2.2 Interest on the Loans 51
2.3 Fees 56
2.4 Repayments, Prepayments and Reductions in Revolving
Loan Commitments; General Provisions Regarding Payments 56
2.5 Use of Proceeds 67
2.6 Special Provisions Governing Eurodollar Rate Loans 67
2.7 Increased Costs; Taxes; Capital Adequacy 70
2.8 Obligation of Lenders and Issuing Lenders to Mitigate 75
2.9 Replacement of Lender 75
Section 3. LETTERS OF CREDIT 76
3.1 Issuance of Letters of Credit and Revolving Lenders'
Purchase of Participations Therein 76
3.2 Letter of Credit Fees 80
3.3 Drawings and Reimbursement of Amounts Paid Under
Letters of Credit. 81
3.4 Obligations Absolute 84
3.5 Indemnification; Nature of Issuing Lenders' Duties 85
3.6 Increased Costs and Taxes Relating to Letters of
Credit 87
Section 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT 88
4.1 Conditions to Initial Purchase of Term Loans and
Initial Revolving Loans and Swing Line Loans 88
4.2 Conditions to All Loans 94
4.3 Conditions to Letters of Credit 95
Section 5. COMPANY'S REPRESENTATIONS AND WARRANTIES 96
5.1 Organization, Powers, Qualification, Good Standing,
Business and Subsidiaries 96
5.2 Authorization of Borrowing, etc. 97
5.3 Financial Condition 99
5.4 No Material Adverse Change; No Restricted Junior
Payments 99
5.5 Title to Properties; Liens 100
5.6 Litigation; Adverse Facts 100
5.7 Payment of Taxes 100
5.8 Performance of Agreements; Materially Adverse
Agreements; Material Contracts 101
5.9 Governmental Regulation 101
5.10 Securities Activities 101
5.11 Employee Benefit Plans 102
5.12 Certain Fees 103
5.13 Environmental Protection 103
5.14 Employee Matters 105
5.15 Solvency 105
5.16 Matters Relating to Collateral 105
5.17 Permits 106
5.18 Disclosure 106
5.19 Real Property Assets 107
Section 6. AFFIRMATIVE COVENANTS 107
6.1 Financial Statements and Other Reports 107
6.2 Corporate Existence, etc. 113
6.3 Payment of Taxes and Claims; Tax Consolidation 113
6.4 Maintenance of Properties; Insurance 114
6.5 Inspection; Lender Meeting 114
6.6 Compliance with Laws, etc. 114
6.7 Environmental Disclosure and Inspection; Remedial
Action Regarding Hazardous Materials 115
6.8 Execution of Subsidiary Guaranty and Collateral
Documents by Future Subsidiaries 117
6.9 Additional Real Property 118
6.10 Designation of Replacement Properties 119
6.11 Release of Collateral 120
Section 7. COMPANY'S NEGATIVE COVENANTS 121
7.1 Indebtedness 122
7.2 Liens and Related Matters 124
7.3 Investments; Joint Ventures 126
7.4 Contingent Obligations 128
7.5 Restricted Junior Payments; Other Restricted Payments 131
7.6 Financial Covenants 132
7.7 Restriction on Fundamental Changes; Asset Sales and
Acquisitions 134
7.8 Consolidated Capital Expenditures 136
7.9 Restriction on Leases 137
7.10 Sales and Lease-Backs 138
7.11 Sale or Discount of Receivables 139
7.12 Transactions with Shareholders and Affiliates 139
7.13 Disposal of Subsidiary Stock; Restrictions on
Subsidiaries 139
7.14 Conduct of Business 140
7.15 Amendments or Waivers of Certain Related Agreements;
Amendments of Documents Relating to Subordinated
Indebtedness; Designation of "Designated Senior
Indebtedness" 140
7.16 Fiscal Year 141
Section 8. EVENTS OF DEFAULT 141
8.1 Failure to Make Payments When Due 141
8.2 Default in Other Agreements 141
8.3 Breach of Certain Covenants 142
8.4 Breach of Warranty 142
8.5 Other Defaults Under Loan Documents 142
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc. 142
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc. 143
8.8 Judgments and Attachments 143
8.9 Dissolution 143
8.10 Employee Benefit Plans 144
8.11 Change in Control 144
8.12 Invalidity of Subsidiary Guaranty 144
8.13 Failure of Security 144
8.14 Action Under Senior Subordinated Notes 144
Section 9. ADMINISTRATIVE AGENT 146
9.1 Appointment 146
9.2 Powers and Duties; General Immunity 147
9.3 Representations and Warranties; No Responsibility For
Appraisal of Creditworthiness 149
9.4 Right to Indemnity 149
9.5 Successor Administrative Agent and Swing Line Lender 150
9.6 Collateral Documents and Subsidiary Guaranty 151
Section 10. MISCELLANEOUS 151
10.1 Assignments and Participations in Loans and
Letters of Credit 151
10.2 Expenses 155
10.3 Indemnity 156
10.4 Set-Off 157
10.5 Ratable Sharing 158
10.6 Amendments and Waivers 158
10.7 Independence of Covenants 160
10.8 Notices 161
10.9 Survival of Representations, Warranties and
Agreements 161
10.10 Failure or Indulgence Not Waiver; Remedies
Cumulative 161
10.11 Marshalling; Payments Set Aside 162
10.12 Severability 162
10.13 Obligations Several; Independent Nature of Lenders'
Rights 162
10.14 Headings 162
10.15 Applicable Law 163
10.16 Successors and Assigns 163
10.17 Consent to Jurisdiction and Service of Process 163
10.18 Waiver of Jury Trial 164
10.19 Confidentiality 164
10.20 Counterparts; Effectiveness 165
Signature pages S-1
EXHIBITS
I FORM OF NOTICE OF BORROWING
II FORM OF NOTICE OF CONVERSION/CONTINUATION
III FORM OF NOTICE OF ISSUANCE OF LETTER OF CREDIT
IV-A FORM OF TRANCHE A TERM NOTE
IV-B FORM OF TRANCHE B TERM NOTE
V FORM OF REVOLVING NOTE
VI FORM OF SWING LINE NOTE
VII FORM OF COMPLIANCE CERTIFICATE
VIII FORM OF OPINION OF LATHAM & WATKINS
IX FORM OF OPINION OF O'MELVENY & MYERS
X FORM OF ASSIGNMENT AGREEMENT
XI FORM OF AUDITOR'S LETTER
XII FORM OF FINANCIAL CONDITION CERTIFICATE
XIII FORM OF COLLATERAL ACCOUNT AGREEMENT
XIV FORM OF PLEDGE AGREEMENT
XV FORM OF SECURITY AGREEMENT
XVI FORM OF TRADEMARK SECURITY AGREEMENT
XVII FORM OF SUBSIDIARY GUARANTY
XVIII FORM OF MORTGAGE
XIX FORM OF MASTER ASSIGNMENT AGREEMENT
SCHEDULES
2.1 LENDERS' COMMITMENTS AND PRO RATA SHARES
2.4B STORES UNDER DEVELOPMENT
3.1C EXISTING LETTERS OF CREDIT
5.1 SUBSIDIARIES OF COMPANY
5.3 CERTAIN OBLIGATIONS
5.11 EMPLOYEE BENEFIT PLANS
5.12 CERTAIN FEES
5.13 ENVIRONMENTAL MATTERS
5.17 CERTAIN PERMITS
5.19 REAL PROPERTY ASSETS
7.1 CERTAIN EXISTING INDEBTEDNESS
7.2 CERTAIN EXISTING LIENS
7.3 CERTAIN EXISTING INVESTMENTS
7.4 CERTAIN EXISTING CONTINGENT OBLIGATIONS
7.7 CERTAIN PROPERTIES TO BE SOLD AFTER CLOSING
SMITH'S FOOD & DRUG CENTERS, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
This AMENDED AND RESTATED CREDIT AGREEMENT is dated as of March 27,
1997 and entered into by and among SMITH'S FOOD & DRUG CENTERS, INC., a Delaware
corporation ("COMPANY"), THE FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE
PAGES HEREOF (each individually referred to herein as a "LENDER" and
collectively as "LENDERS"), THE CHASE MANHATTAN BANK ("CHASE"), as
administrative agent for Lenders (in such capacity, "ADMINISTRATIVE AGENT"), and
BANKERS TRUST COMPANY ("BANKERS"), as syndication agent (in such capacity,
"SYNDICATION AGENT").
R E C I T A L S
WHEREAS, Company, Chase, Bankers and certain Lenders are parties to
that certain Credit Agreement dated as of May 23, 1996 (the "EXISTING CREDIT
AGREEMENT") by and among Company, the financial institutions listed on the
signature pages thereto, Bankers and Chase, as arrangers, Chase Securities Inc.,
as syndication agent, and Bankers, as administrative agent;
WHEREAS, Company desires to restructure the credit facilities
established pursuant to the Existing Credit Agreement by amending and restating
the Existing Credit Agreement in its entirety;
WHEREAS, Company desires to continue to secure all of the
Obligations hereunder and under the other Loan Documents by a first priority
Lien on certain of its real, personal and mixed property, including without
limitation a pledge of all of the capital stock of each of its Subsidiaries
(other than any Inactive Subsidiaries); and
WHEREAS, all of the Subsidiaries (other than any Inactive
Subsidiaries) of Company have agreed to continue to guarantee the Obligations
hereunder and under the other Loan Documents and to continue to secure their
guaranties by a first priority Lien on certain of their respective real,
personal and mixed property, including without limitation a pledge of all of the
capital stock of each of their respective Subsidiaries;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Company, Lenders, Syndication Agent
and Administrative Agent agree as follows:
SECTION 1. DEFINITIONS
1.1 CERTAIN DEFINED TERMS.
The following terms used in this Agreement shall have the following
meanings:
"ADDITIONAL SALE LEASEBACK PROPERTY" means any store (other than any
Sale Leaseback Property) which Company sells and concurrently leases back more
than one year after the completion or acquisition of such store, including the
equipment related to such store.
"ADJUSTED EURODOLLAR RATE" means, for any Interest Rate
Determination Date with respect to an Interest Period for a Eurodollar Rate
Loan, the rate per annum obtained by dividing (i) the arithmetic average
(rounded upward to the nearest 1/16 of one percent) of the offered quotations,
if any, to first class banks in the interbank Eurodollar market by Reference
Lenders for U.S. dollar deposits of amounts in same day funds comparable to the
respective principal amounts of the Eurodollar Rate Loans of Reference Lenders
for which the Adjusted Eurodollar Rate is then being determined with maturities
comparable to such Interest Period as of approximately 10:00 A.M. (New York
time) on such Interest Rate Determination Date by (ii) a percentage equal to
100% minus the stated maximum rate of all reserve requirements (including,
without limitation, any marginal, emergency, supplemental, special or other
reserves) applicable on such Interest Rate Determination Date to any member bank
of the Federal Reserve System in respect of "Eurocurrency liabilities" as
defined in Regulation D (or any successor category of liabilities under
Regulation D); provided that if any Reference Lender fails to provide
Administrative Agent with its aforementioned quotation then the Adjusted
Eurodollar Rate shall be determined based on the quotation(s) provided to
Administrative Agent by the other Reference Lender(s).
"ADMINISTRATIVE AGENT" has the meaning assigned to that term in the
preamble to this Agreement and also means and includes any successor
Administrative Agent appointed pursuant to subsection 9.5A.
"AFFECTED LENDER" has the meaning assigned to that term in
subsection 2.6C.
"AFFILIATE", as applied to any Person, means any other Person
directly or indirectly controlling, controlled by, or under common control with,
that Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means (i) the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise, or (ii) the ownership of more than 10% of the voting
securities of that Person; provided that Chase, Bankers, and each of their
respective Affiliates (as defined above) shall not be considered to be an
"Affiliate" of Company or any of its Subsidiaries; and provided further that
Yucaipa shall be deemed an Affiliate of Company so long as (a) the Management
Agreement is in effect or (b) Yucaipa, together with its Affiliates (as defined
above), is permitted to designate one or more members of Company's Board of
Directors pursuant to the terms of the Standstill Agreement or any successor
agreement.
"AGENTS" means Administrative Agent and Syndication Agent,
collectively.
"AGREEMENT" means this Amended and Restated Credit Agreement dated
as of March 27, 1997, as it may be amended, supplemented or otherwise modified
from time to time.
"AMOUNT OF UNFUNDED BENEFIT LIABILITY" means, with respect to any
Pension Plan, (i) if set forth on the most recent actuarial valuation report
with respect to such Pension Plan, the amount of unfunded benefit liabilities
(as defined in Section 4001(a)(18) of ERISA) and (ii) otherwise, the excess of
(a) the greater of the current liability (as defined in Section 412(l)(7) of the
Internal Revenue Code) or the actuarial present value of the accrued benefits
with respect to such Pension Plan over (b) the market value of the assets of
such Pension Plan.
"APPLICABLE TRANCHE A BASE RATE MARGIN" means, as of any date of
determination, a percentage per annum as set forth below opposite the applicable
Leverage Ratio; provided that for the period beginning on and including the
Closing Date to and including August 19, 1997, the Applicable Tranche A Base
Rate Margin shall be 0.25% per annum; provided further that, if Company has
failed to provide a Margin Determination Certificate at the time required
pursuant to subsection 6.1, the Applicable Tranche A Base Rate Margin shall be
0.75% per annum for the period from the date such Margin Determination
Certificate was required to be delivered until such Margin Determination
Certificate is actually delivered:
LEVERAGE RATIO APPLICABLE TRANCHE A BASE RATE MARGIN
greater than 5.0:1.0 0.75%
less than or equal to 5.0:1.0
but greater than 4.75:1.0 0.50%
less than or equal to 4.75:1.0
but greater than 4.25:1.0 0.25%
less than or equal to 4.25:1.0 0.00%
"APPLICABLE TRANCHE A EURODOLLAR MARGIN" means, as of any date of
determination, a percentage per annum set forth below opposite the applicable
Leverage Ratio; provided that for the period beginning on and including the
Closing Date to and including August 19, 1997, the Applicable Tranche A
Eurodollar Margin shall be 1.25% per annum; provided further that, if Company
has failed to provide a Margin Determination Certificate at the time required
pursuant to subsection 6.1, the Applicable Tranche A Eurodollar Margin shall be
1.75% per annum for the period from the date such Margin Determination
Certificate was required to be delivered until such Margin Determination
Certificate is actually delivered:
LEVERAGE RATIO APPLICABLE TRANCHE A EURODOLLAR MARGIN
greater than 5.0:1.0 1.75%
less than or equal to 5.0:1.0
but greater than 4.75:1.0 1.50%
less than or equal to 4.75:1.0
but greater than 4.25:1.0 1.25%
less than or equal to 4.25:1.0
but greater than 3.75:1.0 1.00%
less than or equal to 3.75:1.0
but greater than 3.25:1.0 0.875%
less than or equal to 3.25:1.0 0.75%
"APPLICABLE TRANCHE B BASE RATE MARGIN" means, as of any date of
determination, a percentage per annum set forth below opposite the applicable
Leverage Ratio; provided that for the period beginning on and including the
Closing Date to and including August 19, 1997, the Applicable Tranche B Base
Rate Margin shall be 0.75% per annum; provided further that if Company has
failed to provide a Margin Determination Certificate at the time required
pursuant to subsection 6.1, the Applicable Tranche B Base Rate Margin shall be
1.25% per annum for the period from the date such Margin Determination
Certificate was required to be delivered until such Margin Determination
Certificate is actually delivered:
LEVERAGE RATIO APPLICABLE TRANCHE B BASE RATE MARGIN
greater than 5.0:1.0 1.25%
less than or equal to 5.0:1.0
but greater than 4.75:1.0 1.00%
less than or equal to 4.75:1.0
but greater than 3.75:1.0 0.75%
less than or equal to 3.75:1.0 0.50%
"APPLICABLE TRANCHE B EURODOLLAR MARGIN" means, as of any date of
determination, a percentage per annum set forth below opposite the applicable
Leverage Ratio; provided that for the period beginning on and including the
Closing Date to and including August 19, 1997, the Applicable Tranche B
Eurodollar Margin shall be 1.75% per annum; provided further that if Company has
failed to provide a Margin Determination Certificate at the time required
pursuant to subsection 6.1, the Applicable Tranche B Eurodollar Margin shall be
2.25% per annum for the period from the date such Margin Determination
Certificate was required to be delivered until such Margin Determination
Certificate is actually delivered:
LEVERAGE RATIO APPLICABLE TRANCHE B EURODOLLAR MARGIN
greater than 5.0:1.0 2.25%
less than or equal to 5.0:1.0
but greater than 4.75:1.0 2.00%
less than or equal to 4.75:1.0
but greater than 3.75:1.0 1.75%
less than or equal to 3.75:1.0 1.50%
"APPROVED FUND" has the meaning assigned to such term in the
definition of "Eligible Assignee."
"ARRANGERS" means Chase Securities Inc. and BT Securities
Corporation.
"ASSET SALE" means (i) the sale, lease (other than any lease in the
ordinary course of business consistent with past practices), assignment or other
transfer (whether voluntary or involuntary) for value (collectively, a
"transfer") by Company or any of its Subsidiaries to any Person other than
Company or any of its wholly-owned Subsidiaries of (a) any of the stock of any
of Company's Subsidiaries, (b) substantially all of the assets of any division
or line of business of Company or any of its Subsidiaries, or (c) any other
assets (whether tangible or intangible) of Company or any of its Subsidiaries,
excluding (1) any Cash Equivalents or inventory sold in the ordinary course of
business, (2) any such transfer to the extent that the aggregate value of the
stock or assets transferred in any single transaction or related series of
transactions is equal to $100,000 or less, or $1,000,000 or less in the
aggregate in any Fiscal Year for all such excluded transfers and all excluded
occurrences described in the succeeding clause (ii), and (3) any transfer in an
arm's-length transaction by Company or a Subsidiary of Company to a Developer of
a Development Site constituting a Development Investment permitted under
subsection 7.3(vi) or constituting a California Development Investment permitted
under subsection 7.3(x); or (ii) the occurrence of any complete or partial loss,
damage or destruction of any assets of Company or any of its Subsidiaries giving
rise to insurance proceeds, excluding any such occurrence to the extent that the
aggregate value of the assets lost, destroyed or damaged in any single
occurrence or related series of occurrences is equal to $100,000 or less, or
$1,000,000 or less in the aggregate in any Fiscal Year for all such excluded
occurrences and all excluded transfers described in clause (i)(2) above.
"ASSIGNMENT AGREEMENT" means an Assignment Agreement in
substantially the form of Exhibit X annexed hereto.
"AUDITOR'S LETTER" means a letter, substantially in the form of
Exhibit XI annexed hereto, executed by Company and delivered to Company's
independent certified public accountants pursuant to subsection 4.1O.
"BANKERS" has the meaning assigned to that term in the preamble to
this Agreement.
"BANKRUPTCY CODE" means Title 11 of the United States Code entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute.
"BASE RATE" means, at any time, the higher of (x) the Prime Rate or
(y) the rate which is 1/2 of 1% in excess of the Federal Funds Effective Rate.
"BASE RATE LOANS" means Loans bearing interest at rates determined
by reference to the Base Rate as provided in subsection 2.2A.
"BUSINESS DAY" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the State of New York or the State of
Utah or is a day on which banking institutions located in such states are
authorized or required by law or other governmental action to close.
"CALIFORNIA DEVELOPMENT INVESTMENTS" means (a) a loan by Company or
a Subsidiary of Company to a Developer, the proceeds of which are to be used to
finance the development of California Properties; (b) a cash contribution by
Company or a Subsidiary of Company to the capital of a Developer, the proceeds
of which are used to finance the development of California Properties; (c) a
contribution by Company or a Subsidiary of Company to the capital of a Developer
of any interest of Company or such Subsidiary in one or more parcels of
California Property; or (d) Consolidated Capital Expenditures incurred in
connection with California Properties; provided that in each case Company
reasonably believes, taking into account the amount of such loan, contribution
or expenditure, that such loan, contribution or expenditure will improve its
ability to sell or lease such property on economic terms more favorable to
Company. The amount of any California Development Investment (i) referred to in
clauses (a), (b) and (c) above shall be the amount of cash so loaned or so
contributed or the fair market value of the parcel or parcels of real property
so contributed, which fair market value shall be determined, without regard to
the proposed investment, at the time of such contribution, in good faith by
Company, in each case minus the amount of cash received by Company or any of its
Subsidiaries with respect to such loan or contribution, whether by repayment or
purchase of such loan or contribution, and (ii) referred to in clause (d) above
shall be the amount of Consolidated Capital Expenditures incurred minus the
amount of Net Asset Sale Proceeds received by Company or any of its Subsidiaries
from the sale of such California Properties but in any event not in excess of
the Consolidated Capital Expenditures incurred with respect to such property.
"CALIFORNIA PROPERTIES" means (i) the Real Property Assets owned by
the Company and any of its Subsidiaries and located in California, which Real
Property Assets are identified on Schedule 5.19; and (ii) all personal property
assets owned by the Company and any of its Subsidiaries and related to such Real
Property Assets.
"CAPITAL LEASE", as applied to any Person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee that, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"CASH" means money, currency or a credit balance in a Deposit
Account.
"CASH EQUIVALENTS" means, as at any date of determination,
(i) marketable securities (a) issued or directly and unconditionally guaranteed
as to interest and principal by the United States Government or (b) issued by
any agency of the United States the obligations of which are backed by the full
faith and credit of the United States, in each case maturing within one year
after such date; (ii) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof, in each case maturing within one year after such
date and having, at the time of the acquisition thereof, the highest rating
obtainable from either Standard & Poor's Ratings Group ("S&P") or Moody's
Investors Service, Inc. ("MOODY'S"); (iii) commercial paper maturing no more
than one year from the date of creation thereof and having, at the time of the
acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from
Moody's; (iv) certificates of deposit or bankers' acceptances maturing within
one year after such date and issued or accepted by any Lender or by any
commercial bank organized under the laws of the United States of America or any
state thereof or the District of Columbia that (a) is at least "adequately
capitalized" (as defined in the regulations of its primary Federal banking
regulator) and (b) has Tier 1 capital (as defined in such regulations) of not
less than $100,000,000; (v) shares of any money market mutual fund that (a) has
at least 95% of its assets invested continuously in the types of investments
referred to in clauses (i) and (ii) above, (b) has net assets of not less than
$500,000,000, and (c) has the highest rating obtainable from either S&P or
Moody's; and (vi) repurchase agreements with respect to, and which are fully
secured by a security interest in, obligations of the type described in clause
(i) or clause (ii) above and are with any commercial bank described in clause
(iv) above.
"CERCLA" has the meaning assigned to that term in the definition of
"Environmental Laws".
"CERTIFICATE RE NON-BANK STATUS" means a certificate in form and
substance satisfactory to Administrative Agent delivered by a Lender to
Administrative Agent pursuant to subsection 2.7B(iii) pursuant to which such
Lender certifies, under penalty of perjury, that it is not (i) a "bank" as such
term is defined in subsection 881(c)(3) of the Internal Revenue Code; (ii) a 10
percent shareholder of Company within the meaning of Section 871(h)(3)(B) or
Section 881(c)(3)(B) of the Internal Revenue Code; or (iii) a "controlled"
foreign corporation related to Company within the meaning of Section 864(d)(4)
of the Internal Revenue Code.
"CHANGE OF CONTROL" means (i) any Person (other than a Permitted
Holder) or any group (within the meaning of Section 13(d)(3) of the Exchange
Act) of Persons (other than any Permitted Holders), shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Exchange Act), directly or indirectly, in one or
more transactions, of Securities of Company (or other Securities convertible
into such Securities) representing 25% or more of the combined voting power of
all Securities of Company entitled to vote in the election of directors, other
than Securities having such power only by reason of the happening of a
contingency, or (ii) a change in the composition of the Board of Directors of
Company has occurred such that a majority of the members of the Board of
Directors are not Continuing Directors.
"CHASE" has the meaning assigned to that term in the preamble to
this Agreement.
"CLASS" means, with respect to Lenders, each class of Lenders under
this Agreement, with there being two separate classes of Lenders, i.e.,
(i) Lenders having Tranche A Term Loan Exposure and/or Revolving Loan Exposure
(taken together as a single class) and (ii) Lenders having Tranche B Term Loan
Exposure.
"CLASS A COMMON STOCK" means the Class A Common Stock of Company,
par value $.01 per share.
"CLASS B COMMON STOCK" means the Class B Common Stock of Company,
par value $.01 per share.
"CLASS C COMMON STOCK" means the Non-Voting Convertible Class C
Common Stock of Company, par value $.01 per share.
"CLOSING DATE" means March 27, 1997.
"COLLATERAL" means all of the real, personal and mixed property
(including capital stock) in which Liens are purported to be granted pursuant to
the Collateral Documents as security for the Obligations.
"COLLATERAL ACCOUNT" has the meaning assigned to that term in the
Collateral Account Agreement.
"COLLATERAL ACCOUNT AGREEMENT" means the Amended and Restated
Collateral Account Agreement executed and delivered by Company and
Administrative Agent on the Closing Date, substantially in the form of Exhibit
XIII annexed hereto as such Collateral Account Agreement may hereafter be
amended, supplemented or otherwise modified from time to time.
"COLLATERAL DOCUMENTS" means the Pledge Agreements, the Security
Agreements, the Trademark Security Agreements, the Collateral Account Agreement,
the Mortgages and all other instruments or documents delivered by any Loan Party
pursuant to this Agreement or any of the other Loan Documents in order to grant
to Administrative Agent, on behalf of Lenders, a Lien on any real, personal or
mixed property of that Loan Party as security for the Obligations.
"COLLATERAL RELEASE CONDITIONS" has the meaning assigned to that
term in subsection 6.11.
"COLLATERAL RELEASE DATE" has the meaning assigned to that term in
subsection 6.11.
"COMMERCIAL LETTER OF CREDIT" means any letter of credit payable on
sight or similar instrument issued for the purpose of providing the primary
payment mechanism in connection with the purchase of any materials, goods or
services by Company or any of its Subsidiaries in the ordinary course of
business of Company or such Subsidiary.
"COMMITMENT FEE PERCENTAGE" means, as of any date of determination,
a percentage per annum set forth below opposite the applicable Leverage Ratio;
provided that for the period beginning on and including the Closing Date to and
including August 19, 1997, the Commitment Fee Percentage shall be 0.375% per
annum; provided further that if Company has failed to provide a Margin
Determination Certificate at the time required pursuant to subsection 6.1, the
Commitment Fee Percentage shall be 0.50% per annum for the period from the date
such Margin Determination Certificate was required to be delivered until such
Margin Determination Certificate is actually delivered:
LEVERAGE RATIO COMMITMENT FEE PERCENTAGE
greater than 4.75:1.0 0.50%
less than or equal to 4.75:1.0
but greater than 3.75:1.0 0.375%
less than or equal to 3.75:1.0
but greater than 3.25:1.0 0.30%
less than or equal to 3.25:1.0 0.25%
"COMMITMENTS" means the commitments of Lenders to purchase or make
Loans as set forth in subsection 2.1A.
"COMMON STOCK" means the Class A Common Stock, Class B Common Stock
and Class C Common Stock of Company.
"COMPANY" has the meaning assigned to that term in the preamble to
this Agreement.
"COMPLIANCE CERTIFICATE" means a certificate substantially in the
form of Exhibit VII annexed hereto delivered to Administrative Agent and Lenders
by Company pursuant to subsection 6.1(iv).
"CONSOLIDATED ADJUSTED EBITDA" means, for any period, without
duplication, the sum of the amounts for such period of (i) Consolidated Net
Income, (ii) Consolidated Cash Interest Expense, (iii) provisions for taxes
based on income, (iv) total depreciation expense, (v) total amortization
expense, and (vi) other non-cash items reducing Consolidated Net Income less
other non-cash items increasing Consolidated Net Income, all of the foregoing as
determined on a consolidated basis for Company and its Subsidiaries in conformi
ty with GAAP.
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, an amount
equal to (i) the sum of (a) the aggregate of all expenditures (whether paid in
cash or other consideration or accrued as a liability and including that portion
of Capital Leases which is capitalized on the consolidated balance sheet of
Company and its Subsidiaries) by Company and its Subsidiaries during that period
that, in conformity with GAAP, are included in "additions to property, plant or
equipment" or comparable items reflected in the consolidated balance sheets of
Company and its Subsidiaries plus (b) to the extent not covered by clause
(i)(a) of this definition, the aggregate of all expenditures by Company and its
Subsidiaries during that period to acquire (by purchase or otherwise) the
business, property or fixed assets (other than current assets consisting of
inventory or accounts receivable) of any Person, or the stock or other evidence
of beneficial ownership of any Person that, as a result of such acquisition,
becomes a Subsidiary of Company minus (ii) the sum of (a) Consolidated Capital
Expenditures (as defined in clause (i) above) constituting Development
Investments permitted under subsection 7.3(vi) or Capital Leases required to be
recorded in connection with a Development Investment and permitted under
subsection 7.9; (b) the principal amount of Indebtedness permitted under
subsections 7.1(iii) and 7.1(vii) to the extent relating to equipment, fixtures
and other similar property acquired during such period; (c) an amount equal to
the proceeds received by Company or any of its Subsidiaries from a sale-
leaseback transaction of a store or equipment permitted under subsection 7.10 so
long as such transaction occurs during such period and within one year of the
completion of such store or acquisition of such equipment and to the extent
prior expenditures, up to an equivalent amount for the asset so sold and leased
back, constituted Consolidated Capital Expenditures (as defined above) in such
period or in any prior period; (d) an amount equal to the increase in "property,
plant or equipment" which results from any required reclassification under GAAP
of Operating Leases of Company and its Subsidiaries to Capital Leases (other
than a reclassification that results from an amendment to such Operating
Leases); (e) expenditures in an amount not to exceed the proceeds of insurance,
condemnation awards (or payments in lieu thereof) or indemnity payments received
from third parties, so long as such expenditures were made for purposes
permitted pursuant to subsection 2.4B(iii)(a)(iv) and so long as such
expenditures are made not later than 24 months after receipt of such proceeds;
(f) Consolidated Capital Expenditures (as defined in clause (i) above)
constituting California Development Investments under clause (d) of the
definition thereof permitted under subsection 7.3(x); and (g) an amount equal to
the increase in "property, plant or equipment" which results from the transfer
to Company of Related Assets in connection with Company becoming liable with
respect to Indebtedness permitted under subsection 7.1(viii).
"CONSOLIDATED CASH INTEREST EXPENSE" means, for any period, total
interest expense (including that portion attributable to Capital Leases in accor
dance with GAAP and capitalized interest) net of any interest income received in
Cash by Company or any of its Subsidiaries on a consolidated basis with respect
to all outstanding Indebtedness of Company and its Subsidiaries, including,
without limitation, all commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance financing and net
costs under Interest Rate Agreements, plus all dividends on the Redeemable
Preferred Stock paid or payable in Cash but excluding, however, (i) any amounts
referred to in subsection 2.3 payable to Administrative Agent and Lenders on or
before the Closing Date and (ii) any interest expenses not payable in Cash
(including amortization of discounts and of debt issuance costs).
"CONSOLIDATED EXCESS CASH FLOW" means, for any Fiscal Year, an
amount equal to (i) the sum (without duplication) of the amounts for such Fiscal
Year of (a) Consolidated Net Income; (b) any after-tax gains attributable to
returned surplus assets of any Pension Plan; (c) the amount of Net Asset Sale
Proceeds received in such Fiscal Year that are not otherwise included in
Consolidated Net Income and that are required to be used to prepay the Term
Loans and/or permanently reduce the Revolving Loan Commitments pursuant to
subsection 2.4B(iii)(a), but excluding amounts returned to Company pursuant to
the last sentence of subsection 2.4B(iv)(c) which are not used by Company to
prepay the Term Loans and/or permanently reduce the Revolving Loan Commitments;
(d) the aggregate amount of Cash proceeds (net of underwriting discounts,
similar placement fees and commissions and other reasonable costs and expenses
associated therewith) from the issuance of any debt Securities of Company or any
of its Subsidiaries that are required to be used to prepay the Loans pursuant to
subsection 2.4B(iii)(c), but excluding amounts returned to Company pursuant to
the last sentence of subsection 2.4B(iv)(c) which are not used by Company to
prepay the Terms Loans and/or permanently reduce the Revolving Loan Commitments;
(e) consolidated depreciation and amortization expense for such Fiscal Year;
(f) the net decrease (if any) in deferred tax assets and the net increase (if
any) in deferred tax liabilities of Company and its Subsidiaries; (g) other non-
cash charges reducing Consolidated Net Income; (h) (to the extent not included
in Consolidated Net Income) any cash extraordinary gains; (i) an amount equal to
the Net Asset Sale Proceeds excluded from mandatory prepayments required to be
made under subsection 2.4B(iii)(a) pursuant to clauses (i) and (iii) of the
first proviso thereof; provided that such Net Asset Sale Proceeds which meet the
following requirements ("Excluded Proceeds") shall not be added pursuant to this
clause (i): (x) they have not been reinvested as permitted pursuant to such
clauses (i) and (iii) and (y) the period for permitted reinvestment pursuant to
such clauses (i) and (iii) extends beyond the last date of the Fiscal Year;
(j) all Cash proceeds received by Company or any of its Subsidiaries in payment
or repayment of any Development Investment or California Development Investment
previously made by Company or such Subsidiary; (k) an amount equal to the
Excluded Proceeds from the previous Fiscal Year; and (l) cash proceeds which
result in reductions in long-term assets minus (ii) the sum (without
duplication) of the amounts for such Fiscal Year of (a) Consolidated Capital
Expenditures permitted under subsection 7.8 made during such Fiscal Year;
(b) payments of principal made in respect of any outstanding Indebtedness of
Company or any of its Subsidiaries to the extent such payments are permanent
reductions in Funded Debt and not prohibited under subsection 7.5; (c) the net
increase (if any) in deferred tax assets and the net decrease (if any) in
deferred tax liabilities; (d) the amount of all Development Investments
permitted under subsection 7.3(vi) or California Development Investments
permitted under subsection 7.3(x) which are paid or payable in cash and are made
during such Fiscal Year; (e) other non-cash charges increasing Consolidated Net
Income; (f) cash payments which result in reductions in reserves and/or long
term liabilities in such Fiscal Year; (g) cash payments made by Company to
redeem the Redeemable Preferred Stock in accordance with subsection 7.5; and (h)
$15,000,000, all of the foregoing as determined on a consolidated basis for
Company and its Subsidiaries in conformity with GAAP.
"CONSOLIDATED FIXED CHARGES" means, for any period, the sum (without
duplication) of the amounts for such period of (i) Consolidated Cash Interest
Expense, (ii) Consolidated Rental Payments, (iii) scheduled principal payments
attributable to any Indebtedness of Company and its Subsidiaries and (iv) cash
payments made by Company after the Closing Date to redeem the Redeemable
Preferred Stock, all of the foregoing as determined on a consolidated basis for
Company and its Subsidiaries in conformity with GAAP.
"CONSOLIDATED NET INCOME" means, for any period, the net income (or
loss) of Company and its Subsidiaries on a consolidated basis for such period
taken as a single accounting period determined in conformity with GAAP; provided
that there shall be excluded (without duplication) (i) the income (or loss) of
any Person (other than a Subsidiary of Company) in which any other Person (other
than Company or any of its Subsidiaries) has a joint interest, except to the
extent of the amount of dividends or other distributions actually paid to
Company or any of its Subsidiaries by such Person during such period, (ii) the
income (or loss) of any Person accrued prior to the date it becomes a Subsidiary
of Company or is merged into or consolidated with Company or any of its Subsidi
aries or that Person's assets are acquired by Company or any of its Subsidiar
ies, (iii) the income of any Subsidiary of Company to the extent that the
declaration or payment of dividends or similar distributions by that Subsidiary
of that income is not at the time permitted by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary, (iv) any after-tax gains
or losses attributable to Asset Sales or returned surplus assets of any Pension
Plan, (v) Restructuring Charges incurred during such period, and (vi) (to the
extent not included in clauses (i) through (v) above) any net extraordinary
gains or net non-cash extraordinary losses.
"CONSOLIDATED NET WORTH" means, as at any date of determination,
(i) the capital stock and additional paid-in capital plus (ii) retained earnings
(or minus accumulated deficits) of Company and its Subsidiaries on a
consolidated basis determined in conformity with GAAP plus (iii) Restructuring
Charges for the period from and including the Closing Date to such date of
determination.
"CONSOLIDATED RENTAL PAYMENTS" means, for any period, the aggregate
amount of all rents paid or payable by Company and its Subsidiaries on a
consolidated basis during that period under all Operating Leases to which
Company or any of its Subsidiaries is a party as lessee (net of sublease
income).
"CONSOLIDATED TOTAL DEBT" means, as at any date of determination,
the aggregate stated balance sheet amount of all Indebtedness of Company and its
Subsidiaries plus the Redeemable Preferred Stock, determined on a consolidated
basis in accordance with GAAP.
"CONTINGENT OBLIGATION", as applied to any Person, means any direct
or indirect liability, contingent or otherwise, of that Person (i) with respect
to any Indebtedness, lease, dividend or other obligation of another if the
primary purpose or intent thereof by the Person incurring the Contingent
Obligation 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 agree
ments 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) with respect to any letter of credit issued for the account of
that Person or as to which that Person is otherwise liable for reimbursement of
drawings, or (iii) under Hedge Agreements. Contingent Obligations shall
include, without limitation, (a) the direct or indirect guaranty, 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, (b) the obligation to make take-or-pay or similar
payments if required regardless of non-performance by any other party or parties
to an agreement, and (c) any liability of such Person for the obligation of
another through any agreement (contingent or otherwise) (X) to purchase, repur
chase 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) or
(Y) to maintain the solvency or any balance sheet item, level of income or
financial condition of another if, in the case of any agreement described under
subclauses (X) or (Y) of this sentence, the primary purpose or intent thereof is
as described in the preceding sentence. The amount of any Contingent Obligation
shall be equal to the amount of the obligation so guaranteed or otherwise
supported or, if less, the amount to which such Contingent Obligation is
specifically limited.
"CONTINUING DIRECTORS" means, as of any date of determination, any
member of the Board of Directors of Company who (i) was a member of such Board
of Directors on the Closing Date or (ii) was nominated for election or elected
to such Board of Directors either with the affirmative vote of a majority of the
directors who were either members of such Board of Directors on the Closing Date
or whose nomination or election was previously so approved.
"CONTRACTUAL OBLIGATION", as applied to any Person, means any
provision of any Security issued by that Person or of any material indenture,
mortgage, deed of trust, contract, undertaking, agreement or other instrument to
which that Person is a party or by which it or any of its properties is bound or
to which it or any of its properties is subject.
"COVERED PERIOD" means the period from the date hereof to and
including the Transfer Date, but excluding the period, if any, prior to the
Transfer Date, during which (A) Indemnitee or its Affiliate has obtained and
then remains in possession and control of the Mortgaged Property and (B) neither
Company nor any of its Affiliates is in possession or control of such property
or engaging in any Hazardous Materials Activity on or at such property.
"CURRENCY AGREEMENT" means any foreign exchange contract, currency
swap agreement, futures contract, option contract, synthetic cap or other
similar agreement or arrangement to which Company or any of its Subsidiaries is
a party.
"DEFERRED COMPENSATION AGREEMENTS" means those certain deferred
compensation agreements entered into by and between the Company and certain of
its current and former employees as in effect on May 23, 1996 (or as amended in
a form acceptable to Arrangers), including those certain deferred compensation
agreements entered into by and between Company and James A. Acton, Robert D.
Bolinder, Richard C. Bylski, Michael C. Frei, James W. Hallsey, Larry R.
McNeill, Harry M. Moskal, Matthew G. Tezak, Paul D. Tezak, Frederick F. Urbanek
and Kenneth A. White.
"DEFERRED TRADE PAYABLES" means promissory notes (whether interest
bearing or non-interest bearing) executed by Company or any of its Subsidiaries
in favor of such entity's suppliers to finance the purchase price and delivery
costs of inventory in connection with such entity's opening or acquisition of
new stores or remodeling of existing stores.
"DEPOSIT ACCOUNT" means a demand, time, savings, passbook or like
account with a bank, savings and loan association, credit union or like
organization, other than an account evidenced by a negotiable certificate of
deposit.
"DEVELOPER" means any Person which owns, leases or otherwise
controls or intends to acquire an interest in a Development Site.
"DEVELOPMENT INVESTMENT" means (a) a loan by Company or a Subsidiary
of Company to a Developer, the proceeds of which are to be used to finance a
Development Project of such Developer, (b) a cash contribution by Company or a
Subsidiary of Company to the capital of a Developer, the proceeds of which are
to be used to finance a Development Project of such Developer, or (c) a
contribution by Company or a Subsidiary of Company to the capital of a Developer
of an interest of Company or such Subsidiary in a Development Site, but in any
event excluding any California Development Investments. The amount of any
Development Investment shall be the amount of cash so loaned or contributed or
the fair market value of the interest of a Development Site so contributed,
which fair market value shall be determined, without regard to the proposed
investment, at the time of such contribution in good faith by resolution of the
Board of Directors of Company, in each case minus the amount of cash received by
Company or any of its Subsidiaries in repayment of such Development Investment.
"DEVELOPMENT PROJECT" means a project for the development by or at
the direction of a Developer of a Development Site, including the construction,
remodeling, expansion or renovation of a store thereon, which store is to be
leased to and operated by Company or one of its Subsidiaries.
"DEVELOPMENT SITE" means, with respect to a Development Investment,
real property which is identified by Company or one of its Subsidiaries as the
intended location for a store or a shopping center and related improvements to
be constructed, remodeled, expanded or renovated by or at the direction of the
Developer thereof, which in each case shall include a store intended to be
leased to and operated by Company or one of its Subsidiaries, and with respect
to a California Development Investment, any California Property.
"DOLLARS" and the sign "$" mean the lawful money of the United
States of America.
"ELIGIBLE ASSIGNEE" means (A) (i) a commercial bank organized under
the laws of the United States or any state thereof; (ii) a savings and loan
association or savings bank organized under the laws of the United States or any
state thereof; (iii) a commercial bank organized under the laws of any other
country or a political subdivision thereof; provided that (x) such bank is
acting through a branch or agency located in the United States or (y) such bank
is organized under the laws of a country that is a member of the Organization
for Economic Cooperation and Development or a political subdivision of such
country; and (iv) any other entity which is an "accredited investor" (as defined
in Regulation D under the Securities Act) which extends credit or buys loans as
one of its businesses including, but not limited to, insurance companies, mutual
funds and lease financing companies; and (B) any Lender, any Affiliate of any
Lender and, with respect to any Lender that is a fund that invests in bank
loans, any other fund that invests in bank loans and is managed by the same
investment advisor as such Lender or by an Affiliate of such investment advisor
(any such fund, an "APPROVED FUND"); provided that no Affiliate of Company shall
be an Eligible Assignee.
"EMPLOYEE BENEFIT PLAN" means any "employee benefit plan" as defined
in Section 3(3) of ERISA (i) which is, or, at any time within the five calendar
years immediately preceding the date hereof, was at any time, maintained or
contributed to by the Loan Parties or any of their respective ERISA Affiliates
or (ii) with respect to which any Loan Party retains any liability, including
any potential joint and several liability as a result of an affiliation with an
ERISA Affiliate or a party that would be an ERISA Affiliate except for the fact
the affiliation ceased more than five calendar years prior to the date hereof.
"ENVIRONMENTAL CLAIM" means any accusation, allegation, notice of
violation, notice of potential liability, claim, demand, abatement order or
other order or direction (conditional or otherwise) by any governmental
authority or any Person for any damage, including, without limitation, personal
injury (including sickness, disease or death), tangible or intangible property
damage, contribution, indemnity, indirect or consequential damages, damage to
the environment, nuisance, pollution, contamination or other adverse effects on
the environment, or for fines, penalties or restrictions, in each case relating
to, resulting from or in connection with Hazardous Materials and relating to
Company, any of its Subsidiaries, any of their respective Affiliates or any
Facility.
"ENVIRONMENTAL LAWS" means all present or future statutes,
ordinances, orders, rules, regulations, plans, policies or decrees and the like
relating to (i) environmental matters, including, without limitation, those
relating to fines, injunctions, penalties, damages, contribution, cost recovery
compensation, losses or injuries resulting from the Release or threatened
Release of Hazardous Materials, (ii) the generation, use, storage,
transportation or disposal of Hazardous Materials, or (iii) occupational safety
and health, industrial hygiene, land use or the protection of human, plant or
animal health or welfare, in any manner applicable to Company or any of its
Subsidiaries or any of their respective properties, including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act "CERCLA" (42 U.S.C. 9601 et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. 1801 et seq.), the Resource Conservation and
Recovery Act (42 U.S.C. 6901 et seq.), the Federal Water Pollution Control Act
(33 U.S.C. 1251 et seq.), the Clean Air Act (42 U.S.C. 7401 et seq.), the
Toxic Substances Control Act (15 U.S.C. 2601 et seq.), the Federal
Insecticide, Fungicide and Rodenticide Act (7 U.S.C. 136 et seq.), the
Occupational Safety and Health Act (29 U.S.C. 651 et seq.) and the Emergency
Planning and Community Right-to-Know Act (42 U.S.C. 11001 et seq.), each as
amended or supplemented, and any analogous future or present local, state and
federal statutes and regulations promulgated pursuant thereto, each as in effect
as of the date of determination.
"ENVIRONMENTAL LOSSES" means any and all losses, liabilities,
damages (whether actual, consequential, punitive, or otherwise denominated),
demands, claims, actions, judgments, causes of action, assessments, penalties,
costs and expenses (including, without limitation, reasonable attorneys' fees
and disbursements), of any and every kind or character, foreseeable and
unforeseeable, liquidated and contingent, proximate and remote, suffered or
incurred by any Indemnitee, arising out of or as a result of: (I) any Hazardous
Materials Activity that occurs or is alleged to have occurred on or prior to the
date hereof or during the Covered Period; (II) any violation on or prior to the
date hereof or during the Covered Period of any applicable Environmental Laws
relating to the Mortgaged Property or to the ownership, use, occupancy or
operation thereof; (III) any investigation, inquiry, order, hearing, action, or
other proceeding by or before any governmental agency in connection with any
Hazardous Materials Activity that occurs or is alleged to have occurred on or
prior to the date hereof or during the Covered Period; or (IV) any claim, demand
or cause of action, or any action or other proceeding, whether meritorious or
not, brought or asserted against any Indemnitee which directly or indirectly
relates to, arises from or is based on any of the matters described in clauses
(i), (ii), or (iii), or any allegation of any such matters.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and any successor statute.
"ERISA AFFILIATE" as applied to any Person, means (i) any
corporation which is, or was at any time within the five calendar years
immediately preceding the date hereof, a member of a controlled group of
corporations within the meaning of Section 414(b) of the Internal Revenue Code
of which that Person is, or was at any time within the five calendar years
immediately preceding the date hereof, a member; (ii) any trade or business
(whether or not incorporated) which is, or was at any time within the five
calendar years immediately preceding the date hereof, a member of a group of
trades or businesses under common control within the meaning of Section 414(c)
of the Internal Revenue Code of which that Person is, or was at any time within
the five calendar years immediately preceding the date hereof, a member; and
(iii) any member of an affiliated service group within the meaning of Section
414(m) or (o) of the Internal Revenue Code of which that Person, any corporation
described in clause (i) above or any trade or business described in clause (ii)
above is, or was at any time within the five calendar years immediately
preceding the date hereof, a member.
"ERISA EVENT" means (i) a "reportable event" within the meaning of
Section 4043 of ERISA and the regulations issued thereunder with respect to any
Pension Plan (excluding those for which the provision for 30-day notice to the
PBGC has been waived by regulation); (ii) the failure to meet the minimum
funding standard of Section 412 of the Internal Revenue Code with respect to any
Pension Plan (whether or not waived in accordance with Section 412(d) of the
Internal Revenue Code) or the failure to make by its due date a required
installment under Section 412(m) of the Internal Revenue Code with respect to
any Pension Plan or the failure to make any required contribution to a
Multiemployer Plan; (iii) the provision by the administrator of any Pension Plan
pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such
plan in a distress termination described in Section 4041(c) of ERISA; (iv) the
withdrawal by any of the Loan Parties or any of their respective ERISA
Affiliates from any Pension Plan with two or more contributing sponsors or the
termination of any such Pension Plan resulting in liability pursuant to Section
4063 or 4064 of ERISA; (v) the institution by the PBGC of proceedings to
terminate any Pension Plan, or the occurrence of any event or condition which
might reasonably be expected to constitute grounds under ERISA for the
termination of, or the appointment of a trustee to administer, any Pension Plan;
(vi) the imposition of liability on any of the Loan Parties or any of their
respective ERISA Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by
reason of the application of Section 4212(c) of ERISA; (vii) the withdrawal of
any of the Loan Parties or any of their respective ERISA Affiliates in a
complete or partial withdrawal (within the meaning of Sections 4203 and 4205 of
ERISA) from any Multiemployer Plan if there is any potential liability therefor,
or the receipt by any of the Loan Parties or any of their respective ERISA
Affiliates of notice from any Multiemployer Plan that it is in reorganization or
insolvency pursuant to Section 4241 or 4245 of ERISA, or that it intends to
terminate or has terminated under Section 4041A or 4042 of ERISA; (viii) the
occurrence of an act or omission which could reasonably be expected to give rise
to the imposition on any of the Loan Parties or any of their respective ERISA
Affiliates of fines, penalties, taxes or related charges under Chapter 43 of the
Internal Revenue Code or under Section 409 or 502(c), (i) or (l), or 4071 of
ERISA in respect of any Employee Benefit Plan; (ix) the assertion of a material
claim (other than (a) routine claims for benefits, (b) any claims (and any
resulting liabilities) in an aggregate amount not exceeding $3,500,000 (and then
only to the extent of such excess) made by the United Food and Commercial
Workers Union Employees Benefit Fund for Southern California, or any affected
union, with respect to contributions allegedly owed by Company to such fund as a
result of Company's sale and closure in 1996 of certain of its operations in
California, and (c) solely for the purpose of subsection 8.10, claims (and any
resulting liabilities) under or with respect to the Deferred Compensation
Agreements to the extent not in excess of $30,000,000 (and then only to the
extent of such excess) against any Employee Benefit Plan other than a
Multiemployer Plan or the assets thereof, or against any of the Loan Parties or
any of their respective ERISA Affiliates in connection with any Employee Benefit
Plan; (x) receipt from the Internal Revenue Service of notice of the failure of
any Pension Plan (or any other Employee Benefit Plan intended to be qualified
under Section 401(a) of the Internal Revenue Code) to qualify under Section
401(a) of the Internal Revenue Code, or the failure of any trust forming part of
any Pension Plan to qualify for exemption from taxation under Section 501(a) of
the Internal Revenue Code; or (xi) the imposition of a Lien pursuant to Section
401(a)(29) or 412(n) of the Internal Revenue Code or pursuant to ERISA with
respect to any Pension Plan.
"EURODOLLAR RATE LOANS" means Loans bearing interest at rates
determined by reference to the Adjusted Eurodollar Rate as provided in
subsection 2.2A.
"EVENT OF DEFAULT" means each of the events set forth in Section 8.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute.
"EXCLUDED PROPERTIES" means, as of any date, (i) the California
Properties subject as of the Closing Date to existing contracts for the sale
thereof (as so identified on Schedule 5.19), (ii) the Surplus Properties subject
as of the Closing Date to existing contracts for the sale thereof (as so
identified on Schedule 5.19) and (iii) provided that there shall not then exist
a Potential Event of Default or an Event of Default, any interest in any Real
Property Asset (excluding any Real Property Assets on which Administrative Agent
shall have been granted a Lien in accordance with the terms hereof and excluding
any Replacement Properties) acquired or constructed by Company or any of its
Subsidiaries after the Closing Date for an aggregate purchase price per location
not exceeding $20,000,000 for any such Real Property Asset.
"EXISTING COMPANY IRB'S" means Company's (i) $2,850,000 in initial
aggregate principal amount of 8.85% Industrial Development Revenue Bonds
(Smith's Food King Properties, Inc. Project) due 2000 (the "BRIGHAM CITY
BONDS"), (ii) $2,470,000 in initial aggregate principal amount of Industrial
Development Revenue Bonds, Series 1985 due 2010 (the "NORTH OGDEN BONDS") and
(iii) $3,800,000 in initial aggregate principal amount of Industrial Development
Revenue Bonds, Series 1985 (Provo-Smith's Associates Project) due 2010 (the
"PROVO BONDS"), in each case issued pursuant to the applicable Existing Company
IRB Indenture, and the aggregate outstanding principal amount of which
Indebtedness as of the Closing Date does not exceed $6,100,000.
"EXISTING COMPANY IRB INDENTURES" means (i) the Indenture of Trust
dated September 1, 1980 between Brigham City, Utah, and First Security Bank of
Utah, N.A., as trustee, pursuant to which the Brigham City Bonds were issued,
(ii) the Indenture of Trust dated as of December 1, 1985 between North Ogden
City, Utah, and Zions First National Bank, as trustee, pursuant to which the
North Ogden Bonds were issued, and (iii) the Indenture of Trust dated as of
December 1, 1985 between Provo City, Utah, and Zions First National Bank, as
trustee, pursuant to which the Provo Bonds were issued, in each case as amended
prior to the Closing Date.
"EXISTING CREDIT AGREEMENT" has the meaning assigned to that term in
the recitals to this Agreement.
"EXISTING LETTERS OF CREDIT" means the Letters of Credit listed in
Schedule 3.1C annexed hereto.
"FACILITIES" means any and all real property (including, without
limitation, all buildings, fixtures or other improvements located thereon) now,
hereafter or heretofore owned, leased, operated or used by Company or any of its
Subsidiaries or any of their respective predecessors or Affiliates.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any period, a fluctuating
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by Administrative Agent from three Federal funds brokers
of recognized standing selected by Administrative Agent.
"FINANCIAL PLAN" has the meaning assigned to that term in subsection
6.1(xiii).
"FISCAL PERIOD" means a fiscal period of Company and its
Subsidiaries, consisting of a four-week period or five-week period, as the case
may be.
"FISCAL QUARTER" means a fiscal quarter of Company and its
Subsidiaries, consisting of a 13-week period or, in the case of the first Fiscal
Quarter of any Fiscal Year which has 53 weeks, a 14-week period.
"FISCAL YEAR" means the fiscal year of Company and its Subsidiaries,
consisting of a 52- or 53-week period, ending on the date which is the Saturday
closest to December 31.
"FLOOD HAZARD PROPERTY" means a Mortgaged Property located in an
area designated by the Federal Emergency Management Agency as having special
flood or mud slide hazards.
"FUNDED DEBT", as applied to any Person, means all Indebtedness of
that Person which by its terms or by the terms of any instrument or agreement
relating thereto matures more than one year from, or is directly renewable or
extendable at the option of the debtor to a date more than one year from
(including an option of the debtor under a revolving credit or similar agreement
obligating the lender or lenders to extend credit over a period of one year or
more from), the date of the creation thereof.
"FUNDING AND PAYMENT OFFICE" means (i) the office of Administrative
Agent and Swing Line Lender located at 270 Park Avenue, New York, New York
10017, Attn: Ellen Gertzog, or (ii) such other office of Administrative Agent
and Swing Line Lender as may from time to time hereafter be designated as such
in a written notice delivered by Administrative Agent and Swing Line Lender to
Company and each Lender.
"FUNDING DATE" means the date of the funding of a Loan.
"GAAP" means, subject to the limitations on the application thereof
set forth in subsection 1.2, generally accepted accounting principles set forth
in opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, in each case as the same are applicable to the circum
stances as of the date of determination.
"GOVERNMENTAL AUTHORIZATION" means any permit, license,
authorization, plan, directive, consent order or consent decree of or from any
federal, state or local governmental authority, agency or court.
"HAZARDOUS MATERIALS" means (i) any chemical, material or substance
at any time defined as or included in the definition of "hazardous substances",
"hazardous wastes", "hazardous materials", "extremely hazardous waste",
"restricted hazardous waste", "infectious waste", "toxic substances",
"pollutant", "contaminant" or any formulations intended to define, list or
classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, toxicity, reproductive toxicity, "TCLP
toxicity" or "EP toxicity" or words of similar import under any applicable
Environmental Laws or publications promulgated pursuant thereto; (ii) any oil,
petroleum, petroleum fraction or petroleum derived substance; (iii) any drilling
fluids, produced waters and other wastes associated with the exploration,
development or production of crude oil, natural gas or geothermal resources;
(iv) any flammable substances or explosives; (v) any radioactive materials;
(vi) asbestos in any form; (vii) urea formaldehyde foam insulation;
(viii) electrical equipment which contains any oil or dielectric fluid
containing polychlorinated biphenyls; (ix) pesticides; and (x) any other
chemical, material or substance, exposure to which is prohibited, limited or
regulated by any governmental authority or which may or could pose a hazard to
the health and safety of the owners, occupants or any Persons in the vicinity of
the Facilities.
"HAZARDOUS MATERIALS ACTIVITY" means any use, storage, holding,
existence, release (including any spilling, leaking, pumping, pouring, emitting,
emptying, dumping, disposing into the environment, and the continuing migration
into or through soil, surface water, or groundwater), emission, discharge,
generation, processing, abatement, removal, disposition, handling or
transportation to or from the Mortgaged Property of any Hazardous Materials
from, under, in, into or on such property or surrounding property, including,
without limitation, the movement or migration of any Hazardous Materials from
surrounding property or groundwater in, into or onto such property and any
residual Hazardous Materials contamination on or under such property.
"HEDGE AGREEMENT" means (i) an Interest Rate Agreement, Currency
Agreement or option agreement entered into in order to manage existing or
anticipated interest rate risk and (ii) credit derivatives (including any other
credit risk protection arrangements) entered into to hedge against changes in
market prices of Company's Indebtedness, in each case not for speculative
purposes.
"INACTIVE SUBSIDIARY" means any Subsidiary of Company that does not
engage in any significant business activity and is designated as such on
Schedule 5.1 annexed hereto; provided, however, that all Inactive Subsidiaries
in the aggregate shall not own assets with an aggregate fair market value in
excess of $3,000,000 and shall not generate aggregate annual revenues in excess
of $3,000,000; and provided further that no Inactive Subsidiary shall have any
Subsidiary other than an Inactive Subsidiary.
"INDEBTEDNESS", as applied to any Person, means (i) all indebtedness
for borrowed money, (ii) that portion of obligations with respect to Capital
Leases that is properly classified as a liability on a balance sheet in
conformity with GAAP, (iii) notes payable and drafts accepted representing
extensions of credit whether or not representing obligations for borrowed money,
(iv) any obligation owed for all or any part of the deferred purchase price of
property or services (excluding any such obligations incurred under ERISA),
which purchase price is (a) due more than twelve months from the date of
incurrence of the obligation in respect thereof or (b) evidenced by a note or
similar written instrument, and (v) all indebtedness 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
nonrecourse to the credit of that Person. Obligations under Interest Rate
Agreements and Currency Agreements constitute (X) in the case of Hedge
Agreements, Contingent Obligations, and (Y) in all other cases, Investments, and
in neither case constitute Indebtedness.
"INDEMNITEE" has the meaning assigned to that term in subsection
10.3.
"INTELLECTUAL PROPERTY" means all patents, trademarks, tradenames,
copyrights, technology, know-how and processes used in or necessary for the
conduct of the business of Company and its Subsidiaries as currently conducted
that are material to the condition (financial or otherwise), business or
operations of Company or any of its Subsidiaries.
"INTEREST PAYMENT DATE" means (i) with respect to any Base Rate
Loan, each February 1, May 1, August 1 and November 1 of each year, commencing
on August 1, 1997, and (ii) with respect to any Eurodollar Rate Loan, the last
day of each Interest Period applicable to such Loan; provided that in the case
of each Interest Period of longer than three months "Interest Payment Date"
shall also include each date that is three months after the commencement of such
Interest Period.
"INTEREST PERIOD" has the meaning assigned to that term in
subsection 2.2B.
"INTEREST RATE AGREEMENT" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other similar
agreement or arrangement to which Company or any of its Subsidiaries is a party.
"INTEREST RATE DETERMINATION DATE" means, with respect to any
Interest Period, the second Business Day prior to the first day of such Interest
Period.
"INTEREST RATE EXCHANGERS" means Lenders or Affiliates of Lenders
parties to the Interest Rate Agreements permitted under subsection 7.4(iii).
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter, and any successor
statute.
"INVENTORY" means, with respect to any Person as of any date of
determination, all goods, merchandise and other personal property which are then
held by such Person for sale or lease, including raw materials and work in
process.
"INVESTMENT" means (i) any direct or indirect purchase or other
acquisition by Company or any of its Subsidiaries of, or of a beneficial
interest in, any Securities of any other Person (other than a Person that prior
to such purchase or acquisition was a wholly-owned Subsidiary of Company) or
(ii) any direct or indirect loan, advance (other than (x) advances to employees
for moving, entertainment and travel expenses, (y) loans to employees in
connection with purchase of a home upon relocation, (z) drawing accounts and
similar expenditures, in each case in the ordinary course of business) or
capital contribution by Company or any of its Subsidiaries to any other Person
(other than a wholly-owned Subsidiary of Company), including all indebtedness
and accounts receivable from that other Person that are not current assets or
did not arise from sales to that other Person in the ordinary course of busi
ness. The amount of any Investment shall be the original cost of such
Investment plus the cost of all additions thereto, without any adjustments for
increases or decreases in value, or write-ups, write-downs or write-offs with
respect to such Investment.
"IP COLLATERAL" means, collectively, the Collateral under the
Trademark Security Agreements.
"ISSUING LENDER" means, with respect to any Letter of Credit, the
Lender which agrees or is otherwise obligated to issue such Letter of Credit,
determined as provided in subsection 3.1B(ii).
"JOINT VENTURE" means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form; provided
that in no event shall any corporate Subsidiary of any Person be considered to
be a Joint Venture to which such Person is a party.
"LC SUBSIDIARY" means any Subsidiary of Company or any of its
Subsidiaries which is a limited liability company, including without limitation
Sugarhouse Land Co., L.C. and Treasure Valley Land Company, L.C.
"LENDER" and "LENDERS" means the persons identified as "Lenders" and
listed on the signature pages of this Agreement, together with their successors
and permitted assigns pursuant to subsection 10.1, and the term "Lenders" shall
include Swing Line Lender unless the context otherwise requires; provided that
the term "Lenders", when used in the context of a particular Commitment, shall
mean Lenders having that Commitment.
"LETTER OF CREDIT" or "LETTERS OF CREDIT" means Commercial Letters
of Credit and Standby Letters of Credit issued or to be issued by Issuing
Lenders for the account of Company or any wholly-owned Subsidiary of Company
pursuant to subsection 3.1 and the Existing Letters of Credit.
"LETTER OF CREDIT USAGE" means, as at any date of determination, the
sum of (i) the maximum aggregate amount which is or at any time thereafter may
become available for drawing under all Letters of Credit then outstanding plus
(ii) the aggregate amount of all drawings under Letters of Credit honored by
Issuing Lenders and not theretofore reimbursed by Company (including any such
reimbursement out of the proceeds of Revolving Loans pursuant to subsection
3.3B).
"LEVERAGE RATIO" means, as at any date of determination, the ratio
of Consolidated Total Debt as of the last day of the Fiscal Quarter immediately
preceding the Fiscal Quarter in which such date of determination occurs to
Consolidated Adjusted EBITDA for the four Fiscal Quarters ending as of such last
day of such immediately preceding Fiscal Quarter.
"LIEN" means any lien, mortgage, pledge, assignment, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof, and any
agreement to give any security interest) and any option, trust or other
preferential arrangement having the practical effect of any of the foregoing.
"LOAN" or "LOANS" means one or more of the Term Loans, Revolving
Loans or Swing Line Loans or any combination thereof.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Subsidiary
Guaranty, the Collateral Documents and the Letters of Credit (and any
applications for, or reimbursement agreements or other documents or certificates
executed by Company in favor of an Issuing Lender relating to, the Letters of
Credit).
"LOAN PARTY" means each of Company and any of Company's Subsidiaries
from time to time executing a Loan Document, and "LOAN PARTIES" means all such
Persons, collectively.
"MANAGEMENT AGREEMENT" means that certain Management Services
Agreement dated as of May 23, 1996 between Company and Yucaipa in the form
delivered to Administrative Agent prior to the execution of this Agreement and
as it may be amended from time to time thereafter to the extent permitted under
subsection 7.15A.
"MARGIN DETERMINATION CERTIFICATE" means an Officers' Certificate of
Company delivered with the financial statements required pursuant to subsection
6.1(ii) or 6.1(iii) setting forth the Leverage Ratio which is applicable as of
the last day of the fiscal period for which such financial statements and
Officers' Certificate are being delivered.
"MARGIN STOCK" has the meaning assigned to that term in Regulation U
of the Board of Governors of the Federal Reserve System as in effect from time
to time.
"MASTER ASSIGNMENT AGREEMENT" means that certain Master Assignment
Agreement substantially in the form of Exhibit XIX attached hereto, among
Company, the lenders under the Existing Credit Agreement, Bankers as agent under
the Existing Credit Agreement (the "Existing Agent") and the Lenders and
Administrative Agent under this Agreement, pursuant to which all lenders under
the Existing Credit Agreement assign their loans and/or revolving loan
commitments to the Existing Agent, the Existing Agent assigns such loans and/or
revolving loan commitments to Administrative Agent and Administrative Agent
assigns to each Lender under this Agreement, and each such Lender purchases from
Administrative Agent, the Loans and/or Revolving Loan Commitments as set forth
on Schedule 2.1 attached hereto.
"MATERIAL ADVERSE EFFECT" means (i) a material adverse effect upon
the business, operations, properties, assets, condition (financial or otherwise)
or prospects of Company and its Subsidiaries, taken as a whole, or (ii) the
material impairment of the ability of any Loan Party to perform, or the
impairment of the ability of Administrative Agent or Lenders to enforce, the
Obligations or any of the Loan Documents.
"MORTGAGE" means (i) any deed of trust, mortgage, security agreement
and fixture filing relating to any fee or leasehold interest of any Loan Party
in real property executed by such Loan Party in connection with the Existing
Credit Agreement and (ii) any deed of trust, mortgage, security agreement and
fixture filing relating to any fee interest of any Loan Party in real property
executed after the Closing Date, which shall be substantially in the form of
Exhibit XVIII annexed hereto, in each case containing such schedules and
including such additional provisions and other deviations from such Exhibit as
are satisfactory to Administrative Agent and not inconsistent with the
provisions of subsection 6.9 or as are necessary to conform such Mortgage to
applicable local law, and which shall be dated the date of delivery thereof and
made by such Loan Party as trustor or mortgagor, as the case may be, in favor of
Administrative Agent, as beneficiary or mortgagee, delivered for the purpose of
securing all Obligations hereunder, as the same may be amended, supplemented or
otherwise modified from time to time.
"MORTGAGED PROPERTY" means each Real Property Asset which is subject
to a Mortgage under the Existing Credit Agreement as of the Closing Date other
than the Excluded Properties or which becomes subject to a Mortgage after the
Closing Date pursuant to subsection 6.8A or 6.9.
"MULTIEMPLOYER PLAN" means any Employee Benefit Plan which is a
"multiemployer plan" as defined in Section 3(37) of ERISA.
"NET ASSET SALE PROCEEDS" means, with respect to any Asset Sale,
Cash payments (including any Cash received by way of deferred payment pursuant
to, or by monetization of, a note receivable or otherwise, but only as and when
so received) received from such Asset Sale, net of any bona fide direct costs
incurred in connection with such Asset Sale, including without limitation
(i) income taxes reasonably estimated to be paid as a result of any gain
recognized in connection with such Asset Sale and (ii) payment of the out
standing principal amount of, premium or penalty, if any, and interest on any
Indebtedness (other than the Loans) that is secured by a Lien on the stock or
assets in question and that is required to be repaid under the terms thereof as
a result of such Asset Sale.
"NON-RECOURSE INDEBTEDNESS" means, as applied to any Person, all
Indebtedness of that Person secured by Liens on specified assets of that Person
under the terms of which (i) no recourse may be had against that or any other
Person for the payment of the principal of or interest or premium on such
Indebtedness or for any claim based thereon; provided that if such Person is an
entity formed for the sole purpose of owning and/or developing one or more store
sites or other real property and owns no assets other than those subject to the
Lien by the lender of such Indebtedness and conducts no business other than
owning such asset, recourse may be had against such Person; and (ii) the
enforcement of all obligations relating to such Indebtedness is limited to
foreclosure or other actions with respect to such specified assets, in each case
other than customary exceptions for fraud, waste or environmental
indemnification.
"NOTES" means one or more of the Tranche A Term Notes, Tranche B
Term Notes, Revolving Notes or Swing Line Note or any combination thereof.
"NOTICE OF BORROWING" means a notice substantially in the form of
Exhibit I annexed hereto delivered by Company to Administrative Agent pursuant
to subsection 2.1B with respect to a proposed borrowing.
"NOTICE OF CONVERSION/CONTINUATION" means a notice substantially in
the form of Exhibit II annexed hereto delivered by Company to Administrative
Agent pursuant to subsection 2.2D with respect to a proposed conversion or
continuation of the applicable basis for determining the interest rate with
respect to the Loans specified therein.
"NOTICE OF ISSUANCE OF LETTER OF CREDIT" means a notice
substantially in the form of Exhibit III annexed hereto delivered by Company to
Administrative Agent pursuant to subsection 3.1B(i) with respect to the proposed
issuance of a Letter of Credit.
"OBLIGATIONS" means all obligations of every nature of each Loan
Party from time to time owed to Administrative Agent, Lenders or any of them
under the Loan Documents, whether for principal, interest, reimbursement of
amounts drawn under Letters of Credit, fees, expenses, indemnification or
otherwise.
"OFFICERS' CERTIFICATE" means, as applied to any corporation, a
certificate executed on behalf of such corporation by its chairman of the board
(if an officer) or its president or one of its executive or senior vice
presidents and by its chief financial officer or its treasurer; provided that
every Officers' Certificate with respect to the compliance with a condition
precedent to the making of any Loans hereunder shall include (i) a statement
that the officer or officers making or giving such Officers' Certificate have
read such condition and any definitions or other provisions contained in this
Agreement relating thereto, (ii) a statement that, in the opinion of the
signers, they have made or have caused to be made such examination or
investigation as is necessary to enable them to express an informed opinion as
to whether or not such condition has been complied with, and (iii) a statement
as to whether, in the opinion of the signers, such condition has been complied
with; and provided further that any Officers' Certificate required pursuant to
subsection 2.4B(iii) may be executed by any one of the officers referred to in
this definition.
"OPERATING LEASE" means, as applied to any Person, any lease
(including, without limitation, leases that may be terminated by the lessee at
any time) of any property (whether real, personal or mixed) that is not a
Capital Lease other than any such lease under which that Person is the lessor.
"OWNER TRUSTEE" means State Street Bank & Trust Company, as owner
trustee under the Smith's Food & Drug Centers, Inc. 1994-A Pass Through Trusts.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor thereto.
"PENSION PLAN" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to Section 412 of the Internal Revenue Code
or Section 302 of ERISA.
"PERMITTED ENCUMBRANCES" means the following types of Liens
(excluding any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the
Internal Revenue Code or by ERISA):
(i) Liens for taxes, assessments or governmental charges or claims the
payment of which is not, at the time, required by subsection 6.3;
(ii) statutory Liens of landlords, statutory Liens of banks and rights of
set-off, statutory Liens of carriers, warehousemen, mechanics, repairmen,
workmen, materialmen and of growers on Inventory consisting of agricultural
products, and other Liens imposed by law, in each case incurred in the
ordinary course of business (a) for amounts not yet overdue or (b) for
amounts that are overdue and that (in the case of any such amounts overdue
for a period in excess of 5 days) are being contested in good faith by
appropriate proceedings, so long as (1) such reserves or other appropriate
provisions, if any, as shall be required by GAAP shall have been made for
any such contested amounts, and (2) in the case of a Lien with respect to
any portion of the Collateral, such contest proceedings conclusively
operate to stay the sale of any portion of the Collateral on account of
such Lien;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, trade contracts, performance and return-of-money
bonds and other similar obligations (exclusive of obligations for the
payment of borrowed money), so long as no foreclosure, sale or similar
proceedings have been commenced with respect to any portion of the
Collateral on account thereof;
(iv) any attachment or judgment Lien not constituting an Event of Default
under subsection 8.8;
(v) licenses, concession agreements, leases or subleases entered into
with or granted to third parties in accordance with any applicable terms of
the Collateral Documents and not interfering in any material respect with
the ordinary conduct of the business of Company or any of its Subsidiaries
or resulting in a material diminution in the value of any Collateral as
security for the Obligations;
(vi) easements, rights-of-way, restrictions, encroachments, and other
minor defects or irregularities in title, in each case which do not and
will not interfere in any material respect with the ordinary conduct of the
business of Company or any of its Subsidiaries or result in a material
diminution in the value of any Collateral as security for the Obligations;
(vii) any (a) interest or title of a lessor or sublessor (other than
any Loan Party) under any lease permitted by subsection 7.9,
(b) restriction or encumbrance that the interest or title of such lessor or
sublessor may be subject to (including without limitation ground leases or
other prior leases of the demised premises, mortgages, mechanics liens, tax
liens and easements), or (c) subordination of the interest of the lessee or
sublessee under such lease to any restriction or encumbrance referred to in
the preceding clause (b);
(viii) Liens arising from filing UCC financing statements relating
solely to leases permitted by this Agreement;
(ix) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
(x) any zoning or similar law or right reserved to or vested in any
governmental office or agency (including, without limitation, rights
granted under redevelopment or financial assistance agreements with
redevelopment agencies) to control or regulate the use of any real
property;
(xi) Liens securing obligations (other than obligations representing
Indebtedness for borrowed money) under operating, reciprocal easement or
similar agreements entered into in the ordinary course of business of
Company and its Subsidiaries; and
(xii) licenses of patents, trademarks and other intellectual property
rights granted by Company or any of its Subsidiaries in the ordinary course
of business and not interfering in any material respect with the ordinary
conduct of the business of Company or such Subsidiary.
"PERMITTED HOLDERS" means (i) Yucaipa or any entity controlled
thereby or any of the partners thereof, (ii) the Smith's Group or (iii) any of
the Permitted Transferees.
"PERMITTED TRANSFEREES" means, with respect to any Person, (i) any
Affiliate of such Person, (ii) the heirs, executors, administrators,
testamentary trustees, legatees or beneficiaries of any such Person or (iii) a
trust, the beneficiaries of which, or a corporation or partnership, the
stockholders or general or limited partners of which, include only such Person
or his or her spouse or lineal descendants, in each case to whom such Person has
transferred the beneficial ownership of any Securities of Company.
"PERSON" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, Joint Ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments (whether federal,
state or local, domestic or foreign, and including political subdivisions
thereof) and agencies or other administrative or regulatory bodies thereof.
"PLEDGE AGREEMENT" means each Amended and Restated Pledge Agreement
executed and delivered by Company and Subsidiaries of Company (other than the
Inactive Subsidiaries) on the Closing Date and each other Pledge Agreement to be
executed and delivered by Subsidiaries of Company from time to time in
accordance with subsection 6.8, in each case substantially in the form of
Exhibit XIV annexed hereto, as any such Pledge Agreement may thereafter be
amended, supplemented or otherwise modified from time to time and "Pledge
Agreements" means all such Pledge Agreements, collectively.
"PLEDGED COLLATERAL" means, collectively, the "Pledged Collateral"
as defined in the Pledge Agreements.
"POTENTIAL EVENT OF DEFAULT" means a condition or event that, after
notice or lapse of time or both, would constitute an Event of Default.
"PREFERRED STOCK" means the Redeemable Preferred Stock of Company.
"PRIME RATE" means the rate that Chase announces from time to time
as its prime lending rate, as in effect from time to time. The Prime Rate is a
reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. Chase or any other Lender may make commercial
loans or other loans at rates of interest at, above or below the Prime Rate.
"PRO RATA SHARE" means, on any date of determination, (i) with
respect to all payments, computations and other matters relating to a Type of
Term Loan Commitment or a Type of Term Loan of any Lender, the percentage
obtained by dividing (x) the Term Loan Exposure of such Type of that Lender on
such date by (y) the aggregate Term Loan Exposure of such Type of all Lenders on
such date, (ii) with respect to all payments, computations and other matters
relating to the Revolving Loan Commitment or the Revolving Loans of any Lender
or any Letters of Credit issued or participations therein purchased by any
Lender or any participations in any Swing Line Loans purchased by any Lender,
the percentage obtained by dividing (x) the Revolving Loan Exposure of that
Lender on such date by (y) the aggregate Revolving Loan Exposure of all Lenders
on such date, and (iii) for all other purposes with respect to each Lender, the
percentage obtained by dividing (x) the sum of the Term Loan Exposure of all
Types of that Lender on such date plus the Revolving Loan Exposure of that
Lender on such date by (y) the sum of the aggregate Term Loan Exposure of all
Types of all Lenders on such date plus the aggregate Revolving Loan Exposure of
all Lenders on such date, in any such case as the applicable percentage may be
adjusted by assignments permitted pursuant to subsection 10.1. The initial Pro
Rata Share of each Lender for purposes of the preceding sentence is set forth
opposite the name of that Lender in Schedule 2.1 annexed hereto.
"PTO" means the United States Patent and Trademark Office or any
successor or substitute office in which filings are necessary or, in the opinion
of Administrative Agent, desirable in order to create or perfect Liens on any IP
Collateral.
"RATING AGENCIES" means Standard & Poor's Ratings Group, Moody's
Investors Service, Inc., Duff & Phelps Credit Rating Co. and Fitch Investor
Service.
"REAL PROPERTY ASSET" means, at any time of determination, any
interest in land, buildings, improvements and fixtures attached thereto or used
in the operation thereof, then owned or leased (as lessee) by any Loan Party.
"REDEEMABLE PREFERRED STOCK" means Series I Preferred Stock of
Company, par value $.01 per share, with the terms set forth in Company's
Articles of Incorporation.
"REDEMPTION AMOUNT" means, at any time, $50,000,000; provided that
(i) if the Leverage Ratio (calculated on a pro forma basis giving effect to any
repurchase of Senior Subordinated Notes and/or purchase of capital stock of
Company and all debt incurred in connection therewith) (the "ADJUSTED LEVERAGE
RATIO") at such time is less than 4.00:1.00, the Redemption Amount shall be
increased to $75,000,000; and (ii) if the Adjusted Leverage Ratio at such time
is less than 3.50:1.00, the Redemption Amount shall be increased to
$100,000,000; provided, further, that the Redemption Amount shall be reduced by
the aggregate amount of all prior repurchases and/or redemptions made pursuant
to subsection 7.5A(iii).
"REFERENCE LENDERS" means Chase and Bankers.
"REFUNDED SWING LINE LOANS" has the meaning assigned to that term in
subsection 2.1A(iv).
"REGIONAL DIVISION" means each of the regional divisions designated
by the management of Company for internal reporting purposes which shall be
captioned as (i) Southwest and (ii) Inter-mountain.
"REGISTER" has the meaning assigned to that term in subsection 2.1D.
"REGISTRATION RIGHTS AGREEMENT" means that certain Registration
Rights Agreement dated as of May 23, 1996 by and among Company and holders of
Company's Common Stock named therein as in effect on the Closing Date and as it
may be amended from time to time thereafter to the extent permitted under
subsection 7.15A.
"REGULATION D" means Regulation D of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"REIMBURSEMENT DATE" has the meaning assigned to that term in
subsection 3.3B.
"RELATED AGREEMENTS" means, collectively, the Restated Certificate
of Incorporation of Company, the Senior Subordinated Note Indenture, the
Registration Rights Agreement, the Standstill Agreement, the Management
Agreement, the Yucaipa Warrant and Smith's Shareholder Agreement and all other
agreements or instruments delivered pursuant to or in connection with any of the
foregoing.
"RELATED ASSETS" means any of the properties located in California
and leased by Company from Owner Trustee which properties are designated as
obsolete, uneconomic for use or surplus to Company's needs by Company and are
transferred to Company or a third party to effect the sale of such properties
pursuant to subsection 7.1(viii) or subsection 7.7(xi).
"RELEASE" means any release, spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping,
leaching or migration of Hazardous Materials into the indoor or outdoor
environment (including, without limitation, the abandonment or disposal of any
barrels, containers or other closed receptacles containing any Hazardous
Materials), or into or out of any Facility, including the movement of any
Hazardous Material through the air, soil, surface water, groundwater or
property.
"REPLACED LENDER" has the meaning assigned to such term in
subsection 2.9.
"REPLACED PROPERTY" has the meaning assigned to that term in
subsection 6.10.
"REPLACEMENT LENDER" has the meaning assigned to such term in
subsection 2.9.
"REPLACEMENT PROPERTY" means any Real Property Asset which is
designated by Company as a "Replacement Property" in accordance with subsection
6.10.
"REQUISITE CLASS LENDERS" means, at any time, (i) for the Class of
Lenders having Tranche A Term Loan Exposure and/or Revolving Loan Exposure,
Lenders having or holding at least 66 and _% of the sum of the aggregate Tranche
A Term Loan Exposure of all Lenders plus the aggregate Revolving Loan Exposure
of all Lenders, and (ii) for the Class of Lenders having Tranche B Term Loan
Exposure, Lenders having or holding at least 66 and _% of the aggregate Tranche
B Term Loan Exposure of all Lenders.
"REQUISITE LENDERS" means Lenders having or holding more than 50% of
the sum of the aggregate Term Loan Exposure of all Term Lenders plus the
aggregate Revolving Loan Exposure of all Revolving Lenders.
"RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of stock
of Company now or hereafter outstanding, except a dividend payable solely in
shares of that class of stock to the holders of that class, (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any shares of any class of stock of Company now or
hereafter outstanding, (iii) any payment made to retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire
shares of any class of stock of Company now or hereafter outstanding, and
(iv) any payment or prepayment of principal of, premium, if any, or interest on,
or redemption, purchase, retirement, defeasance (including in-substance or legal
defeasance), sinking fund or similar payment with respect to, any Subordinated
Indebtedness.
"RESTRUCTURING CHARGES" means all non-cash FAS 121 charges incurred
by Company and its Subsidiaries with respect to the write-down or write-off of
any of their properties subsequent to the Closing Date, including the write-down
or write-off of prior tax benefits associated therewith; provided that the
aggregate amount of such charges shall not exceed the sum of (a) $25,000,000
plus (b) the aggregate amount of such charges incurred in connection with the
California Properties.
"REVOLVING LENDER" or "REVOLVING LENDERS" means the Lender or
Lenders having a Revolving Loan Commitment or having a Revolving Loan
outstanding.
"REVOLVING LOAN COMMITMENT" means the commitment of a Lender to make
Revolving Loans to Company pursuant to subsection 2.1A(iii), to issue and/or
purchase participations in Letters of Credit pursuant to Section 3 and to
purchase participations in Swing Line Loans pursuant to subsection 2.1A(iv), and
"REVOLVING LOAN COMMITMENTS" means such commitments of all Lenders in the
aggregate.
"REVOLVING LOAN COMMITMENT TERMINATION DATE" means November 1, 2003.
"REVOLVING LOAN EXPOSURE" means, with respect to any Lender as of
any date of determination (i) prior to the termination of the Revolving Loan
Commitments, that Lender's Revolving Loan Commitment and (ii) after the
termination of the Revolving Loan Commitments, the sum of (a) the aggregate
outstanding principal amount of the Revolving Loans of that Lender plus (b) in
the event that Lender is an Issuing Lender, the aggregate Letter of Credit Usage
in respect of all Letters of Credit issued by that Lender (in each case net of
any funded participations purchased by other Lenders in such Letters of Credit
or any unreimbursed drawings thereunder) plus (c) the aggregate amount of all
funded participations purchased by that Lender in any outstanding Letters of
Credit or any unreimbursed drawings under any Letters of Credit plus (d) in the
case of Swing Line Lender, the aggregate outstanding principal amount of all
Swing Line Loans (net of any funded participations therein purchased by other
Lenders) plus (e) the aggregate amount of all funded participations purchased by
that Lender in any outstanding Swing Line Loans.
"REVOLVING LOANS" means the Loans made by Lenders to Company
pursuant to subsection 2.1A(iii).
"REVOLVING NOTES" means (i) the promissory notes of Company issued
pursuant to subsection 2.1E(iii) on the Closing Date and (ii) any promissory
notes issued by Company pursuant to the last sentence of subsection 10.1B(i) in
connection with assignments of the Revolving Loan Commitments and Revolving
Loans of any Lenders, in each case substantially in the form of Exhibit V
annexed hereto, as they may be amended, supplemented or otherwise modified from
time to time.
"SALE LEASEBACK PROPERTIES" means (i) the Real Property Assets set
forth on Schedule 5.19 which have been identified by Company on the Closing Date
as properties which may be subject to a sale leaseback transaction within one
year after the Closing Date; and (ii) all personal property assets owned by the
Company and any of its Subsidiaries and related to such Real Property Assets.
"SECURITIES" means any stock, shares, partnership interests, voting
trust certificates, certificates of interest or participation in any profit-
sharing agreement or arrangement, options, warrants, bonds, debentures, notes,
or other evidences of indebtedness, secured or unsecured, convertible,
subordinated or otherwise, or in general any instruments commonly known as
"securities" or any certificates of interest, shares or participations in
temporary or interim certificates for the purchase or acquisition of, or any
right to subscribe to, purchase or acquire, any of the foregoing.
"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time, and any successor statute.
"SECURITY AGREEMENT" means each Amended and Restated Security
Agreement executed and delivered by Company and Subsidiaries of Company (other
than the Inactive Subsidiaries) on the Closing Date and each Security Agreement
to be executed and delivered by Subsidiaries of Company from time to time in
accordance with subsection 6.8, in each case substantially in the form of
Exhibit XV annexed hereto, as any such Security Agreement may thereafter be
amended, supplemented or otherwise modified from time to time and "Security
Agreements" means all such Security Agreements, collectively.
"SENIOR INDEBTEDNESS" means any or all of the Smitty's Sinking Fund
Bonds and Indebtedness permitted pursuant to subsection 7.1(viii).
"SENIOR SUBORDINATED NOTES" means $575,000,000 in initial aggregate
principal amount of 11 1/4% Senior Subordinated Notes due 2007 of Company issued
pursuant to the Senior Subordinated Note Indenture, as such notes may be amended
from time to time to the extent permitted under subsection 7.15B.
"SENIOR SUBORDINATED NOTE INDENTURE" means the indenture dated as of
May 23, 1996 between Company and Fleet National Bank of Connecticut, as Trustee,
pursuant to which the Senior Subordinated Notes were issued, as such indenture
may be amended from time to time to the extent permitted under subsection 7.15B.
"SMITH'S GROUP" means Jeffrey P. Smith, Richard D. Smith, Fred L.
Smith, Ida Smith, The Dee Glen Smith Marital Trust I, Trust for the Children of
Jeffrey Paul Smith, Trust for the Children of Richard Dee Smith, and Trust for
the Children of Fred Lorenzo Smith.
"SMITH'S SHAREHOLDER AGREEMENT" means that certain Stockholders'
Agreement dated as of May 23, 1996 by and among Smitty's, Jeffrey P. Smith,
Richard D. Smith, Fred L. Smith, Ida Smith, the Dee Glenn Smith Marital Trust,
Trust for the Children of Jeffrey Paul Smith, Trust for the Children of Richard
Dee Smith, and Trust for the Children of Fred Lorenzo Smith, as the same may be
amended from time to time thereafter to the extent permitted under subsection
7.15A.
"SMITTY'S" means Smitty's Supermarkets, Inc., a Delaware
corporation.
"SMITTY'S SINKING FUND BONDS" means $11,700,000 in outstanding
aggregate principal amount of 10.50% First Mortgage Sinking Fund Bonds, Series
1986, due July 31, 2016 issued by Saint Lawrence Holding Company pursuant to the
Smitty's Sinking Fund Bond Indenture, as such bonds may be amended from time to
time to the extent permitted under subsection 7.15B.
"SMITTY'S SINKING FUND BOND INDENTURE" means the indenture dated as
of July 16, 1986 between Saint Lawrence Holding Company and First Interstate
Bank of Arizona, N.A., as trustee, as supplemented by that certain First
Supplemental Indenture dated as of July 16, 1986 by and between Saint Lawrence
Holding Company and First Interstate Bank of Arizona, N.A., as trustee, pursuant
to which the Smitty's Sinking Fund Bonds were issued, as amended prior to the
Closing Date and as such indenture may be amended from time to time to the
extent permitted under subsection 7.15B.
"SMITTY'S SUBORDINATED NOTE SUPPLEMENT" has the meaning assigned to
such term in the definition of "Smitty's Subordinated Note Indenture".
"SOLVENT" means, with respect to any Person, that as of the date of
determination both (A) (i) the then fair saleable value of the property of such
Person is (y) greater than the total amount of liabilities (including contingent
liabilities) of such Person and (z) not less than the amount that will be
required to pay the probable liabilities on such Person's then existing debts as
they become absolute and matured considering all financing alternatives and
potential asset sales reasonably available to such Person; (ii) such Person's
capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (iii) such Person does not intend to
incur, or believe (nor should it reasonably believe) that it will incur, debts
beyond its ability to pay such debts as they become due; and (B) such Person is
"solvent" within the meaning given that term and similar terms under applicable
laws relating to fraudulent transfers and conveyances. For purposes of this
definition, the amount of any contingent liability at any time shall be computed
as the amount that, in light of all of the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.
"STANDBY LETTER OF CREDIT" means any standby letter of credit or
similar instrument issued for the purpose of supporting (i) Indebtedness of
Company or any of its Subsidiaries in respect of industrial revenue or
development bonds or financings, (ii) workers' compensation liabilities of
Company or any of its Subsidiaries, (iii) the obligations of third party
insurers of Company or any of its Subsidiaries arising by virtue of the laws of
any jurisdiction requiring third party insurers, (iv) obligations with respect
to Capital Leases or Operating Leases of Company or any of its Subsidiaries, and
(v) performance, payment, deposit or surety obligations of Company or any of its
Subsidiaries, in any case if required by law or governmental rule or regulation
or in accordance with custom and practice in the industry; provided that Standby
Letters of Credit may not be issued for the purpose of supporting trade payables
or any Indebtedness constituting "antecedent debt" (as that term is used in
Section 547 of the Bankruptcy Code).
"STANDSTILL AGREEMENT" means that certain Standstill Agreement dated
as of January 29, 1996 by and among Company, Yucaipa, the former stockholders
of Smitty's and certain stockholders of Company named therein, as in effect on
the Closing Date and as it may be amended from time to time thereafter to the
extent permitted under subsection 7.15A.
"SUBORDINATED INDEBTEDNESS" means the Indebtedness of Company
evidenced by the Senior Subordinated Notes and any other Indebtedness of Company
subordinated in right of payment to the Obligations pursuant to documentation
containing maturities, amortization schedules, covenants, defaults, remedies,
subordination provisions and other material terms in form and substance
satisfactory to Administrative Agent and Requisite Lenders.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, limited liability company, association, joint venture or other
business entity of which more than 50% of the total voting power of shares of
stock or other ownership interests entitled (without regard to the occurrence of
any contingency) to vote in the election of the Person or Persons (whether
directors, managers, trustees or other Persons performing similar functions)
having the power to direct or cause the direction of the management and policies
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a combination
thereof.
"SUBSIDIARY GUARANTOR" means any Subsidiary of Company that executes
and delivers a counterpart of the Subsidiary Guaranty on the Closing Date or
from time to time thereafter pursuant to subsection 6.8.
"SUBSIDIARY GUARANTY" means the Amended and Restated Subsidiary
Guaranty executed and delivered by existing Subsidiaries of Company (other than
the Inactive Subsidiaries) on the Closing Date and each Subsidiary Guaranty to
be executed and delivered by additional Subsidiaries of Company from time to
time thereafter in accordance with subsection 6.8, in each case substantially in
the form of Exhibit XVII annexed hereto, as any such Subsidiary Guaranty may be
amended, supplemented or otherwise modified from time to time and "Subsidiary
Guaranties" means all such Subsidiary Guaranties, collectively.
"SUPPLEMENTAL COLLATERAL AGENT" has the meaning assigned to that
term in subsection 9.1B.
"SURPLUS PROPERTIES" means (i) the Real Property Assets set forth on
Schedule 5.19 which have been identified by the Company on the Closing Date as
surplus properties; and (ii) all personal property assets owned by the Company
and any of its Subsidiaries and related to such Real Property Assets.
"SWING LINE LENDER" means Chase, or any Person serving as a
successor Administrative Agent hereunder, in its capacity as Swing Line Lender
hereunder.
"SWING LINE LOAN COMMITMENT" means the commitment of Swing Line
Lender to make Swing Line Loans to Company pursuant to subsection 2.1A(iv).
"SWING LINE LOANS" means the Loans made by Swing Line Lender to
Company pursuant to subsection 2.1A(iv).
"SWING LINE NOTE" means (i) the promissory note of Company issued
pursuant to subsection 2.1E(iv) on the Closing Date and (ii) any promissory note
issued by Company to any successor Administrative Agent and Swing Line Lender
pursuant to the last sentence of subsection 9.5B, in each case substantially in
the form of Exhibit VI annexed hereto, as it may be amended, supplemented or
otherwise modified from time to time.
"SYNDICATION AGENT" has the meaning assigned to that term in the
preamble to this Agreement.
"TAX" or "TAXES" means any present or future tax, levy, impost,
duty, charge, fee, deduction or withholding of any nature and whatever called,
by whomsoever, on whomsoever and wherever imposed, levied, collected, withheld
or assessed; provided that "TAX ON THE OVERALL NET INCOME" of a Person shall be
construed as a reference to a tax imposed by the jurisdiction in which that
Person is organized or in which that Person's principal office (and/or, in the
case of a Lender, its lending office) is located or in which that Person
(and/or, in the case of a Lender, its lending office) is deemed to be doing
business on all or part of the net income, profits or gains (whether worldwide,
or only insofar as such income, profits or gains are considered to arise in or
to relate to a particular jurisdiction, or otherwise) of that Person (and/or, in
the case of a Lender, its lending office).
"TERM LENDER" or "TERM LENDERS" means the Lender or Lenders having a
Term Loan Commitment or having a Term Loan outstanding.
"TERM LOAN COMMITMENT" or "TERM LOAN COMMITMENTS" means such
commitments of Lenders in the aggregate to purchase the Term Loans pursuant to
subsection 2.1A.
"TERM LOAN EXPOSURE" means, with respect to a Lender of a Type of
Term Loan as of any date of determination, (i) prior to the termination of all
of a Lender's Commitment with respect to the Term Loans of such Type, that
Lender's Term Loan Commitment of such Type (or any portion thereof that has not
been terminated) plus the outstanding principal amount of the Term Loan of such
Type of that Lender, and (ii) after the termination of all of a Lender's
Commitment with respect to the Term Loans of such Type, the outstanding
principal amount of the Term Loan of such Type of that Lender.
"TERM LOANS" means one or more of the Tranche A Term Loans or the
Tranche B Term Loans.
"TERM NOTES" means (i) the promissory notes of Company evidencing
the Term Loans of a Type of Term Loan issued pursuant to subsection 2.1E on the
Closing Date, and (ii) any promissory notes issued by Company pursuant to the
last sentence of subsection 10.1B(i) in connection with assignments of the Term
Loan Commitments of such Type or of the Term Loans of such Type, in each case
substantially in the form of Exhibit IV-A annexed hereto in the case of Tranche
A Term Loans (the "Tranche A Term Note") and Exhibit IV-B annexed hereto in the
case of Tranche B Term Loans (the "Tranche B Term Note"), as they may be
amended, supplemented or otherwise modified from time to time.
"TITLE INSURANCE POLICIES" means (i) with respect to the Real
Property Assets subject to a Mortgage under the Existing Credit Agreement, ALTA
or CLTA (as applicable) loan title insurance policies currently in effect with
respect thereto; and (ii) with respect to any Real Property Asset that becomes
subject to a Mortgage pursuant to subsection 6.8A or 6.9, ALTA loan title
insurance policies issued by a title insurance company reasonably satisfactory
to Administrative Agent, in the amounts reasonably satisfactory to
Administrative Agent with respect to each particular Real Property Asset subject
to a Mortgage, in each case, assuring Administrative Agent that the applicable
Mortgage creates a valid and enforceable first priority lien on the respective
Real Property Asset subject to such Mortgage, free and clear of all defects and
encumbrances except Permitted Encumbrances, which Title Insurance Policies shall
be in form and substance reasonably satisfactory to Administrative Agent and
shall include an endorsement for any matters that Administrative Agent may
reasonably request and for future advances under this Agreement, the Notes and
the other Loan Documents, and shall provide for affirmative insurance and such
reinsurance as Administrative Agent may request, all of the foregoing in form
and substance reasonably satisfactory to Administrative Agent.
"TOTAL UTILIZATION OF REVOLVING LOAN COMMITMENTS" means, as at any
date of determination, the sum of (i) the aggregate principal amount of all
outstanding Revolving Loans plus (ii) the aggregate principal amount of all
outstanding Swing Line Loans plus (iii) the Letter of Credit Usage.
"TRADEMARK SECURITY AGREEMENT" means each Amended and Restated
Trademark Security Agreement executed and delivered by Company and Subsidiaries
of Company (other than the Inactive Subsidiaries) on the Closing Date and each
Trademark Security Agreement to be executed and delivered by Subsidiaries of
Company from time to time thereafter in accordance with subsection 6.8, in each
case substantially in the form of Exhibit XVI annexed hereto as any such
Trademark Security Agreement may thereafter be amended, supplemented or
otherwise modified from time to time and "Trademark Security Agreements" means
all such Trademark Security Agreements, collectively.
"TRANCHE A TERM LENDER" or "TRANCHE A TERM LENDERS" means the Lender
or Lenders having a Tranche A Term Loan Commitment or having a Tranche A Term
Loan outstanding.
"TRANCHE A TERM LOAN COMMITMENT" means the commitment of a Tranche A
Term Lender to purchase a Tranche A Term Loan pursuant to subsection 2.1A(i),
and "TRANCHE A TERM LOAN COMMITMENTS" means such commitments of all Tranche A
Term Lenders in the aggregate.
"TRANCHE A TERM LOANS" means the Loans purchased by Tranche A Term
Lenders pursuant to subsection 2.1A(i).
"TRANCHE B TERM LENDER" or "TRANCHE B TERM LENDERS" means the Lender
or Lenders having a Tranche B Term Loan Commitment or having a Tranche B Term
Loan outstanding.
"TRANCHE B TERM LOAN COMMITMENT" means the commitment of a Tranche B
Term Lender to purchase a Tranche B Term Loan pursuant to subsection 2.1A(ii),
and "TRANCHE B TERM LOAN COMMITMENTS" means such commitments of all Tranche B
Term Lenders in the aggregate.
"TRANCHE B TERM LOANS" means the Loans purchased by Tranche B Term
Lenders pursuant to subsection 2.1A(ii).
"TRANSFER DATE" means the date on which Administrative Agent (or its
Affiliate) acquires that title previously held by Company (or its Affiliate) to
any Mortgaged Property pursuant to power of sale or judicial foreclosure of the
lien of the Mortgage, or by receipt of a deed in lieu of such foreclosure, and
any and all redemption rights of Company (or its Affiliate) have expired, unless
within a period of ninety-one (91) days after the date on which such title vests
in Administrative Agent (or its Affiliate) a bankruptcy or other insolvency
proceeding is filed by or against Company (or its Affiliate). If Company (or
its Affiliate) should remain in or reacquire possession of such Mortgaged
Property after the Transfer Date, or if Company (or its Affiliate) should engage
in any Hazardous Materials Activity on or at such property after the Transfer
Date, the Transfer Date shall be deemed to be the date after which neither
Company nor any of its Affiliates is any longer in possession of such property
and Company and its Affiliates have ceased to engage in any Hazardous Materials
Activity on or at such property.
"TYPE" means a Term Loan, a Revolving Loan or a Swing Line Loan
(each of which is a "Type" of Loan) and with respect to a Term Loan, a Tranche A
Term Loan or a Tranche B Term Loan (each of which is a "Type" of Term Loan).
"UCC" means the Uniform Commercial Code (or any similar or
equivalent legislation) as in effect in any applicable jurisdiction.
"YUCAIPA" means The Yucaipa Companies, a California general
partnership, or any successor thereto (i) which is an Affiliate of Ronald W.
Burkle, (ii) which has been established for the sole purpose of changing the
form of The Yucaipa Companies from that of a partnership to that of a limited
liability company or such other form acceptable to Arrangers in their sole
discretion and (iii) the form and structure of which has been approved by
Arrangers in their sole discretion.
"YUCAIPA INVESTORS" means Ronald W. Burkle, Yucaipa SSV Partners,
L.P., Yucaipa Smitty's Partners, L.P., Yucaipa Smitty's Partners II, L.P.,
Yucaipa Arizona Partners, L.P., The Yucaipa Companies and any other entity
formed after the Closing Date which is an Affiliate of Ronald W. Burkle.
"YUCAIPA WARRANT" has the meaning assigned to that term in the
recitals to this Agreement.
1.2 ACCOUNTING TERMS; UTILIZATION OF GAAP FOR PURPOSES OF CALCULATIONS UNDER
AGREEMENT.
Except as otherwise expressly provided in this Agreement, all
accounting terms not otherwise defined herein shall have the meanings assigned
to them in conformity with GAAP. Financial statements and other information
required to be delivered by Company to Lenders pursuant to clauses (i), (ii) and
(iii) of subsection 6.1 shall be prepared in accordance with GAAP as in effect
at the time of such preparation (and delivered together with the reconciliation
statements provided for in subsection 6.1(v)). Calculations in connection with
the definitions, covenants and other provisions of this Agreement shall
(i) utilize accounting principles and policies in conformity with those used to
prepare the financial statements referred to in subsection 5.3, or (ii) if any
amendments to the provisions set forth in Sections 1, 6 or 7 are made pursuant
to negotiations conducted by operation of the following sentence, accounting
principles and policies in effect at the time of the effectiveness of such
amendments. Notwithstanding the foregoing, if any changes in accounting
principles from those used in the preparation of the financial statements
referred to in subsection 5.3 hereafter occasioned by the promulgation of rules,
regulations, pronouncements or opinions by or required by the Financial
Accounting Standards Board or the American Institute of Certified Public
Accountants (or successors thereto or agencies with similar functions) result in
a change in the method of calculation of financial covenants, standards or terms
found in Sections 1, 6 and 7 hereof, the parties hereto agree to enter into
negotiations in order to amend such provisions so as to equitably reflect such
changes with the desired result that the criteria for evaluating Company's
financial condition shall be the same after such changes as if such changes had
not been made. During the period of such negotiations, but in no event for a
period longer than 60 days, Company shall not be required to deliver the
additional financial statements required pursuant to subsection 6.1(v). After
the parties agree on amendments to the provisions of Sections 1, 6 and 7
necessitated by such changes, Company shall not be required to deliver the
additional financial statements required pursuant to subsection 6.1(v) with
respect to such changes.
1.3 OTHER DEFINITIONAL PROVISIONS AND RULES OF CONSTRUCTION.
A. Any of the terms defined herein may, unless the context
otherwise requires, be used in the singular or the plural, depending on the
reference.
B. References to "Sections" and "subsections" shall be to Sections
and subsections, respectively, of this Agreement unless otherwise specifically
provided.
C. The use herein of the word "include" or "including", when
following any general statement, term or matter, shall not be construed to limit
such statement, term or matter to the specific items or matters set forth
immediately following such word or to similar items or matters, whether or not
nonlimiting language (such as "without limitation" or "but not limited to" or
words of similar import) is used with reference thereto, but rather shall be
deemed to refer to all other items or matters that fall within the broadest
possible scope of such general statement, term or matter.
SECTION 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 COMMITMENTS; MAKING OF LOANS; THE REGISTER; NOTES.
A. COMMITMENTS. Subject to the terms and conditions of this Agreement
and in reliance upon the representations and warranties of Company herein set
forth, each Lender hereby severally agrees to purchase or make, as the case may
be, the Loans described in subsections 2.1A(i), 2.1A(ii), and 2.1A(iii), as
applicable, and Swing Line Lender hereby agrees to make the Loans described in
subsection 2.1A(iv).
(i) Tranche A Term Loans. Each Tranche A Term Lender severally agrees
to purchase from the Administrative Agent pursuant to the Master Assignment
Agreement on the Closing Date an amount not exceeding its Pro Rata Share of
the aggregate amount of the Tranche A Term Loans. The amount of each
Tranche A Term Lender's Tranche A Term Loan Commitment is set forth
opposite its name on Schedule 2.1 annexed hereto and the aggregate amount
of the Tranche A Term Loan Commitments is $400,000,000; provided that the
Tranche A Term Loan Commitments of Tranche A Term Lenders shall be adjusted
to give effect to any assignments of the Tranche A Term Loan Commitments
pursuant to subsection 10.1B. Each Tranche A Term Lender's Tranche A Term
Loan Commitment shall expire immediately and without further action on
April 30, 1997 if the Term Loans are not purchased pursuant to the Master
Assignment Agreement on or before that date. Tranche A Term Loans repaid
or prepaid may not be reborrowed.
(ii) Tranche B Term Loans. Each Tranche B Term Lender severally agrees
to purchase from the Administrative Agent pursuant to the Master Assignment
Agreement on the Closing Date an amount not exceeding its Pro Rata Share of
the aggregate amount of the Tranche B Term Loans. The amount of each
Tranche B Term Lender's Tranche B Term Loan Commitment is set forth
opposite its name on Schedule 2.1 annexed hereto and the aggregate amount
of the Tranche B Term Loan Commitments is $200,000,000; provided that the
Tranche B Term Loan Commitments of Tranche B Term Lenders shall be adjusted
to give effect to any assignments of the Tranche B Term Loan Commitments
pursuant to subsection 10.1B. Each Tranche B Term Lender's Tranche B Term
Loan Commitment shall expire immediately and without further action on
April 30, 1997 if the Term Loans are not purchased pursuant to the Master
Assignment Agreement on or before that date. Tranche B Term Loans repaid
or prepaid may not be reborrowed.
(iii) Revolving Loans. Each Revolving Lender severally agrees,
subject to the limitations set forth below with respect to the maximum
amount of Revolving Loans permitted to be outstanding from time to time, to
lend to Company from time to time during the period from the Closing Date
to but excluding the Revolving Loan Commitment Termination Date an
aggregate amount not exceeding its Pro Rata Share of the aggregate amount
of the Revolving Loan Commitments to be used for the purposes identified in
subsection 2.5B. The original amount of each Revolving Lender's Revolving
Loan Commitment is set forth opposite its name on Schedule 2.1 annexed
hereto and the aggregate original amount of the Revolving Loan Commitments
is $150,000,000; provided that the Revolving Loan Commitments of Revolving
Lenders shall be adjusted to give effect to any assignments of the
Revolving Loan Commitments pursuant to subsection 10.1B; and provided
further that the amount of the Revolving Loan Commitments shall be reduced
from time to time by the amount of any reductions thereto made pursuant to
subsections 2.4B(ii) and 2.4B(iii). Each Revolving Lender's Revolving Loan
Commitment shall expire on the Revolving Loan Commitment Termination Date
and all Revolving Loans and all other amounts owed hereunder with respect
to the Revolving Loans and the Revolving Loan Commitments shall be paid in
full no later than that date; provided that each Revolving Lender's
Revolving Loan Commitment shall expire immediately and without further
action on April 30, 1997 if the Term Loans are not purchased pursuant to
the Master Assignment Agreement on or before that date. Amounts borrowed
under this subsection 2.1A(iii) may be repaid and reborrowed to but
excluding the Revolving Loan Commitment Termination Date.
Anything contained in this Agreement to the contrary notwithstanding, the
Revolving Loans and the Revolving Loan Commitments shall be subject to the
limitation that in no event shall the Total Utilization of Revolving Loan
Commitments at any time exceed the Revolving Loan Commitments then in
effect.
(iv) Swing Line Loans. Swing Line Lender hereby agrees, subject to the
limitations set forth below with respect to the maximum amount of Swing
Line Loans permitted to be outstanding from time to time, to make a portion
of the Revolving Loan Commitments available to Company from time to time
during the period from the Closing Date to but excluding the Revolving Loan
Commitment Termination Date by making Swing Line Loans to Company in an
aggregate amount not exceeding the amount of the Swing Line Loan Commitment
to be used for the purposes identified in subsection 2.5B, notwithstanding
the fact that such Swing Line Loans, when aggregated with Swing Line
Lender's outstanding Revolving Loans and Swing Line Lender's Pro Rata Share
of the Letter of Credit Usage then in effect, may exceed Swing Line
Lender's Revolving Loan Commitment. The original amount of the Swing Line
Loan Commitment is $30,000,000; provided that any reduction of the
Revolving Loan Commitments made pursuant to subsection 2.4B(ii) or
2.4B(iii) which reduces the aggregate Revolving Loan Commitments to an
amount less than the then current amount of the Swing Line Loan Commitment
shall result in an automatic corresponding reduction of the Swing Line Loan
Commitment to the amount of the Revolving Loan Commitments, as so reduced,
without any further action on the part of Company, Administrative Agent or
Swing Line Lender. The Swing Line Loan Commitment shall expire on the
Revolving Loan Commitment Termination Date and all Swing Line Loans and all
other amounts owed hereunder with respect to the Swing Line Loans shall be
paid in full no later than that date; provided that the Swing Line Loan
Commitment shall expire immediately and without further action on April 30,
1997 if the Term Loans are not purchased pursuant to the Master Assignment
Agreement on or before that date. Amounts borrowed under this subsection
2.1A(iv) may be repaid and reborrowed to but excluding the Revolving Loan
Commitment Termination Date.
Anything contained in this Agreement to the contrary notwithstanding, the
Swing Line Loans and the Swing Line Loan Commitment shall be subject to the
limitation that in no event shall the Total Utilization of Revolving Loan
Commitments at any time exceed the Revolving Loan Commitments then in
effect.
With respect to any Swing Line Loans which have not been voluntarily
prepaid by Company pursuant to subsection 2.4B(i)(a), Swing Line Lender
(i) may, at any time in its sole and absolute discretion, and (ii) shall,
at least once every seven days, deliver to Administrative Agent (with a
copy to Company), no later than 1:00 P.M. (New York City time) on the first
Business Day in advance of the proposed Funding Date, a notice requesting
Revolving Lenders to make Revolving Loans that are Base Rate Loans on such
Funding Date in an amount equal to the amount of such Swing Line Loans (the
"REFUNDED SWING LINE LOANS") outstanding on the date such notice is given
which Swing Line Lender requests Revolving Lenders to prepay. Anything
contained in this Agreement to the contrary notwithstanding, (i) the
proceeds of such Revolving Loans made by Revolving Lenders other than Swing
Line Lender shall be immediately delivered by Administrative Agent to Swing
Line Lender (and not to Company) and applied to repay a corresponding
portion of the Refunded Swing Line Loans and (ii) on the day such Revolving
Loans are made, Swing Line Lender's Pro Rata Share of the Refunded Swing
Line Loans shall be deemed to be paid with the proceeds of a Revolving Loan
made by Swing Line Lender, and such portion of the Swing Line Loans deemed
to be so paid shall no longer be outstanding as Swing Line Loans and shall
no longer be due under the Swing Line Note of Swing Line Lender but shall
instead constitute part of Swing Line Lender's outstanding Revolving Loans
and shall be due under the Revolving Note of Swing Line Lender. Company
hereby authorizes Administrative Agent and Swing Line Lender to charge
Company's accounts with Administrative Agent and Swing Line Lender (up to
the amount available in each such account) in order to immediately pay
Swing Line Lender the amount of the Refunded Swing Line Loans to the extent
the proceeds of such Revolving Loans made by Revolving Lenders, including
the Revolving Loan deemed to be made by Swing Line Lender, are not
sufficient to repay in full the Refunded Swing Line Loans. If any portion
of any such amount paid (or deemed to be paid) to Swing Line Lender should
be recovered by or on behalf of Company from Swing Line Lender in
bankruptcy, by assignment for the benefit of creditors or otherwise, the
loss of the amount so recovered shall be ratably shared among all Revolving
Lenders in the manner contemplated by subsection 10.5.
Immediately upon funding of the Swing Line Loans by the Swing Line
Lender, each Revolving Lender shall be deemed to, and hereby agrees to,
have purchased a participation in such outstanding Swing Line Loans in an
amount equal to its Pro Rata Share of the unpaid amount of such Swing Line
Loans together with accrued interest thereon. Upon one Business Day's
notice from Swing Line Lender, each Revolving Lender shall deliver to Swing
Line Lender an amount equal to its respective participation in same day
funds at the Funding and Payment Office. In the event any Revolving Lender
fails to make available to Swing Line Lender the amount of such Revolving
Lender's participation as provided in this paragraph, Swing Line Lender
shall be entitled to recover such amount on demand from such Revolving
Lender together with interest thereon at the rate customarily used by Swing
Line Lender for the correction of errors among banks for three Business
Days and thereafter at the Base Rate. In the event Swing Line Lender
receives a payment of any amount in which other Revolving Lenders have
funded their purchase of a participation as provided in this paragraph,
Swing Line Lender shall promptly distribute to each such other Revolving
Lender its Pro Rata Share of such payment. Any such distribution shall be
made to a Revolving Lender at its primary address set forth below its name
on the appropriate signature page hereof or at such other address as such
Revolving Lender may request.
Anything contained herein to the contrary notwithstanding, each Revolving
Lender's obligation to make Revolving Loans for the purpose of repaying any
Refunded Swing Line Loans pursuant to the second preceding paragraph and
each Revolving Lender's obligation to fund a purchase of a participation in
any unpaid Swing Line Loans pursuant to the immediately preceding paragraph
shall be absolute and unconditional and shall not be affected by any
circumstance, including without limitation (a) any set-off, counterclaim,
recoupment, defense or other right which such Revolving Lender may have
against Swing Line Lender, Company or any other Person for any reason what
soever; (b) the occurrence or continuation of an Event of Default or a
Potential Event of Default; (c) any adverse change in the business,
operations, properties, assets, condition (financial or otherwise) or
prospects of Company or any of its Subsidiaries; (d) any breach of this
Agreement or any other Loan Document by any party thereto; or (e) any other
circumstance, happening or event whatsoever, whether or not similar to any
of the foregoing; provided that such obligations of each Revolving Lender
are subject to the satisfaction of one of the following (X) Swing Line
Lender believed in good faith that all conditions under Section 4 to the
making of the applicable Swing Line Loans to be refunded were satisfied at
the time Swing Line Loans were made, (Y) the satisfaction of any such
condition not satisfied had been waived in accordance with subsection 10.6
or (Z) such Revolving Lender had actual knowledge, by receipt of any
notices required to be delivered to Revolving Lenders pursuant to
subsection 6.1(ix) or otherwise, that any such condition had not been satis
fied and such Revolving Lender failed to notify Swing Line Lender and
Administrative Agent in writing that it had no obligation to make Revolving
Loans until such condition was satisfied (any such notice to be effective
as of the date of receipt thereof by Swing Line Lender and Administrative
Agent).
B. BORROWING MECHANICS. Revolving Loans made on any Funding Date
(other than Revolving Loans made pursuant to a request by Swing Line Lender
pursuant to subsection 2.1A(iv) for the purpose of repaying any Swing Line Loans
or Revolving Loans made pursuant to subsection 3.3B for the purpose of
reimbursing any Issuing Lender for the amount of a drawing under a Letter of
Credit issued by it) that are made as (i) Eurodollar Rate Loans shall be in an
aggregate minimum amount of $5,000,000 or (ii) Base Rate Loans shall be in an
aggregate minimum amount of $2,000,000. Swing Line Loans made on any Funding
Date shall be in an aggregate minimum amount of $500,000. Whenever Company
desires that Lenders make Revolving Loans it shall deliver to Administrative
Agent a Notice of Borrowing no later than 1:00 P.M. (New York City time) at
least three Business Days in advance of the proposed Funding Date (in the case
of a Eurodollar Rate Loan) or at least one Business Day in advance of the
proposed Funding Date (in the case of a Base Rate Loan). Whenever Company
desires that Swing Line Lender make a Swing Line Loan, it shall deliver to
Administrative Agent a Notice of Borrowing no later than 1:00 P.M. (New York
City time) on the proposed Funding Date. The Notice of Borrowing shall specify
(i) the proposed Funding Date (which shall be a Business Day), (ii) the amount
and Type of Loans requested, (iii) in the case of Swing Line Loans and any Loans
made on the Closing Date, that such Loans shall be Base Rate Loans, (iv) in the
case of Revolving Loans, whether such Loans shall be Base Rate Loans or
Eurodollar Rate Loans, and (v) in the case of any Loans requested to be made as
Eurodollar Rate Loans, the initial Interest Period requested therefor. Term
Loans and Revolving Loans may be continued as or converted into Base Rate Loans
and Eurodollar Rate Loans in the manner provided in subsection 2.2D. In lieu of
delivering the above-described Notice of Borrowing, Company may give
Administrative Agent telephonic notice by the required time of any proposed
borrowing under this subsection 2.1B; provided that such notice shall be
promptly confirmed in writing by delivery of a Notice of Borrowing to
Administrative Agent on or before the applicable Funding Date.
Notwithstanding anything contained herein to the contrary, during
the period commencing on (and including) the Closing Date and ending on the
earlier of (i) the one-month anniversary of the date on which the first
Eurodollar Rate Loan is made under this Agreement and (ii) the date
Administrative Agent sends notice to Company indicating that Lenders' primary
syndication has been concluded, (a) Company may only request Base Rate Loans and
Eurodollar Rate Loans with an Interest Period of one month and (b) the last day
of the Interest Period applicable to any Eurodollar Rate Loan shall be the one-
month anniversary of the date on which the first Eurodollar Rate Loan is made
under this Agreement.
Neither Administrative Agent nor any Lender shall incur any
liability to Company in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to borrow on behalf of Company or
for otherwise acting in good faith under this subsection 2.1B, and upon funding
of Loans by Lenders in accordance with this Agreement pursuant to any such
telephonic notice Company shall have effected Loans hereunder.
Company shall notify Administrative Agent prior to the funding of
any Loans in the event that any of the matters to which Company is required to
certify in the applicable Notice of Borrowing is no longer true and correct as
of the applicable Funding Date, and the acceptance by Company of the proceeds of
any Loans shall constitute a re-certification by Company, as of the applicable
Funding Date, as to the matters to which Company is required to certify in the
applicable Notice of Borrowing as modified pursuant to the notice provided for
in the first clause of this sentence (it being understood that the making of
such Loans by Lenders shall not in any way be construed as a waiver by Lenders
of any matter set forth in such notice).
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a
Notice of Borrowing for a Eurodollar Rate Loan (or telephonic notice in lieu
thereof) shall be irrevocable on and after the related Interest Rate
Determination Date, and Company shall be bound to make a borrowing in accordance
therewith.
C. DISBURSEMENT OF FUNDS. All Revolving Loans under this Agreement
shall be made by Lenders simultaneously and proportionately to their respective
Pro Rata Shares of the Commitments for the particular Type of Loans requested,
it being understood that no Lender shall be responsible for any default by any
other Lender in that other Lender's obligation to make a Loan requested
hereunder nor shall the Commitment of any Lender to make the particular Type of
Loan requested be increased or decreased as a result of a default by any other
Lender in that other Lender's obligation to make a Loan requested hereunder.
Promptly after receipt by Administrative Agent of a Notice of Borrowing pursuant
to subsection 2.1B (or telephonic notice in lieu thereof), Administrative Agent
shall notify each Lender or Swing Line Lender, as the case may be, of the pro
posed borrowing. Each Lender shall make the amount of its Loan available to
Administrative Agent not later than 12:00 Noon (New York City time) on the
applicable Funding Date, and Swing Line Lender shall make the amount of its
Swing Line Loan available to Administrative Agent not later than 2:00 P.M.(New
York City time) on the applicable Funding Date, in each case in same day funds
in Dollars, at the Funding and Payment Office. Except as provided in subsection
2.1A(iv) or subsection 3.3B with respect to Revolving Loans used to repay
Refunded Swing Line Loans or to reimburse any Issuing Lender for the amount of a
drawing under a Letter of Credit issued by it, upon satisfaction or waiver of
the conditions precedent specified in subsections 4.1 (in the case of Loans made
on the Closing Date) and 4.2 (in the case of all Loans), Administrative Agent
shall make the proceeds of such Loans available to Company on the applicable
Funding Date by causing an amount of same day funds in Dollars equal to the
proceeds of all such Loans received by Administrative Agent from Lenders or
Swing Line Lender, as the case may be, to be credited to the account of Company
at the Funding and Payment Office.
Unless Administrative Agent shall have been notified by any Lender
prior to the Funding Date for any Loans that such Lender does not intend to make
available to Administrative Agent the amount of such Lender's Loan requested on
such Funding Date, Administrative Agent may assume that such Lender has made
such amount available to Administrative Agent on such Funding Date and
Administrative Agent may, in its sole discretion, but shall not be obligated to,
make available to Company a corresponding amount on such Funding Date. If such
corresponding amount is not in fact made available to Administrative Agent by
such Lender, Administrative Agent shall be entitled to recover such
corresponding amount on demand from such Lender together with interest thereon,
for each day from such Funding Date until the date such amount is paid to
Administrative Agent, at the customary rate set by Administrative Agent for the
correction of errors among banks for three Business Days and thereafter at the
Base Rate. If such Lender does not pay such corresponding amount forthwith upon
Administrative Agent's demand therefor, Administrative Agent shall promptly
notify Company and Company shall immediately pay such corresponding amount to
Administrative Agent together with interest thereon, for each day from such
Funding Date until the date such amount is paid to Administrative Agent, at the
rate payable under this Agreement for Base Rate Loans of the applicable Type of
Loans. Nothing in this subsection 2.1C shall be deemed to relieve any Lender
from its obligation to fulfill its Commitments hereunder or to prejudice any
rights that Company may have against any Lender as a result of any default by
such Lender hereunder.
D. THE REGISTER.
(i) Administrative Agent shall maintain, at its address referred to in
subsection 10.8, a register for the recordation of the names and addresses
of Lenders and the Commitments and Loans of each Lender from time to time
(the "REGISTER"). The Register shall be available for inspection by
Company or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(ii) Administrative Agent shall record in the Register the Tranche A Term
Loan Commitment, the Tranche B Term Loan Commitment and the Revolving Loan
Commitment and the Term Loans and Revolving Loans from time to time of each
Lender, the Swing Line Loan Commitment and the Swing Line Loans from time
to time of Swing Line Lender, and each repayment or prepayment in respect
of the principal amount of the Term Loans or Revolving Loans of each Lender
or the Swing Line Loans of Swing Line Lender. Any such recordation shall
be conclusive and binding on Company and each Lender, absent manifest
error; provided that failure to make any such recordation, or any error in
such recordation, shall not affect any Lender's Commitments or Company's
Obligations in respect of the applicable Loans.
(iii) Each Lender shall record on its internal records (including,
without limitation, the Notes held by such Lender) the amount of the Term
Loan and each Revolving Loan made by it and each payment in respect
thereof. Any such recordation shall be conclusive and binding on Company,
absent manifest error; provided that failure to make any such recordation,
or any error in such recordation, shall not affect any Lender's Commitments
or Company's Obligations in respect of any applicable Loans; and provided,
further that in the event of any inconsistency between the Register and any
Lender's records, the recordations in the Register shall govern, absent
manifest error.
(iv) Company, Administrative Agent and Lenders shall deem and treat the
Persons listed as Lenders in the Register as the holders and owners of the
corresponding Commitments and Loans listed therein for all purposes hereof,
and no assignment or transfer of any such Commitment or Loan shall be
effective, in each case unless and until an Assignment Agreement effecting
the assignment or transfer thereof shall have been accepted by
Administrative Agent and recorded in the Register as provided in subsection
10.1B(ii). Prior to such recordation, all amounts owed with respect to the
applicable Commitment or Loan shall be owed to the Lender listed in the
Register as the owner thereof, and any request, authority or consent of any
Person who, at the time of making such request or giving such authority or
consent, is listed in the Register as a Lender shall be conclusive and
binding on any subsequent holder, assignee or transferee of the
corresponding Commitments or Loans.
(v) Company hereby designates Chase to serve as Company's agent solely
for purposes of maintaining the Register as provided in this subsection
2.1D, and Company hereby agrees that, to the extent Chase serves in such
capacity, Chase and its officers, directors, employees, agents and
affiliates shall constitute Indemnitees for all purposes under subsection
10.3.
E. NOTES. Company shall execute and deliver on the Closing Date (i) to
each Tranche A Term Lender (or to Administrative Agent for that Lender) a
Tranche A Term Note substantially in the form of Exhibit IV-A annexed hereto to
evidence that Lender's Tranche A Term Loan, in the principal amount of that
Lender's Tranche A Term Loan and with other appropriate insertions, (ii) to each
Tranche B Term Lender (or Administrative Agent for that Lender) a Tranche B Term
Note substantially in the form of Exhibit IV-B annexed hereto to evidence that
Lender's Tranche B Term Loan, in the principal amount of that Lender's Tranche B
Term Loan and with other appropriate insertions, (iii) to each Revolving Lender
(or to Administrative Agent for that Lender) a Revolving Note substantially in
the form of Exhibit V annexed hereto to evidence that Lender's Revolving Loans,
in the principal amount of that Lender's Revolving Loan Commitment and with
other appropriate insertions, and (iv) to Swing Line Lender a Swing Line Note
substantially in the form of Exhibit VI annexed hereto to evidence Swing Line
Lender's Swing Line Loans, in the principal amount of the Swing Line Loan
Commitment and with other appropriate insertions.
2.2 INTEREST ON THE LOANS.
A. RATE OF INTEREST. Subject to the provisions of subsections 2.6 and
2.7, each Term Loan and each Revolving Loan shall bear interest on the unpaid
principal amount thereof from the date made through maturity (whether by
acceleration or otherwise) at a rate determined by reference to the Base Rate or
the Adjusted Eurodollar Rate. Subject to the provisions of subsection 2.7, each
Swing Line Loan shall bear interest on the unpaid principal amount thereof from
the date made through maturity (whether by acceleration or otherwise) at a rate
determined by reference to the Base Rate. The applicable basis for determining
the rate of interest with respect to any Term Loan or any Revolving Loan shall
be selected by Company initially at the time a Notice of Borrowing is given with
respect to such Loan pursuant to subsection 2.1B, and the basis for determining
the interest rate with respect to any Term Loan or any Revolving Loan may be
changed from time to time pursuant to subsection 2.2D. If on any day a Term Loan
or Revolving Loan is outstanding with respect to which notice has not been
delivered to Administrative Agent in accordance with the terms of this Agreement
specifying the applicable basis for determining the rate of interest, then for
that day that Loan shall bear interest determined by reference to the Base Rate.
(i) Subject to the provisions of subsections 2.2E and 2.7, the Tranche A
Term Loans and the Revolving Loans shall bear interest through maturity as
follows:
(A) if a Base Rate Loan, then at the sum of the Base Rate plus
the Applicable Tranche A Base Rate Margin; or
(B) if a Eurodollar Rate Loan, then at the sum of the Adjusted
Eurodollar Rate plus the Applicable Tranche A Eurodollar Margin.
(ii) Subject to the provisions of subsections 2.2E and 2.7, the Tranche B
Term Loans shall bear interest through maturity as follows:
(A) if a Base Rate Loan, then at the sum of the Base Rate plus
the Applicable Tranche B Base Rate Margin or
(B) if a Eurodollar Rate Loan, then at the sum of the Adjusted
Eurodollar Rate plus the Applicable Tranche B Eurodollar Margin.
(iii) Subject to the provisions of subsections 2.2E and 2.7, the
Swing Line Loans shall bear interest through maturity at the sum of the
Base Rate plus the Applicable Tranche A Base Rate Margin minus the
Commitment Fee Percentage.
Upon delivery of the Margin Determination Certificate by Company to
Administrative Agent pursuant to subsection 6.1(xviii), the Applicable Tranche A
Base Rate Margin, the Applicable Tranche A Eurodollar Margin, the Applicable
Tranche B Base Rate Margin and the Applicable Tranche B Eurodollar Margin shall
automatically be adjusted in accordance with such Margin Determination
Certificate, such adjustment to become effective on the next succeeding Business
Day following the receipt by Administrative Agent of such Margin Determination
Certificate; provided that if a Margin Determination Certificate erroneously
indicates an applicable margin more favorable to Company than should be afforded
by the actual calculation of the Leverage Ratio, Company shall promptly pay
additional interest and letter of credit fees to correct for such error.
B. INTEREST PERIODS. In connection with each Eurodollar Rate Loan,
Company may, pursuant to the applicable Notice of Borrowing or Notice of
Conversion/Continuation, as the case may be, select an interest period (each an
"INTEREST PERIOD") to be applicable to such Loan, which Interest Period shall
be, at Company's option, either a one, two, three or six month period; provided
that:
(i) the initial Interest Period for any Eurodollar Rate Loan shall
commence on the Funding Date in respect of such Loan, in the case of a Loan
initially made as a Eurodollar Rate Loan, or on the date specified in the
applicable Notice of Conversion/Continuation, in the case of a Loan
converted to a Eurodollar Rate Loan;
(ii) in the case of immediately successive Interest Periods applicable to
a Eurodollar Rate Loan continued as such pursuant to a Notice of
Conversion/Continuation, each successive Interest Period shall commence on
the day on which the next preceding Interest Period expires;
(iii) if an Interest Period would otherwise expire on a day that is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided that, if any Interest Period would
otherwise expire on a day that is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(iv) any Interest Period that 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 clause (v) of this subsection 2.2B, end on the last Business Day
of a calendar month;
(v) no Interest Period with respect to any portion of the Tranche A Term
Loans shall extend beyond November 1, 2003, no Interest Period with respect
to any portion of the Tranche B Term Loans shall extend beyond May 1, 2005,
and no Interest Period with respect to any portion of the Revolving Loans
shall extend beyond the Revolving Loan Commitment Termination Date;
(vi) no Interest Period with respect to any portion of any Type of Term
Loan shall extend beyond a date on which Company is required to make a
scheduled payment of principal of Term Loans of such Type unless the sum of
(a) the aggregate principal amount of Term Loans of such Type that are Base
Rate Loans plus (b) the aggregate principal amount of Term Loans of such
Type that are Eurodollar Rate Loans with Interest Periods expiring on or
before such date equals or exceeds the principal amount required to be paid
on Term Loans of such Type on such date;
(vii) there shall be no more than 15 Interest Periods outstanding at
any time (it being understood that Interest Periods for different Types of
Loans (including different Types of Term Loans), whether or not such
Interest Periods are for the same period and end on the same day,
constitute separate Interest Periods); and
(viii) in the event Company fails to specify an Interest Period for
any Eurodollar Rate Loan in the applicable Notice of Borrowing or Notice of
Conversion/Continuation, Company shall be deemed to have selected an
Interest Period of one month.
C. INTEREST PAYMENTS. Subject to the provisions of subsection 2.2E,
interest on each Loan shall be payable in arrears on and to each Interest
Payment Date applicable to that Loan, upon any prepayment of that Loan (to the
extent accrued on the amount being prepaid) and at maturity (including final
maturity); provided that in the event any Swing Line Loans or any Revolving
Loans that are Base Rate Loans are prepaid pursuant to subsection 2.4B(i),
interest accrued on such Swing Line Loans or Revolving Loans through the date of
such prepayment shall be payable on the next succeeding Interest Payment Date
applicable to Base Rate Loans (or, if earlier, at final maturity).
D. CONVERSION OR CONTINUATION. Subject to the provisions of subsection
2.6, Company shall have the option (i) to convert at any time all or any part of
its outstanding Term Loans or Revolving Loans equal to not less than $5,000,000
from Loans bearing interest at a rate determined by reference to one basis to
Loans bearing interest at a rate determined by reference to an alternative basis
or (ii) upon the expiration of any Interest Period applicable to a Eurodollar
Rate Loan, to continue all or any portion of such Loan equal to not less than
$5,000,000 as a Eurodollar Rate Loan; provided, however, that a Eurodollar Rate
Loan may only be converted into a Base Rate Loan on the expiration date of an
Interest Period applicable thereto; provided further that during the period
commencing on (and including) the Closing Date and ending on the earlier of
(i) the one-month anniversary of the date on which the first Eurodollar Rate
Loan is made under this Agreement and (ii) the date Administrative Agent sends a
notice to Company indicating that Lenders' primary syndication has been
concluded, (a) no Loan may be made or continued as or converted into a
Eurodollar Rate Loan having an Interest Period of longer than one month and
(b) the last day of the Interest Period applicable to any Eurodollar Rate Loan
shall be the one-month anniversary of the date on which the first Eurodollar
Rate Loan is made under this Agreement; and provided still further that no Loan
may be made as or converted into a Base Rate Loan during the period from
December 24 of any year to and including January 7 of the immediately succeeding
year for the purpose of investing in securities bearing interest at a rate
determined by reference to any other basis for the purpose of arbitrage or
speculation.
Company shall deliver a Notice of Conversion/Continuation to
Administrative Agent no later than 1:00 P.M. (New York City time) at least one
Business Day in advance of the proposed conversion date (in the case of a
conversion to a Base Rate Loan) and at least three Business Days in advance of
the proposed conversion/continuation date (in the case of a conversion to, or a
continuation of, a Eurodollar Rate Loan). A Notice of Conversion/Continuation
shall specify (i) the proposed conversion/continuation date (which shall be a
Business Day), (ii) the amount and Type of the Loan to be converted/continued,
(iii) the nature of the proposed conversion/continuation, (iv) in the case of a
conversion to, or a continuation of, a Eurodollar Rate Loan, the requested
Interest Period, and (v) in the case of a conversion to, or a continuation of, a
Eurodollar Rate Loan, that no Potential Event of Default or Event of Default has
occurred and is continuing. In lieu of delivering the above-described Notice of
Conversion/Continuation, Company may give Administrative Agent telephonic notice
by the required time of any proposed conversion/continuation under this
subsection 2.2D; provided that such notice shall be promptly confirmed in
writing by delivery of a Notice of Conversion/Continuation to Administrative
Agent on or before the proposed conversion/continuation date. Upon receipt of
written or telephonic notice of any proposed conversion/continuation under this
subsection 2.2D, Administrative Agent shall promptly transmit such notice by
telefacsimile or telephone to each Lender.
Neither Administrative Agent nor any Lender shall incur any
liability to Company in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to act on behalf of Company or for
otherwise acting in good faith under this subsection 2.2D, and upon conversion
or continuation of the applicable basis for determining the interest rate with
respect to any Loans in accordance with this Agreement pursuant to any such
telephonic notice Company shall have effected a conversion or continuation, as
the case may be, hereunder.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a
Notice of Conversion/Continuation for conversion to, or continuation of, a
Eurodollar Rate Loan (or telephonic notice in lieu thereof) shall be irrevocable
on and after the related Interest Rate Determination Date, and Company shall be
bound to effect a conversion or continuation in accordance therewith.
E. DEFAULT RATE. Upon the occurrence and during the continuation of
any Event of Default, the outstanding principal amount of all Loans and, to the
extent permitted by applicable law, any interest payments thereon not paid when
due and any fees and other amounts then due and payable hereunder, shall thereaf
ter bear interest (including post-petition interest in any proceeding under the
Bankruptcy Code or other applicable bankruptcy laws) payable upon demand at a
rate that is 2% per annum in excess of the interest rate otherwise payable under
this Agreement with respect to the applicable Loans (or, in the case of any such
fees and other amounts, at a rate which is 2% per annum in excess of the
interest rate otherwise payable under this Agreement for Base Rate Loans);
provided that, in the case of Eurodollar Rate Loans, upon the expiration of the
Interest Period in effect at the time any such increase in interest rate is
effective such Eurodollar Rate Loans shall thereupon become Base Rate Loans and
shall thereafter bear interest payable upon demand at a rate which is 2% per
annum in excess of the interest rate otherwise payable under this Agreement for
Base Rate Loans. Payment or acceptance of the increased rates of interest
provided for in this subsection 2.2E is not a permitted alternative to timely
payment and shall not constitute a waiver of any Event of Default or otherwise
prejudice or limit any rights or remedies of Administrative Agent or any Lender.
F. COMPUTATION OF INTEREST. Interest on the Loans shall be computed on
the basis of a 360-day year, in each case for the actual number of days elapsed
in the period during which it accrues. In computing interest on any Loan, the
date of the making of such Loan or the first day of an Interest Period
applicable to such Loan or, with respect to a Base Rate Loan being converted
from a Eurodollar Rate Loan, the date of conversion of such Eurodollar Rate Loan
to such Base Rate Loan, as the case may be, shall be included, and the date of
payment of such Loan or the expiration date of an Interest Period applicable to
such Loan or, with respect to a Base Rate Loan being converted to a Eurodollar
Rate Loan, the date of conversion of such Base Rate Loan to such Eurodollar Rate
Loan, as the case may be, shall be excluded; provided that if a Loan is repaid
on the same day on which it is made, one day's interest shall be paid on that
Loan.
2.3 FEES.
A. COMMITMENT FEES. Company agrees to pay to Administrative Agent, for
distribution to each Revolving Lender in proportion to that Revolving Lender's
Pro Rata Share, commitment fees for the period from and including the Closing
Date to and excluding the Revolving Loan Commitment Termination Date equal to
the average of the daily excess of the Revolving Loan Commitments over the
aggregate principal amount of outstanding Revolving Loans (but not any
outstanding Swing Line Loans) multiplied by the then applicable Commitment Fee
Percentage, such commitment fees to be calculated on the basis of a 360-day year
and the actual number of days elapsed and to be payable quarterly in arrears on
each February 1, May 1, August 1 and November 1, commencing on the first such
date to occur after the Closing Date, and on the Revolving Loan Commitment
Termination Date.
Upon delivery of the Margin Determination Certificate by Company to
Administrative Agent pursuant to subsection 6.1(xviii), the Commitment Fee
Percentage shall automatically be adjusted in accordance with such Margin
Determination Certificate, such adjustment to become effective on the next
succeeding Business Day following the receipt by Administrative Agent of such
Margin Determination Certificate; provided that if a Margin Determination
Certificate erroneously indicates an applicable margin more favorable to Company
than should be afforded by the actual calculation of the Leverage Ratio, Company
shall promptly pay additional commitment fees to correct for such error.
B. OTHER FEES. Company agrees to pay to the Agents and Arrangers such
other fees in the amounts and at the times separately agreed upon between
Company and such Agents or Arrangers. After receipt of such other fees from
Company, Agents agree to pay, or cause to be paid by Arrangers, as the case may
be, to each Lender such portion of such other fees in the amounts and at the
times as have been separately agreed upon in writing between such Agents or
Arrangers and such Lender.
2.4 REPAYMENTS, PREPAYMENTS AND REDUCTIONS IN REVOLVING LOAN COMMITMENTS;
GENERAL PROVISIONS REGARDING PAYMENTS.
A. SCHEDULED PAYMENTS OF TERM LOANS.
(i) Scheduled Payments of Tranche A Term Loans. Company shall make
principal payments on the Tranche A Term Loans in installments on the dates
and in the amounts set forth below:
Scheduled Repayment
Date of Tranche A Term Loans
August 1, 1997 $ 7,500,000
November 1, 1997 7,500,000
February 1, 1998 15,000,000
May 1, 1998 15,000,000
August 1, 1998 15,000,000
November 1, 1998 15,000,000
February 1, 1999 16,250,000
May 1, 1999 16,250,000
August 1, 1999 16,250,000
November 1, 1999 16,250,000
February 1, 2000 17,500,000
May 1, 2000 17,500,000
August 1, 2000 17,500,000
November 1, 2000 17,500,000
February 1, 2001 18,750,000
May 1, 2001 18,750,000
August 1, 2001 18,750,000
November 1, 2001 18,750,000
February 1, 2002 20,000,000
May 1, 2002 20,000,000
August 1, 2002 20,000,000
November 1, 2002 20,000,000
February 1, 2003 8,750,000
May 1, 2003 8,750,000
August 1, 2003 8,750,000
November 1, 2003 8,750,000
$400,000,000
; provided that the scheduled installments of principal of the Tranche A
Term Loans set forth above shall be reduced in connection with any
voluntary or mandatory prepayments of the Term Loans in accordance with
subsection 2.4B(iv); and provided further that the Tranche A Term Loans and
all other amounts owed hereunder with respect to the Tranche A Term Loans
shall be paid in full no later than November 1, 2003, and the final
installment payable by Company in respect of the Tranche A Term Loans on
such date shall be in an amount, if such amount is different from that
specified above, sufficient to repay all amounts owing by Company under
this Agreement with respect to the Tranche A Term Loans.
(ii) Scheduled Payments of Tranche B Term Loans. Company shall make
principal payments on the Tranche B Term Loans in installments in the
amount of $250,000 on each February 1, May 1, August 1 and November 1
commencing on August 1, 1997 through and including May 1, 2003, and
thereafter on the dates and in the amounts set forth below:
Scheduled Repayment
Date of Tranche B Term Loans
August 1, 2003 $ 12,625,000
November 1, 2003 12,625,000
February 1, 2004 12,625,000
May 1, 2004 12,625,000
August 1, 2004 35,875,000
November 1, 2004 35,875,000
February 1, 2005 35,875,000
May 1, 2005 35,875,000
$200,000,000
; provided that the scheduled installments of principal of the Tranche B
Term Loans set forth above shall be reduced in connection with any
voluntary or mandatory prepayments of the Term Loans in accordance with
subsection 2.4B(iv); and provided further that the Tranche B Term Loans and
all other amounts owed hereunder with respect to the Tranche B Term Loans
shall be paid in full no later than May 1, 2005, and the final installment
payable by Company in respect of the Tranche B Term Loans on such date
shall be in an amount, if such amount is different from that specified
above, sufficient to repay all amounts owing by Company under this
Agreement with respect to the Tranche B Term Loans.
B. PREPAYMENTS AND UNSCHEDULED REDUCTIONS IN REVOLVING LOAN
COMMITMENTS.
(i) Voluntary Prepayments.
(a) Company may, upon written or telephonic notice to
Administrative Agent on or prior to 12:00 Noon (New York City time) on the
date of prepayment, which notice, if telephonic, shall be promptly
confirmed in writing, at any time and from time to time prepay any Swing
Line Loan on any Business Day in whole or in part in an aggregate minimum
amount of $500,000. Company may, upon not less than one Business Day's
prior written or telephonic notice, in the case of Base Rate Loans, and
three Business Days' prior written or telephonic notice, in the case of
Eurodollar Rate Loans, in each case given to Administrative Agent by 12:00
Noon (New York City time) on the date required and, if given by telephone,
promptly confirmed in writing to Administrative Agent (which original
written or telephonic notice Administrative Agent will promptly transmit by
telefacsimile or telephone to each Lender), at any time and from time to
time prepay any Term Loans or Revolving Loans on any Business Day in whole
or in part in an aggregate minimum amount of $1,000,000 for Eurodollar Rate
Loans or an aggregate minimum amount of $500,000 for Base Rate Loans;
provided, however, that unless Company compensates each Lender for any
breakage costs associated with such prepayment in accordance with
subsection 2.6D, a Eurodollar Rate Loan may only be prepaid on the
expiration of the Interest Period applicable thereto. Notice of prepayment
having been given as aforesaid, the principal amount of the Loans specified
in such notice shall become due and payable on the prepayment date
specified therein. Any such voluntary prepayment shall be applied as
specified in subsection 2.4B(iv).
(b) In the event Company is entitled to replace a non-consenting
Lender pursuant to subsection 10.6B, Company shall have the right, upon
five Business Days' written notice to Administrative Agent (which notice
Administrative Agent shall promptly transmit to each of the Lenders), to
prepay all Loans, together with accrued and unpaid interest, fees and other
amounts owing to such Lender in accordance with subsection 10.6B so long as
(1) in the case of the prepayment of the Revolving Loans of any Lender
pursuant to this subsection 2.4B(i)(b), the Revolving Loan Commitment of
such Lender is terminated concurrently with such prepayment pursuant to
subsection 2.4B(ii)(b) (at which time Schedule 2.1 shall be deemed modified
to reflect the changed Revolving Loan Commitments), and (2) in the case of
the prepayment of the Loans of any Lender, the consents required by
subsection 10.6B in connection with the prepayment pursuant to this
subsection 2.4B(i)(b) shall have been obtained, and at such time, such
Lender shall no longer constitute a "Lender" for purposes of this
Agreement, except with respect to indemnifications under this Agreement
(including, without limitation, subsections 2.6D, 2.7, 3.6, 10.2 and 10.3),
which shall survive as to such Lender.
(ii) Voluntary Reductions of Commitments.
(a) Company may, upon not less than three Business Days' prior
written or telephonic notice confirmed in writing to Administrative Agent
(which original written or telephonic notice Administrative Agent will
promptly transmit by telefacsimile or telephone to each Lender), at any
time and from time to time terminate in whole or permanently reduce in
part, without premium or penalty, the Revolving Loan Commitments in an
amount up to the amount by which the Revolving Loan Commitments exceed the
Total Utilization of Revolving Loan Commitments at the time of such
proposed termination or reduction; provided that any such partial reduction
of the Revolving Loan Commitments shall be in an aggregate minimum amount
of $2,000,000 and integral multiples of $500,000 in excess of that amount.
Company's notice to Administrative Agent shall designate the date (which
shall be a Business Day) of such termination or reduction and the amount of
any partial reduction, and such termination or reduction of the Revolving
Loan Commitments shall be effective on the date specified in Company's
notice and shall reduce the Revolving Loan Commitment of each Lender
proportionately to its Pro Rata Share of such reduction.
(b) In the event Company is entitled to replace a non-consenting
Lender pursuant to subsection 10.6B, Company shall have the right, upon
five Business Days' written notice to Administrative Agent (which notice
Administrative Agent shall promptly transmit to each of the Lenders), to
terminate the entire Revolving Loan Commitment of such Lender, so long as
(1) all Loans, together with accrued and unpaid interest, fees and other
amounts owing to such Lender are repaid, including without limitation
amounts owing to such Lender pursuant to subsection 2.6D, pursuant to
subsection 2.4B(i)(b) concurrently with the effectiveness of such
termination (at which time Schedule 2.1 shall be deemed modified to reflect
such changed amounts) and (2) the consents required by subsection 10.6B in
connection with the prepayment pursuant to subsection 2.4B(i)(b) shall have
been obtained, and at such time, such Lender shall no longer constitute a
"Lender" for purposes of this Agreement, except with respect to
indemnifications under this Agreement (including, without limitation,
subsections 2.6D, 2.7, 3.6, 10.2 and 10.3), which shall survive as to such
Lender.
(iii) Mandatory Prepayments and Mandatory Reductions of Revolving
Loan Commitments. The Loans shall be prepaid and/or the Revolving Loan
Commitments shall be permanently reduced in the amounts and under the
circumstances set forth below, all such prepayments and/or reductions to be
applied as set forth below or as more specifically provided in subsection
2.4B(iv):
(a) Prepayments and Reductions from Net Asset Sale Proceeds.
No later than the earlier to occur of (1) the third Business Day
following the date of receipt, or if Company would incur breakage
costs as a result of a prepayment on such date, on the earlier to
occur of the first such date thereafter on which no such breakage
costs are incurred or 30 days after such date of receipt, by Company
or any of its Subsidiaries of any Net Asset Sale Proceeds in respect
of any Asset Sale in an aggregate cumulative amount equal to or
exceeding $5,000,000; and (2) the date of the occurrence of any Event
of Default or Potential Event of Default, Company shall prepay the
Loans and/or the Revolving Loan Commitments shall be permanently
reduced in an amount equal to such Net Asset Sale Proceeds; provided,
however, that so long as no Event of Default or Potential Event of
Default shall have occurred and be continuing, the following Net Asset
Sale Proceeds received by Company and its Subsidiaries from and after
the Closing Date need not be applied to the mandatory prepayment of
the Loans pursuant to this subsection 2.4B(iii)(a):
(i) other than Net Asset Sale Proceeds from the sale
of a California Property or a Related Asset, (A) Net Asset Sale
Proceeds from the sale of a store to the extent that such Net
Asset Sale Proceeds are reinvested in new stores or the
construction or remodeling of stores within 270 days of such sale
and (B) Net Asset Sale Proceeds from the sale of a store to the
extent that such Net Asset Sale Proceeds do not exceed the
Consolidated Capital Expenditures made to acquire or build a
replacement store in the general vicinity of the store sold
within 270 days preceding the date of such sale, and, so long as
the aggregate amount of such Net Asset Sale Proceeds so excluded
from the mandatory prepayment provisions pursuant to subclauses
(A) and (B) of this clause (i) does not exceed $30,000,000 in any
Fiscal Year; provided that for purposes of sub-clause (A) of this
clause (i) any of the assets listed on Schedule 2.4B annexed
hereto shall be deemed to be stores;
(ii) Net Asset Sale Proceeds from the sale and
concurrent lease-back of (A) any Sale Leaseback Property, (B) any
store opened or acquired after the date one year prior to the
Closing Date or any equipment acquired after the date one year
prior to the Closing Date, in each case within one year of the
completion of such store or the acquisition of such equipment, in
each case to the extent and only to the extent of Consolidated
Capital Expenditures made with respect to such store or such
equipment and (C) Additional Sale Leaseback Properties provided
that Replacement Properties have been provided for such
Additional Sale Leaseback Properties;
(iii) Net Asset Sale Proceeds from the sale of
worn-out or obsolete equipment, to the extent that such Net Asset
Sale Proceeds are reinvested in the same or similar equipment
within 90 days of such sale;
(iv) Net Asset Sale Proceeds from the occurrence of
any loss, damage or destruction of any stores or any other
facilities of Company or any of its Subsidiaries (including any
assets located therein) giving rise to insurance proceeds, to the
extent that (A) such Net Asset Sale Proceeds are required to be
paid to a landlord and cannot be paid to a mortgagee or other
lender to Company or its Subsidiaries in preference to payments
to a landlord under leases existing as of the Closing Date and
which proceeds are in fact paid to such landlord in accordance
with the terms of such leases; (B) such Net Asset Sale Proceeds
are reinvested to repair or rebuild the assets so lost, damaged
or destroyed or reinvested in new stores or the construction or
remodeling of stores within the earlier of (1) 270 days of
receipt of such Net Asset Sale Proceeds and (2) 24 months of the
occurrence of such loss, damage or destruction; or (C) such Net
Asset Sale Proceeds do not exceed the expenditures made by
Company or any of its Subsidiaries within the earlier of (1) 270
days of receipt of such Net Asset Sale Proceeds and (2) 24 months
of the occurrence of such loss, damage or destruction, to repair
or rebuild the applicable assets so lost, damaged or destroyed or
to acquire new stores or to construct or remodel stores; and
(v) up to 50% of the Net Asset Sale Proceeds from the
sale of California Properties.
If, following the receipt by Company or any of its
Subsidiaries of Net Asset Sale Proceeds, Company is required to apply
or cause to be applied any portion of such Net Asset Sale Proceeds to
prepay any Indebtedness evidenced by the Senior Subordinated Notes
pursuant to the Senior Subordinated Note Indenture, then,
notwithstanding anything contained in this subsection 2.4B(iii)(a),
Company shall prepay the Loans and/or reduce the Revolving Loan
Commitments in the order set forth in this subsection 2.4B(iii)(a) so
as to eliminate any obligation to prepay such Indebtedness.
(b) Prepayments and Reductions Due to Reversion of Surplus
Assets of Pension Plans. No later than the first Business Day
following the date of return to Company or any of its Subsidiaries of
any surplus assets of any pension plan of Company or any of its
Subsidiaries, Company shall prepay the Loans and/or the Revolving Loan
Commitments shall be permanently reduced in an amount (such amount
being the "NET PENSION PROCEEDS") equal to 100% of such returned
surplus assets net of transaction costs and expenses incurred in
obtaining such return, including incremental taxes payable as a result
thereof.
(c) Prepayments and Reductions Due to Issuance of Debt
Securities. No later than the first Business Day following the date
of receipt by Company or any of its Subsidiaries of the Cash proceeds
(any such proceeds, net of underwriting discounts, similar placement
fees and commissions and other reasonable costs and expenses
associated therewith, being the "NET DEBT PROCEEDS") from the issuance
of any debt Securities of Company or any such Subsidiary (other than
the issuance of Indebtedness permitted pursuant to subsection 7.1 as
in effect on the Closing Date), Company shall prepay the Loans and/or
the Revolving Loan Commitments shall be permanently reduced in an
amount equal to such Net Debt Proceeds; provided that to the extent
that after giving effect to any such issuances of debt Securities of
Company or any such Subsidiary and any prepayment of the Loans from
the proceeds thereof, the Leverage Ratio is less than 2.50:1.00,
Company shall prepay the Loans and/or the Revolving Loan Commitments
shall be permanently reduced in an amount equal to 50% of such Net
Debt Proceeds.
(d) Prepayments and Reductions from Consolidated Excess Cash
Flow. In the event that (i) the Leverage Ratio is greater than
3.50:1.00 as of the last day of any Fiscal Year and (ii) there shall
be Consolidated Excess Cash Flow for such Fiscal Year, within 100 days
after the last day of such Fiscal Year, Company shall prepay the Loans
and/or the Revolving Loan Commitments shall be permanently reduced in
an amount equal to 50% of such Consolidated Excess Cash Flow.
(e) Calculations of Net Proceeds Amounts; Additional
Prepayments and Reductions Based on Subsequent Calculations.
Concurrently with any prepayment of the Loans and/or reduction of the
Revolving Loan Commitments pursuant to subsections 2.4B(iii)(a)-(d) or
within three Business Days of the receipt of any Net Asset Sale
Proceeds under subsection 2.4B(iii)(a), Company shall deliver to
Administrative Agent an Officers' Certificate demonstrating (1) the
calculation of the amount (the "NET PROCEEDS AMOUNT") of the
applicable Net Asset Sale Proceeds, Net Pension Proceeds, Net Debt
Proceeds (as such latter three terms are defined in subsections
2.4B(iii)(b) and (c), respectively) or the applicable Consolidated
Excess Cash Flow, as the case may be, that gave rise to such
prepayment and/or reduction; (2) with respect to the receipt of Net
Asset Sale Proceeds referred to in clauses (i)(A), (iii) and (iv) of
subsection 2.4B(iii)(a), in reasonable detail, the intended
application of such Net Asset Sale Proceeds and the estimated costs of
the reinvestment referred to in such clauses; and (3) with respect to
the receipt of Net Asset Sale Proceeds referred to in clauses (i)(B),
(ii) and (iv) of subsection 2.4B(iii)(a), in reasonable detail the
Consolidated Capital Expenditures made by Company which accounts for
the exclusion of any such Net Asset Sale Proceeds from the mandatory
prepayment requirements of subsection 2.4B(iii)(a). Such Officers'
Certificate, in the case of clauses (i) and (iii), may be amended at
any time and from time to time by Company during the 270-day or 90-day
period, as applicable, following receipt of such Net Asset Sale
Proceeds. In the event that Company shall subsequently determine that
the actual Net Proceeds Amount was greater than the amount set forth
in such Officers' Certificate or that, with respect to clauses (i),
(iii) and (iv) of subsection 2.4B(iii)(a), such Net Proceeds Amount
was not expended for the purposes specified in such Officers'
Certificate, as amended, within the time periods specified in such
clauses, Company shall promptly make an additional prepayment of the
Loans (and/or, if applicable, the Revolving Loan Commitments shall be
permanently reduced) in an amount equal to the amount of such excess
or unexpended portion, but only to the extent such amount has not been
previously applied as a mandatory prepayment under subsection
2.4B(iii)(d), and Company shall concurrently therewith deliver to
Administrative Agent an Officers' Certificate demonstrating the
derivation of the additional Net Proceeds Amount resulting in such
excess or unexpended portion.
(f) Prepayments Due to Reductions or Restrictions of Revolving
Loan Commitments. Company shall from time to time prepay first the
Swing Line Loans and second the Revolving Loans to the extent
necessary so that the Total Utilization of Revolving Loan Commitments
shall not at any time exceed the Revolving Loan Commitments then in
effect. Any such mandatory prepayments shall be applied as specified
in subsection 2.4B(iv) and shall not reduce the amount of the
Revolving Loan Commitments then in effect.
(iv) Application of Prepayments.
(a) Application of Voluntary Prepayments by Type of Loans and
Order of Maturity. Subject to the immediately succeeding sentence of
this subsection 2.4B(iv)(a), any voluntary prepayments pursuant to
subsection 2.4B(i)(a) shall be applied to Term Loans, Revolving Loans
or Swing Line Loans as specified by Company in the applicable notice
of prepayment; provided that in the event Company fails to specify the
Loans to which any such prepayment shall be applied, such prepayment
shall be applied first to repay outstanding Swing Line Loans to the
full extent thereof, second to repay outstanding Revolving Loans to
the full extent thereof, and third to repay outstanding Term Loans to
the full extent thereof. Any voluntary prepayments of the Term Loans
pursuant to subsection 2.4B(i)(a) shall be applied (x) to the Tranche
A Term Loans and the Tranche B Term Loans on a pro rata basis and
(y) to reduce the unpaid scheduled installments of principal of the
Term Loans set forth in subsections 2.4A(i) and 2.4A(ii) in the order
specified by Company.
(b) Application of Mandatory Prepayments by Type of Loans. Any
amount (the "APPLIED AMOUNT") required to be applied as a mandatory
prepayment of the Loans and/or a reduction of the Revolving Loan
Commitments pursuant to subsections 2.4B(iii)(a)-(d) shall be applied
first to prepay the Term Loans to the full extent thereof, second, to
the extent of any remaining portion of the Applied Amount, to prepay
the Swing Line Loans to the full extent thereof and to permanently
reduce the Revolving Loan Commitments by the amount of such
prepayment, third, to the extent of any remaining portion of the
Applied Amount, to prepay the Revolving Loans to the full extent
thereof and to further permanently reduce the Revolving Loan
Commitments by the amount of such prepayment, and fourth, in an amount
equal to any remaining portion of the Applied Amount, to further
permanently reduce the Revolving Loan Commitments to the full extent
thereof.
(c) Application of Mandatory Prepayments of Term Loans by Order
of Maturity. Any mandatory prepayments of the Term Loans pursuant to
subsection 2.4B(iii) shall be applied (x) to the Tranche A Term Loans
and the Tranche B Term Loans on a pro rata basis; (y) to reduce the
unpaid scheduled installments of principal of the Tranche A Term Loans
set forth in subsection 2.4A(i) due in the 24-month period immediately
succeeding such mandatory prepayment in forward order; and (z) to
reduce the unpaid scheduled installments of principal of the Tranche B
Term Loans and the unpaid scheduled installments of principal of the
Tranche A Term Loans (after giving effect to clause (y) above) set
forth in subsections 2.4A(i) and 2.4A(ii) on a pro rata basis;
provided that, in the case of Tranche B Term Loans upon receipt of any
mandatory prepayments pursuant to subsection 2.4B(iii) with respect to
which Company has given Administrative Agent written notification
prior to such receipt that Company has elected to give the Tranche B
Term Lenders the right to waive such Lenders' right to receive such
prepayment (the "WAIVABLE MANDATORY PREPAYMENT"), Administrative Agent
shall notify the Tranche B Term Lenders of such receipt and the amount
of the prepayment to be applied to each such Lender's Term Loans;
provided, further that Company shall use its reasonable efforts to
notify the Tranche B Term Lenders of such Waivable Mandatory
Prepayment three (3) Business Days prior to the payment to
Administrative Agent of such Waivable Mandatory Prepayments (it being
understood that Company shall have no liabilities for failing to so
notify such Lenders). In the event any such Tranche B Term Lender
desires to waive such Lender's right to receive any such Waivable
Mandatory Prepayment, such Lender shall so advise Administrative Agent
no later than the close of business on the date of such notice from
Administrative Agent. In the event that any such Lender waives such
Lender's right to any such Waivable Mandatory Prepayment,
Administrative Agent shall apply 50% of the amount so waived to prepay
the Tranche A Term Loans. Administrative Agent shall return the
remainder of the amount so waived, if any, by such Lender to Company.
(d) Application of Prepayments to Base Rate Loans and
Eurodollar Rate Loans. Considering Tranche A Term Loans, Tranche B
Term Loans and Revolving Loans being prepaid separately, any
prepayment thereof shall be applied first to Base Rate Loans to the
full extent thereof before application to Eurodollar Rate Loans, in
each case in a manner which minimizes the amount of any payments
required to be made by Company pursuant to subsection 2.6D.
C. GENERAL PROVISIONS REGARDING PAYMENTS.
(i) Manner and Time of Payment. All payments by Company of principal,
interest, fees and other Obligations hereunder, under the Notes and under
the other Loan Documents shall be made in Dollars in same day funds,
without defense, setoff or counterclaim, free of any restriction or
condition, and delivered to Administrative Agent not later than 1:00 P.M.
(New York City time) on the date due at the Funding and Payment Office for
the account of Lenders; funds received by Administrative Agent after that
time on such due date shall be deemed to have been paid by Company on the
next succeeding Business Day. Company hereby authorizes Administrative
Agent to charge its accounts with Administrative Agent in order to cause
timely payment to be made to Administrative Agent of all principal,
interest, fees and expenses due hereunder (subject to sufficient funds
being available in its accounts for that purpose).
(ii) Application of Payments to Principal and Interest. Except as
provided in subsection 2.2C, all payments in respect of the principal
amount of any Loan shall include payment of accrued interest on the
principal amount being repaid or prepaid, and all such payments shall be
applied to the payment of interest before application to principal.
(iii) Apportionment of Payments. Aggregate principal and interest
payments in respect of Term Loans and Revolving Loans shall be apportioned
among all outstanding Loans to which such payments relate, in each case
proportionately to Lenders' respective Pro Rata Shares. Administrative
Agent shall promptly distribute to each Lender, at its primary address set
forth below its name on the appropriate signature page hereof or at such
other address as such Lender may request, its Pro Rata Share of all such
payments received by Administrative Agent and the commitment fees of such
Lender when received by Administrative Agent pursuant to subsection 2.3.
Notwithstanding the foregoing provisions of this subsection 2.4C(iii), if,
pursuant to the provisions of subsection 2.6C, any Notice of
Conversion/Continuation is withdrawn as to any Affected Lender or if any
Affected Lender makes Base Rate Loans in lieu of its Pro Rata Share of any
Eurodollar Rate Loans, Administrative Agent shall give effect thereto in
apportioning payments received thereafter.
(iv) Payments on Business Days. Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business Day,
such payment shall be made on the next succeeding Business Day and such
extension of time shall be included in the computation of the payment of
interest hereunder or of the commitment fees hereunder, as the case may be;
provided, however, that if the day on which payment relating to a
Eurodollar Rate Loan is due is not a Business Day but is a day of the month
after which no further Business Day occurs in that month, then the due date
thereof shall be the next preceding Business Day.
(v) Notation of Payment. Each Lender agrees that before disposing of
any Note held by it (other than by granting participations therein), that
Lender will make a notation thereon of all Loans evidenced by that Note and
all principal payments previously made thereon and of the date to which
interest thereon has been paid; provided that the failure to make (or any
error in the making of) a notation of any Loan made under such Note shall
not limit or otherwise affect the obligations of Company hereunder or under
such Note with respect to any Loan or any payments of principal or interest
on such Note.
2.5 USE OF PROCEEDS.
A. CLOSING DATE. The proceeds of the Revolving Loans made on the
Closing Date may be applied by Company to reduce the Term Loans under the
Existing Credit Agreement to $600,000,000 and to pay accrued interest, fees and
expenses under the Existing Credit Agreement and expenses under the Existing
Credit Agreement and expenses incurred in connection with the transactions
contemplated by this Agreement.
B. REVOLVING LOANS; SWING LINE LOANS. The proceeds of the Revolving
Loans on the Closing Date shall be applied by Company as provided in subsection
2.5A. The proceeds of any other Revolving Loans and any Swing Line Loans shall
be applied by Company for working capital and general corporate purposes.
C. MARGIN REGULATIONS. No portion of the proceeds of any borrowing
under this Agreement shall be used by Company or any of its Subsidiaries in any
manner that might cause the borrowing or the application of such proceeds to
violate Regulation G, Regulation U, Regulation T or Regulation X of the Board of
Governors of the Federal Reserve System or any other regulation of such Board or
to violate the Exchange Act, in each case as in effect on the date or dates of
such borrowing and such use of proceeds.
2.6 SPECIAL PROVISIONS GOVERNING EURODOLLAR RATE LOANS.
Notwithstanding any other provision of this Agreement to the
contrary, the following provisions shall govern with respect to Eurodollar Rate
Loans as to the matters covered:
A. DETERMINATION OF APPLICABLE INTEREST RATE. As soon as practicable
after 10:00 A.M. (New York City time) on each Interest Rate Determination Date,
Administrative Agent shall determine (which determination shall, absent manifest
error, be final, conclusive and binding upon all parties) the interest rate that
shall apply to the Eurodollar Rate Loans for which an interest rate is then
being determined for the applicable Interest Period and shall promptly give
notice thereof (in writing or by telephone confirmed in writing) to Company and
each Lender.
B. INABILITY TO DETERMINE APPLICABLE INTEREST RATE. In the event that
Administrative Agent shall have determined (which determination shall be final
and conclusive and binding upon all parties hereto), on any Interest Rate
Determination Date with respect to any Eurodollar Rate Loans, that by reason of
circumstances affecting the interbank Eurodollar market adequate and fair means
do not exist for ascertaining the interest rate applicable to such Loans on the
basis provided for in the definition of Adjusted Eurodollar Rate, Administrative
Agent shall on such date give notice (by telefacsimile or by telephone confirmed
in writing) to Company and each Lender of such determination, whereupon (i) no
Loans may be made as, or converted to, Eurodollar Rate Loans until such time as
Administrative Agent notifies Company and Lenders that the circumstances giving
rise to such notice no longer exist and (ii) any Notice of Borrowing or Notice
of Conversion/Continuation given by Company with respect to the Loans in respect
of which such determination was made shall be deemed to be rescinded by Company.
C. ILLEGALITY OR IMPRACTICABILITY OF EURODOLLAR RATE LOANS. In the
event that on any date any Lender shall have determined (which determination
shall be final and conclusive and binding upon all parties hereto but shall be
made only after consultation with Company and Administrative Agent) that the
making, maintaining or continuation of its Eurodollar Rate Loans (i) has become
unlawful as a result of compliance by such Lender in good faith with any law,
treaty, governmental rule, regulation, guideline or order (or would conflict
with any such treaty, governmental rule, regulation, guideline or order not
having the force of law even though the failure to comply therewith would not be
unlawful) or (ii) has become impracticable, or would cause such Lender material
hardship, as a result of contingencies occurring after the date of this
Agreement which materially and adversely affect the interbank Eurodollar market
or the position of such Lender in that market, then, and in any such event, such
Lender shall be an "AFFECTED LENDER" and it shall on that day give notice (by
telefacsimile or by telephone confirmed in writing) to Company and
Administrative Agent of such determination (which notice Administrative Agent
shall promptly transmit to each other Lender). Thereafter (a) the obligation of
the Affected Lender to make Loans as, or to convert Loans to, Eurodollar Rate
Loans shall be suspended until such notice shall be withdrawn by the Affected
Lender, (b) to the extent such determination by the Affected Lender relates to a
Eurodollar Rate Loan then being requested by Company pursuant to a Notice of
Borrowing or a Notice of Conversion/Continuation, the Affected Lender shall make
such Loan as (or convert such Loan to, as the case may be) a Base Rate Loan,
(c) the Affected Lender's obligation to maintain its outstanding Eurodollar Rate
Loans (the "AFFECTED LOANS") shall be terminated at the earlier to occur of the
expiration of the Interest Period then in effect with respect to the Affected
Loans or when required by law, and (d) the Affected Loans shall automatically
convert into Base Rate Loans on the date of such termination. Notwithstanding
the foregoing, to the extent a determination by an Affected Lender as described
above relates to a Eurodollar Rate Loan then being requested by Company pursuant
to a Notice of Borrowing or a Notice of Conversion/Continuation, Company shall
have the option, subject to the provisions of subsection 2.6D, to rescind such
Notice of Borrowing or Notice of Conversion/Continuation as to all Lenders by
giving notice (by telefacsimile or by telephone confirmed in writing) to
Administrative Agent of such rescission on the date on which the Affected Lender
gives notice of its determination as described above (which notice of rescission
Administrative Agent shall promptly transmit to each other Lender). Except as
provided in the immediately preceding sentence, nothing in this subsection 2.6C
shall affect the obligation of any Lender other than an Affected Lender to make
or maintain Loans as, or to convert Loans to, Eurodollar Rate Loans in
accordance with the terms of this Agreement.
D. COMPENSATION FOR BREAKAGE OR NON-COMMENCEMENT OF INTEREST PERIODS.
Company shall compensate each Lender, upon written request by that Lender (which
request shall set forth in reasonable detail the basis for requesting such
amounts), for all reasonable losses, expenses and liabilities (including,
without limitation, any interest paid by that Lender to lenders of funds
borrowed by it to make or carry its Eurodollar Rate Loans and any loss, expense
or liability sustained by that Lender in connection with the liquidation or re-
employment of such funds) which that Lender will sustain or has sustained:
(i) if for any reason (other than a default by that Lender) a borrowing of any
Eurodollar Rate Loan does not occur on a date specified therefor in a Notice of
Borrowing or a telephonic request for borrowing, or a conversion to or
continuation of any Eurodollar Rate Loan does not occur on a date specified
therefor in a Notice of Conversion/Continuation or a telephonic request for
conversion or continuation, (ii) if any prepayment or other principal payment or
any conversion of any of its Eurodollar Rate Loans occurs on a date prior to the
last day of an Interest Period applicable to that Loan, (iii) if any prepayment
of any of its Eurodollar Rate Loans is not made on any date specified in a
notice of prepayment given by Company, or (iv) as a consequence of any other
default by Company in the repayment of its Eurodollar Rate Loans when required
by the terms of this Agreement.
E. BOOKING OF EURODOLLAR RATE LOANS. Any Lender may make, carry or
transfer Eurodollar Rate Loans at, to, or for the account of any of its branch
offices or the office of an Affiliate of that Lender.
F. ASSUMPTIONS CONCERNING FUNDING OF EURODOLLAR RATE LOANS. Calcula
tion of all amounts payable to a Lender under this subsection 2.6 and under
subsection 2.7A shall be made as though that Lender had actually funded each of
its relevant Eurodollar Rate Loans through the purchase of a Eurodollar deposit
bearing interest at the rate obtained pursuant to clause (i) of the definition
of Adjusted Eurodollar Rate in an amount equal to the amount of such Eurodollar
Rate Loan and having a maturity comparable to the relevant Interest Period and
through the transfer of such Eurodollar deposit from an offshore office of that
Lender to a domestic office of that Lender in the United States of America;
provided, however, that each Lender may fund each of its Eurodollar Rate Loans
in any manner it sees fit and the foregoing assumptions shall be utilized only
for the purposes of calculating amounts payable under this subsection 2.6 and
under subsection 2.7A.
G. EURODOLLAR RATE LOANS AFTER DEFAULT. After the occurrence of and
during the continuation of a Potential Event of Default or an Event of Default,
(i) Company may not elect to have a Loan be made or maintained as, or converted
to, a Eurodollar Rate Loan after the expiration of any Interest Period then in
effect for that Loan and (ii) subject to the provisions of subsection 2.6D, any
Notice of Borrowing or Notice of Conversion/Continuation given by Company with
respect to a requested borrowing or conversion/continuation that has not yet
occurred shall be deemed to be rescinded by Company.
2.7 INCREASED COSTS; TAXES; CAPITAL ADEQUACY.
A. COMPENSATION FOR INCREASED COSTS AND TAXES. Subject to the
provisions of subsection 2.7B, in the event that any Lender shall determine
(which determination shall, absent manifest error, be final and conclusive and
binding upon all parties hereto) that any law, treaty or governmental rule,
regulation or order, or any change therein or in the interpretation,
administration or application thereof (including the introduction of any new
law, treaty or governmental rule, regulation or order), or any determination of
a court or governmental authority, in each case that becomes effective (other
than any change in such law, treaty or governmental rule, regulation or order
which was promulgated prior to the date hereof and which becomes effective in
accordance with its terms after the date hereof) after the date hereof, or
compliance by such Lender with any guideline, request or directive issued or
made after the date hereof by any central bank, the National Association of
Insurance Commissioners ("NAIC") or other governmental or quasi-governmental
authority (whether or not having the force of law):
(i) subjects such Lender (or its applicable lending office) to any
additional Tax (other than any Tax on the overall net income of such
Lender) with respect to this Agreement or any of its obligations hereunder
or any payments to such Lender (or its applicable lending office) of
principal, interest, fees or any other amount payable hereunder;
(ii) imposes, modifies or holds applicable any reserve (including without
limitation any marginal, emergency, supplemental, special or other
reserve), special deposit, compulsory loan, FDIC insurance or similar
requirement against assets held by, or deposits or other liabilities in or
for the account of, or advances or loans by, or other credit extended by,
or any other acquisition of funds by, any office of such Lender (other than
any such reserve or other requirements with respect to Eurodollar Rate
Loans that are reflected in the definition of Adjusted Eurodollar Rate); or
(iii) imposes any other condition (other than with respect to a Tax
matter) on or affecting such Lender (or its applicable lending office) or
its obligations hereunder or the interbank Eurodollar market;
and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining Loans hereunder or to reduce any amount
received or receivable by such Lender (or its applicable lending office) with
respect thereto; then, in any such case, Company shall promptly pay to such
Lender, upon receipt of the statement referred to in the next sentence, such
additional amount or amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Lender in its
sole discretion shall determine) as may be necessary to compensate such Lender
for any such increased cost or reduction in amounts received or receivable
hereunder; provided that a Lender shall not be entitled to avail itself of the
benefit of this subsection 2.7A to the extent that any such increased cost or
reduction in amounts was incurred more than six months prior to the time it
gives notice to Company (as provided in the next sentence) of the relevant
circumstance, unless such circumstance arose or became applicable
retrospectively, in which case such Lender shall not be limited to such six
month period so long as such Lender has given such notice to Company no later
than six months from the time such circumstance became applicable to such
Lender. Such Lender shall deliver to Company (with a copy to Administrative
Agent) a written statement, setting forth in reasonable detail the basis for
calculating the additional amounts owed to such Lender under this subsection
2.7A, which statement shall be conclusive and binding upon all parties hereto
absent manifest error.
B. WITHHOLDING OF TAXES.
(i) Payments to Be Free and Clear. Except as specifically provided to
the contrary in paragraphs (ii) and (iii) below, all sums payable by
Company under this Agreement and the other Loan Documents shall (except to
the extent required by law) be paid free and clear of, and without any
deduction or withholding on account of, any Tax (other than a Tax on the
overall net income of any Lender) imposed, levied, collected, withheld or
assessed by or within the United States of America or any political
subdivision in or of the United States of America or any other jurisdiction
from or to which a payment is made by or on behalf of Company or by any
federation or organization of which the United States of America or any
such jurisdiction is a member at the time of payment.
(ii) Grossing-up of Payments. If Company or any other Person is required
by law to make any deduction or withholding on account of any such Tax from
any sum paid or payable by Company to Administrative Agent or any Lender
under any of the Loan Documents:
(a) Company shall notify Administrative Agent of any such
requirement or any change in any such requirement as soon as Company
becomes aware of it;
(b) Company shall pay any such Tax before the date on which
penalties attach thereto, such payment to be made (if the liability to
pay is imposed on Company) for its own account or (if that liability
is imposed on Administrative Agent or such Lender, as the case may be)
on behalf of and in the name of Administrative Agent or such Lender;
(c) the sum payable by Company in respect of which the relevant
deduction, withholding or payment is required shall be increased to
the extent necessary to ensure that, after the making of that
deduction, withholding or payment, Administrative Agent or such
Lender, as the case may be, receives on the due date and retains (free
from any liability in respect of any such deduction, withholding or
payment) a net sum equal to what it would have received and so
retained had no such deduction, withholding or payment been required
or made; and
(d) within 30 days after paying any sum from which it is
required by law to make any deduction or withholding, and within 30
days after the due date of payment of any Tax which it is required by
clause (b) above to pay, Company shall deliver to Administrative Agent
evidence satisfactory to the other affected parties of such deduction,
withholding or payment and of the remittance thereof to the relevant
taxing or other authority;
provided that no such additional amount shall be required to be paid to any
Lender under clause (c) above except to the extent that any change after
the date hereof (in the case of each Lender listed on the signature pages
hereof) or after the date of the Assignment Agreement pursuant to which
such Lender became a Lender (in the case of each other Lender) in any such
requirement for a deduction, withholding or payment as is mentioned therein
shall result in an increase in the rate of such deduction, withholding or
payment from that in effect at the date of this Agreement or at the date of
such Assignment Agreement, as the case may be, in respect of payments to
such Lender.
(iii) Evidence of Exemption from U.S. Withholding Tax.
(a) Each Lender that is organized under the laws of any
jurisdiction other than the United States or any state or other
political subdivision thereof (for purposes of this subsection
2.7B(iii), a "NON-US LENDER") shall deliver to Administrative Agent
for transmission to Company, on or prior to the Closing Date (in the
case of each Lender listed on the signature pages hereof) or on or
prior to the date of the Assignment Agreement pursuant to which it
becomes a Lender (in the case of each other Lender), and at such other
times as may be necessary in the determination of Company or
Administrative Agent (each in the reasonable exercise of its
discretion), (1) two original copies of Internal Revenue Service Form
1001 or 4224 (or any successor forms), properly completed and duly
executed by such Lender, together with any other certificate or
statement of exemption required under the Internal Revenue Code or the
regulations issued thereunder to establish that such Lender is not
subject to deduction or withholding of United States federal income
tax with respect to any payments to such Lender of principal,
interest, fees or other amounts payable under any of the Loan
Documents or (2) if such Lender is not a "bank" or other Person
described in Section 881(c)(3) of the Internal Revenue Code and cannot
deliver either Internal Revenue Service Form 1001 or 4224 pursuant to
clause (1) above, a Certificate re Non-Bank Status together with two
original copies of Internal Revenue Service Form W-8 (or any successor
form), properly completed and duly executed by such Lender, together
with any other certificate or statement of exemption required under
the Internal Revenue Code or the regulations issued thereunder to
establish that such Lender is not subject to deduction or withholding
of United States federal income tax with respect to any payments to
such Lender of interest payable under any of the Loan Documents.
(b) Each Lender required to deliver any forms, certificates or
other evidence with respect to United States federal income tax
withholding matters pursuant to subsection 2.7B(iii)(a) hereby agrees,
from time to time after the initial delivery by such Lender of such
forms, certificates or other evidence, whenever a lapse in time or
change in circumstances renders such forms, certificates or other
evidence obsolete or inaccurate in any material respect, that such
Lender shall promptly (1) deliver to Administrative Agent for
transmission to Company two new original copies of Internal Revenue
Service Form 1001 or 4224, or a Certificate re Non-Bank Status and two
original copies of Internal Revenue Service Form W-8, as the case may
be, properly completed and duly executed by such Lender, together with
any other certificate or statement of exemption required in order to
confirm or establish that such Lender is not subject to deduction or
withholding of United States federal income tax with respect to
payments to such Lender under the Loan Documents or (2) promptly
notify Administrative Agent and Company of its inability to deliver
any such forms, certificates or other evidence.
(c) Company shall not be required to pay any additional amount
to any Non-US Lender under clause (c) of subsection 2.7B(ii) if such
Lender shall have failed to satisfy the requirements of subsection
2.7B(iii) (a); provided that if such Lender shall have satisfied such
requirements on the Closing Date (in the case of each Lender listed on
the signature pages hereof) or on the date of the Assignment Agreement
pursuant to which it became a Lender (in the case of each other
Lender), nothing in this subsection 2.7B(iii)(c) shall relieve Company
of its obligation to pay any additional amounts pursuant to clause (c)
of subsection 2.7B(ii) in the event that, as a result of any change
after the date of such satisfaction in any applicable law, treaty or
governmental rule, regulation or order, or any change after the date
of such satisfaction in the interpretation, administration or
application thereof, such Lender is no longer properly entitled to
deliver forms, certificates or other evidence at a subsequent date
establishing the fact that such Lender is not subject to withholding
as described in subsection 2.7B(iii)(a).
C. CAPITAL ADEQUACY ADJUSTMENT. If any Lender shall have determined
that the adoption, effectiveness, phase-in or applicability after the date
hereof of any law, rule or regulation (or any provision thereof) regarding
capital adequacy, or after the date hereof, any change therein or in the
interpretation or administration thereof by any governmental authority, central
bank, the NAIC or comparable agency charged with the interpretation or admin
istration thereof, or compliance by any Lender (or its applicable lending
office) with any guideline, request or directive regarding capital adequacy
(whether or not having the force of law) of any such governmental authority,
central bank, the NAIC or comparable agency, has or would have the effect of
reducing the rate of return on the capital of such Lender or any corporation
controlling such Lender as a consequence of, or with reference to, such Lender's
Loans or Commitments or Letters of Credit or participations therein or other
obligations hereunder with respect to the Loans or the Letters of Credit to a
level below that which such Lender or such controlling corporation could have
achieved but for such adoption, effectiveness, phase-in, applicability, change
or compliance (taking into consideration the policies of such Lender or such
controlling corporation with regard to capital adequacy), then from time to
time, within five Business Days after receipt by Company from such Lender of the
statement referred to in the next sentence, Company shall pay to such Lender
such additional amount or amounts as will compensate such Lender or such
controlling corporation on an after-tax basis for such reduction; provided that
a Lender shall not be entitled to avail itself of the benefit of this subsection
2.7C to the extent that any such reduction in return was incurred more than six
months prior to the time it gives notice to Company (as provided in the next
sentence) of the relevant circumstance, unless such circumstance arose or became
applicable retrospectively, in which case such Lender shall not be limited to
such six month period so long as such Lender has given such notice to Company no
later than six months from the time such circumstance became applicable to such
Lender. Such Lender shall deliver to Company (with a copy to Administrative
Agent) a written statement, setting forth in reasonable detail the basis of the
calculation of such additional amounts, which statement shall be conclusive and
binding upon all parties hereto absent manifest error.
2.8 OBLIGATION OF LENDERS AND ISSUING LENDERS TO MITIGATE.
Each Lender and Issuing Lender agrees that, as promptly as
practicable after the officer of such Lender or Issuing Lender responsible for
administering the Loans or Letters of Credit of such Lender or Issuing Lender,
as the case may be, becomes aware of the occurrence of an event or the existence
of a condition that would cause such Lender to become an Affected Lender or that
would entitle such Lender or Issuing Lender to receive payments under subsection
2.7 or subsection 3.6, it will, to the extent not inconsistent with the internal
policies of such Lender or Issuing Lender and any applicable legal or regulatory
restrictions, use reasonable efforts (i) to make, issue, fund or maintain the
Commitments of such Lender or the affected Loans or Letters of Credit of such
Lender or Issuing Lender through another lending or letter of credit office of
such Lender or Issuing Lender, or (ii) take such other measures as such Lender
or Issuing Lender may deem reasonable, if as a result thereof the circumstances
which would cause such Lender to be an Affected Lender would cease to exist or
the additional amounts which would otherwise be required to be paid to such
Lender or Issuing Lender pursuant to subsection 2.7 or subsection 3.6 would be
materially reduced and if, as determined by such Lender or Issuing Lender in its
sole discretion, the making, issuing, funding or maintaining of such Commitments
or Loans or Letters of Credit through such other lending or letter of credit
office or in accordance with such other measures, as the case may be, would not
otherwise materially adversely affect such Commitments or Loans or Letters of
Credit or the interests of such Lender or Issuing Lender; provided that such
Lender or Issuing Lender will not be obligated to utilize such other lending or
letter of credit office pursuant to this subsection 2.8 unless Company agrees to
pay all incremental expenses incurred by such Lender or Issuing Lender as a
result of utilizing such other lending or letter of credit office as described
in clause (i) above. A certificate as to the amount of any such expenses
payable by Company pursuant to this subsection 2.8 (setting forth in reasonable
detail the basis for requesting such amount) submitted by such Lender or Issuing
Lender to Company (with a copy to Administrative Agent) shall be conclusive
absent manifest error.
2.9 REPLACEMENT OF LENDER.
In the event that Company receives a notice pursuant to subsection
2.7A, 2.7C or 3.6 or in the event of a refusal by a Lender to consent to a
proposed change, waiver, discharge or termination with respect to this Agreement
which has been approved by the Requisite Lenders as provided in subsection 10.6,
Company shall have the right, if no Potential Event of Default or Event of
Default then exists, to replace such Lender (a "REPLACED LENDER") with one or
more Eligible Assignees (collectively, the "REPLACEMENT LENDER") acceptable to
Administrative Agent, provided that (i) at the time of any replacement pursuant
to this subsection 2.9 the Replacement Lender shall enter into one or more
Assignment Agreements pursuant to subsection 10.1B (and with all fees payable
pursuant to such subsection 10.1B to be paid by the Replacement Lender) pursuant
to which the Replacement Lender shall acquire all of the outstanding Loans and
Commitments of, and in each case participations in Letters of Credit and Swing
Line Loans by, the Replaced Lender and, in connection therewith, shall pay to
(x) the Replaced Lender in respect thereof an amount equal to the sum of (A) an
amount equal to the principal of, and all accrued interest on, all outstanding
Loans of the Replaced Lender, (B) an amount equal to all unpaid drawings with
respect to Letters of Credit that have been funded by (and not reimbursed to)
such Replaced Lender, together with all then unpaid interest with respect
thereto at such time and (C) an amount equal to all accrued, but theretofore
unpaid, fees owing to the Replaced Lender with respect thereto, (y) the
appropriate Issuing Lender an amount equal to such Replaced Lender's Pro Rata
Share of any unpaid drawings with respect to Letters of Credit (which at such
time remains an unpaid drawing) issued by it to the extent such amount was not
theretofore funded by such Replaced Lender, and (z) Swing Line Lender an amount
equal to such Replaced Lender's Pro Rata Share of any Refunded Swing Line Loans
to the extent such amount was not theretofore funded by such Replaced Lender,
and (ii) all obligations (including without limitation all such amounts, if any,
owing under subsection 2.6D) of Company owing to the Replaced Lender (other than
those specifically described in clause (i) above in respect of which the
assignment purchase price has been, or is concurrently being, paid), shall be
paid in full to such Replaced Lender concurrently with such replacement. Upon
the execution of the respective Assignment Agreements, recordation of such
assignment in the Register by Administrative Agent pursuant to subsection 2.1D,
the payment of amounts referred to in clauses (i) and (ii) above and, if so
requested by the Replacement Lender, delivery to the Replacement Lender of the
appropriate Note or Notes executed by Company, the Replacement Lender shall
become a Lender hereunder and the Replaced Lender shall cease to constitute a
Lender hereunder except with respect to indemnification provisions under this
Agreement which by the terms of this Agreement survive the termination of this
Agreement, which indemnification provisions shall survive as to such Replaced
Lender. Notwithstanding anything to the contrary contained above, no Issuing
Lender may be replaced hereunder at any time while it has Letters of Credit
outstanding hereunder unless arrangements satisfactory to such Issuing Lender
(including the furnishing of a Standby Letter of Credit in form and substance,
and issued by an issuer satisfactory to such Issuing Lender or the furnishing of
cash collateral in amounts and pursuant to arrangements satisfactory to such
Issuing Lender) have been made with respect to such outstanding Letters of
Credit.
SECTION 3. LETTERS OF CREDIT
3.1 ISSUANCE OF LETTERS OF CREDIT AND REVOLVING LENDERS' PURCHASE OF
PARTICIPATIONS THEREIN.
A. LETTERS OF CREDIT. In addition to Company requesting that Revolving
Lenders make Revolving Loans pursuant to subsection 2.1A(iii) and that Swing
Line Lender make Swing Line Loans pursuant to subsection 2.1A(iv), Company may
request, in accordance with the provisions of this subsection 3.1, from time to
time during the period from the Closing Date to but excluding the Revolving Loan
Commitment Termination Date, that one or more Revolving Lenders issue Letters of
Credit for the account of Company or any wholly-owned Subsidiary of Company for
the purposes specified in the definitions of Commercial Letters of Credit and
Standby Letters of Credit; provided, that if any such Letter of Credit is issued
for the account of any such Subsidiary, Company shall execute jointly with such
Subsidiary all letter of credit documentation (including, without limitation,
letter of credit application) as may be required by the applicable Issuing
Lender. Subject to the terms and conditions of this Agreement and in reliance
upon the representations and warranties of Company herein set forth, any one or
more Revolving Lenders may, but (except as provided in subsection 3.1B(ii))
shall not be obligated to, issue such Letters of Credit in accordance with the
provisions of this subsection 3.1; provided that Company shall not request that
any Revolving Lender issue (and no Revolving Lender shall issue):
(i) any Letter of Credit if, after giving effect to such issuance, the
Total Utilization of Revolving Loan Commitments would exceed the Revolving
Loan Commitments then in effect;
(ii) any Letter of Credit if, after giving effect to such issuance, the
Letter of Credit Usage would exceed $75,000,000;
(iii) any Standby Letter of Credit having an expiration date later
than the earlier of (a) the date which is 30 days prior to the Revolving
Loan Commitment Termination Date and (b) the date which is one year from
the date of issuance of such Standby Letter of Credit; provided that the
immediately preceding clause (b) shall not prevent any Issuing Lender from
agreeing that a Standby Letter of Credit will automatically be extended for
one or more successive periods not to exceed one year each unless such
Issuing Lender elects not to extend for any such additional period;
provided, further that such Issuing Lender shall deliver a written notice
to Administrative Agent setting forth the last day on which such Issuing
Lender may give notice that it will not extend such Standby Letter of
Credit (the "NOTIFICATION DATE" with respect to such Standby Letter of
Credit) at least ten Business Days prior to such Notification Date; and
provided, further that such Issuing Lender shall give notice that it will
not extend such Standby Letter of Credit if it has knowledge that an Event
of Default has occurred and is continuing on such Notification Date, unless
such Event of Default has been waived in accordance with subsection 10.6;
(iv) any Commercial Letter of Credit having an expiration date (a) later
than the earlier of (X) the date which is 30 days prior to the Revolving
Loan Commitment Termination Date and (Y) the date which is 180 days from
the date of issuance of such Commercial Letter of Credit or (b) that is
otherwise unacceptable to the applicable Issuing Lender in its reasonable
discretion; or
(v) any Letter of Credit denominated in a currency other than Dollars.
B. MECHANICS OF ISSUANCE.
(i) Notice of Issuance. Whenever Company desires the issuance of a
Letter of Credit, it shall deliver to the proposed Issuing Lender (with a
copy to Administrative Agent if Administrative Agent is not the proposed
Issuing Lender) a Notice of Issuance of Letter of Credit substantially in
the form of Exhibit III annexed hereto no later than 1:00 P.M. (New York
City time) at least three Business Days (or such shorter period as may be
agreed to by the Issuing Lender in any particular instance), in advance of
the proposed date of issuance; provided that, if the proposed Issuing
Lender so agrees, Company may request that the proposed Issuing Lender
issue a Letter of Credit by telephonic notice so long as it promptly
thereafter delivers to the proposed Issuing Lender (with a copy to
Administrative Agent if Administrative Agent is not the proposed Issuing
Lender) a Notice of Issuance of Letter of Credit substantially in the form
of Exhibit III annexed hereto. The Notice of Issuance of Letter of Credit
shall specify (a) if the Company requests that a Revolving Lender other
than the Administrative Agent issue such Letter of Credit, the Revolving
Lender requested to issue the Letter of Credit, (b) the proposed date of
issuance (which shall be a Business Day), (c) the face amount of the Letter
of Credit, (d) the expiration date of the Letter of Credit, (e) the name
and address of the beneficiary, (f) if such Letter of Credit is proposed to
be issued for the account of a wholly-owned Subsidiary of Company, the name
of such Subsidiary, and (g) the verbatim text of the proposed Letter of
Credit or the proposed terms and conditions thereof, including a precise
description of any documents to be presented by the beneficiary which, if
presented by the beneficiary in substantial compliance with the terms and
conditions of the Letter of Credit prior to the expiration date of the
Letter of Credit, would require the Issuing Lender to make payment under
the Letter of Credit; provided that the Issuing Lender, in its reasonable
discretion, may require changes in the text of the proposed Letter of
Credit or any such documents; and provided, further that no Letter of
Credit shall require payment against a conforming draft to be made
thereunder on the same business day (under the laws of the jurisdiction in
which the office of the Issuing Lender to which such draft is required to
be presented is located) that such draft is presented if such presentation
is made after 10:00 A.M. (in the time zone of such office of the Issuing
Lender) on such business day.
Company shall notify the applicable Issuing Lender (and
Administrative Agent, if Administrative Agent is not such Issuing Lender)
prior to the issuance of any Letter of Credit in the event that any of the
matters to which Company is required to certify in the applicable Notice of
Issuance of Letter of Credit is no longer true and correct as of the
proposed date of issuance of such Letter of Credit, and upon the issuance
of any Letter of Credit Company shall be deemed to have re-certified, as of
the date of such issuance, as to the matters to which Company is required
to certify in the applicable Notice of Issuance of Letter of Credit.
(ii) Determination of Issuing Lender. Upon receipt by a proposed Issuing
Lender of a Notice of Issuance of Letter of Credit pursuant to subsection
3.1B(i) requesting the issuance of a Letter of Credit, (a) in the event
that Administrative Agent is the proposed Issuing Lender (1) if
Administrative Agent elects to issue such Letter of Credit, Administrative
Agent shall promptly so notify Company, and Administrative Agent shall be
the Issuing Lender with respect thereto and (2) if Administrative Agent, in
its sole discretion, elects not to issue such Letter of Credit,
Administrative Agent shall promptly so notify Company, whereupon Company
may request any other Agent to issue such Letter of Credit by delivering to
such Agent a copy of the applicable Notice of Issuance of Letter of Credit
and such Agent shall promptly notify Company and Administrative Agent
whether or not, in its sole discretion, it has elected to issue such Letter
of Credit, and if such Agent so elects to issue such Letter of Credit, it
shall be the Issuing Lender with respect thereto; provided that in the
event that all Agents shall have declined to issue such Letter of Credit,
notwithstanding the prior election of Administrative Agent not to issue
such Letter of Credit, Administrative Agent shall be obligated to issue
such Letter of Credit and shall be the Issuing Lender with respect thereto,
notwithstanding the fact that the Letter of Credit Usage with respect to
such Letter of Credit and with respect to all other Letters of Credit
issued by Administrative Agent, when aggregated with Administrative Agent's
outstanding Revolving Loans and Swing Line Loans, may exceed Administrative
Agent's Revolving Loan Commitment then in effect; and (b) in the event any
other Revolving Lender is the proposed Issuing Lender, such Revolving
Lender shall promptly notify Company and Administrative Agent whether or
not, in its sole discretion, it has elected to issue such Letter of Credit,
and (1) if such Revolving Lender so elects to issue such Letter of Credit,
it shall be the Issuing Lender with respect thereto and (2) if such
Revolving Lender fails to so promptly notify Company and Administrative
Agent or declines to issue such Letter of Credit, Company may require
Administrative Agent or request another Revolving Lender to be the Issuing
Lender with respect to such Letter of Credit in accordance with the
provisions of this subsection 3.1B.
(iii) Issuance of Letter of Credit. Upon satisfaction or waiver (in
accordance with subsection 10.6) of the conditions set forth in subsection
4.3, the Issuing Lender shall issue the requested Letter of Credit in
accordance with the Issuing Lender's standard operating procedures.
(iv) Notification to Revolving Lenders. Upon the issuance of any Letter
of Credit the applicable Issuing Lender shall promptly notify
Administrative Agent of such issuance, which notice shall be accompanied by
a copy of such Letter of Credit if such Letter of Credit is a Standby
Letter of Credit. Promptly after receipt of such notice (or, if
Administrative Agent is the Issuing Lender, together with such notice),
Administrative Agent shall notify each Revolving Lender of the amount of
such Revolving Lender's respective participation in such Letter of Credit,
determined in accordance with subsection 3.1C.
(v) Reports to Revolving Lenders. Within 15 days after the end of each
calendar quarter ending after the Closing Date, so long as any Letter of
Credit shall have been outstanding during such calendar quarter, each
Issuing Lender shall deliver to Administrative Agent, for distribution to
each other Revolving Lender, a report setting forth the daily maximum
amount available to be drawn under the Letters of Credit issued by such
Issuing Lender that were outstanding during such calendar quarter.
C. REVOLVING LENDERS' PURCHASE OF PARTICIPATIONS IN LETTERS OF CREDIT.
Immediately upon the issuance of each Letter of Credit, each Revolving Lender
shall be deemed to, and hereby agrees to, have irrevocably purchased from the
Issuing Lender a participation in such Letter of Credit and any drawings
thereunder in an amount equal to such Revolving Lender's Pro Rata Share of the
maximum amount which is or at any time may become available to be drawn
thereunder. Upon satisfaction of the conditions set forth in subsection 4.1,
the Existing Letters of Credit shall, effective as of the Closing Date, become
Letters of Credit under this Agreement to the same extent as if initially issued
hereunder and each Revolving Lender shall be deemed to have irrevocably
purchased from the Issuing Lender of such Existing Letters of Credit a
participation in such Letters of Credit and drawings thereunder in an amount
equal to such Revolving Lender's Pro Rata Share of the maximum amount which is
or at any time may become available to be drawn thereunder. All such Existing
Letters of Credit which become Letters of Credit under this Agreement shall be
fully secured by the Collateral commencing on the Closing Date to the same
extent as if initially issued hereunder on such date.
3.2 LETTER OF CREDIT FEES.
Company agrees to pay the following amounts with respect to Letters
of Credit:
(i) with respect to each Standby Letter of Credit, (a) to the applicable
Issuing Lender, a fronting fee equal to 0.25% per annum of the daily
maximum amount available to be drawn under such Standby Letter of Credit,
but in any event not less than $500 per year per Standby Letter of Credit,
and (b) to Administrative Agent, a letter of credit fee equal to (x) the
Applicable Tranche A Eurodollar Margin multiplied by (y) the daily maximum
amount available to be drawn under such Standby Letter of Credit, such fees
to be calculated on the basis of a 360-day year for the actual number of
days elapsed and for each quarterly period ending on (but excluding) each
February 1, May 1, August 1 and November 1 of each year payable in arrears
on each such date commencing on August 1, 1997;
(ii) with respect to each Commercial Letter of Credit, (a) to the
applicable Issuing Lender a fronting fee equal to 0.25% per annum of the
daily maximum amount available to be drawn under such Commercial Letter of
Credit (or such lower fronting fee as may be agreed to by the applicable
Issuing Lender with respect to such Commercial Letter of Credit); and
(b) to Administrative Agent a letter of credit fee equal to (x) the
Applicable Tranche A Eurodollar Margin minus (y) 0.25% per annum multiplied
by the daily maximum amount available to be drawn under such Commercial
Letter of Credit, such fees to be calculated on the basis of a 360-day year
for the actual number of days elapsed and for each quarterly period ending
on (but excluding) each February 1, May 1, August 1 and November 1 of each
year payable in arrears on each such date commending on August 1, 1997;
(iii) to the applicable Issuing Lender, with respect to the issuance,
amendment, assignment or transfer of each Letter of Credit and each
drawing made thereunder (without duplication of the fees payable under
clauses (i) and (ii) above), documentary and processing charges in
accordance with such Issuing Lender's standard schedule for such charges in
effect at the time of such issuance, amendment, assignment, transfer or
payment, as the case may be.
Promptly upon receipt by Administrative Agent of any amount described in clauses
(i)(b) or (ii)(b) of this subsection 3.2, Administrative Agent shall distribute
to each Revolving Lender its Pro Rata Share of such amount. With respect to
Existing Letters of Credit, the fees described in clauses (i) and (ii) above
shall accrue from and including the Closing Date.
3.3 DRAWINGS AND REIMBURSEMENT OF AMOUNTS PAID UNDER LETTERS OF CREDIT.
A. RESPONSIBILITY OF ISSUING LENDER WITH RESPECT TO DRAWINGS. In
determining whether to honor any drawing under any Letter of Credit by the
beneficiary thereof, the Issuing Lender shall be responsible only to determine
that the documents and certificates required to be delivered under such Letter
of Credit have been delivered and that they substantially comply on their face
with the requirements of such Letter of Credit.
B. REIMBURSEMENT BY COMPANY OF AMOUNTS PAID UNDER LETTERS OF CREDIT.
In the event an Issuing Lender has determined to honor a drawing under a Letter
of Credit issued by it, such Issuing Lender shall immediately notify Company and
Administrative Agent, and Company shall reimburse such Issuing Lender on or
before the Business Day immediately following the date on which such drawing is
honored (the "REIMBURSEMENT DATE") in an amount in Dollars and in same day funds
equal to the amount of such drawing (whether or not Company is the account party
under such Letter of Credit); provided that, anything contained in this
Agreement to the contrary notwithstanding, (i) unless Company shall have
notified Administrative Agent and such Issuing Lender prior to 12:00 Noon (New
York City time) on the date of such drawing that Company intends to reimburse
such Issuing Lender for the amount of such drawing with funds other than the
proceeds of Revolving Loans, Company shall be deemed to have given a timely
Notice of Borrowing (it being understood, however, that such deemed Notice of
Borrowing shall not be deemed to be a representation of Company that the
representations and warranties contained in the Loan Documents are true, correct
and complete in all material respects on and as of the date of such deemed
Notice of Borrowing) to Administrative Agent requesting Revolving Lenders to
make Revolving Loans that are Base Rate Loans on the Reimbursement Date in an
amount in Dollars equal to the amount of such drawing and (ii) subject to
satisfaction or waiver of the conditions specified in subsection 4.2B, Revolving
Lenders shall, on the Reimbursement Date, make Revolving Loans that are Base
Rate Loans in the amount of such drawing, the proceeds of which shall be applied
directly by Administrative Agent to reimburse such Issuing Lender for the amount
of such drawing; and provided, further that if for any reason proceeds of
Revolving Loans are not received by such Issuing Lender on the Reimbursement
Date in an amount equal to the amount of such drawing, Company shall reimburse
such Issuing Lender, on demand, in an amount in same day funds equal to the
excess of the amount of such drawing over the aggregate amount of such Revolving
Loans, if any, which are so received. Nothing in this subsection 3.3B shall be
deemed to relieve any Revolving Lender from its obligation to make Revolving
Loans on the terms and conditions set forth in this Agreement, and Company shall
retain any and all rights it may have against any Revolving Lender resulting
from the failure of such Revolving Lender to make such Revolving Loans under
this subsection 3.3B.
C. PAYMENT BY REVOLVING LENDERS OF UNREIMBURSED DRAWINGS UNDER LETTERS
OF CREDIT.
(i) Payment by Revolving Lenders. In the event that Company shall fail
for any reason to reimburse any Issuing Lender as provided in subsection
3.3B in an amount equal to the amount of any drawing honored by such
Issuing Lender under a Letter of Credit issued by it, such Issuing Lender
shall promptly notify each other Revolving Lender of the unreimbursed
amount of such drawing and of such other Revolving Lender's respective
participation therein based on such Revolving Lender's Pro Rata Share.
Each Revolving Lender shall make available to such Issuing Lender an amount
equal to its respective participation, in Dollars and in same day funds, at
the office of such Issuing Lender specified in such notice, not later than
1:00 P.M. (New York City time) on the first business day (under the laws of
the jurisdiction in which such office of such Issuing Lender is located)
after the date notified by such Issuing Lender. In the event that any
Revolving Lender fails to make available to such Issuing Lender on such
business day the amount of such Revolving Lender's participation in such
Letter of Credit as provided in this subsection 3.3C, such Issuing Lender
shall be entitled to recover such amount on demand from such Revolving
Lender together with interest thereon at the rate customarily used by such
Issuing Lender for the correction of errors among banks for three Business
Days and thereafter at the Base Rate. Nothing in this subsection 3.3C
shall be deemed to prejudice the right of any Revolving Lender to recover
from any Issuing Lender any amounts made available by such Revolving Lender
to such Issuing Lender pursuant to this subsection 3.3C in the event that
it is determined by the final judgment of a court of competent jurisdiction
that the payment with respect to a Letter of Credit by such Issuing Lender
in respect of which payment was made by such Revolving Lender constituted
gross negligence or willful misconduct on the part of such Issuing Lender.
(ii) Distribution to Revolving Lenders of Reimbursements Received From
Company. In the event any Issuing Lender shall have been reimbursed by
other Revolving Lenders pursuant to subsection 3.3C(i) for all or any
portion of any drawing honored by such Issuing Lender under a Letter of
Credit issued by it, such Issuing Lender shall promptly distribute to each
other Revolving Lender which has paid all amounts payable by it under
subsection 3.3C(i) with respect to such drawing such other Revolving
Lender's Pro Rata Share of all payments subsequently received by such
Issuing Lender from Company in reimbursement of such drawing when such
payments are received. Any such distribution shall be made to a Revolving
Lender at its primary address set forth below its name on the appropriate
signature page hereof or at such other address as such Revolving Lender may
request.
D. INTEREST ON AMOUNTS DRAWN UNDER LETTERS OF CREDIT.
(i) Payment of Interest by Company. Company agrees to pay to each
Issuing Lender, with respect to drawings made under any Letters of Credit
issued by it (whether or not Company is the account party thereunder),
interest on the amount paid by such Issuing Lender in respect of each such
drawing from the date of such drawing to but excluding the date such amount
is reimbursed by Company (including any such reimbursement out of the
proceeds of Revolving Loans pursuant to subsection 3.3B) at a rate equal to
(a) for the period from the date of such drawing to but excluding the
Reimbursement Date, the rate then in effect under this Agreement with
respect to Revolving Loans that are Base Rate Loans and (b) thereafter, a
rate which is 2% per annum in excess of the rate of interest otherwise
payable under this Agreement with respect to Revolving Loans that are Base
Rate Loans. Interest payable pursuant to this subsection 3.3D(i) shall be
computed on the basis of a 360-day year for the actual number of days
elapsed in the period during which it accrues and shall be payable on
demand or, if no demand is made, on the date on which the related drawing
under a Letter of Credit is reimbursed in full.
(ii) Distribution of Interest Payments by Issuing Lender. Promptly upon
receipt by any Issuing Lender of any payment of interest pursuant to
subsection 3.3D(i) with respect to a drawing under a Letter of Credit
issued by it, (a) such Issuing Lender shall distribute to each other
Revolving Lender, out of the interest received by such Issuing Lender in
respect of the period from the date of such drawing to but excluding the
date on which such Issuing Lender is reimbursed for the amount of such
drawing (including any such reimbursement out of the proceeds of Revolving
Loans pursuant to subsection 3.3B), the amount that such other Revolving
Lender would have been entitled to receive in respect of the letter of
credit fee that would have been payable in respect of such Letter of Credit
for such period pursuant to subsection 3.2 if no drawing had been made
under such Letter of Credit, and (b) in the event such Issuing Lender shall
have been reimbursed by other Revolving Lenders pursuant to subsection
3.3C(i) for all or any portion of such drawing, such Issuing Lender shall
distribute to each other Revolving Lender which has paid all amounts
payable by it under subsection 3.3C(i) with respect to such drawing such
other Revolving Lender's Pro Rata Share of any interest received by such
Issuing Lender in respect of that portion of such drawing so reimbursed by
other Revolving Lenders for the period from the date on which such Issuing
Lender was so reimbursed by other Revolving Lenders to but excluding the
date on which such portion of such drawing is reimbursed by Company. Any
such distribution shall be made to a Revolving Lender at its primary
address set forth below its name on the appropriate signature page hereof
or at such other address as such Revolving Lender may request.
3.4 OBLIGATIONS ABSOLUTE.
The obligation of Company to reimburse each Issuing Lender for
drawings made under the Letters of Credit issued by it (whether or not Company
is the account party thereunder) and to repay any Revolving Loans made by
Revolving Lenders pursuant to subsection 3.3B and the obligations of Revolving
Lenders under subsection 3.3C(i) shall be unconditional and irrevocable and
shall be paid strictly in accordance with the terms of this Agreement under all
circumstances including, without limitation, any of the following circumstances:
(i) any lack of validity or enforceability of any Letter of Credit;
(ii) the existence of any claim, set-off, defense or other right which
Company, any Subsidiary that is an account party thereunder or any
Revolving Lender may have at any time against a beneficiary or any
transferee of any Letter of Credit (or any Persons for whom any such
transferee may be acting), any Issuing Lender or other Revolving Lender or
any other Person or, in the case of a Revolving Lender, against Company or
any Subsidiary that is an account party under a Letter of Credit, whether
in connection with this Agreement, the transactions contemplated herein or
any unrelated transaction (including any underlying transaction between
Company or one of its Subsidiaries and the beneficiary for which any Letter
of Credit was procured) other than the defense of payment in accordance
with the terms of this Agreement;
(iii) any draft, demand, certificate or other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) payment to the beneficiary of such Letter of Credit by the
applicable Issuing Lender under any Letter of Credit against presentation
of a draft, demand, certificate or other document which does not comply
with the terms of such Letter of Credit;
(v) any adverse change in the business, operations, properties, assets,
condition (financial or otherwise) or prospects of Company or any of its
Subsidiaries;
(vi) any breach of this Agreement or any other Loan Document by any party
thereto (other than a breach by the applicable Issuing Lender relating to
the Letter of Credit in question);
(vii) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing; or
(viii) the fact that an Event of Default or a Potential Event of
Default shall have occurred and be continuing;
provided, in each case, that payment by the applicable Issuing Lender under the
applicable Letter of Credit shall not have constituted gross negligence or
willful misconduct of such Issuing Lender under the circumstances in question
(as determined by a final judgment of a court of competent jurisdiction).
3.5 INDEMNIFICATION; NATURE OF ISSUING LENDERS' DUTIES.
A. INDEMNIFICATION. In addition to amounts payable as provided in
subsection 3.6, Company hereby agrees to protect, indemnify, pay and save
harmless each Issuing Lender from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
fees, expenses and disbursements of counsel and of internal counsel) which such
Issuing Lender may incur or be subject to as a consequence, direct or indirect,
of (i) the issuance of any Letter of Credit by such Issuing Lender, other than
as a result of (a) the gross negligence or willful misconduct of such Issuing
Lender as determined by a final judgment of a court of competent jurisdiction or
(b) subject to the following clause (ii), the wrongful dishonor by such Issuing
Lender of a proper demand for payment made under any Letter of Credit issued by
it or (ii) the failure of such Issuing Lender to honor a drawing under any such
Letter of Credit as a result of any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto government or
governmental authority (all such acts or omissions herein called "GOVERNMENTAL
ACTS").
B. NATURE OF ISSUING LENDERS' DUTIES. As between Company and any
Issuing Lender, Company assumes all risks of the acts and omissions of, or
misuse of the Letters of Credit issued by such Issuing Lender, by the respective
beneficiaries of such Letters of Credit. In furtherance and not in limitation
of the foregoing, such Issuing Lender shall not be responsible for: (i) the
form, validity, sufficiency, accuracy, genuineness or legal effect of any
document submitted by any party in connection with the application for and
issuance of any such Letter of Credit, even if it should in fact prove to be in
any or all respects invalid, insufficient, inaccurate, fraudulent or forged;
(ii) the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any such Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may prove to
be invalid or ineffective for any reason; (iii) failure of the beneficiary of
any such Letter of Credit to comply fully with any conditions required in order
to draw upon such Letter of Credit; (iv) errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they are in cipher; (v) errors in
interpretation of technical terms; (vi) any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under any such
Letter of Credit or of the proceeds thereof; (vii) the misapplication by the
beneficiary of any such Letter of Credit of the proceeds of any drawing under
such Letter of Credit; or (viii) any consequences arising from causes beyond the
control of such Issuing Lender, including without limitation any Governmental
Acts, and none of the above shall affect or impair, or prevent the vesting of,
any of such Issuing Lender's rights or powers hereunder.
In furtherance and extension and not in limitation of the specific
provisions set forth in the first paragraph of this subsection 3.5B, any action
taken or omitted by any Issuing Lender under or in connection with the Letters
of Credit issued by it or any documents and certificates delivered thereunder,
if taken or omitted in good faith, shall not put such Issuing Lender under any
resulting liability to Company.
Notwithstanding anything to the contrary contained in this
subsection 3.5, Company shall retain any and all rights it may have against any
Issuing Lender for any liability directly attributable to the gross negligence
or willful misconduct of such Issuing Lender or to the wrongful dishonor by any
Issuing Lender of a proper demand for payment made under any Letter of Credit
issued by it, in each case, as determined by a final judgment of a court of
competent jurisdiction.
3.6 INCREASED COSTS AND TAXES RELATING TO LETTERS OF CREDIT.
In the event that any Issuing Lender or any Revolving Lender shall
determine (which determination shall, absent manifest error, be final and
conclusive and binding upon all parties hereto) that any law, treaty or
governmental rule, regulation or order, or any change therein or in the
interpretation, administration or application thereof (including the
introduction of any new law, treaty or governmental rule, regulation or order),
or any determination of a court or governmental authority, in each case that
becomes effective after the date hereof (other than any change in such law,
treaty or governmental rule, regulation or order which was promulgated prior to
the date hereof and which becomes effective in accordance with its terms after
the date hereof), or compliance by any Issuing Lender or any Revolving Lender
with any guideline, request or directive issued or made after the date hereof by
any central bank or other governmental or quasi-governmental authority (whether
or not having the force of law):
(i) subjects such Issuing Lender or such Revolving Lender (or its
applicable lending or letter of credit office) to any additional Tax (other
than any Tax on the overall net income of such Issuing Lender or Revolving
Lender) with respect to the issuing or maintaining of any Letters of Credit
or the purchasing or maintaining of any participations therein or any other
obligations under this Section 3, whether directly or by such being imposed
on or suffered by any particular Issuing Lender;
(ii) imposes, modifies or holds applicable any reserve (including without
limitation any marginal, emergency, supplemental, special or other
reserve), special deposit, compulsory loan, FDIC insurance or similar
requirement in respect of any Letters of Credit issued by any Issuing
Lender or participations therein purchased by any Revolving Lender; or
(iii) imposes any other condition (other than with respect to a Tax
matter) on or affecting such Issuing Lender or such Revolving Lender (or
its applicable lending or letter of credit office) regarding this Section 3
or any Letter of Credit or any participation therein;
and the result of any of the foregoing is to increase the cost to such Issuing
Lender or such Revolving Lender of agreeing to issue, issuing or maintaining any
Letter of Credit or agreeing to purchase, purchasing or maintaining any
participation therein or to reduce any amount received or receivable by such
Issuing Lender or Revolving Lender (or its applicable lending or letter of
credit office) with respect thereto; then, in any such case, Company shall
promptly pay to such Issuing Lender or Revolving Lender, upon receipt of the
statement referred to in the next sentence, such additional amount or amounts as
may be necessary to compensate such Issuing Lender or Revolving Lender for any
such increased cost or reduction in amounts received or receivable hereunder;
provided that a Revolving Lender shall not be entitled to avail itself of the
benefit of this subsection 3.6 to the extent that any such increased cost or
reduction in amounts was incurred more than one year prior to the time it gives
notice to Company (as provided in the next sentence) of the relevant
circumstance, unless such circumstance arose or became applicable
retrospectively, in which case such Revolving Lender shall not be limited to
such six month period so long as such Revolving Lender has given such notice to
Company no later than six months from the time such circumstance became
applicable to such Revolving Lender. Such Issuing Lender or Revolving Lender
shall deliver to Company a written statement, setting forth in reasonable detail
the basis for calculating the additional amounts owed to such Issuing Lender or
Revolving Lender under this subsection 3.6, which statement shall be conclusive
and binding upon all parties hereto absent manifest error.
SECTION 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT
The obligations of Lenders to make Loans and the issuance of Letters
of Credit hereunder are subject to the satisfaction of the following conditions.
4.1 CONDITIONS TO INITIAL PURCHASE OF TERM LOANS AND INITIAL REVOLVING LOANS
AND SWING LINE LOANS.
The obligations of Lenders to purchase the Term Loans and to make
any Revolving Loans and Swing Line Loans to be made on the Closing Date are, in
addition to the conditions precedent specified in subsection 4.2, subject to
prior or concurrent satisfaction of the following conditions:
A. LOAN PARTY DOCUMENTS. On or before the Closing Date, Company shall,
and shall cause each other Loan Party to, deliver to Lenders (or to
Administrative Agent for Lenders with sufficient originally executed copies,
where appropriate, for each Lender and its counsel) the following with respect
to Company or such Loan Party, as the case may be, each, unless otherwise noted,
dated the Closing Date:
(i) Certified copies of the Certificate or Articles of Incorporation of
such Person, together with a good standing certificate from the Secretary
of State of its jurisdiction of incorporation and each other state in which
such Person is qualified as a foreign corporation to do business and, to
the extent generally available, a certificate or other evidence of good
standing as to payment of any applicable franchise or similar taxes from
the appropriate taxing authority of each of such jurisdictions, each dated
a recent date prior to the Closing Date;
(ii) Copies of the Bylaws of such Person, certified as of the Closing
Date by such Person's corporate secretary or an assistant secretary;
(iii) Resolutions of the Board of Directors of such Person approving
and authorizing the execution, delivery and performance of the Loan
Documents to which it is a party, and to the extent applicable, approving
and authorizing the amendments contemplated by this Agreement, in each case
certified as of the Closing Date by the corporate secretary or an assistant
secretary of such Person as being in full force and effect without modifi
cation or amendment;
(iv) Signature and incumbency certificates of the officers of such Person
executing the Loan Documents to which it is a party;
(v) Executed originals of the Loan Documents to which such Person is a
party; and
(vi) Such other documents as Administrative Agent may reasonably request.
B. NO MATERIAL ADVERSE EFFECT. Since September 28, 1996, no Material
Adverse Effect (in the sole opinion of Administrative Agent) shall have
occurred.
C. YUCAIPA INVESTMENT. As of the Closing Date, Yucaipa Investors shall
own and control, directly or indirectly, not less than 2,251,814 shares of
Company's Class B Common Stock.
D. RELATED AGREEMENTS. Each Related Agreement shall be in full force
and effect and no provision thereof shall have been modified or waived in any
respect determined by Administrative Agent to be material, in each case without
the consent of Administrative Agent.
E. EXISTING INDEBTEDNESS TO REMAIN OUTSTANDING. Administrative Agent
shall have received an Officers' Certificate of Company stating that, as of the
Closing Date, the Indebtedness of Loan Parties (other than Indebtedness under
the Loan Documents and the Senior Subordinated Notes) shall consist of
(a) approximately $6,100,000 in aggregate principal amount of Existing Company
IRB's, (b) approximately $11,700,000 in aggregate principal amount of Smitty's
Sinking Fund Bonds, (c) approximately $2,700,000 in aggregate principal amount
of other Indebtedness and (d) Indebtedness in an aggregate amount not to exceed
$41,000,000 in respect of Capital Leases. Company shall be in compliance with
its obligations under the Existing Company IRB Indentures, the Smitty's Sinking
Fund Bond Indenture, such other Indebtedness and Capital Leases and Company
shall have delivered to Administrative Agent a fully executed or conformed copy
of each of the Existing Company IRB Indenture, the Smitty's Sinking Fund
Indenture and other Indebtedness. The terms and conditions of all such
Indebtedness shall be in form and in substance satisfactory to Arrangers.
F. NECESSARY GOVERNMENTAL AUTHORIZATIONS AND CONSENTS. Company shall
have obtained all Governmental Authorizations and all consents of other Persons,
in each case that are necessary or advisable in connection with the amendments
contemplated by this Agreement and each of the foregoing shall be in full force
and effect, in each case other than those the failure to obtain or maintain
which, either individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect.
G. EXISTING CREDIT AGREEMENT PAYMENTS AND ASSIGNMENTS. (1) With
respect to the Existing Credit Agreement, Company shall have paid to Bankers, as
agent under the Existing Credit Agreement, for distribution to lenders and
issuing lenders, as applicable, under the Existing Credit Agreement all unpaid
accrued interest on all loans, all unpaid accrued commitment fees and all unpaid
accrued fees on all Letters of Credit, in each case through but excluding the
Closing Date.
(2) On or before the Closing Date, Company, each lender under the
Existing Credit Agreement, Bankers, as agent under the Existing Credit
Agreement, each Lender and Administrative Agent under this Agreement shall have
executed and delivered the Master Assignment Agreement, substantially in the
form of Exhibit XIX annexed hereto, and on the Closing Date, each such lender,
Bankers, Lender and Administrative Agent shall have sold, purchased and/or
assigned such loans and/or revolving loan commitments pursuant to the Master
Assignment Agreement such that each Lender's Pro Rata Share of the Loans and/or
Revolving Loan Commitments upon consummation of the closing shall be as set
forth on Schedule 2.1 annexed hereto.
H. REAL PROPERTY ASSETS. Schedule 5.19 annexed hereto sets forth all
Real Property Assets of Company or any of its Subsidiaries as of the Closing
Date and identifies each such Real Property Asset which is a Mortgaged Property
as of the Closing Date. Administrative Agent shall have received (i) from
Company and each of its Subsidiaries having Real Property Assets (A) fully
executed counterparts of amendments to Mortgages in form and substance
satisfactory to Administrative Agent, together with evidence that such
counterparts of such amendments to Mortgages have been recorded in all places to
the extent necessary or desirable, in the judgment of Administrative Agent, so
as to effectively amend the Mortgages on the Mortgaged Properties to the extent
necessary or appropriate to reflect the amendments to the Existing Credit
Agreement effected by this Agreement, subject only to Permitted Encumbrances,
and (B) bring-down endorsements to the Title Insurance Policies in form and
substance satisfactory to Administrative Agent, insuring the continued first
priority position of the liens created by the Mortgages on the Mortgaged
Properties, subject to the exceptions in the Mortgages existing under the
Existing Credit Agreement; and (ii) from the agent under the Existing Credit
Agreement, executed releases and reconveyances in favor of Company or any of its
Subsidiaries, as the case may be, of each Real Property Asset which is an
Excluded Property.
I. SECURITY INTERESTS IN PERSONAL AND MIXED PROPERTY. To the extent
not otherwise satisfied pursuant to subsection 4.1H, Administrative Agent shall
have received evidence satisfactory to it that Company and Subsidiary Guarantors
shall have taken or caused to be taken all such actions, executed and delivered
or caused to be executed and delivered all such agreements, documents and
instruments, and made or caused to be made all such filings and recordings
(other than the filing or recording of items described in clauses (iii), (iv)
and (v) below) that may be necessary or, in the opinion of Administrative Agent,
desirable in order to create in favor of Administrative Agent, for the benefit
of Lenders, a valid and (upon such filing and recording) perfected first
priority security interest in the entire personal and mixed property Collateral
except for the prior security interest, if any, granted to the holders of
secured Indebtedness referred to in subsection 7.1 with respect to the personal
property secured thereby. Such actions shall include, without limitation, the
following:
(i) Schedules to Collateral Documents. Delivery to Administrative Agent
of accurate and complete schedules to all of the applicable Collateral
Documents.
(ii) Stock Certificates and Instruments. Delivery to Administrative
Agent of (a) certificates (which certificates shall be accompanied by
irrevocable undated stock powers, duly endorsed in blank and otherwise
satisfactory in form and substance to Administrative Agent) representing
all capital stock pledged pursuant to the Pledge Agreements and (b) all
promissory notes or other instruments (duly endorsed, where appropriate, in
a manner satisfactory to Administrative Agent) evidencing any Collateral;
(iii) Lien Searches and UCC Termination Statements. Delivery to
Administrative Agent of (a) the results of a recent search, by a Person
satisfactory to Administrative Agent, of all effective UCC financing
statements and fixture filings and all judgment and tax lien filings which
may have been made with respect to any personal or mixed property of any
Loan Party, together with copies of all such filings disclosed by such
search, and (b) UCC termination statements duly executed by all applicable
Persons for filing in all applicable jurisdictions as may be necessary to
terminate any effective UCC financing statements or fixture filings
disclosed in such search (other than any such financing statements or
fixture filings in respect of Liens permitted to remain outstanding
pursuant to the terms of this Agreement).
(iv) UCC Financing Statements and Fixture Filings. Delivery to
Administrative Agent of UCC financing statements and, where appropriate,
fixture filings, or assignments to Administrative Agent of such filings
made with respect to the Existing Credit Agreement, duly executed by each
applicable Loan Party or the agent under the Existing Credit Agreement, as
the case may be, with respect to all personal and mixed property Collateral
of such Loan Party, for filing in all jurisdictions as may be necessary or,
in the opinion of Administrative Agent, desirable to perfect or continue
the perfection of the security interests created in such Collateral
pursuant to the Collateral Documents in favor of Administrative Agent; and
(v) PTO Cover Sheets, Etc. Delivery to Administrative Agent of all
cover sheets or other documents or instruments required to be filed with
the PTO in order to create, perfect or continue the perfection of Liens in
respect of any IP Collateral.
J. FINANCIAL STATEMENTS; PRO FORMA BALANCE SHEET. On or before the
Closing Date, Lenders shall have received from Company (i) unaudited financial
statements of Company and its Subsidiaries for the fiscal periods most recently
ended more than 30 days prior to the Closing Date (including, without limitation
monthly financial statements for any such period of less than three months),
consisting of a balance sheet and the related consolidated statements of income,
stockholders' equity and cash flows for such three-month period or, if
applicable, such one-month period, all in reasonable detail and certified by the
chief financial officer of Company that they fairly present the financial
condition of Company and its Subsidiaries as at the dates indicated and the
results of their operations and their cash flows for the periods indicated,
subject to changes resulting from audit and normal year-end adjustments,
(ii) pro forma consolidated balance sheets of Company and its Subsidiaries as at
the Closing Date, prepared in accordance with GAAP (except as otherwise noted
therein) and giving effect to the amendments contemplated by this Agreement, and
(iii) projected financial statements (including balance sheets and statements of
operations and cash flows) of the Company and its Subsidiaries for the eight-
year period after the Closing Date. All of the foregoing financial statements
shall be (x) substantially consistent with any financial statements for the same
periods delivered to the Arrangers prior to February 19, 1997 and, in the case
of any such financial statements for subsequent periods, substantially
consistent with any projected financial results for such periods delivered to
the Arrangers prior to such date and (y) otherwise in form and substance
satisfactory to the Arrangers and the Lenders.
K. SOLVENCY ASSURANCES. On the Closing Date, the Arrangers and the
Lenders shall have received a Financial Condition Certificate dated the Closing
Date substantially in the form of Exhibit XII annexed hereto and with
appropriate attachments demonstrating that, after giving effect to the
amendments contemplated by this Agreement, Company and its Subsidiaries on a
consolidated basis will be Solvent.
L. EVIDENCE OF INSURANCE. Administrative Agent shall have received a
certificate from Company's insurance broker or other evidence satisfactory to it
that all insurance required to be maintained pursuant to subsection 6.4 is in
full force and effect and that Administrative Agent on behalf of Lenders has
been named as additional insured and/or loss payee thereunder to the extent
required under subsection 6.4.
M. OPINIONS OF COUNSEL TO LOAN PARTIES. Lenders and their respective
counsel shall have received (i) originally executed copies of one or more
favorable written opinions of Latham & Watkins, counsel for Loan Parties, in
form and substance reasonably satisfactory to Administrative Agent and its
counsel, dated as of the Closing Date and setting forth substantially the
matters in the opinions designated in Exhibit VIII annexed hereto and as to such
other matters as Administrative Agent acting on behalf of Lenders may reasonably
request and (ii) evidence satisfactory to Administrative Agent that Company has
requested such counsel to deliver such opinions to Lenders.
N. OPINIONS OF ADMINISTRATIVE AGENT'S COUNSEL. Lenders shall have
received originally executed copies of one or more favorable written opinions of
O'Melveny & Myers LLP, counsel to Administrative Agent, dated as of the Closing
Date, substantially in the form of Exhibit IX annexed hereto and as to such
other matters as Administrative Agent acting on behalf of Lenders may reasonably
request.
O. AUDITOR'S LETTER. Administrative Agent shall have received an
executed copy of the Auditor's Letter as delivered by Company to its independent
certified public accountants.
P. FEES. Company shall have paid to Administrative Agent, for
distribution (as appropriate) to Administrative Agent and Lenders, the fees
payable on the Closing Date referred to in subsection 2.3.
Q. REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF AGREEMENTS. Company
shall have delivered to Administrative Agent an Officers' Certificate, in form
and substance satisfactory to Administrative Agent, to the effect that the
representations and warranties in Section 5 hereof are true, correct and
complete in all material respects on and as of the Closing Date to the same
extent as though made on and as of that date (or, to the extent such
representations and warranties specifically relate to an earlier date, that such
representations and warranties were true, correct and complete in all material
respects on and as of such earlier date) and that Company shall have performed
in all material respects all agreements and satisfied all conditions which this
Agreement provides shall be performed or satisfied by it on or before the
Closing Date except as otherwise disclosed to and agreed to in writing by
Administrative Agent and Requisite Lenders.
R. COMPLETION OF PROCEEDINGS. All corporate and other proceedings
taken or to be taken prior to the Closing Date in connection with the
transactions contemplated hereby and all documents incidental hereto not
previously found acceptable by Administrative Agent, acting on behalf of
Lenders, and its counsel shall be satisfactory in form and substance to
Administrative Agent and such counsel, and Administrative Agent and such counsel
shall have received all such counterpart originals or certified copies of such
documents as Administrative Agent may reasonably request.
Each Lender hereby agrees that by its execution and delivery of its
signature page hereto and by the funding of its Loans to be made on the Closing
Date, such Lender approves of and consents to each of the matters set forth in
this subsection 4.1 which must be approved by, or which must be satisfactory to,
all or Requisite Lenders; provided that in the case of any agreement or document
which must be approved by, or which must be satisfactory to, all or Requisite
Lenders, Administrative Agent or Company shall have delivered a copy of such
agreement or document in substantially the form in which executed or delivered
to such Lender on or prior to the Closing Date.
4.2 CONDITIONS TO ALL LOANS.
The obligations of each Lender to make Loans on each Funding Date
(other than any Funding Date relating to any Refunded Swing Line Loans) are
subject to the following further conditions precedent:
A. Administrative Agent shall have received before that Funding
Date, in accordance with the provisions of subsection 2.1B, an originally
executed Notice of Borrowing, in each case signed by the chief executive
officer, the chief financial officer or the treasurer of Company or by any
executive officer of Company designated by any of the above-described officers
on behalf of Company in a writing delivered to Administrative Agent.
B. As of that Funding Date:
(i) The representations and warranties contained herein and in the other
Loan Documents shall be true, correct and complete in all material respects
on and as of that Funding Date to the same extent as though made on and as
of that date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case such representations
and warranties shall have been true, correct and complete in all material
respects on and as of such earlier date;
(ii) No event shall have occurred and be continuing or would result from
the consummation of the borrowing contemplated by such Notice of Borrowing
that would constitute an Event of Default or a Potential Event of Default;
(iii) Each Loan Party shall have performed in all material respects
all agreements and satisfied all conditions which this Agreement provides
shall be performed or satisfied by it on or before that Funding Date;
(iv) No order, judgment or decree of any court, arbitrator or govern
mental authority shall purport to enjoin or restrain any Lender from making
the Loans to be made by it on that Funding Date;
(v) The making of the Loans requested on such Funding Date shall not
violate any law including, without limitation, Regulation G, Regulation T,
Regulation U or Regulation X of the Board of Governors of the Federal
Reserve System; and
(vi) There shall not be pending or, to the knowledge of Company,
threatened, any action, suit, proceeding, governmental investigation or
arbitration against or affecting Company or any of its Subsidiaries or any
property of Company or any of its Subsidiaries that has not been disclosed
by Company in writing pursuant to subsection 5.6 or 6.1(x) prior to the
making of the last preceding Loans (or, in the case of the initial Loans,
prior to the execution of this Agreement), and there shall have occurred no
development not so disclosed in any such action, suit, proceeding,
governmental investigation or arbitration so disclosed, that, in either
event, in the opinion of Administrative Agent or of Requisite Lenders,
could reasonably be expected to have a Material Adverse Effect ; and no
injunction or other restraining order shall have been issued and no hearing
to cause an injunction or other restraining order to be issued shall be
pending or noticed with respect to any action, suit or proceeding seeking
to enjoin or otherwise prevent the consummation of, or to recover any
damages or obtain relief as a result of, the transactions contemplated by
this Agreement or the making of Loans hereunder.
4.3 CONDITIONS TO LETTERS OF CREDIT.
The issuance of any Letter of Credit hereunder (whether or not the
applicable Issuing Lender is obligated to issue such Letter of Credit) is
subject to the following conditions precedent:
A. On or before the date of issuance of the initial Letter of Credit
pursuant to this Agreement, the initial Loans shall have been made.
B. On or before the date of issuance of such Letter of Credit,
Administrative Agent shall have received, in accordance with the provisions of
subsection 3.1B(i), an originally executed Notice of Issuance of Letter of
Credit, in each case signed by the chief executive officer, the chief financial
officer or the treasurer of Company or by any executive officer of Company
designated by any of the above-described officers on behalf of Company in a
writing delivered to Administrative Agent, together with all other information
specified in subsection 3.1B(i) and such other documents or information as the
applicable Issuing Lender may reasonably require in connection with the issuance
of such Letter of Credit.
C. On the date of issuance of such Letter of Credit, all conditions
precedent described in subsection 4.2B shall be satisfied to the same extent as
if the issuance of such Letter of Credit were the making of a Loan and the date
of issuance of such Letter of Credit were a Funding Date.
SECTION 5. COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement and to make
the Loans, to induce Issuing Lenders to issue Letters of Credit and to induce
other Lenders to purchase participations therein, Company represents and
warrants to each Lender, on the date of this Agreement, on each Funding Date and
on the date of issuance of each Letter of Credit, that the following statements
are true, correct and complete:
5.1 ORGANIZATION, POWERS, QUALIFICATION, GOOD STANDING, BUSINESS AND
SUBSIDIARIES.
A. ORGANIZATION AND POWERS. Each Loan Party is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation as specified in Schedule 5.1 annexed hereto. Each
Loan Party has all requisite corporate power and authority to own and operate
its properties, to carry on its business as now conducted and as proposed to be
conducted, to enter into the Loan Documents to which it is a party and to carry
out the transactions contemplated thereby.
B. QUALIFICATION AND GOOD STANDING. Each Loan Party is qualified to do
business and in good standing in every jurisdiction where its assets are located
and wherever necessary to carry out its business and operations, except in
jurisdictions where the failure to be so qualified or in good standing has not
had and will not have, either individually or in the aggregate for all such
jurisdictions, a Material Adverse Effect.
C. CONDUCT OF BUSINESS. Company and its Subsidiaries are engaged only
in the businesses permitted to be engaged in pursuant to subsection 7.14.
D. SUBSIDIARIES. All of the Subsidiaries of Company are identified in
Schedule 5.1 annexed hereto, as said Schedule 5.1 may be supplemented from time
to time pursuant to the provisions of subsection 6.1(xvii). The capital stock
of each of the Subsidiaries of Company identified in Schedule 5.1 annexed hereto
(other than the LC Subsidiaries and the Inactive Subsidiaries) is duly
authorized, validly issued, fully paid and nonassessable and none of such
capital stock constitutes Margin Stock. Each of the Subsidiaries of Company
identified in Schedule 5.1 annexed hereto (other than the LC Subsidiaries) is a
corporation duly organized, validly existing and in good standing under the laws
of its respective jurisdiction of incorporation set forth therein, has all
requisite corporate power and authority to own and operate its properties and to
carry on its business as now conducted and as proposed to be conducted, and is
qualified to do business and in good standing in every jurisdiction where its
assets are located and wherever necessary to carry out its business and
operations, in each case except where failure to be so qualified or in good
standing or to have such corporate power and authority has not had and will not
have, either individually or in the aggregate for all such failures, a Material
Adverse Effect. Each LC Subsidiary identified in Schedule 5.1 annexed hereto
(other than the Inactive Subsidiaries that are LC Subsidiaries) is a duly formed
and validly existing limited liability company under the laws of the state of
its organization or formation, as the case may be, with the power under the
limited liability company act of such state and its articles of organization and
operating agreement or certificate of formation and limited liability company
agreement, as the case may be, to own and operate its properties and to carry on
its business as now conducted and as proposed to be conducted. Schedule 5.1
annexed hereto correctly sets forth the ownership interest of Company and each
of its Subsidiaries in each of the Subsidiaries of Company identified therein
and whether any such Subsidiary is an Inactive Subsidiary. The aggregate assets
and annual revenues of all Inactive Subsidiaries identified on Schedule 5.1
annexed hereto does not and will not exceed $3,000,000 and $3,000,000,
respectively.
5.2 AUTHORIZATION OF BORROWING, ETC.
A. AUTHORIZATION OF BORROWING. The execution, delivery and performance
of the Loan Documents have been duly authorized by all necessary corporate
action on the part of each Loan Party that is a party thereto.
B. NO CONFLICT. The execution, delivery and performance by Loan
Parties of the Loan Documents to which they are parties and the consummation of
the transactions contemplated by the Loan Documents do not and will not
(i) violate any provision of any law or any governmental rule or regulation
applicable to Company or any of its Subsidiaries, the Certificate or Articles of
Incorporation or Bylaws of Company or any of its Subsidiaries or any material
order, judgment or decree of any court or other agency of government binding on
Company or any of its Subsidiaries, (ii) conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any
material Contractual Obligation of Company or any of its Subsidiaries which
could reasonably be expected to result in a Material Adverse Effect,
(iii) result in or require the creation or imposition of any Lien upon any of
the properties or assets of Company or any of its Subsidiaries (other than any
Liens created under any of the Loan Documents in favor of Administrative Agent
on behalf of Lenders), or (iv) require any approval of stockholders or any
approval or consent of any Person under any Contractual Obligation of Company or
any of its Subsidiaries, except for such approvals or consents which will be
obtained on or before the Closing Date or such approvals or consents the failure
to obtain could not reasonably be expected to result in a Material Adverse
Effect.
C. GOVERNMENTAL CONSENTS. The execution, delivery and performance by
Loan Parties of the Loan Documents to which they are parties and the consum
mation of the transactions contemplated by such Loan Documents do not and will
not require any registration with, consent or approval of, or notice to, or
other action to, with or by, any federal, state or other governmental authority
or regulatory body, except for (i) filings and recordings required in connection
with the perfection of the security interests granted pursuant to the Loan
Documents, (ii) such registrations, consents, approvals, notices or other
actions which have been obtained on or before the Closing Date and (iii) notices
or other actions required to be taken after the Closing Date relating to
operating licenses, which notices or other actions will be given or taken as
required in due course (or, in the case of any Loan Document executed and
delivered after the Closing Date, on or before such date of execution and
delivery) except for such filings, recording, registrations, consents,
approvals, notices or other actions the failure to obtain or take could not, in
the aggregate, reasonably be expected to have a Material Adverse Effect.
D. BINDING OBLIGATION. Each of the Loan Documents has been duly
executed and delivered by each Loan Party that is a party thereto and is the
legally valid and binding obligation of such Loan Party, enforceable against
such Loan Party in accordance with its respective terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors' rights generally or by equitable principles
relating to enforceability.
E. VALID ISSUANCE OF COMMON STOCK, PREFERRED STOCK AND SENIOR
SUBORDINATED NOTES.
(i) Common Stock and Preferred Stock. The Preferred Stock is, and each
class of Common Stock is, or when issued and delivered will be, duly and
validly issued, fully paid and nonassessable. No stockholder of Company
has or will have any preemptive rights to subscribe for any additional
equity Securities of Company. The issuance and sale of Company's Common
Stock and Preferred Stock, upon such issuance and sale, will either
(a) have been registered or qualified under applicable federal and state
securities laws or (b) be exempt therefrom.
(ii) Senior Subordinated Notes. The Senior Subordinated Notes are the
legally valid and binding obligations of Company, enforceable against
Company in accordance with their respective terms, except as may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors' rights generally or by equitable
principles relating to enforceability. The subordination provisions of the
Senior Subordinated Notes are enforceable against the holders thereof and
the Loans and all other monetary Obligations hereunder are and will be
within the definition of "Senior Indebtedness" included in such provisions.
The Senior Subordinated Notes either (a) have been registered or qualified
under applicable federal and state securities laws or (b) are exempt
therefrom.
5.3 FINANCIAL CONDITION.
Company has heretofore delivered to Lenders, at Lenders' request,
the following financial statements and information: (i) unaudited financial
statements of Company and its Subsidiaries for the fiscal periods most recently
ended more than 30 days prior to the Closing Date (including, without limitation
monthly financial statements for any such period of less than three months),
consisting of a balance sheet and the related consolidated statements of income,
stockholders' equity and cash flows for such three-month period or, if
applicable, such one-month period, all in reasonable detail and certified by the
chief financial officer of Company that they fairly present the financial
condition of Company and its Subsidiaries as at the dates indicated and the
results of their operations and their cash flows for the periods indicated,
subject to changes resulting from audit and normal year-end adjustments,
(ii) pro forma consolidated balance sheets of Company and its Subsidiaries as at
the Closing Date, prepared in accordance with GAAP (except as otherwise noted
therein) and giving effect to the amendments contemplated by this Agreement and
(iii) projected financial statements (including balance sheets and statements of
operations and cash flows) of the Company and its Subsidiaries for the eight-
year period after the Closing Date. All such statements (other than the pro
forma balance sheet but only to the extent noted therein) were prepared in
conformity with GAAP and fairly present, in all material respects, the financial
position (on a consolidated basis) of the entities described in such financial
statements as at the respective dates thereof and the results of operations and
cash flows (on a consolidated basis) of the entities described therein for each
of the periods then ended, subject, in the case of any such unaudited financial
statements, to changes resulting from audit and normal year-end adjustments.
None of the Loan Parties (and will not following the funding of the initial
Loans) has any Contingent Obligation, contingent liability or liability for
taxes, long-term lease or unusual forward or long-term commitment that is not
reflected in the foregoing financial statements or the notes thereto and which
in any such case is material in relation to the business, operations,
properties, assets, condition (financial or otherwise) or prospects of the Loan
Parties taken as a whole, other than (i) the incurrence of the Obligations and
obligations under other Related Agreements, (ii) contingent obligations or
liabilities for taxes, long term leases or forward or long term commitments and
(iii) any other items disclosed on Schedule 5.3 annexed thereto.
5.4 NO MATERIAL ADVERSE CHANGE; NO RESTRICTED JUNIOR PAYMENTS.
Since September 28, 1996, no event or change has occurred that has
caused or evidences, either in any case or in the aggregate, a Material Adverse
Effect. Neither Company nor any of its Subsidiaries has directly or indirectly
declared, ordered, paid or made, or set apart any sum or property for, any
Restricted Junior Payment or agreed to do so except as permitted by the Existing
Credit Agreement prior to the Closing Date or by subsection 7.5 thereafter.
5.5 TITLE TO PROPERTIES; LIENS.
Each Loan Party has (i) good, sufficient and legal title, subject
only to Liens permitted under this Agreement and, with respect to Real Property
Assets acquired after the Closing Date by such Loan Party from a Person other
than a Loan Party, such defects in title as existed prior to such acquisition,
to (in the case of fee interests in real property), (ii) valid leasehold
interests, subject only to Liens permitted under this Agreement and, with
respect to Real Property Assets acquired after the Closing Date by such Loan
Party from a Person other than a Loan Party, such defects in title as existed
prior to such acquisition, in (in the case of leasehold interests in real or
personal property), or (iii) good title to (in the case of all other personal
property), all of its properties and assets reflected in the financial
statements referred to in subsection 5.3 or in the most recent financial
statements delivered pursuant to subsection 6.1, in each case except for assets
disposed of since the date of such financial statements in the ordinary course
of business or as otherwise permitted under subsection 7.7. Except as permitted
by this Agreement, all such properties and assets are free and clear of Liens.
5.6 LITIGATION; ADVERSE FACTS.
There are no actions, suits, proceedings, arbitrations or governmen
tal investigations (whether or not purportedly on behalf of Company or any of
its Subsidiaries) at law or in equity, or before or by any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign that are pending or, to the knowledge of
Company, threatened against or affecting Company or any of its Subsidiaries or
any property of Company or any of its Subsidiaries and that, individually or in
the aggregate, could reasonably be expected to result in a Material Adverse
Effect. Neither Company nor any of its Subsidiaries (i) is in violation of any
applicable laws that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect, or (ii) is subject to or in
default with respect to any final judgments, writs, injunctions, decrees, rules
or regulations of any court or any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect.
5.7 PAYMENT OF TAXES.
Except to the extent permitted by subsection 6.3, all material tax
returns and reports of Company and its Subsidiaries required to be filed by any
of them have been timely filed, and all material taxes, assessments, fees and
other governmental charges upon Company and its Subsidiaries and upon their
respective properties, assets, income, businesses and franchises which are due
and payable have been paid when due and payable. Company knows of no proposed
tax assessment against Company or any of its Subsidiaries which is not being
actively contested by Company or such Subsidiary in good faith and by appro
priate proceedings; provided that such reserves or other appropriate provisions,
if any, as shall be required in conformity with GAAP shall have been made or
provided therefor.
5.8 PERFORMANCE OF AGREEMENTS; MATERIALLY ADVERSE AGREEMENTS; MATERIAL
CONTRACTS.
A. Neither Company nor any of its Subsidiaries is in default in
the performance, observance or fulfillment of any of the material obligations,
covenants or conditions contained in any of its material Contractual
Obligations, and no condition exists that, with the giving of notice or the
lapse of time or both, would constitute such a default, except where the conse
quences, direct or indirect, of such default or defaults, if any, individually
or in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect.
B. Neither Company nor any of its Subsidiaries is a party to or is
otherwise subject to any agreements or instruments the performance of which,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect, or any charter or other internal restrictions which,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect.
5.9 GOVERNMENTAL REGULATION.
Neither Company nor any of its Subsidiaries is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act or the Investment Company Act of 1940 or under any other
federal or state statute or regulation which may limit its ability to incur
Indebtedness for borrowed money or which may otherwise render all or any portion
of the Obligations unenforceable.
5.10 SECURITIES ACTIVITIES.
A. Neither Company nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any Margin Stock.
B. Following application of the proceeds of each Loan, not more
than 25% of the value of the assets (either of Company only or of Company and
its Subsidiaries on a consolidated basis) subject to the provisions of
subsection 7.2 or 7.7 or subject to any restriction contained in any agreement
or instrument, between Company and any Lender or any Affiliate of any Lender,
relating to Indebtedness and within the scope of subsection 8.2, will be Margin
Stock.
5.11 EMPLOYEE BENEFIT PLANS.
A. Except with respect to the Deferred Compensation Agreements,
each of the Loan Parties and each of their respective ERISA Affiliates are in
material compliance with all applicable provisions and requirements of ERISA and
the regulations and published interpretations thereunder with respect to each
Employee Benefit Plan, and have performed all their material obligations under
each Employee Benefit Plan.
B. Except with respect to the Deferred Compensation Agreements, no
ERISA Events have occurred or are reasonably expected to occur which
individually or in the aggregate resulted in or might reasonably be expected to
result in a liability of any of the Loan Parties or any of their respective
ERISA Affiliates (unless no Loan Parties shall be jointly and severally liable
therefor) in excess of $3,000,000 during the term of this Agreement.
C. Except as disclosed on Schedule 5.11 annexed hereto and except
to the extent required under Section 4980B of the Internal Revenue Code, no
Employee Benefit Plan provides health or welfare benefits (through the purchase
of insurance or otherwise) for any retired or former employees of any of the
Loan Parties or any of their respective ERISA Affiliates (unless no Loan Parties
shall be jointly and severally liable therefor). Except with respect to the
Deferred Compensation Agreements, there are no material liabilities of any Loan
Party under any of the plans listed on Schedule 5.11 annexed hereto that are not
reflected in the consolidated financial statements of Company.
D. As of the most recent valuation date for any Pension Plan, the
Amount of Unfunded Benefit Liabilities, individually or in the aggregate for all
Pension Plans (excluding for purposes of such computation (1) any Pension Plan
which has a negative Amount of Unfunded Benefit Liabilities and (2) any Pension
Plan for which neither Company nor any other Loan Party would have any liability
if the Pension Plan then terminated) does not exceed $6,000,000.
E. With respect to the Deferred Compensation Agreements, (i) each
of the Loan Parties and each of their respective ERISA Affiliates are in
compliance with all applicable provisions and requirements of ERISA and the
regulations and published interpretations thereunder and have performed all
obligations where the failure to do so would have a Material Adverse Effect,
(ii) no ERISA Events have occurred or are reasonably expected to occur which
individually or in the aggregate resulted in or might reasonably be expected to
result in a liability of any of the Loan Parties or any of their respective
ERISA Affiliates (unless no Loan Parties shall be jointly and severally liable
therefor) which would have a Material Adverse Effect and (iii) there are no
liabilities of any Loan Party that are not reflected in the consolidated
financial statements of Company which would have a Material Adverse Effect.
5.12 CERTAIN FEES.
Except as disclosed in Schedule 5.12 annexed hereto, no material
broker's or finder's fee or commission will be payable with respect to this
Agreement or any of the transactions contemplated hereby, and Company hereby
indemnifies Lenders against, and agrees that it will hold Lenders harmless from,
any claim, demand or liability for any such broker's or finder's fees alleged to
have been incurred in connection herewith or therewith and any expenses
(including reasonable fees, expenses and disbursements of counsel) arising in
connection with any such claim, demand or liability.
5.13 ENVIRONMENTAL PROTECTION.
A. Except as set forth in Schedule 5.13 annexed hereto:
(i) the operations of the Loan Parties (including, without limitation,
all operations and conditions at or in the Facilities) comply in all
material respects with all Environmental Laws;
(ii) each of the Loan Parties has obtained all Governmental
Authorizations under Environmental Laws necessary to their respective
operations, and all such Governmental Authorizations are in good standing,
and each of the Loan Parties is in compliance with all material terms and
conditions of such Governmental Authorizations;
(iii) no Loan Party has received (a) any notice or claim to the
effect that it is or may be liable to any Person as a result of or in
connection with any Hazardous Materials except as would not reasonably be
expected to have a Material Adverse Effect or (b) any letter or request for
information under Section 104 of the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. 9604) or comparable state laws
regarding any matter which could reasonably be expected to result in a
Material Adverse Effect, and, to the best of Company's knowledge, none of
the operations of any of the Loan Parties is the subject of any federal or
state investigation relating to or in connection with any Hazardous
Materials at any Facility or at any other location;
(iv) none of the operations of any of the Loan Parties is subject to any
judicial or administrative proceeding alleging the violation of or
liability under any Environmental Laws which if adversely determined could
reasonably be expected to have a Material Adverse Effect;
(v) none of the Loan Parties or, to the best knowledge of Company, any
predecessor of the Loan Parties has filed any notice under any
Environmental Law indicating past or present treatment or Release of
Hazardous Materials at any Facility except as would not reasonably be
expected to have a Material Adverse Effect, and none of Loan Parties'
operations involves the generation, transportation, treatment, storage or
disposal of hazardous waste, as defined under 40 C.F.R. Parts 260-270 or
any state equivalent other than in compliance in all material respects with
all applicable Environmental Laws;
(vi) no Hazardous Materials exist on, under or about any Facility in a
manner that has a reasonable possibility of giving rise to an Environmental
Claim having a Material Adverse Effect, and no Loan Party has filed any
notice or report of a Release of any Hazardous Materials that has a
reasonable possibility of giving rise to an Environmental Claim having a
Material Adverse Effect;
(vii) none of the Loan Parties or, to the best knowledge of Company,
any of its predecessors has disposed of any Hazardous Materials in a manner
that has a reasonable possibility of giving rise to an Environmental Claim
having a Material Adverse Effect;
(viii) to the best knowledge of Company, no unpermitted underground
storage tanks or surface impoundments are on or at any Facility; and
(ix) no Lien in favor of any Person relating to or in connection with any
Environmental Claim has been filed or has been attached to any Facility
that has a reasonable possibility of having a Material Adverse Effect.
B. None of the Loan Parties or any of their respective Facilities or
operations are subject to any outstanding written order or agreement with any
governmental authority or private party relating to (a) any Environmental Laws
or (b) any Environmental Claims which could reasonably be expected to result in
a liability to Company or any of its Subsidiaries, after giving effect to
indemnification provisions upon which Company is reasonably relying, in excess
of $12,000,000 individually or in the aggregate.
C. None of the Loan Parties has any contingent liability in
connection with any Release of any Hazardous Materials by the Loan Parties
which could reasonably be expected to result in a liability to Company or any of
its Subsidiaries, after giving effect to indemnification provisions upon which
Company is reasonably relying, in excess of $12,000,000 individually or in the
aggregate.
D. Except as set forth in Schedule 5.13 annexed hereto, no event or
condition has occurred with respect to the Loan Parties relating to any
Environmental Laws or any Release of Hazardous Materials at any Facility or any
other location, which, individually, or in the aggregate, has had or could
reasonably be expected to have a Material Adverse Effect.
5.14 EMPLOYEE MATTERS.
There is no strike or work stoppage in existence or threatened
involving Company or any of its Subsidiaries that could reasonably be expected
to have a Material Adverse Effect.
5.15 SOLVENCY.
Each Loan Party is and, upon the incurrence of any Obligations by
such Loan Party on any date on which this representation is made, will be,
Solvent.
5.16 MATTERS RELATING TO COLLATERAL.
A. CREATION, PERFECTION AND PRIORITY OF LIENS. The execution and
delivery of the Collateral Documents by Loan Parties, together with (i) the
actions taken on or prior to the date hereof pursuant to subsections 4.1H, 4.1I,
6.8 and 6.9 and (ii) the delivery to Administrative Agent of any Pledged
Collateral not delivered to Administrative Agent at the time of execution and
delivery of the applicable Collateral Document (all of which Pledged Collateral
has been so delivered) are effective to create in favor of Administrative Agent
for the benefit of Lenders, as security for the respective Secured Obligations
(as defined in the applicable Collateral Document in respect of any Collateral),
a valid and perfected first priority Lien on all of the Collateral, and all
filings and other actions necessary or desirable to perfect and maintain the
perfection and first priority status of such Liens have been duly made or taken
and remain in full force and effect, other than the filing of any UCC financing
statements delivered to Administrative Agent for filing (but not yet filed) and
the periodic filing of UCC continuation statements in respect of UCC financing
statements filed by or on behalf of Administrative Agent.
B. GOVERNMENTAL AUTHORIZATIONS. No authorization, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for either (i) the pledge or grant by any Loan Party
of the Liens purported to be created in favor of Administrative Agent pursuant
to any of the Collateral Documents or (ii) the exercise by Administrative Agent
of any rights or remedies in respect of any Collateral (whether specifically
granted or created pursuant to any of the Collateral Documents or created or
provided for by applicable law), except for filings or recordings contemplated
by subsection 5.16A, except as may be required, in connection with the
disposition of any Pledged Collateral, by laws generally affecting the offering
and sale of securities and except for such authorizations, approvals, other
actions, notices or filings, the failure to have which could not reasonably be
expected to result in a Material Adverse Effect.
C. MARGIN REGULATIONS. The pledge of the Pledged Collateral pursuant
to the Collateral Documents does not violate Regulation G, T, U or X of the
Board of Governors of the Federal Reserve System.
D. INFORMATION REGARDING COLLATERAL. All information supplied to
Administrative Agent by or on behalf of any Loan Party with respect to any of
the Collateral (in each case taken as a whole with respect to any particular
Collateral) is accurate and complete in all material respects.
5.17 PERMITS.
Except as disclosed in Schedule 5.17 annexed hereto, each of Company
and its Subsidiaries has such certificates, permits, licenses, franchises,
consents, approvals, authorizations and clearances that are material to the
condition (financial or otherwise), business or operations of any of Company and
its Subsidiaries ("Permits") and is in compliance in all material respects with
all applicable laws as are necessary to own, lease or operate its properties and
to conduct its businesses in substantially the manner as presently conducted and
all such Permits are valid and in full force and effect. Each of Company and
its Subsidiaries is in compliance in all material respects with its obligations
under such Permits and no event has occurred that allows, or after notice or
lapse of time would allow, revocation or termination of such Permits, except for
any such revocation or termination which could not reasonably be expected to
individually or in the aggregate have a Material Adverse Effect.
5.18 DISCLOSURE.
No representation or warranty of Company or any of its Subsidiaries
contained in any Loan Document or in any other document, certificate or written
statement furnished to Lenders by or on behalf of Company or any of its
Subsidiaries for use in connection with the transactions contemplated by this
Agreement contains any untrue statement of a material fact or omits to state a
material fact (known to Company, 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. Any
projections and pro forma financial information contained in such materials are
based upon good faith estimates and assumptions believed by Company to be
reasonable at the time made, it being recognized by Lenders that such projec
tions as to future events are not to be viewed as facts and that actual results
during the period or periods covered by any such projections may differ from the
projected results. There are no facts known (or which should upon the
reasonable exercise of diligence be known) to Company (other than matters of a
general economic nature) that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect and that have not
been disclosed herein or in such other documents, certificates and statements
furnished to Lenders for use in connection with the transactions contemplated
hereby.
5.19 REAL PROPERTY ASSETS.
Schedule 5.19 sets forth all of the Real Property Assets of Company
or any of its Subsidiaries and identifies those Real Property Assets which are
California Properties (including those California Properties subject to a
contract for the sale thereof), Surplus Properties (including those Surplus
Properties subject to a contract for the sale thereof) and Sale Leaseback
Properties of Company or any of its Subsidiaries, in each case as of the Closing
Date.
SECTION 6. AFFIRMATIVE COVENANTS
Company covenants and agrees that, so long as any of the Commitments
hereunder shall remain in effect and until payment in full of all of the Loans
and other Obligations and the cancellation or expiration of all Letters of
Credit, unless Requisite Lenders shall otherwise give prior written consent,
Company shall perform, and shall cause each of its Subsidiaries to perform, all
covenants in this Section 6.
6.1 FINANCIAL STATEMENTS AND OTHER REPORTS.
Company will maintain, and cause each of its Subsidiaries to
maintain, a system of accounting established and administered in accordance with
sound business practices to permit preparation of financial statements in
conformity with GAAP. Company will deliver to Administrative Agent and Lenders:
(i) Fiscal Period Financials: as soon as available and in any event
within 30 days (or, in the case of the last Fiscal Period in any Fiscal
Quarter (other than the last Fiscal Quarter in any Fiscal Year), 45 days,
or in the case of the last Fiscal Period in any Fiscal Year, 90 days) after
the end of each Fiscal Period ending after the Closing Date (a) the
consolidated balance sheet of Company and its Subsidiaries as at the end of
such Fiscal Period and the related consolidated statements of income and
cash flows of Company and its Subsidiaries for such Fiscal Period and for
the period from the beginning of the then current Fiscal Year to the end of
such Fiscal Period, setting forth in comparative form (1) other than for
Fiscal Periods ending prior to June 30, 1996, the corresponding figures for
the consolidated balance sheet and the related consolidated statement of
income for the corresponding periods of the previous Fiscal Year and (2)
the corresponding figures for the consolidated balance sheet and the
related consolidated statement of income from the Financial Plan for the
current Fiscal Year, and (b) sales growth on a comparable store basis for
each Regional Division for such Fiscal Period and for the period from the
beginning of the then current Fiscal Year to the end of such Fiscal Period,
setting forth in comparative form the corresponding figures from the
Financial Plan for the current Fiscal Year, all in reasonable detail and
certified by the chief financial officer of Company that they fairly
present the financial condition of Company and its Subsidiaries as at the
dates indicated and the results of their operations for the periods
indicated, subject to changes resulting from audit and normal year-end
adjustments;
(ii) Quarterly Financials: as soon as available and in any event within
45 days after the end of each of the first three Fiscal Quarters of each
Fiscal Year and within 90 days after the end of the fourth Fiscal Quarter
of each Fiscal Year, (a) the consolidated balance sheet of Company and its
Subsidiaries as at the end of such Fiscal Quarter and the related
consolidated statements of income and cash flows of Company and its
Subsidiaries for such Fiscal Quarter and for the period from the beginning
of the then current Fiscal Year to the end of such Fiscal Quarter, setting
forth in comparative form (1) other than for Fiscal Quarters ending prior
to June 30, 1996, the corresponding figures for the corresponding periods
of the previous Fiscal Year and (2) the corresponding figures from the
Financial Plan for the current Fiscal Year, and (b) sales growth on a
comparable store basis for each Regional Division for such Fiscal Quarter
and for the period from the beginning of the then current Fiscal Year to
the end of such Fiscal Quarter, setting forth in comparative form the
corresponding figures from the Financial Plan for the current Fiscal Year,
all in reasonable detail and certified by the chief financial officer of
Company that they fairly present the financial condition of Company and its
Subsidiaries as at the dates indicated and the results of their operations
and their cash flows for the periods indicated, subject to changes
resulting from audit and normal year-end adjustments;
(iii) Year-End Financials: as soon as available and in any event
within 90 days after the end of each Fiscal Year, including the Fiscal Year
ended December 28, 1996, (or, if an extension has been obtained from the
Securities and Exchange Commission for filing such report after such 90th
day, then on the date of delivery of such report to the Securities and
Exchange Commission and in any event within 105 days after the end of such
Fiscal Year), (a) the consolidated balance sheet of Company and its
Subsidiaries as at the end of such Fiscal Year and the related consolidated
statements of income, stockholders' equity and cash flows of Company and
its Subsidiaries for such Fiscal Year, setting forth in each case in
comparative form the corresponding figures for the previous Fiscal Year,
and the corresponding figures from the Financial Plan for the Fiscal Year
covered by such financial statements, all in reasonable detail and certi
fied by the chief financial officer of Company that they fairly present the
financial condition of Company and its Subsidiaries as at the dates indi
cated and the results of their operations and their cash flows for the
periods indicated, and (b) in the case of such consolidated financial
statements, a report thereon of Ernst & Young LLP or other independent
certified public accountants of recognized national standing selected by
Company and satisfactory to Administrative Agent, which report shall be
unqualified as to scope of audit, shall express no doubts about the ability
of Company and its Subsidiaries to continue as a going concern, and shall
state that such consolidated financial statements fairly present the
consolidated financial position of Company and its Subsidiaries as at the
dates indicated and the results of their operations and their cash flows
for the periods indicated in conformity with GAAP applied on a basis
consistent with prior years (except as otherwise disclosed in such
financial statements) and that the examination by such accountants in
connection with such consolidated financial statements has been made in
accordance with generally accepted auditing standards;
(iv) Officers' and Compliance Certificates: (a) together with each
delivery of financial statements of Company and its Subsidiaries pursuant
to subdivisions (ii) and (iii) above, (1) an Officers' Certificate of
Company stating that the signers have reviewed the terms of this Agreement
and have made, or caused to be made under their supervision, a review in
reasonable detail of the transactions and condition of Company and its
Subsidiaries during the accounting period covered by such financial
statements and that such review has not disclosed the existence during or
at the end of such accounting period, and that the signers do not have
knowledge of the existence as at the date of such Officers' Certificate, of
any condition or event that constitutes an Event of Default or Potential
Event of Default, or, if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what action
Company has taken, is taking and proposes to take with respect thereto; and
(2) beginning with such financial statements to be delivered for the second
Fiscal Quarter of 1997, a Compliance Certificate duly executed and duly
completed in all respects; and (b) within 100 days after the beginning of
each Fiscal Year and in any event on or prior to the date of any mandatory
prepayments made pursuant to subsection 2.4B(iii)(d) during such Fiscal
Year, an Officers' Certificate of Company setting forth the Consolidated
Excess Cash Flow for the Fiscal Year covered by such financial statements
and demonstrating in reasonable detail the derivation of such Consolidated
Excess Cash Flow;
(v) Reconciliation Statements: subject to subsection 1.2, if, as a
result of any change in accounting principles and policies from those used
in the preparation of the audited financial statements referred to in
subsection 5.3, the financial statements of Company and its Subsidiaries on
a consolidated basis delivered pursuant to subdivisions (i), (ii), (iii) or
(xiii) of this subsection 6.1 will differ in any material respect from the
financial statements that would have been delivered pursuant to such
subdivisions had no such change in accounting principles and policies been
made, then (a) together with the first delivery of financial statements
pursuant to subdivision (i), (ii), (iii) or (xiii) of this subsection 6.1
following such change, financial statements of Company and its Subsidiaries
on a consolidated basis prepared on a pro forma basis as if such change had
been in effect during such periods, and (b) together with each delivery of
financial statements pursuant to subdivision (i), (ii), (iii) or (xiii) of
this subsection 6.1 following such change, such financial statements
prepared on a basis consistent with the accounting principles and policies
used in the preparation of the financial statements delivered immediately
prior to such change;
(vi) Accountants' Certification: together with each delivery of
consolidated financial statements of Company and its Subsidiaries pursuant
to subdivision (iii) above, a written statement by the independent
certified public accountants giving the report thereon (a) stating whether,
in connection with their audit examination, any condition or event that
constitutes an Event of Default or Potential Event of Default that relates
to accounting matters has come to their attention and, if such a condition
or event has come to their attention, specifying the nature and period of
existence thereof; provided that such accountants shall not be liable by
reason of any failure to obtain knowledge of any such Event of Default or
Potential Event of Default that would not be disclosed in the course of
their audit examination, and (b) stating that based on their audit
examination nothing has come to their attention that causes them to believe
that the information contained in the certificates delivered therewith
pursuant to subdivision (iv) above is not correct;
(vii) Accountants' Reports: promptly upon receipt thereof (unless
restricted by applicable professional standards), copies of all reports
(other than reports of a routine or ministerial nature which are not
material) submitted to Company by independent certified public accountants
in connection with each annual, interim or special audit of the financial
statements of Company and its Subsidiaries made by such accountants, includ
ing, without limitation, any comment letter submitted by such accountants
to management in connection with their annual audit;
(viii) SEC Filings and Press Releases: promptly upon the sending or
filing thereof, copies of (a) all financial statements, reports, notices
and proxy statements sent or made available generally by Company to its
security holders, (b) all regular and periodic reports and all registration
statements (other than on Form S-8 or a similar form) and prospectuses, if
any, filed by Company or any of its Subsidiaries with any securities
exchange or with the Securities and Exchange Commission or any governmental
or private regulatory authority (other than reports of a routine or
ministerial nature which are not material), and (c) all press releases and
other statements made available generally by Company or any of its Subsid
iaries to the public concerning material developments in the business of
Company or any of its Subsidiaries;
(ix) Events of Default, etc.: promptly upon any officer of Company
obtaining knowledge (a) that a condition or event that constitutes an Event
of Default or Potential Event of Default has occurred and is continuing, or
becoming aware that any Lender has given any notice (other than to
Administrative Agent) or taken any other action with respect to a claimed
Event of Default or Potential Event of Default, (b) that any Person has
given any notice to Company or any of its Subsidiaries or taken any other
action with respect to a claimed default or event or condition of the type
referred to in subsection 8.2 or (c) of the occurrence of any event or
change that has caused or evidences, either in any case or in the
aggregate, a Material Adverse Effect, an Officers' Certificate specifying
the nature and period of existence of such condition, event or change, or
specifying the notice given or action taken by any such Person and the
nature of such claimed Event of Default, Potential Event of Default,
default, event or condition, and what action Company has taken, is taking
and proposes to take with respect thereto;
(x) Litigation or Other Proceedings: promptly upon any officer of
Company obtaining knowledge of (X) the institution of, or non-frivolous
threat of, any action, suit, proceeding (whether administrative, judicial
or otherwise), governmental investigation or arbitration against or
affecting Company or any of its Subsidiaries or any property of Company or
any of its Subsidiaries (collectively, "PROCEEDINGS") not previously dis
closed in writing by Company to Lenders or (Y) any material development in
any Proceeding that, in any case:
(1) if adversely determined, has a reasonable possibility of
giving rise to a Material Adverse Effect; or
(2) seeks to enjoin or otherwise prevent the consummation of,
or to recover any damages or obtain relief as a result of, the
transactions to occur or which have occurred pursuant to the Loan
Documents;
written notice thereof together with such other information as may be
reasonably available to Company to enable Lenders and their counsel to
evaluate such matters;
(xi) ERISA Events: promptly upon becoming aware of the occurrence of or
forthcoming occurrence of any ERISA Event, a written notice specifying the
nature thereof, what action Company, any of its Subsidiaries or any of
their respective ERISA Affiliates has taken, is taking or proposes to take
with respect thereto and, when known, any action taken or threatened by the
Internal Revenue Service, the Department of Labor or the PBGC with respect
thereto;
(xii) ERISA Notices: with reasonable promptness, copies of (a) each
Schedule B (Actuarial Information) to the annual report (Form 5500 Series)
filed by Company, any of its Subsidiaries or any of their respective ERISA
Affiliates with the Internal Revenue Service with respect to each Pension
Plan; (b) all notices received by Company, any of its Subsidiaries or any
of their respective ERISA Affiliates from a Multiemployer Plan sponsor
concerning an ERISA Event; and (c) copies of such other documents or
governmental reports or filings relating to any Employee Benefit Plan as
Administrative Agent shall reasonably request;
(xiii) Financial Plans: as soon as practicable and in any event no
later than 60 days after the beginning of each Fiscal Year, a consolidated
plan and financial forecast for such Fiscal Year (the "FINANCIAL PLAN" for
such Fiscal Year) as customarily prepared by Company, including without
limitation (a) forecasted balance sheets and forecasted statements of
income and cash flows of Company and its Subsidiaries on a consolidated
basis and sales growth on a comparable store basis for each Regional
Division for such Fiscal Year, together with an explanation of the
assumptions on which such forecasts are based, (b) forecasted statements of
income and cash flows of Company and its Subsidiaries on a consolidated
basis for each Fiscal Period of such Fiscal Year, together with an
explanation of the assumptions on which such forecasts are based, and
(c) such other information and projections as any Lender may reasonably
request;
(xiv) Insurance: as soon as practicable and in any event by the last
day of July in each Fiscal Year, an Officers' Certificate or other report,
in each case in form and substance satisfactory to Administrative Agent,
outlining all material insurance coverage maintained as of the date of such
Officers' Certificate or report by Company and its Subsidiaries and all
material insurance coverage planned to be maintained by Company and its
Subsidiaries in the immediately succeeding Fiscal Year;
(xv) Environmental Audits and Reports: as soon as practicable following
receipt thereof, copies of all environmental audits and reports (other than
routine follow-up reports to matters previously disclosed to Lenders),
whether prepared by personnel of Company or any of its Subsidiaries or by
independent consultants, with respect to significant environmental matters
at any Facility or which relate to an Environmental Claim which could
reasonably be expected to result in a Material Adverse Effect;
(xvi) Board of Directors: with reasonable promptness, written notice
of any change in the Board of Directors of Company;
(xvii) New Subsidiaries: promptly upon any Person becoming a
Subsidiary of Company, a written notice setting forth with respect to such
Person (a) the date on which such Person became a Subsidiary of Company and
(b) all of the data required to be set forth in Schedule 5.1 annexed hereto
with respect to all Subsidiaries of Company (it being understood that such
written notice shall be deemed to supplement Schedule 5.1 annexed hereto
for all purposes of this Agreement);
(xviii) Margin Determination Certificate: concurrently with the
delivery of the financial statements required under subsections 6.1(ii) and
6.1(iii), Company shall deliver a Margin Determination Certificate;
(xix) Schedules to the Security Agreement: as soon as available and
in any event within 5 days after the end of each Fiscal Quarter, Company
and the Subsidiary Guarantors shall deliver to Administrative Agent a
supplement, if any, to Schedule 1(a), Schedule 1(b) and Schedule 1(h) to
the Security Agreement and other statements and schedules required to be
furnished pursuant to the Security Agreement; and
(xx) Other Information: with reasonable promptness, such other
information and data with respect to Company or any of its Subsidiaries as
from time to time may be reasonably requested by any Lender.
6.2 CORPORATE EXISTENCE, ETC.
Except as permitted under subsection 7.7, Company will, and will
cause each of its Subsidiaries to, at all times preserve and keep in full force
and effect its corporate existence and all rights and franchises material to its
business; provided, however that neither Company nor any of its Subsidiaries
shall be required to preserve the corporate existence of any Subsidiary or any
such right or franchise if the Board of Directors of Company or such Subsidiary
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of Company or its Subsidiaries and if the loss thereof
is not disadvantageous in any material respect to Company and its Subsidiaries,
taken as a whole, or Lenders.
6.3 PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION.
A. Company will, and will cause each of its Subsidiaries to, pay
all material taxes, assessments and other governmental charges imposed upon it
or any of its material properties or assets or in respect of any of its income,
businesses or franchises before any material penalty accrues thereon, and all
claims (including, without limitation, claims for labor, services, materials and
supplies) for sums that have become due and payable and that by law have or may
become a Lien upon any of its properties or assets, prior to the time when any
material penalty or fine shall be incurred with respect thereto; provided that
no such charge or claim need be paid if it is being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted, so long as
such reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor.
B. Company will not, nor will it permit any of its Subsidiaries
to, file or consent to the filing of any consolidated income tax return with any
Person (other than Company or any of its Subsidiaries).
6.4 MAINTENANCE OF PROPERTIES; INSURANCE.
Company will, and will cause its Subsidiaries to, maintain or cause
to be maintained in good repair, working order and condition, ordinary wear and
tear excepted, all material Collateral (without limiting any obligations under
the Collateral Documents) and all other material properties used or useful in
the business of Company and its Subsidiaries (including, without limitation,
Intellectual Property) and from time to time will make or cause to be made all
appropriate repairs, renewals and replacements thereof. Company will maintain
or cause to be maintained, with financially sound and reputable insurance
companies or associations or with self-insurance programs, in each case to the
extent consistent with prudent business practices and customary in its industry,
insurance with respect to its properties and business and the properties and
businesses of its Subsidiaries against loss or damage of the kinds (including,
in any event, business interruption insurance and, to the extent commercially
reasonable, earthquake insurance) and in the amounts customarily carried or
maintained under similar circumstances by corporations of established reputation
engaged in similar businesses and owning similar properties in the same general
geographic areas in which Company or any of its Subsidiaries operates. In
addition, Company will maintain or cause to be maintained flood insurance with
respect to each Flood Hazard Property included in the Collateral and located in
a community that participates in the National Flood Insurance Program. All
insurance relating to the Collateral shall comply with the insurance provisions
of the Collateral Documents.
6.5 INSPECTION; LENDER MEETING.
Company shall, and shall cause each of its Subsidiaries to, permit
any authorized representatives designated by any Lender to visit and inspect any
of the properties of Company or any of its Subsidiaries, including its and their
financial and accounting records, and to make copies and take extracts
therefrom, and to discuss its and their affairs, finances and accounts with its
and their officers and independent public accountants (provided that
representatives of Company or any of its Subsidiaries may, if it so chooses, be
present at or participate in any such discussion), all upon reasonable notice
and at such reasonable times during normal business hours and as often as may be
reasonably requested. Without in any way limiting the foregoing, Company will,
upon the request of Administrative Agent or Requisite Lenders, participate in a
meeting of Administrative Agent and Lenders once during each Fiscal Year to be
held at Company's corporate offices (or such other location as may be agreed to
by Company and Administrative Agent) at such time as may be agreed to by Company
and Administrative Agent.
6.6 COMPLIANCE WITH LAWS, ETC.
Company shall comply, and shall cause each of its Subsidiaries to
comply, with the requirements of all applicable laws, rules, regulations and
orders of any governmental authority, noncompliance with which could reasonably
be expected to cause, individually or in the aggregate, a Material Adverse
Effect.
6.7 ENVIRONMENTAL DISCLOSURE AND INSPECTION; REMEDIAL ACTION REGARDING
HAZARDOUS MATERIALS.
A. Company shall, and shall cause its Subsidiaries to, exercise
all due diligence in order to comply and cause (i) all tenants under any leases
or occupancy agreements affecting any portion of the Facilities and (ii) all
other Persons on or occupying such property, to comply with all Environmental
Laws.
B. Company agrees that Administrative Agent may, from time to time
as Administrative Agent deems reasonably necessary, retain, at Company's
expense, an independent professional consultant reasonably acceptable to Company
to review any report relating to Hazardous Materials prepared by or for Company
or any of its Subsidiaries and to conduct its own investigation of any Facility
currently owned, leased, operated or used by Company or any of its Subsidiaries,
and Company agrees to use its reasonable best efforts to obtain permission for
Administrative Agent's professional consultant to conduct its own investigation
of any Facility previously owned, leased, operated or used by Company or any of
its Subsidiaries. Company hereby grants (to the extent it is authorized to do
so) to Administrative Agent and its agents, employees, consultants and
contractors the right to enter into or on to the Facilities currently owned,
leased, operated or used by Company or any of its Subsidiaries to perform such
tests on such property as are reasonably necessary to conduct such a review
and/or investigation. Any such investigation of any Facility shall only be
conducted, unless otherwise agreed to by such Person and Administrative Agent,
during normal business hours and, to the extent reasonably practicable, shall be
conducted so as not to interfere with the ongoing operations at any such
Facility or to cause any damage or loss to any property at such Facility.
Company and Administrative Agent hereby acknowledge and agree that any report of
any investigation conducted at the request of Administrative Agent pursuant to
this subsection 6.7B will be obtained and shall only be used by Administrative
Agent and Lenders for the purposes of Lenders' internal credit decisions, to
monitor and police the Loans and to protect Lenders' security interests, if any,
created by the Loan Documents. Administrative Agent agrees to deliver a copy of
any such report to Company with the understanding that Company acknowledges and
agrees that (i) it will indemnify and hold harmless Administrative Agent and
each Lender from any costs, losses or liabilities relating to Company's or any
of its Subsidiary's use of or reliance on such report, (ii) neither
Administrative Agent nor any Lender makes any representation or warranty with
respect to such report, and (iii) by delivering such report to Company, neither
Administrative Agent nor any Lender is requiring or recommending the
implementation of any suggestions or recommendations contained in such report.
C. Company shall promptly advise Lenders in writing and in
reasonable detail of (i) any Release of any Hazardous Materials at any Facility
required to be reported to any federal, state or local governmental or
regulatory agency under any applicable Environmental Laws, (ii) any and all
written communications with any governmental authority or any adverse party with
respect to any Environmental Claims that have a reasonable possibility of giving
rise to a Material Adverse Effect or with respect to any Release of Hazardous
Materials at any Facility required to be reported to any federal, state or local
governmental or regulatory agency, (iii) any remedial action taken by Company or
any of its Subsidiaries or any other Person in response to (x) any Hazardous
Materials on, under or about any Facility, the existence of which has a
reasonable possibility of resulting in an Environmental Claim having a Material
Adverse Effect, or (y) any Environmental Claim that could reasonably be expected
to result in a Material Adverse Effect, (iv) Company's or any of its
Subsidiaries' discovery of any occurrence or condition on any real property
adjoining or in the vicinity of any Facility that could cause such Facility or
any part thereof to be subject to any material restrictions on the ownership,
occupancy, transferability or use thereof under any Environmental Laws, and
(v) any request for information from any governmental agency that suggests such
agency is investigating whether Company or any of its Subsidiaries may be
potentially responsible for a Release of Hazardous Materials.
D. Company shall promptly notify Lenders of (i) any proposed
acquisition of stock, assets, or property by Company or any of its Subsidiaries
that could reasonably be expected to expose Company or any of its Subsidiaries
to, or result in, Environmental Claims that could reasonably be expected to have
a Material Adverse Effect or that could reasonably be expected to have a
material adverse effect on any Governmental Authorization then held by Company
or any of its Subsidiaries and (ii) any proposed action to be taken by Company
or any of its Subsidiaries to commence manufacturing, industrial or other
operations that could reasonably be expected to subject Company or any of its
Subsidiaries to additional laws, rules or regulations which could reasonably be
expected to have a Material Adverse Effect, including, without limitation, laws,
rules and regulations requiring additional environmental permits or licenses.
E. Company shall, at its own expense, provide copies of such
documents or information as Administrative Agent may reasonably request in
relation to any matters disclosed pursuant to this subsection 6.7.
F. Company shall promptly take, and shall cause its Subsidiaries
promptly to take, the appropriate remedial action as requested or approved by
the Governmental Authority having jurisdiction over the Facility at issue in
connection with the presence, storage, use, disposal, transportation or Release
of any Hazardous Materials on, under or about any Facility in order to comply
with all applicable Environmental Laws and Governmental Authorizations. In the
event Company or any of its Subsidiaries undertakes any remedial action with
respect to any Hazardous Materials on, under or about any Facility, Company or
such Subsidiary shall conduct and complete such remedial action in material
compliance with all applicable Environmental Laws, and in accordance with the
policies, orders and directives of all federal, state and local governmental
authorities except when, and only to the extent that, Company's or such
Subsidiary's liability for such presence, storage, use, disposal, transportation
or discharge of any Hazardous Materials is being contested in good faith by
Company or such Subsidiary.
6.8 EXECUTION OF SUBSIDIARY GUARANTY AND COLLATERAL DOCUMENTS BY FUTURE
SUBSIDIARIES.
A. EXECUTION OF SUBSIDIARY GUARANTY AND COLLATERAL DOCUMENTS. In
the event that any Person becomes a Subsidiary (other than an Inactive
Subsidiary) of Company after the date hereof, Company will promptly notify
Administrative Agent of that fact and cause such Subsidiary to execute and
deliver to Administrative Agent a counterpart of the Subsidiary Guaranty and, if
such Person became or becomes a Subsidiary of Company before the Collateral
Release Date, cause (i) such Subsidiary to execute and deliver to Administrative
Agent a Pledge Agreement, a Security Agreement, Mortgages (with respect to Real
Property Assets which do not constitute Excluded Properties) and a Trademark
Security Agreement and to take all such further actions and execute all such
further documents and instruments (including without limitation actions,
documents and instruments comparable to those described in subsection 4.1I) as
may be necessary or, in the opinion of Administrative Agent, desirable to create
in favor of Administrative Agent, for the benefit of Lenders, a first-priority
security interest (subject only to Liens permitted under this Agreement) in all
of the real, personal and mixed property assets of such Subsidiary (other than
with respect to Excluded Properties and other than any such assets which are
subject to Liens permitted under subsection 7.2A(iv) and other Real Property
Assets that such Subsidiary would not be obligated to pledge to Administrative
Agent pursuant to subsection 6.9 (it being understood and agreed that all of the
requirements of subsection 6.9 are applicable to the Real Property Assets of
such Subsidiary, with the date such Subsidiary became a Subsidiary of Company
being treated for purposes of subsection 6.9 as the date on which such
Subsidiary acquired all of its Real Property Assets)) and (ii) the parent of
such Subsidiary to execute and deliver to Administrative Agent a counterpart of
the Pledge Agreement or a Pledge Amendment to the Pledge Agreement previously
executed by such parent effecting the pledge by such parent to Administrative
Agent of all of the capital stock of, or any other equity interest in, such
Subsidiary.
B. SUBSIDIARY CHARTER DOCUMENTS, LEGAL OPINIONS, ETC. Company
shall deliver to Administrative Agent, together with such Loan Documents,
(i) certified copies of such Subsidiary's Certificate or Articles of
Incorporation, together with a good standing certificate from the Secretary of
State of the jurisdiction of its incorporation, each to be dated a recent date
prior to their delivery to Administrative Agent, (ii) a copy of such
Subsidiary's Bylaws, certified by its corporate secretary or an assistant
secretary as of a recent date prior to their delivery to Administrative Agent,
(iii) a certificate executed by the secretary or an assistant secretary of such
Subsidiary as to (a) the fact that the attached resolutions of the Board of
Directors of such Subsidiary approving and authorizing the execution, delivery
and performance of such Loan Documents are in full force and effect and have not
been modified or amended and (b) the incumbency and signatures of the officers
of such Subsidiary executing such Loan Documents, (iv) if such Person became or
becomes a Subsidiary of Company before the Collateral Release Date, the
certificate or certificates evidencing all of the capital stock of (or, if
certificated, any other equity interest in) such Subsidiary, and (v) if
reasonably requested by Administrative Agent, a favorable opinion of counsel to
such Subsidiary, in form and substance satisfactory to Administrative Agent and
its counsel, as to the enforceability of such Loan Documents against such
Subsidiary and such matters relating to the creation and perfection of Liens in
any Collateral pursuant to such Loan Documents as Administrative Agent may
reasonably request, all of the foregoing to be satisfactory in form and
substance to Administrative Agent and its counsel.
6.9 ADDITIONAL REAL PROPERTY.
After the Closing Date, Company shall, and shall cause its
Subsidiaries to, with respect to each Real Property Asset required to be subject
to a Mortgage pursuant to subsection 6.8, each fee interest in a Real Property
Asset acquired after the Closing Date which does not constitute an Excluded
Property and each Replacement Property required to be subject to a Mortgage
pursuant to subsection 6.10, as soon as practicable and in any event within
three months after the applicable Real Property Asset is so acquired or required
to be subject to a Mortgage, deliver:
(A) fully executed counterparts of a Mortgage, or an amendment
to a Mortgage, in form satisfactory to Administrative Agent, which
Mortgage or amendment shall encumber such Real Property Asset,
together with evidence that counterparts of such Mortgage or amendment
have been recorded in all places to the extent necessary or desirable,
in the reasonable judgment of Administrative Agent, so as to
effectively create a valid and enforceable first priority Lien
(subject only to Permitted Encumbrances) on such Real Property Asset
in favor of Administrative Agent (or such other trustee as may be
required or desired under local law) for the benefit of Lenders,
(B) if requested by Administrative Agent, a title report, title
commitment or other title search satisfactory to Administrative Agent
obtained by such Person in respect of such Real Property Asset,
(C) if reasonably requested by Administrative Agent, an opinion
of counsel (which counsel shall be reasonably satisfactory to
Administrative Agent) in the state in which such Real Property Asset
is located with respect to the enforceability of the Mortgages
recorded in such state, in form and substance satisfactory to
Administrative Agent,
(D) environmental audits with respect to such Real Property
Asset prepared by professional consultants mutually acceptable to
Company and Administrative Agent, in form, scope and substance
satisfactory to Administrative Agent in its reasonable discretion,
(E) if Company or any of its Subsidiaries obtains an owner's
policy of title insurance with respect to such Real Property Asset, or
if requested by Administrative Agent with respect to any other Real
Property Asset having an acquisition cost or value (as estimated by
Administrative Agent) in excess of $2,000,000, a Title Insurance
Policy, in an amount reasonably satisfactory to Administrative Agent,
with respect to Administrative Agent's lien thereon,
(F) information sufficient for Administrative Agent to
determine whether (1) any such Real Property Asset is Flood Hazard
Property and (2) the community in which each Flood Hazard Property is
located is participating in the National Flood Insurance Program,
(G) upon Company's or such Subsidiary's receipt of written
notification from Administrative Agent (1) as to the existence of each
such Flood Hazard Property and (2) as to whether the community in
which each such Flood Hazard Property is located is participating in
the National Flood Insurance Program, written acknowledgment of the
receipt of such notification, and
(H) the evidence of insurance with respect to such Real
Property Asset required to be provided to Administrative Agent
pursuant to the terms of the Mortgages, including flood insurance with
respect to each Flood Hazard Property located in a community that is
participating in the National Flood Insurance Program.
Company shall, and shall cause each of its Subsidiaries to, permit
any authorized representatives designated by Administrative Agent to visit and
inspect any Real Property Asset for the purpose of obtaining an appraisal of
value, conducted by consultants retained by Administrative Agent in compliance
with all applicable banking regulations.
6.10 DESIGNATION OF REPLACEMENT PROPERTIES.
If, on any date after the Closing Date, Administrative Agent no
longer has a Lien on any Real Property Asset ("REPLACED PROPERTY") which
Administrative Agent had prior to such date (whether due to an Asset Sale
relating to such Real Property Asset, due to a termination of lease relating to
such Real Property Asset or otherwise), then Company shall designate on or
before such date a Real Property Asset (other than any Real Property Asset
existing as of the Closing Date) which is not subject to any Liens as a
"Replacement Property" for such Replaced Property; provided, however, that
Company shall not be required to designate any Replacement Property with respect
to any:
(i) Real Property Asset in which Company or any of its Subsidiaries has
only a leasehold interest, any California Property and any Surplus
Property;
(ii) Additional Sale Leaseback Property if Company applies the Net Asset
Sale Proceeds received in connection with such sale leaseback in accordance
with the provisions of subsection 2.4B(iii)(a) and without regard to any
exclusions permitted pursuant to clauses (i)-(v) of the proviso therein
contained; and
(iii) Replaced Property (other than Additional Sale Leaseback
Property) to the extent the Net Asset Sale Proceeds of an Asset Sale
relating to such Replaced Property are actually applied to (a) repay Term
Loans or (b) permanently reduce Revolving Loan Commitments pursuant to
subsection 2.4B(iii)(a).
The Replacement Property for any Replaced Property shall be a fee interest and
shall have a fair market value (as determined in good faith by the chief
financial officer of Company and evidenced by an Officers' Certificate of
Company certifying as to the fair market value thereof) that is equal to or
greater than the fair market value (also as determined in the same manner) of
the Replaced Property; provided, that if such Replacement Property has a fair
market value greater than the fair market value of the Replaced Property, then
such excess fair market value (i) may be applied as fair market value of
Replacement Property for another Real Property Asset which concurrently becomes
a Replaced Property or (ii) shall be reserved and may be applied as fair market
value of Replacement Property for any Real Property Asset which subsequently
becomes a Replaced Property. Concurrently with the designation of any
Replacement Property, Company shall deliver to Administrative Agent an Officers'
Certificate (i) setting forth all such information as Administrative Agent may
reasonably request with respect to such Replacement Property and the related
Replaced Property (including without limitation the fair market value thereof)
as Administrative Agent may reasonably request, (ii) certifying that the
Replacement Property complies with each of the requirements set forth in this
subsection 6.10, and (iii) setting forth a summary report of all Replacement
Properties theretofore designated by Company and the related Replaced Properties
(including without limitation the aggregate fair market value thereof).
6.11 RELEASE OF COLLATERAL.
If, as of the first Business Day of any Fiscal Quarter, (i) the
actual or implied rating established and publicly announced or provided in a
private letter from the Rating Agencies or published by at least two of the
Rating Agencies (one of which must be either Standard & Poor's Ratings Group or
Moody's Investors Service, Inc.) with respect to senior, unsecured, non-credit
enhanced long term debt of Company is BBB- or Baa3, as applicable, or higher as
of such date and the actual or implied rating established and publicly announced
or provided in a private letter from the Rating Agencies or published by the
same two Rating Agencies with respect to senior, unsecured, non-credit enhanced
long term debt of Company has continuously been BBB- or Baa3, as applicable, or
higher during the two consecutive Fiscal Quarters immediately preceding such
date, (ii) Company is not and shall not have been on credit watch with negative
implications by either of the same two Rating Agencies, and (iii) no Event of
Default or Potential Event of Default has occurred and is continuing (the
conditions set forth in clauses (i), (ii) and (iii) above being referred to
herein as the "COLLATERAL RELEASE CONDITIONS"), then Company may on such date
request that Administrative Agent execute and deliver to Company reconveyance
documents and releases (including without limitation UCC termination statements)
releasing all Liens on the Collateral that were granted in favor of
Administrative Agent on behalf of the Lenders pursuant to the Collateral
Documents (other than the Collateral Account Agreement). Company shall make
such request in writing and shall concurrently deliver to Administrative Agent
and Lenders evidence in form and substance satisfactory to Administrative Agent
showing that the Collateral Release Condition set forth in clauses (i) and (ii)
above has been satisfied and an Officers' Certificate certifying that each of
the Collateral Release Conditions has been satisfied as of such date and that no
Event of Default or Potential Event of Default has occurred and is continuing or
will be caused by such release of Collateral. The date on which each Collateral
Release Condition has been satisfied and on which each such delivery has been
made is referred to herein as the "COLLATERAL RELEASE DATE". Upon receiving such
request, Administrative Agent shall, at Company's expense, promptly execute and
deliver to Company such reconveyance documents and releases, in recordable form,
and deliver to Company upon Company's request and at its expense, against
receipt and without recourse to Administrative Agent, such of stock certificates
(together with stock powers that were delivered to Administrative Agent by the
Loan Parties) and promissory notes pledged by the Loan Parties pursuant to the
Pledge Agreements as shall not have been sold or applied pursuant to the terms
of the Pledge Agreements; provided that, at the time of Administrative Agent's
execution and delivery of such reconveyance documents and releases and delivery
of such stock powers and promissory notes, no Event of Default or Potential
Event of Default shall have occurred and be continuing or shall be caused by
such release of Collateral.
SECTION 7. COMPANY'S NEGATIVE COVENANTS
Company covenants and agrees that, so long as any of the Commitments
hereunder shall remain in effect and until payment in full of all of the Loans
and other Obligations and the cancellation or expiration of all Letters of
Credit, unless Requisite Lenders shall otherwise give prior written consent,
Company shall perform, and shall cause each of its Subsidiaries to perform, all
covenants in this Section 7.
7.1 INDEBTEDNESS.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume or guaranty, or otherwise become
or remain directly or indirectly liable with respect to, any Indebtedness,
except:
(i) Company may become and remain liable with respect to the Obliga
tions;
(ii) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations permitted by subsection 7.4 and, upon any
matured obligations actually arising pursuant thereto, the Indebtedness
corresponding to the Contingent Obligations so extinguished;
(iii) Company and its Subsidiaries may become and remain liable with
respect to Indebtedness in respect of Capital Leases; provided that such
Capital Leases are permitted under the terms of subsection 7.9;
(iv) Company may become and remain liable with respect to Indebtedness to
any of its wholly-owned Subsidiaries, and any wholly-owned Subsidiary of
Company may become and remain liable with respect to Indebtedness to
Company or any other wholly-owned Subsidiary of Company; provided that
(a) subject to subsection 6.11, all such intercompany Indebtedness shall be
evidenced by promissory notes that are pledged to Administrative Agent
pursuant to the terms of the applicable Collateral Documents, (b) all such
intercompany Indebtedness owed by Company to any of its Subsidiaries or by
any Subsidiary to Company or any other Subsidiary shall be subordinated in
right of payment to the payment in full of the Obligations pursuant to the
terms of the applicable promissory notes or an intercompany subordination
agreement, in each case approved by Administrative Agent, and (c) any
payment by any Subsidiary of Company under any guaranty of the Obligations
shall result in a pro tanto reduction of the amount of any intercompany
Indebtedness owed by such Subsidiary to Company or to any of its
Subsidiaries for whose benefit such payment is made;
(v) Company and its Subsidiaries, as applicable, may remain liable with
respect to each of the items of existing Indebtedness described in
Schedule 7.1 annexed hereto and any Indebtedness incurred to refinance such
existing Indebtedness; provided that after giving effect to such
refinancing Indebtedness and the repayment of the corresponding existing
Indebtedness with the proceeds thereof, (a) the aggregate principal amount
of the refinancing Indebtedness and the corresponding existing Indebtedness
so refinanced shall not be greater than the outstanding principal amount of
such existing Indebtedness immediately prior to such refinancing, (b) the
weighted average life to maturity of such refinancing Indebtedness shall be
no shorter than the existing Indebtedness being refinanced and (c) such
refinancing Indebtedness shall not be secured by any additional property
than that which secures the existing Indebtedness being refinanced;
(vi) Company may remain liable with respect to Indebtedness evidenced by
the Senior Subordinated Notes in an aggregate principal amount not to
exceed $575,000,000 minus the aggregate principal amount thereof from time
to time repurchased, redeemed or prepaid;
(vii) Company and its Subsidiaries may become and remain liable with
respect to Indebtedness incurred to finance (or may assume Indebtedness
originally incurred to finance) (a) the purchase price of equipment,
fixtures and any other similar property or the remodeling or other
improvement costs of any facility of Company or any of its Subsidiaries or
(b) the purchase price of any Real Property Assets consisting of fee
interests in stores; provided that the aggregate principal amount of such
Indebtedness when incurred (and, in the case of assumed Indebtedness, when
originally incurred) shall not be less than 80% or more than 100% of the
fair market value of (i) the equipment, fixtures and any other similar
property acquired plus the reasonable installation and delivery charges
associated therewith or the remodeling or other improvement costs relating
to such facility or (ii) such Real Property Assets, as applicable; provided
further that (1) the aggregate principal amount of all such Indebtedness
incurred or assumed during any Fiscal Year for purposes described in the
first clause (a) of this subsection 7.1(vii) shall not exceed $30,000,000
and (2) the aggregate principal amount of all Indebtedness incurred to
finance the purchase price of any such Real Property Assets (together with
assumed Indebtedness originally incurred to finance the purchase price of
any such Real Property Assets) shall not exceed $25,000,000 at any time;
(viii) Company may become and remain liable with respect to unsecured
Indebtedness so long as each of the following conditions is satisfied:
(A) Company becomes liable with respect to such Indebtedness concurrently
with the termination of a lease of a Related Asset or the transfer to
Company of either (i) an unencumbered fee interest in a Related Asset by
the Owner Trustee or (ii) the proceeds realized by the Owner Trustee or
Company from the sale of a Related Asset or as the result of a refinancing
of such Indebtedness (such proceeds, the "Related Asset Proceeds"); (B) the
principal amount of such Indebtedness does not exceed the then outstanding
amount of indebtedness incurred by the Owner Trustee to acquire such
Related Asset plus accrued interest and premiums thereon and the cost of
any such refinancing; (C) if the Related Assets are transferred to Company,
Company closes an Asset Sale selling the Related Assets so transferred not
later than 90 days after such Related Assets are transferred to Company;
(D) the Net Asset Sale Proceeds of the Asset Sale of the Related Assets or
the Related Asset Proceeds, as the case may be, are applied by Company to
permanently reduce the outstanding principal amount of Indebtedness of
Company under this Agreement pursuant to subsection 2.4B(iii)(a) within the
third Business Day following the date of receipt by Company of such Net
Asset Sale Proceeds or Related Asset Proceeds and without regard to any
exclusions permitted pursuant to clauses (i)-(v) of the proviso therein
contained; and (E) the outstanding principal amount of the Indebtedness
permitted pursuant to this clause (viii) shall not exceed the sum of (1)
$25,000,000 plus (2) on amount equal to the Net Asset Sales Proceeds of all
Asset Sales of Related Assets and all Related Asset Proceeds which have
been applied to permanently reduce the Loans pursuant to the foregoing
clause (D).
(ix) Company and its Subsidiaries may become and remain liable with
respect to Indebtedness represented by Deferred Trade Payables in an
aggregate amount for all such Indebtedness not to exceed $10,000,000 at any
time outstanding;
(x) Subsidiaries of Company acquired after the Closing Date, the
acquisition of which is permitted under this Agreement, may remain liable
with respect to Indebtedness existing immediately prior to the time any
such entity became a Subsidiary of Company in an aggregate amount for all
such Subsidiaries not to exceed $5,000,000 at any time outstanding;
provided that such Indebtedness is not incurred in contemplation of such
acquisition; and
(xi) Company and its Subsidiaries may become and remain liable with
respect to other Indebtedness in an aggregate principal amount not to
exceed $15,000,000 at any time outstanding.
7.2 LIENS AND RELATED MATTERS.
A. PROHIBITION ON LIENS. Company shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly, create, incur, assume or
permit to exist any Lien on or with respect to any property or asset of any kind
(including any document or instrument in respect of goods or accounts
receivable) of Company or any of its Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, or file or permit the
filing of, or permit to remain in effect, any financing statement or other
similar notice of any Lien with respect to any such property, asset, income or
profits under the Uniform Commercial Code of any State or under any similar
recording or notice statute, except:
(i) Permitted Encumbrances;
(ii) Liens granted pursuant to the Collateral Documents, including Liens
securing its obligations to one or more Interest Rate Exchangers;
(iii) existing Liens described in Schedule 7.2 annexed hereto;
(iv) Liens on (a) Real Property Assets consisting of fee interests in
stores or (b) equipment, fixtures and other similar property of Company or
any of its Subsidiaries, in each case securing Indebtedness described in
subsections 7.1(iii) and 7.1(vii); provided that such Liens shall extend
only to the equipment, fixtures and other similar property so financed and
the proceeds thereof; provided, further, that with respect to any such Lien
described in clause (a) above, (1) no Event of Default or Potential Event
of Default shall have occurred and be continuing at the time of incurrence
or assumption of such Lien, (2) such Lien is limited to such Real Property
Assets (and equipment located in or on such Real Property Assets), (3) the
Indebtedness secured by such Lien is Non-Recourse Indebtedness, and (4) the
aggregate principal amount of all Indebtedness secured by all such Liens
shall not at any time exceed $25,000,000;
(v) other Liens securing Indebtedness in an aggregate amount not to
exceed $8,000,000 at any time outstanding; provided that (a) any such
Indebtedness shall be permitted under subsection 7.1 and (b) such Liens
shall not attach to any Collateral;
(vi) Liens securing Indebtedness permitted under subsection 7.1(x), which
Liens are existing prior to the time the entity which incurred such
Indebtedness became a Subsidiary of Company; provided that such Liens were
not incurred in connection with, or in contemplation of, the acquisition of
such Subsidiary and such Liens extend to or cover only the property and
assets of such entity which were covered by such Liens and which were owned
by such entity, in each case at the time such entity became a Subsidiary of
Company;
(vii) Liens in favor of third parties as consignors (or as creditors
of such consignors) in goods which are delivered to Company or any of its
Subsidiaries by such third parties on consignment in the ordinary course of
business, the value of which goods so held on consignment shall at no time
exceed $12,000,000 in the aggregate for Company and its Subsidiaries; and
(viii) the replacement, extension or renewal of any Lien permitted by
this subsection 7.2A upon or in the same property subject to such Lien and
as security for the same obligations or any refinancings thereof; provided
that such Lien does not extend to or cover any property other than the
property covered by such Lien immediately prior to such replacement,
extension or renewal of such Lien and the principal of the obligations
secured thereby is not increased.
B. EQUITABLE LIEN IN FAVOR OF LENDERS. If Company or any of its Sub
sidiaries shall create or assume any Lien upon any of its properties or assets,
whether now owned or hereafter acquired, other than Liens excepted by the
provisions of subsection 7.2A, it shall make or cause to be made effective
provision whereby the Obligations will be secured by such Lien equally and
ratably with any and all other Indebtedness secured thereby as long as any such
Indebtedness shall be so secured; provided that, notwithstanding the foregoing,
this covenant shall not be construed as a consent by Requisite Lenders to the
creation or assumption of any such Lien not permitted by the provisions of
subsection 7.2A.
C. NO FURTHER NEGATIVE PLEDGES. Except with respect to specific
property encumbered to secure payment of particular Indebtedness or to be sold
pursuant to an executed agreement with respect to an Asset Sale or as may be
provided for in the Senior Subordinated Note Indenture, neither Company nor any
of its Subsidiaries shall enter into any agreement prohibiting the creation or
assumption of any Lien upon any of its properties or assets, whether now owned
or hereafter acquired. The foregoing shall not prohibit the execution or
renewal of a store lease which by its terms prohibits the hypothecation of the
leasehold interest thereunder (but does not prohibit the incurrence of liens on
any property of Company and its Subsidiaries other than such leasehold interest
and equipment related thereto) if, despite the best efforts of Company and its
Subsidiaries in accordance with subsection 6.9, the lessor will not agree to
permit such hypothecation.
7.3 INVESTMENTS; JOINT VENTURES.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, make or own any Investment in any Person, including any
Joint Venture, except:
(i) Company and its Subsidiaries may make and own Investments in Cash
Equivalents;
(ii) Company and its Subsidiaries may continue to own the Investments
owned by them as of the Closing Date in any Subsidiaries of Company and
described on Schedule 5.1 annexed hereto as in effect on the Closing Date;
(iii) Company and its Subsidiaries may make intercompany loans to the
extent permitted under subsection 7.1(iv);
(iv) Company and its Subsidiaries may create or acquire new Subsidiaries
to the extent otherwise permitted under this Agreement; provided that (a)
any such new Subsidiary is wholly-owned by Company or one of its wholly-
owned Subsidiaries and the provisions of subsections 6.8 and 6.9 have been
complied with and (b) to the extent such creation or acquisition
constitutes a Consolidated Capital Expenditure, such Consolidated Capital
Expenditure is permitted under subsection 7.8;
(v) Company and its Subsidiaries may continue to own the existing
Investments owned by them and described in Schedule 7.3 annexed hereto;
(vi) Company or any of its Subsidiaries may, so long as no Potential
Event of Default or Event of Default has occurred and is continuing or
occurs as a result thereof, make Development Investments in or to any
Developer; provided that (a) no such Development Investment shall be
permitted unless, at the time of the making of such Development Investment,
the Development Site and the store located or to be located at the
Development Site have been leased or irrevocably committed by the Developer
to be leased to Company or one of its Subsidiaries, (b) neither Company nor
any of its Subsidiaries may be or become a general partner of any Developer
or otherwise be liable in any manner for any Indebtedness or any other
obligations of any Developer (other than pursuant to customary provisions
contained in any lease pertaining to a Development Site or a store leased
to Company or one of its Subsidiaries) and (c) the aggregate Development
Investments, together with the maximum aggregate liability, contingent or
otherwise, of Company and its Subsidiaries in respect of all Contingent
Obligations under subsection 7.4(viii), shall not exceed $35,000,000 at any
time outstanding;
(vii) Company and its Subsidiaries may make and own Investments
received in connection with the bankruptcy of suppliers and customers or
received pursuant to a plan of reorganization of any supplier or customer,
in each case in settlement of delinquent obligations or disputes with such
suppliers or customers;
(viii) So long as no Event of Default or Potential Event of Default
shall have occurred and be continuing, Company or any of its Subsidiaries
may make loans to its employees for the purpose of purchasing Common Stock
of Company; provided that the aggregate amount of such loans shall not
exceed $6,000,000 at any time outstanding;
(ix) Company and its Subsidiaries may accept promissory notes received in
consideration of, or the deferral of a portion of the sales price accepted
with respect to, any Asset Sale; provided that (a) with respect to Asset
Sales of California Properties, the aggregate principal amount of such
promissory notes and the deferred portion of such sales prices from and
after the Closing Date shall not exceed 80% of the aggregate sales prices
related to such Asset Sales of California Property; (b) the aggregate
principal amount of such promissory notes and the deferred portion of such
sales prices related to all other Asset Sales shall not at any time exceed
$10,000,000; and (c) subject to subsection 6.11, any such promissory notes
so accepted shall be pledged as security for the Obligations pursuant to
the applicable Collateral Document;
(x) Company or any of its Subsidiaries may, so long as no Potential
Event of Default or Event of Default has occurred and is continuing or
occurs as a result thereof, make California Development Investments;
provided that (a) neither Company nor any of its Subsidiaries may be or
become a general partner of any Developer or otherwise be liable in any
manner for any Indebtedness or any other obligations of any Developer
(other than pursuant to customary provisions contained in any lease
pertaining to a Development Site); (b) the aggregate California Development
Investments, together with the maximum aggregate liability, contingent or
otherwise, of Company and its Subsidiaries in respect of all Contingent
Obligations under subsection 7.4(ix), shall not exceed $25,000,000 at any
time outstanding; (c) California Development Investments may be made in
cash only with respect to California Properties which are then subject to
an executed contract of sale or lease with a party not an Affiliate of
Company and the aggregate amount of all such cash California Development
Investments shall not exceed $15,000,000 at any time outstanding; provided
that up to $5,000,000 in California Development Investments may be made in
cash with respect to California Properties which are not then subject to
such an executed contract of sale or lease;
(xi) Company and its Subsidiaries may make loans to redevelopment
agencies for business purposes in an aggregate amount not to exceed
$5,000,000 at any time outstanding;
(xii) Company and its Subsidiaries may make and own Investments
(a) in suppliers in anticipation of becoming a customer of such suppliers
and in lieu of deposits, cash discounts or concessions and (b) in
connection with joint ventures with suppliers entered into in the ordinary
course of business; provided that the aggregate amount of all such
Investments under clauses (a) and (b), together with the amount of
guarantees permitted under subsection 7.4(v), shall not exceed $5,000,000
at any time outstanding;
(xiii) Company may purchase and hold securities evidencing
Indebtedness incurred by the Owner Trustee in connection with the
acquisition by the Owner Trustee of Related Assets so long as the aggregate
principal amount of such securities so held by Company at any time does not
exceed $20,000,000; and
(xiv) Company and its Subsidiaries may make and own other Investments
in an aggregate amount not to exceed at any time $10,000,000.
7.4 CONTINGENT OBLIGATIONS.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create or become or remain liable with respect to any
Contingent Obligation, except:
(i) Subsidiaries of Company may become and remain liable with respect to
Contingent Obligations in respect of the Subsidiary Guaranty, including
Contingent Obligations thereunder for the benefit of Interest Rate
Exchangers;
(ii) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations in respect of Letters of Credit;
(iii) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations under Hedge Agreements, which Hedge
Agreements are in form and substance satisfactory to Administrative Agent;
(iv) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations in respect of customary indemnification
and purchase price adjustment obligations incurred in connection with Asset
Sales or other sales of assets other than guaranties of Indebtedness
incurred by any Person acquiring all or any portion of such assets for the
purpose of financing such acquisition; provided that the maximum assumable
liability in respect of all such obligations shall at no time exceed the
gross proceeds actually received by Company and its Subsidiaries in
connection with such Asset Sales and other sales;
(v) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations under guarantees in the ordinary course
of business of the obligations of suppliers, customers, franchisees and
licensees of Company and its Subsidiaries in an aggregate amount which,
together with the amount of Investments permitted under subsection
7.3(xii), shall not exceed at any time $5,000,000;
(vi) Company may become and remain liable with respect to Contingent
Obligations under guarantees in respect of Operating Leases and Capital
Leases entered into by Company or any of its Subsidiaries which are
permitted under subsection 7.9;
(vii) Company and its Subsidiaries, as applicable, may remain liable
with respect to existing Contingent Obligations described in Schedule 7.4
annexed hereto;
(viii) Company and its Subsidiaries may, so long as no Potential Event
of Default or Event of Default has occurred and is continuing at the time
of becoming liable therefor or occurs as a result thereof, become and
remain liable with respect to Contingent Obligations that are
(x) guaranties of Development Investments described in clause (a) of the
term "Development Investments" or (y) commitments by Company or any of its
Subsidiaries to make a Development Investment; provided that, with respect
to both clause (x) and clause (y) above, (1) no such Contingent Obligations
shall be permitted unless, at the time of becoming liable with respect to
such Contingent Obligations, the Development Site and the store located or
to be located at the Development Site have been leased or irrevocably
committed by the Developer to be leased to Company or one of its
Subsidiaries, (2) neither Company nor any of its Subsidiaries may be or
become a general partner of any Developer or otherwise be liable in any
manner for any Indebtedness or any other obligations of any Developer
(other than pursuant to customary provisions contained in any lease
pertaining to a Development Site or a store leased to Company or one of its
Subsidiaries) and (3) the maximum aggregate liability, contingent or
otherwise, of Company and its Subsidiaries in respect of all Contingent
Obligations under this subsection 7.4(viii), together with the aggregate
Development Investments under subsection 7.3(vi), shall not exceed
$35,000,000 at any time outstanding;
(ix) Company and its Subsidiaries may, so long as no Potential Event of
Default or Event of Default has occurred and is continuing at the time of
becoming liable therefor or occurs as a result thereof, become and remain
liable with respect to Contingent Obligations that are (x) guaranties of
California Development Investments described in clause (a) of the term
"California Development Investments" or (y) commitments by Company or any
of its Subsidiaries to make a California Development Investment; provided
that, with respect to both clauses (x) and (y) above, (1) no such
Contingent Obligations shall be permitted unless, at the time of becoming
liable with respect to such Contingent Obligations, neither Company nor any
of its Subsidiaries may be or become a general partner of any Developer or
otherwise be liable in any manner for any Indebtedness or any other
obligations of any Developer (other than pursuant to customary provisions
contained in any lease pertaining to a Development Site) and (2) the
maximum aggregate liability, contingent or otherwise, of Company and its
Subsidiaries in respect of all Contingent Obligations under this subsection
7.4(ix), together with the aggregate California Development Investments
under subsection 7.3(x), shall not exceed $25,000,000 at any time
outstanding;
(x) Subsidiaries of Company may become and remain liable with respect to
Contingent Obligations in respect of subordinated guaranties of the Senior
Subordinated Notes in the form contained in, and to the extent required to
be made in accordance with the terms and conditions of, the Senior
Subordinated Note Indenture as in effect on the Closing Date; and
(xi) Company and its Subsidiaries may become and remain liable with
respect to other Contingent Obligations; provided that the maximum
aggregate liability, contingent or otherwise, of Company and its
Subsidiaries in respect of all such Contingent Obligations shall at no time
exceed $20,000,000.
7.5 RESTRICTED JUNIOR PAYMENTS; OTHER RESTRICTED PAYMENTS.
A. Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, declare, order, pay, make or set apart any sum for
any Restricted Junior Payment; provided that, so long as no Event of Default or
Potential Event of Default shall have occurred and be continuing or occurs as a
result thereof: (i) Company may redeem its Redeemable Preferred Stock at the
times and in the amounts required under its Restated Articles of Incorporation;
(ii) Company may make regularly scheduled payments of interest in respect of the
Senior Subordinated Notes in accordance with the terms of, and only to the
extent required by, and subject to the subordination provisions contained in,
the Senior Subordinated Note Indenture; (iii) so long as no default exists under
the Senior Subordinated Note Indenture, or would occur as a result thereof,
Company may at any time repurchase or redeem shares of its capital stock and the
Senior Subordinated Notes up to the Redemption Amount; and (iv) Company may make
regularly scheduled payments of interest in respect of Subordinated Indebtedness
(other than the Senior Subordinated Notes) in accordance with the terms of, and
only to the extent required by, and subject to the subordination provisions
contained in, the agreements, documents and indentures evidencing and/or
relating to such Subordinated Indebtedness. Neither Company nor any of its
Subsidiaries will directly or indirectly declare, order, pay or make, or set
apart any sum or property for, any Restricted Junior Payment or agree to do so
except as permitted by this subsection 7.5.
B. Other than with respect to the Brigham City Bonds referenced in
clause (i) of the definition of Existing Company IRB's, Company shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly, declare,
order, pay, make or set apart any sum for any voluntary or optional payment or
prepayment of principal of, premium, if any, or interest on, or voluntary or
optional redemption, purchase, retirement, defeasance (including in-substance or
legal defeasance), sinking fund or similar payment with respect to, any other
Senior Indebtedness; provided that, so long as no Event of Default or Potential
Event of Default shall have occurred and be continuing or occurs as a result
thereof, (i) Company may make payments of regularly scheduled interest or
principal in respect of any other Senior Indebtedness (other than Smitty's
Sinking Fund Bonds) in accordance with the terms of and to the extent required
by the applicable agreement or instrument governing such Senior Indebtedness and
(ii) Saint Lawrence Holding Company may make regularly scheduled interest and
sinking fund payments in respect of any Smitty's Sinking Fund Bonds in
accordance with the terms of and to the extent required by the Smitty's Sinking
Fund Bond Indenture. Notwithstanding the foregoing, nothing herein shall
preclude Company from purchasing and holding securities evidencing Indebtedness
incurred by the Owner Trustee in connection with the acquisition by the Owner
Trustee of Related Assets as permitted pursuant to subsection 7.3(xiii).
7.6 FINANCIAL COVENANTS.
A. MINIMUM FIXED CHARGE COVERAGE RATIO. Company shall not permit
the ratio of (i) the sum of Consolidated Adjusted EBITDA plus Consolidated
Rental Payments to (ii) Consolidated Fixed Charges for any consecutive four-
Fiscal Quarter period ending as of the last day of any Fiscal Quarter set forth
below to be less than the correlative ratio indicated:
MINIMUM FIXED
PERIOD CHARGE COVERAGE RATIO
Second Fiscal Quarter 1997 1.65
Third Fiscal Quarter 1997 1.50
Fourth Fiscal Quarter 1997 1.45
First Fiscal Quarter 1998 1.40
Second Fiscal Quarter 1998 1.30
Third Fiscal Quarter 1998 1.25
Fourth Fiscal Quarter 1998 1.20
and each Fiscal Quarter thereafter
B. MAXIMUM LEVERAGE RATIO. Company shall not permit the ratio of (i)
Consolidated Total Debt as of the last day of any Fiscal Quarter set forth below
to (ii) Consolidated Adjusted EBITDA for the four-Fiscal Quarter period ending
on such last day to exceed the correlative ratio indicated:
PERIOD MAXIMUM LEVERAGE RATIO
Second Fiscal Quarter 1997 5.75
Third Fiscal Quarter 1997 5.70
Fourth Fiscal Quarter 1997 5.65
First Fiscal Quarter 1998 5.50
Second Fiscal Quarter 1998 5.40
Third Fiscal Quarter 1998 5.20
Fourth Fiscal Quarter 1998 5.10
First Fiscal Quarter 1999 5.00
Second Fiscal Quarter 1999 4.90
Third Fiscal Quarter 1999 4.80
Fourth Fiscal Quarter 1999 4.65
First Fiscal Quarter 2000 4.55
Second Fiscal Quarter 2000 4.45
Third Fiscal Quarter 2000 4.35
Fourth Fiscal Quarter 2000 4.25
First Fiscal Quarter 2001 4.15
Second Fiscal Quarter 2001 4.00
Third Fiscal Quarter 2001 3.90
Fourth Fiscal Quarter 2001 3.80
First Fiscal Quarter 2002 3.70
Second Fiscal Quarter 2002 3.60
Third Fiscal Quarter 2002 3.50
Fourth Fiscal Quarter 2002 3.40
First Fiscal Quarter 2003 3.35
Second Fiscal Quarter 2003 3.25
and each Fiscal Quarter thereafter
C. MINIMUM CONSOLIDATED NET WORTH. Company shall not permit Con
solidated Net Worth at any time during the period commencing on the day
immediately preceding the first day of any of the periods set forth below and
ending on the day immediately preceding the last day of such period set forth
below to be less than the correlative amount indicated below for such period set
forth below:
MINIMUM
PERIOD CONSOLIDATED NET WORTH
Second Fiscal Quarter 1997 ($190,000,000)
Third Fiscal Quarter 1997 (180,000,000)
Fourth Fiscal Quarter 1997 (170,000,000)
First Fiscal Quarter 1998 (160,000,000)
Second Fiscal Quarter 1998 (150,000,000)
Third Fiscal Quarter 1998 (140,000,000)
Fourth Fiscal Quarter 1998 (130,000,000)
First Fiscal Quarter 1999 (115,000,000)
Second Fiscal Quarter 1999 (100,000,000)
Third Fiscal Quarter 1999 (90,000,000)
Fourth Fiscal Quarter 1999 (75,000,000)
First Fiscal Quarter 2000 (60,000,000)
Second Fiscal Quarter 2000 (45,000,000)
Third Fiscal Quarter 2000 (30,000,000)
Fourth Fiscal Quarter 2000 (15,000,000)
First Fiscal Quarter 2001 5,000,000
Second Fiscal Quarter 2001 20,000,000
Third Fiscal Quarter 2001 40,000,000
Fourth Fiscal Quarter 2001 55,000,000
First Fiscal Quarter 2002 75,000,000
Second Fiscal Quarter 2002 95,000,000
Third Fiscal Quarter 2002 115,000,000
Fourth Fiscal Quarter 2002 130,000,000
First Fiscal Quarter 2003 155,000,000
Second Fiscal Quarter 2003 175,000,000
Third Fiscal Quarter 2003 200,000,000
Fourth Fiscal Quarter 2003 220,000,000
First Fiscal Quarter 2004 245,000,000
Second Fiscal Quarter 2004 270,000,000
Third Fiscal Quarter 2004 290,000,000
Fourth Fiscal Quarter 2004 315,000,000
First Fiscal Quarter 2005 345,000,000
Second Fiscal Quarter 2005 370,000,000
7.7 RESTRICTION ON FUNDAMENTAL CHANGES; ASSET SALES AND ACQUISITIONS.
Company shall not, and shall not permit any of its Subsidiaries to, alter
the corporate, capital or legal structure of Company or any of its Subsidiaries,
including the creation or acquisition of any Subsidiaries, or enter into any
transaction of merger or consolidation, or liquidate, wind-up or dissolve itself
(or suffer any liquidation or dissolution), or convey, sell, lease or sub-lease
(as lessor or sublessor), transfer or otherwise dispose of, in one transaction
or a series of transactions, all or any part of its business, property or
assets, whether now owned or hereafter acquired, or acquire by purchase or
otherwise all or a substantial portion of the business, property or assets of,
or stock or other evidence of beneficial ownership of, any Person or any
division or line of business of any Person, except:
(i) any wholly-owned Subsidiary of Company may be merged with or into
Company or any wholly-owned Subsidiary, or be liquidated, wound up or
dissolved, or all or any part of its business, property or assets may be
conveyed, sold, leased, transferred or otherwise disposed of, in one
transaction or a series of transactions, to Company or any wholly-owned
Subsidiary; provided that, in the case of such a merger or consolidation,
Company or such wholly-owned Subsidiary shall be the continuing or
surviving corporation; and provided further that if any such transaction
involves a Subsidiary Guarantor, the surviving corporation shall be Company
or a Subsidiary Guarantor;
(ii) Company and its Subsidiaries may make Consolidated Capital
Expenditures permitted under subsection 7.8 and Development Investments (to
the extent such Development Investments do not constitute Consolidated
Capital Expenditures) permitted under subsection 7.3(vi);
(iii) Company and its Subsidiaries may sell or otherwise dispose of
assets in transactions that do not constitute Asset Sales; provided that
the consideration received for such assets shall be in an amount at least
equal to the fair market value thereof;
(iv) Company and its Subsidiaries may sell or otherwise dispose of
damaged, worn out or obsolete assets that are no longer necessary for the
proper conduct of their respective business for fair market value in the
ordinary course of business;
(v) Company and its Subsidiaries may sell (A) grocery stores (including
equipment therein acquired after the date which precedes the Closing Date
by one year) opened or acquired after the date which precedes the Closing
Date by one year in connection with a concurrent lease-back of such grocery
stores (including such equipment); and (B) any Sale Leaseback Property and
up to five Additional Sale Leaseback Properties per year in connection with
a concurrent lease-back of such Sale Leaseback Property or Additional Sale
Leaseback Property, as the case may be, each to the extent such
transactions are permitted under subsection 7.10;
(vi) Company and its Subsidiaries, as lessors or sublessors, may lease or
sublease any of their respective real or personal property in the ordinary
course of business;
(vii) Company may make sales of Related Assets acquired pursuant to
subsection 7.1(viii) or subsection 7.7(xi); provided that the consideration
received shall be in an amount at least equal to the fair market value
thereof and the proceeds of the sale of the Related Asset shall be applied
as required by subsection 7.1(viii) or subsection 7.7(xi), as the case may
be;
(viii) Company and its Subsidiaries may make Asset Sales of stores
which are no longer useful to the business of Company and its Subsidiaries;
provided that the aggregate number of any stores sold pursuant to this
clause (viii) shall not exceed five in any Fiscal Year plus a number of
stores equal to the difference between five and the number of stores sold
under this clause (viii) in the immediately preceding Fiscal Year;
(ix) Company and its Subsidiaries may make Asset Sales of assets having a
fair market value not in excess of $7,000,000; provided that (x) the
consideration received for such assets shall be in an amount at least equal
to the fair market value thereof and (y) the proceeds of such Asset Sales
shall be applied as required by subsection 2.4B(iii)(a);
(x) Company and its Subsidiaries may sell or otherwise dispose of all or
any portion of the manufacturing facilities, stores and related personal
property located at or used in connection with the operation of such
facilities and stores, in each case as listed on Schedule 7.7; provided
that the consideration received shall be an amount at least equal to the
fair market value thereof and the proceeds thereof shall be applied as
required by subsection 2.4B(iii)(a); and
(xi) Company may transfer a store to the Owner Trustee concurrently with
the receipt of an unencumbered fee interest in a Related Asset so long as
each of the following conditions is satisfied: (A) the transfer is made in
accordance with the terms of the documentation governing the Related Assets
as in effect on the Closing Date or in accordance with terms which are
approved by Agents; (B) the fair market value of the store or stores
transferred to the Owner Trustee does not exceed the fair market value of
the Related Asset or Assets received by Company by more than an amount
which has been approved by Administrative Agent; (C) Company closes an
Asset Sale selling such Related Asset not later than 90 days after receipt
of such Related Asset; and (D) the Net Asset Sale Proceeds of the Asset
Sale of the Related Asset are applied by Company to permanently reduce the
outstanding principal amount of Indebtedness of Company under this
Agreement pursuant to subsection 2.4B(iii)(a) within the third Business Day
following the date of receipt by Company of such Net Asset Sale Proceeds
and without regard to any exclusion permitted pursuant to clauses (i)-(v)
of the proviso therein contained.
7.8 CONSOLIDATED CAPITAL EXPENDITURES.
Company shall not, and shall not permit its Subsidiaries to, make or
incur Consolidated Capital Expenditures, in any Fiscal Year indicated below, in
an aggregate amount in excess of the corresponding amount (the "MAXIMUM
CONSOLIDATED CAPITAL EXPENDITURES AMOUNT") set forth below opposite such Fiscal
Year; provided that the Maximum Consolidated Capital Expenditures Amount for any
Fiscal Year shall be increased by an amount up to, but in no event greater than
(i) the lesser of (A) the unused portion of the Maximum Consolidated Capital
Expenditures Amount for the immediately preceding Fiscal Year as set forth in
the table below for each Fiscal Year and (B) 30% of the Maximum Consolidated
Capital Expenditures Amount for such immediately preceding Fiscal Year; (ii) 30%
of the Maximum Consolidated Capital Expenditures Amount for the immediately
following Fiscal Year, as set forth in the table below, which amount described
in this clause (ii) shall reduce the Maximum Consolidated Capital Expenditures
Amount for the immediately following Fiscal Year; (iii) the aggregate amount
(but in no event greater than $30,000,000 for any Fiscal Year) of Net Asset Sale
Proceeds (other than insurance proceeds, condemnation awards and indemnity
payments) received by Company and its Subsidiaries during such Fiscal Year to
the extent such proceeds have been reinvested in new stores or the construction
or remodeling of stores of Company and its Subsidiaries within 270 days of
receipt in accordance with subsection 2.4B(iii)(a)(i); and (iv) for the Fiscal
Year 1997 only, $19,000,000; provided, however that the amount which may be
added to the Maximum Consolidated Capital Expenditures Amount pursuant to
clauses (i) and (ii) of the immediately preceding proviso shall not exceed 30%
of the Maximum Consolidated Capital Expenditures Amount for such Fiscal Year:
MAXIMUM CONSOLIDATED
FISCAL YEAR CAPITAL EXPENDITURES
Fiscal Year 1997 $75,000,000
Fiscal Year 1998 65,000,000
Fiscal Year 1999 70,000,000
Fiscal Year 2000 70,000,000
Fiscal Year 2001 70,000,000
Fiscal Year 2002 75,000,000
Fiscal Year 2003 80,000,000
Fiscal Year 2004 85,000,000
January 2, 2005 to
May 1, 2005 45,000,000
7.9 RESTRICTION ON LEASES.
Company shall not, and shall not permit any of its Subsidiaries to,
become liable in any way, whether directly or by assignment or as a guarantor or
other surety, for the obligations of the lessee under any lease, whether an
Operating Lease or a Capital Lease (other than intercompany leases between
Company and its wholly-owned Subsidiaries), unless, immediately after giving
effect to the incurrence of liability with respect to such lease, all amounts
paid or payable under all Capital Leases and Operating Leases (net of sublease
income) at the time in effect during (i) with respect to Fiscal Year 1997, the
last three Fiscal Quarters of 1997, and (ii) the then current Fiscal Year, shall
not exceed the corresponding amount set forth below opposite such period:
MAXIMUM
PERIOD LEASE PAYMENTS
Last Three Fiscal Quarters of 1997 $ 40,000,000
Fiscal Year 1998 70,000,000
Fiscal Year 1999 90,000,000
Fiscal Year 2000 100,000,000
Fiscal Year 2001 110,000,000
Fiscal Year 2002 125,000,000
Fiscal Year 2003 135,000,000
Fiscal Year 2004 145,000,000
January 2, 2005 to
May 1, 2005 80,000,000
7.10 SALES AND LEASE-BACKS.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, become or remain liable as lessee or as a guarantor or
other surety with respect to any lease, whether an Operating Lease or a Capital
Lease, of any property (whether real, personal or mixed), whether now owned or
hereafter acquired, (i) which Company or any of its Subsidiaries has sold or
transferred or is to sell or transfer to any other Person (other than Company or
any of its Subsidiaries) or (ii) which Company or any of its Subsidiaries
intends to use for substantially the same purpose as any other property which
has been or is to be sold or transferred by Company or any of its Subsidiaries
to any Person (other than Company or any of its Subsidiaries) in connection with
such lease; provided that Company and its Subsidiaries may become and remain
liable as lessee, guarantor or other surety with respect to any such lease if
and to the extent that Company or any of its Subsidiaries would be permitted to
enter into, and remain liable under, such lease under subsection 7.9.
7.11 SALE OR DISCOUNT OF RECEIVABLES.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, sell with recourse, or discount or otherwise sell for
less than the face value thereof, any of its notes or accounts receivable.
7.12 TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, enter into or permit to exist any transaction
(including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with any Affiliate of Company, on
terms that are less favorable to Company or that Subsidiary, as the case may be,
than those that might be obtained at the time from Persons who are not such an
Affiliate; provided that the foregoing restriction shall not apply to (i) any
transaction between Company and any of its wholly-owned Subsidiaries or between
any of its wholly-owned Subsidiaries; (ii) reasonable and customary fees paid to
members of the Boards of Directors of Company and its Subsidiaries; (iii)
issuances of stock, payments of bonuses and other transactions pursuant to
employment or compensation agreements, stock option agreements, indemnification
agreements, severance agreements and other arrangements, in each case as in
effect as of the Closing Date and unamended, and substantially similar
agreements as may hereafter become effective, in each case with officers or
directors who are Affiliates of Company or any of its Subsidiaries; (iv) payment
of consulting and other fees and expenses and the reimbursement of losses,
costs and expenses under the Management Agreement, as amended in accordance with
subsection 7.15A, and in form and substance satisfactory to Administrative
Agent; (v) payments by Company and its Subsidiaries pursuant to tax sharing
agreements in effect from time to time among Company and its Subsidiaries; or
(vi) the issuance by Company of common stock to Yucaipa pursuant to Yucaipa's
exercise of the Yucaipa Warrant.
7.13 DISPOSAL OF SUBSIDIARY STOCK; RESTRICTIONS ON SUBSIDIARIES.
A. Except for any sale of 100% of the capital stock or other equity
Securities of any of its Subsidiaries in compliance with the provisions of
subsection 7.7(i) and except pursuant to the Collateral Documents, Company shall
not and shall not permit any of its Subsidiaries to directly or indirectly sell,
assign, pledge or otherwise encumber or dispose of any shares of capital stock
or other equity Securities of any of its Subsidiaries, except to qualify
directors if required by applicable law, or in the case of Company's
Subsidiaries, to Company or to a wholly-owned Subsidiary of Company.
B. Except as provided herein or in any of the other Loan Documents,
the Senior Subordinated Note Indenture and in any other document evidencing
Indebtedness in existence on the Closing Date or any permitted refinancing
thereof as permitted under subsection 7.1(v) (only so long as the agreements
governing such refinancing shall not contain covenants that are more restrictive
than the covenants contained in the indentures or documents so refinanced),
Company will not, and will not permit any of its Subsidiaries to, create or
otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any such Subsidiary to
(i) pay dividends or make any other distributions on any of such Subsidiary's
capital stock owned by Company or any other Subsidiary of Company, (ii) repay or
prepay any Indebtedness owed by such Subsidiary to Company or any other
Subsidiary of Company, (iii) make loans or advances to Company or any other
Subsidiary of Company, or (iv) transfer any of its property or assets to Company
or any other Subsidiary of Company.
7.14 CONDUCT OF BUSINESS.
From and after the Closing Date, Company shall not, and shall not
permit any of its Subsidiaries to, engage in any business other than (i) the
businesses engaged in by Company and its Subsidiaries on the Closing Date and
similar or related businesses and (ii) such other lines of business as may be
consented to by Requisite Lenders.
7.15AMENDMENTS OR WAIVERS OF CERTAIN RELATED AGREEMENTS; AMENDMENTS OF
DOCUMENTS RELATING TO SUBORDINATED INDEBTEDNESS; DESIGNATION OF "DESIGNATED
SENIOR INDEBTEDNESS".
A. AMENDMENTS OR WAIVERS OF CERTAIN RELATED AGREEMENTS. Company
shall not, and shall not permit any of its Subsidiaries to, amend, waive any of
its rights under, or otherwise change the terms of any of the Related Agreements
(other than the Senior Subordinated Note Indenture) in each case as in effect on
the Closing Date, without the prior written consent of the Requisite Lenders, if
such amendment, waiver or change would increase materially the obligations of
Company or any of its Subsidiaries or confer additional rights on any other
party to any such agreement which would be adverse to Company or any of its
Subsidiaries.
B. AMENDMENTS OF DOCUMENTS RELATING TO SENIOR INDEBTEDNESS AND
SUBORDINATED INDEBTEDNESS. Company shall not, and shall not permit any of its
Subsidiaries to, amend or otherwise change the terms of any of the Senior
Indebtedness, the Senior Subordinated Notes, the Smitty's Sinking Fund Bond
Indenture, or the Senior Subordinated Note Indenture (collectively, "RESTRICTED
AGREEMENTS"), or make any payment consistent with an amendment thereof or change
thereto, if the effect of such amendment or change is to increase the interest
rate on any such Restricted Agreements, change any dates upon which payments of
principal or interest are due thereon, change any of the covenants with respect
thereto in a manner which is more restrictive to Company or any of its
Subsidiaries, change any event of default or condition to an event of default
with respect thereto, change the redemption, prepayment or defeasance provisions
thereof, change the subordination provisions (if any) thereof (or of any
guaranty thereof), or change any collateral therefor (other than to release such
collateral), or if the effect of such amendment or change, together with all
other amendments or changes made, is to increase the obligations of the obligor
thereunder or to confer any additional rights on the holders of any such
Restricted Agreements (or a trustee or other representative on their behalf)
which would be adverse to any Loan Party or Lenders. Notwithstanding the
foregoing, nothing herein shall preclude Company from purchasing and holding
securities evidencing Indebtedness incurred by the Owner Trustee in connection
with the acquisition by the Owner Trustee of Related Assets as permitted
pursuant to subsection 7.3(xiii).
C. DESIGNATION OF "DESIGNATED SENIOR INDEBTEDNESS". Company shall
not designate any Indebtedness as "Designated Senior Indebtedness" (as defined
in the Senior Subordinated Note Indenture) for purposes of the Senior
Subordinated Note Indenture without the prior written consent of Requisite
Lenders.
7.16 FISCAL YEAR
Company shall not change its Fiscal Year-end from the Saturday closest
to December 31.
SECTION 8. EVENTS OF DEFAULT
If any of the following conditions or events ("Events of Default")
shall occur:
8.1 FAILURE TO MAKE PAYMENTS WHEN DUE.
Failure by Company to pay any installment of principal of any Loan when
due, whether at stated maturity, by acceleration, by notice of voluntary
prepayment, by mandatory prepayment or otherwise; failure by Company to pay when
due any amount payable to an Issuing Lender in reimbursement of any drawing
under a Letter of Credit; or failure by Company to pay any interest on any Loan
or any fee or any other amount due under this Agreement within five days after
the date due; or
8.2 DEFAULT IN OTHER AGREEMENTS.
(i) Failure of Company or any of its Subsidiaries to pay when due
(a) any principal of or interest on any Indebtedness (other than Indebtedness
referred to in subsection 8.1) in an individual principal amount of $5,000,000
or more or any items of Indebtedness with an aggregate principal amount of
$10,000,000 or more or (b) any Contingent Obligation in an individual principal
amount of $5,000,000 or more or any Contingent Obligations with an aggregate
principal amount of $10,000,000 or more, in each case beyond the end of any
grace period provided therefor; or (ii) breach or default by Company or any of
its Subsidiaries with respect to any other material term of (a) any evidence of
any Indebtedness in an individual principal amount of $5,000,000 or more or any
items of Indebtedness with an aggregate principal amount of $10,000,000 or more
or any Contingent Obligation in an individual principal amount of $5,000,000 or
more or any Contingent Obligations with an aggregate principal amount of
$10,000,000 or more or (b) any loan agreement, mortgage, indenture or other
agreement relating to such Indebtedness or Contingent Obligation(s), if the
effect of such breach or default is to cause, or to permit the holder or holders
of that Indebtedness or Contingent Obligation(s) (or a trustee on behalf of such
holder or holders) to cause, that Indebtedness or Contingent Obligation(s) to
become or be declared due and payable prior to its stated maturity or the stated
maturity of any underlying obligation, as the case may be (upon the giving or
receiving of notice, lapse of time, both, or otherwise); or
8.3 BREACH OF CERTAIN COVENANTS.
Failure of Company to perform or comply with any term or condition
contained in subsection 2.5 or 6.2 or Section 7 of this Agreement; or
8.4 BREACH OF WARRANTY.
Any representation, warranty, certification or other statement made by
any Loan Party in any Loan Document or in any statement or certificate at any
time given by any Loan Party in writing pursuant hereto or thereto or in
connection herewith or therewith shall be false in any material respect on the
date as of which made; or
8.5 OTHER DEFAULTS UNDER LOAN DOCUMENTS.
Any Loan Party shall default in the performance of or compliance with
any term contained in this Agreement or any of the other Loan Documents, other
than any such term referred to in any other subsection of this Section 8, and
such default shall not have been remedied or waived within 30 days after the
receipt by Company of notice from Administrative Agent or any Lender of such
default; or
8.6 INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
(i) A court having jurisdiction in the premises shall enter a decree
or order for relief in respect of Company or any of its Subsidiaries (other than
an Inactive Subsidiary whose financial condition does not adversely affect any
other Loan Party) in an involuntary case under the Bankruptcy Code or under any
other applicable bankruptcy, insolvency or similar law now or hereafter in
effect, which decree or order is not stayed; or any other similar relief shall
be granted under any applicable federal or state law; or (ii) an involuntary
case shall be commenced against Company or any of its Subsidiaries (other than
an Inactive Subsidiary) under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect; or a decree or
order of a court having jurisdiction in the premises for the appointment of a
receiver, liquidator, sequestrator, trustee, custodian or other officer having
similar powers over Company or any of its Subsidiaries (other than an Inactive
Subsidiary), or over all or a substantial part of its property, shall have been
entered; or there shall have occurred the involuntary appointment of an interim
receiver, trustee or other custodian of Company or any of its Subsidiaries
(other than an Inactive Subsidiary) for all or a substantial part of its
property; or a warrant of attachment, execution or similar process shall have
been issued against any substantial part of the property of Company or any of
its Subsidiaries (other than an Inactive Subsidiary), and any such event
described in this clause (ii) shall continue for 60 days unless dismissed,
bonded or discharged; or
8.7 VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
(i) Company or any of its Subsidiaries shall have an order for relief
entered with respect to it or commence a voluntary case under the Bankruptcy
Code or under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect, or shall consent to the entry of an order for relief in an
involuntary case, or to the conversion of an involuntary case to a voluntary
case, under any such law, or shall consent to the appointment of or taking
possession by a receiver, trustee or other custodian for all or a substantial
part of its property; or Company or any of its Subsidiaries shall make any
assignment for the benefit of creditors; or (ii) Company or any of its
Subsidiaries shall be unable, or shall fail generally, or shall admit in writing
its inability, to pay its debts as such debts become due; or the Board of Direc
tors of Company or any of its Subsidiaries (or any committee thereof) shall
adopt any resolution or otherwise authorize any action to approve any of the
actions referred to in clause (i) above or this clause (ii); or
8.8 JUDGMENTS AND ATTACHMENTS.
Any money judgment, writ or warrant of attachment or similar process
involving (i) in any individual case an amount in excess of $5,000,000 or
(ii) in the aggregate at any time an amount in excess of $10,000,000 (in either
case not adequately covered by insurance as to which a solvent and unaffiliated
insurance company has acknowledged coverage) shall be entered or filed against
Company or any of its Subsidiaries or any of their respective assets and either
(a) shall remain undischarged, unvacated, unbonded or unstayed for a period of
60 days (or in any event later than five days prior to the date of any proposed
sale thereunder) or (b) shall not be discharged and there shall have been a
period of 60 days after the date on which any period for appeal has expired; or
8.9 DISSOLUTION.
Any order, judgment or decree shall be entered against Company or any
of its Subsidiaries decreeing the dissolution or split up of such Person and
such order shall remain undischarged or unstayed for a period in excess of 30
days; or
8.10 EMPLOYEE BENEFIT PLANS.
There shall occur one or more ERISA Events which individually or in the
aggregate results in or could reasonably be expected to result in liability of
any of the Loan Parties or any of their respective ERISA Affiliates (unless no
Loan Party shall be jointly and severally liable therefor) in excess of
$5,000,000 during the term of this Agreement; or there shall exist an Amount of
Unfunded Benefit Liabilities individually or in the aggregate for all Pension
Plans (excluding for purposes of such computation (1) any Pension Plan which has
a negative Amount of Unfunded Benefit Liabilities and (2) any Pension Plan for
which neither Company nor any other Loan Party would have liability if the
Pension Plan were terminated) which exceeds $10,000,000; or
8.11 CHANGE IN CONTROL.
A Change of Control shall have occurred; or
8.12 INVALIDITY OF SUBSIDIARY GUARANTY.
The Subsidiary Guaranty for any reason, other than the satisfaction in
full of all Obligations, ceases to be in full force and effect (other than in
accordance with its terms) or is declared to be null and void, or any Loan Party
denies that it has any further liability, including without limitation with
respect to future advances by Lenders, under any Loan Document to which it is a
party, or gives notice to such effect; or
8.13 FAILURE OF SECURITY.
Any Collateral Document shall, at any time, cease to be in full force
and effect (other than by reason of a release of Collateral in accordance with
the terms thereof or of subsection 6.11) or shall be declared null and void, or
the validity or enforceability thereof shall be contested by any Loan Party, or
Administrative Agent shall not have or cease to have a valid and perfected first
priority security interest in any significant part of the Collateral (other than
as a direct result of a breach by Administrative Agent of any obligation imposed
on Administrative Agent under the Collateral Documents or by reason of a release
of Collateral in accordance with the terms thereof or of subsection 6.11); or
8.14 ACTION UNDER SENIOR SUBORDINATED NOTES.
Any holder of any Indebtedness evidenced by the Senior Subordinated
Notes shall file an action seeking the rescission thereof or damages or
injunctive relief relating thereto; or any event shall occur which, under the
terms of the Senior Subordinated Note Indenture, shall require Company or any of
its Subsidiaries to purchase, redeem or otherwise acquire or offer to purchase,
redeem or otherwise acquire all or any portion of any Indebtedness evidenced by
the Senior Subordinated Note Indenture; or Company or any of its Subsidiaries
shall for any other reason purchase, redeem or otherwise acquire or offer to
purchase, redeem or otherwise acquire, or make any other payments in respect of,
all or any portion of any Indebtedness evidenced by the Senior Subordinated Note
Indenture, except to the extent expressly permitted by subsection 7.5:
THEN (i) upon the occurrence of any Event of Default described in subsection 8.6
or 8.7, each of (a) the unpaid principal amount of and accrued interest on the
Loans, (b) an amount equal to the maximum amount that may at any time be drawn
under all Letters of Credit then outstanding (whether or not any beneficiary
under any such Letter of Credit shall have presented, or shall be entitled at
such time to present, the drafts or other documents or certificates required to
draw under such Letter of Credit), and (c) all other Obligations shall
automatically become immediately due and payable, without presentment, demand,
protest or other requirements of any kind, all of which are hereby expressly
waived by Company, and the obligation of each Lender to make any Loan (including
the obligation of Swing Line Lender to make any Swing Line Loans), the
obligation of Administrative Agent to issue any Letter of Credit and the right
of any Lender to issue any Letter of Credit hereunder shall thereupon terminate,
and (ii) upon the occurrence and during the continuation of any other Event of
Default, Administrative Agent shall, upon the written request or with the
written consent of Requisite Lenders, by written notice to Company, declare all
or any portion of the amounts described in clauses (a) through (c) above to be,
and the same shall forthwith become, immediately due and payable, and the
obligation of each Lender to make any Loan (including the obligation of Swing
Line Lender to make any Swing Line Loans), the obligation of Administrative
Agent to issue any Letter of Credit and the right of any Lender to issue any
Letter of Credit hereunder shall thereupon terminate; provided that the
foregoing shall not affect in any way the obligations of Revolving Lenders to
purchase participations in Letters of Credit as provided in subsection 3.3C or
the obligations of Lenders to purchase participations in any unpaid Swing Line
Loans as provided in subsection 2.1A(iv).
Any amounts described in clause (b) above, when received by
Administrative Agent, shall be held by Administrative Agent pursuant to the
terms of the Collateral Account Agreement and shall be applied as therein
provided.
Notwithstanding anything contained in the second preceding paragraph,
if at any time within 60 days after an acceleration of the Loans pursuant to
such paragraph Company shall pay all arrears of interest and all payments on
account of principal which shall have become due otherwise than as a result of
such acceleration (with interest on principal and, to the extent permitted by
law, on overdue interest, at the rates specified in this Agreement) and all
Events of Default and Potential Events of Default (other than non-payment of the
principal of and accrued interest on the Loans, in each case which is due and
payable solely by virtue of acceleration) shall be remedied or waived pursuant
to subsection 10.6, then Requisite Lenders, by written notice to Company, may at
their option rescind and annul such acceleration and its consequences; but such
action shall not affect any subsequent Event of Default or Potential Event of
Default or impair any right consequent thereon. The provisions of this
paragraph are intended merely to bind Lenders to a decision which may be made at
the election of Requisite Lenders and are not intended to benefit Company and do
not grant Company the right to require Lenders to rescind or annul any
acceleration hereunder, even if the conditions set forth herein are met.
SECTION 9. ADMINISTRATIVE AGENT
9.1 APPOINTMENT.
A. APPOINTMENT OF ADMINISTRATIVE AGENT. Each Lender hereby appoints, and
each Interest Rate Exchanger, by its acceptance of the benefits of this
Agreement and the other Loan Documents, shall be deemed to have appointed, Chase
as Administrative Agent hereunder and under the other Loan Documents and each
Lender hereby authorizes, and each Interest Rate Exchanger, by its acceptance of
the benefits of this Agreement and the other Loan Documents, shall be deemed to
have authorized, Administrative Agent to act as its agent in accordance with the
terms of this Agreement and the other Loan Documents, and each Interest Rate
Exchanger is considered to be a "Lender" for purposes of this Section 9. Each
Lender hereby appoints Bankers Trust Company as Syndication Agent hereunder.
Agents each agree to act upon the express conditions contained in this Agreement
and the other Loan Documents, as applicable. The provisions of this Section 9
are solely for the benefit of Agents and Lenders and no Loan Party shall have
any rights as a third party beneficiary of any of the provisions thereof. In
performing its functions and duties under this Agreement, and other than as
expressly provided for in subsection 2.1D(v), Administrative Agent shall act
solely as an agent of Lenders and does not assume and shall not be deemed to
have assumed any obligation towards or relationship of agency or trust with or
for any Loan Party. Notwithstanding anything in the Master Assignment Agreement
to the contrary, Administrative Agent hereby acknowledges that it has all of the
responsibilities and obligations set forth in this Agreement.
B. APPOINTMENT OF SUPPLEMENTAL COLLATERAL AGENTS. It is the purpose of
this Agreement and the other Loan Documents that there shall be no violation of
any law of any jurisdiction denying or restricting the right of banking
corporations or associations to transact business as agent or trustee in such
jurisdiction. It is recognized that in case of litigation under this Agreement
or any of the other Loan Documents, and in particular in case of the enforcement
of any of the Loan Documents, or in case Administrative Agent deems that by
reason of any present or future law of any jurisdiction it may not exercise any
of the rights, powers or remedies granted herein or in any of the other Loan
Documents or take any other action which may be desirable or necessary in
connection therewith, it may be necessary that Administrative Agent appoint an
additional individual or institution as a separate trustee, co-trustee,
collateral agent or collateral co-agent (any such additional individual or
institution being referred to herein individually as a "SUPPLEMENTAL COLLATERAL
AGENT" and collectively as "SUPPLEMENTAL COLLATERAL AGENTS").
In the event that Administrative Agent appoints a Supplemental
Collateral Agent with respect to any Collateral, (i) each and every right,
power, privilege or duty expressed or intended by this Agreement or any of the
other Loan Documents to be exercised by or vested in or conveyed to
Administrative Agent with respect to such Collateral shall be exercisable by and
vest in such Supplemental Collateral Agent to the extent, and only to the
extent, necessary to enable such Supplemental Collateral Agent to exercise such
rights, powers and privileges with respect to such Collateral and to perform
such duties with respect to such Collateral, and every covenant and obligation
contained in the Loan Documents and necessary to the exercise or performance
thereof by such Supplemental Collateral Agent shall run to and be enforceable by
either Administrative Agent or such Supplemental Collateral Agent, and (ii) the
provisions of this Section 9 and of subsections 10.2 and 10.3 that refer to
Administrative Agent shall inure to the benefit of such Supplemental Collateral
Agent and all references therein to Administrative Agent shall be deemed to be
references to Administrative Agent and/or such Supplemental Collateral Agent, as
the context may require.
Should any instrument in writing from Company or any other Loan Party
be required by any Supplemental Collateral Agent so appointed by Administrative
Agent for more fully and certainly vesting in and confirming to him or it such
rights, powers, privileges and duties, Company shall, or shall cause such Loan
Party to, execute, acknowledge and deliver any and all such instruments promptly
upon request by Administrative Agent. In case any Supplemental Collateral
Agent, or a successor thereto, shall die, become incapable of acting, resign or
be removed, all the rights, powers, privileges and duties of such Supplemental
Collateral Agent, to the extent permitted by law, shall vest in and be exercised
by Administrative Agent until the appointment of a new Supplemental Collateral
Agent.
9.2 POWERS AND DUTIES; GENERAL IMMUNITY.
A. POWERS; DUTIES SPECIFIED. Each Lender irrevocably authorizes
Administrative Agent to take such action on such Lender's behalf and to exercise
such powers, rights and remedies hereunder and under the other Loan Documents as
are specifically delegated or granted to Administrative Agent by the terms
hereof and thereof, together with such powers, rights and remedies as are
reasonably incidental thereto. Administrative Agent shall have only those
duties and responsibilities that are expressly specified in this Agreement and
the other Loan Documents. Administrative Agent may exercise such powers, rights
and remedies and perform such duties by or through its agents or employees.
Administrative Agent shall not have, by reason of this Agreement or any of the
other Loan Documents, a fiduciary relationship in respect of any Lender; and
nothing in this Agreement or any of the other Loan Documents, expressed or
implied, is intended to or shall be so construed as to impose upon
Administrative Agent any obligations in respect of this Agreement or any of the
other Loan Documents except as expressly set forth herein or therein.
B. NO RESPONSIBILITY FOR CERTAIN MATTERS. Administrative Agent shall not
be responsible to any Lender for the execution, effectiveness, genuineness,
validity, enforceability, collectibility or sufficiency of this Agreement or any
other Loan Document or for any representations, warranties, recitals or
statements made herein or therein or made in any written or oral statements or
in any financial or other statements, instruments, reports or certificates or
any other documents furnished or made by Administrative Agent to Lenders or by
or on behalf of Company to Administrative Agent or any Lender in connection with
the Loan Documents and the transactions contemplated thereby or for the
financial condition or business affairs of Company or any other Person liable
for the payment of any Obligations, nor shall Administrative Agent be required
to ascertain or inquire as to the performance or observance of any of the terms,
conditions, provisions, covenants or agreements contained in any of the Loan
Documents or as to the use of the proceeds of the Loans or the use of the
Letters of Credit or as to the existence or possible existence of any Event of
Default or Potential Event of Default. Anything contained in this Agreement to
the contrary notwithstanding, Administrative Agent shall not have any liability
arising from confirmations of the amount of outstanding Loans or the Letter of
Credit Usage or the component amounts thereof.
C. EXCULPATORY PROVISIONS. Neither Administrative Agent nor any of its
officers, directors, employees or agents shall be liable to Lenders for any
action taken or omitted by Administrative Agent under or in connection with any
of the Loan Documents except to the extent caused by Administrative Agent's
gross negligence or willful misconduct. Administrative Agent shall be entitled
to refrain from any act or the taking of any action (including the failure to
take an action) in connection with this Agreement or any of the other Loan
Documents or from the exercise of any power, discretion or authority vested in
it hereunder or thereunder unless and until Administrative Agent shall have
received instructions in respect thereof from Requisite Lenders (or such other
Lenders as may be required to give such instructions under subsection 10.6) and,
upon receipt of such instructions from Requisite Lenders (or such other Lenders,
as the case may be), Administrative Agent shall be entitled to act or (where so
instructed) refrain from acting, or to exercise such power, discretion or
authority, in accordance with such instructions. Without prejudice to the
generality of the foregoing, (i) Administrative Agent shall be entitled to rely,
and shall be fully protected in relying, upon any communication, instrument or
document believed by it to be genuine and correct and to have been signed or
sent by the proper person or persons, and shall be entitled to rely and shall be
protected in relying on opinions and judgments of attorneys (who may be
attorneys for Company and its Subsidiaries), accountants, experts and other
professional advisors selected by it; and (ii) no Lender shall have any right of
action whatsoever against Administrative Agent as a result of Administrative
Agent acting or (where so instructed) refraining from acting under this
Agreement or any of the other Loan Documents in accordance with the instructions
of Requisite Lenders (or such other Lenders as may be required to give such
instructions under subsection 10.6).
D. ADMINISTRATIVE AGENT ENTITLED TO ACT AS LENDER. The agency hereby
created shall in no way impair or affect any of the rights and powers of, or
impose any duties or obligations upon, Administrative Agent in its individual
capacity as a Lender hereunder. With respect to its participation in the Loans
and the Letters of Credit, Administrative Agent shall have the same rights and
powers hereunder as any other Lender and may exercise the same as though it were
not performing the duties and functions delegated to it hereunder, and the term
"Lender" or "Lenders" or any similar term shall, unless the context clearly
otherwise indicates, include Administrative Agent in its individual capacity.
Administrative Agent and its Affiliates may accept deposits from, lend money to
and generally engage in any kind of banking, trust, financial advisory or other
business with Company or any of its Affiliates as if it were not performing the
duties specified herein, and may accept fees and other consideration from
Company for services in connection with this Agreement and otherwise without
having to account for the same to Lenders.
9.3 REPRESENTATIONS AND WARRANTIES; NO RESPONSIBILITY FOR APPRAISAL OF CREDIT
WORTHINESS.
Each Lender represents and warrants that it has made its own
independent investigation of the financial condition and affairs of Company and
its Subsidiaries in connection with the making of the Loans and the issuance of
Letters of Credit hereunder and that it has made and shall continue to make its
own appraisal of the creditworthiness of Company and its Subsidiaries.
Administrative Agent shall not have any duty or responsibility, either initially
or on a continuing basis, to make any such investigation or any such appraisal
on behalf of Lenders or to provide any Lender with any credit or other
information with respect thereto, whether coming into its possession before the
making of the Loans or at any time or times thereafter, and Administrative Agent
shall not have any responsibility with respect to the accuracy of or the
completeness of any information provided to Lenders.
9.4 RIGHT TO INDEMNITY.
Each Lender, in proportion to its Pro Rata Share, severally agrees to
indemnify Administrative Agent, to the extent that Administrative Agent shall
not have been reimbursed by Company, for and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including, without limitation, counsel fees and disbursements) or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by or asserted against Administrative Agent in exercising its powers, rights and
remedies or performing its duties hereunder or under the other Loan Documents or
otherwise in its capacity as Administrative Agent in any way relating to or
arising out of this Agreement or the other Loan Documents; provided that no
Lender shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from Administrative Agent's gross negligence or willful misconduct. To
the extent indemnification payments made by Lenders pursuant to this subsection
9.4 are subsequently recovered by Administrative Agent from, or for the account
of, Company, Administrative Agent will promptly refund such previously paid
indemnification payments to Lenders. If any indemnity furnished to
Administrative Agent for any purpose shall, in the opinion of Administrative
Agent, be insufficient or become impaired, Administrative Agent may cease, or
not commence, to do the acts indemnified against until such additional indemnity
is furnished.
9.5 SUCCESSOR ADMINISTRATIVE AGENT AND SWING LINE LENDER.
A. SUCCESSOR ADMINISTRATIVE AGENT. Administrative Agent may resign
at any time by giving 30 days' prior written notice thereof to Lenders and
Company, and Administrative Agent may be removed at any time with or without
cause by an instrument or concurrent instruments in writing delivered to Company
and Administrative Agent and signed by Requisite Lenders. Upon any such notice
of resignation or any such removal, Requisite Lenders shall have the right, upon
five Business Days' notice to Company, to appoint a successor Administrative
Agent. Upon the acceptance of any appointment as Administrative Agent hereunder
by a successor Administrative Agent, that successor Administrative Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring or removed Administrative Agent and the retiring or
removed Administrative Agent shall be discharged from its duties and obligations
under this Agreement. After any retiring or removed Administrative Agent's
resignation or removal hereunder as Administrative Agent, the provisions of this
Section 9 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Administrative Agent under this Agreement.
B. SUCCESSOR SWING LINE LENDER. Any resignation or removal of
Administrative Agent pursuant to subsection 9.5A shall also constitute the
resignation or removal of Administrative Agent or its successor as Swing Line
Lender, and any successor Administrative Agent appointed pursuant to subsection
9.5A shall, upon its acceptance of such appointment, become the successor Swing
Line Lender for all purposes hereunder. In such event (i) Company shall prepay
any outstanding Swing Line Loans made by the retiring or removed Administrative
Agent in its capacity as Swing Line Lender, (ii) upon such prepayment, the
retiring or removed Administrative Agent and Swing Line Lender shall surrender
the Swing Line Note held by it to Company for cancellation, and (iii) Company
shall issue a new Swing Line Note to the successor Administrative Agent and
Swing Line Lender substantially in the form of Exhibit VI annexed hereto, in the
principal amount of the Swing Line Loan Commitment then in effect and with other
appropriate insertions.
9.6 COLLATERAL DOCUMENTS AND SUBSIDIARY GUARANTY.
Each Lender hereby further authorizes Administrative Agent, on behalf
of and for the benefit of Lenders, to enter into each Collateral Document as
secured party and to be the agent for and representative of Lenders under the
Subsidiary Guaranty, and each Lender agrees to be bound by the terms of each
Collateral Document and the Subsidiary Guaranty; provided that Administrative
Agent shall not (i) enter into or consent to any material amendment,
modification, termination or waiver of any provision contained in any Collateral
Document or the Subsidiary Guaranty or (ii) release any Collateral (except as
otherwise expressly permitted or required pursuant to the terms of this
Agreement or the applicable Collateral Document), in each case without the prior
consent of Requisite Lenders (or, if required pursuant to subsection 10.6, all
Lenders); provided further, however, that, without further written consent or
authorization from Lenders, Administrative Agent may execute any documents or
instruments necessary to (a) release any Lien encumbering any item of Collateral
that is the subject of a sale or other disposition of assets permitted by this
Agreement or to which Requisite Lenders have otherwise consented or (b) release
any Subsidiary Guarantor from the Subsidiary Guaranty if all of the capital
stock of such Subsidiary Guarantor is sold to any Person (other than an
Affiliate of Company) pursuant to a sale or other disposition permitted
hereunder or to which Requisite Lenders have otherwise consented. Anything
contained in any of the Loan Documents to the contrary notwithstanding, Company,
Administrative Agent and each Lender hereby agree that (X) no Lender shall have
any right individually to realize upon any of the Collateral under any
Collateral Document or to enforce the Subsidiary Guaranty, it being understood
and agreed that all powers, rights and remedies under the Collateral Documents
and the Subsidiary Guaranty may be exercised solely by Administrative Agent for
the benefit of Lenders in accordance with the terms thereof, and (Y) in the
event of a foreclosure by Administrative Agent on any of the Collateral pursuant
to a public or private sale, Administrative Agent or any Lender may be the
purchaser of any or all of such Collateral at any such sale and Administrative
Agent, as agent for and representative of Lenders (but not any Lender or Lenders
in its or their respective individual capacities unless Requisite Lenders shall
otherwise agree in writing) shall be entitled, for the purpose of bidding and
making settlement or payment of the purchase price for all or any portion of the
Collateral sold at any such public sale, to use and apply any of the Obligations
as a credit on account of the purchase price for any collateral payable by
Administrative Agent at such sale.
SECTION 10. MISCELLANEOUS
10.1 ASSIGNMENTS AND PARTICIPATIONS IN LOANS AND LETTERS OF CREDIT.
A. GENERAL. Subject to subsection 10.1B, each Lender shall have the right
at any time to (i) sell, assign or transfer to any Eligible Assignee, or
(ii) sell participations to any Person in, all or any part of its Commitments or
any Loan or Loans made by it or its Letters of Credit or participations therein
or any other interest herein or in any other Obligations owed to it; provided
that no such sale, assignment, transfer or participation shall, without the
consent of Company, require Company to file a registration statement with the
Securities and Exchange Commission or apply to qualify such sale, assignment,
transfer or participation under the securities laws of any state; provided,
further that no such sale, assignment or transfer described in clause (i) above
shall be effective unless and until an Assignment Agreement effecting such sale,
assignment or transfer shall have been accepted by Administrative Agent and
recorded in the Register as provided in subsection 10.1B(ii); provided, further
that no such sale, assignment, transfer or participation of any Letter of Credit
or any participation therein may be made separately from a sale, assignment,
transfer or participation of a corresponding interest in the Revolving Loan
Commitment and the Revolving Loans of the Lender effecting such sale,
assignment, transfer or participation; and provided, further that, anything
contained herein to the contrary notwithstanding, the Swing Line Loan Commitment
and the Swing Line Loans of Swing Line Lender may not be sold, assigned or
transferred as described in clause (i) above to any Person other than a
successor Administrative Agent and Swing Line Lender to the extent contemplated
by subsection 9.5. Except as otherwise provided in this subsection 10.1, no
Lender shall, as between Company and such Lender, be relieved of any of its
obligations hereunder as a result of any sale, assignment or transfer of, or any
granting of participations in, all or any part of its Commitments or the Loans,
the Letters of Credit or participations therein, or the other Obligations owed
to such Lender.
B. ASSIGNMENTS.
(i) Amounts and Terms of Assignments. Each Commitment, Loan, Letter
of Credit or participation in any Letter of Credit or in any Swing Line
Loan, or other Obligation may (a) be assigned in any amount to another
Lender, or to an Affiliate of the assigning Lender or another Lender, with
the giving of notice to Company and Administrative Agent or (b) be assigned
in an aggregate amount of not less than $5,000,000 (or such lesser amount
as shall constitute the aggregate amount of the Commitments, Loans, Letters
of Credit and participations in any Letter of Credit or in any Swing Line
Loan, and other Obligations of the assigning Lender) to any other Eligible
Assignee, with the consent of Company and Administrative Agent (which
consent of Company and Administrative Agent shall not be unreasonably
withheld or delayed). To the extent of any such assignment in accordance
with either clause (a) or (b) above, the assigning Lender shall be relieved
of its obligations with respect to its Commitments, Loans, Letters of
Credit or participations therein, or other Obligations or the portion
thereof so assigned. The parties to each such assignment shall execute and
deliver to Administrative Agent, for its acceptance and recording in the
Register, an Assignment Agreement, together with a processing and
recordation fee of, in the case of assignments to a Lender or an Affiliate
of Lender, $1,500 and, in the case of assignments to any other Eligible
Assignee, $3,500 and such forms, certificates or other evidence, if any,
with respect to United States federal income tax withholding matters as the
assignee under such Assignment Agreement may be required to deliver to
Administrative Agent pursuant to subsection 2.7B(iii)(a). Upon such
execution, delivery, acceptance and recordation, from and after the
effective date specified in such Assignment Agreement, (y) the assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment
Agreement, shall have the rights and obligations of a Lender hereunder and
(z) the assigning Lender thereunder shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment
Agreement, relinquish its rights (other than any rights which survive the
termination of this Agreement under subsection 10.9B) and be released from
its obligations under this Agreement (and, in the case of an Assignment
Agreement covering all or the remaining portion of an assigning Lender's
rights and obligations under this Agreement, such Lender shall cease to be
a party hereto); provided that, anything contained in any of the Loan
Documents to the contrary notwithstanding, if such Lender is the Issuing
Lender with respect to any outstanding Letters of Credit such Lender shall
continue to have all rights and obligations of an Issuing Lender with
respect to such Letters of Credit until the cancellation or expiration of
such Letters of Credit and the reimbursement of any amounts drawn thereun
der). The Commitments hereunder shall be modified to reflect the
Commitment of such assignee and any remaining Commitment of such assigning
Lender and, if any such assignment occurs after the issuance of the Notes
hereunder, the assigning Lender shall, upon the effectiveness of such
assignment or as promptly thereafter as practicable, surrender its
applicable Notes to Administrative Agent for cancellation, and thereupon
new Notes shall be issued to the assignee and to the assigning Lender,
substantially in the form of Exhibit IV-A, Exhibit IV-B, or Exhibit V
annexed hereto, as the case may be, with appropriate insertions, to reflect
the new Commitments and/or outstanding Term Loans, as the case may be, of
the assignee and/or the assigning Lender.
(ii) Acceptance by Administrative Agent; Recordation in Register. Upon
its receipt of an Assignment Agreement executed by an assigning Lender and
an assignee representing that it is an Eligible Assignee, together with the
processing and recordation fee referred to in subsection 10.1B(i) and any
forms, certificates or other evidence with respect to United States federal
income tax withholding matters that such assignee may be required to
deliver to Administrative Agent pursuant to subsection 2.7B(iii)(a),
Administrative Agent shall, if Administrative Agent and Company have
consented to the assignment evidenced thereby (in each case to the extent
such consent is required pursuant to subsection 10.1B(i)), (a) accept such
Assignment Agreement by executing a counterpart thereof as provided therein
(which acceptance shall evidence any required consent of Administrative
Agent to such assignment), (b) record the information contained therein in
the Register, and (c) give prompt notice thereof to Company.
Administrative Agent shall maintain a copy of each Assignment Agreement
delivered to and accepted by it as provided in this subsection 10.1B(ii).
C. PARTICIPATIONS. The holder of any participation, other than an
Affiliate of the Lender granting such participation, shall not be entitled to
require such Lender to take or omit to take any action hereunder except action
directly affecting (i) the extension of the scheduled final maturity date of any
portion of the principal amount of or the postponement of the date of payment of
interest on any Loan allocated to such participation (it being understood that
changes in interim amortization amounts are not extensions of scheduled final
maturity dates), or the extension of the stated expiration date beyond the
Revolving Loan Commitment Termination Date of any Letter of Credit allocated to
such participation, or (ii) a reduction of the principal amount of or the rate
of interest payable on any Loan allocated to such participation (other than any
waiver of any increase in the interest rate applicable to the Loans pursuant to
subsection 2.2E), and all amounts payable by Company hereunder (including
without limitation amounts payable to such Lender pursuant to subsections 2.6D,
2.7 and 3.6) shall be determined as if such Lender had not sold such participa
tion. Company and each Lender hereby acknowledge and agree that, solely for
purposes of subsections 10.4 and 10.5, (a) any participation will give rise to a
direct obligation of Company to the participant and (b) the participant shall be
considered to be a "Lender".
D. ASSIGNMENTS TO FEDERAL RESERVE BANKS. In addition to the assignments
and participations permitted under the foregoing provisions of this subsection
10.1, any Lender may assign and pledge all or any portion of its Loans, the
other Obligations owed to such Lender, and its Notes to any Federal Reserve Bank
as collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any operating circular issued by such Federal Reserve
Bank; provided that (i) no Lender shall, as between Company and such Lender, be
relieved of any of its obligations hereunder as a result of any such assignment
and pledge and (ii) in no event shall such Federal Reserve Bank be considered to
be a "Lender" or be entitled to require the assigning Lender to take or omit to
take any action hereunder.
E. INFORMATION. Each Lender may furnish any information concerning
Company and its Subsidiaries in the possession of that Lender from time to time
to assignees and participants (including prospective assignees and partici
pants), subject to subsection 10.19.
F. REPRESENTATIONS OF LENDERS. Each Lender listed on the signature pages
hereof hereby represents and warrants (i) that it is an Eligible Assignee
described in clause (A) of the definition thereof; (ii) that it has experience
and expertise in the making of loans such as the Loans; and (iii) that it will
make its Loans for its own account in the ordinary course of its business and
without a view to distribution of such Loans within the meaning of the
Securities Act or the Exchange Act or other federal securities laws (it being
understood that, subject to the provisions of this subsection 10.1, the
disposition of such Loans or any interests therein shall at all times remain
within its exclusive control). Each Lender that becomes a party hereto pursuant
to an Assignment Agreement shall be deemed to agree that the representations and
warranties of such Lender contained in Section 2(c) of such Assignment Agreement
are incorporated herein by this reference.
10.2 EXPENSES.
Whether or not the transactions contemplated hereby shall be
consummated, Company agrees to pay promptly (i) all the actual and reasonable
costs and expenses of the Arrangers incurred in preparation of the Loan
Documents and any consents, amendments, waivers or other modifications thereto;
(ii) all the costs of furnishing all opinions by counsel for Company (including
without limitation any opinions requested by Lenders as to any legal matters
arising hereunder) and of Company's performance of and compliance with all
agreements and conditions on its part to be performed or complied with under
this Agreement and the other Loan Documents including, without limitation, with
respect to confirming compliance with environmental and insurance requirements;
(iii) the reasonable fees, expenses and disbursements of counsel to
Administrative Agent (including internal counsel) in connection with the
negotiation, preparation, execution and administration of the Loan Documents and
any consents, amendments, waivers or other modifications thereto and any other
documents or matters requested by Company; (iv) all the reasonable costs and
expenses of creating and perfecting Liens in favor of Administrative Agent on
behalf of Lenders pursuant to any Collateral Document, including without
limitation filing and recording fees, expenses and taxes, stamp or documentary
taxes, search fees, title insurance premiums, and reasonable fees, expenses and
disbursements of counsel to Administrative Agent and of counsel providing any
opinions that Administrative Agent or Requisite Lenders may reasonably request
in respect of the Collateral Documents or the Liens created pursuant thereto;
(v) all the reasonable costs and expenses (including without limitation the
reasonable fees, expenses and disbursements of any auditors, accountants or
appraisers and any environmental or other consultants, advisors and agents
employed or retained by Administrative Agent or its counsel) of obtaining and
reviewing any appraisals provided for under subsection 6.9, any environmental
audits or reports provided for under subsection 6.9; (vi) all other actual and
reasonable costs and expenses incurred by Arrangers in connection with the
syndication of the Commitments and the negotiation, preparation and execution of
the Loan Documents and any consents, amendments, waivers or other modifications
thereto and the transactions contemplated thereby; and (vii) after the
occurrence of an Event of Default, all reasonable costs and expenses, including
reasonable attorneys' fees (including internal counsel) and costs of settlement,
incurred by Administrative Agent and Lenders in enforcing any Obligations of or
in collecting any payments due from any Loan Party hereunder or under the other
Loan Documents by reason of such Event of Default (including, without
limitation, in connection with the sale of, collection from, or other
realization upon any of the Collateral or the enforcement of the Subsidiary
Guaranty) or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a "work-out" or
pursuant to any insolvency or bankruptcy proceedings.
10.3 INDEMNITY.
In addition to the payment of expenses pursuant to subsection 10.2,
whether or not the transactions contemplated hereby shall be consummated,
Company agrees to defend (subject to Indemnitees' selection of counsel),
indemnify, pay and hold harmless Administrative Agent and Lenders, and the
officers, directors, trustees, employees, agents and affiliates of
Administrative Agent and Lenders (collectively called the "INDEMNITEES"), from
and against any and all Indemnified Liabilities (as hereinafter defined);
provided that Company shall not have any obligation to any Indemnitee hereunder
with respect to any Indemnified Liabilities to the extent such Indemnified
Liabilities arise solely from the gross negligence or willful misconduct of that
Indemnitee as determined by a final judgment of a court of competent
jurisdiction.
As used herein, "INDEMNIFIED LIABILITIES" means, collectively, any and
all liabilities, obligations, losses, damages (including natural resource
damages), penalties, actions, judgments, suits, claims (including Environmental
Claims), costs (including the costs of any investigation, study, sampling,
testing, abatement, cleanup, removal, remediation or other response action
necessary to remove, remediate, clean up or abate any Hazardous Materials
Activity), expenses and disbursements of any kind or nature whatsoever
(including the reasonable fees and disbursements of counsel for Indemnitees in
connection with any investigative, administrative or judicial proceeding com
menced or threatened by any Person, whether or not any such Indemnitee shall be
designated as a party or a potential party thereto, and any fees or expenses
incurred by Indemnitees in enforcing this indemnity), whether direct, indirect
or consequential and whether based on any federal, state or foreign laws,
statutes, rules or regulations (including securities and commercial laws,
statutes, rules or regulations and Environmental Laws), on common law or
equitable cause or on contract or otherwise, that may be imposed on, incurred
by, or asserted against any such Indemnitee, in any manner relating to or
arising out of (i) this Agreement or the other Loan Documents or the Related
Agreements or the transactions contemplated hereby or thereby (including
Lenders' agreement to make the Loans hereunder or the use or intended use of the
proceeds thereof or the issuance of Letters of Credit hereunder or the use or
intended use of any thereof, or any enforcement of any of the Loan Documents
(including any sale of, collection from, or other realization upon any of the
Collateral or the enforcement of the Subsidiary Guaranty), (ii) the statements
contained in the commitment letter delivered by any Lender to Company with
respect thereto, or (iii) any Environmental Claim or any Hazardous Materials
Activity relating to or arising from, directly or indirectly, any past or
present activity, operation, land ownership, or practice of Company or any of
its Subsidiaries and in any event including without limitation the Environmental
Losses.
Without limiting the generality of the foregoing, the rights of each
Indemnitee under this subsection 10.3 relating to any Environmental Losses shall
be in addition to any other rights and remedies of such Indemnitee against
Company or its Affiliates under any other document or instrument now or
hereafter executed by Company or its Affiliates, or at law or in equity
(including, without limitation, any right of reimbursement or contribution
pursuant to CERCLA or other similar Environmental Laws), and shall not in any
way be deemed a waiver of any of such rights. Company agrees that it shall have
no right of contribution (including, without limitation, any right of
contribution under CERCLA or other similar Environmental Laws) or subrogation
against any other Loan Party, unless and until all Obligations of Company (other
than Obligations which are contingent and unliquidated and not due and owing on
such date and which pursuant to the provisions of this Agreement, Letters of
Credit or the Loan Documents survive the termination of this Agreement, the
repayment of the Obligations, the termination of the Commitments and the
expiration or cancellation of all Letters of Credit) have been satisfied.
To the extent that the undertakings to defend, indemnify, pay and hold
harmless set forth in this subsection 10.3 may be unenforceable in whole or in
part because they are violative of any law or public policy, Company shall
contribute the maximum portion that it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all Indemnified Liabilities
incurred by Indemnitees or any of them.
10.4 SET-OFF.
In addition to any rights now or hereafter granted under applicable law
and not by way of limitation of any such rights, upon the occurrence of any
Event of Default each Lender is hereby authorized by Company at any time or from
time to time, without notice to Company or to any other Person, any such notice
being hereby expressly waived, to set off and to appropriate and to apply any
and all deposits (general or special, including, but not limited to, Indebt
edness evidenced by certificates of deposit, whether matured or unmatured, but
not including trust accounts) and any other Indebtedness at any time held or
owing by that Lender to or for the credit or the account of Company against and
on account of the obligations and liabilities of Company to that Lender under
this Agreement, the Letters of Credit and participations therein and the other
Loan Documents, including, but not limited to, all claims of any nature or
description arising out of or connected with this Agreement, the Letters of
Credit and participations therein or any other Loan Document, irrespective of
whether or not (i) that Lender shall have made any demand hereunder or (ii) the
principal of or the interest on the Loans or any amounts in respect of the
Letters of Credit or any other amounts due hereunder shall have become due and
payable pursuant to Section 8 and although said obligations and liabilities, or
any of them, may be contingent or unmatured.
10.5 RATABLE SHARING.
Lenders hereby agree among themselves that if any of them shall,
whether by voluntary payment (other than a voluntary prepayment of Loans made
and applied in accordance with the terms of this Agreement), by realization upon
security, through the exercise of any right of set-off or banker's lien, by
counterclaim or cross action or by the enforcement of any right under the Loan
Documents or otherwise, or as adequate protection of a deposit treated as cash
collateral under the Bankruptcy Code, receive payment or reduction of a
proportion of the aggregate amount of principal, interest, amounts payable in
respect of Letters of Credit, fees and other amounts then due and owing to that
Lender hereunder or under the other Loan Documents (collectively, the "AGGREGATE
AMOUNTS DUE" to such Lender) which is greater than the proportion received by
any other Lender in respect of the Aggregate Amounts Due to such other Lender,
then the Lender receiving such proportionately greater payment shall (i) notify
Administrative Agent and each other Lender of the receipt of such payment and
(ii) apply a portion of such payment to purchase participations or participating
interests (which it shall be deemed to have purchased from each seller of a
participation or a participating interest simultaneously upon the receipt by
such seller of its portion of such payment) in the Aggregate Amounts Due to the
other Lenders so that all such recoveries of Aggregate Amounts Due shall be
shared by all Lenders in proportion to the Aggregate Amounts Due to them;
provided that if all or part of such proportionately greater payment received by
such purchasing Lender is thereafter recovered from such Lender upon the
bankruptcy or reorganization of Company or otherwise, those purchases shall be
rescinded and the purchase prices paid for such participations or participating
interests shall be returned to such purchasing Lender ratably to the extent of
such recovery, but without interest. Company expressly consents to the
foregoing arrangement and agrees that any holder of a participation or a
participating interest so purchased may exercise any and all rights of banker's
lien, set-off or counterclaim with respect to any and all monies owing by
Company to that holder with respect thereto as fully as if that holder were owed
the amount of the participation or participating interests held by that holder.
10.6 AMENDMENTS AND WAIVERS.
A. No amendment, modification, termination or waiver of any provision
of this Agreement or of the Notes, or consent to any departure by Company
therefrom, shall in any event be effective without the written concurrence of
Requisite Lenders; provided that no such amendment, modification, termination,
waiver or consent shall, without the consent of each Lender (with Obligations
directly affected in the case of the following clause (i)): (i) extend the
scheduled final maturity of any Loan or Note, or extend the stated expiration
date of any Letter of Credit beyond the Revolving Loan Commitment Termination
Date, or reduce the rate of interest (other than any waiver of any increase in
the interest rate applicable to any of the Loans pursuant to subsection 2.2E) or
fees thereon, or extend the time of payment of interest or fees thereon, or
reduce the principal amount thereof, (ii) release all or substantially all of
the Collateral or all or substantially all of the Subsidiary Guarantors from the
Subsidiary Guaranty except as expressly provided in subsection 6.11 hereof or in
the Loan Documents, (iii) amend, modify, terminate or waive any provision of
this subsection 10.6, (iv) reduce the percentage specified in the definition of
Requisite Lenders (it being understood that, with the consent of the Requisite
Lenders, additional extensions of credit pursuant to this Agreement may be
included in the determination of the Requisite Lenders on substantially the same
basis as the extensions of Term Loans and Revolving Loan Commitments are
included on the Closing Date) or (v) consent to the assignment or transfer by
Company of any of its rights and obligations under this Agreement; provided
further that no such amendment, modification, termination or waiver shall (1)
increase the Commitments of any Lender over the amount thereof then in effect
without the consent of such Lender (it being understood that amendments,
modifications or waivers of conditions precedent, covenants, Potential Events of
Default or Events of Default or of a mandatory reduction in the Commitments
shall not constitute an increase of the Commitment of any Lender, and that an
increase in the available portion of any Commitment of any Lender shall not
constitute an increase in the Commitment of such Lender); (2) without the
consent of the Swing Line Lender, amend, modify, terminate or waive any
provision of subsection 2.1A(iv) or any other provision of this Agreement
relating to the Swing Line Loan Commitment or the Swing Line Loans; (3) without
the consent of the Requisite Class Lenders of each Class which is being
allocated a lesser prepayment, repayment or commitment reduction as a result of
the actions described below (or without the consent of the Requisite Class
Lenders of each Class in the case of an amendment to the definition of Requisite
Class Lenders), amend the definition of Requisite Class Lenders or alter the
required application of any prepayments or repayments (or commitment reduction),
as between the Classes pursuant to subsection 2.4B(iv) (although the Requisite
Lenders may waive, in whole or in part, any such prepayment, repayment or
commitment reduction so long as the application, as between the Classes, of any
such prepayment, repayment or commitment reduction which is still required to be
made is not altered); (4) without the consent of Requisite Class Lenders of the
respective Class, waive or reduce any scheduled repayment set forth in
subsections 2.4A (i) and (ii) of such affected Class; (5) no amendment,
modification, termination or waiver relating to the obligations of Revolving
Lenders relating to the purchase of participations in Letters of Credit shall be
effective without the written concurrence of each Issuing Lender having a Letter
of Credit then outstanding or which has not been reimbursed for a drawing under
a Letter of Credit issued by Administrative Agent and of Administrative Agent;
or (6) without the consent of Administrative Agent, amend, modify, terminate or
waive any provision of Section 9 as the same applies to Administrative Agent or
of any other provision of this Agreement as the same applies to the rights or
obligations of Administrative Agent.
B. If, in connection with any proposed amendment, modification,
termination or waiver to any of the provisions of this Agreement or the Notes as
contemplated by clauses (i) through (v) of the first proviso of subsection
10.6A, the consent of the Requisite Lenders is obtained but the consent of one
or more of such other Lenders whose consent is required is not obtained, then
Company shall have the right, so long as all non-consenting Lenders whose
individual consent is required are treated as described in either clause (i) or
(ii) below, to either (i) replace each such non-consenting Lender or Lenders
with one or more Replacement Lenders pursuant to subsection 2.9 so long as at
the time of such replacement, each such Replacement Lender consents to the
proposed amendment, modification, termination or waiver, or (ii) terminate such
non-consenting Lender's Commitments and repay in full its outstanding Loans in
accordance with subsections 2.4B(i)(b) and 2.4B(ii)(b); provided that unless the
Commitments that are terminated and the Loans that are repaid pursuant to the
preceding clause (ii) are immediately replaced in full at such time through the
addition of new Lenders or the increase of the Commitments and/or outstanding
Loans of existing Lenders (who in each case must specifically consent thereto),
then in the case of any action pursuant to the preceding clause (ii), the
Requisite Lenders (determined before giving effect to the proposed action) shall
specifically consent thereto; provided further that Company shall not have the
right to terminate such non-consenting Lender's Commitment and repay in full its
outstanding Loans pursuant to clause (ii) of this subsection 10.6B if,
immediately after the termination of such Lender's Revolving Loan Commitment in
accordance with subsection 2.4B(ii)(b), the Revolving Loan Exposure of all
Lenders would exceed the Revolving Loan Commitments of all Lenders; provided
still further that Company shall not have the right to replace a Lender solely
as a result of the exercise of such Lender's rights (and the withholding of any
required consent by such Lender) pursuant to the second proviso to subsection
10.6A.
C. Administrative Agent may, but shall have no obligation to, with
the concurrence of any Lender, execute amendments, modifications, waivers or
consents on behalf of that Lender. Any waiver or consent shall be effective
only in the specific instance and for the specific purpose for which it was
given. No notice to or demand on Company in any case shall entitle Company to
any other or further notice or demand in similar or other circumstances. Any
amendment, modification, termination, waiver or consent effected in accordance
with this subsection 10.6 shall be binding upon each Lender at the time
outstanding, each future Lender and, if signed by Company, on Company.
10.7 INDEPENDENCE OF COVENANTS.
All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or would otherwise be within
the limitations of, another covenant shall not avoid the occurrence of an Event
of Default or Potential Event of Default if such action is taken or condition
exists.
10.8 NOTICES.
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telexed or sent by telefacsimile or United States mail
or courier service and shall be deemed to have been given when delivered in
person or by courier service, upon receipt of telefacsimile or telex, or three
Business Days after depositing it in the United States mail with postage prepaid
and properly addressed; provided that notices to Administrative Agent shall not
be effective until received. For the purposes hereof, the address of each party
hereto shall be as set forth under such party's name on the signature pages
hereof or (i) as to Company and Administrative Agent, such other address as
shall be designated by such Person in a written notice delivered to the other
parties hereto and (ii) as to each other party, such other address as shall be
designated by such party in a written notice delivered to Administrative Agent.
10.9 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
A. All representations, warranties and agreements made herein shall
survive the execution and delivery of this Agreement and the making of the Loans
and the issuance of the Letters of Credit hereunder.
B. Notwithstanding anything in this Agreement or implied by law to
the contrary, the agreements of Company set forth in subsections 2.6D, 2.7,
3.5A, 3.6, 10.2, 10.3 and 10.4 and the agreements of Lenders set forth in subsec
tions 9.2C, 9.4 and 10.5 shall survive the payment of the Loans, the
cancellation or expiration of the Letters of Credit and the reimbursement of any
amounts drawn thereunder, and the termination of this Agreement. Without
limiting the generality of the immediately preceding sentence, Company's
obligations relating to any Environmental Losses under subsection 10.3 shall
survive the sale or other transfer of subject Mortgaged Property by Company (or
its Affiliate) prior to the Transfer Date.
10.10 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of Administrative Agent or any Lender
in the exercise of any power, right or privilege hereunder or under any other
Loan Document shall impair such power, right or privilege or be construed to be
a waiver of any default or acquiescence therein, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other power, right or privilege. All rights and
remedies existing under this Agreement and the other Loan Documents are
cumulative to, and not exclusive of, any rights or remedies otherwise available.
10.11 MARSHALLING; PAYMENTS SET ASIDE.
Neither Administrative Agent nor any Lender shall be under any obliga
tion to marshal any assets in favor of Company or any other party or against or
in payment of any or all of the Obligations. To the extent that Company makes a
payment or payments to Administrative Agent or Lenders (or to Administrative
Agent for the benefit of Lenders), or Administrative Agent or Lenders enforce
any security interests or exercise their rights of setoff, and such payment or
payments or the proceeds of such enforcement or setoff or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, any other state or federal law, common law or any equitable
cause, then, to the extent of such recovery, the obligation or part thereof
originally intended to be satisfied, and all Liens, rights and remedies therefor
or related thereto, shall be revived and continued in full force and effect as
if such payment or payments had not been made or such enforcement or setoff had
not occurred.
10.12 SEVERABILITY.
In case any provision in or obligation under this Agreement or the
Notes shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
10.13 OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF LENDERS' RIGHTS.
The obligations of Lenders hereunder are several and no Lender shall be
responsible for the obligations or Commitments of any other Lender hereunder.
Nothing contained herein or in any other Loan Document, and no action taken by
Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and each Lender shall be entitled to protect and enforce its
rights arising out of this Agreement and it shall not be necessary for any other
Lender to be joined as an additional party in any proceeding for such purpose.
10.14 HEADINGS.
Section and subsection headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
10.15 APPLICABLE LAW.
THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF
THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
10.16 SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and assigns of Lenders (it being understood that
Lenders' rights of assignment are subject to subsection 10.1). Neither
Company's rights or obligations hereunder nor any interest therein may be
assigned or delegated by Company without the prior written consent of all
Lenders.
10.17 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST COMPANY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY OBLIGATIONS
THEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING AND
DELIVERING THIS AGREEMENT, COMPANY, FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE
JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN
ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO COMPANY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SUBSECTION
10.8;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS
SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER COMPANY IN ANY SUCH
PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT;
(V) AGREES THAT LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST COMPANY IN THE
COURTS OF ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 10.17 RELATING TO
JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST
EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR
OTHERWISE.
10.18 WAIVER OF JURY TRIAL.
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE
LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this
waiver is intended to be all-encompassing of any and all disputes that may be
filed in any court and that relate to the subject matter of this transaction,
including without limitation contract claims, tort claims, breach of duty claims
and all other common law and statutory claims. Each party hereto acknowledges
that this waiver is a material inducement to enter into a business relationship,
that each has already relied on this waiver in entering into this Agreement, and
that each will continue to rely on this waiver in their related future dealings.
Each party hereto further warrants and represents that it has reviewed this
waiver with its legal counsel and that it knowingly and voluntarily waives its
jury trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SUBSECTION
10.18 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY
TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. In the event of litigation,
this Agreement may be filed as a written consent to a trial by the court.
10.19 CONFIDENTIALITY.
Each Lender shall hold all non-public information obtained pursuant to
the requirements of or in connection with this Agreement which has been
identified as confidential by Company in accordance with such Lender's customary
procedures for handling confidential information of this nature and in
accordance with safe and sound lending or investment practices, it being
understood and agreed by Company that in any event a Lender may make disclosures
to Affiliates of such Lender or disclosures reasonably required by any bona fide
assignee, transferee or participant in connection with the contemplated
assignment or transfer by such Lender of any Loans or any participations therein
or disclosures required or requested by any governmental agency or repre
sentative thereof or the NAIC or pursuant to legal process; provided that,
unless specifically prohibited by applicable law or court order, each Lender
shall use its best efforts to notify Company of any request by any governmental
agency or representative thereof (other than any such request in connection with
any examination of the financial condition of such Lender by such governmental
agency) for disclosure of any such non-public information prior to disclosure of
such information; and provided, further that in no event shall any Lender be
obligated or required to return any materials furnished by Company or any of its
Subsidiaries.
10.20 COUNTERPARTS; EFFECTIVENESS.
This Agreement and any amendments, waivers, consents or supplements
hereto or in connection herewith may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto and receipt by Company and
Administrative Agent of written or telephonic notification of such execution and
authorization of delivery thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
COMPANY: SMITH'S FOOD & DRUG CENTERS, INC.
By: \s\Michael C. Frei
-------------------------------
Title: Senior Vice President
-------------------------------
Notice Address:
1550 South Redwood Road
Salt Lake City, UT 84104
Attention: Michael Frei
LENDERS: THE CHASE MANHATTAN BANK,
INDIVIDUALLY AND AS ADMINISTRATIVE AGENT
By: \s\Ellen Gertzog
------------------------------
Title: Vice President
------------------------------
Notice Address:
270 Park Avenue
9th Floor
New York, NY 10017-2070
Attention: Ellen Gertzog
BANKERS TRUST COMPANY,
INDIVIDUALLY AND AS SYNDICATION AGENT
By: \s\Gena S. Thompson
------------------------------
Title: Vice President
------------------------------
Notice Address:
One Bankers Trust Plaza
130 Liberty Street
14th Floor
New York, NY 10006
Attention: Lori Marrone
With a copy to:
One Bankers Trust Plaza
130 Liberty Street
30th Floor
New York, NY 10006
Attention: Mary Kay Coyle
THE FIRST NATIONAL BANK OF CHICAGO
By: \s\Christine Zautcke
------------------------------
Title: Vice President
------------------------------
Notice Address:
One First National Plaza
Suite 0088
Chicago, IL 60670
Attention: Sharon Bosch
UNION BANK OF CALIFORNIA, N.A.
By: \s\Dana A. Cox
------------------------------
Title: Vice President
------------------------------
Notice Address:
Retailing Industries Department
350 California St.
11th Floor
San Francisco, CA 94104
Attention: Timothy P. Streb
PPM AMERICA, INC., AS ATTORNEY IN FACT, ON
BEHALF OF JACKSON NATIONAL LIFE INSURANCE
COMPANY
By: \s\Michael DiRe
-------------------------------
Title: Managing Director/Head,
-------------------------------
High Yield Bank Loans
-------------------------------
Notice Address:
225 West Wacker Drive, Suite 1200
Chicago, IL 60606-1228
Attention: Private Placements
Michael DiRe or Guy Petrelli
HELLER FINANCIAL, INC.
By: \s\Christina M. Rashid
------------------------------
Title: Vice President
------------------------------
Notice Address:
500 W. Monroe St.
Chicago, IL 60661
Attention: Linda Wolf
BANK OF IRELAND,
GRAND CAYMAN BRANCH
By: \s\Roger Burns
------------------------------
Title: Vice President
------------------------------
Notice Address:
640 5th Avenue
New York, NY 10019
Attention: Roger Burns
Vice President
THE BANK OF NOVA SCOTIA
By: \s\John Quick
------------------------------
Title:
------------------------------
Notice Address:
580 California Street, Suite 2100
San Francisco, CA 94104
Attention: John Quick
ZIONS FIRST NATIONAL BANK
By: \s\Richard Jackson
------------------------------
Title: Vice President
------------------------------
Notice Address:
One South Main Street - 2F
Salt Lake City, UT 84111
Attention: Richard Jackson
THE SUMITOMO TRUST & BANKING CO., LTD.
LOS ANGELES AGENCY
By: \s\Eleanor Chan
--------------------------------
Title: Manager & Vice President
--------------------------------
Notice Address:
333 S. Grand Ave., Suite 5300
Los Angeles, CA 90071
Attention: Loan Administration
with a copy to: Karen Ryan
THE INDUSTRIAL BANK OF JAPAN, LIMITED
LOS ANGELES AGENCY
By: \s\Vicente L. Timiraos
-------------------------------
Title: Senior Vice President &
-------------------------------
Senior Manager
-------------------------------
Notice Address:
350 S. Grand Avenue, Suite 1500
Los Angeles, CA 90071
Attention: Mark Moss
THE SUMITOMO BANK, LTD.
By: \s\Goro Hirai
------------------------------
Title: Joint General Manager
------------------------------
Notice Address:
777 S. Figueroa St, 26th Floor
Los Angeles, CA 90017
Attention: Alicia Romo
ABN AMRO BANK N.V.
SAN FRANCISCO INTERNATIONAL BRANCH
By: \s\Dianne D. Barkley
--------------------------------
Title: Group Vice President
--------------------------------
By: \s\Daniel P. Taylor
--------------------------------
Title: Assistant Vice President
--------------------------------
Notice Address:
101 California Street, Sutie 4550
San Francisco, CA 94111-5812
Attention: Dianne D. Barkley
Group Vice President
THE MITSUBISHI TRUST AND BANKING
CORPORATION
By: \s\Patricia Loret de Mola
------------------------------
Title: Senior Vice President
------------------------------
Notice Address:
520 Madison Avenue, 26th Floor
New York, New York 10022
Attention: Patricia Loret de Mola
Senior Vice President
BANQUE PARIBAS
By: \s\Linda L. Aleshire
------------------------------
Title: Vice President
------------------------------
By: \s\Stanley P. Berkman
------------------------------
Title: General Manager
------------------------------
Western Region
------------------------------
Notice Address:
2029 Century Park East
Suite 3900
Los Angeles, CA 90067
Attention: Linda Aleshire
COMPAGNIE FINANCIERE DE CIC
ET DE L'UNION EUROPEENNE
By: \s\Brian O'Leary
------------------------------
Title: Vice President
------------------------------
By: \s\Sean Mounier
------------------------------
Title: First Vice President
------------------------------
Notice Address:
520 Madison Avenue
37th Floor
New York, NY 10022
Attention: Brian O'Leary
CIBC INC.
By: \s\Daniel H. Hom
-------------------------------
Title: Director, CIBC Wood
-------------------------------
Gundy Securities Corp.,
-------------------------------
AS AGENT
-------------------------------
Notice Address:
350 South Grand Avenue
Suite 2600
Los Angeles, CA 90071
Attention: Daniel H. Hom
PRIME INCOME TRUST
By: \s\Rafael Scolari
------------------------------
Title: V.P. Portfolio Manager
------------------------------
Notice Address:
2 World Trade Center - 72nd Floor
New York, NY 10048
Attention: Rafael Scolari
US BANK
By: \s\Janet Jordan
------------------------------
Title: Vice President
------------------------------
Notice Address:
555 S.W. Oak Street, Suite 400
Portland, OR 97204
Attention: Janet Jordan
THE SANWA BANK, LIMITED
LOS ANGELES BRANCH
By: \s\Gill S. Realon
------------------------------
Title: Vice President
------------------------------
Notice Address:
601 South Figueroa St., W5-4
Los Angeles, CA 90017
Attention: Gill S. Realon
ING CAPITAL ADVISORS, INC.,
AS AGENT FOR BANK SYNDICATION ACCOUNT
By: \s\Michael Hatley
------------------------------
Title: Vice President and
------------------------------
Portfolio Manager
------------------------------
Notice Address:
333 South Grand Avenue, Suite 4250
Los Angeles, CA 90071
Attention: Michael Hatley
MARINE MIDLAND BANK
By: \s\J B Lyons
------------------------------
Title: Senior Vice President
------------------------------
Notice Address:
HSBC Investment Banking
140 Broadway, 5th Floor
New York, NY 10005
Attention: Gina Sidorsky
KZH HOLDING CORPORATION
By: \s\Robert Goodwin
------------------------------
Title: Authorized Agent
------------------------------
Notice Address:
c/o The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, NY 10001
Attention: Robert Goodwin
CRESCENT/MACH I PARTNERS, L.P.
BY: TCW ASSET MANAGEMENT COMPANY, ITS
INVESTMENT MANAGER
By: \s\Justin Driscoll
------------------------------
Title:
------------------------------
Notice Address:
200 Park Avenue, Suite 2200
New York, NY 10166-0228
Attention: Mark L. Gold/Justin Driscoll
TCW ASSET MANAGEMENT COMPANY, AS ATTORNEY-IN-
FACT FOR INTEGON LIFE INSURANCE CORPORATION
By: \s\Justin Driscoll
------------------------------
Title:
------------------------------
Notice Address:
200 Park Avenue, Suite 2200
New York, NY 10166-0228
Attention: Mark L. Gold/Justin Driscoll
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC.
By: \s\John W. Fraser
------------------------------
Title: Authorized Signatory
------------------------------
Notice Address:
800 Scudders Mill Road, Area 2C
Plainsboro, NJ 08536
Attention: John W. Fraser
CREDIT LYONNAIS LOS ANGELES BRANCH
By: \s\David Miller
------------------------------
Title: Vice President
------------------------------
Notice Address:
515 South Flower Street
Suite 2200
Los Angeles, California 90071
Attention: David Miller
Vice President
ALLIEDSIGNAL INC.
BY: SHENKMAN CAPITAL, AS ATTORNEY-IN-FACT
By: \s\Frank X. Whitley
------------------------------
Title: Senior Vice President
------------------------------
Notice Address:
461 5th Avenue, 22nd Floor
New York, NY 10017
Attention: Frank Whitley
NEW YORK LIFE INSURANCE COMPANY
By: \s\Adam G. Clemens
------------------------------
Title: Managing Director
------------------------------
Notice Address:
51 Madison Avenue
New York, NY 10010
Attention: Vice President
Investment Department
Private Finance Group
TCW ASSET MANAGEMENT COMPANY, AS ATTORNEY-IN-
FACT FOR OCCIDENTAL LIFE INSURANCE COMPANY OF
NORTH CAROLINA
By: \s\Justin Driscoll
------------------------------
Title:
------------------------------
Notice Address:
200 Park Avenue, Suite 2200
New York, New York 10166-0228
Attention: Mark L. Gold/Justin Driscoll
MORGAN STANLEY SENIOR FUNDING, INC.
By: \s\Christopher A. Pucillo
------------------------------
Title:
------------------------------
Notice Address:
1585 Broadway, 2nd Floor
New York, NY 10036
Attention: Chris Pucillo
SOUTHERN PACIFIC THRIFT AND LOAN
ASSOCIATION
By: \s\Charles D. Martorano
------------------------------
Title: Senior Vice President
------------------------------
Notice Address:
12300 Wilshire Blvd., Suite 200
Los Angeles, CA 90025
Attention: Chris Kelleher
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
By: \s\Michael P. Hermsen
------------------------------
Title: Managing Director
------------------------------
Notice Address:
1295 State Street
Springfield, MA 01111
Attention: John Wheeler
MITSUI LEASING (U.S.A.) INC.
By: \s\Jerry Parisi
------------------------------
Title: Senior Vice President
------------------------------
Notice Address:
200 Park Avenue, Suite 3214
New York, NY 10166
Attention: Jerry Parisi
VAN KAMPEN AMERICAN CAPITAL PRIME RATE
INCOME TRUST
By: \s\Kathleen A. Zarn
------------------------------
Title: Vice President
------------------------------
Notice Address:
One Parkview Plaza
Oakbrook Terrace, IL 60181
Attention: Jeffrey W. Maillet
TRANSAMERICA BUSINESS CREDIT CORPORATION
By: \s\Perry Vavoules
------------------------------
Title: Senior Vice President
------------------------------
Notice Address:
555 Theodore Fremd Avenue
Suite C-301
Rye, NY 10580
Attention: Ron Walker
MERITA BANK LTD - NEW YORK BRANCH
By: \s\Frank Maffei
------------------------------
Title: Vice President
------------------------------
By: \s\John Kehnle
------------------------------
Title: Vice President
------------------------------
Notice Address:
437 Madison Avenue
New York, NY 10022
Attention: Frank Maffei
ORIX USA CORPORATION
By: \s\Hiroyuki Miyauchi
------------------------------
Title: Senior Vice-President
------------------------------
Notice Address:
780 Third Avenue, 48th Floor
New York, NY 10017-7088
Attention: Kiyomi Kosaka
OAK HILL SECURITIES FUND, L.P.
By: Oak Hill Securities GenPar, L.P.
its General Partner
By: Oak Hill Securities MGP, Inc.,
its General Partner
By: \s\Scott D. Krase
------------------------------
Title: Vice President
------------------------------
FLEET NATIONAL BANK
By: \s\Eugene M. Sullivan
------------------------------
Title: Senior Vice President
------------------------------
Notice Address:
175 Water Street
27th Floor
New York, New York 10038
Attention: George Triebenbacher
BANK OF AMERICA NT&SA
By: \s\Linda A. Carper
------------------------------
Title: Managing Director
------------------------------
Notice Address:
335 Madison Avenue, #9618-LFG
New York, NY 10017
Attention: Linda A. Carper, M.D.
NATIONAL CITY BANK
By: \s\Lisa Lisi
--------------------------------
Title: Assistant Vice President
--------------------------------
Notice Address:
1900 E. Ninth Street, LOC 2102
Cleveland, Ohio 44114
Attention: Lisa B. Lisi
IMPERIAL BANK
By: \s\Ray Vadalma
------------------------------
Title: Senior Vice President
------------------------------
Notice Address:
9920 South La Cienega Blvd., 14th Floor
Inglewood, CA 90301
Attention: Ray Vadalma
THE TRAVELERS INSURANCE COMPANY
By: \s\Robert M. Mills
------------------------------
Title:
------------------------------
Notice Address:
Investment Group - 9PB
205 Columbus Boulevard - Loading Dock
Hartford, CT 06183-2030
Attention: Robert Mills
THE NIPPON CREDIT BANK, LTD.
LOS ANGELES AGENCY
By: \s\Bernardo E. Correa-Henschke
-----------------------------------
Title: Vice President & Senior
-----------------------------------
Manager
-----------------------------------
Notice Address:
550 South Hope Street
Suite 2500
Los Angeles, CA 90071
Attention: Julien Michaels
FIRST SECURITY BANK OF UTAH, N.A.
By: \s\Jon VanderStek
------------------------------
Title: Vice President
------------------------------
Notice Address:
15 East 100 South, 2nd Floor
Salt Lake City, Utah 84111
Attention: Jon VanderStek
PARIBAS CAPITAL FUNDING LLC
By: \s\Eric Green
------------------------------
Title: Director
------------------------------
Notice Address:
787 Seventh Avenue, 32nd Floor
New York, NY 10019
Attention: Francois Gauvin
OCTAGON CREDIT INVESTORS LOAN PORTFOLIO
(A UNIT OF THE CHASE MANHATTAN BANK)
By: \s\Richard W. Stewart
------------------------------
Title: Managing Director
------------------------------
Notice Address:
380 Madison Avenue - 12F
New York, NY 10017
Attention: Rick Stewart
THE DAI-ICHI KANGYO BANK, LTD.,
LOS ANGELES AGENCY
By: \s\Masatsugu Morishita
-------------------------------
Title: Senior Vice President &
-------------------------------
Joint General Manager
-------------------------------
Notice Address:
555 West 5th Street
Fifth Floor
Los Angeles, CA 90013
Attention: David K. Henry
THE FUJI BANK, LIMITED
LOS ANGELES AGENCY
By: \s\Hirotoshi Naito
------------------------------
Title: Joint General Manager
------------------------------
Notice Address:
333 S. Hope Street, 39th Floor
Los Angeles, CA 90071
Attention: Ching Lim
THE SAKURA BANK, LIMITED
By: \s\Fernando Buesa
---------------------------------
Title: Vice President
---------------------------------
By: \s\Ofusa Sato
---------------------------------
Title: Senior Vice President &
---------------------------------
Assistant General Manager
---------------------------------
Notice Address:
515 South Figueroa St.
Los Angeles, CA 90071
Attention: Fernando Buesa
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