<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
_________
FORM 10-Q
(Mark one)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
-----
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED OCTOBER 11, 1998
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 001-10811
SMART & FINAL INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE NO. 95-4079584
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
600 Citadel Drive
City of Commerce, California 90040
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (323) 869-7500
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No____.
The registrant had 22,531,179 shares of common stock outstanding as of November
20, 1998.
Number of Sequentially Numbered Pages: 19
Exhibit Index at Page: 18
================================================================================
<PAGE>
SMART & FINAL INC.
INDEX
PART I
FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Page
<S> <C>
Item 1. Financial Statements
Unaudited Consolidated Balance Sheets 2
Unaudited Consolidated Statements of Income 3
Unaudited Consolidated Statements of Cash Flows 4
Notes to Unaudited Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition 8
and Results of Operations
PART II
OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 2. Changes in Securities 15
Item 3. Defaults upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
</TABLE>
1
<PAGE>
SMART & FINAL INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
OCTOBER 11, JANUARY 4,
ASSETS 1998 1998
- ------ ----------------- ----------------
<S> <C> <C>
Current assets: (Unaudited)
Cash & cash equivalents $ 23,916 $ 22,891
Trade notes and accounts receivable, less
allowance for doubtful accounts of
$2,781 in 1998 and $5,518 in 1997 79,879 75,995
Inventories 146,405 129,761
Prepaid expenses 14,942 15,906
Deferred tax asset 9,600 9,600
----------------- ----------------
Total current assets 274,742 254,153
Property, plant and equipment:
Land 36,387 35,631
Buildings and improvements 29,625 29,530
Leasehold improvements 75,963 67,821
Fixtures and equipment 156,515 139,316
----------------- ----------------
298,490 272,298
Less - Accumulated depreciation and amortization 102,941 85,808
----------------- ----------------
Net property, plant and equipment 195,549 186,490
Assets under capital leases, net 4,135 4,535
Goodwill 53,723 18,940
Deferred tax asset 3,148 3,148
Other assets 20,497 20,879
----------------- ----------------
Total Assets $ 551,794 $ 488,145
================= ================
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Current maturities of long-term debt $ 6,103 $ 3,576
Current maturities of notes payable to affiliates 7,600 7,600
Bank line of credit 65,000 37,000
Accounts payable 86,163 77,116
Payable to Parent and affiliates 26,174 18,589
Accrued salaries and wages 12,195 9,528
Other accrued liabilities 30,376 32,262
----------------- ----------------
Total current liabilities 233,611 185,671
Long-term liabilities:
Notes payable, net of current maturities 16,659 4,061
Notes payable to affiliates 22,800 22,800
Bank debt 45,000 45,000
Obligations under capital leases 7,620 8,163
Other long-term liabilities 3,011 2,937
Workers' compensation reserve, postretirement
and postemployment benefits 19,156 18,068
----------------- ----------------
Total long-term liabilities 114,246 101,029
Minority interest - 1,116
Stockholders' equity:
Preferred stock, $1 par value (authorized-
10,000,000 shares; no shares issued) - -
Common stock, $0.01 par value (authorized-
100,000,000 shares; 22,527,179 shares issued
and outstanding in 1998 and 22,386,181 in 1997) 225 224
Additional paid-in capital 144,920 142,865
Cumulative translation loss (835) (835)
Retained earnings 59,627 58,075
----------------- ----------------
Total stockholders' equity 203,937 200,329
----------------- ----------------
Total liabilities and stockholders' equity $ 551,794 $ 488,145
================= ================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
2
<PAGE>
SMART & FINAL INC.
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Sixteen Weeks Ended Forty Weeks Ended
---------------------------- ----------------------------
October 11, October 5, October 11, October 5,
1998 1997 1998 1997
------------- ------------ ------------ ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Sales.............................................................. $ 546,434 $ 442,522 $ 1,261,289 $ 1,084,454
Cost of sales, buying and occupancy................................ 473,566 381,236 1,100,801 928,883
------------- ------------ ------------ ------------
Gross margin....................................................... 72,868 61,286 160,488 155,571
Operating and administrative expenses.............................. 59,619 47,746 142,495 119,750
------------- ------------ ------------ ------------
Income from operations...................................... 13,249 13,540 17,993 35,821
Interest expense, net.............................................. 4,044 2,613 8,610 5,877
------------- ------------ ------------ ------------
Income before income taxes, minority share
of net income, and cumulative effect of accounting change..... 9,205 10,927 9,383 29,944
Provision for income taxes......................................... 3,573 4,227 3,546 11,505
Minority share of net income....................................... - (140) - (24)
------------- ------------ ------------ ------------
Income from consolidated subsidiaries........................ 5,632 6,840 5,837 18,463
Equity earnings in unconsolidated subsidiary....................... 3 - 190 200
------------- ------------ ------------ ------------
Income before cumulative effect of accounting change......... 5,635 6,840 6,027 18,663
Cumulative effect of accounting change (start-up costs, net of
tax effect of $758)........................................... - - 1,090 -
------------- ------------ ------------ ------------
Net income................................................... $ 5,635 $ 6,840 $ 4,937 $ 18,663
============= ============ ============ ============
Earnings per common share:
Earnings per common share before cumulative effect of
accounting change............................................. $ 0.25 $ 0.31 $ 0.27 $ 0.84
Cumulative effect of accounting change per common share......... - - (0.05) -
------------- ------------ ------------ ------------
Earnings per common share....................................... $ 0.25 $ 0.31 $ 0.22 $ 0.84
============= ============ ============ ============
Weighted average common shares..................................... 22,513,649 22,196,781 22,458,109 22,093,548
============= ============ ============ ============
Earnings per common share, assuming dilution:
Earnings per common share, assuming dilution, before
cumulative effect of accounting change........................ $ 0.25 $ 0.30 $ 0.27 $ 0.82
Cumulative effect of accounting change per common share......... - - (0.05) -
------------- ------------ ------------ ------------
Earnings per common share, assuming dilution.................... $ 0.25 $ 0.30 $ 0.22 $ 0.82
============= ============ ============ ============
Weighted average common shares
and common share equivalents................................... 22,594,482 23,014,019 22,746,812 22,881,474
============= ============ ============ ============
Dividend per common share.......................................... $ 0.05 $ 0.05 $ 0.15 $ 0.15
============= ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE>
SMART & FINAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FORTY WEEKS ENDED
------------------------------------
OCTOBER 11, OCTOBER 5,
1998 1997
------------- -------------
<S> <C> <C>
Cash Flows From Operating Activities: (UNAUDITED)
Net income........................................................ $ 4,937 $ 18,663
Adjustments to reconcile net income to net
cash provided by operating activities:
Gain on disposal of fixed assets................................ (3,021) (1,840)
Depreciation and amortization................................... 22,409 19,411
Cumulative effect of accounting change, net of taxes............ 1,090 -
Minority share of net income.................................... - (24)
Equity earnings in unconsolidated subsidiary.................... (190) (200)
Decrease (increase) in:
Trade notes and accounts receivable.......................... (890) (13,120)
Inventories.................................................. 6,189 (8,630)
Prepaid expenses and other................................... 1,618 (2,913)
Increase (decrease) in:
Accounts payable............................................. 3,381 (5,903)
Accrued liabilities.......................................... 2,667 (1,416)
Other liabilities............................................ 333 1,462
------------- -------------
Net cash provided by operating activities....................... 38,523 5,490
------------- -------------
Cash Flows From Investing Activities:
Acquisition of property, plant and equipment...................... (26,033) (26,022)
Proceeds from disposal of property, plant and equipment........... 3,580 10,416
Acquisition of business........................................... (44,401) (11,300)
Other............................................................. (1,845) (2,752)
------------- -------------
Net cash used in investing activities........................... (68,699) (29,658)
------------- -------------
Cash Flows From Financing Activities:
Proceeds from issuance of common stock............................ 1,737 3,260
Borrowings on bank line of credit................................. 65,000 25,000
Payments on bank line of credit................................... (37,000) -
Payments on notes payable......................................... (2,918) (2,054)
Increase in payable to Parent and affiliates...................... 7,746 3,835
Quarterly dividend paid........................................... (3,364) (3,321)
------------- -------------
Net cash provided by financing activities....................... 31,201 26,720
------------- -------------
Increase in cash and cash equivalents................................... 1,025 2,552
Cash and cash equivalents at beginning of period........................ 22,891 16,795
------------- -------------
Cash and cash equivalents at end of period.............................. $ 23,916 $ 19,347
============= =============
Noncash Investing and Financing Activities:
Note issued in connection with acquisition of business............ $ 17,500 $ 1,000
============= =============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
(1) BASIS OF PRESENTATION
Smart & Final Inc. (the "Company") is a Delaware corporation and is a 55.1
percent owned subsidiary of Casino USA, Inc. (the "Parent"), and Casino Realty,
Inc., a wholly owned subsidiary of Casino USA. On November 2, 1998, Casino
Realty, Inc. was dissolved and its remaining assets were transferred to the
Parent.
The consolidated balance sheet as of October 11, 1998, the consolidated
statements of income for the sixteen and forty weeks ended October 11, 1998 and
October 5, 1997, and cash flows for the forty weeks ended October 11, 1998 and
October 5, 1997 are unaudited. In the opinion of management, all adjustments
necessary for a fair presentation of these financial statements have been
included. Such adjustments consisted only of normal recurring items. Interim
results are not necessarily indicative of results for a full year.
These consolidated financial statements should be read in conjunction with
the consolidated financial statements and notes thereto included in the
Company's Form 10-K statement for the year ended January 4, 1998.
(2) EARNINGS PER COMMON SHARE
Earnings per common share is based on the weighted average number of shares
of common stock outstanding. Earnings per common share, assuming dilution,
includes the weighted average number of common stock equivalents outstanding
related to employee stock options and a stock purchase agreement.
(3) FISCAL YEARS
The Company's fiscal year ends on the Sunday closest to December 31. Each
fiscal year consists of twelve-week periods in the first, second and fourth
quarters and a sixteen-week period in the third quarter.
(4) DIVIDEND
On September 28, 1998, the Company declared a dividend of $0.05 per share
to stockholders of record at October 2, 1998. The dividend was paid on October
30, 1998.
5
<PAGE>
SMART & FINAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
(5) INCOME TAXES
Tax sharing payments for state income taxes made by the Company to the
Parent were $2,224,000 in the forty weeks ended October 5, 1997. In the forty
weeks ended October 11, 1998, the Company received a refund of $1,509,000 from
the Parent for state income taxes overpaid, due to the loss for 1997 and the
first half of 1998. The Company paid $8,075,000 in federal income taxes in the
forty-week period ended October 5, 1997 and did not pay any taxes in the forty-
week period ended October 11, 1998 due to losses in the first half of 1998.
(6) LEGAL ACTIONS
The Company has been named as defendant in various legal actions arising in
the normal conduct of its business. In the opinion of management, after
consultation with counsel, none of these actions are expected to result in
significant liability to the Company.
(7) ACCOUNTING STANDARDS
During the first quarter of 1998, the Company adopted the provisions of the
American Institute of Certified Public Accountants ("AICPA") Statement of
Position 98-5, "Reporting on the Costs of Start-up Activities". This statement
requires that costs of start-up activities and organization costs be expensed as
incurred. Adoption of this statement resulted in a cumulative effect of
accounting change, net of tax, charge of $1.1 million, or $0.05 per diluted
share.
The Company adopted the provisions of AICPA Statement of Position 98-1,
"Accounting for the costs of Computer Software Developed or Obtained for
Internal Use" during the first quarter of 1998. This statement provides guidance
on accounting for the costs of computer software developed or obtained for
internal use. Adoption of this statement had no material impact on the Company's
consolidated financial statements.
During the first quarter of 1998, the Company adopted the provisions of
Statement of Financial Accounting Standard No. 130 "Reporting Comprehensive
Income". This statement establishes standards for reporting and display of
comprehensive income. There was no difference between comprehensive income and
net income for the periods presented.
6
<PAGE>
SMART & FINAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
(8) ACQUISITION OF BUSINESS
On May 15, 1998, the Company acquired the Cash & Carry operating business
of United Grocers, Inc. which included 39 stores operating in the Pacific
Northwest. The purchase price consisted of $42.5 million in cash, plus a $17.5
million five-year unsecured note. The cash payment was financed by a bridge
loan from the Company's major commercial bank. The results of operations for
the sixteen and forty weeks ended October 11, 1998 include the results of
operations of the acquired Cash & Carry stores since May 15, 1998. The
acquisition has been accounted for using the purchase method of accounting. The
purchase price has been allocated to assets acquired based on preliminary
estimates subject to change when additional information and studies are
completed. The excess of the aggregate purchase price over the fair market
values of the net assets acquired, of approximately $34.7 million, has been
reflected in the balance sheet as "goodwill" and will be amortized over forty
years.
(9) BRIDGE LOAN
Effective April 30, 1998, the Company entered into a Credit Agreement
("Bridge Loan") with Credit Lyonnais Los Angeles Branch for $65 million. The
Bridge Loan has an interest rate structure similar to the Company's $50 million
long-term revolving unsecured line of credit. Proceeds from the Bridge loan
were used to fund the cash payment associated with the United Grocers Cash &
Carry store operations acquisition and to reduce other outstanding debt. The
Bridge loan matures on April 29, 1999.
(10) SUBSEQUENT EVENTS
Effective November 13, 1998, the Company entered into a $55.4 million Loan
Agreement ("Casino Loan") with Casino USA, Inc. The Casino Loan replaces the
Company's existing unsecured promissory note that was issued in conjunction with
the 1996 acquisition of real property from Casino USA, Inc. and Casino Realty,
affiliated parties, that had an outstanding balance of $30.4 million. It also
replaces all outstanding advances made to the Company from Casino USA, Inc. and
Casino Realty. Interest for this loan is at LIBOR plus 4.50%. The Casino Loan
matures on February 15, 2002.
Effective November 13, 1998, the Company entered into Senior Secured Credit
Facilities with a group of banks totaling $240 million. The Senior Secured
Credit Facilities include a $150 million Revolving Credit Facility ("Revolving
Loan") and a $90 million Secured Lease Facility. These facilities expire on
November 13, 2001. At the Company's option, the Revolving Loan can be used to
support daily borrowings up to $15 million and up to $10 million of commercial
letters of credit. The Revolving Loan replaces the Company's existing $65
million Bridge Loan and its existing $50 million revolving line of credit. The
Secured Lease Facility replaces the Company's three existing $30 million lease
facilities. Interest for these facilities is at LIBOR, or the Administrative
Agent's reference rate, plus designated amounts.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Management's discussion and analysis should be read in conjunction with the
accompanying consolidated financial statements and notes thereto and the
Company's annual report on Form 10-K for the year ended January 4, 1998.
SUMMARY
Smart & Final Inc. (the "Company") reported net income of $5.6 million, or
$0.25 per diluted share, for the sixteen weeks ended October 11, 1998, compared
to net income of $6.8 million, or $0.30 per diluted share, in the sixteen weeks
ended October 5, 1997.
For the forty weeks ended October 11, 1998, the Company reported net income
of $4.9 million, or $0.22 per diluted share, compared to net income of $18.7
million, or $0.82 per diluted share, for the forty weeks ended October 5, 1997.
The 1998 period reflects a net of tax charge of $1.1 million, or $0.05 per
diluted share, which represents the cumulative effect of accounting change
related to adoption of the American Institute of Certified Public Accountants
("AICPA") Statement of Position 98-5.
The decline in operating earnings for the third quarter and for the first
three quarters of the year was attributed primarily to a decline in year to year
earnings from Florida foodservice operations and reductions in vendor rebate and
allowance income. Florida operations began encountering distribution problems
early in the third quarter of 1997. Distribution efficiencies have improved in
1998, but comparative first three-quarters earnings are substantially lower due
to these problems. Vendor income is recognized as earned and, although down in
the comparative results for the first three-fourths of the year, is expected to
rise in the last quarter comparative results. Year-to-date results in 1998 were
also affected by slow sales growth as a result of record rainfall early in the
year.
RESULTS OF OPERATIONS
The following table shows, for the periods indicated, certain condensed
consolidated income statement data, expressed as a percentage of total sales.
<TABLE>
<CAPTION>
Sixteen Weeks Ended Forty Weeks Ended
------------------------- -------------------------
October 11, October 5, October 11, October 5,
1998 1997 1998 1997
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Sales:
Store sales 75.2% 72.8% 71.9% 73.3%
Foodservice distribution sales 24.8 27.2 28.1 26.7
----- ----- ----- -----
Total Sales........................................ 100.0 100.0 100.0 100.0
Cost of sales, buying and occupancy... 86.7 86.2 87.3 85.7
----- ----- ----- -----
Gross margin...................................... 13.3 13.8 12.7 14.3
Operating and administrative expenses 10.9 10.8 11.3 11.0
----- ----- ----- -----
Income from operations........................... 2.4 3.0 1.4 3.3
Interest expense, net.............................. 0.7 0.6 0.7 0.5
----- ----- ----- -----
Income before income taxes, minority
share of net income, and cumulative
effect of accounting change...................... 1.7 2.5 0.7 2.8
Income taxes....................................... 0.7 1.0 0.3 1.1
Minority share of net income....................... -- -- -- --
----- ----- ----- -----
Income before cumulative effect of
accounting change................................ 1.0 1.5 0.5 1.7
Cumulative effect of accounting
change (start-up costs).......................... -- -- 0.1 --
----- ----- ----- -----
Net income......................................... 1.0% 1.5% 0.4% 1.7%
===== ===== ===== =====
* Totals do not aggregate due to rounding.
</TABLE>
8
<PAGE>
Background
The Company continued its expansion and acquisition program in 1998 and
1997 as shown in the following table:
<TABLE>
<CAPTION>
Three
Quarter Ended Quarters Ended Year Ended
------------------------- ------------------------- -----------
October 11, October 5, October 11, October 5, January 4,
1998 1997 1998 1997 1998
------------ ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
USA
Store count beginning 208 168 167 168 168
Stores opened:
In new markets -- -- 1 -- 1
In mature markets 1 -- 2 2 3
Stores acquired -- -- 39 -- --
---- ---- ---- ---- ----
Total 1 -- 42 2 4
Relocations -- 2 3 5 7
Stores relocated/(closed) (2) (2) (5) (7) (12)
---- ---- ---- ---- ----
Store count ending 207 168 207 168 167
MEXICO
Store count beginning 6 5 5 5 5
New stores opened -- -- 1 -- --
---- ---- ---- ---- ----
Store count ending 6 5 6 5 5
Grand Total 213 173 213 173 172
==== ==== ==== ==== ====
</TABLE>
Mexico operations are not consolidated and are reported on the equity
basis.
Although new stores are important to the Company's continued growth and
profitability, each new store opening initially penalizes earnings because
stores are not immediately profitable. In recent years new stores opened in
existing market areas generally have achieved break even (after full allocation
of all corporate expenses) within the first six to eighteen months and new
stores opened in new market areas, which mature more slowly, generally have
achieved break even in approximately three years.
Each of the Company's fiscal years consists of twelve-week periods in the
first, second and fourth quarters of the fiscal year and a sixteen-week period
in the third quarter.
COMPARISON OF SIXTEEN WEEKS ENDED OCTOBER 11, 1998 WITH SIXTEEN WEEKS ENDED
OCTOBER 5, 1997.
Sales. Third quarter 1998 sales were $546.4 million, up 23.5% from the
comparable 1997 period. Sales reflect the May 15, 1998 acquisition of the United
Grocers Cash & Carry ("Cash & Carry") store operations. Cash and Carry sales
were $84.3 million for the third quarter of 1998. Excluding Cash & Carry, Smart
& Final Stores Corporation ("Smart & Final") store sales increased 1.4%.
Comparable store sales for the third quarter of 1998 increased 0.7% from
9
<PAGE>
the prior year period. Average comparable transaction size increased 1.5% to
$31.80 in third quarter 1998.
Foodservice distribution sales increased from $120.4 million in the third
quarter of 1997 to $135.6 million in the current year third quarter. Growth was
strong at both Smart & Final Foodservice, formerly Port Stockton Food
Distributors, Inc., where sales increased 10.0% over the prior year quarter and
in Florida foodservice operations, where sales increased by 15.4% over the prior
year quarter.
Gross Margin. Gross margin increased 18.9% from $61.3 million in the third
quarter of 1997 to $72.9 million in the current year quarter. As a percentage of
sales, gross margin declined from 13.8% to 13.3%. The decline was primarily due
to the following: acquisition of Cash & Carry store operations which generate
lower gross margins than Smart & Final stores, lower foodservice gross margins
compared to 1997 caused by increased meat processing and chain account sales and
higher occupancy cost related to new and relocated facilities. These increases
were partially offset by increased vendor rebate and allowance income recognized
in the third quarter, compared to the 1997 third quarter.
Operating and Administrative Expenses. Operating and administrative
expenses for the third quarter of 1998 were $59.6 million, up $11.9 million, or
24.9%, over the third quarter of 1997. These expenses, as a percentage of sales,
increased from 10.8% in the third quarter of 1997 to 10.9% in the third quarter
of 1998. The increased expense levels were the result of increased marketing
costs in an effort to promote sales growth, and increased fringe benefit costs.
These increases were substantially offset by the Cash & Carry operations that
operate at lower expense levels.
Interest Expense, net. Interest expense, net increased from $2.6 million in
the third quarter of 1997 to $4.0 million in the third quarter of 1998 primarily
as the result of higher weighted average borrowings, as well as higher weighted
average interest cost on variable rate debt. Revolving debt borrowings and notes
payable increased primarily due to the Cash & Carry acquisition.
COMPARISON OF FORTY WEEKS ENDED OCTOBER 11, 1998 WITH FORTY WEEKS ENDED OCTOBER
5, 1997.
Sales. For the first three quarters of 1998, sales were $1,261.3 million,
up 16.3% from the comparable 1997 period. Cash & Carry sales were $111.0 million
since their May 1998 acquisition. Smart & Final store sales increased 0.1%.
Comparable store sales decreased 0.9% in the first three quarters of 1998
primarily as a result of the decision to eliminate high discount tobacco sales
in the third quarter of 1997. This decision reduced comparative sales for the
first three quarters of 1998 by approximately 2.3%. Record rainfall in the first
half of 1998 also reduced sales growth. Average comparable transaction size,
also impacted by elimination of high discount tobacco transactions, decreased
0.2% to $31.51 in the first three quarters of 1998.
Foodservice distribution sales increased 22.5% to $354.0 million for the
first three quarters of 1998. Significant sales growth was achieved at Smart &
Final Foodservice where sales increased 27.9% over the 1997 forty-week period.
The Florida foodservice operations experienced strong sales growth of 18.2% over
the first three quarters of 1997.
10
<PAGE>
Gross Margin. Gross margin increased 3.2% from $155.6 million in the first
three quarters of 1997 to $160.5 million in the 1998 forty-week period. As a
percentage of sales, gross margin declined from 14.3% of sales for the first
three quarters of 1997 to 12.7% in the comparable 1998 period. The major factors
in the lower gross margin percentage were the reduced vendor rebate and
allowance income, acquisition of Cash & Carry store operations which generate
lower gross margins and lower expense levels, increased occupancy costs due to
new and relocated stores, a higher mix of foodservice sales which generate lower
gross margins, and lower foodservice gross margins compared to 1997 caused by
increased meat processing and chain account sales.
Operating and Administrative Expenses. Operating and administrative
expenses for the first three quarters of 1998 were $142.5 million, or 11.3% of
sales, compared with $119.8 million, or 11.0% of sales, in the first three
quarters of 1997. The increased expenses were increased marketing costs, and
increased fringe benefits. These increases were partially offset by the Cash &
Carry operations that operate at lower expense levels.
Interest Expense, net. Interest expense, net increased from $5.9 million,
or 0.5% of sales, in the first three quarters of 1997 to $8.6 million, or 0.7%
of sales, in the comparable 1998 period. This increase was a result of higher
weighted average borrowings in the first three quarters of 1998 compared to the
first three quarters of 1997, as well as increased weighted average interest
cost on variable rate debt.
FINANCIAL CONDITION
Cash and cash equivalents were $22.9 million at January 4, 1998, and $23.9
million at October 11, 1998. Cash provided by operating activities for the forty
weeks ended October 11, 1998 was $38.5 million and other changes in financing
activities provided $9.5 million of cash for the forty-week period. The net
increase in debt was $25.1 million for the first three quarters of 1998. The
acquisition of the United Grocers Cash & Carry store operations and investments
in fixed assets and other additions during the first three quarters of 1998
required cash of $68.7 million. During the first three quarters of 1998, $3.4
million of dividends were paid.
Excluding the impact of the acquisition of the United Grocers Cash & Carry
store operations, inventories declined by $6.2 million as a result of a
comprehensive turnover analysis at all operating levels to achieve lower
carrying costs. Other changes in operating assets and liabilities generally
reflect the timing of receipts and disbursements. Prepaid expenses decreased
$1.6 million, accounts payable increased $3.4 million, accrued liabilities
increased $2.7 million, other liabilities increased $0.3 million, and trade
notes and accounts receivable increased $0.9 million in the first three quarters
of 1998.
Stockholders' equity increased by $3.6 million to $203.9 million at October
11, 1998 as a result of the $4.9 million net income for the first three quarters
of 1998 plus $2.1 million proceeds from issuance of stock less the quarterly
cash dividend of $3.4 million.
11
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary source of liquidity is cash flow from operations.
Cash provided by operating activities was $41.5 million in the first three
quarters of 1998, up from $7.3 million in the comparable 1997 period. At October
11, 1998, the Company had cash of $23.9 million, compared to $22.9 million at
January 4, 1998. The Company had $97.5 million of long-term debt and
stockholders' equity of $203.9 million at October 11, 1998.
As a result of the Cash & Carry acquisition and a temporary decline in
earnings, the Company has not complied fully with financial covenants in certain
of its loan agreements. The Company's lending institutions granted the Company a
waiver from compliance with these covenants until November 15, 1998. On November
13, 1998, the Company completed a restructuring of its existing debt with its
lenders.
Effective November 13, 1998, the Company entered into Senior Secured Credit
Facilities with a group of banks totaling $240 million. The Senior Secured
Credit Facilities include a $150 million Revolving Credit Facility ("Revolving
Loan") and a $90 million Secured Lease Facility. These facilities expire on
November 13, 2001. At the Company's option, the Revolving Loan can be used to
support daily borrowings up to $15 million and up to $10 million of commercial
letters of credit. The Revolving Loan replaces the Company's existing $65
million Bridge Loan and its existing $50 million revolving line of credit. The
Secured Lease Facility replaces the Company's three existing $30 million lease
facilities. Interest for these facilities is at LIBOR, or the Administrative
Agent's reference rate, plus designated amounts.
Effective November 13, 1998, the Company entered into a $55.4 million Loan
Agreement ("Casino Loan") with Casino USA, Inc. The Casino Loan replaces the
Company's existing unsecured promissory note that was issued in conjunction with
the 1996 acquisition of real property from Casino USA, Inc. and Casino Realty,
affiliated parties, that had an outstanding balance of $30.4 million. It also
replaces all outstanding advances made to the Company from Casino USA, Inc. and
Casino Realty. Interest for this loan is at LIBOR plus 4.50%. The Casino Loan
matures on February 15, 2002.
The Company expects to be able to fund future acquisitions and other cash
requirements by a combination of available cash, cash from operations, lease
financings and other borrowings and proceeds from the issuance of equity
securities. The Company is constructing a new distribution facility that will be
used to serve its Southern California operations. The facility and related
fixtures and equipment, which are expected to be operational in the first
quarter of 1999, will cost approximately $37 million, most of which will be
financed by the Company's new lease credit facility. During the quarter, the
Company completed the relocation of its corporate headquarters to a new leased
office facility. The amount budgeted for capital expenditures is approximately
$40.0 million for fiscal 1998.
YEAR 2000
The Company relies on a diverse assortment of computer hardware and
software, the integrated operation of which is essential to the successful
implementation of the Company's operations. The Company has undertaken a
comprehensive review of its information technology systems and other systems and
equipment and has developed a Year 2000 implementation
12
<PAGE>
program. The implementation program has been reviewed by the Company's Board of
Directors. Full compliance and testing is scheduled to be completed by mid-1999.
The entire implementation program is divided into three broad systems, the
corporate systems, the store systems and the foodservice systems and the program
has two phases, the impact analysis phase and the modification or replacement
phase.
The impact analysis phase for the corporate systems, includes the
identification of date sensitive computer codes within the systems, has been
completed. The modification or replacement phase for the corporate systems is
substantially complete with one remaining subsystem to be completed by the end
of first quarter 1999.
The impact analysis phase for the store systems has been completed and the
modification or replacement phase is expected to be completed by mid-1999. The
impact analysis phase for the foodservice systems also has been completed, and
the modification or replacement phase is on schedule to be completed by the end
of the second quarter of 1999.
Except for the cost of replacement systems, the Company will expense, as
incurred, the cost of the Year 2000 program. The Company is funding the costs
associated with the Year 2000 program through operating cash flows. The Company
estimates the total incremental cost of the Year 2000 program will not exceed
$2.0 million. At the end of the third quarter, the Company had incurred
approximately $0.7 million in costs with respect to the Year 2000 program.
As part of the Year 2000 project, the Company has identified relationships
with third parties, including vendors, suppliers, and service providers, which
the Company believes are critical to its business operations. The Company is in
the process of communicating with these third parties through questionnaires,
letters and interviews in an effort to determine the extent to which they are
addressing their Year 2000 issues. The Company will continue to communicate
with, assess and monitor the progress of these third parties in resolving Year
2000 issues.
The Company anticipates minimal disruptions in its operations as a result
of system failures related to Year 2000 issues. If the Company or a key third
party experiences a systems failure due to the century change, the Company
believes the most significant adverse impact would be its inability to
communicate with suppliers concerning timely delivery of inventory. Other
possible consequences include, but are not limited to, loss of communications
with stores, loss of electric power, and an inability to process customer
transactions or otherwise engage in similar normal business activities. The
Company cannot assure that there will not be an adverse impact on the Company if
third parties do not appropriately address their Year 2000 issues in a timely
manner.
Although the Company does not believe the actual impact of these failures
will be material, the Company is currently developing a contingency plan for
possible Year 2000 issues including the delivery of inventory and processing of
customer transactions. The Company will continue to develop these plans based
on its internal testing results, tests with third parties and its assessment of
other outside risks. The Company will continually refine its contingency plan
throughout 1999 as additional information becomes available.
From time to time Smart & Final may publish forward-looking statements
about anticipated results. The Private Securities Litigation Reform Act of 1995
provides a safe harbor for forward-looking statements. In order to comply with
the terms of the safe harbor, the Company notes that such forward-looking
statements are based upon internal estimates which are
13
<PAGE>
subject to change because they reflect preliminary information and management
assumptions, and that a variety of factors could cause the Company's actual
results and experience to differ materially from the anticipated results or
other expectations expressed in the Company's forward-looking statements. The
factors which could cause actual results or outcomes to differ from such
expectation include the extent of the company's success in (i) changing market
conditions (ii) unforeseen costs and expenses (iii) ability to attract new
customers and retain existing customers (iv) gain or losses from sales along
with the uncertainties and other factors, including unusually adverse weather
conditions, described from time to time in the company's SEC filing and reports.
This report includes " forward-looking statements" including, without
limitation, statements as to the Company's liquidity, availability of capital
resources and its Year 2000 program.
14
<PAGE>
PART II - OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
Not applicable.
ITEM 2 CHANGES IN SECURITIES
Not applicable.
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable
ITEM 5 OTHER INFORMATION
Not applicable.
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit
Number Description of Exhibit
- ------ ----------------------
10.99 First Waiver (Credit Agreement) dated as of July 22, 1998 by and among
the Company and Credit Lyonnais Los Angeles Branch, as Agent
10.100 First Waiver (Bridge Loan Credit Agreement) dated as of July 22, 1998
by and among the Company and Credit Lyonnais Los Angeles Branch, as
Agent
10.101 First Waiver (1994 Participation Agreement) dated as of July 22, 1998
by and among the Company, Smart & Final Stores Corporation, Port
Stockton Food Distributors, Inc., State Street Bank and Trust Company
of California, N.A., Credit Lyonnais Leasing Corp., Credit Lyonnais
Los Angeles Branch, as Agent, and various lenders named therein
10.102 First Waiver (1997 Participation Agreement) dated as of July 22, 1998
by and among the Company, Smart & Final Stores Corporation, Port
Stockton Food Distributors, Inc., State Street Bank and Trust Company
of California, N.A., Credit Lyonnais Leasing Corp., and Credit
Lyonnais Los Angeles Branch, as Agent
10.103 First Waiver (1998 Participation Agreement) dated as of July 22, 1998
by and among the Company, Smart & Final Realty Trust 1998-1,
Wilmington Trust Company, Credit Lyonnais Leasing Corp., and Credit
Lyonnais Los Angeles Branch, as Agent
15
<PAGE>
10.104 Employment Agreement dated as of September 1, 1998 by and among Smart
& Final Inc. and Phillip E. Hawkins*
10.105 Second Waiver (Credit Agreement) dated as of October 1, 1998 by and
among the Company and Credit Lyonnais Los Angeles Branch, as Agent
10.106 Second Waiver (Bridge Loan Credit Agreement) dated as of October 1,
1998 by and among the Company and Credit Lyonnais Los Angeles Branch,
as Agent
10.107 Second Waiver (1994 Participation Agreement) dated as of October 1,
1998 by and among the Company, Smart & Final Stores Corporation, Port
Stockton Food Distributors, Inc., State Street Bank and Trust Company
of California, N.A., Credit Lyonnais Leasing Corp., Credit Lyonnais
Los Angeles Branch, as Agent, and various lenders named therein
10.108 Second Waiver (1997 Participation Agreement) dated as of October 1,
1998 by and among the Company, Smart & Final Stores Corporation, Port
Stockton Food Distributors, Inc., State Street Bank and Trust Company
of California, N.A., Credit Lyonnais Leasing Corp., and Credit
Lyonnais Los Angeles Branch, as Agent
10.109 Second Waiver (1998 Participation Agreement) dated as of October 1,
1998 by and among the Company, Smart & Final Realty Trust 1998-1,
Wilmington Trust Company, Credit Lyonnais Leasing Corp., and Credit
Lyonnais Los Angeles Branch, as Agent
10.110 Loan Agreement dated as of November 13, 1998 by and among the Company
and Casino USA, Inc.
10.111 Promissory Note dated as of November 13, 1998
10.112 Credit Agreement dated as of November 13, 1998 by and among the
Company, the financial institutions and other entities listed as
Lenders, Credit Lyonnais Los Angeles Branch, as Administrative Agent,
and as Co-Lead Arranger, Nationsbanc Montgomery Securities LLC, as
Syndication Agent, and Credit Lyonnais New York Branch, as L/C Bank
10.113 Participation Agreement dated as of November 13, 1998 by and among the
Company as Lessee and Construction Agent, various parties from time to
time as Guarantors, First Security Bank, National Association, various
banks and other lending institutions as Holders and Lenders, and
Credit Lyonnais Los Angeles Branch as Administrative Agent
27 Financial Data Schedule
* Management contract and compensatory plans, contracts and arrangements of the
Company.
(b) Reports on Form 8-K:
A Form 8-K was filed by the Company, dated August 17, 1998, to report
the appointment of a new President and Chief Operating Officer,
Phillip E. Hawkins.
16
<PAGE>
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.
SMART & FINAL INC.
By:
DATE: NOVEMBER 23, 1998
/s/ MARTIN A. LYNCH
__________________________________
Martin A. Lynch
Executive Vice President,
PrincipaL Financial Officer, And
Principal Accounting Officer of the Company
17
<PAGE>
SMART & FINAL INC.
EXHIBIT INDEX
Sequentially
Numbered
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT Page
- -------------- ---------------------- ----
10.99 First Waiver (Credit Agreement) dated as of July 22, 1998 by
and among the Company and Credit Lyonnais Los Angeles Branch,
as Agent
10.100 First Waiver (Bridge Loan Credit Agreement) dated as of July
22, 1998 by and among the Company and Credit Lyonnais Los
Angeles Branch, as Agent
10.101 First Waiver (1994 Participation Agreement) dated as of July
22, 1998 by and among the Company, Smart & Final Stores
Corporation, Port Stockton Food Distributors, Inc., State
Street Bank and Trust Company of California, N.A., Credit
Lyonnais Leasing Corp., Credit Lyonnais Los Angeles Branch,
as Agent, and various lenders named therein
10.102 First Waiver (1997 Participation Agreement) dated as of July
22, 1998 by and among the Company, Smart & Final Stores
Corporation, Port Stockton Food Distributors, Inc., State
Street Bank and Trust Company of California, N.A., Credit
Lyonnais Leasing Corp., and Credit Lyonnais Los Angeles
Branch, as Agent
10.103 First Waiver (1998 Participation Agreement) dated as of July
22, 1998 by and among the Company, Smart & Final Realty Trust
1998-1, Wilmington Trust Company, Credit Lyonnais Leasing
Corp., and Credit Lyonnais Los Angeles Branch, as Agent
10.104 Employment Agreement dated as of September 1, 1998 by and
among Smart & Final Inc. and Phillip E. Hawkins
10.105 Second Waiver (Credit Agreement) dated as of October 1, 1998
by and among the Company and Credit Lyonnais Los Angeles
Branch, as Agent
10.106 Second Waiver (Bridge Loan Credit Agreement) dated as of
October 1, 1998 by and among the Company and Credit Lyonnais
Los Angeles Branch, as Agent
10.107 Second Waiver (1994 Participation Agreement) dated as of
October 1, 1998 by and among the Company, Smart & Final
Stores Corporation, Port Stockton Food Distributors, Inc.,
State Street Bank and Trust Company of California, N.A.,
Credit Lyonnais Leasing Corp., Credit Lyonnais Los Angeles
Branch, as Agent, and various lenders named therein
10.108 Second Waiver (1997 Participation Agreement) dated as of
October 1, 1998 by and among the Company, Smart & Final
Stores Corporation, Port Stockton Food Distributors, Inc.,
State Street Bank and Trust Company of California, N.A.,
Credit Lyonnais Leasing Corp., and Credit Lyonnais Los
Angeles Branch, as Agent
18
<PAGE>
SMART & FINAL INC.
EXHIBIT INDEX
(continued)
Sequentially
Numbered
Exhibit Number Description of Exhibit Page
- -------------- ---------------------- ----
10.109 Second Waiver (1998 Participation Agreement) dated as of
October 1, 1998 by and among the Company, Smart & Final
Realty Trust 1998-1, Wilmington Trust Company, Credit
Lyonnais Leasing Corp., and Credit Lyonnais Los Angeles
Branch, as Agent
10.110 Loan Agreement dated as of November 13, 1998 by and among
the Company and Casino USA, Inc.
10.111 Promissory Note dated as of November 13, 1998
10.112 Credit Agreement dated as of November 13, 1998 by and among
the Company, the financial institutions and other entities
listed as Lenders, Credit Lyonnais Los Angeles Branch, as
Administrative Agent, and as Co-Lead Arranger, Nationsbanc
Montgomery Securities LLC, as Syndication Agent, and Credit
Lyonnais New York Branch, as L/C Bank
10.113 Participation Agreement dated as of November 13, 1998 by and
among the Company as Lessee and Construction Agent, various
parties from time to time as Guarantors, First Security
Bank, National Association, various banks and other lending
institutions as Holders and Lenders, and Credit Lyonnais Los
Angeles Branch as Administrative Agent
27 Financial Data Schedule
19
<PAGE>
EXHIBIT 10.99
FIRST WAIVER
(CREDIT AGREEMENT)
This FIRST WAIVER (CREDIT AGREEMENT) (the "Waiver"), dated as of July
22, 1998, is among SMART & FINAL INC., a Delaware corporation (the "Borrower"),
the lenders party to the Credit Agreement referred to below (the "Lenders"),
CREDIT LYONNAIS LOS ANGELES BRANCH, a branch duly licensed under the laws of the
State of California ("CL Los Angeles") of a banking corporation organized and
existing under the laws of the Republic of France, as agent (the "Agent") for
the Lenders.
PRELIMINARY STATEMENTS
WHEREAS, the Borrower, the Lenders and the Agent have entered into a
Credit Agreement dated as of November 20, 1995 (as amended by that certain
Amendment No. 1, dated as of May 10, 1996, and by that certain Amendment No. 2,
dated as of March 2, 1998, collectively, the "Credit Agreement"; the terms
defined therein being used herein as therein defined unless otherwise defined
herein); and
WHEREAS, the Borrower has requested that the Lenders waive, through
September 30, 1998, any Default or Event of Default that may have occurred by
reason of the Borrower's failure to comply with certain covenants of the Credit
Agreement expressly identified below;
NOW, THEREFORE, in consideration of the premises, the parties hereto
hereby agree as follows:
SECTION 1. Waiver under Credit Agreement. Effective as of May 15,
-----------------------------
1998 (the "Effective Date") and subject to the satisfaction of the conditions
precedent set forth in Section 3 hereof, the Lenders hereby waive, during the
---------
period beginning on the Effective Date and ending on and including September 30,
1998 (the "Waiver Period"), any Default or Event of Default which would arise by
reason of the Borrower's failure to comply with Section 6.13 (Minimum Tangible
Net Worth) and Section 6.14 (Cash Flow Ratio) of the Credit Agreement. At the
end of the Waiver Period, if the Borrower is not in compliance with any of such
Sections pursuant to the terms thereof, a Default or Event or Default shall be
deemed to exist unless, and except to the extent that, such Default or Event of
Default is further waived or the same shall cease to exist by reason of an
amendment to the applicable provisions of the Credit Agreement.
SECTION 2. Applicable Margin; Commitment Fee.
---------------------------------
(a) As of June 20, 1998 and until the end of the Waiver Period,
Sections 2.05(a), (b) and (c) of the Credit Agreement are hereby deleted in
their entirety and replaced with the following:
<PAGE>
"Section 2.05. Interest Rates and Payment.
--------------------------
(a) Each Base Rate Loan shall bear interest on the outstanding
principal amount thereof, for each day from the date such Loan is made
until it becomes due, at a rate per annum equal to the sum of (i) Base
--- -----
Rate and (ii) from June 20, 1998 and until the end of the Waiver
Period, one-half of one percent (.50%).
(b) Each LIBOR Loan shall bear interest on the outstanding principal
amount thereof, for each day from the date such Loan is made until it
becomes due, at a rate per annum equal to the sum of (i) Adjusted
--- -----
LIBOR and (ii) (a) prior to June 20, 1998, one-half of one percent
(.50%), and (b) from June 20, 1998 and until the end of the Waiver
Period, one and one-quarter of one percent (1.25%).
(c) Each Eurorate Loan shall bear interest on the outstanding
principal amount thereof, for each day from the date such Loan is made
until it becomes due, at a rate per annum equal to the sum of (i)
--- -----
Adjusted Eurorate and (ii) (a) prior to June 20, 1998, one-half of one
percent (.50%), and (b) from June 20, 1998 and until the end of the
Waiver Period, one and one-quarter of one percent (1.25%)."
(b) In addition, as of June 20, 1998 and until the end of the Waiver
Period hereunder, the reference to "two-tenths of one percent (0.2%)" in Section
2.06 (Fees) is hereby deleted and replaced with "(0.35%)."
SECTION 3. Conditions of Effectiveness. This Waiver shall become
---------------------------
effective when the Agent shall have received counterparts of this Waiver
executed by the Borrower and the Majority Lenders or, as to such Lenders, advice
satisfactory to the Agent that such Lenders have executed this Waiver.
SECTION 4. Reference to and Effect on the Loan Documents. (a) Upon
---------------------------------------------
the effectiveness of this Waiver, on and after the date hereof each reference in
the Credit Agreement to "this Agreement," "hereunder," "hereof" or words of like
import referring to the Credit Agreement, and each reference in the other
documents entered into in connection with the Credit Agreement (as amended, the
"Loan Documents") to "the Credit Agreement," "thereunder," "thereof" or words of
like import referring to the Credit Agreement, shall mean and be a reference to
the Credit Agreement as modified hereby.
(a) Except as specifically provided above, the Credit Agreement and
all other Loan Documents are and shall continue to be in full force and effect
and are hereby in all respects ratified and confirmed.
(b) The execution, delivery and effectiveness of this Waiver shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of any Lender or
2
<PAGE>
the Agent under any of the Loan Documents, nor constitute a waiver of any
provision of any of the Loan Documents.
(c) The Agent, each Lender party hereto and the Borrower specifically
acknowledges and agrees that (i) none of the Borrower, the Agent or any Lender
has agreed to any other or future waiver of or amendment to the Loan Documents,
(ii) neither the granting of the waiver described herein nor the granting of any
prior waivers and amendments under the Loan Documents creates any obligation
whatsoever on the part of the Borrower, the Agent or any Lender to grant any
other or future waiver or amendment under the Loan Documents, and (iii) except
as specifically set forth herein, each of the Borrower, the Agent and the
Lenders have reserved all rights and remedies under the Loan Documents.
SECTION 5. General Release of Claims. (a) The Borrower represents
-------------------------
and agrees that it has both diligently and thoroughly investigated the existence
of any Claim (as defined below), and to its knowledge and belief, no Claim
exists and no facts exist that could give rise to or support a Claim.
(b) As additional consideration for the waivers as set forth herein,
the Borrower (by its execution hereof) and each of its agents, employees,
directors, officers, attorneys, affiliates, subsidiaries, successors and assigns
(individually a "Releasing Party," and collectively the "Releasing Parties")
each hereby releases and forever discharges the Agent and each Lender and all of
their respective agents, direct and indirect shareholders, employees, directors,
officers, attorneys, branches, affiliates, subsidiaries, successors and assigns
(individually, a "Released Party," and collectively, the "Released Parties") of
and from all damage, loss, claims, demands, liabilities, obligations (except for
any such obligations hereafter arising pursuant to the terms of the Loan
Documents, as amended to date), actions and causes of action whatsoever
(collectively "Claims") that the Releasing Parties and each of them may, as of
the date hereof, have or claim to have against each of the Released Parties, in
each case whether presently known or with respect to which the facts are known
(or should have been known) that could give rise to or support a Claim and of
every nature and extent whatsoever on account of or in any way relating to,
arising out of or based upon the Loan Documents or this Waiver (including clause
(a) above) or the negotiation or documentation hereof or the waivers under the
Loan Documents effected by this Waiver or the transactions contemplated hereby,
or any action or omission in connection with any of the foregoing, including,
without limitation, all such loss or damage of any kind heretofore sustained, or
that may arise as a consequence of the dealings between the parties up to the
date hereof in connection with or in any way related to the Loan Documents or
this Waiver. Each Releasing Party further covenants and agrees that it has not
assigned heretofore, and will not hereafter sue any Released Party upon, any
Claim released or purported to be released under this Section, and the Borrower
will indemnify and hold harmless said Released Parties against any loss or
liability on account of any actions brought by any Releasing Party or its
assigns or prosecuted on behalf of any Releasing Party and relating to any Claim
released or purported to be released under this Section. It is further
understood and agreed that any and all rights under the provisions of Section
1542 of the California Civil Code are expressly waived by each of the Releasing
Parties. Section 1542 provides as follows:
3
<PAGE>
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE
TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."
SECTION 6. Representations and Warranties. The Borrower represents
------------------------------
and warrants to the Agent and each Lender that:
(a) The representations and warranties in the Credit Agreement and
each of the other Loan Documents remain true and correct in all material
respects immediately prior to and upon giving effect to this Waiver, as if the
same were made on the date of the effectiveness of the amendments set forth
herein (except for those relating to an earlier date which were true and correct
in all material respects as of such date).
(b) The execution, delivery and performance of this Waiver by the
Borrower has been duly authorized by all necessary organizational action.
(c) All conditions set forth in Section 3 of this Waiver have been
---------
satisfied.
(d) Upon giving effect to this Waiver, there is no and will not be
any, Default or Event of Default.
SECTION 7. Costs, Expenses and Taxes. The Borrower agrees to pay
-------------------------
on demand all costs and expenses of the Agent in connection with the
preparation, execution, delivery and administration of this Waiver, and the
other instruments and documents, if any, to be delivered hereunder, including,
without limitation, the reasonable fees and out of pocket expenses of counsel
for the Agent with respect thereto and with respect to advising the Agent as to
its rights and responsibilities hereunder and thereunder. The Borrower further
agrees to pay on demand all costs and expenses, if any (including, without
limitation, reasonable counsel fees and expenses), in connection with the
enforcement (whether though negotiations, legal proceedings or otherwise) of
this Waiver, and the other instruments and documents to be delivered hereunder,
including, without limitation, reasonable counsel fees and expenses in
connection with the enforcement of rights under this Section.
SECTION 8. Execution in Counterparts. This Waiver hereto may be
-------------------------
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which taken together shall constitute but one and
the same agreement. Delivery of an executed counterpart of a signature page to
this Waiver hereto by telefacsimile shall be effective as delivery of a manually
executed counterpart of this Waiver.
SECTION 9. Governing Law. This Waiver hereto shall be governed by,
-------------
and construed in accordance with, the laws of the State of California.
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Waiver
(Credit Agreement) to be executed by their respective officers thereunto duly
authorized, as the date first above written.
SMART & FINAL INC., as the Borrower
By: /s/ Donald G. Alvarado
---------------------------------------------
Name: Donald G. Alvarado
Title: Secretary
CREDIT LYONNAIS LOS ANGELES BRANCH, as the Agent
By: /s/ Pascal Poupelle
---------------------------------------------
Name: Pascal Poupelle
Title: Executive President
LENDERS:
CREDIT LYONNAIS LOS ANGELES BRANCH
By: /s/ Pascal Poupelle
--------------------------------------------
Name: Pascal Poupelle
Title: Executive President
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By: /s/ Pascal Poupelle
--------------------------------------------
Name: Pascal Poupelle
Title: Executive President
NATIONSBANK OF TEXAS, N.A.
By: /s/ Chas A. McDonell
--------------------------------------------
Name: Chas A. McDonell
Title: Vice President
<PAGE>
WELLS FARGO BANK N.A.
By: /s/ Catherine M. Wallace
---------------------------------------
Name: Catherine M. Wallace
Title: Vice President
By: /s/ Frieda Youlious
---------------------------------------
Name: Frieda Youlious
Title: Vice President
FIRST HAWAIIAN BANK
By:
---------------------------------------
Name:
Title:
<PAGE>
EXHIBIT 10.100
FIRST WAIVER
(BRIDGE LOAN CREDIT AGREEMENT)
This FIRST WAIVER (BRIDGE LOAN CREDIT AGREEMENT) (the "Waiver"), dated
as of July 22, 1998, is among SMART & FINAL INC., a Delaware corporation (the
"Company"), and CREDIT LYONNAIS LOS ANGELES BRANCH, a branch duly licensed under
the laws of the State of California (the "Bank") of a banking corporation
organized and existing under the laws of the Republic of France.
PRELIMINARY STATEMENTS
WHEREAS, the Company and the Bank have entered into a Bridge Loan
Credit Agreement dated as of April 10, 1998 (the "Credit Agreement"; the terms
defined therein being used herein as therein defined unless otherwise defined
herein); and
WHEREAS, the Company has requested that the Bank waive, through
September 30, 1998, any Default or Event of Default that may have occurred by
reason of the Company's failure to comply with certain covenants of the Credit
Agreement expressly identified below;
NOW, THEREFORE, in consideration of the premises, the parties hereto
hereby agree as follows:
SECTION 1. Waiver under Credit Agreement. Effective as of May 15,
-----------------------------
1998 (the "Effective Date") and subject to the satisfaction of the conditions
precedent set forth in Section 3 hereof, the Bank hereby waives, during the
---------
period beginning on the Effective Date and ending on and including September 30,
1998 (the "Waiver Period"), any Default or Event of Default which would arise by
reason of the Company's failure to comply with Section 6.14 (Cash Flow Ratio) of
the Credit Agreement. At the end of the Waiver Period, if the Company is not in
compliance with such Section pursuant to the terms thereof, a Default or Event
or Default shall be deemed to exist unless, and except to the extent that, such
Default or Event of Default is further waived or the same shall cease to exist
by reason of an amendment to the applicable provisions of the Credit Agreement.
SECTION 2. Applicable Margin; Commitment Fee.
---------------------------------
(a) As of June 20, 1998 and until the end of the Waiver Period,
Sections 2.05(a) and (b) of the Credit Agreement are hereby deleted in their
entirety and replaced with the following:
"Section 2.05. Interest Rates and Payment.
--------------------------
(a) Each Base Rate Loan shall bear interest on the outstanding
principal amount thereof, for each day from the date such Loan is made
until it becomes due, at a rate per annum equal to the sum of (i) Base
--- -----
Rate
<PAGE>
and (ii) from June 20, 1998 and until the end of the Waiver Period,
one-half of one percent (.50%).
(b) Each LIBOR Loan shall bear interest on the outstanding principal
amount thereof, for each day from the date such Loan is made until it
becomes due, at a rate per annum equal to the sum of (i) Adjusted
--- -----
LIBOR and (ii) (a) prior to June 20, 1998, the Applicable Margin, and
(b) from June 20, 1998 and until the end of the Waiver Period, one and
one-quarter of one percent (1.25%)."
(b) As of June 20, 1998 and until the end of the Waiver Period, the
reference to "one hundred and seventy-five hundredths of one percent (0.175%)"
in Section 2.06 (Fees) is hereby deleted and replaced with "0.35%."
SECTION 3. Conditions of Effectiveness. This Waiver shall become
---------------------------
effective when the Bank shall have received (a) counterparts of this Waiver
executed by the Company and the Bank, and (b) counterparts of the Consent
appended hereto executed by each of Smart & Final Food Stores Corporation,
American Foodservice Distributors, Inc. and Port Stockton Food Distributors,
Inc., each a California corporation.
SECTION 4. Reference to and Effect on the Loan Documents. (a) Upon
---------------------------------------------
the effectiveness of this Waiver, on and after the date hereof each reference in
the Credit Agreement to "this Agreement," "hereunder," "hereof" or words of like
import referring to the Credit Agreement, and each reference in the other
documents entered into in connection with the Credit Agreement (as amended, the
"Loan Documents") to "the Credit Agreement," "thereunder," "thereof" or words of
like import referring to the Credit Agreement, shall mean and be a reference to
the Credit Agreement as modified hereby.
(b) Except as specifically provided above, the Credit Agreement and
all other Loan Documents are and shall continue to be in full force and effect
and are hereby in all respects ratified and confirmed.
(c) The execution, delivery and effectiveness of this Waiver shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of the Bank under any of the Loan Documents, nor constitute a
waiver of any provision of any of the Loan Documents.
(d) The Bank and the Company, and, by execution of the Consent
appended hereto, each Guarantor, specifically acknowledges and agrees that (i)
none of the Company, the Guarantors, or the Bank has agreed to any other or
future waiver of or amendment to the Loan Documents, (ii) neither the granting
of the waiver described herein nor the granting of any prior waivers and
amendments under the Loan Documents creates any obligation whatsoever on the
part of the Company, the Guarantors, or the Bank to grant any other or future
waiver or amendment under the Loan Documents, and (iii) except as specifically
set forth herein, each of the Company, the Guarantors, and the Bank have
reserved all rights and remedies under the Loan Documents.
2
<PAGE>
SECTION 5. General Release of Claims. (a) The Company and the
-------------------------
Guarantors (by execution of the Consent appended hereto) each represent and
agree that they have both diligently and thoroughly investigatged the existence
of any Claim (as defined below), and to their knowledge and belief, no Claim
exists and no facts exist that could give rise to or support a Claim.
(b) As additional consideration for the waivers as set forth herein,
the Company (by its execution hereof) and each the Guarantors (by its execution
of the Consent appended hereto) and each of their respective agents, employees,
directors, officers, attorneys, affiliates, subsidiaries, successors and assigns
(individually a "Releasing Party," and collectively the "Releasing Parties")
each hereby releases and forever discharges the Bank and all of its agents,
direct and indirect shareholders, employees, directors, officers, attorneys,
branches, affiliates, subsidiaries, successors and assigns (individually, a
"Released Party," and collectively, the "Released Parties") of and from all
damage, loss, claims, demands, liabilities, obligations (except for any such
obligations hereafter arising pursuant to the terms of the Loan Documents, as
amended to date), actions and causes of action whatsoever (collectively
"Claims") that the Releasing Parties and each of them may, as of the date
hereof, have or claim to have against each of the Released Parties, in each case
whether presently known or with respect to which the facts are known (or should
have been known) that could give rise to or support a Claim and of every nature
and extent whatsoever on account of or in any way relating to, arising out of or
based upon the Loan Documents or this Waiver (including clause (a) above and the
Consent appended hereto) or the negotiation or documentation hereof or the
waivers under the Loan Documents effected by this Waiver or the transactions
contemplated hereby, or any action or omission in connection with any of the
foregoing, including, without limitation, all such loss or damage of any kind
heretofore sustained, or that may arise as a consequence of the dealings between
the parties up to the date hereof in connection with or in any way related to
the Loan Documents or this Waiver. Each Releasing Party further covenants and
agrees that it has not assigned heretofore, and will not hereafter sue any
Released Party upon, any Claim released or purported to be released under this
Section, and the Company and each of the Guarantors will indemnify and hold
harmless said Released Parties against any loss or liability on account of any
actions brought by any Releasing Party or its assigns or prosecuted on behalf of
any Releasing Party and relating to any Claim released or purported to be
released under this Section. It is further understood and agreed that any and
all rights under the provisions of Section 1542 of the California Civil Code are
expressly waived by each of the Releasing Parties. Section 1542 provides as
follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE
TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."
SECTION 6. Representations and Warranties. Each of the Company and
------------------------------
each of the Guarantors (by its execution of the Consent appended hereof)
represents and warrants to the Bank that:
3
<PAGE>
(a) The representations and warranties in the Credit Agreement and
each of the other Loan Documents to which it is a party remain true and correct
in all material respects immediately prior to and upon giving effect to this
Waiver and the Consent, as if the same were made on the date of the
effectiveness of the amendments set forth herein (except for those relating to
an earlier date which were true and correct in all material respects as of such
date).
(b) The execution, delivery and performance of this Waiver and the
Consent by the Borrower and the Guarantors, as applicable, has been duly
authorized by all necessary organizational action.
(c) All conditions set forth in Section 3 of this Waiver have been
---------
satisfied.
(d) Upon giving effect to this Waiver, there is no and will not be
any, Default or Event of Default.
SECTION 7. Costs, Expenses and Taxes. The Company agrees to pay on
-------------------------
demand all costs and expenses of the Bank in connection with the preparation,
execution, delivery and administration of this Waiver, the Consent hereto, and
the other instruments and documents, if any, to be delivered hereunder,
including, without limitation, the reasonable fees and out of pocket expenses of
counsel for the Bank with respect thereto and with respect to advising the Bank
as to its rights and responsibilities hereunder and thereunder. The Company
further agrees to pay on demand all costs and expenses, if any (including,
without limitation, reasonable counsel fees and expenses), in connection with
the enforcement (whether though negotiations, legal proceedings or otherwise) of
this Waiver, the Consent hereto, and the other instruments and documents to be
delivered hereunder, including, without limitation, reasonable counsel fees and
expenses in connection with the enforcement of rights under this Section.
SECTION 8. Execution in Counterparts. This Waiver and the Consent
-------------------------
hereto may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which taken together shall constitute
but one and the same agreement. Delivery of an executed counterpart of a
signature page to this Waiver or the Consent hereto by telefacsimile shall be
effective as delivery of a manually executed counterpart of this Waiver or such
Consent.
SECTION 9. Governing Law. This Waiver and Consent hereto shall be
-------------
governed by, and construed in accordance with, the laws of the State of
California.
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Waiver
(Bridge Loan Credit Agreement) to be executed by their respective officers
thereunto duly authorized, as the date first above written.
SMART & FINAL INC.
By: /s/ Donald G. Alvarado
-------------------------
Name: Donald G. Alvarado
Title: Secretary
CREDIT LYONNAIS LOS ANGELES BRANCH
By: /s/ Pascal Poupelle
_________________________________
Name: Pascal Poupelle
Title: Executive President
<PAGE>
CONSENT
Dated as of July 22, 1998
The undersigned, SMART & FINAL STORES CORPORATION, AMERICAN
FOODSERVICE DISTRIBUTORS, INC., and PORT STOCKTON FOOD DISTRIBUTORS, INC., each
a California corporation and party to the Subsidiary Guaranty (as defined in the
Credit Agreement referred to in the foregoing Waiver), each hereby consents to
the foregoing Waiver and hereby confirms and agrees that the Subsidiary Guaranty
is, and shall continue to be, in full force and effect and is hereby ratified
and confirmed in all respects except that, upon the effectiveness of, and on and
after the date of, the said Waiver, each reference in the Subsidiary Guaranty to
the Credit Agreement, "thereunder," "thereof" or words of like import shall mean
and be a reference to the Credit Agreement as modified by the said Waiver.
SMART & FINAL STORES CORPORATION
By: /s/ Richard Phegley
---------------------
Name: Richard Phegley
Title: VP & Treasurer
AMERICAN FOODSERVICE DISTRIBUTORS, INC.
By: /s/ Donald G. Alvarado
------------------------
Name: Donald G. Alvarado
Title: Secretary
PORT STOCKTON FOOD DISTRIBUTORS, INC.
By: /s/ Donald G. Alvarado
------------------------
Name: Donald G. Alvarado
Title: Secretary
<PAGE>
EXHIBIT 10.101
FIRST WAIVER
(1994 PARTICIPATION AGREEMENT)
This FIRST WAIVER (1994 PARTICIPATION AGREEMENT) (the "Waiver"), dated
as of July 22, 1998, is among SMART & FINAL INC., a Delaware corporation (the
"Lessee"), SMART & FINAL STORES CORPORATION, a California corporation, and PORT
STOCKTON FOOD DISTRIBUTORS, INC., a California corporation (each a "Permitted
Sublessee" and together, the "Permitted Sublessees"), STATE STREET BANK AND
TRUST COMPANY OF CALIFORNIA N.A., a national banking association, not in its
individual capacity, but solely as the successor Owner Trustee, CREDIT LYONNAIS
LOS ANGELES BRANCH, a branch duly licensed under the laws of California of a
banking corporation organized and existing under the laws of the Republic of
France, BANK LEUMI USA, a New York State chartered bank, THE INDUSTRIAL BANK OF
JAPAN, LIMITED, LOS ANGELES AGENCY, an agency duly licensed under the laws of
California of a banking corporation organized and existing under the laws of
Japan, and VIA BANQUE, S.A., a banking corporation organized and existing under
the laws of the Republic of France (each of the foregoing holding Series A
Notes, being in such capacity a "Series A Lender"; and each of the foregoing
holding Series B Notes, being in such capacity a "Series B Lender"), CREDIT
LYONNAIS LEASING CORP., as the Equity Participant under the Trust Agreement (the
"Equity Participant"), and CREDIT LYONNAIS NEW YORK BRANCH, a branch duly
licensed under the laws of New York of a banking corporation organized and
existing under the laws of the Republic of France, as agent for the Lenders (the
"Agent").
PRELIMINARY STATEMENTS
WHEREAS, the parties hereto have entered into a Participation
Agreement dated as of December 15, 1994 (as amended and restated by that certain
First Amendment and Restatement, dated as of June 20, 1997, and amended by that
certain Second Amendment to Participation Agreement dated as of August 15, 1997,
and by that Third Amendment to Participation Agreement dated as of March 2,
1998, collectively the "Participation Agreement"; the terms defined therein
being used herein as therein defined unless otherwise defined herein); and
WHEREAS, the Lessee has requested that any Default or Event of Default
be waived, through September 30, 1998, that may have occurred by reason of the
Lessee's failure to comply with certain covenants of the Participant Agreement
expressly identified below;
NOW, THEREFORE, in consideration of the premises, the parties hereto
hereby agree as follows:
SECTION 1. Waiver under Participant Agreement. Effective as of May
----------------------------------
15, 1998 (the "Effective Date") and subject to the satisfaction of the
conditions precedent set forth in Section 3 hereof, the Lenders, the Equity
---------
Participant, the Agent and the Lessor hereby waive, during the period beginning
on the Effective Date and ending on and including September 30,
<PAGE>
1998 (the "Waiver Period"), any Default or Event of Default which would arise
under any of the Transaction Documents by reason of the Lessee's failure to
comply with Sections 4.03(c) and (d) of the Participation Agreement. At the end
of the Waiver Period, if the Lessee is not in compliance with any of such
Sections pursuant to the terms thereof, a Default or Event or Default shall be
deemed to exist unless, and except to the extent that, such Default or Event of
Default is further waived or the same shall cease to exist by reason of an
amendment to the applicable provisions of the Participation Agreement.
SECTION 2. Rates.
-----
(a) As of June 20, 1998 and until the end of the Waiver Period, the
definition of "Finance Rate" in the Participation Agreement is amended by (X) in
clause (i) deleting the reference to "0.56930%", as well as the balance of
clause (i) after such reference, and replacing it with "(a) prior to June 20,
1998, 0.56930%, and (b) from June 20, 1998 and until the end of the Waiver
Period, 1.31930%," and (Y) adding to the end of clause (ii) "plus, from June 20,
1998 and until the end of the Waiver Period, 0.50%".
(b) As of June 20, 1998 and until the end of the Waiver Period, the
definition of "Certificate Rate" in the Participation Agreement is amended by
adding to the end of the definition "plus, in any case, from June 20, 1998 and
until the end of the Waiver Period, 0.75%".
(c) As of June 20, 1998 and until the end of the Waiver Period,
clauses (i), (ii) and (iii) of Section 2.02(b) of Loan Agreement are hereby
deleted and replaced in their entirety with the following:
"(i) For each LIBOR Series A Note, at a rate equal to the LIBOR
Rate plus (a) prior to June 20, 1998, 0.50% per annum, and (b) from
June 20, 1998 and until the end of the Waiver Period, 1.25% per annum;
and for each LIBOR Series B Note, at a rate equal to the LIBOR Rate
plus (x) prior to June 20, 1998, 0.75% per annum; and (y) from June
20, 1998 and until the end of the Waiver Period, 1.50%;
(ii) For each Eurodollar Series A Note, at a rate equal to the
Eurodollar Rate plus (a) prior to June 20, 1998, 0.50% per annum, and
(b) from June 20, 1998 and until the end of the Waiver Period, 1.25%
per annum; and for each Eurodollar Series B Note, at a rate equal to
the Eurodollar Rate plus (x) prior to June 20, 1998, 0.75% per annum;
and (y) from June 20, 1998 and until the end of the Waiver Period
1.50%; and
(iii) For a Base Rate Note, whether a Series A Note or a Series B
Note, at a rate equal to the Base Rate, plus, from June 20, 1998 and
until the end of the Waiver Period, 0.50%."
SECTION 3. Conditions of Effectiveness. This Waiver shall become
---------------------------
effective when the Agent shall have received counterparts of this Waiver
executed by the Lessee, the Significant Sublessees and the other parties to the
Participation Agreement as required thereby.
2
<PAGE>
SECTION 4. Reference to and Effect on the Transaction Documents. (a)
----------------------------------------------------
Upon the effectiveness of this Waiver, on and after the date hereof, (i) each
reference in the Participation Agreement to "this Agreement," "hereunder,"
"hereof" or words of like import referring to the Participation Agreement, and
each reference in the other Transaction Documents to "the Participation
Agreement," "thereunder," "thereof" or words of like import referring to the
Participation Agreement, shall mean and be a reference to the Participation
Agreement as modified hereby, and (ii) each reference in the Loan Agreement to
"this Agreement," "hereunder," "hereof" or words of like import referring to the
Loan Agreement, and each reference in the other Transaction Documents to "the
Loan Agreement," "thereunder," "thereof" or words of like import referring to
the Loan Agreement, shall mean and be a reference to the Loan Agreement as
modified hereby.
(b) Except as specifically provided above, the Participation
Agreement, the Loan Agreement and all other Transaction Documents are and shall
continue to be in full force and effect and are hereby in all respects ratified
and confirmed. Without limiting the generality of the foregoing, any collateral
described therein does and shall continue to secure the payment of all secured
obligations under and as defined therein.
(c) The execution, delivery and effectiveness of this Waiver shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of the Agent, the Lenders, the Equity Participant, or the Lessor
under any of the Transaction Documents, nor constitute a waiver of any provision
of any of the Transaction Documents.
(d) Each of the parties hereto specifically acknowledges and agrees
that (i) none of the parties to the Participation Agreement or the Loan
Agreement have agreed to any other or future waiver of or amendment to the
Transaction Documents, (ii) neither the granting of the waiver described herein
nor the granting of any prior waivers and amendments under the Transaction
Documents creates any obligation whatsoever on the part of any of the parties to
the Participation Agreement or the Loan Agreement to grant any other or future
waiver or amendment under the Transaction Documents, and (iii) except as
specifically set forth herein, each of the parties to the Participation
Agreement and the Loan Agreement have reserved all rights and remedies under the
Transaction Documents.
SECTION 5. General Release of Claims. (a) The Lessee and Sublessee
-------------------------
each represent and agree that they have both diligently and thoroughly
investigated the existence of any Claim (as defined below), and to their
knowledge and belief, no Claim exists and no facts exist that could give rise to
or support a Claim.
(b) As additional consideration for the waivers as set forth herein,
the Lessee and Significant Sublessees and each of their respective agents,
employees, directors, officers, attorneys, affiliates, subsidiaries, successors
and assigns (individually a "Releasing Party," and collectively the "Releasing
Parties") each hereby releases and forever discharges each of the Lessor, the
Equity Participant, the Agent and each Lender and all of their respective
agents, direct and indirect shareholders, employees, directors, officers,
attorneys, branches, affiliates, subsidiaries, successors and assigns
(individually, a "Released Party," and collectively, the "Released Parties") of
and from all damage, loss, claims, demands, liabilities, obligations (except
3
<PAGE>
for any such obligations hereafter arising pursuant to the terms of the
Transaction Documents, as amended to date), actions and causes of action
whatsoever (collectively "Claims") that the Releasing Parties and each of them
may, as of the date hereof, have or claim to have against each of the Released
Parties, in each case whether presently known or with respect to which the facts
are known (or should have been known) that could give rise to or support a Claim
and of every nature and extent whatsoever on account of or in any way relating
to, arising out of or based upon the Transaction Documents or this Waiver or the
negotiation or documentation hereof or the waivers under the Transaction
Documents effected by this Waiver (including clause (a) above) or the
transactions contemplated hereby, or any action or omission in connection with
any of the foregoing, including, without limitation, all such loss or damage of
any kind heretofore sustained, or that may arise as a consequence of the
dealings between the parties up to the date hereof in connection with or in any
way related to the Transaction Documents or this Waiver. Each Releasing Party
further covenants and agrees that it has not assigned heretofore, and will not
hereafter sue any Released Party upon, any Claim released or purported to be
released under this Section, and the Lessee and Significant Sublessees each will
indemnify and hold harmless said Released Parties against any loss or liability
on account of any actions brought by any Releasing Party or its assigns or
prosecuted on behalf of any Releasing Party and relating to any Claim released
or purported to be released under this Section. It is further understood and
agreed that any and all rights under the provisions of Section 1542 of the
California Civil Code are expressly waived by each of the Releasing Parties.
Section 1542 provides as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR."
SECTION 6. Representations and Warranties. Each of the Lessee and the
------------------------------
Significant Sublessees represents and warrants to the other parties to the
Participation Agreement that:
(a) The representations and warranties in the Participation Agreement
and each of the other Transaction Documents to which it is a party remain true
and correct in all material respects immediately prior to and upon giving effect
to this Waiver, as if the same were made on the date of the effectiveness of the
amendments set forth herein (except for those relating to an earlier date which
were true and correct in all material respects as of such date).
(b) The execution, delivery and performance of this Waiver by the
Lessee and the Significant Sublessees has been duly authorized by all necessary
organizational action.
(c) All conditions set forth in Section 3 of this Waiver have been
---------
satisfied.
(d) Upon giving effect to this Waiver, there is no and will not be
any, Default or Event of Default.
4
<PAGE>
SECTION 7. Costs, Expenses and Taxes. The Lessee agrees to pay on
-------------------------
demand all costs and expenses of the Agent, the Lenders, the Equity Participant
and the Lessor in connection with the preparation, execution, delivery and
administration of this Waiver and the other instruments and documents, if any,
to be delivered hereunder, including, without limitation, the reasonable fees
and out of pocket expenses of counsel for the Agent, the Lenders, the Equity
Participant and the Lessor with respect thereto and with respect to advising
each of such parties as to its rights and responsibilities hereunder and
thereunder. The Lessee further agrees to pay on demand all costs and expenses,
if any (including, without limitation, reasonable counsel fees and expenses), in
connection with the enforcement (whether though negotiations, legal proceedings
or otherwise) of this Waiver, and the other instruments and documents to be
delivered hereunder, including, without limitation, reasonable counsel fees and
expenses in connection with the enforcement of rights under this Section.
SECTION 8. Execution in Counterparts. This Waiver hereto may be
-------------------------
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which taken together shall constitute but one and
the same agreement. Delivery of an executed counterpart of a signature page to
this Waiver hereto by telefacsimile shall be effective as delivery of a manually
executed counterpart of this Waiver.
SECTION 9. Governing Law. This Waiver hereto shall be governed by,
-------------
and construed in accordance with, the laws of the State of California.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Waiver
(1994 Participation Agreement) to be executed by their respective officers
thereunto duly authorized, as the date first above written.
SMART & FINAL INC.
By: /s/ Donald G. Alvarado
----------------------------------
Name: Donald G. Alvarado
Title: Secretary
SMART & FINAL STORES CORPORATION
By: /s/ Richard Phegley
----------------------------------
Name: Richard Phegley
Title: VP & Treasurer
PORT STOCKTON FOOD DISTRIBUTORS, INC.
By: /s/ Donald G. Alvarado
----------------------------------
Name: Donald G. Alvarado
Title: Secretary
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Pascal Poupelle
---------------------------------
Name: Pascal Poupelle
Title: Executive President
CREDIT LYONNAIS LEASING CORP.
By: /s/ L.M. Wertheim
---------------------------------
Name: L.M. Wertheim
Title: Vice President and
Secretary
CREDIT LYONNAIS LOS ANGELES BRANCH
By: /s/ Pascal Poupelle
---------------------------------
Name: Pascal Poupelle
Title: Executive President
<PAGE>
BANK LEUMI USA
By: /s/ Jacques Delvoye
--------------------------------
Name: Jacques Delvoye
Title: Vice President
THE INDUSTRIAL BANK OF JAPAN, LIMITED, LOS ANGELES
AGENCY
By: /s/ Vicente L. Timiraos
--------------------------------
Name: Vicente L. Timiraos
Title: SVP & SDGM
VIA BANQUE, S.A.
By: /s/ Christel Prot
--------------------------------
Name: Christel Prot
Title: Sous-Directeur
STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA
N.A., not in its individual capacity, but solely
as successor to Fleet National Bank as Owner
Trustee under the Trust Agreement, as the Lessor
By: /s/ Mark Henson
--------------------------------
Name: Mark Henson
Title: Assistant Vice Prsident
<PAGE>
EXHIBIT 10.102
FIRST WAIVER
(1997 PARTICIPATION AGREEMENT)
This FIRST WAIVER (1997 PARTICIPATION AGREEMENT) (the "Waiver"), dated
as of July 22, 1998, is among SMART & FINAL INC., a Delaware corporation (the
"Lessee"), SMART & FINAL STORES CORPORATION, a California corporation, and
AMERICAN FOODSERVICE DISTRIBUTORS, a California corporation (each a "Significant
Sublessee" and together, the "Significant Sublessees"), STATE STREET BANK AND
TRUST COMPANY OF CALIFORNIA N.A., not in its individual capacity (except as
expressly stated herein), but solely as the successor Owner Trustee under the
Trust Agreement (the "Lessor"), the banks named on Schedule I to the
Participation Agreement as holders of the Notes (the "Lenders"), CREDIT LYONNAIS
LEASING CORP., a Delaware corporation, as the Equity Participant under the Trust
Agreement (the "Equity Participant"), and CREDIT LYONNAIS NEW YORK BRANCH, a
branch duly licensed under the laws of New York of a banking corporation
organized and existing under the laws of the Republic of France, as agent for
the Lenders (the "Agent").
PRELIMINARY STATEMENTS
WHEREAS, the parties hereto have entered into a Participation
Agreement dated as of April 16, 1997 (as amended by that certain First Amendment
to Participation Agreement dated as of April 16, 1997, and by that Second
Amendment to Participation Agreement dated as of March 2, 1998, collectively the
"Participation Agreement"; the terms defined therein being used herein as
therein defined unless otherwise defined herein); and
WHEREAS, the Lessee has requested that any Default or Event of Default
be waived, through September 30, 1998, that may have occurred by reason of the
Lessee's failure to comply with certain covenants of the Participant Agreement
expressly identified below;
NOW, THEREFORE, in consideration of the premises, the parties hereto
hereby agree as follows:
SECTION 1. Waiver under Participant Agreement. Effective as of May
----------------------------------
15, 1998 (the "Effective Date") and subject to the satisfaction of the
conditions precedent set forth in Section 3 hereof, the Lenders, the Equity
---------
Participant, the Agent and the Lessor hereby waive, during the period beginning
on the Effective Date and ending on and including September 30, 1998 (the
"Waiver Period"), any Default or Event of Default which would arise under any of
the Transaction Documents by reason of the Lessee's failure to comply with
Sections 4.03(c) and (d) of the Participation Agreement. At the end of the
Waiver Period, if the Lessee is not in compliance with any of such Sections
pursuant to the terms thereof, a Default or Event or Default shall be deemed to
exist unless, and except to the extent that, such Default or Event of Default is
further waived or the same shall cease to exist by reason of an amendment to the
applicable provisions of the Participation Agreement.
<PAGE>
SECTION 2. Rates.
-----
(a) As of June 20, 1998 and until the end of the Waiver Period, the
definition of "Finance Rate" in the Participation Agreement is amended by (x)
deleting the reference to "0.50%" and replacing it with "(a) prior to June 20,
1998, 0.50%, and (b) from June 20, 1998 and until the end of the Waiver Period,
1.25%", and (y) adding to the end of clause (ii) "plus, from June 20, 1998 and
until the end of the Waiver Period, 0.50%".
(b) As of June 20, 1998 and until the end of the Waiver Period, the
definition of "Certificate Rate" in the Participation Agreement is amended by
adding to the end of the definition "plus, from June 20, 1998 and until the end
of the Waiver Period, 0.75%".
(c) As of June 20, 1998 and until the end of the Waiver Period,
Section 1.06 (Fees Payable by Lessee) of the Participation Agreement is hereby
amended by deleting the reference to "0.175%" and replacing it with "(a) prior
to June 20, 1998, 0.175%, and (b) from June 20, 1998 and until the end of the
Waiver Period, 0.35%, in each case,".
(d) As of June 20, 1998 and until the end of the Waiver Period,
clauses (i), (ii) and (iii) of Section 2.02(b) of Loan Agreement are hereby
deleted and replaced in their entirety with the following:
"(i) For each LIBOR Note at a rate equal to the LIBOR Rate plus
(a) prior to June 20, 1998, 0.50%, and (b) from June 20, 1998 and
until the end of the Waiver Period, 1.25%;
(ii) For each Eurodollar Note at a rate equal to the Eurodollar
Rate plus (a) prior to June 20, 1998, 0.50%, and (b) from June 20,
1998 and until the end of the Waiver Period, 1.25%; and
(iii) For a Base Rate Note, at a rate equal to the Base Rate,
plus, from June 20, 1998 and until the end of the Waiver Period,
0.50%."
SECTION 3. Conditions of Effectiveness. This Waiver shall become
---------------------------
effective when the Agent shall have received counterparts of this Waiver
executed by the Lessee, the Significant Sublessees and the other parties to the
Participation Agreement as required thereby.
SECTION 4. Reference to and Effect on the Transaction Documents. (a)
----------------------------------------------------
Upon the effectiveness of this Waiver, on and after the date hereof, (i) each
reference in the Participation Agreement to "this Agreement," "hereunder,"
"hereof" or words of like import referring to the Participation Agreement, and
each reference in the other Transaction Documents to "the Participation
Agreement," "thereunder," "thereof" or words of like import referring to the
Participation Agreement, shall mean and be a reference to the Participation
Agreement as modified hereby, and (ii) each reference in the Loan Agreement to
"this Agreement," "hereunder," "hereof" or words of like import referring to the
Loan Agreement, and each reference in the other Transaction Documents to "the
Loan Agreement," "thereunder," "thereof"
2
<PAGE>
or words of like import referring to the Loan Agreement, shall mean and be a
reference to the Loan Agreement as modified hereby
(b) Except as specifically provided above, the Participation
Agreement, the Loan Agreement and all other Transaction Documents are and shall
continue to be in full force and effect and are hereby in all respects ratified
and confirmed. Without limiting the generality of the foregoing, any collateral
described therein does and shall continue to secure the payment of all secured
obligations under and as defined therein.
(c) The execution, delivery and effectiveness of this Waiver shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of the Agent, the Lenders, the Equity Participant, or the Lessor
under any of the Transaction Documents, nor constitute a waiver of any provision
of any of the Transaction Documents.
(d) Each of the parties hereto specifically acknowledges and agrees
that (i) none of the parties to the Participation Agreement or the Loan
Agreement have agreed to any other or future waiver of or amendment to the
Transaction Documents, (ii) neither the granting of the waiver described herein
nor the granting of any prior waivers and amendments under the Transaction
Documents creates any obligation whatsoever on the part of any of the parties to
the Participation Agreement or the Loan Agreement to grant any other or future
waiver or amendment under the Transaction Documents, and (iii) except as
specifically set forth herein, each of the parties to the Participation
Agreement and the Loan Agreement have reserved all rights and remedies under the
Transaction Documents.
SECTION 5. General Release of Claims. (a) The Lessee and Sublessee
-------------------------
each represent and agree that they have both diligently and thoroughly
investigated the existence of any Claim (as defined below), and to their
knowledge and belief, no Claim exists and no facts exist that could give rise to
or support a Claim.
(b) As additional consideration for the waivers as set forth herein,
the Lessee and Significant Sublessees and each of their respective agents,
employees, directors, officers, attorneys, affiliates, subsidiaries, successors
and assigns (individually a "Releasing Party," and collectively the "Releasing
Parties") each hereby releases and forever discharges each of the Lessor, the
Equity Participant, the Agent and each Lender and all of their respective
agents, direct and indirect shareholders, employees, directors, officers,
attorneys, branches, affiliates, subsidiaries, successors and assigns
(individually, a "Released Party," and collectively, the "Released Parties") of
and from all damage, loss, claims, demands, liabilities, obligations (except for
any such obligations hereafter arising pursuant to the terms of the Transaction
Documents, as amended to date), actions and causes of action whatsoever
(collectively "Claims") that the Releasing Parties and each of them may, as of
the date hereof, have or claim to have against each of the Released Parties, in
each case whether presently known or with respect to which the facts are known
(or should have been known) that could give rise to or support a Claim and of
every nature and extent whatsoever on account of or in any way relating to,
arising out of or based upon the Transaction Documents or this Waiver (including
clause (a) above) or the negotiation or documentation hereof or the waivers
under the Transaction Documents effected by this Waiver
3
<PAGE>
or the transactions contemplated hereby, or any action or omission in connection
with any of the foregoing, including, without limitation, all such loss or
damage of any kind heretofore sustained, or that may arise as a consequence of
the dealings between the parties up to the date hereof in connection with or in
any way related to the Transaction Documents or this Waiver. Each Releasing
Party further covenants and agrees that it has not assigned heretofore, and will
not hereafter sue any Released Party upon, any Claim released or purported to be
released under this Section, and the Lessee and Significant Sublessees each will
indemnify and hold harmless said Released Parties against any loss or liability
on account of any actions brought by any Releasing Party or its assigns or
prosecuted on behalf of any Releasing Party and relating to any Claim released
or purported to be released under this Section. It is further understood and
agreed that any and all rights under the provisions of Section 1542 of the
California Civil Code are expressly waived by each of the Releasing Parties.
Section 1542 provides as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE
TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."
SECTION 6. Representations and Warranties. Each of the Lessee and
------------------------------
the Significant Sublessees represents and warrants to the other parties to the
Participation Agreement that:
(a) The representations and warranties in the Participation Agreement
and each of the other Transaction Documents to which it is a party remain true
and correct in all material respects immediately prior to and upon giving effect
to this Waiver, as if the same were made on the date of the effectiveness of the
amendments set forth herein (except for those relating to an earlier date which
were true and correct in all material respects as of such date).
(b) The execution, delivery and performance of this Waiver by the
Lessee and the Significant Sublessees has been duly authorized by all necessary
organizational action.
(c) All conditions set forth in Section 3 of this Waiver have been
---------
satisfied.
(d) Upon giving effect to this Waiver, there is no and will not be
any, Default or Event of Default.
SECTION 7. Costs, Expenses and Taxes. The Lessee agrees to pay on
-------------------------
demand all costs and expenses of the Agent, the Lenders, the Equity Participant
and the Lessor in connection with the preparation, execution, delivery and
administration of this Waiver and the other instruments and documents, if any,
to be delivered hereunder, including, without limitation, the reasonable fees
and out of pocket expenses of counsel for the Agent, the Lenders, the Equity
Participant and the Lessor with respect thereto and with respect to advising
each of such parties as to its rights and responsibilities hereunder and
thereunder. The Lessee further agrees to pay on demand all costs and expenses,
if any (including, without limitation, reasonable counsel fees and expenses), in
connection with the enforcement (whether though negotiations, legal proceedings
4
<PAGE>
or otherwise) of this Waiver, and the other instruments and documents to be
delivered hereunder, including, without limitation, reasonable counsel fees and
expenses in connection with the enforcement of rights under this Section.
SECTION 8. Execution in Counterparts. This Waiver hereto may be
-------------------------
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which taken together shall constitute but one and
the same agreement. Delivery of an executed counterpart of a signature page to
this Waiver hereto by telefacsimile shall be effective as delivery of a manually
executed counterpart of this Waiver.
SECTION 9. Governing Law. This Waiver hereto shall be governed by,
-------------
and construed in accordance with, the laws of the State of California.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Waiver
(1997 Participation Agreement) to be executed by their respective officers
thereunto duly authorized, as the date first above written.
CREDIT LYONNAIS NEW YORK BRANCH,
as Agent
By:________________________________________
Name:
Title:
CREDIT LYONNAIS LOS ANGELES BRANCH,
as Lender
By:________________________________________
Name:
Title:
BANQUE NATIONALE DE PARIS,
as Lender
By:________________________________________
Name:
Title:
UNION BANK OF CALIFORNIA, N.A.,
as Lender
By:________________________________________
Name:
Title:
CREDIT LYONNAIS LEASING CORP.,
as Equity Participant
By:________________________________________
Name:
Title:
<PAGE>
CIBC INC.,
as Lender
By:________________________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA
N.A., not in its individual capacity (except as
expressly stated herein), but solely as successor
Owner Trustee under the Trust Agreement, as the
Lessor
By:________________________________________
Name:
Title:
SMART & FINAL INC.,
as Lessee
By: /s/ Donald G. Alvarado
------------------------------
Name: Donald G. Alvarado
Title: Secretary
SMART & FINAL STORES CORPORATION,
as Significant Sublessee
By: /s/ Richard Phegley
------------------------------
Name: Richard Phegley
Title: VP & Treasurer
AMERICAN FOODSERVICE DISTRIBUTORS,
as Significant Sublessee
By: /s/ Donald G. Alvarado
------------------------------
Name: Donald G. Alvarado
Title: Secretary
<PAGE>
EXHIBIT 10.103
FIRST WAIVER
(1998 PARTICIPATION AGREEMENT)
This FIRST WAIVER (1998 PARTICIPATION AGREEMENT) (the "Waiver"), dated
as of July 22, 1998, is among SMART & FINAL INC., as Lessee, SMART & FINAL
STORES CORPORATION, as Sublessee and Construction Agent, SMART & FINAL REALTY
TRUST 1998, as Lessor, WILMINGTON TRUST COMPANY, as Trustee, CREDIT LYONNAIS
LEASING CORP., as Investor, financial institutions party hereto from time to
time, as Lenders, and CREDIT LYONNAIS LOS ANGELES BRANCH, a branch duly licensed
under the laws of the State of California as a banking corporation organized and
existing under the laws of the Republic of France, as Agent for the benefit of
itself and Lenders.
PRELIMINARY STATEMENTS
WHEREAS, the parties hereto have entered into a Participation
Agreement dated as of May 20, 1998 (the "Participation Agreement"; the terms
defined therein being used herein as therein defined unless otherwise defined
herein); and
WHEREAS, the Lessee has requested that any Default or Event of Default
be waived, through September 30, 1998, that may have occurred by reason of the
Lessee's failure to comply with certain covenants of the Participant Agreement
expressly identified below;
NOW, THEREFORE, in consideration of the premises, the parties hereto
hereby agree as follows:
SECTION 1. Waiver under Participant Agreement. Effective as of May
----------------------------------
20, 1998 (the "Effective Date") and subject to the satisfaction of the
conditions precedent set forth in Section 3 hereof, the Lenders, the Investor,
---------
the Agent and the Lessor hereby waive, during the period beginning on the
Effective Date and ending on and including September 30, 1998 (the "Waiver
Period"), any Default or Event of Default which would arise under any of the
Operative Documents by reason of the Lessee's failure to comply with Section 5.6
(Consolidated Cash Flow Ratio) of the Participation Agreement. At the end of
the Waiver Period, if the Lessee is not in compliance with such Section pursuant
to the terms thereof, a Default or Event or Default shall be deemed to exist
unless, and except to the extent that, such Default or Event of Default is
further waived or the same shall cease to exist by reason of an amendment to the
applicable provisions of the Participation Agreement.
SECTION 2. Applicable Margin.
-----------------
(a) As of June 20, 1998 and until the end of the Waiver Period, the
definition of "Applicable Margin" in the Participation Agreement is amended by
deleting clause (a) thereof and replacing it with the following:
"Applicable Margin" means:
<PAGE>
(a) for any Interest Period occurring in whole or in part one
hundred eighty (180) days after the Document Closing Date, (i) with respect
to interest determined by reference to the Base Rate, prior to June 20,
1998, zero (0) basis points, and from June 20, 1998 and until the end of
the Waiver Period, fifty (50) basis points; and (ii) with respect to
interest determined by reference to LIBO Rate, prior to June 20, 1998,
sixty (60) basis points, and from June 20, 1998 and until the end of the
Waiver Period, one hundred and twenty-five (125) basis points. In
addition, notwithstanding clause (b) below, the Commitment Fee Applicable
Margin from June 20, 1998 and until the end of the Waiver Period shall be
equal to thirty-five (35) basis points."
(b) As of June 20, 1998 and until the end of the Waiver Period, the
definition of "Yield" in the Participation Agreement is amended by adding to the
end of the definition "plus, in any case, from June 20, 1998 and until the end
of the Waiver Period, 0.75%."
SECTION 3. Conditions of Effectiveness. This Waiver shall become
---------------------------
effective when the Agent shall have received counterparts of (a) this Waiver
executed by the Lessee, the Sublessee and the other parties to the Participation
Agreement as required thereby, and (b) the Consent appended hereto executed by
each of Smart & Final Inc. and Smart & Final Stores Corporation.
SECTION 4. Reference to and Effect on the Operative Documents. (a)
--------------------------------------------------
Upon the effectiveness of this Waiver, on and after the date hereof, each
reference in the Participation Agreement to "this Agreement" "hereunder,"
"hereof" or words of like import referring to the Participation Agreement, and
each reference in the other Operative Documents to "the Participation
Agreement," "thereunder," "thereof" or words of like import referring to the
Participation Agreement, shall mean and be a reference to the Participation
Agreement as modified hereby.
(b) Except as specifically provided above, the Participation
Agreement, and all other Operative Documents are and shall continue to be in
full force and effect and are hereby in all respects ratified and confirmed.
Without limiting the generality of the foregoing, any collateral described
therein does and shall continue to secure the payment of all secured obligations
under and as defined therein.
(c) The execution, delivery and effectiveness of this Waiver shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of the Agent, the Lenders, the Investor, or the Lessor under any
of the Operative Documents, nor constitute a waiver of any provision of any of
the Operative Documents.
(d) Each of the parties hereto, and by execution of the Consent
appended hereto, each Guarantor, specifically acknowledges and agrees that (i)
none of the parties to the Participation Agreement or any other Operative
Document have agreed to any other or future waiver of or amendment to the
Operative Documents, (ii) neither the granting of the waiver described herein
nor the granting of any prior waivers and amendments under the Operative
Documents creates any obligation whatsoever on the part of any of the parties to
any of the Operative Documents to grant any other or future waiver or amendment
under the Operative
2
<PAGE>
Documents, and (iii) except as specifically set forth herein, each of the
parties to any of the Operative Documents have reserved all rights and remedies
under the Operative Documents.
SECTION 5. General Release of Claims. (a) The Lessee and Sublessee
-------------------------
each represent and agree that they have both diligently and thoroughly
investigated the existence of any Claim (as defined below), and to their
knowledge and belief, no Claim exists and no facts exist that could give rise to
or support a Claim.
(b) As additional consideration for the waivers as set forth herein,
the Lessee and Sublessee and each of their respective agents, employees,
directors, officers, attorneys, affiliates, subsidiaries, successors and assigns
(individually a "Releasing Party," and collectively the "Releasing Parties")
each hereby releases and forever discharges each of the Lessor, the Investor,
the Agent and each Lender and all of their respective agents, direct and
indirect shareholders, employees, directors, officers, attorneys, branches,
affiliates, subsidiaries, successors and assigns (individually, a "Released
Party," and collectively, the "Released Parties") of and from all damage, loss,
claims, demands, liabilities, obligations (except for any such obligations
hereafter arising pursuant to the terms of the Operative Documents, as amended
to date), actions and causes of action whatsoever (collectively "Claims") that
the Releasing Parties and each of them may, as of the date hereof, have or claim
to have against each of the Released Parties, in each case whether presently
known or with respect to which the facts are known (or should have been known)
that could give rise to or support a Claim and of every nature and extent
whatsoever on account of or in any way relating to, arising out of or based upon
the Operative Documents or this Waiver (including clause (a) above and the
Consent attached hereto) or the negotiation or documentation hereof or the
waivers under the Operative Documents effected by this Waiver or the
transactions contemplated hereby, or any action or omission in connection with
any of the foregoing, including, without limitation, all such loss or damage of
any kind heretofore sustained, or that may arise as a consequence of the
dealings between the parties up to the date hereof in connection with or in any
way related to the Operative Documents or this Waiver. Each Releasing Party
further covenants and agrees that it has not assigned heretofore, and will not
hereafter sue any Released Party upon, any Claim released or purported to be
released under this Section, and the Lessee and Sublessee each will indemnify
and hold harmless said Released Parties against any loss or liability on account
of any actions brought by any Releasing Party or its assigns or prosecuted on
behalf of any Releasing Party and relating to any Claim released or purported to
be released under this Section. It is further understood and agreed that any
and all rights under the provisions of Section 1542 of the California Civil Code
are expressly waived by each of the Releasing Parties. Section 1542 provides as
follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE
TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."
SECTION 6. Representations and Warranties. Each of the Lessee and
------------------------------
the Sublessee represents and warrants to the other parties to the Participation
Agreement that:
3
<PAGE>
(a) The representations and warranties in the Participation Agreement
and each of the other Operative Documents to which it is a party remain true and
correct in all material respects immediately prior to and upon giving effect to
this Waiver and the Consent, as if the same were made on the date of the
effectiveness of the amendments set forth herein (except for those relating to
an earlier date which were true and correct in all material respects as of such
date).
(b) The execution, delivery and performance of this Waiver and the
Consent by the Lessee and the Sublessee have been duly authorized by all
necessary organizational action.
(c) All conditions set forth in Section 3 of this Waiver have been
---------
satisfied.
(d) Upon giving effect to this Waiver, there is no and will not be
any, Default or Event of Default.
SECTION 7. Costs, Expenses and Taxes. The Lessee agrees to pay on
-------------------------
demand all costs and expenses of the Agent, the Lenders, the Investor and the
Lessor in connection with the preparation, execution, delivery and
administration of this Waiver, the Consent and the other instruments and
documents, if any, to be delivered hereunder, including, without limitation, the
reasonable fees and out of pocket expenses of counsel for the Agent, the
Lenders, the Equity Participant and the Lessor with respect thereto and with
respect to advising each of such parties as to its rights and responsibilities
hereunder and thereunder. The Lessee further agrees to pay on demand all costs
and expenses, if any (including, without limitation, reasonable counsel fees and
expenses), in connection with the enforcement (whether though negotiations,
legal proceedings or otherwise) of this Waiver, the Consent and the other
instruments and documents to be delivered hereunder, including, without
limitation, reasonable counsel fees and expenses in connection with the
enforcement of rights under this Section.
SECTION 8. Execution in Counterparts. This Waiver and the Consent
-------------------------
hereto may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which taken together shall constitute
but one and the same agreement. Delivery of an executed counterpart of a
signature page to this Waiver or the Consent hereto by telefacsimile shall be
effective as delivery of a manually executed counterpart of this Waiver or such
Consent.
SECTION 9. Governing Law. This Waiver and the Consent hereto shall
-------------
be governed by, and construed in accordance with, the laws of the State of
California.
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Waiver
(1998 Participation Agreement) to be executed by their respective officers
thereunto duly authorized, as the date first above written.
SMART & FINAL INC.
as Lessee
By: /s/ Donald G. Alvarado
---------------------------
Name: Donald G. Alvarado
Title: Secretary
SMART & FINAL STORES CORPORATION,
as Sublessee
By: /s/ Richard Phegley
---------------------------
Name: Richard Phegley
Title: VP & Treasurer
SMART & FINAL REALTY TRUST 1998,
as Lessor
By: Wilmington Trust Company, not in its
individual capacity but solely as Trustee
By: /s/ Joseph B. Feil
---------------------
Name: Joseph B. Feil
Title: Financial Services Officer
CREDIT LYONNAIS LEASING CORP.,
as Investor
By: /s/ L.M. Wertheim
---------------------------
L.M. Wertheim
Vice President and Secretary
CREDIT LYONNAIS LOS ANGELES BRANCH
as Agent and Lender
By: /s/ Pascal Poupelle
--------------------------
Name: Pascal Poupelle
Title: Executive President
<PAGE>
COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK
B.A., "RABOBANK NEDERLAND," NEW YORK BRANCH,
as Lender
By: /s/ Bradford F. Scott
------------------------------------------
Name: Bradford F. Scott
Title: Vice President
By:
------------------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
as Trustee
By: /s/ Joseph B. Feil
-----------------------------------------
Name: Joseph B. Feil
Title: Financial Services Officer
<PAGE>
CONSENT
Dated as of July 22, 1998
The undersigned, SMART & FINAL INC., a Delaware corporation, and SMART
& FINAL STORES CORPORATION, a California corporation, are each a party to the
Guaranty (as defined in the Participation Agreement referred to in the foregoing
Waiver) and each (i) hereby consents to the foregoing Waiver, and (ii) hereby
confirms and agrees that the Guaranty is, and shall continue to be, in full
force and effect and is hereby ratified and confirmed in all respects, except
that, upon the effectiveness of, and on and after the date of, the said Waiver,
each reference in the Guaranty to the Participation Agreement, "thereunder,"
"thereof" or words of like import shall mean and be a reference to the
Participation Agreement as modified by the said Waiver.
SMART & FINAL
By: /s/ Donald G. Alvarado
--------------------------------
Name: Donald G. Alvarado
Title: Secretary
SMART & FINAL STORES CORPORATION
By: /s/ Richard Phegley
--------------------------------
Name: Richard Phegley
Title: VP & Treasurer
<PAGE>
EXHIBIT 10.104
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
the 1st day of September, 1998, by and between SMART & FINAL INC., a Delaware
corporation ("Employer"), and PHILLIP E. HAWKINS ("Employee").
RECITALS
--------
A. Employer is engaged in the business of distributing food and related
non-food items through wholesale outlets under the name "Smart & Final" and by
delivery, under the trade names "Smart & Final Foodservice" and "Henry Lee" in
the Western United States, Florida and Northern Mexico.
B. Employer desires to employ Employee, and Employee desires to be
employed, on the terms and conditions set forth in this Agreement.
AGREEMENT
---------
Accordingly, in consideration of the mutual covenants contained herein, the
parties agree as follows:
1. TERM OF AGREEMENT.
-----------------
1.1 Term. The term of this Agreement shall begin on September
1, 1998 and shall continue until the earlier of (a) the date on which it is
terminated pursuant to Section 5 or (b) September 30, 2000.
2. EMPLOYMENT
----------
2.1 Employment of Employee. Employer hereby hires Employee as
----------------------
President and Chief Operating Officer of its Smart & Final Stores Corporation
subsidiary ("Stores"). Employee hereby accepts such employment on the terms and
conditions of this Agreement.
2.2 Position and Duties. Employee shall serve as the President
-------------------
and Chief Operating Officer of Stores and shall have the general powers, duties,
and obligations commensurate with that office to be performed in such place or
places, as may be prescribed by the Board of Directors or the Bylaws of Employer
from time to time, provided, however that notwithstanding anything to the
contrary in the Section 2.2, Section 2.3 below, or any other provision of this
Agreement, Employee's principal office shall be at the corporate headquarters of
Employer in the greater Los Angeles metropolitan area. In this position,
Employee shall report directly to, and be subject to the supervision of,
Employer's Chairman and CEO or his/her designee.
2.3 Standard of Performance. Employee agrees that he will at all
-----------------------
times faithfully and industriously and to the best of his ability, experience
and talents perform all of the duties that may be required of and from him
pursuant to the terms of this Agreement. Such duties shall be performed at such
place or places as the interests, needs, business and opportunities of Employer
shall require or render advisable.
2.4 Exclusive Service. Employee shall devote all of his business
-----------------
energies and abilities and all of his productive time to the performance of his
duties under this Agreement (reasonable absences during holidays and vacations
excepted), and shall not, without the prior written consent of Employer, render
to others any service of any kind (whether or not for compensation) that, in the
reasonable opinion of Employer, would materially interfere with the performance
of his duties under this Agreement. Employee shall not, without the prior
written consent of Employer, maintain any affiliation with, whether as an agent,
consultant, employee, officer, director, trustee or otherwise, nor shall he
directly or indirectly render any services of an advisory nature or otherwise
to, or participate or engage in, any other business activity. Nothing contained
herein shall restrict or prohibit Employee from making investments in other
companies for his personal benefit, provided that at no time
1
<PAGE>
shall Employee own 5% or more of any company that is in direct competition with
Employer. Employee shall use diligent, conscientious, good faith efforts to
promote the interests of Employer.
2.5 Employee shall be subject to and bound by all policies, group
requirements, rules and procedures of Employer including without limitation all
policies requiring employees to submit to testing as to consumption of alcohol
and/or illegal substances.
2.6 Employee shall be deemed part of Employer's senior management group
and notwithstanding anything to the contrary in this Agreement in that capacity
shall be subject only to such policies, procedures and rules as other members of
Employer's senior management group. As used herein "senior management" shall
include all of Employer's executive officers except the Chairman. Employer
shall, during the term of this agreement be considered for the same benefits or
perquisites as any other member of Employer's senior management group.
3. COMPENSATION
------------
3.1 Compensation. During the term of this Agreement, Employer
shall pay the amounts and provide the benefits described in this Section 3, and
Employee agrees to accept such amounts and benefits in full payment for
Employee's services under this Agreement.
3.2 Base Salary. Employer shall pay to Employee a base salary
-----------
of $400,000.00 annually in equal installments payable no less frequently than
monthly. Such salary shall be subject to the normal review procedures of
Employer regarding increases; provided that Employee acknowledges that he is not
guaranteed any increase in compensation.
3.3 Bonus. Employer shall pay to Employee a bonus in accordance
-----
with Employer's policies as established from time to time by the Compensation
Committee and the Board of Directors. For calendar year 1998, Employer's target
bonus shall constitute up to 60% of base salary and shall be prorated based on
the number of months in the year in which Employee was employed by Employer.
3.4 Fringe Benefits. Upon satisfaction of any applicable
---------------
eligibility requirements, Employee shall be entitled to such fringe benefits
which Employer may make generally available from time to time for its executive
employees. Such benefits shall include the following:
(a) group healthcare insurance including the Executive
Healthcare program which provides for an additional $9,500 of coverage
for Employee and Employee's family;
(b) participation in Employer's retirement, pension and
401(k) plans upon meeting such eligibility requirements as are
enumerated therein;
(c) reimbursement of up to $10,000 per year for tax and
estate planning services; and
(d) insurance coverage for primary vehicle under Employer's
fleet program and reimbursement for maintenance expenses of up to
$2,500 annually.
Notwithstanding the foregoing, Employee shall not be eligible to
participate in the Supplemental Employee Retirement Plan ("Plan") adopted for
officers employed by the Company on the effective date of the Plan.
3.5 Stock Options. At the first Board of Directors meeting
-------------
following the date of this Agreement, Employee shall be awarded a grant of
options for the purchase of 100,000 shares of common stock in Employer pursuant
to the terms of Employer's Long-Term Equity Compensation Plan.
3.6 Deduction from Compensation. Employer shall deduct and
---------------------------
withhold from all compensation payable to Employee all amounts required to be
deducted or withheld pursuant to any present or future law, ordinance,
regulation, order, writ, judgment, or decree requiring such deduction and
withholding.
2
<PAGE>
4. REIMBURSEMENT OF EXPENSES
-------------------------
4.1 Travel and Other Expenses. Employer shall pay to or
-------------------------
reimburse Employee for those travel and similar expenditures incurred by
Employee which Employer determines are reasonably necessary for the proper
discharge of Employee's duties under this Agreement and for which Employee
submits appropriate receipts and indicates the amount, date, location and
business character. Such reimbursements shall be timely made in accordance with
customary Employer policy.
5. TERMINATION
-----------
5.1 Termination. Employee's employment under this Agreement
-----------
shall terminate prior to the expiration of its stated term upon the happening of
any of the following events:
(a) By mutual agreement between Employer and Employee.
(b) Upon the death of Employee.
(c) At the option of Employer or Employee, if Employee has
become (in the opinion of a licensed physician selected by Employer) so
physically or mentally disabled as to be incapable of substantially performing
his duties hereunder for a period of 90 consecutive days.
(d) By Employee in the event of any material breach by
Employer hereunder constituting good cause, which shall mean the failure of
Employer to pay any amounts payable pursuant to Section 3 or the failure of
Employer to perform any material obligation hereunder, within 3 days following
written notice from Employee specifying with particularity the amounts payable
or obligations to be so performed, it being agreed that in the event this
Agreement is terminated pursuant to this subsection (d), Employee shall not be
bound by the provisions of Section 6.5 below.
(e) By Employer in the event of any breach by Employee
hereunder constituting good cause, which shall mean (i) the failure of Employee
to perform any obligation hereunder within 3 days following written notice from
Employer specifying with particularity the obligations to be so performed, or
(ii) the Employee shall have been convicted of or shall have pled guilty or no
contest to any (A) felony or (B) misdemeanor involving either I) moral turpitude
or II) an offense that may have a material adverse effect on Employer, (iii) any
willful violation by Employee of any material laws or regulations applicable to
Employer's business, (iv) gross negligence, willful or dishonest misconduct,
fraud, or embezzlement on the part of Employee, or (v) commission of any act
involving moral turpitude including without limitation any offense relating to
being under the influence of a controlled substance or driving a vehicle while
intoxicated, or (vi) any adverse misrepresentations made by Employee.
5.2 Termination Date. The date on which this Agreement
----------------
terminates shall be the "Termination Date." After the Termination Date, Employee
shall not be employed by Employer, Employer shall promptly, but in no event
later than 5 days following the Termination Date, pay to Employee any
compensation under this Agreement accrued but unpaid as of that date, and
Employee shall not be entitled to any compensation from Employer for the
performance by Employee after that date of any obligations of Employee to
Employer under this Agreement. Notwithstanding the foregoing in the event
Employer terminates Employee's employment prior to the term of this Agreement
for any reason other than that specified in section's 5.1(a), 5.1(b), 5.1(c), or
5.1(e), or if Employee terminates this Agreement pursuant to Section 5.1(d)
above, Employee shall be entitled to all compensation due to him under the
Agreement.
5.3 Return of Employer Property. Within five days after the
Termination Date, Employee shall return to Employer all products, books,
records, forms, specifications, formulae, data processes, designs, papers and
writings relating to the business of Employer including without limitation
proprietary or licensed computer programs, customer lists and customer data,
and/or copies or duplicates thereof in Employee' s
3
<PAGE>
possession or under Employee's control. Employee shall not retain any copies or
duplicates of such property and all licenses granted to him by Employer to use
computer programs or software shall be revoked on the Termination Date.
6. CONFIDENTIAL INFORMATION As a material inducement to
------------------------
Employer to enter into and consummate this Agreement, Employee agrees that:
6.1 Trade Secrets. Employee shall not, without the prior written
-------------
consent of Employer, except as may be required by law, governmental rules and
regulations or litigation between the parties, disclose or use, in any way, any
confidential business or technical information or trade secret of Employer,
whether or not conceived of or prepared by Employee (the "Trade Secrets"),
including without limitation any information concerning any procedures,
operations, investments, techniques, data, compilations of information, records,
financing, costs, employees, purchasing, accounting, marketing, merchandising,
sales, customers, salaries, pricing, profits, plans for future development, and
the identity, requirements, preferences, practices and methods of doing business
of specific parties with whom Employer transacts business, and all other
information which is related to any service or business of Employer; all of
which Trade Secrets are the exclusive and valuable property of Employer.
6.2 Tangible Items. All customer lists, patents, copyrights,
--------------
trademarks, tradenames, files, records, documents, drawings, plans,
specifications, manuals, books, forms, receipts, notes, reports, memoranda,
studies, data, calculations, recordings, catalogues, compilations of
information, correspondence and all copies, abstracts and summaries of the
foregoing and all physical items related to the business of Employer, other than
a merely personal item, whether of a public nature or not, and whether prepared
by Employee or not, are and shall remain the exclusive property of Employer and
shall not be removed from the premises of Employer, without the prior written
consent of Employer.
6.3 Solicitation of Customers. During the one(1) year period
-------------------------
commencing on the earlier to occur of (i) the Termination Date or (ii) the date
on which this agreement expires by its terms, Employee shall not directly,
either for his own benefit or purposes or for the benefit or purposes of any
other person, solicit, call on, interfere with, accept any business form,
attempt to or divert or entice away any person or firm who has or is a customer
of Employer, if such business involves the wholesale distribution of food or
related equipment or supplies.
6.4 Solicitation of Employees. , During the one (1) year period
-------------------------
commencing on the earlier to occur of (i) the Termination Date or (ii) the date
on which this agreement expires by its terms, Employee shall not directly or
indirectly, employ or offer to employ, call on, solicit, interfere with, attempt
to direct or entice away any prior or existing employee or independent
contractor of Employer in any capacity if that person possesses or has knowledge
of any Trade Secrets.
6.5 Noncompetition.
--------------
(a) As used herein, the term "Competitive Activity" shall
mean any participation in, assistance of business from, engagement in business
with, or assistance, promotion or organization of, any person, partnership,
corporation, firm, association or other business organization, entity or
enterprise by Employee (other than Employer) which, directly or indirectly, is
engaged in, or hereinafter engages in the operation of retail stores selling
food or related equipment or supplies (other than ownership not to exceed two
percent in any publicly traded company).
(b) During the one (1) year period commencing on the
earlier to occur of (i) the Termination Date or (ii) the date on which this
agreement expires by its terms, Employee shall not engage in any Competitive
Activity in any of the following geographic areas: the States of Arizona,
California, Florida, Idaho, Nevada, Oregon and Washington and the country of
Mexico.
6.6 Injunctive Relief. Employee hereby acknowledges and agrees
that it would be difficult to fully compensate Employer for damages resulting
from the breach or threatened breach of the foregoing provisions and,
accordingly, that Employer, without being required to post any bond, shall be
entitled to temporary and injunctive relief, including temporary restraining
orders, preliminary injunctions and permanent injunctions, to
4
<PAGE>
enforce such provisions. This provision with respect to injunctive relief shall
not, however, diminish Employer's right to claim and recover damages.
6.7 Confidentiality Program. Employee shall implement such
-----------------------
policies and programs specified by Employer, all in order to protect the trade
secrets and other confidential information of Employer, its affiliates and
customers.
6.8 Continuing Effect. The provisions of this Section 6 shall
-----------------
remain in effect after the Termination Date.
6.9 Early Termination. Notwithstanding anything to the contrary
-----------------
in this Agreement, Sections 6.3, 6.4, 6.5 and 6.8 shall not apply in the event
that (a) Employee is terminated involuntarily prior to the expiration date of
the term hereof, or (b) Employer elects not to extend or renew or this Agreement
(upon terms comparable to those set forth herein) upon the expiration of the
term of this Agreement, or (c) Employee terminates this Agreement pursuant to
Section 5.1 (d) above.
7. OTHER PROVISIONS
----------------
7.1 Compliance With Other Agreements. Employee represents and
--------------------------------
warrants to Employer that the execution, delivery and performance of this
Agreement will not conflict with or result in the violation or breach of any
term or provision of any order, judgment, injunction, contract, agreement,
commitment or other arrangement to which Employee is a party or by which he is
bound, including without limitation any agreement restricting the sale of
products similar to Employer's products in any geographic location or otherwise.
Employee acknowledges that Employer is relying on his representation and
warranty in entering into this Agreement, and agrees to indemnify Employer from
and against all claims, demands, causes of action, damages, costs or expenses
(including attorneys' fees) arising from any breach thereof.
7.2 Injunctive Relief. Employee acknowledges that the services
-----------------
to be rendered under this Agreement and the items described in Sections 5.3 and
6 are of a special, unique and extraordinary character, that it would be
difficult or impossible to replace such services or to compensate Employer in
money damages for a breach of this Agreement. Accordingly, Employee agrees and
consents that if he violates any of the provisions of this Agreement, Employer,
in addition to any other rights and remedies available under this Agreement or
otherwise, shall be entitled to temporary and permanent injunctive relief,
without the necessity of proving actual damages and without the necessity of
posting any bond or other undertaking in connection therewith.
7.3 Attorneys' Fees. In the event any party takes legal action
---------------
to enforce any of the terms of this Agreement, the unsuccessful party to such
action shall pay the successful party's reasonable expenses, including
attorneys' fees for pretrial investigation, at trial, and on appeal, incurred in
such action.
7.4 Nondelegable Duties. This is a contract for Employee's
-------------------
personal services. The duties of Employee under this Agreement are personal and
may not be delegated or transferred in any manner whatsoever, and shall not be
subject to involuntary alienation, assignment or transfer by Employee during his
life.
7.5 Entire Agreement. This Agreement is the only agreement and
----------------
understanding between the parties pertaining to the subject matter of this
Agreement, and supersedes all prior agreements, summaries of agreements,
descriptions of compensation packages, discussions, negotiations,
understandings, representations or warranties, whether verbal or written,
between the parties pertaining to such subject matter.
7.6 Governing Law; Venue. The validity, construction and
--------------------
interpretation of this Agreement shall be governed by the internal laws of the
State of California applicable to contracts made and to be performed wholly
within that state. Any action commenced by the parties may be brought only in
the Federal or California state courts serving Los Angeles County, California.
The parties expressly consent to the jurisdiction of the foregoing courts, and
waive any objection that such courts constitute an inconvenient forum.
5
<PAGE>
7.7 Severability. The invalidity or unenforce ability of any
------------
particular provision of this Agreement shall not affect the other provisions,
and this Agreement shall be construed in all respects as if any invalid or
unenforceable provision were omitted.
7.8 Amendment and Waiver. This Agreement may be amended,
--------------------
modified or supplemented only by a writing executed by each of the parties.
Either party may in writing waive any provision of this Agreement to the extent
such provision is for the benefit of the waiving party. No waiver by either
party of a breach of any provision of this Agreement shall be construed as a
waiver of any subsequent or different breach, and no forbearance by a party to
seek a remedy for noncompliance or breach by the other party shall be construed
as a waiver of any right or remedy with respect to such noncompliance or breach.
7.9 Binding Effect. The provisions of this Agreement shall bind
--------------
and inure to the benefit of the parties and their respective successors and
permitted assigns.
7.10 Notice. Any notice or other communication required or
------
permitted hereunder shall be in writing, and shall be deemed to have been given
if personally delivered, or delivered by facsimile transmission, or actually
delivered (as evidenced by appropriate receipt) by Federal Express or 72 hours
after being placed in the United States mail, registered or certified-return
receipt requested, postage prepaid, addressed as follows:
If to Employee:
Phillip E. Hawkins
26140 Birchfield Dr.
Rancho Palos Verdes, CA 90275
If to Employer:
Smart & Final, Inc.
600 Citadel Drive
City of Commerce, California 90040
Attn: Legal Department
Facsimile: (323) 869-7862
Each of the parties shall be entitled to specify a different address by
giving notice as aforesaid.
7.11 Headings. The Section and other headings contained in this
--------
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
EMPLOYER
SMART & FINAL INC.
a Delaware corporation
By /s/ Robert J. Emmons
--------------------------
Title Chairman
-----------------------
By /s/ Donald G. Alvarado
--------------------------
Title Sr. VP
-----------------------
EMPLOYEE
/s/ Phillip E. Hawkins
-----------------------------
PHILLIP E. HAWKINS
6
<PAGE>
EXHIBIT 10.105
EXHIBIT 10.105
SECOND WAIVER
(CREDIT AGREEMENT)
This SECOND WAIVER (CREDIT AGREEMENT) (the "Waiver"), dated as of
October 1, 1998, is among SMART & FINAL INC., a Delaware corporation (the
"Borrower"), the lenders party to the Credit Agreement referred to below (the
"Lenders"), CREDIT LYONNAIS LOS ANGELES BRANCH, a branch duly licensed under the
laws of the State of California ("CL Los Angeles") of a banking corporation
organized and existing under the laws of the Republic of France, as agent (the
"Agent") for the Lenders.
PRELIMINARY STATEMENTS
WHEREAS, the Borrower, the Lenders and the Agent have entered into a
Credit Agreement dated as of November 20, 1995 (as amended by that certain
Amendment No. 1, dated as of May 10, 1996, and by that certain Amendment No. 2,
dated as of March 2, 1998, collectively, the "Credit Agreement"; the terms
defined therein being used herein as therein defined unless otherwise defined
herein);
WHEREAS, the Borrower had previously requested, and the Lenders had
previously agreed, that any Default or Event of Default be waived, through
September 30, 1998, that may have occurred by reason of the Borrower's failure
to comply with certain covenants of the Credit Agreement that were expressly
identified in that certain First Waiver, dated as of July 22, 1998; and
WHEREAS, the Borrower has further requested that any Default or Event
of Default be waived, through November 15, 1998, that may have occurred by
reason of the Borrower's failure to comply with certain covenants of the Credit
Agreement expressly identified below;
NOW, THEREFORE, in consideration of the premises, the parties hereto
hereby agree as follows:
SECTION 1. Waiver under Credit Agreement. Effective as of October
-----------------------------
1, 1998 (the "Effective Date") and subject to the satisfaction of the conditions
precedent set forth in Section 3 hereof, the Lenders hereby waive, during the
---------
period beginning on the Effective Date and ending on and including November 15,
1998 (the "Waiver Period"), any Default or Event of Default which would arise by
reason of the Borrower's failure to comply with Section 6.13 (Minimum Tangible
Net Worth) and Section 6.14 (Cash Flow Ratio) of the Credit Agreement. At the
end of the Waiver Period, if the Borrower is not in compliance with any of such
Sections pursuant to the terms thereof, a Default or Event or Default shall be
deemed to exist unless, and except to the extent that, such Default or Event of
Default is further waived or the same shall cease to exist by reason of an
amendment to the applicable provisions of the Credit Agreement.
1
<PAGE>
SECTION 2. Applicable Margin; Commitment Fee.
---------------------------------
(a) As of June 20, 1998 and until the end of the Waiver Period,
Sections 2.05(a), (b) and (c) of the Credit Agreement are hereby deleted in
their entirety and replaced with the following:
"Section 2.05. Interest Rates and Payment.
--------------------------
(a) Each Base Rate Loan shall bear interest on the outstanding
principal amount thereof, for each day from the date such Loan is made
until it becomes due, at a rate per annum equal to the sum of (i) Base
--- -----
Rate and (ii) from June 20, 1998 and until the end of the Waiver
Period, one-half of one percent (.50%).
(b) Each LIBOR Loan shall bear interest on the outstanding principal
amount thereof, for each day from the date such Loan is made until it
becomes due, at a rate per annum equal to the sum of (i) Adjusted
--- -----
LIBOR and (ii) (a) prior to June 20, 1998, one-half of one percent
(.50%), and (b) from June 20, 1998 and until the end of the Waiver
Period, one and one-quarter of one percent (1.25%).
(c) Each Eurorate Loan shall bear interest on the outstanding
principal amount thereof, for each day from the date such Loan is made
until it becomes due, at a rate per annum equal to the sum of (i)
--- -----
Adjusted Eurorate and (ii) (a) prior to June 20, 1998, one-half of one
percent (.50%), and (b) from June 20, 1998 and until the end of the
Waiver Period, one and one-quarter of one percent (1.25%)."
(b) In addition, as of June 20, 1998 and until the end of the Waiver
Period hereunder, the reference to "two-tenths of one percent (0.2%)" in Section
2.06 (Fees) is hereby deleted and replaced with "(0.35%)."
SECTION 3. Conditions of Effectiveness. This Waiver shall become
---------------------------
effective when the Agent shall have received counterparts of this Waiver
executed by the Borrower and the Majority Lenders or, as to such Lenders, advice
satisfactory to the Agent that such Lenders have executed this Waiver.
SECTION 4. Reference to and Effect on the Loan Documents. (a) Upon
---------------------------------------------
the effectiveness of this Waiver, on and after the date hereof each reference in
the Credit Agreement to "this Agreement," "hereunder," "hereof" or words of like
import referring to the Credit Agreement, and each reference in the other
documents entered into in connection with the Credit Agreement (as amended, the
"Loan Documents") to "the Credit Agreement," "thereunder," "thereof" or words of
like import referring to the Credit Agreement, shall mean and be a reference to
the Credit Agreement as modified hereby.
2
<PAGE>
(a) Except as specifically provided above, the Credit Agreement and
all other Loan Documents are and shall continue to be in full force and effect
and are hereby in all respects ratified and confirmed.
(b) The execution, delivery and effectiveness of this Waiver shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of any Lender or the Agent under any of the Loan Documents, nor
constitute a waiver of any provision of any of the Loan Documents.
(c) The Agent, each Lender party hereto and the Borrower specifically
acknowledges and agrees that (i) none of the Borrower, the Agent or any Lender
has agreed to any other or future waiver of or amendment to the Loan Documents,
(ii) neither the granting of the waiver described herein nor the granting of any
prior waivers and amendments under the Loan Documents creates any obligation
whatsoever on the part of the Borrower, the Agent or any Lender to grant any
other or future waiver or amendment under the Loan Documents, and (iii) except
as specifically set forth herein, each of the Borrower, the Agent and the
Lenders have reserved all rights and remedies under the Loan Documents.
SECTION 5. General Release of Claims. (a) The Borrower represents
-------------------------
and agrees that it has both diligently and thoroughly investigated the existence
of any Claim (as defined below), and to its knowledge and belief, no Claim
exists and no facts exist that could give rise to or support a Claim.
(b) As additional consideration for the waivers as set forth herein,
the Borrower (by its execution hereof) and each of its agents, employees,
directors, officers, attorneys, affiliates, subsidiaries, successors and assigns
(individually a "Releasing Party," and collectively the "Releasing Parties")
each hereby releases and forever discharges the Agent and each Lender and all of
their respective agents, direct and indirect shareholders, employees, directors,
officers, attorneys, branches, affiliates, subsidiaries, successors and assigns
(individually, a "Released Party," and collectively, the "Released Parties") of
and from all damage, loss, claims, demands, liabilities, obligations (except for
any such obligations hereafter arising pursuant to the terms of the Loan
Documents, as amended to date), actions and causes of action whatsoever
(collectively "Claims") that the Releasing Parties and each of them may, as of
the date hereof, have or claim to have against each of the Released Parties, in
each case whether presently known or with respect to which the facts are known
(or should have been known) that could give rise to or support a Claim and of
every nature and extent whatsoever on account of or in any way relating to,
arising out of or based upon the Loan Documents or this Waiver (including clause
(a) above) or the negotiation or documentation hereof or the waivers under the
Loan Documents effected by this Waiver or the transactions contemplated hereby,
or any action or omission in connection with any of the foregoing, including,
without limitation, all such loss or damage of any kind heretofore sustained, or
that may arise as a consequence of the dealings between the parties up to the
date hereof in connection with or in any way related to the Loan Documents or
this Waiver. Each Releasing Party further covenants and agrees that it has not
assigned heretofore, and will not hereafter sue any Released Party upon, any
Claim released or purported to be released under this Section, and the Borrower
will indemnify and hold harmless
3
<PAGE>
said Released Parties against any loss or liability on account of any actions
brought by any Releasing Party or its assigns or prosecuted on behalf of any
Releasing Party and relating to any Claim released or purported to be released
under this Section. It is further understood and agreed that any and all rights
under the provisions of Section 1542 of the California Civil Code are expressly
waived by each of the Releasing Parties. Section 1542 provides as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE
TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."
SECTION 6. Representations and Warranties. The Borrower represents
------------------------------
and warrants to the Agent and each Lender that:
(a) The representations and warranties in the Credit Agreement and
each of the other Loan Documents remain true and correct in all material
respects immediately prior to and upon giving effect to this Waiver, as if the
same were made on the date of the effectiveness of the amendments set forth
herein (except for those relating to an earlier date which were true and correct
in all material respects as of such date).
(b) The execution, delivery and performance of this Waiver by the
Borrower has been duly authorized by all necessary organizational action.
(c) All conditions set forth in Section 3 of this Waiver have been
---------
satisfied.
(d) Upon giving effect to this Waiver, there is no and will not be
any, Default or Event of Default.
SECTION 7. Costs, Expenses and Taxes. The Borrower agrees to pay
-------------------------
on demand all costs and expenses of the Agent in connection with the
preparation, execution, delivery and administration of this Waiver, and the
other instruments and documents, if any, to be delivered hereunder, including,
without limitation, the reasonable fees and out of pocket expenses of counsel
for the Agent with respect thereto and with respect to advising the Agent as to
its rights and responsibilities hereunder and thereunder. The Borrower further
agrees to pay on demand all costs and expenses, if any (including, without
limitation, reasonable counsel fees and expenses), in connection with the
enforcement (whether though negotiations, legal proceedings or otherwise) of
this Waiver, and the other instruments and documents to be delivered hereunder,
including, without limitation, reasonable counsel fees and expenses in
connection with the enforcement of rights under this Section.
SECTION 8. Execution in Counterparts. This Waiver hereto may be
-------------------------
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which taken together shall constitute but one and
the same agreement. Delivery of an executed
4
<PAGE>
counterpart of a signature page to this Waiver hereto by telefacsimile
shall be effective as delivery of a manually executed counterpart of
this Waiver.
SECTION 9. Governing Law. This Waiver hereto shall be governed by,
-------------
and construed in accordance with, the laws of the State of California.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Second Waiver
(Credit Agreement) to be executed by their respective officers thereunto duly
authorized, as the date first above written.
SMART & FINAL INC., as the Borrower
By: /s/ Donald G. Alvarado
-------------------------------
Name: Donald G. Alvarado
Title: Secretary
CREDIT LYONNAIS LOS ANGELES BRANCH,
as the Agent
By: /s/ Pascal Poupelle
-------------------------------
Name: Pascal Poupelle
Title: Executive President
LENDERS:
CREDIT LYONNAIS LOS ANGELES BRANCH
By: /s/ Pascal Poupelle
-------------------------------
Name: Pascal Poupelle
Title: Executive President
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By: /s/ Pascal Poupelle
-------------------------------
Name: Pascal Poupelle
Title: Executive President
NATIONSBANK OF TEXAS, N.A.
By: /s/ Chas A. McDonell
-------------------------------
Name: Chas A. McDonell
Title: Vice President
6
<PAGE>
WELLS FARGO BANK N.A.
By: /s/ Catherine M. Wallace
---------------------------------
Name: Catherine M. Wallace
Title: Vice President
By: /s/ Donald A. Hartmann
---------------------------------
Name: Donald A. Hartmann
Title: Senior Vice President
FIRST HAWAIIAN BANK
By: /s/ Charles L. Jenkins
---------------------------------
Name: Charles L. Jenkins
Title: Vice President, Manager
7
<PAGE>
EXHIBIT 10.106
SECOND WAIVER
(BRIDGE LOAN CREDIT AGREEMENT)
This SECOND WAIVER (BRIDGE LOAN CREDIT AGREEMENT) (the "Waiver"),
dated as of October 1, 1998, is among SMART & FINAL INC., a Delaware corporation
(the "Company"), and CREDIT LYONNAIS LOS ANGELES BRANCH, a branch duly licensed
under the laws of the State of California (the "Bank") of a banking corporation
organized and existing under the laws of the Republic of France.
PRELIMINARY STATEMENTS
WHEREAS, the Company and the Bank have entered into a Bridge Loan
Credit Agreement dated as of April 10, 1998 (the "Credit Agreement"; the terms
defined therein being used herein as therein defined unless otherwise defined
herein);
WHEREAS, the Company had previously requested, and the Bank had
previously agreed, that any Default or Event of Default be waived, through
September 30, 1998, that may have occurred by reason of the Company's failure to
comply with certain covenants of the Credit Agreement that were expressly
identified in that certain First Waiver, dated as of July 22, 1998; and
WHEREAS, the Company has further requested that any Default or Event
of Default be waived, through November 15, 1998, that may have occurred by
reason of the Company's failure to comply with certain covenants of the Credit
Agreement expressly identified below;
NOW, THEREFORE, in consideration of the premises, the parties hereto
hereby agree as follows:
SECTION 1. Waiver under Credit Agreement. Effective as of October 1,
-----------------------------
1998 (the "Effective Date") and subject to the satisfaction of the conditions
precedent set forth in Section 3 hereof, the Bank hereby waives, during the
---------
period beginning on the Effective Date and ending on and including November 15,
1998 (the "Waiver Period"), any Default or Event of Default which would arise by
reason of the Company's failure to comply with Section 6.14 (Cash Flow Ratio) of
the Credit Agreement. At the end of the Waiver Period, if the Company is not in
compliance with such Section pursuant to the terms thereof, a Default or Event
or Default shall be deemed to exist unless, and except to the extent that, such
Default or Event of Default is further waived or the same shall cease to exist
by reason of an amendment to the applicable provisions of the Credit Agreement.
<PAGE>
SECTION 2. Applicable Margin; Commitment Fee.
---------------------------------
(a) As of June 20, 1998 and until the end of the Waiver Period,
Sections 2.05(a) and (b) of the Credit Agreement are hereby deleted in their
entirety and replaced with the following:
"Section 2.05. Interest Rates and Payment.
--------------------------
(a) Each Base Rate Loan shall bear interest on the outstanding
principal amount thereof, for each day from the date such Loan is made
until it becomes due, at a rate per annum equal to the sum of (i) Base
--- -----
Rate and (ii) from June 20, 1998 and until the end of the Waiver
Period, one-half of one percent (.50%).
(b) Each LIBOR Loan shall bear interest on the outstanding principal
amount thereof, for each day from the date such Loan is made until it
becomes due, at a rate per annum equal to the sum of (i) Adjusted
--- -----
LIBOR and (ii) (a) prior to June 20, 1998, the Applicable Margin, and
(b) from June 20, 1998 and until the end of the Waiver Period, one and
one-quarter of one percent (1.25%)."
(b) As of June 20, 1998 and until the end of the Waiver Period, the
reference to "one hundred and seventy-five hundredths of one percent (0.175%)"
in Section 2.06 (Fees) is hereby deleted and replaced with "0.35%."
SECTION 3. Conditions of Effectiveness. This Waiver shall become
---------------------------
effective when the Bank shall have received (a) counterparts of this Waiver
executed by the Company and the Bank, and (b) counterparts of the Consent
appended hereto executed by each of Smart & Final Food Stores Corporation,
American Foodservice Distributors, Inc. and Port Stockton Food Distributors,
Inc., each a California corporation.
SECTION 4. Reference to and Effect on the Loan Documents. (a) Upon
---------------------------------------------
the effectiveness of this Waiver, on and after the date hereof each reference in
the Credit Agreement to "this Agreement," "hereunder," "hereof" or words of like
import referring to the Credit Agreement, and each reference in the other
documents entered into in connection with the Credit Agreement (as amended, the
"Loan Documents") to "the Credit Agreement," "thereunder," "thereof" or words of
like import referring to the Credit Agreement, shall mean and be a reference to
the Credit Agreement as modified hereby.
(b) Except as specifically provided above, the Credit Agreement and
all other Loan Documents are and shall continue to be in full force and effect
and are hereby in all respects ratified and confirmed.
(c) The execution, delivery and effectiveness of this Waiver shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of the Bank
2
<PAGE>
under any of the Loan Documents, nor constitute a waiver of any provision of any
of the Loan Documents.
(d) The Bank and the Company, and, by execution of the Consent
appended hereto, each Guarantor, specifically acknowledges and agrees that (i)
none of the Company, the Guarantors, or the Bank has agreed to any other or
future waiver of or amendment to the Loan Documents, (ii) neither the granting
of the waiver described herein nor the granting of any prior waivers and
amendments under the Loan Documents creates any obligation whatsoever on the
part of the Company, the Guarantors, or the Bank to grant any other or future
waiver or amendment under the Loan Documents, and (iii) except as specifically
set forth herein, each of the Company, the Guarantors, and the Bank have
reserved all rights and remedies under the Loan Documents.
SECTION 5. General Release of Claims. (a) The Company and the
-------------------------
Guarantors (by execution of the Consent appended hereto) each represent and
agree that they have both diligently and thoroughly investigatged the existence
of any Claim (as defined below), and to their knowledge and belief, no Claim
exists and no facts exist that could give rise to or support a Claim.
(b) As additional consideration for the waivers as set forth herein,
the Company (by its execution hereof) and each the Guarantors (by its execution
of the Consent appended hereto) and each of their respective agents, employees,
directors, officers, attorneys, affiliates, subsidiaries, successors and assigns
(individually a "Releasing Party," and collectively the "Releasing Parties")
each hereby releases and forever discharges the Bank and all of its agents,
direct and indirect shareholders, employees, directors, officers, attorneys,
branches, affiliates, subsidiaries, successors and assigns (individually, a
"Released Party," and collectively, the "Released Parties") of and from all
damage, loss, claims, demands, liabilities, obligations (except for any such
obligations hereafter arising pursuant to the terms of the Loan Documents, as
amended to date), actions and causes of action whatsoever (collectively
"Claims") that the Releasing Parties and each of them may, as of the date
hereof, have or claim to have against each of the Released Parties, in each case
whether presently known or with respect to which the facts are known (or should
have been known) that could give rise to or support a Claim and of every nature
and extent whatsoever on account of or in any way relating to, arising out of or
based upon the Loan Documents or this Waiver (including clause (a) above and the
Consent appended hereto) or the negotiation or documentation hereof or the
waivers under the Loan Documents effected by this Waiver or the transactions
contemplated hereby, or any action or omission in connection with any of the
foregoing, including, without limitation, all such loss or damage of any kind
heretofore sustained, or that may arise as a consequence of the dealings between
the parties up to the date hereof in connection with or in any way related to
the Loan Documents or this Waiver. Each Releasing Party further covenants and
agrees that it has not assigned heretofore, and will not hereafter sue any
Released Party upon, any Claim released or purported to be released under this
Section, and the Company and each of the Guarantors will indemnify and hold
harmless said Released Parties against any loss or liability on account of any
actions brought by any Releasing Party or its assigns or prosecuted on behalf of
any Releasing Party and relating to any Claim released or purported to be
released under this Section. It is further
3
<PAGE>
understood and agreed that any and all rights under the provisions of Section
1542 of the California Civil Code are expressly waived by each of the Releasing
Parties. Section 1542 provides as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE
TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."
SECTION 6. Representations and Warranties. Each of the Company and
------------------------------
each of the Guarantors (by its execution of the Consent appended hereof)
represents and warrants to the Bank that:
(a) The representations and warranties in the Credit Agreement and
each of the other Loan Documents to which it is a party remain true and correct
in all material respects immediately prior to and upon giving effect to this
Waiver and the Consent, as if the same were made on the date of the
effectiveness of the amendments set forth herein (except for those relating to
an earlier date which were true and correct in all material respects as of such
date).
(b) The execution, delivery and performance of this Waiver and the
Consent by the Borrower and the Guarantors, as applicable, has been duly
authorized by all necessary organizational action.
(c) All conditions set forth in Section 3 of this Waiver have been
---------
satisfied.
(d) Upon giving effect to this Waiver, there is no and will not be
any, Default or Event of Default.
SECTION 7. Costs, Expenses and Taxes. The Company agrees to pay on
-------------------------
demand all costs and expenses of the Bank in connection with the preparation,
execution, delivery and administration of this Waiver, the Consent hereto, and
the other instruments and documents, if any, to be delivered hereunder,
including, without limitation, the reasonable fees and out of pocket expenses of
counsel for the Bank with respect thereto and with respect to advising the Bank
as to its rights and responsibilities hereunder and thereunder. The Company
further agrees to pay on demand all costs and expenses, if any (including,
without limitation, reasonable counsel fees and expenses), in connection with
the enforcement (whether though negotiations, legal proceedings or otherwise) of
this Waiver, the Consent hereto, and the other instruments and documents to be
delivered hereunder, including, without limitation, reasonable counsel fees and
expenses in connection with the enforcement of rights under this Section.
SECTION 8. Execution in Counterparts. This Waiver and the Consent
-------------------------
hereto may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which taken together shall constitute
but one and the same agreement. Delivery of an executed counterpart of a
signature page to this Waiver or the Consent hereto by
4
<PAGE>
telefacsimile shall be effective as delivery of a manually executed counterpart
of this Waiver or such Consent.
SECTION 9. Governing Law. This Waiver and Consent hereto shall be
-------------
governed by, and construed in accordance with, the laws of the State of
California.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Second Waiver
(Bridge Loan Credit Agreement) to be executed by their respective officers
thereunto duly authorized, as the date first above written.
SMART & FINAL INC.
By: /s/ Donald G. Alvarado
------------------------
Name: Donald G. Alvarado
Title: Secretary
CREDIT LYONNAIS LOS ANGELES BRANCH
By: /s/ Dianne M. Scott
---------------------------------
Name: Dianne M. Scott
Title: First Vice President and Manager
<PAGE>
CONSENT
Dated as of October 1, 1998
The undersigned, SMART & FINAL STORES CORPORATION, AMERICAN
FOODSERVICE DISTRIBUTORS, INC., and PORT STOCKTON FOOD DISTRIBUTORS, INC., each
a California corporation and party to the Subsidiary Guaranty (as defined in the
Credit Agreement referred to in the foregoing Waiver), each hereby consents to
the foregoing Waiver and hereby confirms and agrees that the Subsidiary Guaranty
is, and shall continue to be, in full force and effect and is hereby ratified
and confirmed in all respects except that, upon the effectiveness of, and on and
after the date of, the said Waiver, each reference in the Subsidiary Guaranty to
the Credit Agreement, "thereunder," "thereof" or words of like import shall mean
and be a reference to the Credit Agreement as modified by the said Waiver.
SMART & FINAL STORES CORPORATION
By: /s/ Richard Phegley
---------------------
Name: Richard Phegley
Title: VP & Treasurer
AMERICAN FOODSERVICE DISTRIBUTORS, INC.
By: /s/ Donald G. Alvarado
------------------------
Name: Donald G. Alvarado
Title: Secretary
PORT STOCKTON FOOD DISTRIBUTORS, INC.
By: /s/ Donald G. Alvarado
------------------------
Name: Donald G. Alvarado
Title: Secretary
<PAGE>
EXHIBIT 10.107
SECOND WAIVER
(1994 PARTICIPATION AGREEMENT)
This SECOND WAIVER (1994 PARTICIPATION AGREEMENT) (the "Waiver"),
dated as of October 1, 1998, is among SMART & FINAL INC., a Delaware corporation
(the "Lessee"), SMART & FINAL STORES CORPORATION, a California corporation, and
PORT STOCKTON FOOD DISTRIBUTORS, INC., a California corporation (each a
"Permitted Sublessee" and together, the "Permitted Sublessees"), STATE STREET
BANK AND TRUST COMPANY OF CALIFORNIA N.A., a national banking association, not
in its individual capacity, but solely as the successor Owner Trustee, CREDIT
LYONNAIS LOS ANGELES BRANCH, a branch duly licensed under the laws of California
of a banking corporation organized and existing under the laws of the Republic
of France, BANK LEUMI USA, a New York State chartered bank, THE INDUSTRIAL BANK
OF JAPAN, LIMITED, LOS ANGELES AGENCY, an agency duly licensed under the laws of
California of a banking corporation organized and existing under the laws of
Japan, and VIA BANQUE, S.A., a banking corporation organized and existing under
the laws of the Republic of France (each of the foregoing holding Series A
Notes, being in such capacity a "Series A Lender"; and each of the foregoing
holding Series B Notes, being in such capacity a "Series B Lender"), CREDIT
LYONNAIS LEASING CORP., as the Equity Participant under the Trust Agreement (the
"Equity Participant"), and CREDIT LYONNAIS NEW YORK BRANCH, a branch duly
licensed under the laws of New York of a banking corporation organized and
existing under the laws of the Republic of France, as agent for the Lenders (the
"Agent").
PRELIMINARY STATEMENTS
WHEREAS, the parties hereto have entered into a Participation
Agreement dated as of December 15, 1994 (as amended and restated by that certain
First Amendment and Restatement, dated as of June 20, 1997, and amended by that
certain Second Amendment to Participation Agreement dated as of August 15, 1997,
and by that Third Amendment to Participation Agreement dated as of March 2,
1998, collectively the "Participation Agreement"; the terms defined therein
being used herein as therein defined unless otherwise defined herein);
WHEREAS, the Lessee had previously requested, and the Lenders, the
Equity Participant, the Agent and the Lessor previously agreed, that any Default
or Event of Default be waived, through September 30, 1998, that may have
occurred by reason of the Lessee's failure to comply with certain covenants of
the Participant Agreement expressly identified in that certain Waiver among the
parties hereto, dated as of July 22, 1998; and
WHEREAS, the Lessee has further requested that any Default or Event of
Default be waived, through November 15, 1998, that may have occurred by reason
of the Lessee's failure to comply with certain covenants of the Participant
Agreement expressly identified below;
NOW, THEREFORE, in consideration of the premises, the parties hereto
hereby agree as follows:
<PAGE>
SECTION 1. Waiver under Participant Agreement. Effective as of
----------------------------------
October 1, 1998 (the "Effective Date") and subject to the satisfaction of the
conditions precedent set forth in Section 3 hereof, the Lenders, the Equity
---------
Participant, the Agent and the Lessor hereby waive, during the period beginning
on the Effective Date and ending on and including November 15, 1998 (the "Waiver
Period"), any Default or Event of Default which would arise under any of the
Transaction Documents by reason of the Lessee's failure to comply with Sections
4.03(c) and (d) of the Participation Agreement. At the end of the Waiver
Period, if the Lessee is not in compliance with any of such Sections pursuant to
the terms thereof, a Default or Event or Default shall be deemed to exist
unless, and except to the extent that, such Default or Event of Default is
further waived or the same shall cease to exist by reason of an amendment to the
applicable provisions of the Participation Agreement.
SECTION 2. Rates.
-----
(a) As of June 20, 1998 and until the end of the Waiver Period, the
definition of "Finance Rate" in the Participation Agreement is amended by (X) in
clause (i) deleting the reference to "0.56930%", as well as the balance of
clause (i) after such reference, and replacing it with "(a) prior to June 20,
1998, 0.56930%, and (b) from June 20, 1998 and until the end of the Waiver
Period, 1.31930%," and (Y) adding to the end of clause (ii) "plus, from June 20,
1998 and until the end of the Waiver Period, 0.50%".
(b) As of June 20, 1998 and until the end of the Waiver Period, the
definition of "Certificate Rate" in the Participation Agreement is amended by
adding to the end of the definition "plus, in any case, from June 20, 1998 and
until the end of the Waiver Period, 0.75%".
(c) As of June 20, 1998 and until the end of the Waiver Period,
clauses (i), (ii) and (iii) of Section 2.02(b) of Loan Agreement are hereby
deleted and replaced in their entirety with the following:
"(i) For each LIBOR Series A Note, at a rate equal to the LIBOR
Rate plus (a) prior to June 20, 1998, 0.50% per annum, and (b) from
June 20, 1998 and until the end of the Waiver Period, 1.25% per annum;
and for each LIBOR Series B Note, at a rate equal to the LIBOR Rate
plus (x) prior to June 20, 1998, 0.75% per annum; and (y) from June
20, 1998 and until the end of the Waiver Period, 1.50%;
(ii) For each Eurodollar Series A Note, at a rate equal to the
Eurodollar Rate plus (a) prior to June 20, 1998, 0.50% per annum, and
(b) from June 20, 1998 and until the end of the Waiver Period, 1.25%
per annum; and for each Eurodollar Series B Note, at a rate equal to
the Eurodollar Rate plus (x) prior to June 20, 1998, 0.75% per annum;
and (y) from June 20, 1998 and until the end of the Waiver Period
1.50%; and
(iii) For a Base Rate Note, whether a Series A Note or a Series
B Note, at a rate equal to the Base Rate, plus, from June 20, 1998 and
until the end of the Waiver Period, 0.50%."
2
<PAGE>
SECTION 3. Conditions of Effectiveness. This Waiver shall become
---------------------------
effective when the Agent shall have received counterparts of this Waiver
executed by the Lessee, the Significant Sublessees and the other parties to the
Participation Agreement as required thereby.
SECTION 4. Reference to and Effect on the Transaction Documents. (a)
----------------------------------------------------
Upon the effectiveness of this Waiver, on and after the date hereof, (i) each
reference in the Participation Agreement to "this Agreement," "hereunder,"
"hereof" or words of like import referring to the Participation Agreement, and
each reference in the other Transaction Documents to "the Participation
Agreement," "thereunder," "thereof" or words of like import referring to the
Participation Agreement, shall mean and be a reference to the Participation
Agreement as modified hereby, and (ii) each reference in the Loan Agreement to
"this Agreement," "hereunder," "hereof" or words of like import referring to the
Loan Agreement, and each reference in the other Transaction Documents to "the
Loan Agreement," "thereunder," "thereof" or words of like import referring to
the Loan Agreement, shall mean and be a reference to the Loan Agreement as
modified hereby.
(b) Except as specifically provided above, the Participation
Agreement, the Loan Agreement and all other Transaction Documents are and shall
continue to be in full force and effect and are hereby in all respects ratified
and confirmed. Without limiting the generality of the foregoing, any collateral
described therein does and shall continue to secure the payment of all secured
obligations under and as defined therein.
(c) The execution, delivery and effectiveness of this Waiver shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of the Agent, the Lenders, the Equity Participant, or the Lessor
under any of the Transaction Documents, nor constitute a waiver of any provision
of any of the Transaction Documents.
(d) Each of the parties hereto specifically acknowledges and agrees
that (i) none of the parties to the Participation Agreement or the Loan
Agreement have agreed to any other or future waiver of or amendment to the
Transaction Documents, (ii) neither the granting of the waiver described herein
nor the granting of any prior waivers and amendments under the Transaction
Documents creates any obligation whatsoever on the part of any of the parties to
the Participation Agreement or the Loan Agreement to grant any other or future
waiver or amendment under the Transaction Documents, and (iii) except as
specifically set forth herein, each of the parties to the Participation
Agreement and the Loan Agreement have reserved all rights and remedies under the
Transaction Documents.
SECTION 5. General Release of Claims. (a) The Lessee and Sublessee
-------------------------
each represent and agree that they have both diligently and thoroughly
investigated the existence of any Claim (as defined below), and to their
knowledge and belief, no Claim exists and no facts exist that could give rise to
or support a Claim.
(b) As additional consideration for the waivers as set forth herein,
the Lessee and Significant Sublessees and each of their respective agents,
employees, directors, officers, attorneys, affiliates, subsidiaries, successors
and assigns (individually a "Releasing Party," and collectively the "Releasing
Parties") each hereby releases and forever discharges each of the
3
<PAGE>
Lessor, the Equity Participant, the Agent and each Lender and all of their
respective agents, direct and indirect shareholders, employees, directors,
officers, attorneys, branches, affiliates, subsidiaries, successors and assigns
(individually, a "Released Party," and collectively, the "Released Parties") of
and from all damage, loss, claims, demands, liabilities, obligations (except for
any such obligations hereafter arising pursuant to the terms of the Transaction
Documents, as amended to date), actions and causes of action whatsoever
(collectively "Claims") that the Releasing Parties and each of them may, as of
the date hereof, have or claim to have against each of the Released Parties, in
each case whether presently known or with respect to which the facts are known
(or should have been known) that could give rise to or support a Claim and of
every nature and extent whatsoever on account of or in any way relating to,
arising out of or based upon the Transaction Documents or this Waiver or the
negotiation or documentation hereof or the waivers under the Transaction
Documents effected by this Waiver (including clause (a) above) or the
transactions contemplated hereby, or any action or omission in connection with
any of the foregoing, including, without limitation, all such loss or damage of
any kind heretofore sustained, or that may arise as a consequence of the
dealings between the parties up to the date hereof in connection with or in any
way related to the Transaction Documents or this Waiver. Each Releasing Party
further covenants and agrees that it has not assigned heretofore, and will not
hereafter sue any Released Party upon, any Claim released or purported to be
released under this Section, and the Lessee and Significant Sublessees each will
indemnify and hold harmless said Released Parties against any loss or liability
on account of any actions brought by any Releasing Party or its assigns or
prosecuted on behalf of any Releasing Party and relating to any Claim released
or purported to be released under this Section. It is further understood and
agreed that any and all rights under the provisions of Section 1542 of the
California Civil Code are expressly waived by each of the Releasing Parties.
Section 1542 provides as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE
TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."
SECTION 6. Representations and Warranties. Each of the Lessee and
------------------------------
the Significant Sublessees represents and warrants to the other parties to the
Participation Agreement that:
(a) The representations and warranties in the Participation Agreement
and each of the other Transaction Documents to which it is a party remain true
and correct in all material respects immediately prior to and upon giving effect
to this Waiver, as if the same were made on the date of the effectiveness of the
amendments set forth herein (except for those relating to an earlier date which
were true and correct in all material respects as of such date).
(b) The execution, delivery and performance of this Waiver by the
Lessee and the Significant Sublessees has been duly authorized by all necessary
organizational action.
(c) All conditions set forth in Section 3 of this Waiver have been
---------
satisfied.
4
<PAGE>
(d) Upon giving effect to this Waiver, there is no and will not be
any, Default or Event of Default.
SECTION 7. Costs, Expenses and Taxes. The Lessee agrees to pay on
-------------------------
demand all costs and expenses of the Agent, the Lenders, the Equity Participant
and the Lessor in connection with the preparation, execution, delivery and
administration of this Waiver and the other instruments and documents, if any,
to be delivered hereunder, including, without limitation, the reasonable fees
and out of pocket expenses of counsel for the Agent, the Lenders, the Equity
Participant and the Lessor with respect thereto and with respect to advising
each of such parties as to its rights and responsibilities hereunder and
thereunder. The Lessee further agrees to pay on demand all costs and expenses,
if any (including, without limitation, reasonable counsel fees and expenses), in
connection with the enforcement (whether though negotiations, legal proceedings
or otherwise) of this Waiver, and the other instruments and documents to be
delivered hereunder, including, without limitation, reasonable counsel fees and
expenses in connection with the enforcement of rights under this Section.
SECTION 8. Execution in Counterparts. This Waiver hereto may be
-------------------------
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which taken together shall constitute but one and
the same agreement. Delivery of an executed counterpart of a signature page to
this Waiver hereto by telefacsimile shall be effective as delivery of a manually
executed counterpart of this Waiver.
SECTION 9. Governing Law. This Waiver hereto shall be governed by,
-------------
and construed in accordance with, the laws of the State of California.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Second Waiver
(1994 Participation Agreement) to be executed by their respective officers
thereunto duly authorized, as the date first above written.
SMART & FINAL INC.
By: /s/ Donald G. Alvarado
----------------------------------
Name: Donald G. Alvarado
Title: Secretary
SMART & FINAL STORES CORPORATION
By: /s/ Richard Phegley
----------------------------------
Name: Richard Phegley
Title: VP & Treasurer
PORT STOCKTON FOOD DISTRIBUTORS, INC.
By: /s/ Donald G. Alvarado
----------------------------------
Name: Donald G. Alvarado
Title: Secretary
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Pascal Poupelle
---------------------------------
Name: Pascal Poupelle
Title: Executive President
CREDIT LYONNAIS LEASING CORP.
By: /s/ L. M. Wertheim
---------------------------------
Name: L. M. Wertheim
Title: Vice President/Secretary
CREDIT LYONNAIS LOS ANGELES BRANCH
By: /s/ Pascal Poupelle
---------------------------------
Name: Pascal Poupelle
Title: Executive President
<PAGE>
BANK LEUMI USA
By: /s/ Jacques Delvoye
----------------------------------------------
Name: Jacques Delvoye
Title: V.P.
THE INDUSTRIAL BANK OF JAPAN, LIMITED, LOS ANGELES
AGENCY
By: /s/ Vicente L. Timiraos
----------------------------------------------
Name: Vicente L. Timiraos
Title: SVP & SDGM
VIA BANQUE, S.A.
By: /s/ Christel Prot
----------------------------------------------
Name: Christel Prot
Title: Sous Directeur
STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA
N.A., not in its individual capacity, but solely
as successor to Fleet National Bank as Owner
Trustee under the Trust Agreement, as the Lessor
By: /s/ Mark Henson
----------------------------------------------
Name: Mark Henson
Title: Assistant Vice President
<PAGE>
EXHIBIT 10.108
SECOND WAIVER
(1997 PARTICIPATION AGREEMENT)
This SECOND WAIVER (1997 PARTICIPATION AGREEMENT) (the "Waiver"),
dated as of October 1, 1998, is among SMART & FINAL INC., a Delaware corporation
(the "Lessee"), SMART & FINAL STORES CORPORATION, a California corporation, and
AMERICAN FOODSERVICE DISTRIBUTORS, a California corporation (each a "Significant
Sublessee" and together, the "Significant Sublessees"), STATE STREET BANK AND
TRUST COMPANY OF CALIFORNIA N.A., not in its individual capacity (except as
expressly stated herein), but solely as the successor Owner Trustee under the
Trust Agreement (the "Lessor"), the banks named on Schedule I to the
Participation Agreement as holders of the Notes (the "Lenders"), CREDIT LYONNAIS
LEASING CORP., a Delaware corporation, as the Equity Participant under the Trust
Agreement (the "Equity Participant"), and CREDIT LYONNAIS NEW YORK BRANCH, a
branch duly licensed under the laws of New York of a banking corporation
organized and existing under the laws of the Republic of France, as agent for
the Lenders (the "Agent").
PRELIMINARY STATEMENTS
WHEREAS, the parties hereto have entered into a Participation
Agreement dated as of April 16, 1997 (as amended by that certain First Amendment
to Participation Agreement dated as of April 16, 1997, and by that Second
Amendment to Participation Agreement dated as of March 2, 1998, collectively the
"Participation Agreement"; the terms defined therein being used herein as
therein defined unless otherwise defined herein);
WHEREAS, the Lessee had previously requested, and the Lenders, the
Equity Participant, the Agent and the Lessor previously agreed, that any Default
or Event of Default be waived, through September 30, 1998, that may have
occurred by reason of the Lessee's failure to comply with certain covenants of
the Participant Agreement expressly identified in that certain Waiver among the
parties hereto, dated as of July 22, 1998; and
WHEREAS, the Lessee has further requested that any Default or Event of
Default be waived through November 15, 1998, that may have occurred by reason of
the Lessee's failure to comply with certain covenants of the Participant
Agreement expressly identified below;
NOW, THEREFORE, in consideration of the premises, the parties hereto
hereby agree as follows:
SECTION 1. Waiver under Participant Agreement. Effective as of
----------------------------------
October 1, 1998 (the "Effective Date") and subject to the satisfaction of the
conditions precedent set forth in Section 3 hereof, the Lenders, the Equity
---------
Participant, the Agent and the Lessor hereby waive, during the period beginning
on the Effective Date and ending on and including November 15, 1998 (the "Waiver
Period"), any Default or Event of Default which would arise under any of the
Transaction Documents by reason of the Lessee's failure to comply with Sections
4.03(c) and (d)
<PAGE>
of the Participation Agreement. At the end of the Waiver Period, if the Lessee
is not in compliance with any of such Sections pursuant to the terms thereof, a
Default or Event or Default shall be deemed to exist unless, and except to the
extent that, such Default or Event of Default is further waived or the same
shall cease to exist by reason of an amendment to the applicable provisions of
the Participation Agreement.
SECTION 2. Rates.
-----
(a) As of June 20, 1998 and until the end of the Waiver Period, the
definition of "Finance Rate" in the Participation Agreement is amended by (x)
deleting the reference to "0.50%" and replacing it with "(a) prior to June 20,
1998, 0.50%, and (b) from June 20, 1998 and until the end of the Waiver Period,
1.25%", and (y) adding to the end of clause (ii) "plus, from June 20, 1998 and
until the end of the Waiver Period, 0.50%".
(b) As of June 20, 1998 and until the end of the Waiver Period, the
definition of "Certificate Rate" in the Participation Agreement is amended by
adding to the end of the definition "plus, from June 20, 1998 and until the end
of the Waiver Period, 0.75%".
(c) As of June 20, 1998 and until the end of the Waiver Period,
Section 1.06 (Fees Payable by Lessee) of the Participation Agreement is hereby
amended by deleting the reference to "0.175%" and replacing it with "(a) prior
to June 20, 1998, 0.175%, and (b) from June 20, 1998 and until the end of the
Waiver Period, 0.35%, in each case,".
(d) As of June 20, 1998 and until the end of the Waiver Period,
clauses (i), (ii) and (iii) of Section 2.02(b) of Loan Agreement are hereby
deleted and replaced in their entirety with the following:
"(i) For each LIBOR Note at a rate equal to the LIBOR Rate
plus (a) prior to June 20, 1998, 0.50%, and (b) from June 20, 1998 and
until the end of the Waiver Period, 1.25%;
(ii) For each Eurodollar Note at a rate equal to the
Eurodollar Rate plus (a) prior to June 20, 1998, 0.50%, and (b) from
June 20, 1998 and until the end of the Waiver Period, 1.25%; and
(iii) For a Base Rate Note, at a rate equal to the Base
Rate, plus, from June 20, 1998 and until the end of the Waiver Period,
0.50%."
SECTION 3. Conditions of Effectiveness. This Waiver shall become
---------------------------
effective when the Agent shall have received counterparts of this Waiver
executed by the Lessee, the Significant Sublessees and the other parties to the
Participation Agreement as required thereby.
SECTION 4. Reference to and Effect on the Transaction Documents. (a)
----------------------------------------------------
Upon the effectiveness of this Waiver, on and after the date hereof, (i) each
reference in the Participation Agreement to "this Agreement," "hereunder,"
"hereof" or words of like import referring to the Participation Agreement, and
each reference in the other Transaction Documents
2
<PAGE>
to "the Participation Agreement," "thereunder," "thereof" or words of like
import referring to the Participation Agreement, shall mean and be a reference
to the Participation Agreement as modified hereby, and (ii) each reference in
the Loan Agreement to "this Agreement," "hereunder," "hereof" or words of like
import referring to the Loan Agreement, and each reference in the other
Transaction Documents to "the Loan Agreement," "thereunder," "thereof" or words
of like import referring to the Loan Agreement, shall mean and be a reference to
the Loan Agreement as modified hereby
(b) Except as specifically provided above, the Participation
Agreement, the Loan Agreement and all other Transaction Documents are and shall
continue to be in full force and effect and are hereby in all respects ratified
and confirmed. Without limiting the generality of the foregoing, any collateral
described therein does and shall continue to secure the payment of all secured
obligations under and as defined therein.
(c) The execution, delivery and effectiveness of this Waiver shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of the Agent, the Lenders, the Equity Participant, or the Lessor
under any of the Transaction Documents, nor constitute a waiver of any provision
of any of the Transaction Documents.
(d) Each of the parties hereto specifically acknowledges and agrees
that (i) none of the parties to the Participation Agreement or the Loan
Agreement have agreed to any other or future waiver of or amendment to the
Transaction Documents, (ii) neither the granting of the waiver described herein
nor the granting of any prior waivers and amendments under the Transaction
Documents creates any obligation whatsoever on the part of any of the parties to
the Participation Agreement or the Loan Agreement to grant any other or future
waiver or amendment under the Transaction Documents, and (iii) except as
specifically set forth herein, each of the parties to the Participation
Agreement and the Loan Agreement have reserved all rights and remedies under the
Transaction Documents.
SECTION 5. General Release of Claims. (a) The Lessee and Sublessee
-------------------------
each represent and agree that they have both diligently and thoroughly
investigated the existence of any Claim (as defined below), and to their
knowledge and belief, no Claim exists and no facts exist that could give rise to
or support a Claim.
(b) As additional consideration for the waivers as set forth herein,
the Lessee and Significant Sublessees and each of their respective agents,
employees, directors, officers, attorneys, affiliates, subsidiaries, successors
and assigns (individually a "Releasing Party," and collectively the "Releasing
Parties") each hereby releases and forever discharges each of the Lessor, the
Equity Participant, the Agent and each Lender and all of their respective
agents, direct and indirect shareholders, employees, directors, officers,
attorneys, branches, affiliates, subsidiaries, successors and assigns
(individually, a "Released Party," and collectively, the "Released Parties") of
and from all damage, loss, claims, demands, liabilities, obligations (except for
any such obligations hereafter arising pursuant to the terms of the Transaction
Documents, as amended to date), actions and causes of action whatsoever
(collectively "Claims") that the Releasing Parties and each of them may, as of
the date hereof, have or claim to have against each
3
<PAGE>
of the Released Parties, in each case whether presently known or with respect to
which the facts are known (or should have been known) that could give rise to or
support a Claim and of every nature and extent whatsoever on account of or in
any way relating to, arising out of or based upon the Transaction Documents or
this Waiver (including clause (a) above) or the negotiation or documentation
hereof or the waivers under the Transaction Documents effected by this Waiver or
the transactions contemplated hereby, or any action or omission in connection
with any of the foregoing, including, without limitation, all such loss or
damage of any kind heretofore sustained, or that may arise as a consequence of
the dealings between the parties up to the date hereof in connection with or in
any way related to the Transaction Documents or this Waiver. Each Releasing
Party further covenants and agrees that it has not assigned heretofore, and will
not hereafter sue any Released Party upon, any Claim released or purported to be
released under this Section, and the Lessee and Significant Sublessees each will
indemnify and hold harmless said Released Parties against any loss or liability
on account of any actions brought by any Releasing Party or its assigns or
prosecuted on behalf of any Releasing Party and relating to any Claim released
or purported to be released under this Section. It is further understood and
agreed that any and all rights under the provisions of Section 1542 of the
California Civil Code are expressly waived by each of the Releasing Parties.
Section 1542 provides as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR."
SECTION 6. Representations and Warranties. Each of the Lessee and
------------------------------
the Significant Sublessees represents and warrants to the other parties to the
Participation Agreement that:
(a) The representations and warranties in the Participation Agreement
and each of the other Transaction Documents to which it is a party remain true
and correct in all material respects immediately prior to and upon giving effect
to this Waiver, as if the same were made on the date of the effectiveness of the
amendments set forth herein (except for those relating to an earlier date which
were true and correct in all material respects as of such date).
(b) The execution, delivery and performance of this Waiver by the
Lessee and the Significant Sublessees has been duly authorized by all necessary
organizational action.
(c) All conditions set forth in Section 3 of this Waiver have been
---------
satisfied.
(d) Upon giving effect to this Waiver, there is no and will not be
any, Default or Event of Default.
SECTION 7. Costs, Expenses and Taxes. The Lessee agrees to pay on
-------------------------
demand all costs and expenses of the Agent, the Lenders, the Equity Participant
and the Lessor in connection with the preparation, execution, delivery and
administration of this Waiver and the other instruments and documents, if any,
to be delivered hereunder, including, without limitation,
4
<PAGE>
the reasonable fees and out of pocket expenses of counsel for the Agent, the
Lenders, the Equity Participant and the Lessor with respect thereto and with
respect to advising each of such parties as to its rights and responsibilities
hereunder and thereunder. The Lessee further agrees to pay on demand all costs
and expenses, if any (including, without limitation, reasonable counsel fees and
expenses), in connection with the enforcement (whether though negotiations,
legal proceedings or otherwise) of this Waiver, and the other instruments and
documents to be delivered hereunder, including, without limitation, reasonable
counsel fees and expenses in connection with the enforcement of rights under
this Section.
SECTION 8. Execution in Counterparts. This Waiver hereto may be
-------------------------
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which taken together shall constitute but one and
the same agreement. Delivery of an executed counterpart of a signature page to
this Waiver hereto by telefacsimile shall be effective as delivery of a manually
executed counterpart of this Waiver.
SECTION 9. Governing Law. This Waiver hereto shall be governed by,
-------------
and construed in accordance with, the laws of the State of California.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Second Waiver
(1997 Participation Agreement) to be executed by their respective officers
thereunto duly authorized, as the date first above written.
CREDIT LYONNAIS NEW YORK BRANCH,
as Agent
By: /s/ Pascal Poupelle
--------------------------------------
Name: Pascal Poupelle
Title: Executive President
CREDIT LYONNAIS LOS ANGELES BRANCH,
as Lender
By: /s/ Pascal Poupelle
--------------------------------------
Name: Pascal Poupelle
Title: Executive President
BANQUE NATIONALE DE PARIS,
as Lender
By: /s/ Clive Bettles
--------------------------------------
Name: Clive Bettles
Title: Senior Vice President & Manager
By: /s/ Mitchell M. Ozawa
------------------------------------
Name: Mitchell M. Ozawa
Title: Vice President
UNION BANK OF CALIFORNIA, N.A.,
as Lender
By: /s/ Terry Rocha
------------------------------------
Name: Terry Rocha
Title: Vice President
<PAGE>
CREDIT LYONNAIS LEASING CORP.,
as Equity Participant
By: /s/ L.M. Wertheim
----------------------------------
Name: L.M. Wertheim
Title: Vice President/Secretary
CIBC INC.,
as Lender
By: /s/ Gerald Girardi
----------------------------------
Name: Gerald Girardi
Title: Executive Director
CIBC Oppenheimer Corp. as Agent
STATE STREET BANK AND TRUST COMPANY OF
CALIFORNIA N.A., not in its individual
capacity (except as expressly stated
herein), but solely as successor Owner
Trustee under the Trust Agreement, as the
Lessor
By: /s/ Mark Henson
----------------------------------
Name: Mark Henson
Title: Assistant Vice President
SMART & FINAL INC.,
as Lessee
By: /s/ Donald G. Alvarado
-----------------------
Name: Donald G. Alvarado
Title: Secretary
SMART & FINAL STORES CORPORATION,
as Significant Sublessee
By: /s/ Richard Phegley
--------------------
Name: Richard Phegley
Title: VP & Treasurer
<PAGE>
AMERICAN FOODSERVICE DISTRIBUTORS,
as Significant Sublessee
By: /s/ Donald G. Alvarado
------------------------
Name: Donald G. Alvarado
Title: Secretary
<PAGE>
EXHIBIT 10.109
SECOND WAIVER
(1998 PARTICIPATION AGREEMENT)
This SECOND WAIVER (1998 PARTICIPATION AGREEMENT) (the "Waiver"),
dated as of October 1, 1998, is among SMART & FINAL INC., as Lessee, SMART &
FINAL STORES CORPORATION, as Sublessee and Construction Agent, SMART & FINAL
REALTY TRUST 1998, as Lessor, WILMINGTON TRUST COMPANY, as Trustee, CREDIT
LYONNAIS LEASING CORP., as Investor, financial institutions party hereto from
time to time, as Lenders, and CREDIT LYONNAIS LOS ANGELES BRANCH, a branch duly
licensed under the laws of the State of California as a banking corporation
organized and existing under the laws of the Republic of France, as Agent for
the benefit of itself and Lenders.
PRELIMINARY STATEMENTS
WHEREAS, the parties hereto have entered into a Participation
Agreement dated as of May 20, 1998 (the "Participation Agreement"; the terms
defined therein being used herein as therein defined unless otherwise defined
herein);
WHEREAS, the Lessee had previously requested, and the Lenders, the
Investor, the Agent and the Lessor previously agreed, that any Default or Event
of Default be waived, through September 30, 1998, that may have occurred by
reason of the Lessee's failure to comply with certain covenants of the
Participant Agreement expressly identified in that certain Waiver among the
parties hereto, dated as of July 22, 1998;
WHEREAS, the Lessee has further requested that any Default or Event of
Default be waived, through November 15, 1998, that may have occurred by reason
of the Lessee's failure to comply with certain covenants of the Participant
Agreement expressly identified below;
NOW, THEREFORE, in consideration of the premises, the parties hereto
hereby agree as follows:
SECTION 1. Waiver under Participant Agreement. Effective as of
----------------------------------
October 1, 1998 (the "Effective Date") and subject to the satisfaction of the
conditions precedent set forth in Section 3 hereof, the Lenders, the Investor,
---------
the Agent and the Lessor hereby waive, during the period beginning on the
Effective Date and ending on and including November 15, 1998 (the "Waiver
Period"), any Default or Event of Default which would arise under any of the
Operative Documents by reason of the Lessee's failure to comply with Section 5.6
(Consolidated Cash Flow Ratio) of the Participation Agreement. At the end of
the Waiver Period, if the Lessee is not in compliance with such Section pursuant
to the terms thereof, a Default or Event or Default shall be deemed to exist
unless, and except to the extent that, such Default or Event of Default is
further waived or the same shall cease to exist by reason of an amendment to the
applicable provisions of the Participation Agreement.
<PAGE>
SECTION 2. Applicable Margin.
-----------------
(a) As of June 20, 1998 and until the end of the Waiver Period, the
definition of "Applicable Margin" in the Participation Agreement is amended by
deleting clause (a) thereof and replacing it with the following:
"Applicable Margin" means:
(a) for any Interest Period occurring in whole or in part one
hundred eighty (180) days after the Document Closing Date, (i) with respect
to interest determined by reference to the Base Rate, prior to June 20,
1998, zero (0) basis points, and from June 20, 1998 and until the end of
the Waiver Period, fifty (50) basis points; and (ii) with respect to
interest determined by reference to LIBO Rate, prior to June 20, 1998,
sixty (60) basis points, and from June 20, 1998 and until the end of the
Waiver Period, one hundred and twenty-five (125) basis points. In
addition, notwithstanding clause (b) below, the Commitment Fee Applicable
Margin from June 20, 1998 and until the end of the Waiver Period shall be
equal to thirty-five (35) basis points."
(b) As of June 20, 1998 and until the end of the Waiver Period, the
definition of "Yield" in the Participation Agreement is amended by adding to the
end of the definition "plus, in any case, from June 20, 1998 and until the end
of the Waiver Period, 0.75%."
SECTION 3. Conditions of Effectiveness. This Waiver shall become
---------------------------
effective when the Agent shall have received counterparts of (a) this Waiver
executed by the Lessee, the Sublessee and the other parties to the Participation
Agreement as required thereby, and (b) the Consent appended hereto executed by
each of Smart & Final Inc. and Smart & Final Stores Corporation.
SECTION 4. Reference to and Effect on the Operative Documents.
--------------------------------------------------
(a) Upon the effectiveness of this Waiver, on and after the date
hereof, each reference in the Participation Agreement to "this Agreement"
"hereunder," "hereof" or words of like import referring to the Participation
Agreement, and each reference in the other Operative Documents to "the
Participation Agreement," "thereunder," "thereof" or words of like import
referring to the Participation Agreement, shall mean and be a reference to the
Participation Agreement as modified hereby.
(b) Except as specifically provided above, the Participation
Agreement, and all other Operative Documents are and shall continue to be in
full force and effect and are hereby in all respects ratified and confirmed.
Without limiting the generality of the foregoing, any collateral described
therein does and shall continue to secure the payment of all secured obligations
under and as defined therein.
(c) The execution, delivery and effectiveness of this Waiver shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of the Agent, the Lenders, the Investor, or the Lessor under any
of the Operative Documents, nor constitute a waiver of any provision of any of
the Operative Documents.
2
<PAGE>
(d) Each of the parties hereto, and by execution of the Consent
appended hereto, each Guarantor, specifically acknowledges and agrees that (i)
none of the parties to the Participation Agreement or any other Operative
Document have agreed to any other or future waiver of or amendment to the
Operative Documents, (ii) neither the granting of the waiver described herein
nor the granting of any prior waivers and amendments under the Operative
Documents creates any obligation whatsoever on the part of any of the parties to
any of the Operative Documents to grant any other or future waiver or amendment
under the Operative Documents, and (iii) except as specifically set forth
herein, each of the parties to any of the Operative Documents have reserved all
rights and remedies under the Operative Documents.
SECTION 5. General Release of Claims.
-------------------------
(a) The Lessee and Sublessee each represent and agree that they have
both diligently and thoroughly investigated the existence of any Claim (as
defined below), and to their knowledge and belief, no Claim exists and no facts
exist that could give rise to or support a Claim.
(b) As additional consideration for the waivers as set forth herein,
the Lessee and Sublessee and each of their respective agents, employees,
directors, officers, attorneys, affiliates, subsidiaries, successors and assigns
(individually a "Releasing Party," and collectively the "Releasing Parties")
each hereby releases and forever discharges each of the Lessor, the Investor,
the Agent and each Lender and all of their respective agents, direct and
indirect shareholders, employees, directors, officers, attorneys, branches,
affiliates, subsidiaries, successors and assigns (individually, a "Released
Party," and collectively, the "Released Parties") of and from all damage, loss,
claims, demands, liabilities, obligations (except for any such obligations
hereafter arising pursuant to the terms of the Operative Documents, as amended
to date), actions and causes of action whatsoever (collectively "Claims") that
the Releasing Parties and each of them may, as of the date hereof, have or claim
to have against each of the Released Parties, in each case whether presently
known or with respect to which the facts are known (or should have been known)
that could give rise to or support a Claim and of every nature and extent
whatsoever on account of or in any way relating to, arising out of or based upon
the Operative Documents or this Waiver (including clause (a) above and the
Consent attached hereto) or the negotiation or documentation hereof or the
waivers under the Operative Documents effected by this Waiver or the
transactions contemplated hereby, or any action or omission in connection with
any of the foregoing, including, without limitation, all such loss or damage of
any kind heretofore sustained, or that may arise as a consequence of the
dealings between the parties up to the date hereof in connection with or in any
way related to the Operative Documents or this Waiver. Each Releasing Party
further covenants and agrees that it has not assigned heretofore, and will not
hereafter sue any Released Party upon, any Claim released or purported to be
released under this Section, and the Lessee and Sublessee each will indemnify
and hold harmless said Released Parties against any loss or liability on account
of any actions brought by any Releasing Party or its assigns or prosecuted on
behalf of any Releasing Party and relating to any Claim released or purported to
be released under this Section. It is further understood and agreed that any
and all rights under the provisions of Section 1542 of the California Civil Code
are expressly waived by each of the Releasing Parties. Section 1542 provides as
follows:
3
<PAGE>
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE
TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."
SECTION 6. Representations and Warranties. Each of the Lessee and
------------------------------
the Sublessee represents and warrants to the other parties to the Participation
Agreement that:
(a) The representations and warranties in the Participation Agreement
and each of the other Operative Documents to which it is a party remain true and
correct in all material respects immediately prior to and upon giving effect to
this Waiver and the Consent, as if the same were made on the date of the
effectiveness of the amendments set forth herein (except for those relating to
an earlier date which were true and correct in all material respects as of such
date).
(b) The execution, delivery and performance of this Waiver and the
Consent by the Lessee and the Sublessee have been duly authorized by all
necessary organizational action.
(c) All conditions set forth in Section 3 of this Waiver have been
---------
satisfied.
(d) Upon giving effect to this Waiver, there is no and will not be
any, Default or Event of Default.
SECTION 7. Costs, Expenses and Taxes. The Lessee agrees to pay on
-------------------------
demand all costs and expenses of the Agent, the Lenders, the Investor and the
Lessor in connection with the preparation, execution, delivery and
administration of this Waiver, the Consent and the other instruments and
documents, if any, to be delivered hereunder, including, without limitation, the
reasonable fees and out of pocket expenses of counsel for the Agent, the
Lenders, the Equity Participant and the Lessor with respect thereto and with
respect to advising each of such parties as to its rights and responsibilities
hereunder and thereunder. The Lessee further agrees to pay on demand all costs
and expenses, if any (including, without limitation, reasonable counsel fees and
expenses), in connection with the enforcement (whether though negotiations,
legal proceedings or otherwise) of this Waiver, the Consent and the other
instruments and documents to be delivered hereunder, including, without
limitation, reasonable counsel fees and expenses in connection with the
enforcement of rights under this Section.
SECTION 8. Execution in Counterparts. This Waiver and the Consent
-------------------------
hereto may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which taken together shall constitute
but one and the same agreement. Delivery of an executed counterpart of a
signature page to this Waiver or the Consent hereto by telefacsimile shall be
effective as delivery of a manually executed counterpart of this Waiver or such
Consent.
SECTION 9. Governing Law. This Waiver and the Consent hereto shall
-------------
be governed by, and construed in accordance with, the laws of the State of
California.
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Second Waiver
(1998 Participation Agreement) to be executed by their respective officers
thereunto duly authorized, as the date first above written.
SMART & FINAL INC.
as Lessee
By: /s/ Donald G. Alvarado
----------------------
Name: Donald G. Alvarado
Title: Secretary
SMART & FINAL STORES CORPORATION,
as Sublessee
By: /s/ Richard Phegley
-------------------
Name: Richard Phegley
Title: VP & Treasurer
SMART & FINAL REALTY TRUST 1998,
as Lessor
By: Wilmington Trust Company, not in its
individual capacity but solely as Trustee
By: /s/ Joseph B. Feil
-----------------------------------------
Name: Joseph B. Feil
Title: Financial Services Officer
CREDIT LYONNAIS LEASING CORP.,
as Investor
By: /s/ L.M. Wertheim
---------------------------------------------
L.M. Wertheim
Vice President and Secretary
CREDIT LYONNAIS LOS ANGELES BRANCH
as Agent and Lender
By: /s/ Dianne M. Scott
---------------------------------------------
Name: Dianne M. Scott
Title: First Vice President and Manager
<PAGE>
COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK
B.A., "RABOBANK NEDERLAND," NEW YORK BRANCH,
as Lender
By: /s/ Bradford F. Scott
---------------------------------------------
Name: Bradford F. Scott
Title: Vice President
By: /s/ Ian Reece
---------------------------------------------
Name: Ian Reece
Title: Senior Credit Officer
WILMINGTON TRUST COMPANY,
as Trustee
By: /s/ Joseph B. Feil
---------------------------------------------
Name: Joseph B. Feil
Title: Financial Services Officer
<PAGE>
CONSENT
Dated as of October 1, 1998
The undersigned, SMART & FINAL INC., a Delaware corporation, and SMART
& FINAL STORES CORPORATION, a California corporation, are each a party to the
Guaranty (as defined in the Participation Agreement referred to in the foregoing
Waiver) and each (i) hereby consents to the foregoing Waiver, and (ii) hereby
confirms and agrees that the Guaranty is, and shall continue to be, in full
force and effect and is hereby ratified and confirmed in all respects, except
that, upon the effectiveness of, and on and after the date of, the said Waiver,
each reference in the Guaranty to the Participation Agreement, "thereunder,"
"thereof" or words of like import shall mean and be a reference to the
Participation Agreement as modified by the said Waiver.
SMART & FINAL
By: /s/ Donald G. Alvarado
----------------------
Name: Donald G. Alvarado
Title: Secretary
SMART & FINAL STORES CORPORATION
By: /s/ Richard Phegley
-------------------
Name: Richard Phegley
Title: VP & Treasurer
<PAGE>
EXHIBIT 10.110
LOAN AGREEMENT
THIS LOAN AGREEMENT ("Agreement") is made and entered into as
of the 13th day of November, 1998 by and between CASINO USA, INC., a California
corporation ("Casino"), and SMART & FINAL INC., a Delaware corporation
("Company"), based upon the following facts:
A. Company has experienced reduced earnings for the past year,
incurring net losses in the fourth quarter of 1997 and the first quarter of
1998, and modest earnings in the second quarter of 1998. As a result of the
reduced earnings, Company has been in violation of certain financial covenants
in its credit agreements with third-party bank lenders ("Bank Debt"). Company is
currently operating under waivers with respect to the financial covenant
violation and is restructuring the existing credit agreements. As a condition of
commitment to this restructuring, the third-party bank lenders have required
that certain existing obligations of Company to Casino be revised to evidence a
maturity date which is subsequent to the anticipated maturity date of new credit
facilities undertaken as a part of this restructuring; this is, in effect, a
structural subordination of the existing obligations of Company to Casino. A
history of these existing obligations of Company to Casino follows; and
B. On December 29, 1996 Company issued an unsecured negotiable
promissory note with a principal amount of $250,000, payable to Casino, and
Company simultaneously issued an unsecured negotiable promissory note with a
principal amount of $37,750,000, payable to Casino Realty, Inc. ("Realty"), a
wholly-owned subsidiary of Casino; together forming an aggregate principal
amount of $38,000,000 (the "Existing Notes"). The Existing Notes were issued
pursuant to that certain Agreement for Conveyance of Real Property dated as of
October 31, 1996, as amended (the "Property Agreement") whereby Casino and
Realty agreed to sell to Company a total of 91 improved real properties and
leasehold interests. On October 15, 1998, Realty assigned its rights and
interest in its Existing Note to Casino. As of November 10, 1998, the
outstanding aggregate principal balance of the Existing Notes is $30,400,000 and
the accrued but unpaid interest due is $299,989; and
C. From time to time, in the ordinary course of its business,
Casino and Realty have made unsecured cash advances ("Advances") to Company and
its affiliates, consistent with the terms of the August 6, 1991 Intercompany
Agreement ("Intercompany Agreement") among Company and Casino and Realty. These
Advances are payable upon demand and as of November 10, 1998 the current
aggregate balance of principal and accrued but unpaid interest is $23,734,905;
and
1
<PAGE>
D. As of the date of this Agreement, Casino is the holder of
approximately 12,264,225 shares of the common stock of the Company, which
represents approximately 56% of the issued and outstanding common shares of the
Company; and
E. Casino and Company now mutually desire to enter into this
Agreement (i) to consolidate the outstanding amounts due under the Existing
Notes and the Advances into one single amount, and (ii) to establish terms for
the accrual of interest and repayment of this amount, and (iii) to document the
consolidated amount and terms in the form of a single new note ("New Note")
issued by Company to Casino, and (iv) simultaneous with the execution of the New
Note, Company will cancel the Existing Notes and be deemed to have repaid the
Advances, in an aggregate amount represented by the principal amount of the New
Note, and (v) to further delineate the rights and obligations of the parties
under the Existing Notes, the Advances, the New Note, and such other matters as
are set forth below; and
F. At its meetings of November 3, 1998 and November 9, 1998,
the Board of Directors of the Company authorized the terms of this Agreement as
being in the best interests of the Company and its shareholders; and
G. This Agreement is being entered into in contemplation of
Company's refinancing of existing credit obligations to its banks and others
("Restructuring"), and to evidence Casino's support of this Restructuring by its
willingness to enter into this Agreement; and
H. The parties intend that the New Note will have a maturity
date beyond the maturity date of any credit agreements and other financing
arrangements entered into by Company as part of its Restructuring; and
NOW, THEREFORE, based on the foregoing, and in consideration
of the mutual promises contained below and for good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
1. Definitions. For purposes of this Loan Agreement the
-----------
terms below are defined as follows:
"Business Day" means a day that Company's corporate offices
are open for business with the general public.
"Indebtedness" means the combined outstanding principal
balance plus accrued interest due and payable on the amounts due under (1) the
Existing Notes plus (2) the Advances and plus (3) the Structuring Fee, as
evidenced by the New Note.
2
<PAGE>
"Interest Rate" means, with respect to the Indebtedness, the
rate of interest equal to the London interbank offered rate, for a six-month
period, as published from time to time in the Wall Street Journal, determined as
of each applicable Payment Date under the New Note (as defined below), plus four
and one-half percent (4.5%), or the maximum rate of interest permitted by
applicable law, whichever is lower. Interest on the New Note shall be calculated
on the basis of a 360 day year for the actual number of days elapsed in the
period during which it accrues.
"Late Payment Rate" means the Interest Rate plus one percent
(1%) per annum, so long as such Late Payment Rate does not exceed the maximum
rate permitted by law, in which case the Late Payment Rate shall be fixed at the
maximum rate permitted by law.
"Maturity Date" means February 15, 2002.
"New Note" means the promissory note to be issued pursuant to
this Agreement, substantially in the form of Exhibit A hereto, and any and all
Notes later issued in replacement or exchange therefor in accordance with the
provisions thereof.
"Payment Date" means the last Business Day of any December,
March, June and September until the Indebtedness is paid in full, commencing
December 31, 1998, provided, however, that in the event that any Payment Date
shall occur on a date which is not a Business Day, such Payment Date shall be
the next following Business Day (unless such next following Business Day is the
first Business Day of another calendar month, in which case such Payment Date
shall be the immediately preceding Business Day).
"Structuring Fee" means a fee payable to Casino in the amount
of 1.75% of the aggregate amounts due under (1) the Existing Notes and (2) the
Advances.
2. The Indebtedness. Casino hereby agrees, on the terms and
----------------
conditions set forth in this Agreement, to make a loan in the amount of the
Indebtedness to Company. The Indebtedness shall take the place of and supercede
the amounts due to Casino under (1) the Notes and (2) the Advances and (3) shall
additionally include the Structuring Fee. Company's obligation to repay the
Indebtedness shall be evidenced by the New Note. The New Note shall be dated as
of the date of this Agreement, shall be unsecured, and shall entitle the holder
thereto to payments, in quarterly installments of interest only on the unpaid
principal balance, at a rate equal to the Interest Rate, payable on each Payment
Date. Unless sooner paid, by reason of prepayment, acceleration or otherwise,
the entire unpaid principal balance of the New Note, together with interest
accrued thereon, shall be due and payable on the Maturity Date.
3. Payments. Payments on the New Note shall be made on the
--------
Payment Date by wire transfer of federal funds not later than 2:00 p.m. in Los
Angeles,
3
<PAGE>
California on such date or other immediately available funds to Casino's account
at Wells Fargo Bank, N.A. In computing interest on the New Note, the first date
of the period ending on a Payment Date shall be included and the Payment Date
shall be excluded. Except in the case of an event of default, any amounts not
paid when due shall bear additional interest at the Late Payment Rate for the
period for which the same shall be overdue. Payments of interest accruing at the
Late Payment Rate are due and payable on demand.
4. Prepayment and Conversion. Company shall not have the right
-------------------------
to prepay the New Note prior to the Maturity Date without both (i) the express
consent of Casino and (ii) only to the extent that Company's prepayment of
principal under the New Notes is allowed under the terms and conditions of
credit agreements and other financing arrangements entered into as a result of
the Restructuring, provided however, that a full reduction or, from time to
time, partial reductions in the Indebtedness evidenced by the New Note will be
allowed, with the express consent of Casino, if each such reduction is effected
by a conversion or exchange thereof to an equity-oriented investment in the
Company.
5. Debt Incurrance. The Company will not incur or permit to
---------------
exist any indebtedness which is prohibited by the credit agreement or other
financing arrangements entered into as a result of the Restructuring.
6. Covenants of Credit Agreements. Company agrees that the New
------------------------------
Note will not be a secured obligation of the Company so long as the revolving
credit agreement and other financing arrangements entered into in connection
with the Restructuring (and any indebtedness or commitments which may be entered
into for the purpose of refinancing such credit agreement or other financing
arrangement) remains outstanding.
Financial covenants of the New Note shall consist of (and shall be calculated on
the same basis as set forth in the credit agreement):
. Minimum Net Worth. Maintenance at all times of a minimum net worth of 50%
of net worth at Closing with step-ups equal to 50% of net income and 100%
of the cash proceeds of any equity issuances.
. Adjusted Leverage Ratio. The ratio of the sum of (I) Debt plus (ii) rent
expense multiplied by 8 to the sum of (iii) EBITDA plus (iv) rent expense
(as determined on a rolling four quarter basis) shall not be greater than
6.50 from Closing up to and including fiscal year end 1998, 6.00 for
fiscal year 1999, and 5.75 thereafter.
. Fixed Charge Coverage Ratio. The ratio of the sum of (i) EBITDA plus (ii)
rent expense to the sum of (iii) interest expense plus (iv) rent expense
(as determined on a rolling four quarter basis) shall not be less than
1.00 to 1.
. Permitted Adjustments. (1) For the reporting period ending with the third
quarter 1998, the special charge of not more than $8.9 million may be
added back to EBITDA for financial covenant calculations; and (2)
Borrower will be permitted to take a one time charge associated with the
closing of its Florida stores of not more than $20
4
<PAGE>
million (of which a maximum an $10 million may be cash charges). This
charge may be added back to EBITDA for financial covenant calculations
for the next four fiscal quarters.
. Affirmative covenants contained in Section 6.01 of the credit agreement
executed as part of the Restructuring are incorporated herein by
reference.
. Any waiver or amendment of any covenant or other agreement of the Company
by lenders under the credit agreement and other financing arrangements
entered into by the Company as part of the Restructuring to a covenant
therein shall automatically waive any similar covenant or other agreement
hereunder (except as it may relate to the payment of principal or
interest hereunder) without any further action of the holder hereof;
provided however that changes to numerical ratios in covenants hereunder
shall be made proportionately to the numerical change made in the
covenants of the credit agreement.
7. Representations, Warranties and Covenants of Company.
----------------------------------------------------
Company hereby represents and warrants to and covenants with Casino that, as of
the date hereof:
a. Company has been duly organized and is validly existing
and in good standing as a corporation in the State of Delaware. The execution
and performance of this Agreement has been duly authorized by all requisite
corporate action, and the individual or individuals executing this Agreement on
behalf of Company and to execute all other documents and perform all other acts
as may be necessary in connection with the performance of this Agreement.
b. Company shall duly and punctually pay (or cause to be
paid) to Casino the interest and principal on the New Note in accordance with
the terms thereof and this Agreement when such payments become due.
c. Company shall faithfully abide by, perform and discharge
each and every obligation, covenant and agreement under this Agreement and the
New Note.
8. Events of Default and Remedies. If any of the following
------------------------------
events (each such event hereinafter referred to as an "Event of Default") shall
have occurred and be continuing:
a. failure of the Company to pay any installment of
interest on any New Note when due and payable and the continuance of such
default for a period of 30 days or to pay all or part of the principal on the
New Note when due and payable at maturity (whether by redemption or otherwise)
and whether or not such payment is prohibited by any subordination provisions
herein; or
5
<PAGE>
b. failure of the Company to observe or perform any
covenant or agreement of the Company contained herein (other than such failure
which is specifically dealt with elsewhere in this Section 8) and the
continuance of such failure for a period of 30 days after there has been given
to the Company by Casino a written notice specifying the default and requiring
it to be remedied; or
c. one or more defaults with respect to the indebtedness
under the credit agreement or other financing arrangements entered into in
conjunction with the Restructuring (or any refinancings thereof) which results
from the failure to pay such indebtedness at its final maturity date or results
in the acceleration of such indebtedness prior to its stated maturity; or
d. the entry of an order for relief or the filing of an
involuntary petition with respect to Company under the United States Bankruptcy
Code; the Company shall have instituted proceedings to be adjudicated a
voluntary bankrupt or shall consent to the filing of a similar proceeding
against it or shall file a petition or answer or consent seeking reorganization
under the United States Bankruptcy Code or similar statute or consent to the
filing of such petition; the appointment of a receiver, trustee, custodian or
liquidator of or for any part of the assets or property of Company or Company
makes a general assignment for the benefit of creditors.
Upon the occurrence of an event of default specified in the
preceding section then Casino may, by notice to Administrative Agent (as defined
under the credit agreement and other financing documents executed as part of the
Restructuring) and Company, and in the case of clauses (a) through (c) of this
Section 8 after a ten (10) day period after such notice during which the Company
may act to cure such default (it being understood and agreed that the Lenders
under the credit agreement may (but have no obligation to) act to cure such
default), and in the case of clause (d) of this Section 8, immediately declare
the unpaid principal amount of the New Note, interest accrued thereon and all
other amounts owing by Company hereunder to be immediately due and payable
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived, and an action shall immediately accrue. Casino
shall be further entitled to exercise every other right and power and remedy
herein specifically given or now or hereafter existing at law, in equity or by
statute. No delay or omission by Casino in the exercise of any right, power or
remedy or in the pursuance of any remedy shall impair any such right, power or
remedy or be construed to be a waiver of any default on the part of Casino or to
be an acquiescence therein. No waiver in respect of any event of default shall
extend to any subsequent or other event of default.
9. Miscellaneous.
-------------
a. Notices. Any notice required or permitted under this
-------
Agreement or by law in respect of this Agreement, shall be in writing and shall
be deemed effective, when personally delivered or if sent by registered or
certified mail, three Business
6
<PAGE>
days after the date of delivery to the post office, or if sent by overnight
delivery when received, or if sent by telecopier, upon receipt, in each case
addressed to the person required to receive same at the following addresses:
If to Casino: Casino USA, Inc.
524 Chapala Street
Santa Barbara, CA 93101
Attn: Robert J. Emmons
Fax: (805) 564-6729
If to Company: Smart & Final Inc.
600 Citadel Drive
City of Commerce, CA 90040
Attn: Donald G. Alvarado, Esq.
Fax: (323) 869-7862.
b. Survival. All covenants, agreements, representations and
--------
warranties contained in this Agreement, or any document, agreement or instrument
delivered pursuant hereto shall survive the expiration or other termination of
this Agreement.
c. Amendments and Waivers. The terms of this Agreement
----------------------
shall not be waived (except as expressly provided in Section 6 above), altered,
modified, supplemented or terminated in any manner whatsoever except by written
instrument signed by Casino and Company, and only to the extent expressly
allowed in writing by the lenders under the credit agreement and other financing
documents entered into as part of the Restructuring and any refinancing thereof.
d. Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of California.
e. Non-Recourse to Certain Parties. This Agreement is
-------------------------------
solely a corporate obligation and no recourse shall be had in respect of any
obligation, covenant or agreement of this Agreement, or referred to herein,
against any stockholder, incorporator, director or officer, as such, past,
present, and future, of the parties hereto by the enforcement of any assessment
or by any legal or equitable proceeding, by virtue of statute or otherwise.
d. Entire Agreement. This Agreement and the other
----------------
agreements and documents referred to herein constitute the final and entire
expression of the agreement with respect to the matters contemplated hereby.
e. Invalidity of Provisions. Any provision of this
------------------------
Agreement which may be prohibited or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the
7
<PAGE>
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
f. Counterparts. This Agreement may be executed in any
------------
number of counterparts and by the different parties hereto on separate
counterparts, all of which together shall constitute a single agreement.
g. Headings. Any headings or captions preceding the
--------
individual sections hereof are intended solely for the convenience of the
parties and shall not alter or vary the meaning, construction or effect of this
Agreement.
h. Successors and Assigns. The provisions of this Agreement
----------------------
shall be binding upon and shall inure to the benefit of Casino and Company and
their respective successors and assigns, except that Company may not assign its
rights and obligations hereunder without the express written consent of the
Casino. Casino at any time may sell, assign, transfer, pledge as collateral or
otherwise dispose of all or any portion of the New Note, or of any of its right,
title and interest therein; provided, however, that such sale or assignment does
not affect the validity of the conveyance of the Properties pursuant to the
Property Agreement as a reorganization within the meaning of Sections
368(a)(1)(D) and 368(a)(2)(H) of the United States Internal Revenue Code, and
further provided that no transfer may be made until such time as the Adjusted
Leverage Ratio (as set forth in Section 6 hereof) has not exceeded 4.25 for two
consecutive fiscal quarters. However, not withstanding the foregoing, Casino may
at any time, without permission of lenders, enter into an agreement to exchange
some or all of the Indebtedness for equity-oriented securities of Company.
IN WITNESS WHEREOF, the parties hereto have each caused this
Agreement to be duly executed by their respective officers thereunto duly
authorized.
For "Casino":
CASINO USA, INC.,
a California corporation
By: /s/ ROBERT J. EMMONS
--------------------------
Robert J. Emmons
Chairman
8
<PAGE>
For "Company":
SMART & FINAL INC.,
a Delaware corporation
By: /s/ MARTIN A. LYNCH
-----------------------------
Martin A. Lynch
Executive Vice President and
Chief Financial Officer
9
<PAGE>
PROMISSORY NOTE
$55,387,505 Dated: November 13, 1998
FOR VALUE RECEIVED, the undersigned, SMART & FINAL INC., a Delaware
corporation ("Borrower"), HEREBY PROMISES TO PAY to the order of CASINO USA,
INC., a California corporation ("Lender") the principal sum of Fifty-Five
Million Three-Hundred Eighty-Seven Thousand Five-Hundred Five Dollars
($55,387,505).
The Borrower promises to pay interest on the unpaid principal amount
of the Advances (as defined below) from the date hereof until such principal
amount is paid in full, at such interest rates, and payable at such times, as
are specified in the Loan Agreement (as defined below).
Both principal and interest are payable in lawful money of the United
States of America in same day funds to the Lender in accordance with the
provisions of Sections 2 and 3 of the Loan Agreement.
This Promissory Note is the New Note referred to in, and is entitled
to the benefits of, the Loan Agreement dated as of November 13, 1998 (as the
same may be amended, supplemented or otherwise modified from time to time, "Loan
Agreement") among the Borrower and the Lender. The Loan Agreement, among other
things, provides for the consolidation of certain obligations owed by the
Borrower to the Lender more particularly described in the Loan Agreement (the
"Existing Notes", the"Advances", and the "Structuring Fee") in the U.S. dollar
amount first above mentioned, the indebtedness of the Borrower resulting from
such Advances now being evidenced by this Promissory Note, and contains
provisions for acceleration of the maturity hereof upon the happening of certain
stated events and also for prepayments on account of principal hereof prior to
the maturity hereof upon the terms and conditions therein specified.
This Promissory Note shall be governed by, and construed in accordance
with, the laws of the State of California.
SMART & FINAL INC.
By: /s/ MARTIN A. LYNCH
---------------------------
Martin A. Lynch
Executive Vice President &
Chief Financial Officer
<PAGE>
EXHIBIT 10.112
================================================================================
$150,000,000
CREDIT AGREEMENT
DATED AS OF NOVEMBER 13, 1998
AMONG
SMART & FINAL INC.,
AS BORROWER
-- --------
AND
THE FINANCIAL INSTITUTIONS NAMED HEREIN,
AS INITIAL LENDERS
-- ---------------
AND
CREDIT LYONNAIS LOS ANGELES BRANCH,
AS ADMINISTRATIVE AGENT
-- -------------- -----
CO-LEAD ARRANGERS:
-----------------
CREDIT LYONNAIS LOS ANGELES BRANCH
NATIONSBANC MONTGOMERY SECURITIES LLC
SYNDICATION AGENT:
-----------------
NATIONSBANC MONTGOMERY SECURITIES LLC
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS......................................... 1
Section 1.01. Certain Defined Terms............................................. 1
Section 1.02. Computation of Time Periods....................................... 21
Section 1.03. Accounting Terms.................................................. 21
Section 1.04. Other Definitional Provisions..................................... 21
ARTICLE II. AMOUNTS AND TERMS OF THE ADVANCES........................................ 21
Section 2.01. The Advances...................................................... 21
Section 2.02. Making the Advances............................................... 23
Section 2.03. Repayment......................................................... 27
Section 2.04. Reduction of the Revolving Commitments and Swing Line
Commitments....................................................... 28
Section 2.05. Prepayments....................................................... 29
Section 2.06. Interest.......................................................... 30
Section 2.07. Fees.............................................................. 34
Section 2.08. Increased Costs, Etc.............................................. 34
Section 2.09. Payments and Computations......................................... 35
Section 2.10. Taxes............................................................. 38
Section 2.11. Sharing of Payments, Etc.......................................... 40
Section 2.12. Use of Proceeds................................................... 41
Section 2.13. Evidence of Debt.................................................. 41
ARTICLE III. AMOUNTS AND TERMS OF LETTERS OF CREDIT................................... 42
Section 3.01. The Letter of Credit Subfacility.................................. 42
Section 3.02. Issuance of Letters of Credit..................................... 42
Section 3.03. Drawing and Reimbursement......................................... 43
Section 3.04. Obligations Absolute.............................................. 44
Section 3.05. Letter of Credit Compensation..................................... 45
Section 3.06. Use of Letters of Credit.......................................... 46
ARTICLE IV. CONDITIONS OF LENDING.................................................... 46
Section 4.01. Conditions Precedent to Initial Borrowing......................... 46
Section 4.02. Conditions Precedent to Each Borrowing and Issuance............... 50
Section 4.03. Determinations Under Section 4.01................................. 51
ARTICLE V. REPRESENTATIONS AND WARRANTIES........................................... 51
Section 5.01. Representations and Warranties of the Borrower.................... 51
ARTICLE VI. COVENANTS OF THE BORROWER................................................ 59
Section 6.01. Affirmative Covenants............................................. 59
Section 6.02. Negative Covenants................................................ 64
Section 6.03. Reporting Requirements............................................ 69
Section 6.04. Financial Covenants............................................... 72
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
ARTICLE VII. EVENTS OF DEFAULT....................................................... 73
Section 7.01. Events of Default................................................ 73
Section 7.02. Actions in Respect of the Letters of Credit Upon Default......... 76
ARTICLE VIII. THE ADMINISTRATIVE AGENT................................................ 77
Section 8.01. Authorization and Action......................................... 77
Section 8.02. Agent's Reliance, Etc............................................ 77
Section 8.03. Credit Lyonnais Los Angeles Branch and Affiliates................ 78
Section 8.04. Lender Party Credit Decision..................................... 78
Section 8.05. Indemnification.................................................. 78
Section 8.06. Successor Agents................................................. 79
ARTICLE IX. MISCELLANEOUS........................................................... 79
Section 9.01. Amendments, Etc.; Release of Collateral.......................... 79
Section 9.02. Notices, Etc..................................................... 80
Section 9.03. No Waiver; Remedies.............................................. 81
Section 9.04. Costs and Expenses............................................... 81
Section 9.05. Right of Set-off................................................. 83
Section 9.06. Binding Effect................................................... 83
Section 9.07. Assignments and Participations................................... 83
Section 9.08. Governing Law.................................................... 86
Section 9.09. Execution in Counterparts........................................ 86
Section 9.10. No Liability of the Issuing Bank................................. 86
Section 9.11. Confidentiality.................................................. 87
Section 9.12. Waiver of Jury Trial............................................. 87
</TABLE>
ii
<PAGE>
SCHEDULES AND EXHIBITS
- ----------------------
SCHEDULES
---------
Schedule I Commitments, Etc.
Schedule 1.01(a) Existing Letters of Credit
Schedule 1.01(b) Florida Stores
Schedule 4.01(b) Surviving Debt
Schedule 4.01(j)(v) Jurisdictions
Schedule 4.01(j)(ix) Mortgages
Schedule 5.01(b) Capital Stock of Loan Parties
Schedule 5.01(h) Litigation
Schedule 5.01(j) Pension Plans
Schedule 5.01(n) Open Years
Schedule 5.01(q)(i) Existing Debt
Schedule 5.01(r)(i) Real Property
Schedule 5.01(r)(ii) Leases
Schedule 5.01(s) Existing Investments
Schedule 5.01(t) Intellectual Property
Schedule 5.01(u) Certain Agreements, Etc.
Schedule 6.01(l)(ii) Certain Real Property
Schedule 6.01(m) Appraisals
Schedule 6.02(a) Existing Liens
EXHIBITS
--------
Exhibit A Form of Assignment and Acceptance
Exhibit B-1 Form of Notice of Borrowing
Exhibit B-2 Form of Notice of Swing Line
Borrowing
Exhibit C Form of Notice of Issuance
Exhibit D-1 Form of Revolving Note
Exhibit D-2 Form of Swing Line Note
Exhibit E Form of Security Agreement
Exhibit F Form of Deed of Trust
Exhibit G Form of Guaranty
Exhibit H Form of Intercompany Note
Exhibit I Form of Solvency Certificate
Exhibit J-1 Form of Opinion of Borrower's
Counsel
Exhibit J-2 Form of Opinion of Borrower's In-
House Counsel
Exhibit K Form of Borrowing Base Certificate
Exhibit L Form of Amendment to Guaranty
Exhibit M Form of Amendment to Security
Agreement
iii
<PAGE>
CREDIT AGREEMENT, dated as of November 13, 1998 among SMART & FINAL
INC., a Delaware corporation (the "BORROWER"), the financial institutions and
--------
other entities listed on the signature pages hereof as Lenders (the "INITIAL
-------
LENDERS"), CREDIT LYONNAIS LOS ANGELES BRANCH, as Administrative Agent (in such
- -------
capacity, together with any successor in such capacity appointed pursuant to
Article VIII, the "ADMINISTRATIVE AGENT") and as Co-Lead Arranger, NATIONSBANC
--------------------
MONTGOMERY SECURITIES LLC, as Syndication Agent (the "SYNDICATION AGENT" and,
-----------------
together with the Administrative Agent, the "AGENTS") and as Co-Lead Arranger,
------
and CREDIT LYONNAIS NEW YORK BRANCH, as L/C Bank (as hereinafter defined).
PRELIMINARY STATEMENTS
(1) The Borrower has requested, on the terms and conditions set forth
herein, (a) that the Lenders make Revolving Advances (as hereinafter defined) to
the Borrower from time to time in an aggregate principal amount not to exceed at
any time outstanding the aggregate Revolving Commitments (as hereinafter
defined) of the Lenders less the sum of (i) the aggregate amount of Letter of
Credit Obligations (as hereinafter defined) outstanding at such time, and (ii)
Swing Line Advances (as hereinafter defined) outstanding from time to time, (b)
that the Swing Line Lender (as hereinafter defined) make Swing Line Advances to
the Borrower from time to time in an aggregate principal amount not to exceed at
any time outstanding Fifteen Million Dollars ($15,000,000) and (c) that the L/C
Bank and the other Issuing Banks (as hereinafter defined) issue Letters of
Credit (as hereinafter defined) for the account of the Borrower from time to
time in an aggregate Available Amount (as hereinafter defined) not to exceed at
any time outstanding the L/C Sublimit (as hereinafter defined).
(2) Subject to the terms and conditions set forth in this Agreement,
(a) the Lenders have agreed severally to make such Revolving Advances to the
Borrower, (b) the Swing Line Lender has agreed to make such Swing Line Advances
to the Borrower, and (c) the L/C Bank has agreed to issue such Letters of Credit
for the account of the Borrower.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, and for other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
ARTICLE I.
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. CERTAIN DEFINED TERMS. As used in this Agreement, the
---------------------
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"ACCOUNTS RECEIVABLE" means all Accounts Receivable referred to in
-------------------
Section 2(a)(iii) of the Security Agreement.
<PAGE>
"ADDITIONAL DIVIDEND AMOUNT" means, at any time of determination, the
--------------------------
lesser of (i) $3,000,000, and (ii) an amount equal to the product of $0.20
multiplied by the number of Qualifying Shares duly issued after the Closing Date
- ---------- --
and prior to such time of determination as certified in a certificate of the
Chief Financial Officer delivered to the Administrative Agent. For purposes of
this definition, the term "QUALIFYING SHARES" means shares of common stock of
-----------------
the Borrower, par value $.01, issued after the Closing Date (A) to Casino upon
the conversion of the aggregate principal amount of the Casino Note into such
common stock of the Borrower (but only to the extent such debt is converted on a
dollar for dollar basis at the market price for such common stock at the time of
such conversion), (B) for cash at market price on the date of issuance (but only
to the extent such cash has been applied to the mandatory prepayment of the
Revolving Advances pursuant to Section 2.05(b)(iii) and the permanent reduction
of the Revolving Commitments pursuant to Section 2.04(b)), or (C) upon the
exercise of options issued under the Borrower's management stock option plan (as
such plan is in effect on October 15, 1998); provided that the number of
-------- ----
Qualifying Shares shall be reduced by the number of shares, if any, issued after
the Closing Date as a dividend or distribution on or in respect of outstanding
common stock of the Borrower.
"ADDITIONAL MORTGAGES" has the meaning set forth in Section 6.01(l).
--------------------
"ADJUSTED LEVERAGE RATIO" means, as of any date of determination, the
-----------------------
ratio of (i) the sum of (A) Consolidated Total Debt as of the end of the most
recently ended fiscal quarter of the Borrower plus (B) the product of (1) rent
----
expense for the Borrower and its Subsidiaries on a Consolidated basis for the
period of four fiscal quarters ending as of the end of the most recently ended
fiscal quarter of the Borrower multiplied by (2) 8 to (ii) the sum of (A) EBITDA
-------------
for the Borrower and its Subsidiaries on a Consolidated basis for the period of
four fiscal quarters ending as of the end of the most recently ended fiscal
quarter of the Borrower (it being understood and agreed that for the period of
four fiscal quarters ending January 3, 1999, there shall be added to such
Consolidated EBITDA the sum of $2,500,000 and for the period of four fiscal
quarters ending March 28, 1999, there shall be added to such Consolidated EBITDA
the sum of $900,000, in each case to the extent such sums represent EBITDA of
Cash & Carry Inc. (prior to its acquisition by the Borrower) not otherwise
reflected in the Consolidated EBITDA of the Borrower and its Subsidiaries) plus
----
(B) rent expense for the Borrower and its Subsidiaries on a Consolidated basis
for the period of four fiscal quarters ending as of the end of the most recently
ended fiscal quarter of the Borrower.
"ADVANCE" means a Revolving Advance, a Swing Line Advance or an L/C
-------
Advance.
"AFFILIATE" means, as to any Person, any other Person that, directly
---------
or indirectly, controls, is controlled by or is under common control with such
Person or is a director or officer of such Person. For purposes of this
definition, the term "control" (including the terms "controlling," "controlled
by" and "under common control with") of a Person means to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of Voting Stock, by contract or otherwise.
2
<PAGE>
"AGENT'S ACCOUNT" means the account of the Administrative Agent
---------------
maintained by the Administrative Agent with the Federal Reserve Bank of New
York, for account of Credit Lyonnais New York, ABA No. 026008073, in favor of
Credit Lyonnais New York, Attention: Loan Servicing Syndications, Reference:
Smart & Final.
"APPLICABLE LENDING OFFICE" means, with respect to each Lender, such
-------------------------
Lender's Domestic Lending Office in the case of a Base Rate Advance and such
Lender's Eurodollar Lending Office in the case of a Eurodollar Rate Advance.
"APPLICABLE MARGIN" means, for any fiscal quarter for each Interest
-----------------
Type of Advance set forth below, the applicable rate per annum set forth in the
table below opposite the Adjusted Leverage Ratio determined as of the last day
of the immediately preceding fiscal quarter and beneath such Interest Type of
Loan:
<TABLE>
<CAPTION>
========================================================================================
Applicable Applicable
Margin for Margin for
Adjusted Leverage Eurodollar Rate Base Rate
Tier Ratio Advances Advances
<S> <C> <C> <C>
----------------------------------------------------------------------------------------
I Greater than or equal to 4.75 2.50% 1.50%
----------------------------------------------------------------------------------------
II Greater than or equal to 4.25 but
less than 4.75 2.25% 1.25%
----------------------------------------------------------------------------------------
III Greater than or equal to 3.75 but
less than 4.25 2.00% 1.00%
----------------------------------------------------------------------------------------
IV Greater than or equal to 3.25 but
less than 3.75 1.75% 0.50%
----------------------------------------------------------------------------------------
V Less than 3.25 1.50% 0.00%
========================================================================================
</TABLE>
provided, however, that, notwithstanding the foregoing, for purposes of
- -------- -------
determining the Applicable Margin, the Adjusted Leverage Ratio shall be deemed
to be greater than or equal to 4.75 to 1.0 at all times (i) prior to receipt by
the Administrative Agent of the financial statements, compliance certificate and
Borrowing Base Certificate required by Section 6.03(d) with respect to the
fiscal year of the Borrower ending January 3, 1999, and (ii) when a Default has
occurred and is continuing based on the Borrower's failure to deliver any
financial statement, compliance certificate or Borrowing Base Certificate as and
when required pursuant to Sections 6.03(a), 6.03(c) or 6.03(d), as applicable.
For purposes of this Agreement, any change in the Applicable Margin based on a
change in the Adjusted Leverage Ratio shall be effective three Business Days
after the date of receipt by the Administrative Agent of the financial
statements, compliance certificate and Borrowing Base Certificate required by
Sections 6.03(a), 6.03(c) and 6.03(d), as applicable, reflecting such change.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance entered
-------------------------
into by a Lender Party and an Eligible Assignee, and accepted by the Borrower
and the Administrative Agent, in accordance with Section 9.07 and in
substantially the form of Exhibit A hereto.
"AVAILABLE AMOUNT" of any Letter of Credit means, at any time, the
----------------
maximum amount available to be drawn under such Letter of Credit at such time
(assuming compliance at such time with all conditions to drawing).
3
<PAGE>
"BANK HEDGE AGREEMENT" means a Hedge Agreement between the Borrower
--------------------
and any Lender.
"BASE RATE" means a fluctuating interest rate per annum in effect from
---------
time to time, which rate per annum shall at all times be equal to the higher of:
(a) the rate of interest established by Credit Lyonnais New York Branch as its
"base rate", with each change in such rate to be effective for purposes of this
Agreement and the transactions contemplated hereby without necessity of any
action on the part of any Person, on the day on which such change is effective,
it being understood that such rate does not and shall not necessarily reflect
the best or lowest rate of interest available to Credit Lyonnais New York
Branch's best or preferred commercial customers and (b) 1/2 of one percent per
annum above the Federal Funds Rate.
"BASE RATE ADVANCE" means an Advance that bears interest as provided
-----------------
in Section 2.06(a)(i).
"BORROWER" has the meaning set forth in the recital of parties to this
--------
Agreement.
"BORROWER'S ACCOUNT" means the account of the Borrower maintained by
------------------
the Borrower with the Administrative Agent.
"BORROWING BASE AMOUNT" means, at any time of determination, the
---------------------
lesser of (i) the aggregate Revolving Commitments in effect at such time, and
(ii) the sum of the following amounts for each category of Eligible Collateral
(as reflected in the then most recently delivered Borrowing Base Certificate):
(a) from and after the Eligible Real Property Inclusion Date, 35% of
the net book value of Eligible Real Property;
(b) with respect to Eligible Inventory, 60% of the value thereof, and
(c) with respect to Eligible Accounts Receivable, 80% of the value
thereof;
provided, however, that in the event a Default has occurred and is continuing
- -------- -------
based on the Borrower's failure to deliver any financial statement, compliance
certificate or Borrowing Base Certificate as and when required pursuant to
Sections 6.03(a), 6.03(c), or 6.03(d), as applicable, the Borrowing Base Amount
shall be such amount as may be determined from time to time by the
Administrative Agent and the Required Lenders in their sole discretion.
"BORROWING BASE CERTIFICATE" means a certificate of the Borrower
--------------------------
concerning the Borrowing Base of the Borrower substantially in the form of
Exhibit K.
"BORROWING" means a Revolving Borrowing or a Swing Line Borrowing.
---------
"BORROWING BASE DEFICIENCY" means, at any time, the failure of the
-------------------------
Borrowing Base Amount at such time to equal or exceed the sum of (i) the then
outstanding aggregate principal amount of the Revolving Advances and the Swing
Line Advances plus (ii) the aggregate Letters of Credit Obligations then
----
outstanding.
4
<PAGE>
"BUSINESS DAY" means a day of the year on which banks are not required
------------
or authorized by law to close in Los Angeles, California or New York, New York
and, if the applicable Business Day relates to any Eurodollar Rate Advances, on
which dealings are carried on in the London interbank market.
"CAPITAL EXPENDITURES" means, for any period, the sum of (a) all
--------------------
expenditures during such period for equipment, fixed assets, real property or
improvements, or for replacements or substitutions therefor or additions
thereto, that have a useful life of more than one year plus (b) the aggregate
principal amount of all Debt (including obligations under Capitalized Leases)
assumed or incurred in connection with any such expenditures.
"CAPITALIZED LEASES" has the meaning specified in clause (e) of the
------------------
definition of Debt.
"CASH EQUIVALENTS" means any of the following, to the extent owned by
----------------
the Borrower free and clear of all Liens and having a maturity of not greater
than 180 days from the date of acquisition thereof: (a) readily marketable
direct obligations of the Government of the United States or any agency or
instrumentality thereof or obligations unconditionally guaranteed by the full
faith and credit of the Government of the United States, (b) insured
certificates of deposit of or time deposits with any commercial bank that (i) is
a Lender or a member of the Federal Reserve System, (ii) issues (or the parent
of which issues) commercial paper rated as described in clause (c), (iii) is
organized under the laws of the United States or any State thereof and (iv) has
combined capital and surplus of at least $1 billion or (c) commercial paper
(other than commercial paper issued by or on behalf of the Borrower or any of
its Affiliates) in an aggregate amount of no more than $500,000 per issuer
outstanding at any time, issued by any corporation organized under the laws of
any State of the United States and rated at least "Prime-1" (or the then
equivalent grade) by Moody's Investors Services or "A-1" (or the then equivalent
grade) by Standard & Poor's Ratings Group.
"CASINO" means Casino USA, Inc. and its Affiliates.
------
"CASINO INTERCOMPANY ADVANCES" means unsecured intercompany advances
----------------------------
made by Casino to the Borrower after the Closing Date pursuant to the Casino
Intercompany Agreement.
"CASINO INTERCOMPANY AGREEMENT" means that certain intercompany
-----------------------------
agreement dated August 6, 1991 by and between Casino and the Borrower.
"CASINO LOAN AGREEMENT" means the loan agreement dated as of November
---------------------
13, 1998 by and between Casino and the Borrower.
"CASINO NOTE" means the promissory note dated as of November 13, 1998
-----------
by the Borrower in favor of Casino in the principal amount of $53,000,000.
5
<PAGE>
"CERCLA" means the Comprehensive Environmental Response, Compensation
------
and Liability Act of 1980, as amended or supplemented from time to time, and the
regulations promulgated pursuant thereto.
"CLOSING DATE" means the date on which each of the conditions in
------------
Section 4.01 is satisfied or waived.
"CO-LEAD ARRANGERS" means Credit Lyonnais Los Angeles Branch and
-----------------
NationsBanc Montgomery Securities LLC.
"COLLATERAL" means all "Collateral" referred to in the Collateral
----------
Documents and all other property that is subject to any Lien in favor of the
Administrative Agent, the Lenders or any Issuing Bank.
"COLLATERAL DOCUMENTS" means the Security Agreement and the Mortgages
--------------------
and any Additional Mortgages.
"COMMITMENT" means a Revolving Commitment or a Swing Line Commitment.
----------
"COMMITMENT FEE PERCENTAGE" means a fee per annum on the undrawn
-------------------------
amount of the Facility as set forth below payable quarterly in arrears following
the Closing:
<TABLE>
<CAPTION>
====================================================================
Commitment
Adjusted Leverage Fee
Tier Ratio Percentage
<S> <C> <C>
--------------------------------------------------------------------
I Greater than or equal to 4.75 0.50%
--------------------------------------------------------------------
II Greater than or equal to 4.25 but
less than 4.75 0.50%
--------------------------------------------------------------------
III Greater than or equal to 3.75 but
less than 4.25 0.40%
--------------------------------------------------------------------
IV Greater than or equal to 3.25 but
less than 3.75 0.35%
--------------------------------------------------------------------
V less than 3.25 0.30%
====================================================================
</TABLE>
provided, however, that, notwithstanding the foregoing, for purposes of
- -------- -------
determining the Commitment Fee Percentage, the Adjusted Leverage Ratio shall be
deemed to be greater than or equal to 4.75 to 1.0 at all times (i) prior to
receipt by the Administrative Agent of the financial statements, compliance
certificate and Borrowing Base Certificate required by Section 6.03(d) with
respect to the fiscal year of the Borrower ending January 3, 1999, and (ii) when
a Default has occurred and is continuing based on the Borrower's failure to
deliver any financial statement, compliance certificate or Borrowing Base
Certificate as and when required pursuant to Sections 6.03(a), 6.03(c) or
6.03(d), as applicable. For purposes of this Agreement, any change in the
Commitment Fee Percentage based on a change in the Adjusted Leverage Ratio shall
be effective three Business Days after the date of receipt by the Administrative
Agent of the financial statements, compliance certificate and Borrowing Base
Certificate required by Sections 6.03(a), 6.03(c) and 6.03(d), as applicable,
reflecting such change.
6
<PAGE>
"COMMITMENT TERMINATION DATE" means November 12, 2001, on which date
---------------------------
the Facilities shall terminate and all amounts outstanding thereunder shall be
due and payable, subject to early termination and acceleration upon the
occurrence of an Event of Default.
"CONFIDENTIAL INFORMATION" means information that the Borrower
------------------------
furnishes to the Administrative Agent or any Lender in a writing designated as
confidential but does not include any such information that is or becomes
generally available to the public or that is or becomes available to the
Administrative Agent or such Lender from a source other than the Borrower that
is not, to the best of the Administrative Agent's or such Lender's knowledge,
acting in violation of a confidentiality agreement with the Borrower.
"CONSOLIDATED" refers to the consolidation of accounts in accordance
------------
with GAAP.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, total interest
-----------------------------
expense (including the interest component of Capitalized Leases) of the Borrower
and its Subsidiaries on a Consolidated basis for such period in conformity with
GAAP, including, without limitation, all commissions, discounts and other fees
and charges owed with respect to any financings or letters of credit, but
excluding charges in such period for the amortization or write-off of
capitalized (i) amounts payable pursuant to Section 2.07, (ii) other non-cash
charges for amortization or write-off of debt issuance expenses incurred prior
to the date hereof, and (iii) other expenses relating to the negotiation and
preparation of, and the initial Advances under, this Agreement.
"CONSOLIDATED NET INCOME" means, for any period, the net earnings (or
-----------------------
loss) after taxes of the Borrower and its Subsidiaries on a Consolidated basis
determined for such period in conformity with GAAP.
"CONSOLIDATED NET WORTH" means the excess of (i) the total assets of
----------------------
the Borrower and its Subsidiaries determined on a Consolidated basis in
accordance with GAAP, over (ii) all liabilities of the Borrower and its
Subsidiaries determined on a Consolidated basis in accordance with GAAP.
"CONSOLIDATED TOTAL DEBT" means, as of any time of determination,
-----------------------
determined for the Borrower and its Subsidiaries on a consolidated basis, (i)
indebtedness for borrowed money (including, without limitation, obligations in
respect of Casino Intercompany Advances), (ii) obligations evidenced by bonds,
debentures, notes or other similar instruments, (iii) non-contingent obligations
to pay the deferred purchase price of property or services other than trade
payables incurred in the ordinary course of business, and (iv) Capitalized
Leases.
"CONTROLLED GROUP MEMBER" means each trade or business (whether or not
-----------------------
incorporated) which, at any time, together with Borrower or any Subsidiary of
any thereof is treated as a single employer under Sections 4001(a)(14) or
4001(b)(1) of ERISA or Sections 414(b), (c), (m) or (o) of the Internal Revenue
Code.
"CONVERSION", "CONVERT" and "CONVERTED" each refer to a conversion of
---------- ------- ---------
Advances of one Interest Type into Advances of the other Interest Type pursuant
to Section 2.06.
7
<PAGE>
"DEBT" of any Person means, without duplication, (a) all indebtedness
----
of such Person for borrowed money, (b) all Obligations of such Person for the
deferred purchase price of property or services (other than trade payables not
overdue by more than 60 days incurred in the ordinary course of such Person's
business), (c) all Obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all Obligations of such Person
created or arising under any conditional sale or other title retention agreement
with respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such property), (e) all Obligations of
such Person as lessee under leases that have been or should be, in accordance
with GAAP, recorded as capital leases ("CAPITALIZED LEASES"), (f) all
------------------
Obligations, contingent or otherwise, of such Person under acceptance, letter of
credit or similar facilities, (g) all Obligations of such Person to purchase,
redeem, retire, defease or otherwise make any payment in respect of any capital
stock of or other ownership or profit interest in such Person or any other
Person or any warrants, rights or options to acquire such capital stock, valued,
in the case of Redeemable Preferred Stock, at the greater of its voluntary or
involuntary liquidation preference plus accrued and unpaid dividends, (h) all
Obligations of such Person in respect of Hedge Agreements, (i) all Debt of
others referred to in clauses (a) through (h) above guaranteed directly or
indirectly in any manner by such Person, or in effect guaranteed directly or
indirectly by such Person through an agreement (i) to pay or purchase such Debt
or to advance or supply funds for the payment or purchase of such Debt, (ii) to
purchase, sell or lease (as lessee or lessor) property, or to purchase or sell
services, primarily for the purpose of enabling the debtor to make payment of
such Debt or to assure the holder of such Debt against loss, (iii) to supply
funds to or in any other manner invest in the debtor (including any agreement to
pay for property or services irrespective of whether such property is received
or such services are rendered) or (iv) otherwise to assure a creditor against
loss, and (j) all Debt referred to in clauses (a) through (h) above secured by
(or for which the holder of such Debt has an existing right, contingent or
otherwise, to be secured by) any Lien on property (including, without
limitation, accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Debt.
"DEFAULT" means any Event of Default or any event that would
-------
constitute an Event of Default but for the requirement that notice be given or
time elapse or both.
"DEFAULT RATE" has the meaning specified in Section 2.06(d).
------------
"DOMESTIC LENDING OFFICE" means, with respect to any Lender, the
-----------------------
office of such Lender specified as its "Domestic Lending Office" opposite its
name on Schedule I hereto or in the Assignment and Acceptance pursuant to which
it became a Lender, or such other office of such Lender as such Lender may from
time to time specify to the Borrower and the Administrative Agent.
"DOMESTIC SUBSIDIARY" means a direct or indirect Subsidiary of the
-------------------
Borrower that is not a Foreign Subsidiary.
8
<PAGE>
"EBITDA" means, for any period, net income (or net loss) plus, to the
------ ----
extent deducted in determining such net income (or net loss), the sum of (a)
interest expense, (b) income tax expense, (c) depreciation expense and (d)
amortization expense, in each case determined in accordance with GAAP for such
period. In the event the Borrower takes a charge associated with the closing of
the Florida Stores permitted under clause (i) of Section 7.01(r), up to
$18,000,000 of such charge may be added back to EBITDA for financial covenant
calculations for such fiscal quarter and, without duplication, the next three
fiscal quarters (but such amount may only be added back to EBITDA for any period
to the extent such amount is deducted in determining EBITDA for the applicable
period).
"ELIGIBLE ACCOUNTS RECEIVABLE" means Accounts Receivable of the
----------------------------
Borrower and its Domestic Subsidiaries. The value of such Accounts Receivable
shall be their book value determined in accordance with GAAP, as reflected on
the most recent Borrowing Base Certificate received by the Administrative Agent
pursuant to Section 4.02(a)(iii) or Section 6.03(a). Notwithstanding the
foregoing, Accounts Receivable owing from any Person that is an Affiliate of the
Borrower or any of its Subsidiaries shall not be Eligible Accounts Receivable.
"ELIGIBLE ASSIGNEE" means (a) any Lender Party and any Affiliate of
-----------------
any Lender Party, and (b) any commercial bank, savings and loan association,
savings bank, finance company, insurance company, mutual fund or other financial
institution, fund or investor which has been approved in writing (or, in the
case of the Borrower, deemed approved as provided below) by the Borrower and the
Administrative Agent as an Eligible Assignee for purposes of this Agreement,
provided that in each such case such approval shall not be unreasonably
- --------
withheld, or, in the case of Affiliates of such Lender Party, written notice to
the Administrative Agent shall have been provided, and provided, further, that
-------- -------
if the Borrower is requested at any time to approve any Person as an Eligible
Assignee hereunder and the Administrative Agent has not received written notice
from the Borrower, within three Business Days of such request, that the Borrower
does not approve such Person as an Eligible Assignee, the Borrower shall be
deemed to have approved such Person as an Eligible Assignee. Such approval of
the Borrower shall not be required if an Event of Default has occurred and is
continuing.
"ELIGIBLE COLLATERAL" means, collectively, Eligible Inventory,
-------------------
Eligible Accounts Receivable and Eligible Real Property.
"ELIGIBLE INVENTORY" means Inventory of the Borrower and its Domestic
------------------
Subsidiaries. The value of such Inventory shall be the book value of such
Inventory determined in accordance with GAAP as reflected on the most recent
Borrowing Base Certificate received by the Administrative Agent pursuant to
Section 4.02(a)(iii) or Section 6.03(a).
"ELIGIBLE REAL PROPERTY" means only such real property of the Borrower
----------------------
and its Domestic Subsidiaries as is subject to a valid and perfected first
priority Lien in favor of the Administrative Agent pursuant to the Mortgages;
provided, however, that any such real property may be excluded to the extent
- --------- -------
that the Borrower has not complied with the provisions of Section 6.01(m) with
respect to such real property. The value of such real property shall be its
book value determined in accordance with GAAP, as reflected on the Borrower's
most recent
9
<PAGE>
Borrowing Base Certificate received by the Administrative Agent pursuant to
Section 4.02(a)(iii) or Section 6.03(a); provided, however, that the
-------- -------
Administrative Agent may, from time to time, exclude from Eligible Real Property
such real property as the Administrative Agent determines must be so excluded in
order to maintain compliance with the Federal Financial Institution Reform,
Recovery and Enforcement Act of 1989, as amended.
"ELIGIBLE REAL PROPERTY INCLUSION DATE" means the first date after the
-------------------------------------
Closing Date as of which all appraisals required by the provisions of Section
6.01(m)(i) have been delivered to the Administrative Agent.
"ENVIRONMENTAL ACTION" means any administrative, regulatory or
--------------------
judicial action, suit, demand, demand letter, claim, notice of non-compliance or
violation, investigation, proceeding, consent order or consent agreement
relating in any way to any Environmental Law or any Environmental Permit
including, without limitation, (a) any claim by any governmental or regulatory
authority for enforcement, cleanup, removal, response, remedial or other actions
or damages pursuant to any Environmental Law and (b) any claim by any third
party seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from Hazardous Materials or arising
from alleged injury or threat of injury to health, safety or the environment.
"ENVIRONMENTAL LAW" means any federal, state or local law, rule,
-----------------
regulation, order, writ, judgment, injunction, decree, determination or award
and any and all common law requirements, rules and bases of liability relating
to the environment, health, safety or Hazardous Materials, including, without
limitation, CERCLA, the Resource Conservation and Recovery Act, the Hazardous
Materials Transportation Act, the Clean Water Act, the Toxic Substances Control
Act, the Clean Air Act, the Safe Drinking Water Act, the Atomic Energy Act, the
Federal Insecticide, Fungicide and Rodenticide Act and the Occupational Safety
and Health Act.
"ENVIRONMENTAL PERMIT" means any permit, approval, identification
--------------------
number, license or other authorization required under any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"ERISA AFFILIATE" of any Person means any other Person that for
---------------
purposes of Title IV of ERISA is a member of such Person's controlled group, or
under common control with such Person, within the meaning of Section 414 of the
Internal Revenue Code.
"ERISA EVENT" with respect to any Person means (a) the occurrence of a
-----------
reportable event, within the meaning of Section 4043 of ERISA, with respect to
any Plan of such Person or any of its ERISA Affiliates unless the 30-day notice
requirement with respect to such event has been waived by the PBGC; (b) the
provision by the administrator of any Plan of such Person or any of its ERISA
Affiliates of a notice of intent to terminate such Plan, pursuant to Section
4041(a)(2) of ERISA (including any such notice with respect to a plan amendment
referred to in Section 4041(e) of ERISA); (c) the cessation of operations at a
facility of such Person or any of its ERISA Affiliates in the circumstances
described in Section 4062(e) of
10
<PAGE>
ERISA; (d) the withdrawal by such Person or any of its ERISA Affiliates from a
Multiple Employer Plan during a plan year for which it was a substantial
employer, as defined in Section 4001(a)(2) of ERISA; (e) the failure by such
Person or any of its ERISA Affiliates to make a payment to a Plan required under
Section 302(f)(1) of ERISA; (f) the adoption of an amendment to a Plan of such
Person or any of its ERISA Affiliates requiring the provision of security to
such Plan, pursuant to Section 307 of ERISA; or (g) the institution by the PBGC
of proceedings to terminate a Plan of such Person or any of its ERISA
Affiliates, pursuant to Section 4042 of ERISA, or the occurrence of any event or
condition described in Section 4042 of ERISA that could constitute grounds for
the termination of, or the appointment of a trustee to administer, such Plan.
"EUROCURRENCY LIABILITIES" has the meaning specified in Regulation D
------------------------
of the Board of Governors of the Federal Reserve System, as in effect from time
to time.
"EURODOLLAR LENDING OFFICE" means, with respect to any Lender, the
-------------------------
office of such Lender specified as its "Eurodollar Lending Office" opposite its
name on Schedule I hereto or in the Assignment and Acceptance pursuant to which
it became a Lender (or, if no such office is specified, its Domestic Lending
Office), or such other office of such Lender as such Lender may from time to
time specify to the Borrower and the Administrative Agent.
"EURODOLLAR RATE" means, for any Eurodollar Rate Advance for any
---------------
Interest Period therefor, an interest rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) equal to the rate per annum obtained by
dividing (a) the rate per annum appearing on Telerate Page 3750 (or any
successor page) as the London interbank offered rate for deposits in U.S.
dollars at approximately 11:00 a.m. (London time) two Business Days prior to the
first day of such Interest Period for a term comparable to such Interest Period
by (b) a percentage equal to 100% minus the Eurodollar Rate Reserve Percentage
for such Interest Period. If for any reason the rate described in the foregoing
clause (a) is not available at the time of determination of the Eurodollar Rate
for any Eurodollar Rate Advances for any Interest Period, the term "Eurodollar
Rate" shall mean, for any such Eurodollar Rate Advances for any such Interest
Period therefor, an interest rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) equal to the rate per annum obtained by dividing (i)
the rate per annum appearing on Reuters Screen LIBO Page as the London interbank
offered rate for deposits in U.S. dollars at approximately 11:00 a.m. (London
time) two Business Days prior to the first day of such Interest Period for a
term comparable to such Interest Period (provided, however, if more than one
-------- -------
rate is specified on Reuters Screen LIBO Page, the applicable rate shall be the
arithmetic mean of all such rates) by (ii) a percentage equal to 100% minus the
Eurodollar Rate Reserve Percentage for such Interest Period.
"EURODOLLAR RATE ADVANCE" means an Advance that bears interest as
-----------------------
provided in Section 2.06(b).
"EURODOLLAR RATE RESERVE PERCENTAGE" means, for any Interest Period
----------------------------------
for any Eurodollar Rate Advance, the reserve percentage applicable two Business
Days before the first day of such Interest Period under regulations issued from
time to time by the Board of Governors
11
<PAGE>
of the Federal Reserve System (or any successor) for determining the maximum
reserve requirement (including, without limitation, any emergency, supplemental
or other marginal reserve requirement) for a member bank of the Federal Reserve
System in New York City with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities (or with respect to any other category of
liabilities that includes deposits by reference to which the interest rate on
Eurodollar Rate Advances is determined) having a term equal to such Interest
Period.
"EVENTS OF DEFAULT" has the meaning specified in Section 7.01.
-----------------
"EXISTING BRIDGE LOAN" means that certain bridge loan dated as of
--------------------
April 30, 1998 by and among the Borrower and Credit Lyonnais Los Angeles Branch,
as amended, supplemented or modified to the date hereof.
"EXISTING CREDIT AGREEMENT" means that certain Credit Agreement dated
-------------------------
as of November 20, 1995 by and among the Borrower, the Banks listed therein and
Credit Lyonnais Los Angeles Branch, as Agent, as amended, supplemented or
modified to the date hereof.
"EXISTING DEBT" means the Debt identified on Schedule 5.01(q)(i).
-------------
"EXISTING LETTERS OF CREDIT" means the letters of credit described on
--------------------------
Schedule 1.01(a).
"EXISTING LIENS" means the Liens identified on Schedule 6.02(a).
--------------
"FACILITY" means the Revolving Facility or the Swing Line Facility.
--------
"FEDERAL FUNDS RATE" means, for any period, a fluctuating interest
------------------
rate per annum equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"FLORIDA STORES" means the stores and other real properties identified
--------------
on Schedule 1.01(b).
"FOREIGN SUBSIDIARY" means any "controlled foreign corporation" within
------------------
the meaning of Section 957(a) of the Internal Revenue Code as to which the
Borrower or any of its Subsidiaries is a "United States shareholder" as defined
in Section 951(b) of the Internal Revenue Code.
"GAAP" has the meaning specified in Section 1.03.
----
"GUARANTORS" means each present and future direct or indirect
----------
Subsidiary of the Borrower that is a party to the Guaranty.
12
<PAGE>
"GUARANTY" has the meaning specified in Section 4.01(j)(x), and
--------
includes any amendment to Guaranty delivered hereunder.
"HAZARDOUS MATERIALS" means (a) petroleum or petroleum products,
-------------------
natural or synthetic gas, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation and radon gas, (b) any substances defined as
or included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous wastes," "restricted hazardous
wastes," "toxic substances," "toxic pollutants," "contaminants" or "pollutants,"
or words of similar import, under any Environmental Law and (c) any other
substance exposure to which is regulated under any Environmental Law.
"HEDGE AGREEMENTS" means interest rate swap, cap or collar agreements,
----------------
interest rate future or option contracts and other similar agreements.
"INDEMNIFIED PARTY" has the meaning specified in Section 9.04(b).
-----------------
"INITIAL LENDERS" has the meaning specified in the recital of parties
---------------
to this Agreement.
"INSUFFICIENCY" means, with respect to any Plan, the amount, if any,
-------------
of its unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA.
"INTERCOMPANY NOTES" has the meaning specified in Section 4.01(j)(xv).
------------------
"INTEREST PERIOD" has the meaning specified in Section 2.06(b).
---------------
"INTEREST TYPE" refers to the distinction between Advances bearing
-------------
interest at the Base Rate and Advances bearing interest at the Eurodollar Rate.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
---------------------
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"INVENTORY" means all Inventory referred to in Section 2(a)(i) of the
---------
Security Agreement.
"INVESTMENT" in any Person means any loan or advance to such Person,
----------
any purchase or other acquisition of any capital stock, warrants, rights,
options, obligations or other securities of such Person, any capital
contribution to such Person or any other investment in such Person, including,
without limitation, any arrangement pursuant to which the investor incurs Debt
of the types referred to in clauses (i) and (j) of the definition of "Debt" in
----
respect of such Person.
"ISSUE" means, with respect to any Letter of Credit, either issue such
-----
Letter of Credit, extend the expiry of such Letter of Credit (other than any
such extension occurring pursuant to the terms of such Letter of Credit), renew
such Letter of Credit (other than any such renewal occurring pursuant to the
terms of such Letter of Credit), or increase the amount of such
13
<PAGE>
Letter of Credit, and the terms "Issued", "Issuing", and "Issuance" shall have
------ ------- --------
corresponding meanings.
"ISSUING BANK" means the L/C Bank and any other Lender that is a
------------
commercial bank, acting through a domestic branch, as issuer of a Letter of
Credit.
"LENDER PARTY" means any Lender or any Issuing Bank.
------------
"LENDERS" means the Initial Lenders and each Eligible Assignee that
-------
shall become a party hereto pursuant to Section 9.07.
"L/C ADVANCE" means a payment made by an Issuing Bank under a Letter
-----------
of Credit.
"L/C BANK" means Credit Lyonnais New York Branch in its capacity as an
--------
Issuing Bank or any assignee acting in such capacity.
"L/C CASH COLLATERAL ACCOUNT" has the meaning specified in Section
---------------------------
7.02.
"L/C RELATED DOCUMENTS" has the meaning specified in Section 3.04(a).
---------------------
"L/C SUBLIMIT" means Ten Million Dollars ($10,000,000) as such amount
------------
may be reduced pursuant to Section 2.04.
"LETTER OF CREDIT" means any letter of credit issued hereunder.
----------------
"LETTER OF CREDIT AGREEMENT" has the meaning specified in Section
--------------------------
3.02(a).
"LETTER OF CREDIT OBLIGATIONS" means, as of any date of determination
----------------------------
with respect to any Letter of Credit, the sum of (a) the then outstanding
Available Amount of such Letter of Credit, and (b) the aggregate amount of the
Unreimbursed Letter of Credit Liability thereunder.
"LETTER OF CREDIT SUBFACILITY" has the meaning specified in Section
----------------------------
3.01.
"LIEN" means any lien, security interest or other charge or
----
encumbrance of any kind, or any other type of preferential arrangement,
including, without limitation, the lien or retained security title of a
conditional vendor and any easement, right of way or other encumbrance on title
to real property.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Guaranty, the
--------------
Collateral Documents, each Letter of Credit Agreement, each Bank Hedge
Agreement, the Intercompany Notes and any other instrument or agreement executed
by the Borrower and the Administrative Agent that states that it is a Loan
Document.
"LOAN PARTIES" means the Borrower and the Guarantors.
------------
14
<PAGE>
"MARGIN STOCK" has the meaning specified in Regulation U.
------------
"MATERIAL ADVERSE CHANGE" means any material adverse change in the
-----------------------
business, assets, condition (financial or otherwise), operations, performance,
properties or prospects of the Borrower and its Subsidiaries taken as a whole.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
-----------------------
business, assets, condition (financial or otherwise), operations, performance,
properties or prospects of the Borrower and its Subsidiaries taken as a whole,
(b) the rights and remedies of the Administrative Agent or any Lender Party
under any Loan Document or (c) the ability of any Loan Party to perform its
Obligations under any Loan Document to which it is or is to be a party.
"MORTGAGE" has the meaning specified in Section 4.01(j)(ix).
--------
"MORTGAGE POLICY" has the meaning specified in Section 4.01(j)(ix)(A).
---------------
"MULTIEMPLOYER PLAN" of any Person means a multiemployer plan, as
------------------
defined in Section 4001(a)(3) of ERISA, to which such Person or any of its ERISA
Affiliates is making or accruing an obligation to make contributions, or has
within any of the preceding six plan years made or accrued an obligation to make
contributions.
"MULTIPLE EMPLOYER PLAN" of any Person means a single employer plan,
----------------------
as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees
of such Person or any of its ERISA Affiliates and at least one Person other than
such Person and its ERISA Affiliates or (b) was so maintained and in respect of
which such Person or any of its ERISA Affiliates could have liability under
Section 4064 or 4069 of ERISA in the event such plan has been or were to be
terminated.
"NET CASH PROCEEDS" means, with respect to any sale, lease, transfer
-----------------
or other disposition of any asset or the sale or issuance of any Debt or capital
stock (other than common stock of the Borrower issued to Casino upon conversion
of the Casino Note), any securities convertible into or exchangeable for capital
stock or any warrants, rights or options to acquire capital stock by any Person,
the aggregate amount of cash received from time to time by or on behalf of such
Person in connection with such transaction after deducting therefrom only (a)
reasonable and customary brokerage commissions, underwriting fees and discounts,
legal fees, finder's fees and other similar fees and commissions and (b) the
amount of taxes payable in connection with or as a direct result of such
transaction and (c) the amount of any Debt secured by a Lien on such asset that,
by the terms of such transaction, is required to be repaid upon such
disposition, in each case with respect to the foregoing clauses (a) and (c) to
the extent, but only to the extent, that the amounts so deducted are, at the
time of receipt of such cash, actually paid to a Person that is not an Affiliate
and are properly attributable to such transaction or to the asset that is the
subject thereof.
"NOTE" means a Revolving Note or a Swing Line Note.
----
15
<PAGE>
"NOTICE OF BORROWING" means either (a) a notice in substantially the
-------------------
form of Exhibit B-1, or (b) notice by teletransmission or telephonic notice of
the information required by Exhibit B-1.
"NOTICE OF ISSUANCE" means a notice in substantially the form of
------------------
Exhibit C.
"NOTICE OF SWING LINE BORROWING" means either (a) a notice
------------------------------
substantially in the form of Exhibit B-2, or (b) notice by teletransmission or
telephonic notice of the information required by Exhibit B-2.
"OBLIGATION" means, with respect to any Person, any obligation of such
----------
Person of any kind, including, without limitation, any liability of such Person
on any claim, whether or not the right of any creditor to payment in respect of
such claim is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, disputed, undisputed, legal, equitable, secured or unsecured, and
whether or not such claim is discharged, stayed or otherwise affected by any
proceeding referred to in Section 7.01(f). Without limiting the generality of
the foregoing, the Obligations of the Loan Parties under the Loan Documents
include (a) the obligation to pay principal, interest, Letter of Credit
commissions, charges, expenses, fees, attorneys' fees and disbursements,
indemnities and other amounts payable by any Loan Party under any Loan Document
and (b) the obligation to reimburse any amount in respect of any of the
foregoing that any Lender Party, in its sole discretion, may elect to pay or
advance on behalf of such Loan Party.
"OFFERING MEMORANDUM" means the offering memorandum emoradated
-------------------
October, 1998 used by the Syndication Agent in connection with the syndication
of the Commitments.
"OPEN YEAR" has the meaning specified in Section 4.01(z).
---------
"OTHER TAXES" has the meaning specified in Section 2.10(b).
-----------
"PARTICIPATION AGREEMENT" means that certain Participation Agreement
-----------------------
dated as of November 13, 1998 among Smart & Final Inc., as the Construction
Agent and as the Lessee, the various parties hereto from time to time, as the
Guarantors, First Security Bank, National Association, not individually, except
as expressly stated herein, but solely as the Owner Trustee under the S&F Trust
1998-1, the various banks and other lending institutions which are parties
hereto from time to time, as the Holders, the various banks and other lending
institutions which are parties hereto from time to time, as the Lenders, and
Credit Lyonnais Los Angeles Branch, as the Administrative Agent for the Lenders
and respecting the Security Documents, as the Administrative Agent for the
Lenders and the Holders, to the extent of their interests.
"PBGC" means the Pension Benefit Guaranty Corporation.
----
"PERMITTED ENCUMBRANCES" means, with respect to any property subject
----------------------
to a Mortgage or an Additional Mortgage, the matters listed on Schedule B to the
policy of title insurance in favor of the Administrative Agent with respect to
such property.
16
<PAGE>
"PERMITTED LIENS" means such of the following as to which no
---------------
enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced: (a) Liens for taxes, assessments and governmental charges or
levies not yet due and payable; (b) Liens imposed by law, such as materialmen's,
mechanics', carriers', workmen's and repairmen's Liens and other similar Liens
arising in the ordinary course of business securing obligations that are not
overdue for a period of more than 30 days; (c) pledges or deposits to secure
obligations under workers' compensation laws or similar legislation or to secure
public or statutory obligations; and (d) Permitted Encumbrances.
"PERSON" means an individual, partnership, limited liability company,
------
corporation (including a business trust), joint stock company, trust,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency thereof.
"PLAN" means a Single Employer Plan or a Multiple Employer Plan.
----
"PREFERRED STOCK" means, with respect to any corporation, capital
---------------
stock issued by such corporation that is entitled to a preference or priority
over any other capital stock issued by such corporation upon any distribution of
such corporation's assets, whether by dividend or upon liquidation.
"PRO RATA SHARE" of any amount means, with respect to any Lender at
--------------
any time, the product of (a) a fraction the numerator of which is such Lender's
Revolving Commitment (without giving effect to any termination thereof pursuant
to Section 7.01) at such time and the denominator of which is the sum of the
Revolving Facility (in each case without giving effect to any termination of
Commitments pursuant to Section 7.01) at such time times (b) such amount.
-----
"REDEEMABLE" means, with respect to any capital stock, Debt or other
----------
right or Obligation, any such right or Obligation that (a) the issuer has
undertaken to redeem at a fixed or determinable date or dates, whether by
operation of a sinking fund or otherwise, or upon the occurrence of a condition
not solely within the control of the issuer or (b) is redeemable at the option
of the holder.
"REGISTER" has the meaning specified in Section 9.07(c).
--------
"REGULATION U" means Regulation U of the Board of Governors of the
------------
Federal Reserve System, as in effect from time to time.
"REQUIRED LENDERS" means at any time Lender Parties owed or holding
----------------
more than 66-2/3% of the sum of (a) the aggregate principal amount of the
Advances outstanding at such time and (b) the aggregate Available Amount of all
Letters of Credit outstanding at such time, or, if no such principal amount and
no Letters of Credit are outstanding at such time, Lender Parties holding more
than 66-2/3% of the Revolving Commitments at such time. For purposes of this
definition, the Available Amount of each Letter of Credit and the aggregate
principal amount of all outstanding Swing Line Advances shall be considered to
be owed to the Lenders ratably in accordance with their respective Revolving
Commitments.
17
<PAGE>
"RESPONSIBLE OFFICER" means the President, Chief Executive Officer,
-------------------
any Vice President, the Chief Financial Officer and the Treasurer of the
Borrower.
"REVOLVING ADVANCE" has the meaning specified in Section 2.01(b).
-----------------
"REVOLVING BORROWING" means a borrowing consisting of simultaneous
-------------------
Revolving Advances of the same Interest Type made by the Lenders.
"REVOLVING COMMITMENT" means, (i) with respect to any Lender listed on
--------------------
Schedule I, the amount set forth opposite such Lender's name on Schedule I under
the caption "Revolving Commitment," (ii) with respect to any Lender not listed
on Schedule I hereto, the amount set forth in the Assignment and Acceptance
pursuant to which such Person became a Lender hereunder, or (iii) if any of
such Lenders has entered into one or more Assignments and Acceptances, the
amount set forth for such Lender in the Register maintained by the
Administrative Agent pursuant to Section 9.07(c) as such Lender's "Revolving
Commitment", in the case of each of the foregoing clauses (i), (ii) and (iii),
as such amount may be reduced at or prior to such time pursuant to Section 2.04.
"REVOLVING FACILITY" means, at any time, the aggregate amount of the
------------------
Lenders' Revolving Commitments at such time.
"REVOLVING NOTE" means a promissory note of the Borrower payable to
--------------
the order of any Lender, in substantially the form of Exhibit D-1 hereto,
evidencing the aggregate indebtedness of the Borrower to such Lender resulting
from the Revolving Advances made by such Lender.
"SECURED OBLIGATIONS" has the meaning specified in the Security
-------------------
Agreement.
"SECURITY AGREEMENT" has the meaning specified in Section
------------------
4.01(j)(viii).
"SINGLE EMPLOYER PLAN" of any Person means a single employer plan, as
--------------------
defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of
such Person or any of its ERISA Affiliates and no Person other than such Person
and its ERISA Affiliates or (b) was so maintained and in respect of which such
Person or any of its ERISA Affiliates could have liability under Section 4069 of
ERISA in the event such plan has been or were to be terminated.
"SOLVENT" and "SOLVENCY" mean, with respect to any Person on a
------- --------
particular date, that on such date (a) the fair value of the property of such
Person is greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such Person, (b) the present fair salable
value of the assets of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its debts as they
become absolute and matured, (c) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such Person's ability to
pay as such debts and liabilities mature and (d) such Person is not engaged in
business or a transaction, and is not about to engage in business or a
transaction, for which such Person's property would constitute an unreasonably
small capital. The amount of contingent liabilities at any time shall be
computed as the amount that, in the light of all the facts
18
<PAGE>
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 Letter of Credit issued under the
------------------------
Letter of Credit Subfacility, other than a Trade Letter of Credit.
"SUBSIDIARY" of any Person means any corporation partnership, limited
----------
liability company, joint venture, trust or estate of which (or in which) more
than 50% of (a) the issued and outstanding capital stock having ordinary voting
power to elect a majority of the Board of Directors of such corporation
(irrespective of whether at the time capital stock of any other class or classes
of such corporation shall or might have voting power upon the occurrence of any
contingency) (b) the interest in the capital or profits of such partnership,
limited liability company or joint venture or (c) the beneficial interest in
such trust or estate is at the time directly or indirectly owned or controlled
by such Person, by such Person and one or more of its other Subsidiaries or by
one or more of such Person's other Subsidiaries.
"SURVIVING DEBT" has the meaning specified in Section 4.01(b).
--------------
"SURVIVING DEBT AGREEMENT" means any agreement or instrument setting
------------------------
forth the terms and conditions of any Surviving Debt.
"SWING LINE ADVANCE" means an advance by the Swing Line Lender to the
------------------
Borrower pursuant to Section 2.01(b).
"SWING LINE BORROWING" means a borrowing consisting of a Swing Line
--------------------
Advance made by the Swing Line Lender.
"SWING LINE COMMITMENT" means, with respect to the Swing Line Lender,
---------------------
the amount, not to exceed 15,000,000, agreed to by the Swing Line Lender and the
Borrower and consented to by the Administrative Agent and set forth in the
Register maintained by the Agent pursuant to Section 9.07(c),or, if such Lender
has entered into one or more Assignments and Acceptances with respect to the
Swing Line Commitment, the amount set forth for the Swing Line Lender in the
Register maintained by the Administrative Agent pursuant to Section 9.07(c) as
such Lender's "Swing Line Commitment", in each case as such amount may be
reduced at or prior to such time pursuant to Section 2.04.
"SWING LINE COMMITMENT COMMENCEMENT DATE" means such date as of which
---------------------------------------
a Lender shall have agreed in writing with the Borrower (with the consent of the
Administrative Agent) to act as the Swing Line Lender hereunder.
"SWING LINE FACILITY" means, at any time, the aggregate amount of the
-------------------
Swing Line Lender's Swing Line Commitments at such time.
"SWING LINE LENDER" means such Lender as shall agree in writing with
-----------------
the Borrower and with the consent of the Administrative Agent to act as the
Swing Line Lender
19
<PAGE>
hereunder and any assignee of the Swing Line Commitment which assumes such Swing
Line Commitment in accordance with the terms of Section 9.07.
"SWING LINE NOTE" means a promissory note of the Borrower payable to
---------------
the order of the Swing Line Lender, in substantially the form of Exhibit D-2
hereto, evidencing the aggregate indebtedness of the Borrower to such Lender
resulting from the Swing Line Advances made by such Lender.
"SWING LINE RESERVE AMOUNT" means, (i) at all times prior to the Swing
-------------------------
Line Commitment Commencement Date, zero, and (ii) at any time of determination
thereafter, the greater of (A) the aggregate Swing Line Commitment in effect at
such time, and (B) the aggregate principal amount of all outstanding Swing Line
Advances at such time.
"SYNTHETIC LEASE DOCUMENTS" means the Operative Documents as defined
-------------------------
in the Participation Agreement.
"SYNTHETIC LEASES" means the Lease as defined in the Participation
----------------
Agreement.
"TAXES" has the meaning specified in Section 2.10(a).
-----
"TOTAL COMMITMENT" means, with respect to each Lender Party at any
----------------
time, the aggregate of such Lender Party's Revolving Commitment at such time.
"TRADE LETTER OF CREDIT" means any Letter of Credit that is issued
----------------------
under the Letter of Credit Subfacility for the benefit of a supplier of
Inventory to the Borrower or any of its Subsidiaries to effect payment for such
Inventory the conditions to drawing under which include the presentation to the
Issuing Bank of negotiable bills of lading, invoices and related documents
sufficient, in the judgment of the Issuing Bank, to create a valid and perfected
Lien on such Inventory.
"UNREIMBURSED LETTER OF CREDIT LIABILITY" means, as of any date of
---------------------------------------
determination with respect to any Letter of Credit, the aggregate amount of all
L/C Advances which have been made by, and not reimbursed to, the Issuing Bank
under such Letter of Credit.
"UNUSED REVOLVING COMMITMENT" means, with respect to any Lender at any
---------------------------
time, (a) such Lender's Revolving Commitment at such time, minus (b) the sum of
-----
(i) the aggregate principal amount of all Revolving Advances of such Lender
outstanding at such time, plus (ii) such Lender's Pro Rata Share of the
----
aggregate Letter of Credit Obligations outstanding at such time, plus (iii) such
----
Lender's Pro Rata Share of the Swing Line Advances then outstanding.
"UNUSED SWING LINE COMMITMENT" means, with respect to the Swing Line
----------------------------
Lender at any time, the remainder of (a) such Lender's Swing Line Commitment at
such time, minus (b) the aggregate principal amount of all Swing Line Advances
-----
made by such Lender and outstanding at such time.
20
<PAGE>
"VOTING STOCK" means capital stock issued by a corporation, or
------------
equivalent interests in any other Person, the holders of which are ordinarily,
in the absence of contingencies, entitled to vote for the election of directors
(or persons performing similar functions) of such Person, even though the right
so to vote has been suspended by the happening of such a contingency.
"WELFARE PLAN" means a welfare plan, as defined in Section 3(1) of
------------
ERISA.
"WITHDRAWAL LIABILITY" has the meaning specified in Part I of Subtitle
--------------------
E of Title IV of ERISA.
"YEAR 2000 PROBLEM" has the meaning set forth in Section 5.01(v).
-----------------
SECTION 1.02. COMPUTATION OF TIME PERIODS. In this Agreement in the
---------------------------
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding".
SECTION 1.03. ACCOUNTING TERMS. All accounting terms not specifically
----------------
defined herein shall be construed in accordance with generally accepted
accounting principles consistent with those applied in the preparation of the
financial statements referred to in Section 4.01(f) ("GAAP").
----
SECTION 1.04. OTHER DEFINITIONAL PROVISIONS. References to Sections
-----------------------------
and subsections shall be to Sections and subsections, respectively, of this
Agreement unless otherwise specified. The term "including" means including
without limitation.
ARTICLE II.
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. THE ADVANCES
------------
(A) REVOLVING ADVANCES. Each Lender severally agrees, on the terms
------------------
and conditions hereinafter set forth, to make advances (each a "REVOLVING
---------
ADVANCE") to the Borrower from time to time on any Business Day during the
- -------
period from the Closing Date until the Commitment Termination Date in an amount
for each such Advance not to exceed the lesser of (i) such Lender's Unused
Revolving Commitment on such Business Day (after giving effect to any repayment
of Swing Line Advances made or to be made with the proceeds thereof pursuant to
a designation therefor set forth by the Borrower in a Notice of Borrowing for
such Borrowing or pursuant to a Notice of Borrowing given by the Administrative
Agent in accordance with Section 2.02(f)) and (ii) such Lender's Pro Rata Share
of the remainder of the Borrowing Base Amount as of such date minus the sum of
-----
(A) the then outstanding Letter of Credit Obligations and (B) the then
outstanding Swing Line Advances; provided, however, that (1) the foregoing
-------- -------
clause (ii) shall not limit any Lender's obligations under Section 2.02(f), and
(2) except with respect to a Borrowing the proceeds of which will be applied to
repay outstanding Swing Line Advances pursuant to a designation therefor set
forth by the Borrower in a Notice of Borrowing for such Borrowing or pursuant to
a Notice of Borrowing given by the Administrative Agent
21
<PAGE>
pursuant to Section 2.02(f), the Borrower shall not request, and no Lender shall
be required to make Revolving Advances in respect of, any Borrowing if after
giving effect thereto the aggregate principal amount of all outstanding
Revolving Advances would exceed the remainder of the Borrowing Base Amount at
such time minus the sum of (A) the then outstanding Letter of Credit Obligations
-----
and (B) the Swing Line Reserve Amount. Each Revolving Borrowing shall be in an
aggregate amount of Five Million Dollars ($5,000,000) or (except in the case of
the initial Advances) an integral multiple of One Million Dollars ($1,000,000)
in excess thereof and shall consist of Revolving Advances made by the Lenders
ratably according to their respective Revolving Commitments. Within the
foregoing limits, the Borrower may borrow under this Section 2.01(a), prepay
pursuant to Section 2.05 and reborrow under this Section 2.01(a).
(B) SWING LINE ADVANCES. The Swing Line Lender agrees, on the terms
-------------------
and conditions hereinafter set forth, to make advances (each a "SWING LINE
----------
ADVANCE") to the Borrower from time to time on any Business Day during the
- -------
period from the Swing Line Commitment Commencement Date until the Commitment
Termination Date in an amount not to exceed the Swing Line Lender's Unused Swing
Line Commitment on such Business Day; provided, however, that the Swing Line
-------- -------
Lender shall not make any Swing Line Advance if, after giving effect to such
Swing Line Advance, the aggregate principal amount of all outstanding Swing Line
Advances would exceed the remainder of the Borrowing Base Amount then in effect
minus the sum of (A) the aggregate amount of the Letter of Credit Obligations
- -----
then outstanding, and (B) the aggregate principal amount of the Revolving
Advances then outstanding. Each Swing Line Borrowing shall consist of Swing Line
Advances made by the Swing Line Lender and shall be in an amount equal to
$1,000,000 or an integral multiple of $100,000 in excess thereof. Immediately
upon the making of each Swing Line Advance by the Swing Line Lender, the Swing
Line Lender shall be deemed to have sold and transferred to each Lender, and
each Lender shall be deemed to have purchased and received from the Swing Line
Lender, in each case irrevocably and without any further action by any party, an
undivided interest and participation in such Swing Line Advance and the
Obligations of the Borrower under this Agreement in respect thereof in an amount
equal to such Lender's Pro Rata Share of such Swing Line Advance, provided,
--------
however, that (i) no Lender shall be required to fund its participation in any
- -------
such Swing Line Advance until demand therefor is made by the Administrative
Agent pursuant to Section 2.02(f)(ii) hereof, and (ii) no Lender shall be
entitled to share in any payments of principal or interest in respect of its
participation in any such Swing Line Advance except to the extent set forth in
Section 2.02(f)(ii) hereof with respect to any such participation which has been
funded by such Lender as provided therein. Within the limits of the Swing Line
Lender's Unused Swing Line Commitment in effect from time to time, the Borrower
may borrow under this Section 2.01(b), prepay pursuant to Section 2.05 and
reborrow under this Section 2.01(b).
SECTION 2.02. MAKING THE ADVANCES
-------------------
(A) INITIAL BORROWINGS. The initial Borrowings hereunder shall be
------------------
made on the Closing Date and shall be made on notice received by the
Administrative Agent from the Borrower (pursuant to a Notice of Borrowing) not
later than 9:00 a.m. (Los Angeles, California time) (or such later time as the
Administrative Agent may agree) on the Business Day
22
<PAGE>
immediately preceding the Closing Date. Such Notice of Borrowing shall be
irrevocable upon receipt by the Administrative Agent. Upon receipt of such
notice, the Administrative Agent shall promptly give notice to each Lender (but
in no event later than 10:30 a.m. on the Closing Date). Each Lender shall,
before 11:30 a.m. (Los Angeles, California time) on the Closing Date, make
available for the account of its Applicable Lending Office to the Administrative
Agent such Lender's ratable share of such Borrowings by depositing same day
funds in the Administrative Agent's Account. Notwithstanding any contrary
provision hereof, the initial Borrowings may consist only of Base Rate Advances.
(B) SUBSEQUENT REVOLVING BORROWINGS. Each Revolving Borrowing occuring
-------------------------------
after the Closing Date shall be made on notice received by the Administrative
Agent from the Borrower (pursuant to a Notice of Borrowing) not later than 9:00
a.m. (Los Angeles, California time) (a) on the Business Day prior to the date of
such Borrowing if such Borrowing consists of Base Rate Advances, and (b) on the
third Business Day prior to the date of such Borrowing if such Borrowing
consists of Eurodollar Rate Advances. Each such Notice of Borrowing shall be
irrevocable upon receipt by the Administrative Agent and, in the case of any
Notice of Borrowing for Eurodollar Rate Advances, the Borrower shall indemnify
each Lender against any loss, cost or expense incurred by such Lender as a
result of any failure to fulfill on or before the date specified by such Notice
of Borrowing the applicable conditions set forth in this Section 2.02 or Article
IV, including, without limitation, any loss, cost or expense incurred by reason
of the liquidation or reemployment of deposits or other funds acquired by such
Lender to fund the Advance to be made by such Lender as a part of such Borrowing
when such Advance, as a result of such failure, is not made on such date.
(C) REVOLVING ADVANCES BY LENDERS. If the Administrative Agent
-----------------------------
receives a Notice of Borrowing, (or if the Administrative Agent gives a Notice
of Borrowing pursuant to Section 2.02(f)) the Administrative Agent shall
promptly (and, in any event not later than 4:00 p.m. (Los Angeles, California
time) on the Business Day prior to the date of such Borrowing or, if such
Borrowing consists of Eurodollar Rate Advances, the third Business Day prior to
the date of such Borrowing) give each Lender notice of such Notice of Borrowing.
Each Lender shall, before 11:30 a.m. (Los Angeles, California time) on the date
of such Borrowing in the case of any Revolving Borrowing to be made on such
date, make available for the account of its Applicable Lending Office to the
Administrative Agent such Lender's ratable portion of such Borrowing by
depositing same day funds in the Administrative Agent's Account. Unless the
Administrative Agent shall have received written notice from a Lender prior to
the date of any Revolving Borrowing hereunder that such Lender will not make
available to the Administrative Agent such Lender's ratable portion of such
Borrowing, the Administrative Agent may assume that such Lender has made such
ratable portion available to the Administrative Agent on the date of such
Borrowing in accordance with the terms hereof and the Administrative Agent may,
in reliance upon such assumption, but shall not be required to, make available
to or for the account of the Borrower on such date a corresponding amount. If
and to the extent that such Lender shall not have so made such ratable portion
available to the Administrative Agent and the Administrative Agent makes such
ratable portion available to the Borrower, such Lender and the Borrower, without
prejudice to any rights or remedies that the Borrower may have against such
Lender, severally agree to repay to the Administrative Agent forthwith on demand
such
23
<PAGE>
corresponding amount together with interest thereon, for each day from the date
such amount is made available to or for the account of the Borrower until the
date such amount is repaid to the Administrative Agent, at (A) in the case of
the Borrower, the interest rate applicable at the time to the Advances
comprising such Borrowing, and (B) in the case of such Lender, the Federal Funds
Rate. If such Lender shall pay to the Administrative Agent such amount, such
amount so paid shall constitute such Lender's Advance as part of the relevant
Borrowing for purposes of this Agreement and, to the extent that the Borrower
previously paid such amount to the Administrative Agent, the Administrative
Agent will refund to the Borrower such amount so paid, but without interest.
(D) DISBURSEMENT OF REVOLVING ADVANCES. Upon fulfillment of the
----------------------------------
applicable conditions set forth in Article IV (which fulfillment the
Administrative Agent may assume in the absence of actual knowledge, or notice
received from the Borrower or the Required Lenders, to the contrary), the
Administrative Agent will make funds for any Borrowing available to the Borrower
by crediting the Borrower's Account, subject to the Administrative Agent's
-------
receipt of funds from the Lenders, and provided that the Administrative Agent
--------
shall first make a portion of such funds equal to any outstanding L/C Advance
under any Letter of Credit, and any interest accrued and unpaid thereon to and
as of such date, available to the applicable Issuing Bank for reimbursement of
such L/C Advance and payment of such interest.
(E) SWING LINE BORROWINGS. Each Swing Line Borrowing shall be made on
---------------------
notice received by the Administrative Agent and the Swing Line Lender from the
Borrower (pursuant to a Notice of Swing Line Borrowing) not later than 9:00 A.M.
(Los Angeles, California time) on the date of such Borrowing. Each such Notice
of Swing Line Borrowing shall be irrevocable upon receipt by the Administrative
Agent and the Swing Line Lender. If (i) the Administrative Agent and the Swing
Line Lender receive a Notice of Swing Line Borrowing and (ii) the applicable
conditions set forth in Article IV have been fulfilled (which fulfillment the
Administrative Agent and the Swing Line Lender may assume in the absence of
actual knowledge, or notice received from the Borrower, the Administrative Agent
or the Required Lenders, to the contrary), then the Swing Line Lender will make
funds for any Swing Line Borrowing available to the Borrower by wire transfer to
the Borrower on or before 4:00 p.m. (Los Angeles, California time) on the date
of such Swing Line Borrowing.
(F) SETTLEMENT OF SWING LINE ADVANCES. (i) The Administrative Agent
---------------------------------
may, and upon request by the Swing Line Lender in the Swing Line Lender's sole
and absolute discretion, the Administrative Agent shall, at any time and from
time to time, give to the Lenders and the Borrower a Notice of Borrowing for a
Borrowing of Revolving Advances which are Base Rate Advances on behalf of the
Borrower, in each case in an amount equal to the aggregate amount of Swing Line
Advances then owing by the Borrower (or such lesser amount as the Administrative
Agent or the Swing Line Lender shall specify), and the proceeds of which are to
be used to prepay such Swing Line Advances on the date of such Borrowing. Upon
receipt of any such Notice of Borrowing, each Lender (other than the Swing Line
Lender) shall (subject to Section 2.02(f)(iv)), before 11:30 a.m. (Los Angeles,
California time) on the Business Day following the date on which such Notice of
Borrowing is given), make available for the account of its Applicable Lending
Office to the Administrative Agent such Lender's Pro Rata Share of
24
<PAGE>
such Borrowing by depositing same day funds in the Administrative Agent's
Account. Notwithstanding any contrary provision of this Agreement, (A) the
proceeds of any such Borrowing shall be distributed by the Administrative Agent
to the Swing Line Lender (subject to Section 2.02(f)(iv)) as a prepayment of all
or a portion of the then outstanding Swing Line Advances, and (B) the
outstanding Swing Line Advances of the Swing Line Lender, in an amount equal to
the aggregate amount of the Swing Line Advances to be prepaid on such date,
shall be deemed to be prepaid with the proceeds of a Revolving Advance made by
the Swing Line Lender and such portion of the Swing Line Advances deemed to be
so prepaid shall no longer be outstanding as Swing Line Advances but shall be
outstanding as Revolving Advances made by the Swing Line Lender.
(ii) In addition to the right of the Swing Line Lender to require a
Borrowing under Section 2.02(f)(i), the Swing Line Lender may at any time and
from time to time and in its sole and absolute discretion request (by notice to
the Administrative Agent and the Borrower) the Administrative Agent to, and upon
receipt of such request the Administrative Agent shall, make demand on each
Lender for payment of its participation in each Swing Line Advance then
outstanding, and upon receipt of any such demand each Lender shall (subject to
Section 2.02(f)(iv)) promptly fund such participation by paying to the
Administrative Agent, for the account of the Swing Line Lender (subject to
Section 2.02(f)(iv)), the amount of such participation in same day funds on the
date such request is given by the Administrative Agent to the Lenders. With
respect to each such participation in any Swing Line Advance which is funded by
any Lender, the Swing Line Lender shall promptly pay to the Administrative
Agent, and the Administrative Agent shall promptly pay to such Lender, in lawful
money of the United States and in the kind of funds so received, an amount equal
to such Lender's ratable share of all payments received by the Swing Line Lender
in respect of (A) the principal of such Swing Line Advance, and (B) interest on
such Swing Line Advance for the period from and after the date on which such
participation was funded. If any payment received by the Swing Line Lender on
account of any Swing Line Advance and distributed to any Lender as a participant
under the preceding sentence is thereafter recovered from the Swing Line Lender
in connection with any bankruptcy or insolvency proceeding relating to the
Borrower or otherwise, each Lender which received such distribution shall, upon
demand by the Swing Line Lender through the Administrative Agent, repay to the
Swing Line Lender such Lender's ratable share of the amount so recovered
together with such Lender's ratable share (according to the proportion of (1)
the amount of such Lender's required prepayment to (2) the total amount so
recovered) of any interest or other amount paid or payable by the Swing Line
Lender in respect of the total amount so recovered. The Borrower agrees that
any Lender purchasing a participation in any Swing Line Advance from the Swing
Line Lender hereunder may, to the fullest extent permitted by law, exercise all
its rights of payment with respect to such participation as fully as if such
Lender were the direct creditor of the Borrower in the amount of such
participation.
(iii) Anything contained herein to the contrary notwithstanding (but
subject to Section 2.02(f)(iv) below), the obligation of each Lender to make any
Revolving Advance pursuant to Section 2.02(f)(i) or to fund its participation in
any Swing Line Advances pursuant to Section 2.02(f)(ii) shall be absolute and
unconditional and shall not be subject to any conditions set forth in Article IV
hereof or otherwise affected by any circumstance including, without
25
<PAGE>
limitation, (A) any set-off, counterclaim, recoupment, defense or other right
which such Lender may have against the Swing Line Lender or any Loan Party; (B)
the occurrence or continuance of a Default or Event of Default; (C) any adverse
change in the business, condition (financial or otherwise), operations,
performance, properties or prospects of any Loan Party; (D) any breach of any
Loan Document by the Borrower, any other Loan Party or any other Lender Party;
or (E) any other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing.
(iv) Notwithstanding Section 2.02(f)(iii) above, if at the time that
any Lender is required to make any Revolving Advance or fund any participation
pursuant to Section 2.02(f)(i) or (ii) above, the Borrower would not otherwise
be entitled to obtain a Borrowing as a result of the failure of any of the
conditions set forth in Article IV hereof, the obligation of each Lender to make
any such Revolving Advance or to fund any such participation with respect to any
Swing Line Advance owing to the Swing Line Lender shall be subject to the
condition that at least one of the following is true: (A) the Swing Line Lender
shall have believed in good faith that all conditions under Article IV to the
making of such Swing Line Advance were satisfied at the time such Swing Line
Advance was made, or (B) such Lender shall have had actual knowledge, by receipt
of the statements required pursuant to Section 6.03 or otherwise, that any such
condition had not been satisfied and failed to notify the Swing Line Lender and
the Administrative Agent in writing that it had no obligation to make Revolving
Advances until such condition was satisfied (which notice shall be effective as
of the date of receipt by the Swing Line Lender and the Administrative Agent),
or (C) the satisfaction of any such condition not satisfied shall have been
waived by the Required Lenders prior to or at the time such Swing Line Advance
was made. Anything contained in this Section 2.02(f) to the contrary
notwithstanding, the amount to be distributed by the Administrative Agent to the
Swing Line Lender under this Section 2.02(f) shall be reduced to the extent that
any Lender shall refuse to fund its portion of any Revolving Advance or
participation with respect to the Swing Line Lender as a result of the failure
of the conditions set forth above.
(v) The Borrower irrevocably authorizes (A) the Administrative Agent
to give any Notice of Borrowing pursuant to Section 2.02(f)(i) (with a copy to
the Borrower), (B) the Lenders to make the Revolving Advances pursuant to such
Notice of Borrowing, and (C) the Administrative Agent to distribute the proceeds
thereof as provided herein.
(G) NATURE OF LENDERS' OBLIGATIONS. The failure of any Lender to make
------------------------------
the Advance to be made by it as part of any Borrowing shall not relieve any
other Lender of its obligation, if any, hereunder to make its Advance on the
date of such Borrowing, but no Lender shall be responsible for the failure of
any other Lender to make the Advance to be made by such other Lender on the date
of any Borrowing.
(H) REPORTS BY SWING LINE LENDER. If requested by the Administrative
----------------------------
Agent, the Swing Line Lender shall furnish to the Administrative Agent prior to
the fifth Business Day of each month (and at such other times as the
Administrative Agent may request) a written report summarizing all Swing Line
Borrowings and payments in respect thereof during the preceding month and the
aggregate outstanding principal amount of all Swing Line Advances
26
<PAGE>
as of the last day of such month (or as of such other date as the Administrative
Agent may request).
SECTION 2.03. REPAYMENT.
---------
(A) REVOLVING ADVANCES. The Borrower shall repay to each Lender (in
------------------
accordance with the provisions of Section 2.09(a)) on the Commitment Termination
Date the aggregate principal amount of all Revolving Advances owing to such
Lender outstanding on the Commitment Termination Date.
(B) L/C ADVANCES. The Borrower shall repay each L/C Advance as
------------
provided in Section 3.03.
(C) SWING LINE ADVANCES. The Borrower shall repay to the Swing Line
-------------------
Lender the aggregate principal amount of all Swing Line Advances then
outstanding on the Commitment Termination Date.
SECTION 2.04. REDUCTION OF THE REVOLVING COMMITMENTS AND SWING LINE
-----------------------------------------------------
COMMITMENTS.
- -----------
(A) OPTIONAL REDUCTIONS. The Borrower shall have the right, upon at
-------------------
least three Business Days' notice to the Administrative Agent, to terminate in
whole or reduce ratably in part the unused portions of the respective Revolving
Commitments of the Lenders; provided, however, that (i) each partial reduction
-------- -------
shall be in an amount of Five Million Dollars ($5,000,000) or any multiple of
One Million Dollars ($1,000,000) in excess thereof, and (ii) the aggregate
amount of the Revolving Commitments shall not be reduced pursuant to this
Section 2.04 to an amount less than the sum of (A) the aggregate principal
amount of all Revolving Advances then outstanding, (B) the aggregate amount of
all Letter of Credit Obligations then outstanding, and (C) the aggregate
principal amount of all Swing Line Advances then outstanding.
(B) MANDATORY REDUCTIONS. The Revolving Facility shall be
--------------------
automatically and permanently reduced on a pro rata basis on each date on which
prepayment thereof is required to be made (or would be required to be made if
any Revolving Advances were then outstanding) pursuant to Section 2.05(b)(iii)
in an amount equal to the Net Cash Proceeds received by the Borrower or any of
its Subsidiaries in the transaction giving rise to such required prepayment.
Each such reduction of the Revolving Facility shall be made ratably among the
Lenders in accordance with their Revolving Commitments.
(C) REDUCTION OF SWING LINE COMMITMENT. The Swing Line Commitment of
----------------------------------
the Swing Line Lender shall be (i) terminated automatically and simultaneously
upon any termination in whole of the Revolving Commitments, and (ii) reduced
ratably in an aggregate amount equal to the product of (i) the amount by which,
as a result of any partial reduction of the Revolving Commitments of the
Lenders, the aggregate Revolving Commitments of the Lenders are reduced below
Twenty-Five Million Dollars ($25,000,000) multiplied by (ii) 0.60.
----------
27
<PAGE>
(D) REDUCTION OF THE LETTER OF CREDIT SUBFACILITY. The Letter of
---------------------------------------------
Credit Subfacility shall be (i) terminated automatically and simultaneously upon
any termination in whole of the Revolving Commitments, and (ii) reduced by an
amount equal to product of (i) the amount by which, as a result of any partial
reduction of the Revolving Commitments of the Lenders, the aggregate Revolving
Commitments of the Lenders are reduced below Twenty-Five Million Dollars
($25,000,000) multiplied by (ii) 0.40 (any such reduction of the Letter of
----------
Credit Subfacility to be effective automatically and simultaneously with any
such reduction of the Revolving Commitments).
SECTION 2.05. PREPAYMENTS.
-----------
(A) OPTIONAL PREPAYMENTS. The Borrower may, upon (i) prior notice to
--------------------
the Administrative Agent (which shall be given not later than 11:00 a.m. on the
day of prepayment in the case of prepayment of Revolving Advances which consist
of Base Rate Advances and three Business Days in advance in the case of
prepayment of Revolving Advances which are Eurodollar Rate Advances) or (ii)
prior notice to the Swing Line Lender (which may be given on the date of
prepayment in the case of prepayment of Swing Line Advances), in either case
stating the proposed date and aggregate principal amount of the prepayment and,
in the case of Revolving Advances, the Interest Type of Advances to be prepaid
(and if such notice is given the Borrower shall), prepay in whole or in part the
outstanding principal of Advances of such Interest Type, together with, in the
case of any prepayment of Eurodollar Rate Advances, interest thereon to the date
of such prepayment on the principal amounts prepaid (plus, in the case of
prepayment of Eurodollar Rate Advances prior to the end of the applicable
Interest Period, any additional amount for which the Borrower shall be obligated
pursuant to Section 9.04(c)); provided, however, that each partial prepayment of
-------- -------
Revolving Advances shall be in an aggregate principal amount of Five Million
Dollars ($5,000,000) or an integral multiple of One Million Dollars ($1,000,000)
in excess thereof and each partial prepayment of Swing Line Advances shall be in
an aggregate principal amount of One Million Dollars ($1,000,000) or an integral
multiple of One Hundred Thousand Dollars ($100,000) in excess thereof.
(B) MANDATORY PREPAYMENTS.
---------------------
(I) EXCESS ADVANCES. If, at any time, the then outstanding
---------------
aggregate principal amount of all Revolving Advances shall exceed either the
aggregate amount of the Revolving Commitments of the Lenders at such time or the
Borrowing Base Amount at such time, in each case minus the sum of (i) the
aggregate amount of the Letter of Credit Obligations then outstanding and (ii)
the aggregate principal amount of the Swing Line Advances then outstanding, the
Borrower shall immediately prepay, for the ratable account of the Lenders, the
outstanding principal amount of Revolving Advances in an aggregate amount equal
to such excess. If, at any time, the then outstanding aggregate amount of all
Swing Line Advances shall exceed either (i) the Swing Line Commitment of the
Swing Line Lender, or (ii) the Borrowing Base Amount then in effect minus the
-----
sum of (A) the aggregate amount of the Letter of Credit Obligations then
outstanding, and (B) the aggregate principal amount of the Revolving Advances
then outstanding, the Borrower shall thereupon prepay, for the account of the
Swing Line
28
<PAGE>
Lender, the outstanding principal amount of Swing Line Advances in an aggregate
amount equal to such excess.
(II) INCOMPLETE SETTLEMENT. If any Lender shall for any reason
---------------------
fail to pay any amount payable by it (including the funding of any participation
in any Swing Line Advances), or fail to make any Revolving Advance to be made by
it, pursuant to Section 2.02(f), the Borrower shall, on demand by the
Administrative Agent, prepay the Swing Line Advances then outstanding in an
amount equal to such amount.
(III) NET CASH PROCEEDS. The Borrower shall, on the date of
-----------------
receipt by the Borrower or any of its Subsidiaries of the Net Cash Proceeds from
(A) the sale, lease, transfer or other disposition of any assets of the Borrower
or any of its Subsidiaries (including the sale by the Borrower or any of its
Subsidiaries of the capital stock of any of their respective Subsidiaries but
excluding (1) sales of inventory in the ordinary course of business, (2) sales
of damaged, worn or obsolete equipment to the extent the proceeds thereof are
intended to be (and are) used to purchase replacements for such equipment within
180 days or sales of damaged, worn or obsolete equipment made after the purchase
of replacements for such equipment, and (3) sales, leases, transfers and other
dispositions of assets, or a series of sales, leases, transfers and other
dispositions of related assets, which are sold, leased, transferred or otherwise
disposed of for an amount, or an aggregate amount, less than $500,000, except to
------
the extent that the aggregate of all such sales, leases, transfers, and other
dispositions in any fiscal year exceeds $5,000,000), (B) the incurrence or
issuance by the Borrower or any of its Subsidiaries of any Debt not permitted
under Section 6.02(b) (it being understood that the provisions of this Section
2.05(b)(iii) shall not be construed to permit the incurrence of Debt otherwise
prohibited by Section 6.02(b)) and (C) the sale or issuance by the Borrower or
any of its Subsidiaries of any capital stock (other than common stock of the
Borrower issued to Casino upon conversion of the Casino Note), any securities
convertible into or exchangeable for capital stock or any warrants, rights or
options to acquire capital stock, prepay an aggregate principal amount of the
outstanding Revolving Advances equal to the amount of such Net Cash Proceeds in
accordance with the provisions of Section 2.09(a).
(IV) L/C CASH COLLATERAL. If, at any time, the aggregate
-------------------
Available Amount of all Letters of Credit then outstanding exceeds the L/C
Sublimit in effect at such time, the Borrower shall immediately pay to the
Administrative Agent for deposit in the L/C Cash Collateral Account an amount
sufficient to cause the aggregate amount on deposit in such account to equal the
amount of such excess.
(V) INTEREST PAYABLE ON AMOUNTS PREPAID. All prepayments of
-----------------------------------
Eurodollar Rate Advances under this Section 2.05 shall be made together with
accrued interest to the date of such prepayment on the principal amount prepaid.
SECTION 2.06. INTEREST. The Borrower shall pay interest on the unpaid
--------
principal amount of each Advance from the date of such Advance until such
principal is paid in full at the applicable rate set forth below.
29
<PAGE>
(A) INTEREST ON BASE RATE AND SWING LINE ADVANCES. Except to the
---------------------------------------------
extent that the Borrower shall elect to pay interest on all or any part of any
Advance made or to be made to the Borrower under Section 2.01 for any Interest
Period pursuant to subsections (b) and (c) of this Section 2.06, the Borrower
shall pay interest on the unpaid principal amount of each Advance, from the date
of such Advance until such principal amount is paid in full, payable quarterly
in arrears on the last Business Day of each March, June, September and December,
commencing December 31, 1998 and on the Commitment Termination Date, at a
fluctuating interest rate per annum equal, subject to Section 2.06(d), to the
sum of the Base Rate in effect from time to time plus the Applicable Margin for
----
Base Rate Advances in effect from time to time.
(B) INTEREST PERIODS FOR EURODOLLAR RATE ADVANCES. The Borrower may,
---------------------------------------------
pursuant to Section 2.06(c), elect to have the interest on the principal amount
of all or any portion of any Advances made or to be made to the Borrower under
Section 2.01, in each case ratably according to the respective outstanding
principal amounts of Advances owing to each Lender (each such principal amount
owing to a Lender as to which such election has been made being a "EURODOLLAR
----------
RATE ADVANCE" owing to such Lender) determined and payable for a specified
- ------------
period (an "INTEREST PERIOD" for such Eurodollar Rate Advance) in accordance
---------------
with subsection (c) below, provided, however, that the Borrower may not (i) make
-------- -------
any such election with respect to any Swing Line Advances, or (ii) have more
than four (4) Eurodollar Rate Advances owing to any Lender outstanding at any
one time. Each Interest Period shall be one, two, three, or six months, at the
Borrower's election pursuant to subsection (c) below, provided, however, that:
-------- -------
(i) the first day of an Interest Period for any Eurodollar Rate
Advance shall be either the last day of any then current Interest Period
for such Advance or, if there shall be no then current Interest Period for
such Advance, any Business Day;
(ii) whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day of such
Interest Period shall be extended to occur on the next succeeding Business
Day; provided, however, that if such extension would cause the last day of
-------- -------
such Interest Period to occur in the next following month, the last day of
such Interest Period shall occur on the next preceding Business Day; and
(iii) whenever the first day of any Interest Period occurs on a
day of the month for which there is no numerically corresponding day in the
calendar month that succeeds such initial calendar month by the number of
months equal to the number of months of such Interest Period, such Interest
Period shall end on the last Business Day of such succeeding calendar
month.
(C) INTEREST ON EURODOLLAR RATE ADVANCES. The Borrower may from time
------------------------------------
to time, on the condition that no Event of Default has occurred and is
continuing, and subject to the provisions of Sections 2.06(b) and 2.06(e), elect
to pay interest on all or any portion of any Advances during any Interest Period
therefor at a rate per annum equal to the sum of the Eurodollar Rate for such
Interest Period for such Advances plus the Applicable Margin for
30
<PAGE>
Eurodollar Rate Advances in effect from time to time, by notice, specifying the
amount of the Advances as to which such election is made (which amount shall
aggregate at least Five Million Dollars ($5,000,000) or any multiple of One
Million Dollars ($1,000,000) in excess thereof) and the first day and duration
of such Interest Period, received by the Administrative Agent before 9:00 a.m.
(Los Angeles, California time) three Business Days prior to the first day of
such Interest Period. If the Borrower has made such election for Eurodollar Rate
Advances for any Interest Period, the Borrower shall pay interest on the unpaid
principal amount of such Eurodollar Rate Advances during such Interest Period,
payable in arrears on the last day of such Interest Period and, in the case of
any Interest Period which is longer than three months, on each three month
anniversary of the first day of such Interest Period, in each case at a rate
equal, subject to Section 2.06(d), to the sum of the Eurodollar Rate for such
Interest Period for such Eurodollar Rate Advances plus the Applicable Margin for
Eurodollar Rate Advances in effect from time to time during such Interest
Period. On the last day of each Interest Period for any Eurodollar Rate Advance,
the unpaid principal balance thereof shall automatically become and bear
interest as a Base Rate Advance, except to the extent that the Borrower has
elected to pay interest on all or any portion of such amount for a new Interest
Period commencing on such day in accordance with this Section 2.06(c). Each
notice by the Borrower under this Section 2.06(c) shall be irrevocable upon
receipt by the Administrative Agent, and the Borrower shall indemnify each
Lender against any loss, cost or expense incurred by such Lender as a result of
any failure to fulfill on or before the date specified by such notice the
applicable conditions set forth in this Section 2.06(c) or Article IV,
including, without limitation, any loss, cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by such
Lender to fund any such Eurodollar Rate Advance when such Eurodollar Rate
Advance, as a result of such failure, is not made or does not become effective.
(D) DEFAULT INTEREST. Upon the occurrence and during the continuance
----------------
of an Event of Default, the Borrower shall, at the dates set forth herein for
the payment of interest and upon demand, (i) pay interest on all Base Rate
Advances and Swing Line Advances and any other amounts owing hereunder not paid
when due (other than then outstanding Eurodollar Rate Advances) at a rate per
annum (the "DEFAULT RATE") equal at all times to the rate otherwise applicable
------------
to Base Rate Advances plus 2.00% per annum, and (ii) pay interest on each then
----
outstanding Eurodollar Rate Advance at a rate per annum equal at all times to
the rate otherwise applicable to such Eurodollar Rate Advance plus 2.00% per
----
annum.
(E) SUSPENSION OF EURODOLLAR RATE ADVANCES.
--------------------------------------
(I) ILLEGALITY. Notwithstanding any other provision of this
----------
Agreement, if the introduction of or any change in or in the interpretation
of any law or regulation shall make it unlawful, or any central bank or
other governmental authority shall assert that it is unlawful, for any
Lender or its Eurodollar Lending Office to perform its obligations
hereunder to make Eurodollar Rate Advances or to continue to fund or
maintain Eurodollar Rate Advances hereunder, then, on notice thereof and
demand therefor by such Lender to the Borrower through the Administrative
Agent, (i) each Eurodollar Rate Advance will automatically, upon such
demand, Convert into a Base Rate Advance and (ii) the obligation of the
Lenders to make, or to Convert Advances
31
<PAGE>
into, Eurodollar Rate Advances shall be suspended until the Administrative
Agent shall notify the Borrower that such Lender has determined that the
circumstances causing such suspension no longer exist; provided, however,
-------- -------
that, before making any such demand, such Lender agrees to use reasonable
efforts (consistent with its internal policy and legal and regulatory
restrictions) to designate a different Eurodollar Lending Office if the
making of such a designation would allow such Lender or its Eurodollar
Lending Office to continue to perform its obligations to make Eurodollar
Rate Advances or to continue to fund or maintain Eurodollar Rate Advances
and would not, in the judgment of such Lender, be otherwise disadvantageous
to such Lender.
(II) OTHER CIRCUMSTANCES. If, with respect to any Eurodollar
-------------------
Rate Advances, (A) the Administrative Agent shall determine in good faith
(which determination shall be conclusive) that the Eurodollar Rate cannot
be determined in accordance with the definition thereof, or (B) Lenders
owed at least 50% of the then aggregate unpaid principal amount thereof
notify the Administrative Agent that the Eurodollar Rate for any Interest
Period for such Advances will not adequately reflect the cost to such
Lenders of making, funding or maintaining their Eurodollar Rate Advances
for such Interest Period, the Administrative Agent shall forthwith so
notify the Borrower and the Lenders, whereupon (i) each such Eurodollar
Rate Advance will automatically, on the last day of the then existing
Interest Period therefor, Convert into a Base Rate Advance and (ii) the
obligation of the Lenders to make, or to Convert Advances into, Eurodollar
Rate Advances shall be suspended until the Administrative Agent shall
notify the Borrower that such Lenders have determined that the
circumstances causing such suspension no longer exist.
(III) SUSPENSION ON EVENT OF DEFAULT. Upon the occurrence and
------------------------------
during the continuance of any Event of Default, (i) each Eurodollar Rate
Advance will automatically, on the last day of the then existing Interest
Period therefor, convert into a Base Rate Advance and (ii) the obligation
of the Lenders to make, or to convert Advances into, Eurodollar Rate
Advances shall be suspended.
SECTION 2.07. FEES.
----
(A) COMMITMENT FEES. The Borrower agrees to pay to the Administrative
---------------
Agent a commitment fee on the average daily amount of each Lender's Revolving
Commitment less the sum of (i) Revolving Advances made by such Lender and
----
outstanding from time to time, (ii) such Lender's Pro Rata Share of the
aggregate Letter of Credit Obligations outstanding from time to time, and (iii)
in the case of the Swing Line Lender only, the outstanding amount of any Swing
Line Advances, for the account of such Lender, from the Closing Date in the case
of each Initial Lender and from the effective date specified in the Assignment
and Acceptance pursuant to which it became a Lender in the case of each other
Lender until the Commitment Termination Date, at the rate per annum equal to the
Commitment Fee Percentage in effect from time to time, payable in arrears on the
last Business Day of each March, June, September and December, commencing
December 31, 1998 and, and on the Commitment Termination Date.
32
<PAGE>
(B) AGENT'S FEES. The Borrower agrees to pay to each Agent, for their
------------
own respective account, (i) the fees in the amounts and at the times set forth
in the letter dated September 18, 1998 from the Agents to the Borrower, and
agreed to and accepted by the Borrower on September 18, 1998, and (ii) such
other fees as may from time to time be agreed between the Borrower and such
Agent.
(C) ABSOLUTE OBLIGATION. The Borrower's obligation hereunder to pay
-------------------
the fees referred to in this Section 2.07 shall be absolute and unconditional
and shall survive the making and repayment of Advances, the termination of all
Letter of Credit Obligations and the termination of this Agreement. All fees
which are due or become due pursuant to this Section 2.07 are nonrefundable.
SECTION 2.08. INCREASED COSTS, ETC.
--------------------
(A) INCREASED COSTS. If, due to either (i) the introduction of or any
---------------
change in or in the interpretation of any law or regulation or (ii) the
compliance with any guideline or request from any central bank or other
governmental authority (whether or not having the force of law), there shall be
any increase in the cost to any Lender Party of agreeing to make or of making,
funding or maintaining Eurodollar Rate Advances or of agreeing to issue or of
issuing or maintaining Letters of Credit (or of agreeing to purchase or
purchasing participations therein) or of agreeing to make or of making or
maintaining L/C Advances (or of agreeing to purchase or purchasing
participations therein), then the Borrower shall from time to time, upon demand
by such Lender Party (with a copy of such demand to the Administrative Agent),
pay to the Administrative Agent for the account of such Lender Party additional
amounts sufficient to compensate such Lender Party for such increased cost;
provided, however, that, before making any such demand, each Lender Party agrees
- -------- -------
to use reasonable efforts (consistent with its internal policy and legal and
regulatory restrictions) to designate a different Applicable Lending Office if
the making of such a designation would avoid the need for, or reduce the amount
of, such increased cost and would not, in the reasonable judgment of such Lender
Party, be otherwise disadvantageous to such Lender Party. A certificate as to
the amount of such increased cost, submitted to the Borrower by such Lender
Party, shall be conclusive and binding for all purposes, absent manifest error.
(B) CAPITAL REQUIREMENTS. If, due to either (i) the introduction of
--------------------
or any change in or in the interpretation of any law or regulation or (ii) the
compliance with any guideline or request from any central bank or other
governmental authority (whether or not having the force of law), there shall be
any increase in the amount of capital required or expected to be maintained by
such Lender Party or any corporation controlling such Lender Party as a result
of or based upon the existence of such Lender Party's commitment to lend or to
issue or purchase participations in Letters of Credit hereunder and other
commitments of such type or the issuance or maintenance of the Letters of Credit
(or similar contingent obligations), then, upon demand by such Lender Party
(with a copy of such demand to the Administrative Agent), the Borrower shall pay
to the Administrative Agent for the account of such Lender Party, from time to
time as specified by such Lender Party, additional amounts sufficient to
compensate such Lender Party in the light of such circumstances, to the extent
that such Lender Party reasonably
33
<PAGE>
determines such increase in capital to be allocable to the existence of such
Lender Party's commitment to lend or to issue Letters of Credit hereunder or to
the issuance or maintenance of any Letters of Credit. A certificate as to such
amounts submitted to the Borrower by such Lender Party, shall be conclusive and
binding for all purposes, absent manifest error.
SECTION 2.09. PAYMENTS AND COMPUTATIONS.
-------------------------
(A) PAYMENTS BY BORROWER. The Borrower shall make each payment
--------------------
hereunder and under any other Loan Document to which it is a party, irrespective
of and without condition or deduction for any counterclaim, defense, recoupment
or setoff, in lawful money of the United States and in same day funds delivered
to the Administrative Agent not later than 10:00 a.m. (Los Angeles, California
time) on the day when due by deposit of such funds to the Administrative Agent's
Account. Any payment so delivered to the Administrative Agent after 10:00 a.m.
(Los Angeles, California time) on any Business Day, or on any day which is not a
Business Day, shall be deemed received by the Administrative Agent on the next
succeeding Business Day. The Administrative Agent will promptly after receipt of
each payment cause to be distributed like funds relating to the payment of
principal, interest, commitment fees or letter of credit fees ratably to each
Lender for the account of its Applicable Lending Office, and like funds relating
to the payment of any other amount payable to any Lender or any Issuing Bank
(including payments with respect to Letters of Credit and payments for the
account of any Lender under Sections 2.08, 2.10 or 9.04(c)) to such Lender for
the account of its Applicable Lending Office or to such Issuing Bank, in each
case to be applied in accordance with, and subject to, the terms of this
Agreement, including Section 2.09(e) below. Upon its acceptance of an Assignment
and Acceptance and recording of the information contained therein in the
Register pursuant to Section 9.07(c), from and after the effective date
specified in such Assignment and Acceptance, the Administrative Agent shall make
all payments hereunder and under any other Loan Document in respect of the
interest assigned thereby to the Lender assignee thereunder, and the parties to
such Assignment and Acceptance shall make all appropriate adjustments in such
payments for periods prior to such effective date directly between themselves.
(B) COMPUTATIONS. All computations of interest in respect of Base
------------
Rate Advances (and in respect of any other amount payable hereunder other than
interest in respect of Eurodollar Rate Advances and Letter of Credit fees and
commissions and all computations in respect of commitment fees) shall be made by
the Administrative Agent on the basis of a year of 365 days and all computations
of interest in respect of Eurodollar Rate Advances and all computations in
respect of Letter of Credit fees and commissions and all computations in respect
of commitment fees shall be made by the Administrative Agent on the basis of a
year of 360 days, in each case for the actual number of days (including the
first day but excluding the last day) occurring in the period for which such
interest or fees are payable; provided that if any Advance is repaid on the same
--------
day on which it is made, one day's interest shall be paid on such Advance. Each
determination by the Administrative Agent of an interest rate, fee, commission
or discount rate hereunder shall be conclusive and binding for all purposes,
absent manifest error.
34
<PAGE>
(C) PAYMENTS ASSUMED. Unless the Administrative Agent shall have
----------------
received notice from the Borrower prior to the date on which any payment is due
to the Lenders or any Issuing Bank hereunder that the Borrower will not make
such payment in full, the Administrative Agent may assume that the Borrower has
made such payment in full to the Administrative Agent on such date and the
Administrative Agent may, in reliance upon such assumption, but shall not be
required to, cause to be distributed to each Lender or such Issuing Bank on such
due date an amount equal to the amount then due to such Lender or such Issuing
Bank. If and to the extent that the Borrower shall not have so made such payment
in full to the Administrative Agent, each Lender and Issuing Bank shall repay to
the Administrative Agent forthwith on demand such amount distributed to such
Lender or Issuing Bank together with interest thereon, for each day from the
date such amount is distributed to such Lender or Issuing Bank until the date
such Lender or Issuing Bank repays such amount to the Administrative Agent, at
the Federal Funds Rate.
(D) APPLICATION OF PAYMENTS SPECIFIED BY THE BORROWER. Except as
-------------------------------------------------
otherwise specified herein, so long as no Event of Default has occurred and is
continuing, all payments shall be applied as instructed by the Borrower if such
instructions are received by the Administrative Agent prior to or
contemporaneously with receipt of funds therefor.
(E) APPLICATION OF PAYMENTS NOT OTHERWISE SPECIFIED. If the
-----------------------------------------------
Administrative Agent receives funds for application to the Advances or any
Letter of Credit Obligations or other Obligations of the Borrower under the Loan
Documents under circumstances for which the Loan Documents do not specify the
Advances or the Facility or the Obligations to which, or the manner in which,
such funds are to be applied, the Administrative Agent may elect to distribute
such funds first, to the Issuing Banks ratably in payment of the principal of
-----
and interest on any outstanding L/C Advances, second, to the payment of the
------
outstanding Swing Line Advances and interest thereon, third, to each Lender
-----
ratably in accordance with such Lender's proportionate share of all Advances
(other than Swing Line Advances) then outstanding, in repayment or prepayment of
such of the outstanding Advances (other than Swing Line Advances), and for
application to such principal installments, as the Administrative Agent may
direct, and thereafter ratably to the Lenders in repayment or prepayment of any
other Obligations of the Borrower then outstanding under the Loan Documents as
the Administrative Agent shall direct, provided that if an Event of Default has
--------
occurred and is continuing and the Revolving Commitments of the Lenders and the
Swing Line Commitments of the Swing Line Lender have been terminated in full,
the Administrative Agent shall distribute any payments and any proceeds of any
collection, sale or other realization or liquidation of any Collateral first, to
-----
the payment of all costs and expenses of the Administrative Agent under the Loan
Documents, second, to the Issuing Banks ratably in payment of the principal of
------
and interest on any outstanding L/C Advances, third, to the payment of the
-----
outstanding Swing Line Advances and interest thereon, and fourth, to each Lender
------
ratably in accordance with such Lender's proportionate share of the principal
amount of all Advances (other than Swing Line Advances) and Letter of Credit
Obligations then outstanding, in payment or prepayment of such Obligations owed
to such Lender under the Loan Documents, and for application to such principal
installments (if applicable) as the Administrative Agent shall direct.
35
<PAGE>
(F) PAYMENTS ON BUSINESS DAYS. Whenever any payment hereunder or
-------------------------
under any other Loan Document shall be stated to be due on a day other than a
Business Day, such payment shall be made on the next succeeding Business Day,
and such extension of time shall in such case be included in the computation of
payment of interest and commitment and other fees; provided, however, if such
-------- -------
extension would cause payment of interest on or principal of any Eurodollar Rate
Advance to be made in the next following month, such payment shall be made on
the immediately preceding Business Day.
(G) PAYMENTS FROM BORROWER'S ACCOUNTS. The Borrower hereby authorizes
---------------------------------
each Lender, if and to the extent payment owed to such Lender is not made when
due hereunder or under the Note(s) held by such Lender, to charge from time to
time against any or all of the Borrower's accounts with such Lender any amount
so due.
(H) CERTAIN TERMS. The terms "pay", "paid" or "payment" under this
-------------
Agreement shall include prepay, prepaid or prepayment, respectively, under this
Agreement, and the term "due" under this Agreement shall include due by reason
of a mandatory prepayment (including upon an actual or deemed entry of an order
for relief with respect to the Borrower or any Guarantor under the Federal
Bankruptcy Code or upon acceleration).
SECTION 2.10. TAXES
-----
(A) WITHHOLDING TAXES. Any and all payments by the Borrower hereunder
-----------------
or under the Notes shall be made, in accordance with Section 2.09, free and
clear of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of each Lender Party and the Administrative
---------
Agent, net income taxes that are imposed by the United States and franchise
taxes and net income taxes that are imposed on such Lender Party or the
Administrative Agent by the state or foreign jurisdiction under the laws of
which such Lender Party or the Administrative Agent (as the case may be) is
organized or any political subdivision thereof and, in the case of each Lender
Party, franchise taxes and net income taxes that are imposed on such Lender
Party by the state or foreign jurisdiction of such Lender Party's Applicable
Lending Office or any political subdivision thereof (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "TAXES"). If the Borrower shall be required by law to
-----
deduct any Taxes from or in respect of any sum payable hereunder or under any
Note to any Lender Party or the Administrative Agent, (i) the sum payable shall
be increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.10) such Lender Party or the Administrative Agent (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and (iii) the
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law.
(B) OTHER TAXES. In addition, the Borrower shall pay any present or
-----------
future stamp, documentary, excise, property or similar taxes, charges or levies
that arise from any payment made hereunder or under the Notes or from the
execution, delivery or registration of, or
36
<PAGE>
otherwise with respect to, this Agreement or the Notes (hereinafter referred
to as "OTHER TAXES").
-----------
(C) INDEMNIFICATION. The Borrower shall indemnify each Lender Party
---------------
and the Administrative Agent for the full amount of Taxes and Other Taxes, and
for the full amount of taxes imposed by any jurisdiction on amounts payable
under this Section 2.10, paid by such Lender Party or the Administrative Agent
(as the case may be) and any liability (including penalties, additions to tax,
interest and expenses) arising therefrom or with respect thereto. This
indemnification shall be made within 30 days from the date such Lender Party or
the Administrative Agent (as the case may be) makes written demand therefor.
(D) EVIDENCE OF PAYMENT. Within 30 days after the date of any payment
-------------------
of Taxes, the Borrower shall furnish to the Administrative Agent, at its address
referred to in Section 9.02, the original receipt of payment thereof or a
certified copy of such receipt. In the case of any payment hereunder or under
the Notes by the Borrower through an account or branch outside the United States
or on behalf of the Borrower by a payor that is not a United States person, if
the Borrower determines that no Taxes are payable in respect thereof, the
Borrower shall furnish, or shall cause such payor to furnish, to the
Administrative Agent, at such address, an opinion of counsel acceptable to the
Administrative Agent stating that such payment is exempt from Taxes. For
purposes of this subsection (d) and subsection (e), the terms "UNITED STATES"
-------------
and "UNITED STATES PERSON" shall have the meanings specified in Section 7701 of
--------------------
the Internal Revenue Code.
(E) FOREIGN LENDERS AND ISSUING BANKS. Each Lender Party organized
---------------------------------
under the laws of a jurisdiction outside the United States shall, on or prior to
the date of its execution and delivery of this Agreement in the case of each
Initial Lender, and on the date of the Assignment and Acceptance pursuant to
which it became a Lender Party in the case of each other Lender Party, and from
time to time thereafter upon the reasonable request in writing by the Borrower
or the Administrative Agent (but only so long thereafter as such Lender Party
remains lawfully able to do so), provide the Administrative Agent and the
Borrower with Internal Revenue Service form 1001 or 4224, as appropriate, or any
successor form prescribed by the Internal Revenue Service, certifying that such
Lender Party is exempt from or is entitled to a reduced rate of United States
withholding tax on payments under this Agreement or the Notes. If the form
provided by a Lender Party at the time such Lender Party first becomes a party
to this Agreement indicates a United States interest withholding tax rate in
excess of zero, withholding tax at such rate shall be considered excluded from
Taxes unless and until such Lender Party provides the appropriate form
certifying that a lesser rate applies, whereupon withholding tax at such lesser
rate only shall be considered excluded from Taxes for periods governed by such
form; provided, however, that, if at the date of the Assignment and Acceptance
-------- -------
pursuant to which a Lender Party assignee becomes a party to this Agreement, the
Lender Party assignor was entitled to payments under subsection (a) in respect
of United States withholding tax with respect to interest paid at such date,
then, to such extent, the term Taxes shall include (in addition to withholding
taxes that may be imposed in the future or other amounts otherwise includable in
Taxes) United States withholding tax, if any, applicable with respect to the
Lender Party assignee on such date. If any form or document referred to in this
Section 2.10(e) requires the disclosure of
37
<PAGE>
of information, other than information necessary to compute the tax payable and
information required on the date hereof by Internal Revenue Service form 1001 or
4224, that the Lender Party reasonably considers to be confidential, the Lender
Party shall give notice thereof to the Borrower and shall not be obligated to
include in such form or document such confidential information.
(F) FAILURE TO PROVIDE FORMS. For any period with respect to which a
------------------------
Lender Party has failed to provide the Borrower with the appropriate form
described in Section 2.10(e) (other than if such failure is due to a change in
------ ----
law occurring after the date on which a form originally was required to be
provided or if such form otherwise is not required under Section 2.10(e)), such
Lender Party shall not be entitled to indemnification under Section 2.10(a) or
Section 2.10(c) with respect to Taxes imposed by the United States; provided,
--------
however, that should a Lender Party become subject to Taxes because of its
- -------
failure to deliver a form required hereunder, the Borrower shall take such steps
as such Lender Party shall reasonably request to assist such Lender Party to
recover such Taxes.
(G) CHANGE OF APPLICABLE LENDING OFFICE. Any Lender Party claiming
-----------------------------------
any additional amounts payable pursuant to this Section 2.10 shall use
reasonable efforts (consistent with its internal policy and legal and regulatory
restrictions) to change the jurisdiction of its Eurodollar Lending Office if the
making of such a change would avoid the need for, or reduce the amount of, any
such additional amounts that may thereafter accrue and would not, in the
reasonable judgment of such Lender Party, be otherwise disadvantageous to such
Lender Party.
(H) SURVIVAL. Without prejudice to the survival of any other
--------
agreement of the Borrower hereunder, the agreements and obligations of the
Borrower contained in this Section 2.10 shall survive the payment in full of
principal and interest hereunder and under the Notes.
SECTION 2.11. SHARING OF PAYMENTS, ETC. If any Lender Party shall
------------------------
obtain at any time any payment (whether voluntary, involuntary, through the
exercise of any right of set-off, or otherwise) (a) on account of Obligations
due and payable to such Lender Party hereunder and under the Notes at such time
in excess of its ratable share (according to the proportion of (i) the amount of
such Obligations due and payable to such Lender Party at such time to (ii) the
aggregate amount of the Obligations due and payable to all Lender Parties
hereunder and under the Notes at such time) of payments on account of the
Obligations due and payable to all Lender Parties hereunder and under the Notes
at such time obtained by all the Lender Parties at such time or (b) on account
of Obligations owing (but not due and payable) to such Lender Party hereunder
and under the Notes at such time in excess of its ratable share (according to
the proportion of (i) the amount of such Obligations owing to such Lender Party
at such time to (ii) the aggregate amount of the Obligations owing (but not due
and payable) to all Lender Parties hereunder and under the Notes at such time)
of payments on account of the Obligations owing (but not due and payable) to all
Lender Parties hereunder and under the Notes at such time obtained by all the
Lender Parties at such time, such Lender Party shall forthwith purchase from the
other Lender Parties such participations in the Obligations due and payable or
owing to them, as the case may be, as shall be necessary to cause such
purchasing Lender Party to share the excess payment ratably with each of them;
provided, however, that if all or any portion of such
- -------- -------
38
<PAGE>
excess payment is thereafter recovered from such purchasing Lender Party, such
purchase from each other Lender Party shall be rescinded and such other Lender
Party shall repay to the purchasing Lender Party the purchase price to the
extent of such other Lender Party's ratable share (according to the proportion
of (i) the purchase price paid to such Lender Party to (ii) the aggregate
purchase price paid to all Lender Parties) of such recovery together with an
amount equal to such Lender Party's ratable share (according to the proportion
of (i) the amount of such other Lender Party's required repayment to (ii) the
total amount so recovered from the purchasing Lender Party) of any interest or
other amount paid or payable by the purchasing Lender Party in respect of the
total amount so recovered. The Borrower agrees that any Lender Party so
purchasing a participation from another Lender Party pursuant to this Section
2.11 may, to the fullest extent permitted by law, exercise all its rights of
payment (including the right of set-off) with respect to such participation as
fully as if such Lender Party were the direct creditor of the Borrower in the
amount of such participation.
SECTION 2.12. USE OF PROCEEDS. The proceeds of the Advances shall be
---------------
available (and the Borrower agrees that it shall use such proceeds) to repay in
full all amounts outstanding under the Existing Credit Agreement and the
Existing Bridge Loan, to pay transaction fees and expenses, to provide working
capital for the Borrower and its Subsidiaries and, subject to the provisions of
this Agreement and the other Loan Documents, for other general corporate
purposes of the Borrower and its Subsidiaries.
SECTION 2.13. EVIDENCE OF DEBT.
----------------
(A) MAINTENANCE OF ACCOUNTS BY LENDERS. Each Lender shall maintain in
----------------------------------
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to such Lender resulting from each Advance owing to
such Lender from time to time, including the amounts of principal and interest
payable and paid to such Lender from time to time hereunder.
(B) MAINTENANCE OF ACCOUNTS BY AGENT. The Register maintained by the
--------------------------------
Administrative Agent pursuant to Section 9.07(c) shall include a control
account, and a subsidiary account for each Lender Party, in which accounts
(taken together) shall be recorded (i) the date and amount of each Borrowing
made hereunder, the Interest Type of the Advances comprising such Borrowing and
any Interest Period applicable thereto, (ii) the terms of each Assignment and
Acceptance delivered to and accepted by it, (iii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender Party hereunder, and (iv) the amount of any sum received by the
Administrative Agent from the Borrower hereunder and each Lender Party's share
thereof. The entries made in the Register shall be conclusive and binding for
all purposes, absent manifest error.
ARTICLE III.
AMOUNTS AND TERMS OF LETTERS OF CREDIT
SECTION 3.01. THE LETTER OF CREDIT SUBFACILITY. The Borrower may
--------------------------------
request any Lender, on the terms and conditions hereinafter set forth, to Issue,
and any such Lender may, if in its sole discretion it elects to do so, and the
L/C Bank shall, if no other Lender elects to do so,
39
<PAGE>
Issue Letters of Credit for the account of the Borrower from time to time on any
Business Day during the period after the Closing Date until the Commitment
Termination Date (a) in an aggregate Available Amount for all Letters of Credit
(including the Existing Letters of Credit) not to exceed at any time Ten Million
Dollars ($10,000,000) (the "LETTER OF CREDIT SUBFACILITY"), and (b) in an
----------------------------
Available Amount for each such Letter of Credit not to exceed the Unused
Revolving Commitments of the Lenders on such Business Day. The L/C Bank and the
Issuing Banks shall not be obligated to issue a Letter of Credit if such
Issuance would cause the sum of the Revolving Advances, the Swing Line Reserve
Amount and the Letter of Credit Obligations then outstanding to exceed the
Borrowing Base Amount. No Letter of Credit shall (i) have a face amount of less
than $20,000, or (ii) have an expiration date (including all rights of the
Borrower or the beneficiary to require renewal) later than the earlier of 60
days before the Commitment Termination Date, one year after the date of issuance
thereof and, in the case of a Trade Letter of Credit, 60 days after the date of
issuance thereof. As of the Closing Date, each Existing Letter of Credit shall
constitute, for all purposes of this Agreement and the other Loan Documents, a
Letter of Credit issued and outstanding hereunder and shall, for purposes of
Section 3.05, be deemed to be Issued hereunder on the Closing Date. Within the
limits of the Letter of Credit Subfacility, and subject to the limits referred
to above, the Borrower may request the Issuance of one or more Letters of Credit
under this Section 3.01, repay amounts due resulting from L/C Advances
thereunder pursuant to Section 3.03, and request the Issuance of one or more
additional Letters of Credit under this Section 3.01.
SECTION 3.02. ISSUANCE OF LETTERS OF CREDIT.
-----------------------------
(A) NOTICE OF ISSUANCE. Each Letter of Credit shall be Issued
------------------
pursuant to a Notice of Issuance, which must be received by the Administrative
Agent and the Issuing Bank not later than 9:00 a.m. (Los Angeles, California
time) on the third Business Day prior to the date of the proposed Issuance of
such Letter of Credit (or such shorter period as may be acceptable to the
applicable Issuing Bank). Each such Notice of Issuance shall specify the
requested (i) date of such Issuance (which shall be a Business Day), (ii)
Available Amount of such Letter of Credit, (iii) expiration date of such Letter
of Credit, (iv) name and address of the beneficiary of such Letter of Credit,
and (v) form of such Letter of Credit, and shall be accompanied by such
customary application and agreement for letter of credit of the Issuing Bank (a
"LETTER OF CREDIT AGREEMENT") as the Issuing Bank may specify to the Borrower
--------------------------
for use in connection with such requested Letter of Credit.
(B) CONDITIONS TO ISSUANCE. If (i) the requested form of such Letter
----------------------
of Credit is acceptable to the Administrative Agent and the Issuing Bank in the
reasonable discretion of each, (ii) in the case of any Issuing Bank other than
the L/C Bank, such Issuing Bank elects in its sole discretion to Issue the
requested Letter of Credit, and (iii) such Issuing Bank has not received notice
from the Administrative Agent or the Required Lenders that the Issuance of such
Letter of Credit is not authorized because such Issuance would not comply with
the requirements of clause (a) or (b) of Section 3.01 or one or more of the
conditions set forth in Section 4.02 has not been satisfied, then such Issuing
Bank will, upon fulfillment of the applicable conditions set forth in Section
4.02 (which fulfillment such Issuing Bank may assume in the absence of actual
knowledge, or notice received from the Borrower, the Administrative Agent or the
Required
40
<PAGE>
Lenders, to the contrary) and subject to the provisions of this Article III,
make such Letter of Credit available to the Borrower at its office referred to
in Section 9.02 or as otherwise agreed upon with the Borrower in connection with
such Issuance. In the event and to the extent that the provisions of any Letter
of Credit Agreement shall conflict with this Agreement, the provisions of this
Agreement shall govern.
(C) REPORTS BY ISSUING BANKS. Each Issuing Bank shall furnish to the
------------------------
Administrative Agent (i) prior to the issuance of any Letter of Credit, notice
of the Issuance, amount and expiration date thereof, (ii) concurrently with the
making of any L/C Advance, notice of the amount thereof, (iii) prior to the
fifth Business Day of each month a written report summarizing Issuance and
expiration dates of Letters of Credit Issued by such Issuing Bank during the
preceding month and L/C Advances during such month under all Letters of Credit
Issued by such Issuing Bank, and (iv) two Business Days prior to the last
Business Day of each March, June, September and December, a written report
setting forth the average daily aggregate Available Amount during the preceding
calendar quarter of all Letters of Credit Issued by such Issuing Bank.
SECTION 3.03. DRAWING AND REIMBURSEMENT. The Borrower agrees to
-------------------------
reimburse the Issuing Bank under each Letter of Credit, within one Business Day
after it has notice of any L/C Advance by such Issuing Bank thereunder, for the
principal amount of such L/C Advance, and shall pay to such Issuing Bank, on
demand, interest on the unreimbursed principal of such L/C Advance at a rate per
annum equal to (a) from the date of such L/C Advance to the first Business Day
after notice thereof has been given to the Borrower, the rate applicable to Base
Rate Advances in effect from time to time, and (b) from and after such first
Business Day, the Default Rate. If the Borrower shall fail to so reimburse the
Issuing Bank within one Business Day after the Borrower receives notice that any
such L/C Advance has been made, then upon demand by the Issuing Bank, and
whether or not a Default has occurred and is continuing or any conditions set
forth in Section 4.02 are satisfied, each Lender shall purchase from such
Issuing Bank, and such Issuing Bank shall sell and assign to each Lender, such
Lender's Pro Rata Share of such outstanding L/C Advance as of the date of such
purchase, by making available for the account of such Issuing Bank, by deposit
to the Administrative Agent's Account, in same day funds, an amount equal to the
portion of the outstanding principal amount of such L/C Advance to be purchased
by such Lender. Each Lender agrees to purchase its Pro Rata Share of an
outstanding L/C Advance on (A) the Business Day on which demand therefor is made
by the Issuing Bank which made such L/C Advance, provided notice of such demand
is given not later than 12:00 noon (Los Angeles, California time) on such
Business Day, or (B) the first Business Day next succeeding such demand if
notice of such demand is given after such time. Upon any such assignment by an
Issuing Bank to any Lender of a portion of an L/C Advance, such Issuing Bank
represents and warrants to such Lender that such Issuing Bank is the legal and
beneficial owner of such interest being assigned by it, but makes no other
representation or warranty and assumes no responsibility with respect to such
L/C Advance, the Loan Documents or any Loan Party.
SECTION 3.04. OBLIGATIONS ABSOLUTE. The Obligations of the Borrower
--------------------
under this Agreement, any Letter of Credit Agreement and any other agreement or
instrument relating
41
<PAGE>
to any Letter of Credit shall be unconditional and irrevocable, and shall be
paid strictly in accordance with the terms of this Agreement, such Letter of
Credit Agreement and such other agreement or instrument under all circumstances,
including, without limitation, the following circumstances (it being understood
that any such payment by the Borrower is without prejudice to, and does not
constitute a waiver of, any rights the Borrower might have or might acquire as a
result of the payment by any Issuing Bank of any draft or the reimbursement by
the Borrower thereof):
(a) any lack of validity or enforceability of this Agreement, any
Letter of Credit Agreement, any Letter of Credit or any other agreement or
instrument relating thereto (this Agreement and all of the other foregoing
being collectively referred to herein as the "L/C RELATED DOCUMENTS");
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations of the Borrower in respect of
any L/C Related Document or any other amendment or waiver of or any consent
to departure from all or any of the L/C Related Documents;
(c) the existence of any claim, set-off, defense or other right that
the Borrower or any of its Subsidiaries may have at any time against any
beneficiary or any transferee of a Letter of Credit (or any Persons for
whom any such beneficiary or any such transferee may be acting), any
Issuing Bank or any other Person, whether in connection with the
transactions contemplated by the L/C Related Documents or any unrelated
transaction;
(d) any statement or any other document presented under a 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;
(e) payment by any Issuing Bank under a Letter of Credit against
presentation of a draft or certificate that does not strictly comply with
the terms of such Letter of Credit, or payment by the Issuing Bank under a
Letter of Credit in any other circumstances in which conditions to payment
are not met;
(f) any exchange, release or non-perfection of any Collateral or other
collateral, or any release or amendment or waiver of or consent to
departure from any guarantee, for all or any of the Obligations of the
Borrower in respect of the L/C Related Documents; or
(g) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including, without limitation, any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, the Borrower or a Guarantor.
SECTION 3.05. LETTER OF CREDIT COMPENSATION.
-----------------------------
42
<PAGE>
(a) The Borrower shall pay to the Administrative Agent:
(i) for the account of the Issuing Bank which Issues a Letter of
Credit, an issuance fee in an amount equal to 0.25% per annum of the
average daily Available Amount of such Letter of Credit outstanding from
time to time: and
(ii) for the account of each Lender, a letter of credit fee with
respect to each Letter of Credit, in each case in an amount equal to
(A) with respect to each Standby Letter of Credit, a rate
per annum equal to the Applicable Margin for Eurodollar Rate Advances
in effect from time to time on such Lender's Pro Rata Share of the
average daily Available Amount of such Letter of Credit outstanding
from time to time;
(B) with respect to each Trade Letter of Credit, 0.25% of
the amount of such Lender's Pro Rata Share of the Available Amount of
such Letter of Credit as of the date of Issuance thereof.
The letter of credit and issuance fees payable under this Section 3.05(a) shall
be payable quarterly in arrears on the last Business Day of each March, June,
September and December, commencing December 31, 1998, and on the Commitment
Termination Date except that the letter of credit fee payable under Section
3.05(a)(ii)(B) shall be payable upon issuance of the applicable Letter of
Credit. For purposes of computing any fees under this Section 3.05(a), the
determination of the maximum amount available to be drawn under a Letter of
Credit at any time shall assume strict compliance with all conditions for
drawing. Any fees paid pursuant to this Section 3.05(a) are nonrefundable.
(b) The Borrower shall pay to each Issuing Bank, for its own account
and on demand, such other commissions, issuance fees, transfer fees and
other fees, charges and expenses in connection with the Issuance,
amendment, transfer, cancellation or administration of each Letter of
Credit as the Borrower and such Issuing Bank shall agree; provided that in
no event shall any Issuing Bank require, after giving effect to the amounts
payable to it pursuant to Section 3.05(a) above (in the case of the
Issuance of any Letter of Credit), more than the standard fees, charges and
expenses which it normally charges in connection with such matters.
SECTION 3.06. USE OF LETTERS OF CREDIT. Any Letters of Credit Issued
------------------------
hereunder shall be used solely to support Obligations of the Borrower and its
Subsidiaries not prohibited hereunder.
ARTICLE IV.
CONDITIONS OF LENDING
SECTION 4.01. CONDITIONS PRECEDENT TO INITIAL BORROWING. The
-----------------------------------------
obligation of each Lender Party to make an Advance on the occasion of the
initial Borrowing is subject to the following conditions precedent:
43
<PAGE>
(a) The Lender Parties shall be satisfied with the corporate and legal
structure and capitalization of each Loan Party and each of its
Subsidiaries, including the terms and conditions of the charter, bylaws and
each class of capital stock of each Loan Party and each such Subsidiary and
of each agreement or instrument relating to such structure or
capitalization.
(b) The Lender Parties shall (i) be satisfied that the Existing Credit
Agreement, the Existing Bridge Loan and all other Existing Debt, other than
the Debt identified on Schedule 4.01(b) (the "SURVIVING DEBT"), has been
--------------
prepaid, redeemed or defeased in full or otherwise satisfied and
extinguished (ii) shall have received satisfactory evidence (including,
without limitation, a duly executed payoff letter, UCC termination
statements and real property reconveyances) that any liens and security
interests granted pursuant to, or in connection with, the Existing Credit
Agreement shall be terminated or released contemporaneously with the
initial Borrowing.
(c) There shall have occurred no Material Adverse Change since January
4, 1998.
(d) There shall exist no action, suit, investigation, litigation or
proceeding affecting any Loan Party or any of their Subsidiaries pending or
threatened before any court, governmental agency or arbitrator that (i)
could have a Material Adverse Effect or (ii) purports to affect the
legality, validity or enforceability of this Agreement, any Note, any other
Loan Document, or the consummation of the transactions contemplated hereby.
(e) The Borrower shall have paid all accrued fees and expenses of the
Agents and the Lender Parties (including the accrued fees and expenses of
counsel to the Agents).
(f) The Borrower shall have entered into the Casino Loan Agreement and
the Casino Note on terms and conditions satisfactory to the Agents and the
Required Lenders.
(g) The Borrower shall have entered into the Synthetic Leases with
respect to the Properties (as defined in the Participation Agreement), and
shall have terminated and satisfied all obligations with respect to any
existing synthetic leases, in each case on terms and conditions
satisfactory to the Agents and the Lenders.
(h) The Consolidated EBITDA of the Borrower and its Subsidiaries for
the third quarterly period of fiscal year 1998 shall be not less than
Twenty Two Million Five Hundred Thousand Dollars ($22,500,000).
(i) The Agents and the Lenders shall have received (i) the
Consolidated financial statements of the Borrower and its Subsidiaries for
the fiscal years ended December 29, 1996 and January 4, 1998, including
balance sheets and income and cash flow statements audited by independent
public accountants of recognized national
44
<PAGE>
standing and prepared in conformity with GAAP and (ii) the most recent
interim quarterly financial statements.
(j) The Agents shall have received on or before the day of the
initial Borrowing the following, each dated such day (unless otherwise
specified), in form and substance satisfactory to the Agents (unless
otherwise specified) and (except for the Notes) in sufficient copies for
each Lender Party:
(i) Fully executed counterparts of this Agreement.
(ii) The Notes to the order of each Lender, as appropriate.
(iii) Certified copies of the resolutions of the Board of
Directors of the Borrower and each other Loan Party approving this
Agreement, the Notes, and each other Loan Document to which it is or is to
be a party, and of all documents evidencing other necessary corporate
action and governmental approvals, if any, with respect to the Agreement,
the Notes, and each other Loan Document.
(iv) With respect to each Loan Party, a copy of a certificate of
the Secretary of State of the State of such Loan Party's organization,
dated reasonably near the date of the initial Borrowing, listing the
charter of such Loan Party and each amendment thereto on file in such
office and certifying that (A) such amendments are the only amendments to
such Loan Party's charter on file in such office, (B) such Loan Party has
paid all franchise taxes to the date of such certificate and (C) such Loan
Party is duly incorporated and in good standing under the laws of the State
of such Loan Party's organization.
(v) With respect to each Loan Party, a copy of a certificate of
the Secretary of State of each jurisdiction listed with respect to such
Loan Party on Schedule 4.01(j)(v), dated reasonably near the date of the
initial Borrowing, stating that such Loan Party is duly qualified and in
good standing as a foreign corporation in such State and have filed all
annual reports required to be filed to the date of such certificate.
(vi) A certificate of each Loan Party, signed on behalf of such
Loan Party by its President or a Vice President and its Secretary or any
Assistant Secretary, dated the date of the initial Borrowing (the
statements made in which certificate shall be true on and as of the date of
the initial Borrowing), certifying as to (A) the absence of any amendments
to the charter of such Loan Party since the date of the Secretary of
State's certificate referred to in Section 4.01(j)(iv), (B) a true and
correct copy of the bylaws of such Loan Party as in effect on the date of
the initial Borrowing, (C) the due incorporation and good standing of such
Loan Party as a corporation organized under the laws of the State of its
jurisdiction of incorporation, and the absence of any proceeding for the
dissolution or liquidation of such Loan Party, (D) the truth of the
representations and warranties contained in the Loan Documents as though
made on and as of the date of the initial Borrowing and (E) the absence of
any event occurring and continuing, or resulting from the initial
Borrowing, that constitutes a Default.
45
<PAGE>
(vii) A certificate of the Secretary or an Assistant Secretary
of each Loan Party certifying the names and true signatures of the officers
of such Loan Party authorized to sign this Agreement, the Notes, and each
other Loan Document to which they are or are to be parties and the other
documents to be delivered hereunder and thereunder.
(viii) A security agreement in substantially the form of Exhibit
E (as amended from time to time in accordance with its terms, the "SECURITY
--------
AGREEMENT"), duly executed by the Borrower and each other Loan Party,
---------
together with:
(A) certificates representing the Pledged Shares referred
to therein accompanied by undated stock powers executed in blank and
instruments evidencing the Pledged Debt referred to therein endorsed
in blank,
(B) duly executed financing statements in appropriate
form for filing under the Uniform Commercial Code in all jurisdictions
that the Agents or the Required Lenders may deem necessary or
desirable in order to perfect and protect the Liens created by the
Security Agreement, covering the Collateral described in the Security
Agreement,
(C) evidence of the insurance required by the terms of
the Security Agreement (subject to such exceptions as may be
acceptable to the Administrative Agent,
(D) evidence that all other action that the Agents or the
Required Lenders may deem necessary or desirable in order to perfect
and protect the Liens created by the Security Agreement has been
taken.
(ix) Deeds of trust, trust deeds and mortgages in substantially
the form of Exhibit F and covering the properties listed on Schedule
4.01(j)(ix) (as amended from time to time in accordance with their terms,
the "MORTGAGES"), duly executed by the Borrower in appropriate form for
---------
filing in all filing or recording offices that the Agents or the Required
Lenders may deem necessary or desirable in order to create a valid and
subsisting lien subject only to Permitted Liens on the property described
therein in favor of the Administrative Agent for the benefit of the Lender
Parties, together with:
(A) a commitment or commitments from First American Title
Insurance Company to issue American Land Title Association Lender's
Extended Coverage title insurance policies (the "MORTGAGE POLICIES")
-----------------
in form and substance, with endorsements and in amount acceptable to
the Agents, insuring the Mortgages to be valid first and subsisting
Liens on the property described therein, free and clear of all defects
(including, but not limited to, mechanics' and materialmen's Liens)
and encumbrances, excepting only Permitted Encumbrances, and providing
for such other affirmative insurance (including endorsements for
future advances under the Loan Documents and for mechanics' and
materialmen's Liens) as the Agents may deem necessary or desirable,
46
<PAGE>
(B) to the extent required by the Agents, an appraisal of
each of the properties described in the Mortgages complying with the
requirements of the Federal Financial Institutions Reform, Recovery
and Enforcement Act of 1989,
(C) such consents and agreements of lessors and other
third parties, and such estoppel letters and other confirmations, as
the Agents may deem necessary or desirable,
(D) evidence that all other action that the Agents or the
Required Lenders may deem necessary or desirable in order to create
valid first and subsisting Liens on the property described in the
Mortgages has been taken.
(x) A guaranty in substantially the form of Exhibit G (as
amended from time to time in accordance with its terms, the "GUARANTY"),
--------
duly executed by each of the Borrower's direct and indirect Subsidiaries
(other than any Foreign Subsidiary).
(xi) Such financial, business and other information regarding
each Loan Party and their Subsidiaries as the Lender Parties shall have
requested, including, without limitation, information as to possible
contingent liabilities, tax matters, environmental matters, obligations
under ERISA and Welfare Plans, collective bargaining agreements and other
arrangements with employees, interim financial statements dated the end of
the most recent fiscal quarter for which financial statements are available
(or, in the event the Lender Parties' due diligence review reveals material
changes since such financial statements, as of a later date within 45 days
of the day of the initial Borrowing), pro forma financial statements as to
the Borrower and forecasts prepared by management of the Borrower, in form
and substance satisfactory to the Lender Parties, of balance sheets, income
statements and cash flow statements on a monthly basis for the first year
following the day of the initial Borrowing and on an annual basis for each
year thereafter until the Commitment Termination Date.
(xii) A certificate, in the form of Exhibit I hereto, attesting
to the Solvency of each Loan Party after giving effect to the other
transactions contemplated hereby, from its chief financial officer.
(xiii) Evidence of insurance naming the Administrative Agent as
insured and loss payee with such responsible and reputable insurance
companies or associations, and in such amounts and covering such risks, as
is satisfactory to the Lender Parties.
(xiv) Favorable opinions of (i) Crosby, Heafey, Roach & May,
special counsel for the Borrower and the other Loan Parties, in
substantially the form of Exhibit J-1 hereto and (ii) Donald G. Alvarado,
general counsel of the Borrower, in substantially the form of Exhibit J-2
hereto and, in each case, as to such other matters as any Lender Party
through the Agents may reasonably request.
47
<PAGE>
(xv) Intercompany Notes in substantially the form of Exhibit H
(as amended from time to time, the "INTERCOMPANY NOTE", duly executed by
-----------------
each of the Borrower's Domestic Subsidiaries in favor of the Borrower).
SECTION 4.02. CONDITIONS PRECEDENT TO EACH BORROWING AND ISSUANCE.
---------------------------------------------------
The obligation of each Lender to make an Advance (other than an L/C Advance and
other than a Revolving Advance made by a Lender pursuant to Section 2.02(f)) on
the occasion of each Borrowing (including the initial Borrowing), and the right
of the Borrower to request a Swing Line Borrowing or the issuance of Letters of
Credit, shall be subject to the further conditions precedent that on the date of
such Borrowing or issuance (a) the following statements shall be true (and each
of the giving of the applicable Notice of Borrowing, Notice of Swing Line
Borrowing or Notice of Issuance and the acceptance by the Borrower of the
proceeds of such Borrowing or of such Letter of Credit shall constitute a
representation and warranty by the Borrower that on the date of such Borrowing
or issuance such statements are true):
(i) the representations and warranties contained in each Loan
Document are correct on and as of the date of such Borrowing or issuance,
before and after giving effect to such Borrowing or issuance and to the
application of the proceeds therefrom, as though made on and as of such
date other than any such representations or warranties that, by their
terms, are specifically made as of a date other than the date of such
Borrowing or issuance;
(ii) no Event of Default or event which, with the giving of
notice or passage of time or both, would be an Event of Default, has
occurred and is continuing, or would result from such Borrowing; and
(iii) for each Revolving Advance or issuance of any Letter of
Credit, the sum of the Borrowing Base Amounts exceeds the aggregate
principal amount of the Revolving Advances plus the Swing Line Reserve
Amount plus the aggregate Letter of Credit Obligations then outstanding
after giving effect to such Advance or issuance, respectively and the
Borrower shall have delivered a Borrowing Base Certificate evidencing the
same;
and (b) the Agents shall have received such other approvals, opinions or
documents as any Lender or such Issuing Bank through the Agents may reasonably
request.
SECTION 4.03. DETERMINATIONS UNDER SECTION 4.01. For purposes of
---------------------------------
determining compliance with the conditions specified in Section 4.01, each
Lender Party shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or satisfactory to the Lender Parties unless an
officer of the Administrative Agent responsible for the transactions
contemplated by the Loan Documents shall have received notice from such Lender
Party prior to the initial Borrowing specifying its objection thereto and such
Lender Party shall not have made available to the Administrative Agent such
Lender Party's ratable portion of such Borrowing.
48
<PAGE>
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
SECTION 5.01. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The
----------------------------------------------
Borrower represents ans warrants as follows:
(A) INCORPORATION, QUALIFICATION, CORPORATE POWER AND AUTHORITY. Each
-----------------------------------------------------------
Loan Party (i) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, (ii) is duly
qualified and in good standing as a foreign corporation in each other
jurisdiction in which it owns or leases property or in which the conduct of its
business requires it to so qualify or be licensed except where the failure to so
qualify or be licensed would not have a Material Adverse Effect and (iii) has
all requisite corporate power and authority to own or lease and operate its
properties and to carry on its business as now conducted and as proposed to be
conducted.
(B) CAPITAL STOCK. Set forth on Schedule 5.01(b) hereto is a
-------------
complete and accurate list, as of the date hereof, of all Subsidiaries of each
Loan Party, showing as of the date hereof (as to each such Subsidiary), the
jurisdiction of its incorporation, the number of shares of each class of capital
stock authorized and outstanding, the percentage of the outstanding shares of
each such class owned (directly or indirectly) by such Loan Party and the number
of shares covered by all outstanding options, warrants, rights of conversion or
purchase and similar rights. All of the outstanding capital stock of all of such
Subsidiaries has been validly issued, is fully paid and non-assessable and is
owned by such Loan Party or one or more of its Subsidiaries free and clear of
all Liens, except those created by the Collateral Documents. Each such
Subsidiary (i) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, (ii) is duly
qualified and in good standing as a foreign corporation in each other
jurisdiction in which it owns or leases property or in which the conduct of its
business requires it to so qualify or be licensed except where the failure to so
qualify or be licensed would not have a Material Adverse Effect and (iii) has
all requisite corporate power and authority to own or lease and operate its
properties and to carry on its business as now conducted and as proposed to be
conducted.
(C) AUTHORIZATION; NO CONFLICT OR VIOLATION; COMPLIANCE WITH LAWS. The
-------------------------------------------------------------
execution, delivery and performance by each Loan Party of this Agreement, the
Notes, and each other Loan Document to which it is or is to be a party, and the
consummation of the other transactions contemplated hereby and thereby, are
within such Loan Party's corporate powers, have been duly authorized by all
necessary corporate action, and do not (i) contravene such Loan Party's charter
or by-laws, (ii) violate any law, rule, regulation (including, without
limitation, Regulation X of the Board of Governors of the Federal Reserve
System), order, writ, judgment, injunction, decree, determination or award,
(iii) conflict with or result in the breach of, or constitute a default under,
any contract, loan agreement, indenture, mortgage, deed of trust, lease or other
instrument binding on or affecting any Loan Party, any of its Subsidiaries or
any of their properties or (iv) except for the Liens created by the Collateral
Documents, result in or require the creation or imposition of any Lien upon or
with respect to any of the properties of any Loan Party or any of its
Subsidiaries. No Loan Party or any of its Subsidiaries is in violation of any
49
<PAGE>
such law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award or in breach of any such contract, loan agreement,
indenture, mortgage, deed of trust, lease or other instrument, the violation or
breach of which could have a Material Adverse Effect.
(D) APPROVALS AND CONSENTS. No authorization or approval or other
----------------------
action by, and no notice to or filing with, any governmental authority or
regulatory body or any other third party is required for (i) the due execution,
delivery, recordation, filing or performance by any Loan Party of this
Agreement, the Notes, or any other Loan Document to which it is or is to be a
party, or for the consummation of the other transactions contemplated hereby and
thereby, (ii) the grant by any Loan Party of the Liens granted by it pursuant to
the Collateral Documents, (iii) the perfection or maintenance of the Liens
created by the Collateral Documents (including the first priority nature
thereof) or (iv) the exercise by the Administrative Agent or any Lender of its
rights under the Loan Documents or the remedies in respect of the Collateral
pursuant to the Collateral Documents, approvals, actions, all of which have been
duly obtained, taken, given or made and are in full force and effect.
(E) ENFORCEABILITY. This Agreement has been, and each of the Notes,
--------------
and each other Loan Document when delivered hereunder will have been, duly
executed and delivered by each Loan Party thereto. This Agreement is, and each
of the Notes, and each other Loan Document when delivered hereunder will be, the
legal, valid and binding obligation of each Loan Party thereto, enforceable
against such Loan Party in accordance with its terms.
(F) FINANCIAL STATEMENTS.
--------------------
(i) The Consolidated balance sheets of the Borrower and its
Subsidiaries as at January 4, 1998, and the related Consolidated statements
of income and cash flows of the Borrower and its Subsidiaries for the
fiscal year then ended, accompanied by an opinion of Arthur Andersen LLP,
independent public accountants, and the Consolidated balance sheets of the
Borrower and its Subsidiaries as at October 11, 1998, and the related
Consolidated statements of income and cash flows of the Borrower and its
Subsidiaries for the three quarters then ended, duly certified by the chief
financial officer of the Borrower, copies of which have been furnished to
each Lender, fairly present, subject, in the case of said balance sheets as
at October 11, 1998, and said statements of income and cash flows for the
nine months then ended, to year-end audit adjustments, the Consolidated
financial condition of the Borrower and its Subsidiaries as at such dates
and the Consolidated results of the operations of the Borrower and its
Subsidiaries for the periods ended on such dates, all in accordance with
GAAP applied on a consistent basis, and since January 4, 1998, there has
been no Material Adverse Change.
(ii) The Consolidated forecasted balance sheets, income
statements and cash flows statements of the Borrower and its Subsidiaries
delivered to the Lenders pursuant to Section 4.01(i), 6.03(c) or 6.03(d)
were prepared in good faith on the basis of the assumptions stated therein,
which assumptions were fair in the light of conditions
50
<PAGE>
existing at the time of delivery of such forecasts, and represented, at the
time of delivery, the Borrower's best estimate of its future financial
performance.
(G) DISCLOSURE. Neither the Offering Memorandum nor any other
----------
information, exhibit or report furnished by any Loan Party to the Administrative
Agent or any Lender Party in connection with the negotiation of the Loan
Documents or pursuant to the terms of the Loan Documents contained any untrue
statement of a material fact or omitted to state a material fact necessary to
make the statements made therein not misleading.
(H) LITIGATION. There is no action, suit, investigation, litigation
----------
or proceeding affecting any Loan Party or any of their Subsidiaries, including
any Environmental Action, pending or threatened before any court, governmental
agency or arbitrator that (i) could reasonably be expected to have a Material
Adverse Effect (other than the Disclosed Litigation) (ii) purports to affect the
legality, validity or enforceability of this Agreement, any Note, or any other
Loan Document or the consummation of the transactions contemplated hereby or
thereby, and there has been no adverse change in the status, or financial effect
on any Loan Party or any of their Subsidiaries, of the Disclosed Litigation from
that described on Schedule 5.01(h).
(I) USE OF PROCEEDS.
---------------
(i) No proceeds of any Advance will be used to acquire any
equity security of a class that is registered pursuant to Section 12 of the
Securities Exchange Act of 1934.
(ii) The Borrower is not engaged in the business of extending
credit for the purpose of purchasing or carrying Margin Stock, and no
proceeds of any Advance will be used to purchase or carry any Margin Stock
or to extend credit to others for the purpose of purchasing or carrying any
Margin Stock.
(iii) Following application of the proceeds of each Advance, not
more than 25 percent of the value of the assets (either of the Borrower
only or of the Borrower and its Subsidiaries on a Consolidated basis)
subject to the provisions of Section 6.02(a) or 6.02(e) or subject to any
restriction contained in any agreement or instrument between the Borrower
and any Lender Party or any Affiliate of any Lender Party relating to Debt
and within the scope of Section 6.01(e) will be Margin Stock.
(J) PENSION PLANS.
-------------
(i) Set forth on Schedule 5.01(j) hereto is a complete and
accurate list of all Plans, Multiemployer Plans and Welfare Plans with
respect to any employees of any Loan Party, or any of their Subsidiaries.
(ii) No ERISA Event has occurred or is reasonably expected to
occur with respect to any Plan of any Loan Party or any of its ERISA
Affiliates that has resulted in or could reasonably be expected to result
in a material liability of any Loan Party or any of its ERISA Affiliates.
51
<PAGE>
(iii) Schedule B (Actuarial Information) to the 1997 annual
report (Form 5500 Series) for each Plan of any Loan Party or any of its
ERISA Affiliates, copies of which have been filed with the Internal Revenue
Service and furnished to the Lender Parties, is complete and accurate and
fairly presents the funding status of such Plan, and since the date of such
Schedule B there has been no material adverse change in such funding
status.
(iv) Neither any Loan Party nor any of its ERISA Affiliates has
incurred or is reasonably expected to incur any Withdrawal Liability to any
Multiemployer Plan.
(v) Neither any Loan Party nor any of its ERISA Affiliates has
been notified by the sponsor of a Multiemployer Plan of any Loan Party or
any of its ERISA Affiliates that such Multiemployer Plan is in
reorganization or has been terminated, within the meaning of Title IV of
ERISA, and no such Multiemployer Plan is reasonably expected to be in
reorganization or to be terminated, within the meaning of Title IV of
ERISA.
(vi) The aggregate annualized cost (including, without
limitation, the cost of insurance premiums) with respect to post-retirement
benefits under Welfare Plans for which the Loan Parties and their
Subsidiaries are liable does not exceed $100,000.
(K) NO ADVERSE CONDITIONS. Neither the business nor the properties
---------------------
of any Loan Party or any of its Subsidiaries are affected by any fire,
explosion, accident, strike, lockout or other labor dispute, drought, storm,
hail, earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance) that could have a Material Adverse Effect
and there has been no Material Adverse Change affecting the value of the
collateral or the ability of the Borrower or any other Loan Party to perform its
obligations under the Loan Documents.
(L) COMPLIANCE WITH ENVIRONMENTAL LAWS.
----------------------------------
(i) The operations and properties of each Loan Party and each of
its Subsidiaries comply in all material respects with all Environmental
Laws, all necessary Environmental Permits have been obtained and are in
effect for the operations and properties of each Loan Party and its
Subsidiaries, each Loan Party and its Subsidiaries are in compliance in all
material respects with all such Environmental Permits, and no circumstances
exist that could (i) form the basis of an Environmental Action against any
Loan Party or any of its Subsidiaries or any of their properties that could
have a Material Adverse Effect or (ii) cause any such property to be
subject to any restrictions on ownership, occupancy, use or transferability
under any Environmental Law.
(ii) None of the properties of any Loan Party or any of its
Subsidiaries is listed or proposed for listing on the National Priorities
List under CERCLA or on the Comprehensive Environmental Response,
Compensation and Liability Information System maintained by the
Environmental Protection Agency or any analogous state list of
52
<PAGE>
sites requiring investigation or cleanup or is adjacent to any such
property, and no underground storage tanks, as such term is defined in 42
U.S.C. (S) 6991, are located on any property of any Loan Party or any of
its Subsidiaries or, to the best of its knowledge, on any adjoining
property.
(iii) Neither any Loan Party nor any of its Subsidiaries has
transported or arranged for the transportation of any Hazardous Materials
to any location that is listed or proposed for listing on the National
Priorities List under CERCLA or on the Comprehensive Environmental
Response, Compensation and Liability Information System maintained by the
Environmental Protection Agency or any analogous state list, Hazardous
Materials have not been generated, used, treated, handled, stored or
disposed of on, or released or transported to or from, any property of any
Loan Party or any of its Subsidiaries or, to the best of its knowledge, any
adjoining property, except in compliance with all Environmental Laws and
Environmental Permits, and all other wastes generated at any such
properties have been disposed of in compliance with all Environmental Laws
and Environmental Permits.
(M) NO BURDENSOME AGREEMENTS. Neither any Loan Party nor any of its
------------------------
Subsidiaries is a party to any indenture, loan or credit agreement or any lease
or other agreement or instrument or subject to any charter or corporate
restriction that could have a Material Adverse Effect.
(N) TAX INFORMATION.
---------------
(i) Each Loan Party and each of its Subsidiaries has filed,
has caused to be filed or has been included in all tax returns (Federal,
state, local and foreign) required to be filed and has paid all taxes shown
thereon to be due, together with applicable interest and penalties.
(ii) Set forth on Schedule 5.01(n) hereto is a complete and
accurate list, as of the date hereof, of each taxable year of the Borrower
for which Federal income tax returns have been filed and for which the
expiration of the applicable statute of limitations for assessment or
collection has not occurred by reason of extension or otherwise (an "OPEN
----
YEAR").
----
(iii) The aggregate unpaid amount, as of the date hereof, of
adjustments to the Federal income tax liability of the Borrower proposed by
the Internal Revenue Service with respect to Open Years does not exceed
$5,000,000. No issues have been raised by the Internal Revenue Service in
respect of Open Years that, in the aggregate, could have a Material Adverse
Effect.
(iv) The aggregate unpaid amount, as of the date hereof, of
adjustments to the state, local and foreign tax liability of the Borrower
and its Subsidiaries proposed by all state, local and foreign taxing
authorities (other than amounts arising from adjustments to Federal income
tax returns) does not exceed $2,000,000. No issues have
53
<PAGE>
been raised by such taxing authorities that, in the aggregate, could have a
Material Adverse Effect.
(O) NO INVESTMENT COMPANY. Neither any Loan Party nor any of its
---------------------
Subsidiaries is an "investment company," or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company," as such
terms are defined in the Investment Company Act of 1940, as amended. Neither the
making of any Advances, nor the issuance of any Letters of Credit, nor the
application of the proceeds or repayment thereof by the Borrower, nor the
consummation of the other transactions contemplated hereby, will violate any
provision of such Act or any rule, regulation or order of the Securities and
Exchange Commission thereunder.
(P) SOLVENCY. Each Loan Party is, individually and together with its
--------
Subsidiaries, Solvent.
(Q) DEBT OF THE BORROWER AND ITS SUBSIDIARIES.
-----------------------------------------
(i) Set forth on Schedule 5.01(q)(i) hereto is a complete and
accurate list of all Existing Debt (other than Surviving Debt), showing as
of the date hereof the principal amount outstanding thereunder.
(ii) Set forth on Schedule 4.01(b) hereto is a complete and
accurate list of all Surviving Debt, showing as of the date hereof the
principal amount outstanding thereunder.
(iii) Set forth on Schedule 6.02(a) hereto is a complete and
accurate list of all Existing Liens, showing as of the date hereof the
principal amount outstanding thereunder.
(R) REAL PROPERTY.
-------------
(i) Set forth on Schedule 5.01(r)(i) hereto is a complete and
accurate list, as of the date hereof, of all real property owned by any
Loan Party or any of their Subsidiaries, showing as of the date hereof the
street address, county or other relevant jurisdiction, state, record owner
and book value thereof. Each Loan Party or such Subsidiary has good,
marketable and insurable fee simple title to such real property, free and
clear of all Liens, other than Liens created or permitted by the Loan
Documents.
(ii) Set forth on Schedule 5.01(r)(ii) hereto is a complete and
accurate list, as of the date hereof, of all leases of real property under
which any Loan Party or any of their Subsidiaries is the lessee, showing as
of the date hereof the street address, county or other relevant
jurisdiction, state, lessor and execution date thereof. Each such lease is
the legal, valid and binding obligation of the lessor thereof, enforceable
in accordance with its terms.
54
<PAGE>
(S) INVESTMENTS. Set forth on Schedule 5.01(s) hereto is a complete
-----------
and accurate list of all Investments held by any Loan Party or any of their
Subsidiaries, showing as of the date hereof the amount, obligor or issuer and
maturity, if any, thereof.
(T) INTELLECTUAL PROPERTY. Set forth on Schedule 5.01(t) hereto is a
---------------------
complete and accurate list of all patents, trademarks, trade names, service
marks and copyrights, and all applications therefor and licenses thereof, of
each Loan Party or any of their Subsidiaries, showing as of the date hereof the
jurisdiction in which registered, the registration number, the date of
registration and the expiration date.
(U) OTHER AGREEMENTS. Schedule 5.01(u) sets forth a complete and
----------------
accurate list as of the date hereof of (i) all joint venture and partnership
agreements to which the Borrower or any of its Subsidiaries is a party, and (ii)
all covenants not to compete restricting the Borrower or any of its Subsidiaries
to which the Borrower or any of its Subsidiaries is a part or by which the
Borrower or any of its Subsidiaries is bound.
(V) YEAR 2000 PREPAREDNESS. Borrower has reviewed its operations and
----------------------
those of its Subsidiaries with a view to assessing whether its businesses, or
the businesses of any of its Subsidiaries, will be vulnerable to a Year 2000
Problem (as defined below) and has a reasonable basis to believe that no Year
2000 Problem will exist on or after December 31, 1999. Borrower shall take all
actions necessary and commit adequate resources to assure that its computer-
based and other systems (and those of all Subsidiaries) are able to effectively
process data, including dates before, on or after January 1, 2000, without
experiencing any Year 2000 Problem that could cause a Material Adverse Effect.
At the request of Agent, Borrower will, at Borrower's expense, provide Agent
with assurances and substantiations (including, but not limited to, the results
of internal or external audit reports) reasonably acceptable to Agent as to the
capability of Borrower and its Subsidiaries to conduct its and their businesses
and operations before, on and after January 1, 2000 without experiencing a Year
2000 Problem. "YEAR 2000 PROBLEM" means any significant risk that computer
-----------------
hardware, software or equipment containing embedded microchips essential to the
business or operations of Borrower or any of its Subsidiaries will not, in the
case of dates or time periods occurring after December 31, 1999, function at
least as effectively and reliably as in the case of times or time periods
occurring before January 1, 2000, including the making of accurate leap year
calculations. The Borrower has no knowledge of the existence of a Year 2000
Problem with respect to any of its vendors or suppliers that could have a
Material Adverse Effect.
ARTICLE VI.
COVENANTS OF THE BORROWER
SECTION 6.01. AFFIRMATIVE COVENANTS. So long as any Advance shall
---------------------
remain unpaid, any Letter of Credit shall be outstanding or any Lender shall
have any Commitment hereunder, the Borrower will, unless the Required Lenders
shall otherwise consent in writing:
(A) COMPLIANCE WITH LAWS, ETC. Comply, and cause each of its
-------------------------
Subsidiaries to comply, in all material respects, with all applicable laws,
rules, regulations and orders, including, without limitation, compliance with
ERISA.
55
<PAGE>
(B) PAYMENT OF TAXES, ETC. Pay and discharge, and cause each of its
---------------------
Subsidiaries to pay and discharge, before the same shall become delinquent, (i)
all material taxes, assessments and governmental charges or levies imposed upon
it or upon its property and (ii) all material lawful claims that, if unpaid,
might by law become a Lien upon its property; provided, however, that neither
-------- -------
the Borrower nor any of its Subsidiaries shall be required to pay or discharge
any such tax, assessment, charge or claim that is being contested in good faith
and by proper proceedings and as to which appropriate reserves are being
maintained, unless and until any Lien resulting therefrom attaches to its
property and becomes enforceable against its other creditors.
(C) COMPLIANCE WITH ENVIRONMENTAL LAWS. Comply, and cause each of its
----------------------------------
Subsidiaries and all lessees and other Persons occupying its properties to
comply, in all material respects, with all Environmental Laws and Environmental
Permits applicable to its operations and properties; obtain and renew all
Environmental Permits necessary for its operations and properties; and conduct,
and cause each of its Subsidiaries to conduct, any investigation, study,
sampling and testing, and undertake any cleanup, removal, remedial or other
action necessary to remove and clean up all Hazardous Materials from any of its
properties, in accordance with the requirements of all Environmental Laws;
provided, however, that neither the Borrower nor any of its Subsidiaries shall
- -------- -------
be required to undertake any such cleanup, removal, remedial or other action to
the extent that its obligation to do so is being contested in good faith and by
proper proceedings and appropriate reserves are being maintained with respect to
such circumstances.
(D) MAINTENANCE OF INSURANCE. Maintain, and cause each of its
------------------------
Subsidiaries to maintain, insurance with responsible and reputable insurance
companies or associations in such amounts and covering such risks as is
commercially reasonable and prudent with respect to the business and properties
of the Borrower and its Subsidiaries. The Insurance maintained by the Borrower
and its Subsidiaries, as of the date hereof shall be deemed to satisfy the
requirements of this Section 6.01(d) as of the date hereof.
(E) PRESERVATION OF CORPORATE EXISTENCE, ETC. Preserve and maintain,
----------------------------------------
and cause each of its Subsidiaries to preserve and maintain, its corporate
existence, rights (charter and statutory) and franchises; provided, however,
-------- -------
that the Borrower and its Subsidiaries may consummate any other merger or
consolidation permitted under Section 6.02(c) and provided further, neither the
-------- -------
Borrower nor any of its Subsidiaries shall be required to preserve any right or
franchise if the Board of Directors of the Borrower or such Subsidiary shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Borrower or such Subsidiary, as the case may be, and that
the loss thereof is not disadvantageous in any material respect to the Borrower,
such Subsidiary or the Lender Parties.
(F) VISITATION RIGHTS. At any reasonable time and from time to time
-----------------
and upon reasonable notice, permit the Administrative Agent or any of the Lender
Parties or any agents or representatives thereof, to examine and make copies of
and abstracts from the records and books of account of, and visit the properties
of, the Borrower and any of its Subsidiaries, and to discuss the affairs,
finances and accounts of the Borrower and any of its Subsidiaries with any of
their officers or directors and with their independent certified public
accountants.
56
<PAGE>
(G) PREPARATION OF ENVIRONMENTAL REPORTS. At the request of the
------------------------------------
Administrative Agent from time to time, provide to the Lender Parties within 60
days after such request, at the expense of the Borrower, an environmental site
assessment report for all of its and its Subsidiaries' properties described in
such request, prepared by an environmental consulting firm acceptable to the
Administrative Agent, indicating the presence or absence of Hazardous Materials
and the estimated cost of any compliance, removal or remedial action in
connection with any Hazardous Materials on such properties; without limiting the
generality of the foregoing, if the Administrative Agent determines at any time
that a material risk exists that any such report will not be provided within the
time referred to above, the Administrative Agent may retain an environmental
consulting firm to prepare such report at the expense of the Borrower, and the
Borrower hereby grants and agrees to cause any Subsidiary which owns any
property described in such request to grant at the time of such request, to the
Administrative Agent, the Lender Parties, such firm and any agents or
representatives thereof an irrevocable non-exclusive license, subject to the
rights of tenants, to enter onto their respective properties to undertake such
an assessment.
(H) KEEPING OF BOOKS. Keep, and cause each of its Subsidiaries to
----------------
keep, proper books of record and account, in which full and correct entries
shall be made of all financial transactions and the assets and business of the
Borrower and each such Subsidiary in accordance with generally accepted
accounting principles in effect from time to time.
(I) MAINTENANCE OF PROPERTIES, ETC. Maintain and preserve, and cause
------------------------------
each of its Subsidiaries to maintain and preserve, all of its properties that
are used or useful in the conduct of its business in good working order and
condition, ordinary wear and tear excepted.
(J) COMPLIANCE WITH TERMS OF LEASEHOLDS. Make all payments and
-----------------------------------
otherwise perform all obligations in respect of the Synthetic Leases and all
other leases of real property, keep such Synthetic Leases and all other leases
in full force and effect and not allow such Synthetic Leases or other leases to
lapse or be terminated or any rights to renew such leases to be forfeited or
canceled except, with respect to the Synthetic Leases, pursuant to the terms
thereof, notify the Administrative Agent of any default by any party with
respect to such Synthetic Leases and other leases and cooperate with the
Administrative Agent in all respects to cure any such default, and cause each of
its Subsidiaries to do so.
(K) TRANSACTIONS WITH AFFILIATES. Conduct, and cause each of its
----------------------------
Subsidiaries to conduct, all transactions otherwise permitted under the Loan
Documents with any of their Affiliates on terms that are fair and reasonable and
no less favorable to the Borrower or such Subsidiary than it would obtain in a
comparable arm's-length transaction with a Person not an Affiliate.
(L) ADDITIONAL LOAN PARTIES; ADDITIONAL COLLATERAL. (i)
----------------------------------------------
Substantially concurrently with the formation or acquisition of any Subsidiary
of the Borrower, (A) cause such Subsidiary (other than a Foreign Subsidiary) to
guarantee all Obligations of the Borrower hereunder and under the Notes by
executing and delivering to the Administrative Agent an amendment to Guaranty in
substantially the form of Exhibit L, (B) cause such Subsidiary (other
57
<PAGE>
than a Foreign Subsidiary) to execute and deliver to the Administrative Agent,
an amendment to the Security Agreement, in substantially the form of Exhibit M
(whereby such Subsidiary shall grant a Lien on those of its assets described in
the Security Agreement), (C) promptly pledge to the Administrative Agent or
cause to be pledged to the Administrative Agent all of the outstanding capital
stock of such Subsidiary (or, if such Subsidiary is a Foreign Subsidiary, 65% of
such capital stock) owned by any Loan Party to secure such Loan Party's
Obligations under the Loan Documents, (D) with respect to any real property in
which such Subsidiary has an interest, cause such Subsidiary to execute and
deliver such deeds of trust, trust deeds and mortgages ("ADDITIONAL MORTGAGES")
--------------------
in appropriate form for filing in all filing or recording offices that the
Administrative Agent may deem necessary or desirable to create a valid first and
subsisting Lien on the property described therein in favor of the Administrative
Agent for the benefit of the Lender Parties, (E) promptly take, and cause such
Subsidiary and each other Loan Party to take all action necessary or (in the
opinion of the Administrative Agent or the Required Lenders) desirable to
perfect and protect the Liens intended to be created by the Collateral
Documents, as amended pursuant to this Section 6.01(l), and (F) promptly deliver
to the Administrative Agent such opinions of counsel, if any, as the
Administrative Agent or the Required Lenders may reasonably require with respect
to the foregoing (including opinions as to enforceability and perfection of
security interests).
(ii) In addition to the foregoing, (1) within 90 days following the
Closing Date with respect to each property identified on Schedule 6.01(l)(ii)
with a fair market value of $500,000 or more, and (2) promptly upon the
acquisition by any Loan Party on or after the date hereof of any interest in any
real property with a fair market value in excess of $750,000 (A) the applicable
Loan Party shall execute and deliver such Additional Mortgages in appropriate
form for filing in all filing or recording offices that the Administrative Agent
may deem necessary or desirable to create a valid first and subsisting Lien on
such real property in favor of the Administrative Agent for the benefit of the
Lender Parties, (B) the Borrower shall take, and cause each Loan Party to take,
all action necessary or (in the opinion of the Administrative Agent or the
Required Lenders) desirable to perfect and protect the Liens intended to be
created by the Additional Mortgages, (C) the Borrower shall take, and cause each
Loan Party to take, all action necessary or (in the opinion of the
Administrative Agent or the Required Lenders) desirable to provide such Mortgage
Policies, American Land Title Association form surveys, appraisals,
environmental reports, engineering, soils and other reports, assignments of
leases and rents, consents and agreements of lessors and other third parties,
estoppel letters and other confirmations, and evidence of insurance with respect
to any real property that becomes the subject of an Additional Mortgage, as the
Administrative Agent may deem necessary or desirable, in each case in form and
substance acceptable to the Administrative Agent, and (D) deliver to the
Administrative Agent such opinions of counsel, if any, as the Administrative
Agent or the Required Lenders may reasonably require with respect to the
foregoing (including opinions as to enforceability and perfection of security
interests).
(M) APPRAISALS. (i) As soon as reasonably practicable after the
----------
Closing Date (and in any event within 90 days after the Closing Date), provide
to the Administrative Agent, at the expense of the Borrower, appraisals of the
properties of the Borrower and its Subsidiaries identified on Schedule 6.01(m)
(or such portion of such properties as shall be otherwise
58
<PAGE>
acceptable to the Administrative Agent and each Lender), which appraisals comply
with all applicable requirements of the Federal Financial Institutions Reform,
Recovery and Enforcement Act of 1989, as amended, and (ii) at the request of the
Administrative Agent or any Lender from time to time after the Closing Date,
provide to the Administrative Agent within 60 days after such request, at the
expense of the Borrower, appraisals of the properties of the Borrower and its
Subsidiaries described in such request as the Administrative Agent or such
Lender may determine are necessary or desirable to ensure compliance with, and
which appraisals comply with all applicable requirements of, the Federal
Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended.
(N) YEAR 2000. The Borrower shall review and monitor, and shall
---------
cause each of its Subsidiaries to review and monitor, its operations and those
of its Subsidiaries with a view to assessing whether its businesses, or the
businesses of any of its Subsidiaries, will be vulnerable to a Year 2000 Problem
or will be vulnerable to the effect of a Year 2000 Problem suffered by the
Borrower or any of its Subsidiaries or any of its material suppliers or vendors.
The Borrower shall take, and shall cause each of its Subsidiaries to take, all
actions necessary and commit adequate resources to assure that its computer-
based and other systems are able to effectively process data, including dates
before, on and after January 1, 2000, without experiencing any Year 2000 Problem
that results in, or could reasonably be expected to result in, a Material
Adverse Effect. At the request of the Administrative Agent, the Borrower will
provide the Administrative Agent with reasonable assurances and substantiations
(including without limitation the results of internal or external audit reports)
reasonably acceptable to the Administrative Agent as to the capability of the
Borrower and its Subsidiaries to conduct its and their businesses and operations
before, on and after January 1, 2000, without experiencing a Year 2000 Problem
that results in, or could reasonably be expected to result in, a Material
Adverse Effect.
(O) CONSENTS AND AGREEMENTS OF LESSOR; CERTAIN POST-CLOSING MATTERS.
---------------------------------------------------------------
(i) The Borrower shall use its best efforts to provide to the
Administrative Agent within 60 days after the Closing Date such consents and
agreements of lessors and other third parties and such estoppel letters and
other confirmations as the Administrative Agent or the Required Lenders may
require, all in form and substance satisfactory to the Administrative Agent and
the Required Lenders.
(ii) Within 90 days after the Closing Date, and from time to time
thereafter as reasonably requested by the Administrative Agent or the Required
Lenders, deliver such flood hazard certification as the Administrative Agent or
the Required Lenders may require with respect to the properties subject to the
Mortgages.
(iii) Within 90 days after the Closing Date, cause to be effective,
at the Borrower's expense, such increases in the amounts of title insurance
applicable to the properties subject to the Mortgages as the Administrative
Agent or the Required Lenders may reasonably request after consideration of the
appraisals referred to in Section 6.01(m). It is understood and
59
<PAGE>
agreed that such increases may be required with respect to properties subject
to, and with respect to properties not subject to, such appraisals.
(iv) Within 30 days after the Closing Date, provide to the
Administrative Agent evidence of the insurance required by the Security
Agreement.
SECTION 6.02. NEGATIVE COVENANTS. So long as any Advance shall
------------------
remain unpaid, any Letter of Credit shall be outstanding or any Lender shall
have any Commitment hereunder, the Borrower will not, at any time, without the
written consent of the Required Lenders or, if required under Section 9.01, of
all of the Lenders:
(A) LIENS, ETC. Create, incur, assume or suffer to exist, or permit
----------
any of its Subsidiaries to create, incur, assume or suffer to exist, any Lien on
or with respect to any of its properties of any character (including, without
limitation, accounts) whether now owned or hereafter acquired, or sign or file,
or permit any of its Subsidiaries to sign or file, under the Uniform Commercial
Code of any jurisdiction, a financing statement that names the Borrower or any
of its Subsidiaries as debtor, or sign, or permit any of its Subsidiaries to
sign, any security agreement authorizing any secured party thereunder to file
such financing statement, or assign, or permit any of its Subsidiaries to
assign, any accounts or other right to receive income, excluding, however, from
--------- -------
the operation of the foregoing restrictions the following:
(i) Liens created by the Loan Documents and the Synthetic Lease
Documents;
(ii) Permitted Liens;
(iii) the Liens described on Schedule 6.02(a); and
(iv) purchase money Liens upon or in property acquired or held
by the Borrower or any of its Subsidiaries in the ordinary course of
business to secure the purchase price of such property or to secure Debt
incurred solely for the purpose of financing the acquisition, construction
or improvement of any such property to be subject to such Liens, or Liens
existing on any such property at the time of acquisition, or extensions,
renewals or replacements of any of the foregoing for the same or a lesser
amount; provided, however, that no such Lien shall extend to or cover any
-------- -------
property other than the property being acquired, constructed or improved,
and no such extension, renewal or replacement shall extend to or cover any
property not theretofore subject to the Lien being extended, renewed or
replaced; and provided further that the aggregate principal amount of the
-------- -------
Debt secured by Liens permitted by this clause (iv) shall not exceed
$7,500,000 at any time outstanding.
(v) Liens arising in connection with Capitalized Leases in an
aggregate principal amount not to exceed $7,500,000 at any time
outstanding, provided that no such Lien shall extend to or cover any
Collateral;
60
<PAGE>
(vi) other Liens securing Debt outstanding in an aggregate
principal amount not to exceed $2,500,000, provided that no such Lien shall
extend to or cover any Collateral; and
(vii) the replacement, extension or renewal of any Lien
permitted by clause (iii) above upon or in the same property theretofore
subject thereto or the replacement, extension or renewal (without increase
in the amount or change in any direct or contingent obligor) of the Debt
secured thereby.
(B) DEBT. Create, incur, assume or suffer to exist, or permit any of
----
its Subsidiaries to create, incur, assume or suffer to exist, any Debt other
than:
(i) in the case of the Borrower,
(A) Debt under the Loan Documents and the Synthetic Lease
Documents,
(B) Debt in respect of Hedge Agreements in an aggregate
notional amount not to exceed $100,000,000 at any time outstanding not
entered into for speculative purposes; and
(C) unsecured Debt in respect of the Casino Intercompany
Advances in an aggregate principal amount not to exceed $10,000,000 at
any time outstanding.
(ii) in the case of any of its wholly-owned Domestic
Subsidiaries that is a Loan Party, Debt owed to the Borrower or to another
wholly-owned Domestic Subsidiary of the Borrower that is Loan Party so long
as such Debt is evidenced by a promissory note that has been pledged to the
Administrative Agent pursuant to the Security Agreement; and
(iii) in the case of the Borrower and any of its Subsidiaries,
(A) Debt secured by Liens permitted by Section 6.02(a)(iv)
and (v) not to exceed in the aggregate the amount set forth in such
Sections,
(B) the Surviving Debt,
(C) indorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business.
(C) MERGERS, CORPORATE CHANGES, ETC. Merge into or consolidate with
--------------------------------
any Person or permit any Person to merge into it or liquidate or dissolve itself
(or suffer any liquidation or dissolution), or permit any of its Subsidiaries to
do so, except that (i) any wholly-owned Solvent Domestic Subsidiary of the
Borrower may merge into or consolidate with any other wholly-owned
61
<PAGE>
Solvent Domestic Subsidiary of the Borrower provided that, in the case of any
such consolidation, the Person formed by such consolidation shall be a wholly-
owned Solvent Domestic Subsidiary of the Borrower and (ii) any of the Borrower's
wholly-owned Solvent Domestic Subsidiaries may merge into the Borrower;
provided, however, that in each case, immediately after giving effect thereto,
- -------- -------
no event shall occur and be continuing that constitutes a Default.
(D) SALES, ETC. OF ASSETS. Sell, lease, transfer or otherwise
---------------------
dispose of, or permit any of its Subsidiaries to sell, lease, transfer or
otherwise dispose of, any assets, or grant any option or other right to
purchase, lease or otherwise acquire any Collateral other than Inventory to be
sold in the ordinary course of its business, except (i) sales of Inventory in
the ordinary course of its business, (ii) in a transaction authorized by
subsection (d) of this Section, (iii) the sale of any asset by the Borrower or
any Subsidiary (other than a bulk sale of Inventory and a sale of Accounts
Receivable other than delinquent accounts for collection purposes only) so long
as (A) the purchase price paid to the Borrower or such Subsidiary for such asset
shall be no less than the fair market value of such asset at the time of such
sale, (B) the purchase price for such asset shall be paid to the Borrower or
such Subsidiary solely in cash and (C) the aggregate purchase price paid to the
Borrower and all of its Subsidiaries for such asset and all other assets sold by
the Borrower and its Subsidiaries during the same Fiscal Year pursuant to this
clause (iii) shall not exceed $5,000,000 and (D) the Borrower shall, on the date
of such sale, prepay the Advances pursuant to, and in the order of priority set
forth in, Section 2.05(b)(ii) in an aggregate principal amount equal to the Net
Cash Proceeds received by the Borrower or such Subsidiary from the sale of such
asset and (iv) so long as no Default shall occur and be continuing, the grant of
any option or other right to purchase any asset in a transaction which would be
permitted under the provisions of the next preceding clause (iii).
(E) INVESTMENTS IN OTHER PERSONS. Make or hold, or permit any of its
----------------------------
Subsidiaries to make or hold, any Investment in any Person other than
(i) Investments by the Borrower and its Subsidiaries in wholly-
owned Domestic Subsidiaries that are Loan Parties;
(ii) loans and advances to officers and employees in the
ordinary course of the business of the Borrower and its Subsidiaries as
presently conducted in an aggregate principal amount not to exceed
$1,500,000 at any time outstanding;
(iii) Investments by the Borrower and its Subsidiaries in Cash
Equivalents; and
(iv) other Investments in an aggregate amount invested not to
exceed $2,000,000.
(F) DIVIDENDS, ETC. Declare or pay any dividends, purchase, redeem,
--------------
retire, defease or otherwise acquire for value any of its capital stock or any
warrants, rights or options to acquire such capital stock, now or hereafter
outstanding, return any capital to its stockholders as such, make any
distribution of assets, capital stock, warrants, rights, options, obligations or
securities to its stockholders as such or issue or sell any capital stock or any
warrants, rights or options to acquire such capital stock, or permit any of its
Subsidiaries to purchase, redeem, retire,
62
<PAGE>
defease or otherwise acquire for value any capital stock of the Borrower or any
warrants, rights or options to acquire such capital stock or to issue or sell
any capital stock or any warrants, rights or options to acquire such capital
stock, except that, so long as no Default shall have occurred and be continuing,
the Borrower may (i) declare and deliver dividends and distributions payable
only in (and to the holders of) common stock of the Borrower, (ii) except to the
extent the Net Cash Proceeds thereof are required to be applied to the
prepayment of the Advances pursuant to Section 2.05(b), purchase, redeem,
retire, defease or otherwise acquire shares of its capital stock with the
proceeds received from the issue of new shares of its capital stock with equal
or inferior voting powers, designations, preferences and rights, (iii) declare
and pay cash dividends to its stockholders in an aggregate amount not to exceed
in any fiscal year of the Borrower the sum of (A) $4,700,000 plus (B) the
----
Additional Dividend Amount but only if the Fixed Charge Coverage Ratio of the
Borrower determined pursuant to Section 6.04(c) hereto equals 2.0 or greater as
of the then most recently ended period of four consecutive fiscal quarters of
the Borrower, and (iv) issue equity securities upon the exercise of rights to
acquire such equity securities but only if (A) the exercise of such rights
requires either the payment of cash or the conversion of the Casino Note (or any
portion thereof ) and (B) the Net Cash Proceeds of the exercise of such rights
are applied to the prepayment of Advances to the extent required pursuant to
Section 2.05(b).
(G) CHANGE IN NATURE OF BUSINESS. Make, or permit any of its
----------------------------
Subsidiaries to make, any material change in the nature of its business as
carried on at the date hereof.
(H) CHARTER AMENDMENTS; NEW SUBSIDIARIES. Amend, or permit any of
------------------------------------
its Subsidiaries to amend, its certificate or articles of incorporation, bylaws
or other organizational or charter documents (including, without limitation, by
filing any certificate of designation with respect to any preferred stock or
otherwise creating any new preferred stock) or create or acquire, or permit its
Subsidiaries to directly or indirectly create or acquire, a Subsidiary not in
existence on the date hereof.
(I) ACCOUNTING CHANGES. Make or permit, or permit any of its
------------------
Subsidiaries to make or permit, any change in accounting policies or reporting
practices, except as required by generally accepted accounting principles.
(J) PREPAYMENTS, ETC. OF DEBT. (i) Prepay, redeem, purchase, defease
-------------------------
or otherwise satisfy prior to the scheduled maturity thereof in any manner any
Debt other than (A) the prepayment of the Advances in accordance with the terms
of this Agreement, (B) regularly scheduled or required repayments or redemptions
of Surviving Debt, and (C) redemption of all or any portion of the Casino Note
for equity securities of the Borrower, (ii) make any payment in violation of any
subordination terms of any Debt, or (iii) amend, modify or change in any manner
any term or condition of the Casino Intercompany Agreement, the Casino Loan
Agreement or any other Surviving Debt or permit any of its Subsidiaries to do
any of the foregoing other than to prepay any Debt payable to the Borrower.
(K) NEGATIVE PLEDGE. Enter into or suffer to exist, or permit any of
---------------
its Subsidiaries to enter into or suffer to exist, any agreement prohibiting or
conditioning the creation or assumption of any Lien upon any of its property or
assets other than (i) in favor of the
63
<PAGE>
Administrative Agent and the Lender Parties or (ii) in connection with (A) any
Surviving Debt and any Debt outstanding on the date such Subsidiary first
becomes a Subsidiary or (B) any Debt permitted by Section 6.02(b)(iii)(a) hereof
so long as such prohibition extends only to the property subject to the Lien
securing such Debt.
(L) PARTNERSHIPS. Become a general partner in any general or limited
------------
partnership, or permit any of its Subsidiaries to do so, other than any
Subsidiary the sole assets of which consist of its interest in such partnership.
(M) AFFILIATE TRANSACTIONS. Enter into, or permit any of its
----------------------
Subsidiaries to, directly or indirectly, enter into any transaction with,
including, without limitation, the purchase, sale or exchange of property or the
rendering of any service to, any Subsidiary or Affiliate of any Borrower, except
pursuant to the reasonable requirements of such Borrower's or such Subsidiary's
business, as the case may be, and upon fair and reasonable terms no less
favorable to such Borrower or such Subsidiary than could be obtained in a
comparable arm's-length transaction with an unaffiliated Person.
SECTION 6.03. REPORTING REQUIREMENTS. So long as any Advance shall
----------------------
remain unpaid, any Letter of Credit shall be outstanding or any Lender shall
have any Commitment hereunder, the Borrower will, unless the Required Lenders
shall otherwise consent in writing, furnish to the Lenders:
(A) BORROWING BASE CERTIFICATE. Quarterly, within 10 Business Days
--------------------------
after the last Business day of each quarter and prior to the making of any
Revolving Advance and any Issuance of a Letter of Credit and at any other time
reasonably requested by the Administrative Agent, a Borrowing Base Certificate,
which shall: (i) be completed substantially in the form of Exhibit K, detailing
the Borrower's Eligible Accounts Receivable, Eligible Inventory and Eligible
Real Property as of the last day of such quarter (except that, in the case of a
Borrowing Base Certificate delivered more than 40 days after the end of the then
most recently ended fiscal quarter of the Borrower, such Borrowing Base
Certificate shall set forth the Borrower's Eligible Accounts Receivable,
Eligible Inventory and Eligible Real Property as of the last day of the most
recently ended fiscal month of the Borrower) or as of such other date as the
Administrative Agent may request; (ii) be prepared by or under the supervision
of the Borrower's chief financial officer and certified by such officer subject
only to adjustment upon completion of the normal year-end audit of physical
inventory; and (iii) include such additional schedules and other information as
the Administrative Agent may reasonably request.
(B) DEFAULT NOTICE. (i) As soon as possible after the Borrower has
--------------
reason to believe a Default will occur and (ii) as soon as possible and in any
event within two days after the occurrence of each Default continuing on the
date of such statement, a statement of the chief financial officer of the
Borrower setting forth details of such Default and the action that the Borrower
has taken and proposes to take with respect thereto.
(C) QUARTERLY FINANCIALS. As soon as available and in any event
--------------------
within 45 days after the end of each of the first three quarters of each fiscal
year of the Borrower, Consolidated and consolidating balance sheets of the
Borrower and its Subsidiaries as of the end
64
<PAGE>
of such quarter and Consolidated and consolidating statements of income and cash
flows of the Borrower and its Subsidiaries for the period commencing at the end
of the previous fiscal year and ending with the end of such quarter, setting
forth in each case in comparative form the corresponding figures for the
corresponding period of the preceding fiscal year, all in reasonable detail and
duly certified (subject to year-end audit adjustments) by the chief financial
officer of the Borrower as having been prepared in accordance with GAAP,
together with (i) a certificate of said officer stating that the representations
and warranties in Section 5.01 are true and correct in all material respects as
of the date of such certificate and that no Default has occurred and is
continuing or, if a Default has occurred and is continuing, a statement as to
the nature thereof and the action that the Borrower has taken and proposes to
take with respect thereto and (ii) a schedule in form satisfactory to the
Administrative Agent of the computations used by the Borrower in determining
compliance with the covenants contained in Sections 6.02(a), (b), (c), (e), (f),
(g) and 6.04.
(D) ANNUAL FINANCIALS. As soon as available and in any event within
-----------------
90 days after the end of each fiscal year of the Borrower, a copy of the annual
audit report for such year for the Borrower and its Subsidiaries, including
therein audited Consolidated and unaudited consolidating balance sheets of the
Borrower and its Subsidiaries as of the end of such fiscal year and audited
Consolidated and unaudited consolidating statements of income and cash flows of
the Borrower and its Subsidiaries for such fiscal year, in each case with
respect to such audited balance sheets and statements of income and cash flow
accompanied by an opinion acceptable to the Required Lenders of Arthur Andersen
LLP or other independent public accountants of recognized standing acceptable to
the Required Lenders, together with (i) a certificate of such accounting firm to
the Lenders stating that in the course of the regular audit of the business of
the Borrower and its Subsidiaries, which audit was conducted by such accounting
firm in accordance with generally accepted auditing standards, such accounting
firm has obtained no knowledge that a Default has occurred and is continuing, or
if, in the opinion of such accounting firm, a Default has occurred and is
continuing, a statement as to the nature thereof, (ii) a schedule in form
satisfactory to the Administrative Agent of the computations used by such
accountants in determining, as of the end of such fiscal year, compliance with
the covenants contained in Sections 6.02(a), (b), (c), (e), (f), (g) and 6.04
and (iii) a certificate of the chief financial officer of the Borrower stating
that the representations and warranties in Section 5.01 are true and correct in
all material respects as of the date of such certificate and that no Default has
occurred and is continuing or, if a default has occurred and is continuing, a
statement as to the nature thereof and the action that the Borrower has taken
and proposes to take with respect thereto.
(E) ERISA EVENTS. Promptly and in any event within ten days after
------------
any Loan Party or any of its ERISA Affiliates knows or has reason to know that
any material ERISA Event with respect to any Loan Party or any of its ERISA
Affiliates has occurred, a statement of the chief financial officer of the
Borrower describing such ERISA Event and the action, if any, that such Loan
Party or such ERISA Affiliate has taken and proposes to take with respect
thereto.
(F) PLAN TERMINATIONS. Promptly and in any event within 10 Business
-----------------
Days after receipt thereof by any Loan Party or any of its ERISA Affiliates,
copies of each notice from
65
<PAGE>
the PBGC stating its intention to terminate any Plan of any Loan Party or any of
its ERISA Affiliates or to have a trustee appointed to administer any such Plan.
(G) PLAN ANNUAL REPORTS. Promptly and in any event within 30 days
-------------------
after the filing thereof with the Internal Revenue Service, copies of each
Schedule B (Actuarial Information) to the annual report (Form 5500 Series) with
respect to each Plan of each Loan Party or any of its ERISA Affiliates.
(H) MULTIEMPLOYER PLAN NOTICES. Promptly and in any event within 10
--------------------------
Business Days after receipt thereof by any Loan Party or any of its ERISA
Affiliates from the sponsor of a Multiemployer Plan of any Loan Party or any of
its ERISA Affiliates, copies of each notice concerning (i) the imposition of
Withdrawal Liability by any such Multiemployer Plan, (ii) the reorganization or
termination, within the meaning of Title IV of ERISA, of any such Multiemployer
Plan or (iii) the amount of liability incurred, or that may be incurred, by such
Loan Party or any of its ERISA Affiliates in connection with any event described
in clause (i) or (ii).
(I) LITIGATION. Promptly after the commencement thereof, notice of
----------
all material actions, suits, investigations, litigation and proceedings before
any court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting any Loan Party or any of its
Subsidiaries of the type described in Section 4.01(d), and promptly after the
occurrence thereof, notice of any adverse change in the status or the financial
effect on any Loan Party or any of their Subsidiaries of the Disclosed
Litigation from that described on Schedule 5.01(h).
(J) PRESS RELEASES; SECURITIES REPORTS. Promptly after the sending
----------------------------------
or filing thereof, copies of all (i) press releases, (ii) proxy statements,
financial statements and reports that any Loan Party or any of its Subsidiaries
sends to its stockholders, and (iii) regular, periodic and special reports, and
all registration statements, that any Loan Party or any of its Subsidiaries
files with the Securities and Exchange Commission or any governmental authority
that may be substituted therefor, or with any national securities exchange.
(K) CREDITOR REPORTS. Promptly after the furnishing thereof, copies
----------------
of any statement or report furnished to (i) any other party to a Synthetic
Lease, or (ii) any other holder of the securities of any Loan Party or of any of
its Subsidiaries pursuant to the terms of any indenture, loan or credit or
similar agreement and not otherwise required to be furnished to the Lender
Parties pursuant to any other clause of this Section 6.03.
(L) ENVIRONMENTAL CONDITIONS. Promptly after the occurrence thereof,
------------------------
notice of any condition or occurrence on any property of any Loan Party or any
of its Subsidiaries that results in a material noncompliance by any Loan Party
or any of its Subsidiaries with any Environmental Law or Environmental Permit or
could (i) form the basis of an Environmental Action against any Loan Party or
any of its Subsidiaries or such property that could have a Material Adverse
Effect or (ii) cause any such property to be subject to any material
restrictions on ownership, occupancy, use or transferability under any
Environmental Law.
66
<PAGE>
(M) OTHER INFORMATION. Such other information respecting the
-----------------
business, condition (financial or otherwise), operations, performance,
properties or prospects of any Loan Party or any of its Subsidiaries as any
Lender Party may from time to time reasonably request.
SECTION 6.04. FINANCIAL COVENANTS. So long as any Advance shall
-------------------
remain unpaid, any Letter of Credit shall be outstanding or any Lender shall
have any Commitment hereunder, the Borrower will, unless the Required Lenders
otherwise consent in writing:
(A) NET WORTH. Maintain at all times a Consolidated Net Worth of the
---------
Borrower and its Subsidiaries of not less than the sum of (i) $173,346,450, plus
----
(ii) 50% of positive cumulative Consolidated Net Income of the Borrower and its
Subsidiaries for all fiscal quarters ending after October 9, 1998 (but without
any deduction for any period in which Consolidated Net Income is a negative
number), plus (iii) 100% of the amount of all cash proceeds of any equity
----
issuances by the Borrower or any of its Subsidiaries after the date hereof, plus
----
(iv) the aggregate principal amount of Debt under the Casino Notes converted to
equity.
(B) ADJUSTED LEVERAGE RATIO. Maintain an Adjusted Leverage Ratio not
-----------------------
greater than (i) 5.25 to 1 from and including January 3, 1999 to, but not
including, March 28, 1999, (ii) 4.75 from and including March 28, 1999 to, but
not including, March 26, 2000, and (iii) 4.50 thereafter.
(C) FIXED CHARGE COVERAGE RATIO. Maintain at all times a ratio of
---------------------------
the sum of (i) Consolidated EBITDA of the Borrower and its Subsidiaries plus
(ii) Consolidated rent expense of the Borrower and its Subsidiaries to the sum
of (iii) Consolidated Interest Expense of the Borrower and its Subsidiaries plus
(iv) Consolidated rent expense of the Borrower and its Subsidiaries (in each
case determined for the period of four consecutive fiscal quarters ending as of
the last day of each fiscal quarter of the Borrower) of not less than 1.75 to 1.
(D) CAPITAL EXPENDITURES. Not make, or permit any of its
--------------------
Subsidiaries to make, any Capital Expenditures that would cause the aggregate of
all such Capital Expenditures made by the Borrower and its Subsidiaries in any
period set forth below to exceed the amount set forth below for such period:
<TABLE>
<CAPTION>
Fiscal Year
Ending Amount
------ ------
<S> <C>
January 3, 1999 $50,000,000
January 2, 2000 $45,000,000
December 31, 2000 $45,000,000
</TABLE>
ARTICLE VII.
EVENTS OF DEFAULT
SECTION 7.01. EVENTS OF DEFAULT. If any of the following events
-----------------
("EVENTS OF DEFAULT") shall occur and be continuing:
-----------------
67
<PAGE>
(a) the Borrower shall fail to pay any principal of any Advance when
the same becomes due and payable; or any Loan Party shall fail to make any
interest or any other payment under any Loan Document within three days
after such interest or other amount becomes due and payable; or
(b) any representation or warranty made by any Loan Party (or any of
its officers) under or in connection with any Loan Document shall prove to
have been incorrect in any material respect when made or deemed made; or
(c) the Borrower shall fail to perform or observe any term, covenant
or agreement contained in Sections 6.01(e), (f), (k), (l) or (m), 6.02,
6.03 or 6.04; or
(d) any Loan Party shall fail to perform any other term, covenant or
agreement contained in any Loan Document on its part to be performed or
observed if such failure shall remain unremedied for 30 days after written
notice thereof shall have been given to the Borrower by the Administrative
Agent or any Lender Party; or
(e) any "Event of Default" (under and as defined in the Participation
Agreement) shall have occurred and be continuing or any Loan Party or any
of its Subsidiaries shall fail to pay any principal of, premium or interest
on or any other amount payable in respect of any Debt that is outstanding
in a principal amount of at least $5,000,000 in the aggregate (but
excluding Debt outstanding hereunder) of such Loan Party or such Subsidiary
(as the case may be), when the same becomes due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise)
or any other event shall occur or condition shall exist under any agreement
or instrument relating to any such Debt, if the effect of such event or
condition is to accelerate, or to permit the acceleration of, the maturity
of such Debt or otherwise to cause, or to permit the holder thereof to
cause, such Debt to mature; or any such Debt shall be declared to be due
and payable or required to be prepaid or redeemed (other than by a
regularly scheduled required prepayment or redemption), purchased or
defeased, or an offer to prepay, redeem, purchase or defease such Debt
shall be required to be made, in each case prior to the stated maturity
thereof; or
(f) any Loan Party or any of its Subsidiaries shall generally not pay
its debts as such debts become due, or shall admit in writing its inability
to pay its debts generally, or shall make a general assignment for the
benefit of creditors; or any proceeding shall be instituted by or against
any Loan Party or any of its Subsidiaries seeking to adjudicate it a
bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its
debts under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, or other similar official for it or for
any substantial part of its property; or any Loan Party or any of its
Subsidiaries shall take any corporate action to authorize any of the
actions set forth above in this subsection (f); or
68
<PAGE>
(g) any judgment or order for the payment of money in excess of
$5,000,000 shall be rendered against any Loan Party or any of its
Subsidiaries and either (i) enforcement proceedings shall have been
commenced by any creditor upon such judgment or order or (ii) there shall
be any period of 60 consecutive days during which a stay of enforcement of
such judgment or order, by reason of a pending appeal or otherwise, shall
not be in effect; or
(h) any non-monetary judgment or order shall be rendered against any
Loan Party or any of its Subsidiaries that could have a Material Adverse
Effect, and there shall be any period of 10 consecutive days during which a
stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect; or
(i) any provision of any Loan Document after delivery thereof
pursuant to Section 4.01 shall for any reason cease to be valid and binding
on or enforceable against any Loan Party party to it, or any such Loan
Party shall so state in writing; or
(j) any Collateral Document after delivery thereof pursuant to
Section 4.01 shall for any reason (other than pursuant to the terms
thereof) cease to create a valid and perfected first priority Lien on the
Collateral purported to be covered thereby; or
(k) (i) any Person or two or more Persons acting in concert other
than Casino shall have acquired beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934), directly or indirectly, of Voting Stock of the
Borrower (or other securities convertible into such Voting Stock)
representing 50% or more of the combined voting power of all Voting Stock
of the Borrower; or (ii) during any period of up to 24 consecutive months,
commencing before or after the date of this Agreement, individuals who at
the beginning of such 24-month period were directors of the Borrower shall
cease for any reason to constitute a majority of the board of directors of
the Borrower; or (iii) any Person or two or more Persons acting in concert
other than Casino shall have acquired by contract or otherwise, or shall
have entered into a contract or arrangement that, upon consummation, will
result in its or their acquisition of, the power to exercise, directly or
indirectly, a controlling influence over the management or policies of the
Borrower, or control over Voting Stock of the Borrower (or other securities
convertible into such securities) representing 50% or more of the combined
voting power of all Voting Stock of the Borrower; or
(l) any ERISA Event shall have occurred with respect to a Plan of any
Loan Party or any of its ERISA Affiliates and the liability of the Loan
Parties and their ERISA Affiliates related to such ERISA Event and any and
all other ERISA Events which shall have occurred and then exist with
respect to any Plans of the Loan Parties and their ERISA Affiliates exceeds
$5,000,000; or
(m) (i) there occurs any failure to meet the minimum funding standard
under Section 302 of ERISA or Section 412 of the Internal Revenue Code with
respect to a Plan, or any tax return is filed showing any tax payable under
Section 4971(a) of the
69
<PAGE>
Internal Revenue Code with respect to any such failure, or Borrower or any
Subsidiary thereof or any other Controlled Group Member receives a notice
of deficiency from the Internal Revenue Service with respect to any alleged
or asserted such failure, or (ii) any request is made by any Person for a
variance from the minimum funding standard, or an extension of the period
for amortizing unfunded liabilities, with respect to a Plan; or
(n) any Loan Party or any of its ERISA Affiliates shall have been
notified by the sponsor of a Multiemployer Plan of any Loan Party or any of
its ERISA Affiliates that it has incurred Withdrawal Liability to such
Multiemployer Plan in an amount that, when aggregated with all other
amounts required to be paid to Multiemployer Plans by the Loan Parties and
their ERISA Affiliates as Withdrawal Liability (determined as of the date
of such notification), exceeds $5,000,000 or requires payments exceeding
$1,000,000 per annum; or
(o) any Loan Party or any of its ERISA Affiliates shall have been
notified by the sponsor of a Multiemployer Plan of any Loan Party or any of
its ERISA Affiliates that such Multiemployer Plan is in reorganization or
is being terminated, within the meaning of Title IV of ERISA, and as a
result of such reorganization or termination the aggregate annual
contributions of the Loan Parties and their ERISA Affiliates to all
Multiemployer Plans that are then in reorganization or being terminated
have been or will be increased over the amounts contributed to such
Multiemployer Plans for the plan years of such Multiemployer Plans
immediately preceding the plan year in which such reorganization or
termination occurs by an amount exceeding $1,000,000; or
(p) there shall occur any Material Adverse Change; or
(q) any Borrowing Base Deficiency shall occur and no prepayment of
such Borrowing Base Deficiency has been made when and as required pursuant
to Section 2.05(b)(i) hereof; or
(r) the Borrower shall report on its Consolidated financial
statements in or with respect to the third or fourth quarter of fiscal year
1998 of the Borrower, (i) any charge (other than non-material charges
consistent with past practices in the ordinary course of business) except a
one time charge associated with the closing of the Florida Stores in an
aggregate amount not to exceed $18,000,000 (except that (A) not more than
$9,000,000 may represent items requiring cash payments and (B) such amounts
may not include any charges of the type referred to in the following clause
(ii)) or (ii) any charge associated with operating losses relating to the
Florida Stores in an amount in excess of $9,000,000.
then, and in any such event, the Administrative Agent (i) shall at the request,
or may with the consent, of the Required Lenders, by notice to the Borrower,
declare the obligation of each Lender to make Advances and of any Issuing Bank
to issue Letters of Credit to be terminated, whereupon the same shall forthwith
terminate, and (ii) shall at the request, or may with the consent, of the
Required Lenders, by notice to the Borrower, declare the Notes, all interest
thereon and all other amounts payable under this Agreement and the other Loan
Documents to be
70
<PAGE>
forthwith due and payable, whereupon the Notes, all such interest and all such
amounts shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by the Borrower; provided, however, that in the event of an actual or
-------- -------
deemed entry of an order for relief with respect to any Loan Party or any of its
Subsidiaries under the Federal Bankruptcy Code, (x) the obligation of each
Lender Party to make Advances and of each Issuing Bank to issue Letters of
Credit shall automatically be terminated and (y) the Notes, all such interest
and all such amounts shall automatically become and be due and payable, without
presentment, demand, protest or any notice of any kind, all of which are hereby
expressly waived by the Borrower.
SECTION 7.02. ACTIONS IN RESPECT OF THE LETTERS OF CREDIT UPON
------------------------------------------------
DEFAULT. If any Event of Default shall have occurred and be continuing, the
- -------
Administrative Agent may, irrespective of whether it is taking any of the
actions described in Section 7.01 or otherwise, make demand upon the Borrower
to, and forthwith upon such demand the Borrower will, pay to the Administrative
Agent on behalf of the Lender Parties in same day funds at the Administrative
Agent's office designated in such demand, for deposit to a non-interest bearing
account established by the Administrative Agent for such purposes or for
purposes of Section 2.05(b)(iv) (the "L/C CASH COLLATERAL ACCOUNT"), an amount
---------------------------
equal to the aggregate Available Amount of all Letters of Credit then
outstanding (and the Borrower hereby grants to the Administrative Agent, for the
ratable benefit of the Administrative Agent and each Lender Party, a continuing
security interest in all amounts at any time on deposit in the L/C Cash
Collateral Account to secure all Letter of Credit Obligations from time to time
outstanding and all other Obligations hereunder). If at any time the
Administrative Agent determines that any funds held in the L/C Cash Collateral
Account are subject to any right or claim of any Person other than the
Administrative Agent and the Lender Parties or that the total amount of such
funds is less than the aggregate Available Amount of all Letters of Credit, the
Borrower will, forthwith upon demand by the Administrative Agent, pay to the
Administrative Agent, as additional funds to be deposited and held in the L/C
Cash Collateral Account, an amount equal to the excess of (a) such aggregate
Available Amount over (b) the total amount of funds, if any, then held in the
L/C Cash Collateral Account that the Administrative Agent determines to be free
and clear of any such right and claim.
ARTICLE VIII.
THE ADMINISTRATIVE AGENT
SECTION 8.01. AUTHORIZATION AND ACTION. Each Lender Party hereby
------------------------
appoints and authorizes the Administrative Agent to take such action as agent on
its behalf and to exercise such powers and discretion under this Agreement and
the other Loan Documents as are delegated to the Administrative Agent by the
terms hereof and thereof, together with such powers and discretion as are
reasonably incidental thereto. As to any matters not expressly provided for by
the Loan Documents (including, without limitation, enforcement or collection of
the Notes, the Administrative Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Required Lenders, and such instructions shall be
binding upon all Lender Parties and all holders of Notes; provided, however,
-------- -------
that the
71
<PAGE>
Administrative Agent shall not be required to take any action that exposes the
Administrative Agent to personal liability or that is contrary to this Agreement
or applicable law. The Administrative Agent agrees to give to each Lender Party
prompt notice of each notice given to it by the Borrower pursuant to the terms
of this Agreement.
SECTION 8.02. AGENT'S RELIANCE, ETC. Neither the Administrative
---------------------
Agent nor any of its directors, officers, agents or employees shall be liable
for any action taken or omitted to be taken by it or them under or in connection
with the Loan Documents, except for its or their own gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, the
Administrative Agent: (i) may treat the payee of any Note as the holder thereof
until the Administrative Agent receives and accepts an Assignment and Acceptance
entered into by the Lender that is the payee of such Note, as assignor, and an
Eligible Assignee, as assignee, as provided in Section 9.07; (ii) may consult
with legal counsel (including counsel for any Loan Party), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts; (iii) makes no warranty or
representation to any Lender Party and shall not be responsible to any Lender
Party for any statements, warranties or representations made in or in connection
with the Loan Documents; (iv) shall not have any duty to ascertain or to inquire
as to the performance or observance of any of the terms, covenants or conditions
of any Loan Document on the part of any Loan Party or to inspect the property
(including the books and records) of any Loan Party; (v) shall not be
responsible to any Lender Party for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of any Loan Document or any
other instrument or document furnished pursuant hereto or thereto; (vi) shall
incur no liability under or in respect of any Loan Document by acting upon any
notice, consent, certificate or other instrument or writing (which may be by
telegram, telecopy, cable or telex) believed by it to be genuine and signed or
sent by the proper party or parties; and (vii) shall incur no liability as a
result of any determination whether the transactions contemplated by the Loan
Documents constitute a "highly leveraged transaction" within the meaning of the
interpretations issued by the Comptroller of the Currency, the Federal Deposit
Insurance Corporation and the Board of Governors of the Federal Reserve System.
SECTION 8.03. CREDIT LYONNAIS LOS ANGELES BRANCH AND AFFILIATES.
-------------------------------------------------
With respect to its Commitments and the Advances made by it and the Notes issued
to it, Credit Lyonnais Los Angeles Branch shall have the same rights and powers
under the Loan Documents as any other Lender Party and may exercise the same as
though it were not the Administrative Agent; and the terms "Lender", "Lenders",
"Lender Party" or "Lender Parties" shall, unless otherwise expressly indicated,
include Credit Lyonnais Los Angeles Branch in its individual capacity. Credit
Lyonnais Los Angeles Branch and its Affiliates may accept deposits from, lend
money to, act as trustee under indentures of, accept investment banking
engagements from and generally engage in any kind of business with, any Loan
Party, any of its Subsidiaries and any Person who may do business with or own
securities of any Loan Party or any such Subsidiary, all as if Credit Lyonnais
Los Angeles Branch were not the Administrative Agent and without any duty to
account therefor to the Lender Parties.
72
<PAGE>
SECTION 8.04. LENDER PARTY CREDIT DECISION. Each Lender Party
----------------------------
acknowledges that it has, independently and without reliance upon the
Administrative Agent or any other Lender Party and based on the financial
statements referred to in Section 5.01 and such other documents and information
as it has deemed appropriate, made its own credit analysis and decision to enter
into this Agreement. Each Lender Party also acknowledges that it will,
independently and without reliance upon the Administrative Agent or any other
Lender Party and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.
SECTION 8.05. INDEMNIFICATION. Each Lender Party severally agrees to
---------------
indemnify the Administrative Agent and Syndication Agent and their affiliates,
officers, directors, employees, attorneys, agents and advisors (to the extent
not promptly reimbursed by the Borrower) from and against such Lender Party's
ratable share of any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever that may be imposed on, incurred by, or asserted
against the Administrative Agent or the Syndication Agent in any way relating to
or arising out of the Loan Documents or any action taken or omitted by the
Administrative Agent or the Syndication Agent under the Loan Documents;
provided, however, that no Lender Party shall be liable for any portion of such
- -------- -------
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from such Agent's gross negligence or
willful misconduct. Without limitation of the foregoing, each Lender Party
agrees to reimburse the Administrative Agent or the Syndication Agent promptly
upon demand for its ratable share of any costs and expenses payable by the
Borrower under Section 9.04, to the extent that such Agent is not promptly
reimbursed for such costs and expenses by the Borrower. For purposes of this
Section 8.05, the Lender Parties' respective ratable shares of any amount shall
be determined, at any time, according to the sum of (a) the aggregate principal
amount of the Advances (other than L/C Advances) outstanding at such time and
owing to the respective Lender Parties, (b) their respective Pro Rata Shares of
the aggregate Letter of Credit Obligations outstanding at such time, plus (c)
----
their respective Unused Revolving Commitments at such time. The failure of any
Lender Party to reimburse the Administrative Agent or the Syndication Agent
promptly upon demand for its ratable share of any amount required to be paid by
the Lender Parties to such Agent as provided herein shall not relieve any other
Lender Party of its obligation hereunder to reimburse such Agent for its ratable
share of such amount, but no Lender Party shall be responsible for the failure
of any other Lender Party to reimburse such Agent for such other Lender Party's
ratable share of such amount.
SECTION 8.06. SUCCESSOR AGENTS. The Administrative Agent may resign
----------------
at any time by giving written notice thereof to the Lender Parties and the
Borrower and may be removed at any time with or without cause by the Required
Lenders. Upon any such resignation or removal, the Required Lenders shall have
the right to appoint a successor Agent. If no successor Agent shall have been so
appointed by the Required Lenders, and shall have accepted such appointment,
within 30 days after the retiring Agent's giving of notice of resignation or the
Required Lenders' removal of the retiring Agent, then the retiring Agent may, on
behalf of the Lender Parties, appoint a successor Agent, which shall be a
commercial bank organized under the laws of the United States or of any State
thereof and having a combined capital and surplus of
73
<PAGE>
at least $250,000,000. Upon the acceptance of any appointment as Agent hereunder
by a successor Agent and upon the execution and filing or recording of such
financing statements, or amendments thereto, and such amendments or supplements
to the Mortgages, and such other instruments or notices, as may be necessary or
desirable, or as the Required Lenders may request, in order to continue the
perfection of the Liens granted or purported to be granted by the Collateral
Documents, such successor Agent shall succeed to and become vested with all the
rights, powers, discretion, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations under the
Loan Documents. After any retiring Agent's resignation or removal hereunder as
Agent, the provisions of this Article VIII shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement.
ARTICLE IX.
MISCELLANEOUS
SECTION 9.01. AMENDMENTS, ETC.; RELEASE OF COLLATERAL.
---------------------------------------
(A) AMENDMENTS, ETC. No amendment or waiver of any provision of this
----------------
Agreement or the Notes, nor consent to any departure by the Borrower therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Required Lenders (and, in the case of any such amendment, the Borrower),
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided, however, that no
-------- -------
amendment, waiver or consent shall, unless in writing and signed by all the
Lender Parties, do any of the following at any time: (i) waive any of the
conditions specified in Section 4.02 or, in the case of the initial Borrowing,
4.01, or waive any Event of Default arising under Section 7.01(k), (ii) change
the percentage of the Commitments or of the aggregate unpaid principal amount of
the Notes that shall be required for the Lender Parties or any of them to take
any action hereunder, (iii) release all of the Collateral or release any portion
of the Collateral equal to or greater than (at the time of such release) 10% or
more of the total assets of the Borrower and its Subsidiaries on a consolidated
basis or release any Guarantor from its obligations under the Guaranty or
otherwise modify the Guaranty in any way requiring consent of all Lenders
pursuant to Section 8 of the Guaranty, (iv) increase the total Obligations under
this Facility, (v) reduce or alter the principal of, or interest on, the Notes
held by the Lender or any fees or other amounts payable hereunder to any Lender,
(vi) postpone any date fixed for any payment of principal of, or interest on,
the Notes held by any Lender or any fees or other amounts payable hereunder to
any Lender, or (vii) amend this Section 9.01 or amend Section 2.05; provided
--------
further that no amendment, waiver or consent shall, unless in writing and signed
- -------
by the Swing Line Lender or the applicable Issuing Bank, as the case may be, in
addition to the Lenders required above to take such action, affect the rights or
obligations of the Swing Line Lender or of any Issuing Bank, as the case may be,
under this Agreement; and provided further that no amendment, waiver or consent
-------- -------
shall, unless in writing and signed by the Administrative Agent in addition to
the Lenders required above to take such action, affect the rights or duties of
the Administrative Agent
74
<PAGE>
(B) RELEASE OF COLLATERAL. So long as no Default under Section
----------------------
7.01(a), (e), or (f) and no Event of Default has occurred and is continuing,
upon the request of the Borrower, and without the consent of the Required
Lenders or any other Lender Party, the Administrative Agent is authorized to
and, subject to the provisions of this Section 9.01(b), shall release from the
Lien of any Collateral Document any item or items of Collateral comprising less
than all or substantially all of the Collateral at the time of such release (and
is authorized to, and subject to the provisions of this Section 9.01(b), shall,
at the Borrower's expense, execute any documents or instruments reasonably
requested by the Borrower in connection therewith) if (A) such release is
requested in conjunction with the consummation of any sale or other disposition
of such Collateral by the Borrower or any of its Subsidiaries that is not
prohibited by this Agreement, (B) arrangements satisfactory to the
Administrative Agent for the receipt by the Administrative Agent of any
prepayment required under Section 2.05(b) have been made, and (C) the Borrower
has delivered to the Administrative Agent an officer's certificate, signed by a
Responsible Officer, certifying that no Default under Section 6.01(a), (e), or
(f) and no Event of Default has occurred and is continuing and that such sale or
other disposition is not prohibited by this Agreement.
SECTION 9.02. NOTICES, ETC. All notices and other communications
------------
provided for hereunder shall be in writing (including telegraphic, telecopy,
telex or cable communication) and mailed, telegraphed, telecopied, telexed,
cabled or delivered, if to the Borrower, at its address at Smart & Final, Inc.,
600 Citadel Drive, Commerce, California 90040, Telecopier No. (323) 869-7862,
Attn: Donald G. Alvarado; if to any Initial Lender, at its Domestic Lending
Office specified opposite its name on Schedule I hereto; if to any other Lender,
at its Domestic Lending Office specified in the Assignment and Acceptance
pursuant to which it became a Lender; and if to the Administrative Agent, at its
address at Credit Lyonnais Los Angeles Branch, 515 South Flower Street, Los
Angeles, California, Telecopier No. (213) 623-3437, or, as to each party, at
such other address as shall be designated by such party in a written notice to
the other parties. All such notices and communications shall, when mailed,
telegraphed, telecopied, telexed or cabled, be effective when deposited in the
mails, delivered to the telegraph company, transmitted by telecopier, confirmed
by telex answerback or delivered to the cable company, respectively, except that
notices and communications to the Administrative Agent pursuant to Article II,
III, IV or VIII shall not be effective until received by the Administrative
Agent.
SECTION 9.03. NO WAIVER; REMEDIES. No failure on the part of any
-------------------
Lender Party or the Administrative Agent to exercise, and no delay in
exercising, any right hereunder, under any Note or under any other Loan Document
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right preclude any other or further exercise thereof or the exercise of
any other right. The remedies herein provided are cumulative and not exclusive
of any remedies provided by law.
SECTION 9.04. COSTS AND EXPENSES. (a) The Borrower agrees to pay on
------------------
demand (i) all costs and expenses of the Co-Lead Arrangers and the Agents in
connection with the negotiation, preparation, execution, delivery, syndication,
administration, modification and amendment of the Loan Documents, whether or not
the Loan Documents are executed or the Facility is closed, (including, without
limitation, (A) all due diligence, transportation, computer,
75
<PAGE>
duplication, appraisal, audit, insurance, consultant, search, filing and
recording fees and expenses and (B) the reasonable fees and expenses of counsel
for the Co-Lead Arrangers and the Agents with respect thereto, with respect to
advising the Co-Lead Arrangers and the Agents as to their rights and
responsibilities, or the perfection, protection or preservation of rights or
interests, under the Loan Documents, with respect to negotiations with any Loan
Party or with other creditors of any Loan Party or any of its Subsidiaries
arising out of any Default or any events or circumstances that may give rise to
a Default and with respect to presenting claims in or otherwise participating in
or monitoring any bankruptcy, insolvency or other similar proceeding involving
creditors' rights generally and any proceeding ancillary thereto) and (ii) all
costs and expenses of the Co-Lead Arrangers and the Agents, each Lender and each
Issuing Bank in connection with the enforcement of the Loan Documents, whether
in any action, suit or litigation, any bankruptcy, insolvency or other similar
proceeding affecting creditors' rights generally or otherwise (including,
without limitation, the reasonable fees and expenses of counsel for the Co-Lead
Arrangers and the Agents and each Lender Party with respect thereto).
(b) The Borrower agrees to indemnify and hold harmless the Agents,
each Lender, each Issuing Bank and each of their Affiliates and their officers,
directors, employees, agents and advisors (each, an "INDEMNIFIED PARTY") from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements (including, without
limitation, reasonable fees and expenses of counsel) that may be incurred by or
asserted or awarded against any Indemnified Party, in each case arising out of
or in connection with or by reason of, or in connection with the preparation for
a defense of, any investigation, litigation or proceeding arising out of,
related to or in connection with (i) this Agreement or any other Loan Document,
the actual or proposed use of the proceeds of any Advance or of any Letter of
Credit issued hereunder or any of the transactions contemplated hereby or by the
other Loan Documents, or (ii) the actual or alleged presence of Hazardous
Materials on any property of any Loan Party or any of its Subsidiaries or any
Environmental Action relating in any way to any Loan Party or any of its
Subsidiaries, in each case whether or not such investigation, litigation or
proceeding is brought by any Loan Party, its directors, shareholders or
creditors or an Indemnified Party or any Indemnified Party is otherwise a party
thereto and whether or not the transactions contemplated hereby are consummated,
except to the extent such claim, damage, loss, liability or expense is found in
a final, non-appealable judgment by a court of competent jurisdiction to have
resulted from such Indemnified Party's gross negligence or willful misconduct.
The Borrower also agrees not to assert any claim against the Administrative
Agent, any Lender Party, any of their affiliates, or any of their respective
directors, officers, employees, attorneys and agents, on any theory of
liability, for special, indirect, consequential or punitive damages arising out
of or otherwise relating to any of the transactions contemplated herein or in
any other Loan Document or the actual or proposed use of the proceeds of the
Advances.
(c) If any payment of principal of, or Conversion of, any Eurodollar
Rate Advance is made by the Borrower to or for the account of a Lender Party
other than on the last day of the Interest Period for such Advance, as a result
of a payment or conversion pursuant to Section 2.05 or 2.06, acceleration of the
maturity of the Notes pursuant to Section 7.01 or for any other reason, the
Borrower shall, upon demand by such Lender Party (with a copy of such
76
<PAGE>
demand to the Administrative Agent), pay to the Administrative Agent for the
account of such Lender Party any amounts required to compensate such Lender
Party for any additional losses, costs or expenses that it may reasonably incur
as a result of such payment, including, without limitation, any loss, cost or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by any Lender Party to fund or maintain such Advance. In
addition to the foregoing, if any losses, costs or expenses are incurred by the
Administrative Agent or any Lender with respect to Eurodollar Rate Advances
during the 180 day period following the Closing Date as a result of or in
connection with the syndication of the Facilities, the Borrower shall, upon
demand by the Administrative Agent or any Lender, pay to the Administrative
Agent or such Lender any amounts required to compensate the Administrative Agent
or such Lender for any such losses, costs or expenses.
(d) If any Loan Party fails to pay when due any costs, expenses or
other amounts payable by it under any Loan Document, including, without
limitation, fees and expenses of counsel and indemnities, such amount may be
paid on behalf of such Loan Party by the Administrative Agent or any Lender
Party, in its sole discretion and the Borrower shall reimburse the
Administrative Agent or such Lender Party on demand for any amounts so paid with
interest thereon at the Default Rate from the date of such payment until so
reimbursed.
SECTION 9.05. RIGHT OF SET-OFF. Upon (a) the occurrence and during
----------------
the continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 7.01 to authorize the
Administrative Agent to declare the Notes due and payable pursuant to the
provisions of Section 7.01, each Lender Party is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
otherwise apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by such Lender Party to or for the credit or the account of the Borrower against
any and all of the Obligations of the Borrower now or hereafter existing under
this Agreement and the Note or Notes held by such Lender Party, irrespective of
whether such Lender Party shall have made any demand under this Agreement or
such Note or Notes and although such obligations may be unmatured. Each Lender
Party agrees promptly to notify the Borrower after any such set-off and
application; provided, however, that the failure to give such notice shall not
-------- -------
affect the validity of such set-off and application. The rights of each Lender
Party under this Section are in addition to other rights and remedies
(including, without limitation, other rights of set-off) that such Lender Party
may have.
SECTION 9.06. BINDING EFFECT. This Agreement shall become effective
--------------
when it shall have been executed by the Borrower and the Administrative Agent
and when the Administrative Agent shall have been notified by each Lender Party
that such Lender Party has executed it and thereafter shall be binding upon and
inure to the benefit of the Borrower, the Administrative Agent and each Lender
Party and their respective successors and assigns, except that the Borrower
shall not have the right to assign its rights hereunder or any interest herein
without the prior written consent of the Lender Parties.
SECTION 9.07. ASSIGNMENTS AND PARTICIPATIONS. (a) Each Lender Party
------------------------------
may assign to one or more banks or other entities all or a portion of its rights
and obligations under
77
<PAGE>
this Agreement (including, without limitation, all or a portion of its
Commitment or Commitments, and the Advances owing to it and the Note or Notes
held by it); provided, however, that (i) each such assignment shall be of a
-------- -------
uniform, and not a varying, percentage of all rights and obligations under and
in respect of all of the Facilities and must occur simultaneously with an
assignment of a ratable portion of such Lenders' rights and obligations under
the Synthetic Lease Documents (and any assignment which is not made in
compliance with this clause (i) shall be void and of no force or effect), (ii)
except in the case of an assignment to a Person that, immediately prior to such
assignment, was a Lender Party or an assignment of all of a Lender Party's
rights and obligations under this Agreement, the amount of the Commitment of the
assigning Lender Party being assigned pursuant to each such assignment
(determined as of the date of the Assignment and Acceptance with respect to such
assignment) shall in no event be less than $5,000,000 and shall be an integral
multiple of $1,000,000, (iii) each such assignment shall be to an Eligible
Assignee, and (iv) the parties to each such assignment shall execute and deliver
to the Administrative Agent, for its acceptance and recording in the Register,
an Assignment and Acceptance, together with any Note or Notes subject to such
assignment and a processing and recordation fee of $2,500. Upon such execution,
delivery, acceptance and recording, from and after the effective date specified
in such Assignment and Acceptance, (x) the assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, have the rights and
obligations of a Lender Party hereunder and (y) the Lender Party assignor
thereunder shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its rights
and be released from its obligations under this Agreement (and, in the case of
an Assignment and Acceptance covering all or the remaining portion of an
assigning Lender Party's rights and obligations under this Agreement, such
Lender Party shall cease to be a party hereto).
(b) By executing and delivering an Assignment and Acceptance, the
Lender Party assignor thereunder and the assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (i) other than
as provided in such Assignment and Acceptance, such assigning Lender Party makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any other Loan Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any lien or security interest created or purported to be created
under or in connection with, this Agreement or any other Loan Document or any
other instrument or document furnished pursuant hereto or thereto; (ii) such
assigning Lender Party makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or any
other Loan Party or the performance or observance by any Loan Party of any of
its obligations under any Loan Document or any other instrument or document
furnished pursuant thereto; (iii) such assignee confirms that it has received a
copy of this Agreement, together with copies of the financial statements
referred to in Section 5.01 and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (iv) such assignee will, independently and
without reliance upon the Administrative Agent, such assigning Lender Party or
any other Lender Party and based on such documents and information as it shall
deem appropriate at the time, continue to make its own
78
<PAGE>
credit decisions in taking or not taking action under this Agreement; (v) such
assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints
and authorizes the Administrative Agent to take such action as agent on its
behalf and to exercise such powers and discretion under the Loan Documents as
are delegated to the Administrative Agent by the terms hereof, together with
such powers and discretion as are reasonably incidental thereto; and (vii) such
assignee agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender or Issuing Bank, as the case may be.
(c) The Administrative Agent shall maintain at its address referred
to in Section 9.02 a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and addresses of
the Lender Parties and the Commitment of, and principal amount of the Advances
owing to, each Lender Party from time to time (the "REGISTER"). The entries in
the Register shall be conclusive and binding for all purposes, absent manifest
error, and the Borrower, the Administrative Agent and the Lender Parties may
treat each Person whose name is recorded in the Register as a Lender Party
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by the Borrower or any Lender Party at any reasonable time and
from time to time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender Party and an assignee, together with any Note or Notes subject
to such assignment, the Administrative Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the form of Exhibit A
hereto, (i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof to the
Borrower. Within five Business Days after its receipt of such notice, the
Borrower, at its own expense, shall execute and deliver to the Administrative
Agent in exchange for the surrendered Note or Notes a new Note to the order of
such Eligible Assignee in an amount equal to the Commitment assumed by it
pursuant to such Assignment and Acceptance and, if the assigning Lender Party
has retained a Commitment hereunder, a new Note to the order of the assigning
Lender Party in an amount equal to the Commitment retained by it hereunder.
Such new Note or Notes shall be in an aggregate principal amount equal to the
aggregate principal amount of such surrendered Note or Notes, shall be dated the
effective date of such Assignment and Acceptance and shall otherwise be in
substantially the form of Exhibit D-1 or D-2 hereto, as applicable.
(e) Each Lender Party may sell participations in or to all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitments, the Advances owing to it and
the Note or Notes held by it); provided, however, that (i) such Lender Party's
obligations under this Agreement (including, without limitation, its
Commitments) shall remain unchanged, (ii) such Lender Party shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such Lender Party shall remain the holder of any such Note for all
purposes of this Agreement, (iv) the Borrower, the Administrative Agent and the
other Lender Parties shall continue to deal solely and directly with such Lender
Party in connection with such Lender Party's rights and obligations under this
79
<PAGE>
Agreement and (v) no participant under any such participation shall have any
right to approve any amendment or waiver of any provision of any Loan Document,
or any consent to any departure by any Loan Party therefrom, except to the
extent that such amendment, waiver or consent would reduce the principal of, or
interest on, the Notes or any fees or other amounts payable hereunder, in each
case to the extent subject to such participation, postpone any date fixed for
any payment of principal of, or interest on, the Notes or any fees or other
amounts payable hereunder, in each case to the extent subject to such
participation, or release all or substantially all of the Collateral.
(f) Any Lender Party may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.07, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrower furnished to such Lender
Party by or on behalf of the Borrower; provided, however, that, prior to any
-------- -------
such disclosure, the assignee or participant or proposed assignee or participant
shall agree to preserve the confidentiality of any Confidential Information
received by it from such Lender Party.
(g) Notwithstanding any other provision set forth in this Agreement,
any Lender Party may at any time create a security interest in all or any
portion of its rights under this Agreement (including, without limitation, the
Advances owing to it and the Note or Notes held by it) in favor of any Federal
Reserve Bank in accordance with Regulation A of the Board of Governors of the
Federal Reserve System.
SECTION 9.08. GOVERNING LAW. THIS AGREEMENT AND THE NOTES SHALL BE
-------------
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CALIFORNIA.
SECTION 9.09. EXECUTION IN COUNTERPARTS. This Agreement may be
-------------------------
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 9.10. NO LIABILITY OF THE ISSUING BANK. The Borrower assumes
--------------------------------
all risks of the acts or omissions of any beneficiary or transferee of any
Letter of Credit with respect to its use of such Letter of Credit. Neither any
Issuing Bank nor any of its officers or directors shall be liable or responsible
for: (a) the use that may be made of any Letter of Credit or any acts or
omissions of any beneficiary or transferee in connection therewith; (b) the
validity, sufficiency or genuineness of documents, or of any endorsement
thereon, even if such documents should prove to be in any or all respects
invalid, insufficient, fraudulent or forged; (c) payment by such Issuing Bank
against presentation of documents that do not comply with the terms of a Letter
of Credit, including failure of any documents to bear any reference or adequate
reference to the Letter of Credit; or (d) any other circumstances whatsoever in
making or failing to make payment under any Letter of Credit, except that the
------
Borrower shall have a claim against such
80
<PAGE>
Issuing Bank, and such Issuing Bank shall be liable to the Borrower, to the
extent of any direct, but not consequential, damages suffered by the Borrower
that the Borrower proves were caused by (i) such Issuing Bank's willful
misconduct or gross negligence in determining whether documents presented under
any Letter of Credit comply with the terms of the Letter of Credit or (ii) such
Issuing Bank's willful failure to make lawful payment under a Letter of Credit
after the presentation to it of a draft and certificates strictly complying with
the terms and conditions of the Letter of Credit. In furtherance and not in
limitation of the foregoing, such Issuing Bank may accept documents that appear
on their face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary.
SECTION 9.11. CONFIDENTIALITY. Neither the Administrative Agent nor
---------------
any Lender Party shall disclose any Confidential Information to any Person
without the consent of the Borrower, other than (a) to the Administrative
Agent's or such Lender Party's Affiliates and their officers, directors,
employees, agents and advisors and to actual or prospective Eligible Assignees
and participants, and then only on a confidential basis, (b) as required by any
law, rule or regulation or judicial process and (c) as requested or required by
any state, federal or foreign authority or examiner regulating banks or banking.
SECTION 9.12. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE
--------------------
AGENTS, THE ISSUING BANK AND THE LENDERS HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN
DOCUMENTS, THE ADVANCES, ANY LETTER OF CREDIT OR THE ACTIONS OF THE
ADMINISTRATIVE AGENT OR ANY LENDER PARTY IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE OR ENFORCEMENT THEREOF.
81
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
SMART & FINAL INC.
as Borrower
By: /s/ DONALD G. ALVARADO
-----------------------
Title: Secretary
S-1
<PAGE>
CREDIT LYONNAIS LOS ANGELES BRANCH,
as Administrative Agent
By: /s/ DIANNE M. SCOTT
--------------------------------
Title: First Vice President and
Manager
L/C Bank
--------
CREDIT LYONNAIS NEW YORK BRANCH
By:________________________________
Title: Senior Vice President
S-2
<PAGE>
Initial Lenders
---------------
CREDIT LYONNAIS LOS ANGELES BRANCH,
By: /s/ DIANNE M. SCOTT
--------------------------------
Title: First Vice President and
Manager
S-3
<PAGE>
NATIONSBANK, N.A.
By: /s/ CHAS McDONELL
-----------------------------
Title: Vice President
S-4
<PAGE>
UNION BANK OF CALIFORNIA, N.A.
By: /s/ TERRY ROCHA
--------------------------
Title: Vice President
S-5
<PAGE>
WELLS FARGO BANK, N.A.
By: /s/ CATHERINE M. WALLACE
--------------------------
Title: Vice President
/s/ DONALD A. HARTMAN
-----------------------------
Senior Vice President
S-6
<PAGE>
COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK N.A
"RABOBANK NEDERLAND", NEW YORK
BRANCH
By: /s/ BRADFORD F. SCOTT
---------------------
Title: Vice President
S-7
<PAGE>
SCHEDULE I
COMMITMENTS AND APPLICABLE LENDING OFFICES
<TABLE>
<CAPTION>
Domestic Eurodollar
Name of Revolving Swing Line Lending Lending
Lender Commitment Commitment Office Office
- ------------ ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Total: $150,000,000 $15,000,000
</TABLE>
<PAGE>
EXHIBIT 10.113
________________________________________________________________________________
PARTICIPATION AGREEMENT
Dated as of November 13, 1998
among
SMART & FINAL INC.,
as the Construction Agent and as the Lessee,
THE VARIOUS PARTIES HERETO FROM TIME TO TIME,
as the Guarantors,
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not individually, except as expressly stated herein,
but solely as the Owner Trustee under the S&F Trust 1998-1,
THE VARIOUS BANKS AND OTHER LENDING INSTITUTIONS WHICH ARE PARTIES HERETO FROM
TIME TO TIME, as the Holders,
THE VARIOUS BANKS AND OTHER LENDING INSTITUTIONS WHICH ARE PARTIES HERETO FROM
TIME TO TIME, as the Lenders,
and
CREDIT LYONNAIS LOS ANGELES BRANCH,
as the Administrative Agent for the Lenders
and respecting the Security Documents,
as the Administrative Agent for the Lenders and the Holders,
to the extent of their interests,
Co-Lead Arrangers:
CREDIT LYONNAIS LOS ANGELES BRANCH
NATIONSBANC MONTGOMERY SECURITIES LLC
Syndication Agent:
NATIONSBANC MONTGOMERY SECURITIES LLC
________________________________________________________________________________
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. THE LOANS................................................................................... 1
SECTION 2. HOLDER ADVANCES............................................................................. 2
SECTION 3. SUMMARY OF TRANSACTIONS..................................................................... 2
3.1. Operative Agreements........................................................................ 2
3.2. Property Purchase........................................................................... 2
3.3. Construction of Improvements; Commencement of Basic Rent.................................... 3
3.4. Ratable Interests of the Holders and the Lenders............................................ 3
SECTION 4. THE CLOSINGS................................................................................ 3
4.1. Initial Closing Date........................................................................ 3
4.2. Initial Closing Date; Property Closing Dates; Acquisition Advances; Construction Advances... 3
SECTION 5. FUNDING OF ADVANCES; CONDITIONS PRECEDENT; REPORTING REQUIREMENTS ON COMPLETION DATE;
THE LESSEE'S DELIVERY OF NOTICES; RESTRICTIONS ON LIENS.................................... 4
5.1. General..................................................................................... 4
5.2. Procedures for Funding...................................................................... 4
5.3. Conditions Precedent for the Lessor, the Agent, the Lenders and the Holders Relating to
the Initial Closing Date and the Advance of Funds for the Acquisition of a Property........ 6
5.4. Conditions Precedent for the Lessor, the Agent, the Lenders and the Holders Relating to
the Advance of Funds after the Acquisition Advance......................................... 12
5.5. Additional Reporting and Delivery Requirements on Completion Date and on Construction
Period Termination Date.................................................................... 13
5.6. The Construction Agent Delivery of Construction Budget Modifications........................ 14
5.7. Restrictions on Liens....................................................................... 14
5.8. Joinder Agreement Requirements.............................................................. 14
5.9. Payments.................................................................................... 15
5.10. Ratable Interests held by Holders, Lenders and Lenders pursuant to the Lessee Credit
Agreement.................................................................................. 15
5.11. Application and Allocation of Proceeds of the Sale or Other Disposition of the Properties
After an Event of Default.................................................................. 16
SECTION 6. REPRESENTATIONS AND WARRANTIES.............................................................. 16
6.1. Representations and Warranties of the Borrower.............................................. 16
6.2. Representations and Warranties of the Credit Parties........................................ 19
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
SECTION 6B. GUARANTY.................................................................................... 24
6B.1. Guaranty of Payment and Performance......................................................... 24
6B.2. Obligations Unconditional................................................................... 24
6B.3. Modifications............................................................................... 25
6B.4. Waiver of Rights............................................................................ 26
6B.5. Reinstatement............................................................................... 26
6B.6. Remedies.................................................................................... 26
6B.7. Limitation of Guaranty...................................................................... 27
6B.9. Release of Guarantors....................................................................... 27
SECTION 7. PAYMENT OF CERTAIN EXPENSES................................................................. 28
7.1. Transaction Expenses........................................................................ 28
7.2. Brokers' Fees............................................................................... 29
7.3. Certain Fees and Expenses................................................................... 29
7.4. Unused Fee.................................................................................. 30
7.5. Other Fees.................................................................................. 30
SECTION 8. OTHER COVENANTS AND AGREEMENTS.............................................................. 30
8.1. Cooperation with the Construction Agent or the Lessee....................................... 30
8.2. Covenants of the Owner Trustee and the Holders.............................................. 30
8.3. Credit Party Covenants, Consent and Acknowledgment.......................................... 32
8.4. Sharing of Certain Payments................................................................. 36
8.5. Grant of Easements, etc..................................................................... 37
8.6. Appointment by the Agent, the Lenders, the Holders and the Owner Trustee.................... 37
8.7. Collection and Allocation of Payments and Other Amounts..................................... 38
8.8. Release of Properties, etc.................................................................. 41
SECTION 9. CREDIT AGREEMENT AND TRUST AGREEMENT........................................................ 42
9.1. The Construction Agent's and the Lessee's Credit Agreement Rights........................... 42
9.2. The Construction Agent's and the Lessee's Trust Agreement Rights............................ 42
SECTION 10. TRANSFER OF INTEREST........................................................................ 43
10.1. Restrictions on Transfer.................................................................... 43
10.2. Effect of Transfer.......................................................................... 45
SECTION 11. INDEMNIFICATION............................................................................. 45
11.1. General Indemnity........................................................................... 45
11.2. General Tax Indemnity....................................................................... 48
11.3. Increased Costs, Illegality, etc............................................................ 52
11.4. Funding/Contribution Indemnity.............................................................. 54
11.5. EXPRESS INDEMNIFICATION FOR ORDINARY NEGLIGENCE, STRICT LIABILITY, ETC...................... 55
11.6. Additional Provisions Regarding Environmental Indemnification............................... 56
11.7. Additional Provisions Regarding Indemnification............................................. 56
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
11.8. Indemnifications Provided by the Owner Trustee in Favor of the Other Indemnified Persons.... 56
SECTION 12. MISCELLANEOUS............................................................................... 57
12.1. Survival of Agreements...................................................................... 57
12.2. Notices..................................................................................... 57
12.3. Counterparts................................................................................ 59
12.4. Terminations, Amendments, Waivers, Etc.; Unanimous Vote Matters............................. 59
12.5. Headings, etc............................................................................... 61
12.6. Parties in Interest......................................................................... 61
12.7. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL; VENUE...................... 61
12.9. Liability Limited........................................................................... 62
12.10. Rights of the Credit Parties................................................................ 64
12.11. Further Assurances.......................................................................... 64
12.12. Calculations under Operative Agreements..................................................... 64
12.13. Confidentiality............................................................................. 64
12.14. Financial Reporting/Tax Characterization.................................................... 65
12.15. Set-off..................................................................................... 65
</TABLE>
iii
<PAGE>
EXHIBITS
--------
A - Form of Requisition - Sections 4.2, 5.2, 5.3 and 5.4
B - Form of Outside Counsel Opinion for the Lessee - Section 5.3(j)
C - Form of Officer's Certificate - Section 5.3(x)
D - Form of Secretary's Certificate - Section 5.3(y)
E - Form of Officer's Certificate - Section 5.3(aa)
F - Form of Secretary's Certificate - Section 5.3(bb)
G - Form of Outside Counsel Opinion for the Owner Trustee - Section 5.3(cc)
H - Form of Outside Counsel Opinion for the Lessee - Section 5.3(dd)
I - Form of Officer's Certificate - Section 5.5
J - Form of Joinder Agreement - Section 5.8(a)
K - Description of Material Litigation - Section 6.2(d)
L - State of Incorporation/Formation and Principal Place of Business of Each
Guarantor - Section 6.2(i)
M - Form of Officer's Compliance Certificate - Section 8.3(l)
Appendix A - Rules of Usage and Definitions
iv
<PAGE>
PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT dated as of November 13, 1998 (as amended,
modified, extended, supplemented, restated and/or replaced from time to time,
this "Agreement") is by and among SMART & FINAL INC., a Delaware corporation
---------
(the "Lessee" or the "Construction Agent"); the various parties hereto from time
------ ------------------
to time as guarantors (subject to the definition of Guarantors in Appendix A
hereto, individually, a "Guarantor" and collectively, the "Guarantors"); FIRST
--------- ----------
SECURITY BANK, NATIONAL ASSOCIATION, a national banking association, not
individually (in its individual capacity, the "Trust Company"), except as
expressly stated herein, but solely as the Owner Trustee under the S&F Trust
1998-1 (the "Owner Trustee", the "Borrower" or the "Lessor"); the various banks
------------- -------- ------
and other lending institutions which are parties hereto from time to time as
holders of certificates issued with respect to the S&F Trust 1998-1 (subject to
the definition of Holders in Appendix A hereto, individually, a "Holder" and
---------- ------
collectively, the "Holders"); the various banks and other lending institutions
-------
which are parties hereto from time to time as lenders (subject to the definition
of Lenders in Appendix A hereto, individually, a "Lender" and collectively, the
---------- ------
"Lenders"); Credit Lyonnais Los Angeles Branch, as co-lead arranger and as the
-------
administrative agent for the Lenders and respecting the Security Documents, as
the administrative agent for the Lenders and the Holders, to the extent of their
interests (in such capacity, the "Agent"), and NationsBanc Montgomery Securities
-----
LLC, as co-lead arranger and as syndication agent. Capitalized terms used but
not otherwise defined in this Agreement shall have the meanings set forth in
Appendix A hereto.
- ----------
In consideration of the mutual agreements herein contained and other good
and valuable consideration, the receipt of which is hereby acknowledged, the
parties hereto hereby agree as follows:
SECTION 1. THE LOANS.
Subject to the terms and conditions of this Agreement and the other
Operative Agreements and in reliance on the representations and warranties of
each of the parties hereto contained herein or made pursuant hereto, the Lenders
have agreed to make Loans to the Lessor from time to time in an aggregate
principal amount of up to the aggregate amount of the Commitments of the Lenders
in order for the Lessor to acquire the Properties and certain Improvements, to
develop and construct certain Improvements in accordance with the Agency
Agreement and the terms and provisions hereof and for the other purposes
described herein, and in consideration of the receipt of proceeds of the Loans,
the Lessor will issue the Notes. The Loans shall be made and the Notes shall be
issued pursuant to the Credit Agreement. Pursuant to Section 5 of this Agreement
and Section 2 of the Credit Agreement, the Loans will be made to the Lessor from
time to time at the request of the Construction Agent to acquire the Properties
and the Equipment, in consideration for the Construction Agent agreeing for the
benefit of the Lessor, pursuant to the Agency Agreement, to construct certain
Improvements and to cause the Lessee to lease the Properties, each in accordance
with the Agency Agreement and the other Operative Agreements. The Loans and the
obligations of the Lessor under the Credit Agreement shall be secured by the
Collateral.
<PAGE>
SECTION 2. HOLDER ADVANCES.
Subject to the terms and conditions of this Agreement and the other
Operative Agreements and in reliance on the representations and warranties of
each of the parties hereto contained herein or made pursuant hereto, on each
date Advances are requested to be made in accordance with Section 5 hereof, each
Holder shall make a Holder Advance on a pro rata basis to the Lessor with
respect to the S&F Trust 1998-1 based on its Holder Commitment in an amount in
immediately available funds such that the aggregate of all Holder Advances on
such date shall be four percent (4%) of the amount of the Requested Funds on
such date; provided, that no Holder shall be obligated for any Holder Advance in
--------
excess of its pro rata share of the Available Holder Commitment. The aggregate
amount of Holder Advances shall be up to the aggregate amount of the Holder
Commitments. No prepayment or any other payment with respect to any Advance
shall be permitted such that the Holder Advance with respect to such Advance is
less than four percent (4%) of the outstanding amount of such Advance, except in
connection with termination or expiration of the Term or in connection with the
exercise of remedies relating to the occurrence of a Lease Event of Default. The
representations, warranties, covenants and agreements of the Holders herein and
in the other Operative Agreements are several, and not joint or joint and
several.
SECTION 3. SUMMARY OF TRANSACTIONS.
3.1. OPERATIVE AGREEMENTS.
--------------------
On the date hereof, each of the respective parties hereto and thereto shall
execute and deliver this Agreement, the Lease, each applicable Ground Lease, the
Agency Agreement, the Credit Agreement, the Notes, the Trust Agreement, the
Certificates, the Security Agreement, each applicable Mortgage Instrument and
such other documents, instruments, certificates and opinions of counsel as
agreed to by the parties hereto.
3.2. PROPERTY PURCHASE.
-----------------
On each Property Closing Date and subject to the terms and conditions of
this Agreement (a) the Holders will each make a Holder Advance in accordance
with Sections 2 and 5 of this Agreement and the terms and provisions of the
Trust Agreement; (b) the Lenders will each make Loans in accordance with
Sections 1 and 5 of this Agreement and the terms and provisions of the Credit
Agreement; (c) the Lessor will purchase and acquire good and marketable title
to, or ground lease pursuant to a Ground Lease, the applicable Property, each to
be within an Approved State, identified by the Construction Agent, in each case
pursuant to a Deed, Ground Lease or Bill of Sale, as the case may be, and grant
the Agent a lien on such Property by execution of the required Security
Documents; (d) the Agent, the Lessee and the Lessor shall execute and deliver a
Lease Supplement relating to such Property; and (e) the Term shall commence with
respect to such Property.
2
<PAGE>
3.3. CONSTRUCTION OF IMPROVEMENTS; COMMENCEMENT OF BASIC RENT.
--------------------------------------------------------
Construction Advances will be made with respect to particular Improvements
to be constructed and with respect to ongoing Work regarding the Equipment and
construction of particular Improvements, in each case, pursuant to the terms and
conditions of this Agreement and the Agency Agreement. The Construction Agent
will act as a construction agent on behalf of the Lessor respecting the Work
regarding the Equipment, the construction of such Improvements and the
expenditures of the Construction Advances related to the foregoing. The
Construction Agent shall promptly notify the Lessor upon Completion of the
Improvements and the Lessee shall commence to pay Basic Rent as of the Rent
Commencement Date.
3.4. RATABLE INTERESTS OF THE HOLDERS AND THE LENDERS.
------------------------------------------------
Each Holder and Lender agrees at all times (a) to hold the same ratable
portion of the aggregate Lender Commitment for Tranche A Loans, the aggregate
Lender Commitment for Tranche B Loans, the aggregate Holder Commitment and the
Lessee Credit Agreement Commitment Amount, provided that, solely with respect to
--------
(i) any Lender or Holder that shall, as of the Initial Closing Date, hold its
Lender Commitment for Tranche A Loans and Tranche B Loans, its Holder Commitment
and/or its percentage share of the Lessee Credit Agreement Commitment Amount
other than in the same ratable portion and (ii) any successor or assign of a
Lender or Holder described in clause (i), such Lender or Holder agrees to hold
the same ratable portion of the aggregate Lender Commitment for Tranche A Loans
and the aggregate Lender Commitment for Tranche B Loans and to maintain a
5.0:3.0 ratio between the dollar amount of its percentage share of the Lessee
Credit Agreement Commitment Amount and the dollar amount of the aggregate of its
Lender Commitment for Tranche A Loans, its Lender Commitment for Tranche B Loans
and its Holder Commitment, and (b) to make advances consistent with such
committed amounts referenced in Section 3.4(a) in accordance with the
requirements of the Operative Agreements and the Lessee Credit Agreement,
respectively.
SECTION 4. THE CLOSINGS.
4.1. INITIAL CLOSING DATE.
--------------------
All documents and instruments required to be delivered on the Initial
Closing Date shall be delivered at the offices of Latham & Watkins, Los Angeles,
California or at such other location as may be determined by the Lessor, the
Agent and the Lessee.
4.2. INITIAL CLOSING DATE; PROPERTY CLOSING DATES; ACQUISITION ADVANCES;
-------------------------------------------------------------------
CONSTRUCTION ADVANCES.
---------------------
The Construction Agent shall deliver to the Agent a requisition (a
"Requisition"), in the form attached hereto as Exhibit A or in such other form
----------- ---------
as is satisfactory to the Agent, in its reasonable discretion, in connection
with (a) the Transaction Expenses and other fees, expenses
3
<PAGE>
and disbursements payable, pursuant to Section 7.1, by the Lessor, (b) each
Acquisition Advance pursuant to Section 5.3, and (c) each Construction Advance
pursuant to Section 5.4.
SECTION 5. FUNDING OF ADVANCES; CONDITIONS PRECEDENT;
REPORTING REQUIREMENTS ON COMPLETION DATE;
THE LESSEE'S DELIVERY OF NOTICES; RESTRICTIONS ON LIENS.
5.1. GENERAL.
-------
(a) To the extent funds have been advanced to the Lessor as Loans by
the Lenders and to the Lessor as Holder Advances by the Holders, the Lessor
will use such funds from time to time in accordance with the terms and
conditions of this Agreement and the other Operative Agreements (i) at the
direction of the Construction Agent to acquire the Properties in accordance
with the terms of this Agreement, the Agency Agreement and the other
Operative Agreements, (ii) to make Advances to the Construction Agent to
permit the acquisition, testing, engineering, installation, development,
construction, modification, design, and renovation, as applicable, of the
Properties (or components thereof) in accordance with the terms of the
Agency Agreement and the other Operative Agreements, and (iii) to pay
Transaction Expenses, fees, expenses and other disbursements payable by the
Lessor under Sections 7.1(a) and 7.1(b).
(b) In lieu of the payment of interest on the Loans and Holder Yield
on the Holder Advances on any Scheduled Interest Payment Date with respect
to any Property during the period prior to the Rent Commencement Date with
respect to such Property, (i) each Lender's Loan shall automatically be
increased by the amount of interest accrued and unpaid on such Loan for
such period (except to the extent that at any time such increase would
cause such Lender's Loan to exceed such Lender's Available Commitment, in
which case the Lessee shall pay such excess amount to such Lender in
immediately available funds on the date such Lender's Available Commitment
was exceeded), and (ii) each Holder's Holder Advance shall automatically be
increased by the amount of Holder Yield accrued and unpaid on such Holder
Advance for such period (except to the extent that at any time such
increase would cause the Holder Advance of such Holder to exceed such
Holder's Available Holder Commitment, in which case the Lessee shall pay
such excess amount to such Holder in immediately available funds on the
date the Available Holder Commitment of such Holder was exceeded). Such
increases in a Lender's Loan and a Holder's Holder Advance shall occur
without any disbursement of funds by any Person.
5.2. PROCEDURES FOR FUNDING.
----------------------
(a) The Construction Agent shall designate the date for Advances
hereunder in accordance with the terms and provisions hereof which date
shall not be earlier than three (3) Business Days following the
Construction Agent's delivery to Agent of a Requisition with respect to any
such Advance; provided, however, it is understood and
-------- -------
4
<PAGE>
agreed that no more than one (1) Advance (excluding any continuation of any
Loan or Holder Advance) may be requested during any calendar month. On the
first (1st) Business Day of each calendar month, as needed, the
Construction Agent shall deliver to the Agent, (A) with respect to the date
that the first Advance is requested hereunder and each subsequent
Acquisition Advance, a Requisition as described in Section 4.2 hereof
(including without limitation a legal description of the Land, if any, a
schedule of the Improvements, if any, and a schedule of the Equipment, if
any, acquired or to be acquired on such date, and a schedule of the Work,
if any, to be performed, each of the foregoing in a form reasonably
acceptable to the Agent) and (B) with respect to each Construction Advance,
a Requisition identifying (among other things) the Property to which such
Construction Advance relates.
(b) Each Requisition shall: (i) be irrevocable, (ii) request funds in
an amount that is not in excess of the total aggregate of the Available
Commitments plus the Available Holder Commitments at such time, and (iii)
request that the Holders make Holder Advances and that the Lenders make
Loans to the Lessor for the payment of Transaction Expenses, Property
Acquisition Costs (in the case of an Acquisition Advance) or other Property
Costs (in the case of a Construction Advance) that have previously been
incurred or are to be incurred on the date of such Advance to the extent
such were not subject to a prior Requisition, in each case as specified in
the Requisition.
(c) Subject to the satisfaction of the conditions precedent set forth
in Sections 5.3 or 5.4, as applicable, on each Property Closing Date or the
date on which the Construction Advance is to be made, as applicable, (i)
the Lenders shall make Loans based on their respective Lender Commitments
to the Lessor in an aggregate amount equal to ninety-six percent (96%) of
the Requested Funds specified in any Requisition plus any additional amount
of Transaction Expenses as referenced in Sections 7.1(a) and 7.1(b) and any
additional amount respecting any indemnity payment as referenced in Section
11.8, unless any such funding of Transaction Expenses or any indemnity
payment is declined in writing by each Lender and each Holder (such
decision to be in the sole discretion of each Lender and each Holder)
ratably between the Tranche A Lenders and the Tranche B Lenders with the
Tranche A Lenders funding eighty-six percent (86%) of the Requested Funds
and the Tranche B Lenders funding ten percent (10%) of the Requested
Funds), up to an aggregate principal amount equal to the aggregate of the
Available Commitments; (ii) the Holders shall make Holder Advances based on
their respective Holder Commitments in an aggregate amount equal to four
percent (4%) of the balance of the Requested Funds specified in such
Requisition plus any additional amount of Transaction Expenses as
referenced in Sections 7.1(a) and 7.1(b) and any additional amount
respecting any indemnity payment as referenced in Section 11.8, unless any
such funding of Transaction Expenses or any indemnity payment is declined
in writing by each Lender and each Holder (such decision to be in the sole
discretion of each Lender and each Holder), up to the aggregate advanced
amount equal to the aggregate of the Available Holder Commitments; and
(iii) the total amount of such Loans and Holder Advances made on such date
shall (x) be used by the Lessor to pay Property Costs including Transaction
Expenses within three (3) Business Days of the receipt by the
5
<PAGE>
Lessor of such Advance or (y) be advanced by the Lessor on the date of such
Advance to the Construction Agent or the Lessee to pay Property Costs, as
applicable. Notwithstanding that the Operative Agreements state that
Advances shall be directed to the Lessor, each Advance shall in fact be
directed to the Construction Agent (for the benefit of the Lessor) and
applied by the Construction Agent (for the benefit of the Lessor) pursuant
to the requirements imposed on the Lessor under the Operative Agreements.
(d) With respect to an Advance obtained by the Lessor to pay for
Property Costs and/or Transaction Expenses or other costs payable under
Section 7.1 hereof and not expended by the Lessor for such purpose on the
date of such Advance, such amounts shall be held by the Lessor (or the
Agent on behalf of the Lessor) until the applicable closing date or, if
such closing date does not occur within three (3) Business Days of the date
of the Lessor's receipt of such Advance, shall be applied regarding the
applicable Advance to repay the Lenders and the Holders and, subject to the
terms hereof, and of the Credit Agreement and the Trust Agreement, shall
remain available for future Advances. Any such amounts held by the Lessor
(or the Agent on behalf of the Lessor) shall be subject to the lien of the
Security Agreement.
(e) All Operative Agreements which are to be delivered to the Lessor,
the Agent, the Lenders or the Holders shall be delivered to the Agent, on
behalf of the Lessor, the Agent, the Lenders or the Holders, and such items
(except for Notes, Certificates, Bills of Sale, the Ground Leases and
chattel paper originals, with respect to which in each case there shall be
only one original) shall be delivered with originals sufficient for the
Lessor, the Agent, each Lender and each Holder. All other items which are
to be delivered to the Lessor, the Agent, the Lenders or the Holders shall
be delivered to the Agent, on behalf of the Lessor, the Agent, the Lenders
or the Holders, and such other items shall be held by the Agent. To the
extent any such other items are requested in writing from time to time by
the Lessor, any Lender or any Holder, the Agent shall provide a copy of
such item to the party requesting it.
(f) Notwithstanding the completion or any closing under this
Agreement pursuant to Sections 5.3 or 5.4, each condition precedent in
connection with any such closing may be subsequently enforced by the Agent
(unless such has been expressly waived in writing by the Agent).
5.3. CONDITIONS PRECEDENT FOR THE LESSOR, THE AGENT, THE LENDERS AND THE
--------------------------------------------------------------------
HOLDERS RELATING TO THE INITIAL CLOSING DATE AND THE ADVANCE OF FUNDS
---------------------------------------------------------------------
FOR THE ACQUISITION OF A PROPERTY.
---------------------------------
The obligations (i) on the Initial Closing Date of the Lessor, the Agent,
the Lenders and the Holders to enter into the transactions contemplated by this
Agreement, including without limitation the obligation to execute and deliver
the applicable Operative Agreements to which each is a party on the Initial
Closing Date, (ii) on the Initial Closing Date of the Holders to make Holder
Advances, and of the Lenders to make Loans in order to pay Transaction Expenses,
fees,
6
<PAGE>
expenses and other disbursements payable by the Lessor under Section 7.1(a) of
this Agreement and (iii) on a Property Closing Date for the purpose of providing
funds to the Lessor necessary to pay the Transaction Expenses, fees, expenses
and other disbursements payable by the Lessor under Section 7.1(b) of this
Agreement and to acquire or ground lease a Property (an "Acquisition Advance"),
-------------------
in each case (with regard to the foregoing Sections 5.3(i), (ii) and (iii)) are
subject to the satisfaction or waiver of the following conditions precedent on
or prior to the Initial Closing Date or the applicable Property Closing Date, as
the case may be (to the extent such conditions precedent require the delivery of
any agreement, certificate, instrument, memorandum, legal or other opinion,
appraisal, commitment, title insurance commitment, lien report or any other
document of any kind or type, such shall be in form and substance satisfactory
to the Agent, in its reasonable discretion; notwithstanding the foregoing, the
obligations of each party shall not be subject to any conditions contained in
this Section 5.3 which are required to be performed by such party):
(a) the correctness of the representations and warranties of the
parties to this Agreement contained herein, in each of the other Operative
Agreements and each certificate delivered pursuant to any Operative
Agreement (including without limitation the Incorporated Representations
and Warranties) on each such date;
(b) the performance by the parties to this Agreement of their
respective agreements contained herein and in the other Operative
Agreements to be performed by them on or prior to each such date;
(c) the Agent shall have received a fully executed counterpart copy
of the Requisition, appropriately completed;
(d) title to each such Property shall conform to the representations
and warranties set forth in Section 6.2(l) hereof;
(e) the Construction Agent shall have delivered to the Agent a good
standing certificate for the Construction Agent in the state where each
such Property is located, the Deed with respect to the Land and existing
Improvements (if any), a copy of the Ground Lease (if any), and a copy of
the Bill of Sale with respect to the Equipment (if any), respecting such of
the foregoing as are being acquired or ground leased on each such date with
the proceeds of the Loans and Holder Advances or which have been previously
acquired or ground leased with the proceeds of the Loans and Holder
Advances and such Land, existing Improvements (if any) and Equipment (if
any) shall be located in an Approved State;
(f) there shall not have occurred and be continuing any Default or
Event of Default under any of the Operative Agreements and no Default or
Event of Default under any of the Operative Agreements will have occurred
after giving effect to the Advance requested by each such Requisition;
7
<PAGE>
(g) the Construction Agent shall have delivered to the Agent title
insurance commitments to issue policies respecting each such Property, with
such endorsements as the Agent deems necessary, in favor of the Lessor and
the Agent from a title insurance company acceptable to the Agent, but only
with such title exceptions thereto as are acceptable to the Agent;
(h) the Construction Agent shall have delivered to the Agent an
environmental site assessment respecting each such Property prepared by an
independent recognized professional acceptable to the Agent and evidencing
no pre-existing environmental condition with respect to which there is more
than a remote risk of loss;
(i) the Construction Agent shall have delivered to the Agent a survey
(with a flood hazard certification) respecting each such Property prepared
by (i) an independent recognized professional acceptable to the Agent and
(ii) in a manner and including such information as is required by the
Agent;
(j) unless such an opinion has previously been delivered with respect
to a particular state, the Construction Agent shall have caused to be
delivered to the Agent a legal opinion in the form attached hereto as
Exhibit B or in such other form as is acceptable to the Agent with respect
---------
to local law real property issues respecting the state in which each such
Property is located addressed to the Lessor, the Agent, the Lenders and the
Holders, from counsel located in the state where each such Property is
located, prepared by counsel acceptable to the Agent and a separate flood
hazard certificate respecting each such Property prepared by an independent
recognized professional acceptable to the Agent;
(k) the Agent shall be satisfied that the acquisition, ground leasing
and/or holding of each such Property and the execution of the Mortgage
Instrument and the other Security Documents will not materially and
adversely affect the rights of the Lessor, the Agent, the Holders or the
Lenders under or with respect to the Operative Agreements;
(l) the Construction Agent shall have delivered to the Agent invoices
for, or other reasonably satisfactory evidence of, the various Transaction
Expenses and other fees, expenses and disbursements referenced in Sections
7.1(a) or 7.1(b) of this Agreement, as appropriate;
(m) the Construction Agent shall have caused to be delivered to the
Agent a Mortgage Instrument (in such form as is acceptable to the Agent,
with revisions as necessary to conform to applicable state law), Lessor
Financing Statements and Lender Financing Statements respecting each such
Property, all fully executed and in recordable form;
(n) the Lessee shall have delivered to the Agent with respect to each
such Property a Lease Supplement and a memorandum (or short form lease)
regarding the Lease and such Lease Supplement (such memorandum or short
form lease to be in the
8
<PAGE>
form attached to the Lease as Exhibit B or in such other form as is
---------
acceptable to the Agent, with modifications as necessary to conform to
applicable state law, and in form suitable for recording); and if any such
Property is subject to a Ground Lease, the Construction Agent shall have
caused a lease memorandum (or short form lease) to be delivered to the
Agent for such Ground Lease and, if requested by the Agent, a landlord
waiver and a mortgagee waiver (in each case, in such form as is acceptable
to the Agent);
(o) with respect to each Acquisition Advance, the sum of the
Available Commitment plus the Available Holder Commitment (after deducting
the Unfunded Amount, if any, and after giving effect to the Acquisition
Advance) will be sufficient to pay all amounts payable therefrom;
(p) the Construction Agent shall have delivered to the Agent a
preliminary Construction Budget for each such Property, if applicable;
(q) the Construction Agent shall have provided evidence to the Agent
of insurance with respect to each such Property as provided in the Lease;
(r) the Construction Agent shall have caused an Appraisal regarding
each such Property to be provided to the Agent from an appraiser selected
by the Agent, which Appraisal must show each such Property to have a value
equal to or greater than ninety and 90/100 percent (90.90%) of its Property
Cost or its Budgeted Total Property Cost, as applicable; in other words,
the Property Cost for each such Property shall not exceed 110% of its value
as shown on the related Appraisal;
(s) the Construction Agent shall cause (i) Uniform Commercial Code
lien searches, tax lien searches and judgment lien searches regarding the
Lessee to be conducted (and copies thereof to be delivered to the Agent) in
such jurisdictions as determined by the Agent by a nationally recognized
search company acceptable to the Agent and (ii) the liens referenced in
such lien searches which are objectionable to the Agent to be either
removed or otherwise handled in a manner satisfactory to the Agent;
(t) all taxes, fees and other charges in connection with the
execution, delivery, recording, filing and registration of the Operative
Agreements and/or documents related thereto shall have been paid or
provisions for such payment shall have been made to the satisfaction of the
Agent;
(u) in the opinion of the Agent and its counsel, the transactions
contemplated by the Operative Agreements do not and will not subject the
Lessor, the Lenders, the Agent or the Holders to any adverse regulatory
prohibitions, constraints, penalties or fines;
(v) each of the Operative Agreements to be entered into on such date
shall have been duly authorized, executed and delivered by the parties
thereto, and shall be in
9
<PAGE>
full force and effect, and the Agent shall have received a fully executed
copy of each of the Operative Agreements;
(w) since the date of the most recent audited financial statements
(as delivered pursuant to the requirements of the Lessee Credit Agreement)
of the Lessee, there shall not have occurred any event, condition or state
of facts which shall have or could reasonably be expected to have a
Material Adverse Effect, other than as specifically contemplated by the
Operative Agreements ;
(x) as of the Initial Closing Date only, the Agent shall have
received an Officer's Certificate, dated as of the Initial Closing Date, of
the Lessee in the form attached hereto as Exhibit C or in such other form
---------
as is acceptable to the Agent stating that (i) each and every
representation and warranty of each Credit Party contained in the Operative
Agreements to which it is a party is true and correct on and as of the
Initial Closing Date; (ii) no Default or Event of Default has occurred and
is continuing under any Operative Agreement; (iii) each Operative Agreement
to which any Credit Party is a party is in full force and effect with
respect to it; and (iv) each Credit Party has duly performed and complied
with all covenants, agreements and conditions contained herein or in any
Operative Agreement required to be performed or complied with by it on or
prior to the Initial Closing Date;
(y) as of the Initial Closing Date only, the Agent shall have
received (i) a certificate of the Secretary or an Assistant Secretary of
each Credit Party, dated as of the Initial Closing Date, in the form
attached hereto as Exhibit D or in such other form as is acceptable to the
---------
Agent attaching and certifying as to (1) the resolutions of the Board of
Directors of such Credit Party duly authorizing the execution, delivery and
performance by such Credit Party of each of the Operative Agreements to
which it is or will be a party, (2) the articles of incorporation of such
Credit Party certified as of a recent date by the Secretary of State of its
state of incorporation and its by-laws and (3) the incumbency and signature
of persons authorized to execute and deliver on behalf of such Credit Party
the Operative Agreements to which it is or will be a party and (ii) a good
standing certificate (or local equivalent) from the respective states where
such Credit Party is incorporated and where the principal place of business
of such Credit Party is located as to its good standing in each such state.
To the extent any Credit Party is a partnership, a limited liability
company or is otherwise organized, such Person shall deliver to the Agent
(in form and substance satisfactory to the Agent) as of the Initial Closing
Date (A) a certificate regarding such Person and any corporate general
partners covering the matters described in Exhibit D and (B) a good
---------
standing certificate, a certificate of limited partnership or a local
equivalent of either of the foregoing, as applicable;
(z) as of the Initial Closing Date only, there shall not have
occurred any material adverse change in the consolidated assets,
liabilities, operations, business or condition (financial or otherwise) of
the Credit Parties (on a consolidated basis) from that set forth in the
most recent audited consolidated financial statements of the Credit Parties
which have been provided to the Agent;
10
<PAGE>
(aa) as of the Initial Closing Date only, the Agent shall have
received an Officer's Certificate of the Lessor dated as of the Initial
Closing Date in the form attached hereto as Exhibit E or in such other form
---------
as is acceptable to the Agent, stating that (i) each and every
representation and warranty of the Lessor contained in the Operative
Agreements to which it is a party is true and correct on and as of the
Initial Closing Date, (ii) each Operative Agreement to which the Lessor is
a party is in full force and effect with respect to it and (iii) the Lessor
has duly performed and complied with all covenants, agreements and
conditions contained herein or in any Operative Agreement required to be
performed or complied with by it on or prior to the Initial Closing Date;
(bb) as of the Initial Closing Date only, the Agent shall have
received (i) a certificate of the Secretary, an Assistant Secretary, Trust
Officer or Vice President of the Trust Company in the form attached hereto
as Exhibit F or in such other form as is acceptable to the Agent, attaching
---------
and certifying as to (A) the signing resolutions duly authorizing the
execution, delivery and performance by the Lessor of each of the Operative
Agreements to which it is or will be a party, (B) its articles of
association or other equivalent charter documents and its by-laws, as the
case may be, certified as of a recent date by an appropriate officer of the
Trust Company and (C) the incumbency and signature of persons authorized to
execute and deliver on its behalf the Operative Agreements to which it is a
party and (ii) a good standing certificate from the Office of the
Comptroller of the Currency;
(cc) as of the Initial Closing Date only, counsel for the Lessor
acceptable to the Agent shall have issued to the Lessee, the Holders, the
Lenders and the Agent its opinion in the form attached hereto as Exhibit G
---------
or in such other form as is reasonably acceptable to the Agent;
(dd) as of the Initial Closing Date only, the Construction Agent shall
have caused to be delivered to the Agent a legal opinion in the form
attached hereto as Exhibit H or in such other form as is acceptable to the
---------
Agent, addressed to the Lessor, the Agent, the Lenders and the Holders,
from counsel acceptable to the Agent;
(ee) as of the Initial Closing Date only, the Construction Agent shall
cause (i) tax lien searches and judgment lien searches regarding each
Credit Party to be conducted (and copies thereof to be delivered to the
Agent) in such jurisdictions as determined by the Agent by a nationally
recognized search company acceptable to the Agent and (ii) the liens
referenced in such lien searches which are objectionable to the Agent to be
either removed or otherwise handled in a manner satisfactory to the Agent;
and
(ff) counsel (acceptable to the Agent) for the ground lessor of each
such Property subject to a Ground Lease shall have issued to the Lessor,
the Agent, the Lenders and the Holders, its opinion.
11
<PAGE>
5.4. CONDITIONS PRECEDENT FOR THE LESSOR, THE AGENT, THE LENDERS AND THE
-------------------------------------------------------------------
HOLDERS RELATING TO THE ADVANCE OF FUNDS AFTER THE ACQUISITION
--------------------------------------------------------------
ADVANCE.
-------
The obligations of the Holders to make Holder Advances, and the Lenders to
make Loans in connection with all requests for Advances subsequent to the
acquisition of a Property (and to pay the Transaction Expenses, fees, expenses
and other disbursements payable by the Lessor under Section 7.1 of this
Agreement in connection therewith) are subject to the satisfaction or waiver of
the following conditions precedent (to the extent such conditions precedent
require the delivery of any agreement, certificate, instrument, memorandum,
legal or other opinion, appraisal, commitment, title insurance commitment, lien
report or any other document of any kind or type, such shall be in form and
substance satisfactory to the Agent, in its reasonable discretion.
Notwithstanding the foregoing, the obligations of each party shall not be
subject to any conditions contained in this Section 5.4 which are required to be
performed by such party):
(a) the correctness on such date of the representations and
warranties of the parties to this Agreement contained herein, in each of
the other Operative Agreements and in each certificate delivered pursuant
to any Operative Agreement (including without limitation the Incorporated
Representations and Warranties);
(b) the performance by the parties to this Agreement of their
respective agreements contained herein and in the other Operative
Agreements to be performed by them on or prior to each such date;
(c) the Agent shall have received a fully executed counterpart of the
Requisition, appropriately completed;
(d) based upon the applicable Construction Budget which shall satisfy
the requirements of this Agreement, the Available Commitments and the
Available Holder Commitment (after deducting the Unfunded Amount) will be
sufficient to complete the Improvements;
(e) there shall not have occurred and be continuing any Default or
Event of Default under any of the Operative Agreements and no Default or
Event of Default under any of the Operative Agreements will have occurred
after giving effect to the Construction Advance requested by the applicable
Requisition;
(f) the title insurance policy delivered in connection with the
requirements of Section 5.3(g) shall provide for (or shall be endorsed to
provide for) insurance in an amount at least equal to the maximum total
Property Cost indicated by the Construction Budget referred to in
subparagraph (d) above and there shall be no title change or exception
objectionable to the Agent;
(g) the Construction Agent shall have delivered to the Agent copies
of the Plans and Specifications for the applicable Improvements;
12
<PAGE>
(h) the Construction Agent shall have delivered to the Agent invoices
for, or other reasonably satisfactory evidence of, any Transaction Expenses
and other fees, expenses and disbursements referenced in Section 7.1(b)
that are to be paid with the Advance;
(i) the Construction Agent shall have delivered, or caused to be
delivered to the Agent, invoices, Bills of Sale or other documents
acceptable to the Agent, in each case with regard to any Equipment or other
components of such Property then being acquired with the proceeds of the
Loans and Holder Advances and naming the Lessor as purchaser and
transferee;
(j) all taxes, fees and other charges in connection with the
execution, delivery, recording, filing and registration of the Operative
Agreements shall have been paid or provisions for such payment shall have
been made to the satisfaction of the Agent;
(k) since the date of the most recent audited Financial Statements
(as such term is defined in the Lessee Credit Agreement) of the Lessee,
there shall not have occurred any event, condition or state of facts which
shall have or could reasonably be expected to have a Material Adverse
Effect, other than as specifically contemplated by the Operative
Agreements; and
(l) in the opinion of the Agent and its counsel, the transactions
contemplated by the Operative Agreements do not and will not subject the
Lessor, the Lenders, the Agent or the Holders to any adverse regulatory
prohibitions, constraints, penalties or fines.
5.5. ADDITIONAL REPORTING AND DELIVERY REQUIREMENTS ON COMPLETION DATE AND
---------------------------------------------------------------------
ON CONSTRUCTION PERIOD TERMINATION DATE.
---------------------------------------
On or prior to the Completion Date for each Property, the Construction
Agent shall deliver to the Agent an Officer's Certificate in the form attached
hereto as Exhibit I or in such other form as is acceptable to the Agent
---------
specifying (a) the address for such Property; (b) the Completion Date for such
Property; (c) the aggregate Property Cost for such Property; (d) detailed,
itemized documentation supporting the asserted Property Cost figures; and (e)
that all representations and warranties of the Construction Agent and Lessee in
each of the Operative Agreements and each certificate delivered pursuant thereto
(including without limitation the Incorporated Representations and Warranties)
are true and correct as of the Completion Date. The Agent shall have the right
to contest the information contained in such Officer's Certificate. Furthermore,
on or prior to the Completion Date for each Property, the Construction Agent
shall deliver or cause to be delivered to the Agent (unless previously delivered
to the Agent) originals of the following, each of which shall be in form and
substance acceptable to the Agent, in its reasonable discretion: (w) a title
insurance endorsement regarding the title insurance policy delivered in
connection with the requirements of Section 5.3(g), but only to the extent such
endorsement is necessary to provide for insurance in an amount at least equal to
the maximum total Property Cost and, if endorsed, the endorsement shall not
include a title change or exception
13
<PAGE>
objectionable to the Agent; (x) an as-built survey for such Property; (y)
insurance certificates respecting such Property as required hereunder and under
the Lease Agreement; and (z) if requested by the Agent, amendments to the Lessor
Financing Statements executed by the appropriate parties.
5.6. THE CONSTRUCTION AGENT DELIVERY OF CONSTRUCTION BUDGET MODIFICATIONS.
--------------------------------------------------------------------
The Construction Agent covenants and agrees to deliver to the Agent each
month notification of any modification to any Construction Budget regarding any
Property if such modification increases the cost to construct such Property;
provided no Construction Budget may be increased unless (a) the title insurance
- --------
policies referenced in Section 5.3(g) are also modified or endorsed, if
necessary, to provide for insurance in an amount that satisfies the requirements
of Section 5.4(f) of this Agreement and (b) after giving effect to any such
amendment, the Construction Budget remains in compliance with the requirements
of Section 5.4(d) of this Agreement.
5.7. RESTRICTIONS ON LIENS.
---------------------
On each Property Closing Date, the Construction Agent shall cause each
Property acquired by the Lessor on such date to be free and clear of all Liens
except those referenced in Sections 6.2(r)(i) and 6.2(r)(ii). On each date a
Property is either sold to a third party in accordance with the terms of the
Operative Agreements or, pursuant to Section 22.1(a) of the Lease Agreement,
retained by the Lessor, the Lessee shall cause such Property to be free and
clear of all Liens (other than Lessor Liens and such other Liens that are
expressly set forth as title exceptions on the title commitment issued under
Section 5.3(g) with respect to such Property, to the extent such title
commitment has been approved by the Agent).
5.8. JOINDER AGREEMENT REQUIREMENTS.
------------------------------
Each Domestic Subsidiary formed or acquired subsequent to the Initial
Closing Date shall become a Guarantor and shall satisfy the following conditions
within thirty (30) days after the formation or acquisition of such Domestic
Subsidiary:
(a) such Domestic Subsidiary shall execute and deliver to the Agent a
Joinder Agreement in the form attached hereto as Exhibit J;
---------
(b) such Domestic Subsidiary shall have delivered to the Agent (x) an
Officer's Certificate of such Domestic Subsidiary in the form attached
hereto as Exhibit C, (y) a certificate of the Secretary or an Assistant
---------
Secretary of such Domestic Subsidiary in the form attached hereto as
Exhibit D and (z) good standing certificates (or local equivalent) from the
---------
respective states where such Domestic Subsidiary is incorporated or
organized and where the principal place of business of such Domestic
Subsidiary is located as to its good standing in each such state;
14
<PAGE>
(c) such Domestic Subsidiary shall have delivered to the Agent an
opinion of counsel (acceptable to the Agent) in the form attached hereto as
Exhibit H; and
---------
(d) the Agent shall have received such other documents, certificates
and information as the Agent shall have reasonably requested.
5.9. PAYMENTS.
--------
All payments of principal, interest, Holder Advances, Holder Yield and
other amounts to be made by the Construction Agent or the Lessee under this
Agreement or any other Operative Agreement (excluding Excepted Payments which
shall be paid directly to the party to whom such payments are owed) shall be
made to the Agent at the office designated by the Agent from time to time in
Dollars and in immediately available funds, without setoff, deduction, or
counterclaim. Subject to the definition of "Interest Period" in Appendix A
----------
attached hereto, whenever any payment under this Agreement or any other
Operative Agreement shall be stated to be due on a day that is not a Business
Day, such payment may be made on the next succeeding Business Day, and such
extension of time in such case shall be included in the computation of interest,
Holder Yield and fees payable pursuant to the Operative Agreements, as
applicable and as the case may be.
5.10. RATABLE INTERESTS HELD BY HOLDERS, LENDERS AND LENDERS PURSUANT TO
------------------------------------------------------------------
THE LESSEE CREDIT AGREEMENT.
---------------------------
Each Holder and Lender agrees at all times that it shall hold the same
ratable percentage interest in outstanding Tranche A Loans (if any), Tranche A
Commitments, outstanding Tranche B Loans (if any), Tranche B Commitments,
outstanding Holder Advances (if any), Holder Commitments, outstanding loans
pursuant to the Lessee Credit Agreement (if any) and loan commitments pursuant
to the Lessee Credit Agreement, provided that, solely with respect to (i) any
--------
Holder or Lender that shall, as of the Initial Closing Date, hold its interest
in outstanding Tranche A Loans (if any), Tranche A Commitments, outstanding
Tranche B Loans (if any), Tranche B Commitments, outstanding Holder Advances (if
any), Holder Commitments, outstanding loans pursuant to the Lessee Credit
Agreement (if any) and loan commitments pursuant to the Lessee Credit Agreement
other than in the same ratable portion and (ii) any successor or assign of a
Holder or Lender described in clause (i), such Holder or Lender agrees to hold
the same ratable percentage interest in outstanding Tranche A Loans (if any),
Tranche A Commitments, outstanding Tranche B Loans (if any), and Tranche B
Commitments, and to maintain a 5.0:3.0 ratio (a) between the dollar amount of
its percentage interest in the outstanding loans pursuant to the Lessee Credit
Agreement (if any) and the dollar amount of the aggregate of its percentage
interest in outstanding Tranche A Loans (if any), outstanding Tranche B Loans
(if any) and outstanding Holder Advances (if any) and (b) between the dollar
amount of its loan commitments pursuant to the Lessee Credit Agreement and the
dollar amount of the aggregate of its Lender Commitment for Tranche A Loans, its
Lender Commitment for Tranche B Loans and its Holder Commitment.
15
<PAGE>
5.11. APPLICATION AND ALLOCATION OF PROCEEDS OF THE SALE OR OTHER
-----------------------------------------------------------
DISPOSITION OF THE PROPERTIES AFTER AN EVENT OF DEFAULT.
-------------------------------------------------------
Subject to Section 8.7(c), an amount equal to any payment identified as
proceeds of the sale or other disposition (or lease upon the exercise of
remedies) of the Properties or any portion thereof, whether pursuant to the
exercise of remedies under the Security Documents, the Lease or otherwise,
(whether such payment relates to a period before or after the Construction
Period Termination Date) shall be applied and allocated by the Agent first,
ratably to the payment of the principal and interest of the Tranche B Loans then
outstanding, second, ratably to the payment to the Holders of the outstanding
principal balance of all Holder Advances plus all outstanding Holder Yield with
respect to such outstanding Holder Advances, third, ratably to the payment of
the principal and interest of the Tranche A Loans then outstanding and to the
payment of the principal and interest of the loans under the Lessee Credit
Agreement then outstanding, fourth, to any and all other amounts owing under the
Operative Agreements to the Lenders under the Tranche B Loans, fifth, to any and
all other amounts owing under the Operative Agreements to the Holders, sixth,
ratably to any and all other amounts owing under the Operative Agreements to the
Lenders under the Tranche A Loans, and seventh, to the extent moneys remain
after application and allocation pursuant to clauses first through sixth above,
to the Owner Trustee for application and allocation to any and all other amounts
owing to the Holders or the Owner Trustee and as the Holders shall determine.
SECTION 6. REPRESENTATIONS AND WARRANTIES.
6.1. REPRESENTATIONS AND WARRANTIES OF THE BORROWER.
----------------------------------------------
Effective as of the Initial Closing Date and the date of each Advance, the
Trust Company in its individual capacity and as the Borrower, as indicated,
represents and warrants to each of the other parties hereto as follows,
provided, that the representations in the following paragraphs (h), (j) and (k)
- --------
are made solely in its capacity as the Borrower:
(a) It is a national banking association and is duly organized and
validly existing and in good standing under the laws of the United States
of America and has the power and authority to enter into and perform its
obligations under the Trust Agreement and (assuming due authorization,
execution and delivery of the Trust Agreement by the Holders) has the
corporate and trust power and authority to act as the Owner Trustee and to
enter into and perform the obligations under each of the other Operative
Agreements to which the Trust Company or the Owner Trustee, as the case may
be, is or will be a party and each other agreement, instrument and document
to be executed and delivered by it on or before such Closing Date in
connection with or as contemplated by each such Operative Agreement to
which the Trust Company or the Owner Trustee, as the case may be, is or
will be a party;
(b) The execution, delivery and performance of each Operative
Agreement to which it is or will be a party, either in its individual
capacity or (assuming due
<PAGE>
authorization, execution and delivery of the Trust Agreement by the
Holders) as the Owner Trustee, as the case may be, has been duly authorized
by all necessary action on its part and neither the execution and delivery
thereof, nor the consummation of the transactions contemplated thereby, nor
compliance by it with any of the terms and provisions thereof (i) does or
will require any approval or consent of any trustee or holders of any of
its indebtedness or obligations, (ii) does or will contravene any Legal
Requirement relating to its banking or trust powers, (iii) does or will
contravene or result in any breach of or constitute any default under, or
result in the creation of any Lien upon any of its property under, (A) its
charter or by-laws, or (B) any indenture, mortgage, chattel mortgage, deed
of trust, conditional sales contract, bank loan or credit agreement or
other agreement or instrument to which it is a party or by which it or its
properties may be bound or affected, which contravention, breach, default
or Lien under clause (B) would materially and adversely affect its ability,
in its individual capacity or as the Owner Trustee, to perform its
obligations under the Operative Agreements to which it is a party or (iv)
does or will require any Governmental Action by any Governmental Authority
regulating its banking or trust powers;
(c) The Trust Agreement and, assuming the Trust Agreement is the
legal, valid and binding obligation of the Holders, each other Operative
Agreement to which the Trust Company or the Owner Trustee, as the case may
be, is or will be a party have been, or on or before such Closing Date will
be, duly executed and delivered by the Trust Company or the Owner Trustee,
as the case may be, and the Trust Agreement and each such other Operative
Agreement to which the Trust Company or the Owner Trustee, as the case may
be, is a party constitutes, or upon execution and delivery will constitute,
a legal, valid and binding obligation enforceable against the Trust Company
or the Owner Trustee, as the case may be, in accordance with the terms
thereof;
(d) There is no action or proceeding pending or, to its knowledge,
threatened to which it is or will be a party, either in its individual
capacity or as the Owner Trustee, before any Governmental Authority that,
if adversely determined, would materially and adversely affect its ability,
in its individual capacity or as the Owner Trustee, to perform its
obligations under the Operative Agreements to which it is a party or would
question the validity or enforceability of any of the Operative Agreements
to which it is or will become a party;
(e) It, either in its individual capacity or as the Owner Trustee,
has not assigned or transferred any of its right, title or interest in or
under the Lease, the Agency Agreement or its interest in any Property or
any portion thereof, except in accordance with the Operative Agreements;
(f) No Default or Event of Default under the Operative Agreements
attributable to it has occurred and is continuing;
(g) Except as otherwise contemplated in the Operative Agreements, the
proceeds of the Loans and Holder Advances shall not be applied by the Owner
Trustee,
17
<PAGE>
either in its individual capacity or as the Owner Trustee, for any purpose
other than the purchase and/or lease of the Properties, the acquisition,
installation and testing of the Equipment, the construction of Improvements
and the payment of Transaction Expenses and the fees, expenses and other
disbursements referenced in Sections 7.1(a) and 7.1(b) of this Agreement,
in each case which accrue prior to the Rent Commencement Date with respect
to a particular Property;
(h) Neither the Owner Trustee nor any Person authorized by the Owner
Trustee to act on its behalf has offered or sold any interest in the Trust
Estate or the Notes, or in any similar security relating to a Property, or
in any security the offering of which for the purposes of the Securities
Act would be deemed to be part of the same offering as the offering of the
aforementioned securities to, or solicited any offer to acquire any of the
same from, any Person other than, in the case of the Notes, the Agent, and
neither the Owner Trustee nor any Person authorized by the Owner Trustee to
act on its behalf will take any action which would subject, as a direct
result of such action alone, the issuance or sale of any interest in the
Trust Estate or the Notes to the provisions of Section 5 of the Securities
Act or require the qualification of any Operative Agreement under the Trust
Indenture Act of 1939, as amended;
(i) The Owner Trustee's principal place of business, chief executive
office and office where the documents, accounts and records relating to the
transactions contemplated by this Agreement and each other Operative
Agreement are kept are located at 79 South Main Street, Salt Lake City,
Utah 84111 ;
(j) The Owner Trustee is not engaged principally in, and does not
have as one of its important activities, the business of extending credit
for the purpose of purchasing or carrying any margin stock (within the
meaning of Regulation U of the Board of Governors of the Federal Reserve
System of the United States), and no part of the proceeds of the Loans or
the Holder Advances will be used by it to purchase or carry any margin
stock or to extend credit to others for the purpose of purchasing or
carrying any such margin stock or for any purpose that violates, or is
inconsistent with, the provisions of Regulations G, T, U, or X of the Board
of Governors of the Federal Reserve System of the United States;
(k) The Owner Trustee is not an "investment company" or a company
controlled by an "investment company" within the meaning of the Investment
Company Act;
(l) Each Property is free and clear of all Lessor Liens attributable
to the Owner Trustee, either in its individual capacity or as the Owner
Trustee; and
(m) The Owner Trustee, in its trust capacity, is not a party to any
documents, instruments or agreements other than the Operative Agreements
executed by the Owner Trustee, in its trust capacity.
18
<PAGE>
6.2. REPRESENTATIONS AND WARRANTIES OF THE CREDIT Parties.
----------------------------------------------------
Effective as of the Initial Closing Date, the date of each Advance, the
date each Domestic Subsidiary delivers a Joinder Agreement and the Rent
Commencement Date, each Credit Party represents and warrants to each of the
other parties hereto that:
(a) The Incorporated Representations and Warranties are true and
correct (unless such relate solely to an earlier point in time) and the
Lessee has delivered to the Agent the financial statements and other
reports referred to in Section 5.01(f) of the Lessee Credit Agreement;
(b) The execution and delivery by each Credit Party of this Agreement
and the other applicable Operative Agreements as of such date and the
performance by each Credit Party of its respective obligations under this
Agreement and the other applicable Operative Agreements are within the
corporate, partnership or limited liability company (as the case may be)
powers of each Credit Party, have been duly authorized by all necessary
corporate, partnership or limited liability company (as the case may be)
action on the part of each Credit Party (including without limitation any
necessary shareholder action), have been duly executed and delivered, have
received all necessary governmental approval, and do not and will not (i)
violate any Legal Requirement which is binding on any Credit Party or any
of its Subsidiaries, (ii) contravene or conflict with, or result in a
breach of, any provision of the Articles of Incorporation, By-Laws or other
organizational documents of any Credit Party or any of its Subsidiaries or
of any agreement, indenture, instrument or other document which is binding
on any Credit Party or any of its Subsidiaries or (iii) result in, or
require, the creation or imposition of any Lien (other than pursuant to the
terms of the Operative Agreements) on any asset of any Credit Party or any
of its Subsidiaries;
(c) This Agreement and the other applicable Operative Agreements,
executed prior to and as of such date by any Credit Party, constitute the
legal, valid and binding obligation of such Credit Party, as applicable,
enforceable against such Credit Party, as applicable, in accordance with
their terms. Each Credit Party has executed the various Operative
Agreements required to be executed by such Credit Party as of such date;
(d) There are no material actions, suits or proceedings pending or,
to our knowledge, threatened against any Credit Party in any court or
before any Governmental Authority (nor shall any order, judgment or decree
have been issued or proposed to be issued by any Governmental Authority to
set aside, restrain, enjoin or prevent the full performance of any
Operative Agreement or any transaction contemplated thereby) that (i)
concern any Property or any Credit Party's interest therein, (ii) question
the validity or enforceability of any Operative Agreement to which any
Credit Party is a party or the overall transaction described in the
Operative Agreements to which any Credit Party is a party or (iii) have or
could reasonably be expected to have a Material Adverse Effect; provided,
--------
for purposes of disclosure, the Credit Parties have described the
litigation set forth on Exhibit K;
---------
<PAGE>
(e) No Governmental Action by any Governmental Authority or other
authorization, registration, consent, approval, waiver, notice or other
action by, to or of any other Person pursuant to any Legal Requirement,
contract, indenture, instrument or agreement or for any other reason is
required to authorize or is required in connection with (i) the execution,
delivery or performance of any Operative Agreement, (ii) the legality,
validity, binding effect or enforceability of any Operative Agreement,
(iii) the acquisition, ownership, construction, completion, occupancy,
operation, leasing or subleasing of any Property or (iv) any Advance, in
each case, except those which have been obtained and are in full force and
effect;
(f) Upon the execution and delivery of each Lease Supplement to the
Lease, (i) the Lessee will have unconditionally accepted the Property
subject to the Lease Supplement and will have a valid and subsisting
leasehold interest in such Property, subject only to the Permitted Liens,
and (ii) no offset will exist with respect to any Rent or other sums
payable under the Lease;
(g) Except as otherwise contemplated by the Operative Agreements, the
Construction Agent shall not use the proceeds of any Holder Advance or Loan
for any purpose other than the purchase and/or lease of the Properties, the
acquisition, installation and testing of the Equipment, the construction of
Improvements and the payment of Transaction Expenses and the fees, expenses
and other disbursements referenced in Sections 7.1(a) and 7.1(b) of this
Agreement, in each case which accrue prior to the Rent Commencement Date
with respect to a particular Property;
(h) All information heretofore or contemporaneously herewith
furnished by each Credit Party or its Subsidiaries to the Agent, the Owner
Trustee, any Lender or any Holder for purposes of or in connection with
this Agreement and the transactions contemplated hereby is, and all
information hereafter furnished by or on behalf of each Credit Party or its
Subsidiaries to the Agent, the Owner Trustee, any Lender or any Holder
pursuant hereto or in connection herewith will be, true and accurate in
every material respect on the date as of which such information is dated or
certified, and such information, taken as a whole, does not and will not
omit to state any material fact necessary to make such information, taken
as a whole, not misleading;
(i) The principal place of business, chief executive office and
office of the Construction Agent and the Lessee where the documents,
accounts and records relating to the transactions contemplated by this
Agreement and each other Operative Agreement are kept are located at 600
Citadel Drive, Commerce, California 90040 and the states of formation and
the chief executive offices of each other Credit Party are located at the
places set forth in Exhibit L;
(j) The representations and warranties of each Credit Party set forth
in any of the Operative Agreements are true and correct in all material
respects on and as of each such date as if made on and as of such date.
Each Credit Party is in all material respects
20
<PAGE>
in compliance with its obligations under the Operative Agreements and there
exists no Default or Event of Default under any of the Operative Agreements
which is continuing and which has not been cured within any cure period
expressly granted under the terms of the applicable Operative Agreement or
otherwise waived in accordance with the applicable Operative Agreement. No
Default or Event of Default will occur under any of the Operative
Agreements as a result of, or after giving effect to, the Advance requested
by the Requisition on the date of each Advance;
(k) As of each Property Closing Date, the date of each subsequent
Advance and the Rent Commencement Date only, each Property then being
financed consists of (i) unimproved Land or (ii) Land and existing
Improvements thereon which Improvements are either suitable for occupancy
at the time of acquisition or ground leasing or will be renovated and/or
modified in accordance with the terms of this Agreement. Each Property then
being financed is located at the location set forth on the applicable
Requisition, each of which is in one (1) of the Approved States;
(l) As of each Property Closing Date, the date of each subsequent
Advance and the Rent Commencement Date only, the Lessor has good and
marketable fee simple title to each Property, or, if any Property is the
subject of a Ground Lease, the Lessor will have a valid ground leasehold
interest enforceable against the ground lessor of such Property in
accordance with the terms of such Ground Lease, subject only to (i) such
Liens referenced in Sections 6.2(r)(i) and 6.2(r)(ii) on the applicable
Property Closing Date and (ii) subject to Section 5.7, Permitted Liens
after the applicable Property Closing Date;
(m) As of each Property Closing Date, the date of each subsequent
Advance and the Rent Commencement Date only, no portion of any Property is
located in an area identified as a special flood hazard area by the Federal
Emergency Management Agency or other applicable agency, or if any such
Property is located in an area identified as a special flood hazard area by
the Federal Emergency Management Agency or other applicable agency, then
flood insurance has been obtained for such Property in accordance with
Section 14.2(b) of the Lease and in accordance with the National Flood
Insurance Act of 1968, as amended;
(n) As of each Property Closing Date, the date of each subsequent
Advance and the Rent Commencement Date only, each Property complies with
all Insurance Requirements and all standards of Lessee with respect to
similar properties owned by Lessee;
(o) As of each Property Closing Date, the date of each subsequent
Advance and the Rent Commencement Date only, each Property complies with
all Legal Requirements as of such date (including without limitation all
zoning and land use laws and Environmental Laws), except to the extent that
failure to comply therewith, individually or in the aggregate, shall not
have and could not reasonably be expected to have a Material Adverse
Effect;
21
<PAGE>
(p) As of each Property Closing Date, the date of each subsequent
Advance and the Rent Commencement Date only, all utility services and
facilities necessary for the construction and operation of the Improvements
and the installation and operation of the Equipment regarding each Property
(including without limitation gas, electrical, water and sewage services
and facilities) are available at the applicable Land or will be constructed
prior to the Completion Date for such Property;
(q) As of each Property Closing Date, the date of each subsequent
Advance and the Rent Commencement Date only, acquisition, installation and
testing of the Equipment (if any) and construction of the Improvements (if
any) to such date shall have been performed in a good and workmanlike
manner, substantially in accordance with the applicable Plans and
Specifications;
(r) (i) The Security Documents create, as security for the
Obligations (as such term is defined in the Security Agreement), valid
and enforceable security interests in, and Liens on, all of the
Collateral, in favor of the Agent, for the ratable benefit of the
Lenders and the Holders, as their respective interests appear in the
Operative Agreements, and such security interests and Liens are
subject to no other Liens other than Liens that are expressly set
forth as title exceptions on the title commitment issued under Section
5.3(g) with respect to the applicable Property, to the extent such
title commitment has been approved by the Agent. Upon recordation of
the Mortgage Instrument in the real estate recording office in the
applicable Approved State identified by the Construction Agent or the
Lessee, the Lien created by the Mortgage Instrument in the real
property described therein shall be a perfected first priority
mortgage Lien on such real property (or, in the case of a Ground
Lease, the leasehold estate under such Ground Lease) in favor of the
Agent, for the ratable benefit of the Lenders and the Holders, as
their respective interests appear in the Operative Agreements. To the
extent that the security interests in the portion of the Collateral
comprised of personal property can be perfected by filing in the
filing offices in the applicable Approved States or elsewhere
identified by the Construction Agent or the Lessee, upon filing of the
Lender Financing Statements in such filing offices, the security
interests created by the Security Agreement shall be perfected first
priority security interests in such personal property in favor of the
Agent, for the ratable benefit of the Lenders and the Holders, as
their respective interests appear in the Operative Agreements; and
(ii) The Lease Agreement creates, as security for the
obligations of the Lessee under the Lease Agreement, valid and
enforceable security interests in, and Liens on, each Property leased
thereunder, in favor of the Lessor, and such security interests and
Liens are subject to no other Liens other than Liens that are
expressly set forth as title exceptions on the title commitment issued
under Section 5.3(g) with respect to the applicable Property, to the
extent such title commitment has been approved by the Agent. Upon
recordation of the
22
<PAGE>
memorandum of the Lease Agreement and the memorandum of a Ground Lease
(or, in either case, a short form lease) in the real estate recording
office in the applicable Approved State identified by the Construction
Agent or the Lessee, the Lien created by the Lease Agreement in the
real property described therein shall be a perfected first priority
mortgage Lien on such real property (or, in the case of a Ground
Lease, the leasehold estate under such Ground Lease) in favor of the
Agent, for the ratable benefit of the Lenders and the Holders, as
their respective interests appear in the Operative Agreements. To the
extent that the security interests in the portion of any Property
comprised of personal property can be perfected by the filing in the
filing offices in the applicable Approved State or elsewhere
identified by the Construction Agent or the Lessee upon filing of the
Lessor Financing Statements in such filing offices, a security
interest created by the Lease Agreement shall be perfected first
priority security interests in such personal property in favor of the
Lessor, which rights pursuant to the Lessor Financing Statements are
assigned to the Agent, for the ratable benefit of the Lenders and the
Holders, as their respective interests appear in the Operative
Agreements;
(s) The Plans and Specifications for each Property will be prepared
prior to the commencement of construction in accordance with all applicable
Legal Requirements (including without limitation all applicable
Environmental Laws and building, planning, zoning and fire codes), except
to the extent the failure to comply therewith, individually or in the
aggregate, shall not have and could not reasonably be expected to have a
Material Adverse Effect. Upon completion of the Improvements for each
Property in accordance with the applicable Plans and Specifications, such
Improvements will be within any building restriction lines and will not
encroach in any manner onto any adjoining land (except as permitted by
express written easements, which have been approved by the Agent);
(t) As of the Rent Commencement Date only, each Property shall be
improved in accordance with the applicable Plans and Specifications in a
good and workmanlike manner and shall be operational;
(u) As of the Initial Closing Date, each Domestic Subsidiary (formed
prior to or on such date) shall have executed this Agreement in its
capacity as a Guarantor;
(v) As of each Property Closing Date only, each Property has been
acquired, or ground leased pursuant to a Ground Lease, at a price that is
not in excess of fair market value or fair market rental value, as the case
may be; and
(w) Each Credit Party has reviewed its operations and those of its
Subsidiaries with a view to assessing whether its businesses, or the
businesses of any of its Subsidiaries, will be vulnerable to a Year 2000
Problem and has a reasonable basis to believe that no Year 2000 Problem
will exist on or after December 31, 1999. Each Credit Party shall take all
actions necessary and commit adequate resources to assure that its
computer-based and
23
<PAGE>
other systems (and those of all Subsidiaries) are able to effectively
process data, including dates before, on or after January 1, 2000, without
experiencing any Year 2000 Problem that could cause a Material Adverse
Effect. At the request of Agent, each Credit Party will, at each Credit
Party's own expense, provide Agent with assurances and substantiations
(including, but not limited to, the results of internal or external audit
reports) reasonably acceptable to Agent as to the capability of each Credit
Party and its Subsidiaries to conduct its and their businesses and
operations before, on and after January 1, 2000 without experiencing a Year
2000 Problem.
SECTION 6B. GUARANTY
6B.1. GUARANTY OF PAYMENT AND PERFORMANCE.
-----------------------------------
Subject to Section 6B.7, each Guarantor hereby, jointly and severally,
unconditionally guarantees to each Financing Party the prompt payment and
performance of the Company Obligations in full when due (whether at stated
maturity, as a mandatory prepayment, by acceleration or otherwise) or when such
is otherwise to be performed; provided, notwithstanding the foregoing, the
--------
obligations of the Guarantors under this Section 6B shall not constitute a
direct guaranty of the indebtedness of the Lessor evidenced by the Notes but
rather a guaranty of the Company Obligations arising under the Operative
Agreements. This Section 6B is a guaranty of payment and performance and not of
collection and is a continuing guaranty and shall apply to all Company
Obligations whenever arising. All rights granted to the Financing Parties under
this Section 6B shall be subject to the provisions of Section 8.2(h) and 8.6.
6B.2. OBLIGATIONS UNCONDITIONAL.
-------------------------
Each Guarantor agrees that the obligations of the Guarantors hereunder are
absolute and unconditional, irrespective of the value, genuineness, validity,
regularity or enforceability of any of the Operative Agreements, or any other
agreement or instrument referred to therein, or any substitution, release or
exchange of any other guarantee of or security for any of the Company
Obligations, and, to the fullest extent permitted by applicable law,
irrespective of any other circumstance whatsoever which might otherwise
constitute a legal or equitable discharge or defense of a surety, guarantor or
co-obligor, it being the intent of this Section 6B.2 that the obligations of the
Guarantors hereunder shall be absolute and unconditional under any and all
circumstances. Each Guarantor agrees that this Section 6B may be enforced by
the Financing Parties without the necessity at any time of resorting to or
exhausting any other security or collateral and without the necessity at any
time of having recourse to the Notes, the Certificates or any other of the
Operative Agreements or any collateral, if any, hereafter securing the Company
Obligations or otherwise and each Guarantor hereby waives the right to require
the Financing Parties to proceed against the Construction Agent, the Lessee or
any other Person (including without limitation a co-guarantor) or to require the
Financing Parties to pursue any other remedy or enforce any other right. Each
Guarantor further agrees that it hereby waives any and all right of subrogation,
indemnity, reimbursement or contribution against the Lessee and the Construction
Agent or any other Guarantor of the Company Obligations for amounts paid under
this Section 6B until such time as
24
<PAGE>
the Loans, Holder Advances, accrued but unpaid interest, accrued but unpaid
Holder Yield and all other amounts owing under the Operative Agreements have
been paid in full. Without limiting the generality of the waiver provisions of
this Section 6B, each Guarantor hereby waives any rights to require the
Financing Parties to proceed against the Construction Agent, the Lessee or any
co-guarantor or to require Lessor to pursue any other remedy or enforce any
other right. Each Guarantor further agrees that nothing contained herein shall
prevent the Financing Parties from suing on any Operative Agreement or
foreclosing any security interest in or Lien on any collateral, if any, securing
the Company Obligations or from exercising any other rights available to it
under any Operative Agreement, or any other instrument of security, if any, and
the exercise of any of the aforesaid rights and the completion of any
foreclosure proceedings shall not constitute a discharge of any Guarantor's
obligations hereunder; it being the purpose and intent of each Guarantor that
its obligations hereunder shall be absolute, independent and unconditional under
any and all circumstances; provided that any amounts due under this Section 6B
--------
which are paid to or for the benefit of any Financing Party shall reduce the
Company Obligations by a corresponding amount (unless required to be rescinded
at a later date). Neither any Guarantor's obligations under this Section 6B nor
any remedy for the enforcement thereof shall be impaired, modified, changed or
released in any manner whatsoever by an impairment, modification, change,
release or limitation of the liability of the Construction Agent or the Lessee
or by reason of the bankruptcy or insolvency of the Construction Agent or the
Lessee. Each Guarantor waives any and all notice of the creation, renewal,
extension or accrual of any of the Company Obligations and notice of or proof of
reliance by any Financing Party upon this Section 6B or acceptance of this
Section 6B. The Company Obligations shall conclusively be deemed to have been
created, contracted or incurred, or renewed, extended, amended or waived, in
reliance upon this Section 6B. All dealings between the Construction Agent, the
Lessee and any of the Guarantors, on the one hand, and the Financing Parties, on
the other hand, likewise shall be conclusively presumed to have been had or
consummated in reliance upon this Section 6B.
6B.3. MODIFICATIONS.
-------------
Each Guarantor agrees that (a) all or any part of the security now or
hereafter held for the Company Obligations, if any, may be exchanged,
compromised or surrendered from time to time; (b) no Financing Party shall have
any obligation to protect, perfect, secure or insure any such security
interests, liens or encumbrances now or hereafter held, if any, for the Company
Obligations or the properties subject thereto; (c) the time or place of payment
of the Company Obligations may be changed or extended, in whole or in part, to a
time certain or otherwise, and may be renewed or accelerated, in whole or in
part; (d) the Construction Agent, the Lessee and any other party liable for
payment under the Operative Agreements may be granted indulgences generally; (e)
any of the provisions of the Notes, the Certificates or any of the other
Operative Agreements may be modified, amended or waived; (f) any party
(including any co-guarantor) liable for the payment thereof may be granted
indulgences or be released; and (g) any deposit balance for the credit of the
Construction Agent, the Lessee or any other party liable for the payment of the
Company Obligations or liable upon any security therefor may be released, in
whole or in part, at, before or after the stated, extended or accelerated
maturity of the Company Obligations, all without notice to or further assent by
such Guarantor, which shall remain bound thereon, notwithstanding any such
25
<PAGE>
exchange, compromise, surrender, extension, renewal, acceleration, modification,
indulgence or release.
6B.4. WAIVER OF RIGHTS.
----------------
Each Guarantor expressly waives to the fullest extent permitted by
applicable law: (a) notice of acceptance of this Section 6B by any Financing
Party and of all extensions of credit or other Advances to the Construction
Agent and the Lessee by the Lenders pursuant to the terms of the Operative
Agreements; (b) presentment and demand for payment or performance of any of the
Company Obligations; (c) protest and notice of dishonor or of default with
respect to the Company Obligations or with respect to any security therefor; (d)
notice of any Financing Party obtaining, amending, substituting for, releasing,
waiving or modifying any security interest, lien or encumbrance, if any,
hereafter securing the Company Obligations, or any Financing Party's
subordinating, compromising, discharging or releasing such security interests,
liens or encumbrances, if any; and (e) all other notices to which such Guarantor
might otherwise be entitled. Without limiting the foregoing, each Guarantor
expressly waives, to the fullest extent permitted by applicable law, any defense
to the enforcement of its obligations hereunder, and any rights and benefits
which might otherwise be available to such Guarantor, under California Civil
Code Sections 2809, 2810, 2819, 2822(a), 2839, 2845, 2848, 2849, 2850, 2899 and
3433. Notwithstanding anything to the contrary herein, (i) each Guarantor's
payments hereunder shall be due five (5) Business Days after written demand by
the Agent for such payment (unless the Company Obligations are automatically
accelerated pursuant to the applicable provisions of the Operative Agreements in
which case the Guarantors' payments shall be automatically due) and (ii) any
modification of the Operative Agreements which has the effect of increasing the
Company Obligations shall not be enforceable against a Guarantor unless such
Guarantor executes the document evidencing such modification or otherwise
reaffirms its guaranty in writing in connection with such modification.
6B.5. REINSTATEMENT.
-------------
The obligations of the Guarantors under this Section 6B shall be
automatically reinstated if and to the extent that for any reason any payment by
or on behalf of any Person in respect of the Company Obligations is rescinded or
must be otherwise restored by any holder of any of the Company Obligations,
whether as a result of any proceedings in bankruptcy or reorganization or
otherwise, and each Guarantor agrees that it will indemnify each Financing Party
on demand for all reasonable costs and expenses (including, without limitation,
reasonable fees of counsel) incurred by any Financing Party in connection with
such rescission or restoration, including without limitation any such costs and
expenses incurred in defending against any claim alleging that such payment
constituted a preference, fraudulent transfer or similar payment under any
bankruptcy, insolvency or similar law.
6B.6. REMEDIES.
--------
The Guarantors agree that, as between the Guarantors, on the one hand, and
each Financing Party, on the other hand, the Company Obligations may be declared
to be forthwith due and
26
<PAGE>
payable as provided in the applicable provisions of the Operative Agreements
(and shall be deemed to have become automatically due and payable in the
circumstances provided therein) notwithstanding any stay, injunction or other
prohibition preventing such declaration (or preventing such Company Obligations
from becoming automatically due and payable) as against any other Person and
that, in the event of such declaration (or such Company Obligations being deemed
to have become automatically due and payable), such Company Obligations (whether
or not due and payable by any other Person) shall forthwith become due and
payable by the Guarantors in accordance with the applicable provisions of the
Operative Agreements.
6B.7. LIMITATION OF GUARANTY.
----------------------
Notwithstanding any provision to the contrary contained herein or in any of
the other Operative Agreements, to the extent the obligations of any Guarantor
shall be adjudicated to be invalid or unenforceable for any reason (including
without limitation because of any applicable state or federal law relating to
fraudulent conveyances or transfers) then the obligations of such Guarantor
hereunder shall be limited to the maximum amount that is permissible under
applicable law (whether federal or state and including without limitation the
Bankruptcy Code).
Subject to Section 6B.5, upon the satisfaction of the Company Obligations
in full, regardless of the source of payment, the Guarantors' obligations
hereunder shall be deemed satisfied, discharged and terminated other than
indemnifications set forth herein that expressly survive.
6B.8. PAYMENT OF AMOUNTS TO THE AGENT.
-------------------------------
Each Financing Party hereby instructs each Guarantor, and each Guarantor
hereby acknowledges and agrees, that until such time as the Loans and the Holder
Advances are paid in full and the Liens evidenced by the Security Agreement and
the Mortgage Instruments have been released any and all Rent (excluding Excepted
Payments which shall be payable to each Holder or other Person as appropriate)
and any and all other amounts of any kind or type under any of the Operative
Agreements due and owing or payable to any Person shall instead be paid directly
to the Agent (excluding Excepted Payments which shall be payable to each Holder
or other Person as appropriate) or as the Agent may direct from time to time for
allocation and distribution in accordance with the procedures set forth in
Section 8.7 hereof.
6B.9. RELEASE OF GUARANTORS.
---------------------
Each Financing Party hereby agrees that (a) the Agent shall be permitted to
release any Guarantor from its guaranty obligations under this Section 6B
without the consent of any other Financing Party if the release is granted in
connection with a disposition by the applicable Credit Party of all the shares
of stock or partnership or other equity interest in such Guarantor and such
disposition is permitted pursuant to the applicable provisions of the Operative
Agreements and the Lessee Credit Agreement and (b) the Agent shall be permitted
to release any Guarantor from its guaranty obligations under this Section 6B.9
without the consent of any other Financing Party if the release is requested by
Lessee in connection with a dissolution of the Guarantor, subject to Lessee
27
<PAGE>
providing to the Agent written representations to the effect that such Guarantor
has no business operations and no assets.
SECTION 7. PAYMENT OF CERTAIN EXPENSES.
7.1. TRANSACTION EXPENSES.
--------------------
(a) The Lessor agrees on the Initial Closing Date, to pay, or cause
to be paid, all Transaction Expenses arising from the Initial Closing Date,
including without limitation all reasonable fees, expenses and
disbursements of the various legal counsels for the Lessor and the Agent in
connection with the transactions contemplated by the Operative Agreements
and incurred in connection with such Initial Closing Date, the initial fees
and expenses of the Owner Trustee due and payable on such Initial Closing
Date, all fees, taxes and expenses for the recording, registration and
filing of documents and all other reasonable fees, expenses and
disbursements incurred in connection with such Initial Closing Date;
provided, however, the Lessor shall pay such amounts described in this
-------- -------
Section 7.1(a) only if funds are made available by the Lenders and the
Holders in an amount sufficient to allow such payment and without regard to
whether such amounts are referenced in any Requisition. On the Initial
Closing Date after delivery and receipt of the Requisition referenced in
Section 4.2(a) hereof and satisfaction of the other conditions precedent
for such date, the Holders shall make Holder Advances and the Lenders shall
make Loans to the Lessor to pay for the Transaction Expenses, fees,
expenses and other disbursements referenced in this Section 7.1(a).
(b) Assuming no Default or Event of Default shall have occurred and
be continuing and only for the period prior to the Rent Commencement Date,
the Lessor agrees on each Property Closing Date, on the date of any
Construction Advance and on the Completion Date to pay, or cause to be
paid, all Transaction Expenses including without limitation all reasonable
fees, expenses and disbursements of the various legal counsels for the
Lessor and the Agent in connection with the transactions contemplated by
the Operative Agreements and billed in connection with such Advance or such
Completion Date, all amounts described in Section 7.1(a) of this Agreement
which have not been previously paid, the annual fees and reasonable out-of-
pocket expenses of the Owner Trustee, all fees, expenses and disbursements
incurred with respect to the various items referenced in Sections 5.3, 5.4
and/or 5.5 (including without limitation any premiums for title insurance
policies and charges for any updates to such policies) and all other
reasonable fees, expenses and disbursements in connection with such Advance
or such Completion Date including without limitation all expenses relating
to and all fees, taxes and expenses for the recording, registration and
filing of documents and during the Commitment Period, all fees, expenses
and costs referenced in Sections 7.3(a), 7.3(b), 7.3(d) and 7.4; provided,
--------
however, the Lessor shall pay such amounts described in this Section 7.1(b)
-------
only if funds are made available by the Lenders and the Holders in an
amount sufficient to allow such payment and without regard to whether such
amounts are referenced in any Requisition. On each Property Closing Date,
on the date of any
28
<PAGE>
Construction Advance or any Completion Date, after delivery of the
applicable Requisition and satisfaction of the other conditions precedent
for such date, the Holders shall make a Holder Advance and the Lenders
shall make Loans to the Lessor to pay for the Transaction Expenses, fees,
expenses and other disbursements referenced in this Section 7.1(b).
(c) All fees payable pursuant to the Operative Agreements shall be
calculated on the basis of a year of three hundred sixty (360) days for the
actual days elapsed.
7.2. BROKERS' FEES.
-------------
Excluding broker's fees payable to any broker engaged by any Financing
Party with respect to the Initial Closing Date (but without limiting the
obligations of the Lessee pursuant to Section 7.5 hereof or with respect to any
time period after the Initial Closing Date), the Lessee agrees to pay or cause
to be paid any and all brokers' fees, if any, including without limitation any
interest and penalties thereon, which are payable in connection with the
transactions contemplated by this Agreement and the other Operative Agreements.
7.3. CERTAIN FEES AND EXPENSES.
-------------------------
During the Commitment Period, the Lessor agrees to pay or to cause to be
paid (a) the initial and annual Owner Trustee's fee and all reasonable expenses
of the Owner Trustee and any co-trustees (including without limitation
reasonable counsel fees and expenses) or any successor owner trustee and/or co-
trustee, for acting as the owner trustee under the Trust Agreement; (b) all
reasonable costs and expenses incurred by the Credit Parties, the Agent, the
Lenders, the Holders or the Lessor in entering into any Lease Supplement and any
future amendments, modifications, supplements, restatements and/or replacements
with respect to any of the Operative Agreements, whether or not such Lease
Supplement, amendments, modifications, supplements, restatements and/or
replacements are ultimately entered into, or giving or withholding of waivers of
consents hereto or thereto, which have been requested by any Credit Party, the
Agent, the Lenders, the Holders or the Lessor; (c) all reasonable costs and
expenses incurred by the Credit Parties, the Agent, the Lenders, the Holders or
the Lessor in connection with any exercise of remedies under any Operative
Agreement or any purchase of any Property by the Construction Agent, the Lessee
or any third party; and (d) all reasonable costs and expenses incurred by the
Credit Parties, the Agent, the Lenders, the Holders or the Lessor in connection
with any transfer or conveyance of any Property, whether or not such transfer or
conveyance is ultimately accomplished; provided, however, the Lessor shall pay
-------- -------
such amounts described in this Section 7.3 only if (i) with respect to the fees
and expenses described in clauses (a) and (b) above, such amounts are properly
described in a Requisition delivered on or before the date such fees and
expenses are due, and (ii) funds are made available by the Lenders and the
Holders in connection with such Requisition, or otherwise (with respect to the
expenses described in clauses (c) and (d) above) in an amount sufficient to
allow such payment; provided, further, the Lessee agrees to timely pay all
-------- -------
amounts referred to in this Section 7.3 to the extent not paid by the Lessor.
29
<PAGE>
7.4. UNUSED FEE.
----------
During the Commitment Period, the Lessor agrees to pay or to cause to
be paid to the Agent for the account of (a) the Lenders, respectively, an unused
fee (the "Lender Unused Fee") equal to the product of the average daily
-----------------
Available Commitment of each Lender during the Commitment Period multiplied by
the Applicable Percentage and (b) the Holders, respectively, an unused fee (the
"Holder Unused Fee") equal to the product of the average daily Available Holder
- ------------------
Commitment of each Holder during the Commitment Period multiplied by the
Applicable Percentage; provided, however, the Lessor shall pay such amounts
-------- -------
described in this Section 7.4 only if (i) such amounts are properly described in
a Requisition delivered on or before the Unused Fee Payment Date and (ii) funds
are made available by the Lenders and the Holders in connection with such
Requisition in an amount sufficient to allow such payment; provided, further,
-------- -------
the Lessee agrees to timely pay all amounts referred to in this Section 7.4 to
the extent not paid by the Lessor. Such Unused Fees shall be payable quarterly
in arrears on each Unused Fee Payment Date. If all or a portion of any such
Unused Fee shall not be paid when due, such overdue amount shall bear interest,
payable by the Lessee on demand, at a rate per annum equal to the ABR (or in the
case of Holder Yield, the ABR plus the Applicable Percentage for Eurodollar
Holder Advances) plus two percent (2%) from the date of such non-payment until
such amount is paid in full (as well as before judgment).
7.5. OTHER FEES.
----------
Other fees shall be payable in accordance with the terms and provisions of
that certain letter agreement dated September 18, 1998 among Credit Lyonnais Los
Angeles Branch, NationsBank, N.A., NationsBanc Montgomery Securities LLC, and
Smart & Final Inc.
SECTION 8. OTHER COVENANTS AND AGREEMENTS.
8.1. COOPERATION WITH THE CONSTRUCTION AGENT OR THE LESSEE.
-----------------------------------------------------
The Holders, the Lenders, the Lessor (at the direction of the Majority
Secured Parties) and the Agent shall, at the expense of and to the extent
reasonably requested by the Construction Agent or the Lessee (but without
assuming additional liabilities on account thereof and only to the extent such
is acceptable to the Holders, the Lenders, the Lessor (at the direction of the
Majority Secured Parties) and the Agent in their reasonable discretion),
cooperate with the Construction Agent or the Lessee in connection with the
Construction Agent or the Lessee satisfying its covenant obligations contained
in the Operative Agreements including without limitation at any time and from
time to time, promptly and duly executing and delivering any and all such
further instruments, documents and financing statements (and continuation
statements related thereto).
8.2. COVENANTS OF THE OWNER TRUSTEE AND THE HOLDERS.
----------------------------------------------
Each of the Owner Trustee and the Holders hereby agrees that so long as
this Agreement is in effect:
30
<PAGE>
(a) Neither the Owner Trustee (in its trust capacity or in its
individual capacity) nor any Holder will create or permit to exist at any
time, and each of them will, at its own cost and expense, promptly take
such action as may be necessary duly to discharge, or to cause to be
discharged, all Lessor Liens on the Properties attributable to it;
provided, however, that the Owner Trustee and the Holders shall not be
-------- -------
required to so discharge any such Lessor Lien while the same is being
contested in good faith by appropriate proceedings diligently prosecuted so
long as such proceedings shall not materially and adversely affect the
rights of the Lessee under the Lease and the other Operative Agreements or
involve any material danger of impairment of the Liens of the Security
Documents or of the sale, forfeiture or loss of, and shall not interfere
with the use or disposition of, any Property or title thereto or any
interest therein or the payment of Rent;
(b) Without prejudice to any right under the Trust Agreement of the
Owner Trustee to resign (subject to the requirement set forth in the Trust
Agreement that such resignation shall not be effective until a successor
shall have agreed to accept such appointment), or the Holders' rights under
the Trust Agreement to remove the institution acting as the Owner Trustee
(after consent to such removal by the Agent as provided in the Trust
Agreement), each of the Owner Trustee and the Holders hereby agrees with
the Lessee and the Agent (i) not to terminate or revoke the trust created
by the Trust Agreement except as permitted by Article VIII of the Trust
Agreement, (ii) not to amend, supplement, terminate or revoke or otherwise
modify any provision of the Trust Agreement in such a manner as to
adversely affect the rights of any such party without the prior written
consent of such party and (iii) to comply with all of the terms of the
Trust Agreement, the nonperformance of which would adversely affect such
party;
(c) The Owner Trustee or any successor may resign or be removed by
the Holders as the Owner Trustee, a successor Owner Trustee may be
appointed and a corporation may become the Owner Trustee under the Trust
Agreement, only in accordance with the provisions of Article IX of the
Trust Agreement and, with respect to such appointment, with the consent of
the Lessee (so long as there shall be no Lease Event of Default that shall
have occurred and be continuing), which consent shall not be unreasonably
withheld or delayed;
(d) The Owner Trustee, in its capacity as the Owner Trustee under the
Trust Agreement, and not in its individual capacity, shall not contract
for, create, incur or assume any Indebtedness, or enter into any business
or other activity or enter into any contracts or agreements, other than
pursuant to or under the Operative Agreements;
(e) The Holders will not instruct the Owner Trustee to take any
action in violation of the terms of any Operative Agreement;
(f) Neither any Holder nor the Owner Trustee shall (i) commence any
case, proceeding or other action with respect to the Owner Trustee under
any existing or future
31
<PAGE>
law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, arrangement, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts,
or (ii) seek appointment of a receiver, trustee, custodian or other similar
official with respect to the Owner Trustee or for all or any substantial
benefit of the creditors of the Owner Trustee; and neither any Holder nor
the Owner Trustee shall take any action in furtherance of, or indicating
its consent to, approval of, or acquiescence in, any of the acts set forth
in this paragraph;
(g) The Owner Trustee shall give prompt notice to the Lessee, the
Holders and the Agent if the Owner Trustee's principal place of business or
chief executive office, or the office where the records concerning the
accounts or contract rights relating to any Property are kept, shall cease
to be located at 79 South Main Street, Salt Lake City, Utah 84111, or if it
shall change its name; and
(h) The Owner Trustee shall take or refrain from taking such actions
and grant or refrain from granting such approvals with respect to the
Operative Agreements and/or relating to any Property in each case as
directed in writing by the Agent (until such time as the Loans are paid in
full, and then by the Majority Holders) or, in connection with Sections 8.5
and 9.2 hereof, the Lessee; provided, however, that notwithstanding the
-------- -------
foregoing provisions of this subparagraph (h) the Owner Trustee, the Agent,
the Lenders and the Holders each acknowledge, covenant and agree that
neither the Owner Trustee nor the Agent shall act or refrain from acting,
regarding each Unanimous Vote Matter, until such party has received the
approval of each Lender and each Holder affected by such matter.
8.3. CREDIT PARTY COVENANTS, CONSENT AND ACKNOWLEDGMENT.
--------------------------------------------------
(a) Each Credit Party acknowledges and agrees that the Owner Trustee,
pursuant to the terms and conditions of the Security Agreement and the
Mortgage Instruments, shall create Liens respecting the various personal
property, fixtures and real property described therein in favor of the
Agent. Each Credit Party hereby irrevocably consents to the creation,
perfection and maintenance of such Liens. Each Credit Party shall, to the
extent reasonably requested by any of the other parties hereto, cooperate
with the other parties in connection with their covenants herein or in the
other Operative Agreements and shall from time to time duly execute and
deliver any and all such future instruments, documents and financing
statements (and continuation statements related thereto) as any other party
hereto may reasonably request.
(b) The Lessor hereby instructs each Credit Party, and each Credit
Party hereby acknowledges and agrees, that until such time as the Loans and
the Holder Advances are paid in full and the Liens evidenced by the
Security Agreement and the Mortgage Instruments have been released (i) any
and all Rent (excluding Excepted Payments which shall be payable to each
Holder or other Person as appropriate) and any and all other amounts of any
kind or type under any of the Operative Agreements due and owing or payable
to any Person shall instead be paid directly to the Agent (excluding
32
<PAGE>
Excepted Payments which shall be payable to each Holder or other Person as
appropriate) or as the Agent may direct from time to time for allocation
and distribution in accordance with the procedures set forth in Section 8.7
hereof, (ii) all rights of the Lessor under the Lease shall be exercised by
the Agent and (iii) each Credit Party shall cause all notices,
certificates, financial statements, communications and other information
which are delivered, or are required to be delivered, to the Lessor, to
also to be delivered at the same time to the Agent.
(c) No Credit Party shall consent to or permit any amendment,
supplement or other modification of the terms or provisions of any
Operative Agreement except in accordance with Section 12.4 of this
Agreement.
(d) Each Credit Party hereby covenants and agrees that, except for
amounts payable as Basic Rent, any and all payment obligations owing from
time to time under the Operative Agreements by any Person to the Agent, any
Lender, any Holder or any other Person shall (without further action) be
deemed to be Supplemental Rent obligations payable by the Lessee and
guaranteed by the other Credit Parties. Without limitation, such
obligations of the Credit Parties shall include without limitation
arrangement fees, administrative fees, unused fees, breakage costs,
indemnities, trustee fees and transaction expenses incurred by the parties
hereto in connection with the transactions contemplated by the Operative
Agreements.
(e) The Lessee hereby covenants and agrees to cause an Appraisal or
reappraisal (in form and substance satisfactory to the Agent and from an
appraiser selected by the Agent) to be issued respecting any Property as
requested by the Agent from time to time (i) at each and every time as such
shall be required to satisfy any regulatory requirements imposed on the
Agent, the Lessor, the Trust Company, any Lender and/or any Holder and (ii)
after the occurrence of an Event of Default.
(f) The Lessee hereby covenants and agrees that, except for amounts
payable as Basic Rent, any and all payment obligations owing from time to
time under the Operative Agreements by any Person to the Agent, any Lender,
any Holder or any other Person shall (without further action) be deemed to
be Supplemental Rent obligations payable by the Lessee. Without limitation,
such obligations of the Lessee shall include the Supplement Rent
obligations pursuant to Section 3.3 of the Lease, arrangement fees,
administrative fees, participation fees, commitment fees, unused fees,
prepayment penalties, breakage costs, indemnities, trustee fees and
transaction expenses incurred by the parties hereto in connection with the
transactions contemplated by the Operative Agreements.
(g) At any time the Lessor or the Agent is entitled under the
Operative Agreements to possession of a Property or any component thereof,
each of the Construction Agent and the Lessee hereby covenants and agrees,
at its own cost and expense, to assemble and make the same available to the
Agent (on behalf of the Lessor).
33
<PAGE>
(h) The Lessee hereby covenants and agrees that, respecting each
Property, Non-Integral Equipment financed under the Operative Agreements
may constitute up to, but shall not exceed, ten percent (10%) of the
aggregate Advances extended at or prior to such time with respect to such
Property.
(i) The Lessee hereby covenants and agrees that as of Completion (i)
the Property Cost for each individual parcel of the Property shall be no
less than $1,000,000 and (ii) each parcel of the Property shall be a
Permitted Facility.
(j) The Lessee hereby covenants and agrees that it shall give prompt
notice to the Agent if the Lessee's principal place of business or chief
executive office, or the office where the records concerning the accounts
or contract rights relating to any Property are kept, shall cease to be
located at 600 Citadel Drive, Commerce, California 90040 or if it shall
change its name.
(k) Unless the Agent otherwise agrees in writing, the Lessee hereby
covenants and agrees that the aggregate Property Cost of Non-Integral
Equipment purchased for any reason by the Lessee prior to the Expiration
Date shall not exceed ten percent (10%) of the aggregate Property Cost for
all Properties funded during the Commitment Period.
(l) Until all the obligations of the Credit Parties under the
Operative Agreements have been finally and indefeasibly paid and satisfied
in full, the Commitments and the Holder Commitments terminated and the Term
has expired or been earlier terminated, then unless consent has been
obtained from the Majority Secured Parties, the Lessee will furnish or
cause to be furnished to each Holder, each Lender and the Agent at their
respective addresses set forth or referenced in Section 12.2 of this
Agreement, or such other office as may be designated by any such Holder,
Lender or the Agent from time to time: (i) not later than forty-five (45)
days after the end of each fiscal quarter, a certificate duly signed by the
chief executive officer, chief operating officer, chief financial officer,
treasurer or controller of Lessee setting forth the Adjusted Leverage Ratio
for the period of four (4) consecutive fiscal quarters ending with such
quarter-end and setting forth the computations employed in calculating the
ratio (the "Margin Certificate") and (ii) at each time financial statements
------------------
are delivered or to be delivered pursuant to Section 28.1 of the Lease, a
compliance certificate duly executed by the president, treasurer, chief
financial offer or controller of Lessee substantially in the form of
Exhibit M ATTACHED HERETO (THE "OFFICER'S COMPLIANCE CERTIFICATE").
--------- --------------------------------
(m) The Lessee hereby covenants and agrees that the rights of the
Lessee under this Agreement and the Lease shall not impair or in any way
diminish the obligations of the Construction Agent and/or the rights of the
Lessor under the Agency Agreement.
(n) Each Credit Party hereby covenants and agrees to cause each
Domestic Subsidiary formed or acquired after the Initial Closing Date to
execute a Joinder Agreement and to observe the terms of Sections 5.8(a)-(d)
of this Agreement, all within thirty (30) days of the formation or
acquisition of such Domestic Subsidiary.
34
<PAGE>
(o) Each Credit Party shall promptly notify the Agent, or cause the
Agent to be promptly notified, upon such Credit Party gaining knowledge of
the occurrence of any Default or Event of Default which is continuing at
such time. In any event, such notice shall be provided to the Agent within
ten (10) days of when such Credit Party gains such knowledge.
(p) Until all of the obligations under the Operative Agreements have
been finally and indefeasibly paid and satisfied in full and the
Commitments and the Holder Commitments terminated unless consent has been
obtained from the Majority Secured Parties, each Credit Party will:
(i) except as permitted by the express provisions of the Lessee
Credit Agreement, preserve and maintain its separate legal existence
and all rights, franchises, licenses and privileges necessary to the
conduct of its business, and qualify and remain qualified as a foreign
corporation (or partnership, limited liability company or other such
similar entity, as the case may be) and authorized to do business in
each jurisdiction in which the failure to do so qualify would have a
Material Adverse Effect;
(ii) pay and perform all obligations of the Credit Parties under
the Operative Agreements and pay and perform (A) all taxes,
assessments and other governmental charges that may be levied or
assessed upon it or any of its property, and (B) all other
indebtedness, obligations and liabilities in accordance with customary
trade practices, which if not paid would have a Material Adverse
Effect; provided that any Credit Party may contest any item described
--------
in this Section 8.3(p)(ii) in good faith so long as adequate reserves
are maintained with respect thereto in accordance with GAAP;
(iii) to the extent failure to do so would have a Material
Adverse Effect, observe and remain in compliance with all applicable
Laws and maintain in full force and effect all Governmental Actions,
in each case applicable to the conduct of its business; keep in full
force and effect all licenses, certifications or accreditations
necessary for any Facility to carry on its business; and not permit
the termination of any insurance reimbursement program available to
any Facility; and
(iv) provided that the Agent, the Lenders and the Holders use
reasonable efforts to minimize disruption to the business of the
Credit Parties permit representatives of the Agent or any Lender or
Holder, from time to time, to visit and inspect its properties;
inspect, audit and make extracts from its books, records and files,
including without limitation management letters prepared by
independent accountants; and discuss with its principal officers, and
its independent accountants, its business, assets, liabilities,
financial condition, results of operations and business prospects.
35
<PAGE>
(q) Lessee shall take all action reasonably necessary to assure that
Lessee's computer based systems are able to operate and effectively process
data including dates on and after january 1, 2000. At the request of the
Agent, Lessee shall provide Agent assurance acceptable to Agent of Lessee's
Year 2000 compatibility. In addition, each credit party will promptly
notify the Agent in the event sucH Credit Party discovers or determines
that any computer application (including those of any supplier, vendor or
customer of such Credit Party or any Subsidiary of such Credit Party) that
is material to such Credit Party's or any of its Subsidiaries' business and
operations will not be Year 2000 Compliant, except to the extent that such
failure shall not have and could not reasonably be expected to have a
Material Adverse Effect.
(r) Promptly after obtaining any required architectural approvals by
any business park or any other applicable entity with oversight
responsibility for the applicable Improvements, the Construction Agent
shall deliver to the Agent copies of the same.
(S) Lessee shall perform any and all obligations of Lessor under, and
cause Lessor to otherwise remain in full compliance with, the terms and
provisions of each Ground Lease, if any.
(t) On or before November 18, 1998, Lessee shall deliver to the
Lessor, the Agent and each other Financing party a report (the
"Environmental Compliance Report"), in form and substance satisfactory to
-------------------------------
the Lessor and the Agent, that confirms that the recommendations for
additional investigation and remedial work contained in the Giles
Environmental Report have been satisfied in accordance with applicable
Environmental Laws and to the satisfaction of the Lessor and the Agent. If
Lessee shall fail to so deliver such Environmental Compliance Report, the
Lessor, the Agent or any other Financing Party may obtain such
Environmental Compliance Report and Lessee shall pay all costs and expenses
thereof.
(t) On or before November 18, 1998, the Lessee shall complete the
demolition and removal of all buildings, structures, fixtures and other
improvements that were located on or part of the Commerce Property as oF
May 20, 1998, which demolition and removal shall be completed in compliance
with all applicable laws and to the satisfaction of the Lessor and the
Agent. The Lessee shall provide written notice to the Lessor and the Agent
when such demolition and removal has been completed.
8.4. SHARING OF CERTAIN PAYMENTS.
---------------------------
Except for Excepted Payments, the parties hereto acknowledge and agree that
all payments due and owing by any Credit Party to the Lessor under the Lease or
any of the other Operative Agreements shall be made by such Credit Party
directly to the Agent as more particularly provided in Section 8.3 hereof. The
Lessor, the Holders, the Agent, the Lenders and the Credit Parties acknowledge
the terms of Section 8.7 of this Agreement regarding the
36
<PAGE>
allocation of payments and other amounts made or received from time to time
under the Operative Agreements and agree, that all such payments and amounts are
to be allocated as provided in Section 8.7 of this Agreement.
8.5. GRANT OF EASEMENTS, ETC.
------------------------
The Agent, the Lenders and the Holders hereby agree that, so long as no
Event of Default shall have occurred and be continuing, the Owner Trustee shall,
from time to time at the request of the Lessee (and with the prior consent of
the Agent), in connection with the transactions contemplated by the Agency
Agreement, the Lease or the other Operative Agreements, (i) grant easements and
other rights in the nature of easements with respect to any Property; (ii)
release existing easements or other rights in the nature of easements which are
for the benefit of any Property; (iii) execute and deliver to any Person any
instrument appropriate to confirm or effect such grants or releases; and (iv)
execute and deliver to any Person such other documents or materials in
connection with the acquisition, development, construction, testing or operation
of any Property, including without limitation reciprocal easement agreements,
construction contracts, operating agreements, development agreements, plats,
replats or subdivision documents; provided, that each of the agreements referred
--------
to in this Section 8.5 shall be of the type normally executed by the Lessee in
the ordinary course of the Lessee's business and shall be on commercially
reasonable terms so as not to diminish the value of any Property in any material
respect.
8.6. APPOINTMENT BY THE AGENT, THE LENDERS, THE HOLDERS AND THE OWNER
----------------------------------------------------------------
TRUSTEE.
-------
The Holders hereby appoint the Agent to act as collateral agent for the
Holders in connection with the Lien granted by the Security Documents to secure
the Holder Amount and all other amounts due and owing to the Holders. The
Lenders and the Holders acknowledge and agree and direct that the rights and
remedies of the beneficiaries of the Lien of the Security Documents shall be
exercised by the Agent on behalf of the Lenders and the Holders as directed from
time to time by the Majority Secured Parties or, pursuant to Sections 8.2(h) and
12.4, all of the Lenders and the Holders, as the case may be; provided, in all
--------
cases, the Agent shall allocate payments and other amounts received in
accordance with Section 8.7. The Agent is further appointed to provide notices
under the Operative Agreements on behalf of the Owner Trustee (as determined by
the Agent, in its reasonable discretion), to receive notices under the Operative
Agreements on behalf of the Owner Trustee and (subject to Sections 8.5 and 9.2)
to take such other action under the Operative Agreements on behalf of the Owner
Trustee as the Agent shall determine in its reasonable discretion from time to
time. The Agent hereby accepts such appointments. For purposes hereof, the
provisions of Section 7 of the Credit Agreement, together with such other terms
and provisions of the Credit Agreement and the other Operative Agreements as
required for the full interpretation and operation of Section 7 of the Credit
Agreement are hereby incorporated by reference as if restated herein for the
mutual benefit of the Agent and each Holder as if each Holder were a Lender
thereunder. Outstanding Holder Advances and outstanding Loans shall each be
taken into account for purposes of determining Majority Secured Parties.
Further, the Agent shall be entitled to take such action on behalf of the Owner
Trustee as is delegated to the Agent under any Operative Agreement (whether
express or
37
<PAGE>
implied) as may be reasonably incidental thereto. The parties hereto hereby
agree to the provisions contained in this Section 8.6. Any appointment of a
successor agent under Section 7.9 of the Credit Agreement shall also be
effective as an appointment of a successor agent for purposes of this Section
8.6.
8.7. COLLECTION AND ALLOCATION OF PAYMENTS AND OTHER AMOUNTS.
-------------------------------------------------------
(a) Each Credit Party has agreed pursuant to Sections 5.8 and 5.9 and
otherwise in accordance with the terms of this Agreement to pay to (i) the
Agent any and all Rent (excluding Excepted Payments) and any and all other
amounts of any kind or type under any of the Operative Agreements due and
owing or payable to any Person and (ii) each Person as appropriate the
Excepted Payments. Promptly after receipt, the Agent shall apply and
allocate, in accordance with the terms of this Section 8.7, such amounts
received from any Credit Party and all other payments, receipts and other
consideration of any kind whatsoever received by the Agent pursuant to the
Security Agreement or otherwise received by the Agent, the Holders or any
of the Lenders in connection with the Collateral, the Security Documents or
any of the other Operative Agreements. Ratable distributions among the
Lenders and the Holders pursuant to this Section 8.7 shall be made based on
(in the case of the Lenders) the ratio of the outstanding Loans to the
aggregate Property Cost and (in the case of the Holders) the ratio of the
outstanding Holder Advances to the aggregate Property Cost. Ratable
distributions among the Tranche A Lenders pursuant to this Section 8.7
shall be made based on the ratio of the individual Tranche A Lender's
Commitment for Tranche A Loans to the aggregate of all the Tranche A
Lenders' Commitments for Tranche A Loans. Ratable distributions among the
Tranche B Lenders pursuant to this Section 8.7 shall be made based on the
ratio of the individual Tranche B Lender's Commitment for Tranche B Loans
to the aggregate of all the Tranche B Lenders' Commitments for Tranche B
Loans. Ratable distributions among the Lenders (in situations where the
Tranche A Lenders are not differentiated from the Tranche B Lenders) shall
be made based on the ratio of the individual Lender's Commitment to the
aggregate of all the Lenders' Commitments. Ratable distributions among the
Holders pursuant to this Section 8.7 shall be based on the ratio of the
individual Holder's Holder Commitment to the aggregate of all the Holders'
Holder Commitments.
(b) Payments and other amounts received by the Agent from time to
time in accordance with the terms of subparagraph (a) shall be applied and
allocated as follows:
(i) Any such payment or amount identified as or deemed to be
Basic Rent shall be applied and allocated by the Agent first, ratably
-----
to the Lenders and the Holders for application and allocation to the
payment of interest on the Loans and thereafter the principal of the
Loans which is due and payable on such date and to the payment of
accrued Holder Yield with respect to the Holder Advances and
thereafter the portion of the Holder Advances which is due on such
date; and second, if no Default or Event of Default is in effect, any
------
excess shall be paid to such Person or Persons as the Lessee may
designate; provided, that if a Default or
--------
38
<PAGE>
Event of Default is in effect, such excess (if any) shall instead be
held by the Agent until the earlier of (I) the first date thereafter
on which no Default or Event of Default shall be in effect (in which
case such payments or returns shall then be made to such other Person
or Persons as the Lessee may designate) and (II) the Maturity Date or
the Expiration Date, as the case may be (or, if earlier, the date of
any Acceleration), in which case such amounts shall be applied and
allocated in the manner contemplated by Section 8.7(b)(iv); and
(ii) If on any date the Agent or the Lessor shall receive any
amount in respect of (A) any Casualty or Condemnation pursuant to
Sections 15.1(a) or 15.1(g) of the Lease (excluding any payments in
respect thereof which are payable to the Lessee in accordance with the
Lease), or (B) the Termination Value in connection with the delivery
of a Termination Notice pursuant to Article XVI of the Lease, or (C)
the Termination Value in connection with the exercise of the Purchase
Option under Section 20.1 of the Lease or the exercise of the option
of the Lessor to transfer the Properties to the Lessee pursuant to
Section 20.3 of the Lease, or (D) any payment required to be made or
elected to be made by the Construction Agent to the Lessor pursuant to
the terms of the Agency Agreement, then in each case, the Lessor shall
be required to pay such amount received (1) if no Acceleration has
occurred, to prepay the principal balance of the Loans and the Holder
Advances, on a pro rata basis, a portion of such amount to be
distributed to the Lenders and the Holders or (2) if an Acceleration
has occurred, to apply and allocate the proceeds respecting Sections
8.7(b)(ii)(A) through 8.7(b)(ii)(D) in accordance with Section
8.7(b)(iii) hereof.
(iii) Subject to Section 8.7(c), an amount equal to any payment
identified as proceeds of the sale or other disposition (or lease upon
the exercise of remedies) of the Properties or any portion thereof,
whether pursuant to Article XXII of the Lease or the exercise of
remedies under the Security Documents or otherwise, the execution of
remedies set forth in the Lease and any payment in respect of excess
wear and tear pursuant to Section 22.3 of the Lease (whether such
payment relates to a period before or after the Construction Period
Termination Date) shall be applied and allocated by the Agent first,
-----
ratably to the payment of the principal and interest of the Tranche B
Loans then outstanding, second, ratably to the payment to the Holders
------
of the outstanding principal balance of all Holder Advances plus all
outstanding Holder Yield with respect to such outstanding Holder
Advances, third, to the extent such amount exceeds the maximum amount
-----
to be returned pursuant to the foregoing provisions of this paragraph
(iii), ratably to the payment of the principal and interest of the
Tranche A Loans then outstanding, fourth, to any and all other amounts
------
owing under the Operative Agreements to the Lenders under the Tranche
B Loans, fifth, to any and all other amounts owing under the Operative
-----
Agreements to the Holders, sixth, to any and all other amounts owing
-----
under the Operative Agreements to the Lenders under the Tranche A
Loans, and seventh, to the extent moneys remain after application and
-------
allocation pursuant to clauses first through sixth above, to the
----- -----
39
<PAGE>
Owner Trustee for application and allocation to any and all other
amounts owing to the Holders or the Owner Trustee and as the Holders
shall determine; provided, where no Event of Default shall exist and
--------
be continuing and a prepayment is made for any reason with respect to
less than the full amount of the outstanding principal amount of the
Loans and the outstanding Holder Advances, the proceeds shall be
applied and allocated ratably to the Lenders and to the Holders.
(iv) Subject to Section 8.7(c), an amount equal to (A) any such
payment identified as a payment pursuant to Section 22.1(b) of the
Lease (or otherwise) of the Maximum Residual Guarantee Amount (and any
such lesser amount as may be required by Section 22.1(b) of the Lease)
in respect of the Properties, (B) any other amount payable upon any
exercise of remedies after the occurrence of an Event of Default not
covered by Sections 8.7(b)(i) or 8.7(b)(iii) above (including without
limitation any amount received in connection with an Acceleration
which does not represent proceeds from the sale or liquidation of the
Properties), and (C) any other amount payable by any Guarantor
pursuant to Section 6B shall be applied and allocated by the Agent
first, ratably, to the payment of the principal and interest
-----
balance of Tranche A Loans then outstanding, second, ratably to the
------
payment of the principal and interest balance of the Tranche B Loans
then outstanding, third, ratably to the payment of the principal
-----
balance of all Holder Advances plus all outstanding Holder Yield with
respect to such outstanding Holder Advances, fourth, to the payment of
------
any other amounts owing to the Lenders hereunder or under any of the
other Operative Agreement, and fifth, to the extent moneys remain
-----
after application and allocation pursuant to clauses first through
-------------
fourth above, to the Owner Trustee for application and allocation to
------
Holder Advances and Holder Yield and any other amounts owing to the
Holders or the Owner Trustee as the Holders shall determine.
(v) An amount equal to any such payment identified as
Supplemental Rent shall be applied and allocated by the Agent to the
payment of any amounts then owing to the Agent, the Lenders, the
Holders and the other parties to the Operative Agreements (or any of
them) (other than any such amounts payable pursuant to the preceding
provisions of this Section 8.7(b)) as shall be determined by the Agent
in its reasonable discretion; provided, however, that Supplemental
-------- -------
Rent received upon the exercise of remedies after the occurrence and
continuance of an Event of Default in lieu of or in substitution of
the Maximum Residual Guarantee Amount or as a partial payment thereon
shall be applied and allocated as set forth in Section 8.7(b)(iv).
(vi) The Agent in its reasonable judgment shall identify the
nature of each payment or amount received by the Agent and apply and
allocate each such amount in the manner specified above.
40
<PAGE>
(c) Upon the termination of the Commitments and the payment in full
of the Loans and all other amounts owing by the Owner Trustee hereunder or
under any Credit Document and the payment in full of all amounts owing to
the Holders and the Owner Trustee under the Trust Agreement, any moneys
remaining with the Agent shall be returned to the Owner Trustee or such
other Person or Persons as the Holders may designate for application and
allocation to any and all other amounts owing to the Holders or the Owner
Trustee and as the Holders shall determine. In the event of an Acceleration
it is agreed that, prior to the application and allocation of amounts
received by the Agent in the order described in Section 8.7(b) above, any
such amounts shall first be applied and allocated to the payment of (i) any
and all sums advanced by the Agent in order to preserve the Collateral or
to preserve its Lien thereon; (ii) the expenses of retaking, holding,
preparing for sale or lease, selling or otherwise disposing or realizing on
the Collateral, or of any exercise by the Agent of its rights under the
Security Documents, together with reasonable attorneys' fees and expenses
and court costs; and (iii) any and all other amounts reasonably owed to the
Agent under or in connection with the transactions contemplated by the
Operative Agreements (including without limitation any accrued and unpaid
administration fees).
(d) Subject to Section 8.7(c), an amount equal to any payment
identified as proceeds of the sale or other disposition of the Properties
or any part thereof (whether pursuant to the exercise of remedies under the
Security Documents, the Lease or otherwise) shall be applied and allocated
by the Agent in accordance with Section 5.11.
(e) Notwithstanding anything to the contrary in any of the Operative
Agreements, to the extent that any procceds derived from any of the
Properties (whether by sale, in the form of an award in condemnation or
taking, in the form of insurance proceeds after a casualty, or otherwise)
and held by Agent are payable, pursuant to the terms of the Operative
Agreements, to the Lessee (other than in reimbursement for restoration or
replacement work performed by the Lessee after a condemnation, taking or
casualty), Lessee hereby directs that Agent handle such proceeds in
accordance with Section 6(d) of the LCA Security Agreement.
8.8. RELEASE OF PROPERTIES, ETC.
---------------------------
If the Lessee shall at any time purchase any Property pursuant to the
Lease, or the Construction Agent shall purchase any Property pursuant to the
Agency Agreement, or if any Property shall be sold in accordance with Article
XXII of the Lease, then, upon satisfaction by the Owner Trustee of its
obligation to prepay the Loans, and Holder Advances in respect of such property
and all other amounts owing to the Lenders and the Holders under the Operative
Agreements, the Agent is hereby authorized and directed to release such Property
from the Liens created by the Security Documents to the extent of
41
<PAGE>
its interest therein. In addition, upon the termination of the Commitments and
the Holder Commitments and the payment in full of the Loans, the Holder Advances
and all other amounts owing by the Owner Trustee and the Lessee hereunder or
under any other Operative Agreement the Agent is hereby authorized and directed
to release all of the Properties from the Liens created by the Security
Documents to the extent of its interest therein. Upon request of the Owner
Trustee following any such release, the Agent shall, at the sole cost and
expense of the Lessee, execute and deliver to the Owner Trustee and the Lessee
such documents as the Owner Trustee or the Lessee shall reasonably request to
evidence such release.
SECTION 9. CREDIT AGREEMENT AND TRUST AGREEMENT.
9.1. THE CONSTRUCTION AGENT'S AND THE LESSEE'S CREDIT AGREEMENT RIGHTS.
-----------------------------------------------------------------
Notwithstanding anything to the contrary contained in the Credit Agreement,
the Agent, the Lenders, the Holders, the Construction Agent, the Credit Parties
and the Owner Trustee hereby agree that, prior to the occurrence and
continuation of any Default or Event of Default, the Construction Agent or the
Lessee, as the case may be, shall have the following rights:
(a) the right to designate an account to which amounts funded under
the Operative Agreements shall be credited pursuant to Section 2.3(a) of
the Credit Agreement;
(b) the right to terminate or reduce the Commitments pursuant to
Section 2.5(a) of the Credit Agreement;
(c) the right to exercise the conversion and continuation options
pursuant to Section 2.7 of the Credit Agreement;
(d) the right to receive any notice and any certificate, in each case
issued pursuant to Section 2.11(a) of the Credit Agreement;
(e) the right to replace any Lender pursuant to Section 2.11(b) of
the Credit Agreement;
(f) the right to approve any successor agent pursuant to Section 7.9
of the Credit Agreement; and
(g) the right to consent to any assignment by a Lender to which the
Lessor has the right to consent pursuant to Section 9.8 of the Credit
Agreement.
9.2. THE CONSTRUCTION AGENT'S AND THE LESSEE'S TRUST AGREEMENT RIGHTS.
----------------------------------------------------------------
Notwithstanding anything to the contrary contained in the Trust Agreement,
the Credit Parties, the Owner Trustee and the Holders hereby agree that, prior
to the occurrence and continuation of any Default or Event of Default, the
Construction Agent or the Lessee, as the case may be, shall have the following
rights:
(a) the right to exercise the conversion and continuation options
pursuant to Section 3.8 of the Trust Agreement;
42
<PAGE>
(b) the right to receive any notice and any certificate, in each
case issued pursuant to Section 3.9(a) of the Trust Agreement;
(c) the right to replace any Holder pursuant to Section 3.9(b) of the
Trust Agreement; and
(d) the right to exercise the removal options contained in Section
3.9 of the Trust Agreement; provided, however, that no removal of the Owner
-------- -------
Trustee and appointment of a successor Owner Trustee pursuant to Section
9.1 of the Trust Agreement shall be made without the prior written consent
(not to be unreasonably withheld or delayed) of the Lessee.
SECTION 10. TRANSFER OF INTEREST.
10.1. RESTRICTIONS ON TRANSFER.
------------------------
(a) Each Lender may participate, assign or transfer all or a
portion of its interest hereunder and under the other Operative Agreements
in accordance with Sections 9.7 and 9.8 of the Credit Agreement; provided,
--------
each participant, assignee or transferee must obtain either:
(i) the same ratable interest in Tranche A Commitments,
outstanding Tranche A Loans (if any), Tranche B Commitments, outstanding
Tranche B Loans (if any), Holder Commitments, outstanding Holder Advances
(if any) and loan commitments with regard and outstanding loans (if any)
under and pursuant to the Lessee Credit Agreement, or
(ii) only if such participant, assignee or transferee shall
obtain its interest from a Lender that itself does not hold the same
ratable interest in the Tranche A Commitments, outstanding Tranche A Loans
(if any), Tranche B Commitments, outstanding Tranche B Loans (if any),
Holder Commitments, outstanding Holder Advances (if any) and loan
commitments with regard and outstanding loans (if any) under and pursuant
to the Lessee Credit Agreement, the same ratable interest in Tranche A
Commitments, outstanding Tranche A Loans (if any), Tranche B Commitments
and oustsatnding Tranche B Loans (if any), and such an interest in the in
Tranche A Commitments, outstanding Tranche A Loans (if any), Tranche B
Commitments, outstanding Tranche B Loans (if any), Holder Commitments,
outstanding Holder Advances (if any) and loan commitments and outstanding
loans (if any) under and pursuant to the Lessee Credit Agreement that there
exists a 5.0:3.0 ratio (A) between the dollar amount of its interest in the
loans commitments with regard to the Lessee Credit Agreement and the dollar
amount of the aggregate of its interest in the Tranche A Commitments, the
Tranche B Commitments and the Holder Commitments and (B) between the dollar
amount of its interest in the outstanding loans under and pursuant to the
Lessee Credit Agreement (if any) and the aggregate dollar amount of its
interest in the
43
<PAGE>
outstanding Tranche A Loans(if any), the outstanding Tranche B Loans (if
any) and the outstanding Holder Advances (if any).
(b) The Holders may, directly or indirectly, assign, convey or
otherwise transfer any of their right, title or interest in or to the Trust
Estate or the Trust Agreement with the prior written consent of the Agent
and the Lessee (which consent shall not be unreasonably withheld or
delayed) and in accordance with the terms of Section 11.8(b) of the Trust
Agreement; provided, each assignee, recipient of a conveyance or transferee
must obtain either:
(i) the same ratable interest in and to the Tranche A Commitments,
outstanding Tranche A Loans (if any), Tranche B Commitments, outstanding
Tranche B Loans (if any), Holder Commitments, outstanding Holder Advances
(if any) and loan commitments with regard and outstanding loans (if any)
under and pursuant to the Lessee Credit Agreement, or
(ii) only if such assignee, recipient of a conveyance or transferee
shall obtain its interest from a Holder that itself does not hold the same
ratable interest in the Tranche A Commitments, outstanding Tranche A Loans
(if any), Tranche B Commitments, outstanding Tranche B Loans (if any),
Holder Commitments, outstanding Holder Advances (if any) and loan
commitments with regard and outstanding loans (if any) under and pursuant
to the Lessee Credit Agreement, the same ratable interest in Tranche A
Commitments, outstanding Tranche A Loans (if any), Tranche B Commitments
and oustsatnding Tranche B Loans (if any) and such an interest in the in
Tranche A Commitments, outstanding Tranche A Loans (if any), Tranche B
Commitments, outstanding Tranche B Loans (if any), Holder Commitments,
outstanding Holder Advances (if any) and loan commitments and outstanding
loans (if any) under and pursuant to the Lessee Credit Agreement that there
exists a 5.0:3.0 ratio (A) between the dollar amount of its interest in the
loans commitments with regard to the Lessee Credit Agreement and the dollar
amount of the aggregate of its interest in the Tranche A Commitments, the
Tranche B Commitments and the Holder Commitments and (B) between the dollar
amount of its interest in the outstanding loans under and pursuant to the
Lessee Credit Agreement (if any) and the aggregate dollar amount of its
interest in the outstanding Tranche A Loans(if any), the outstanding
Tranche B Loans (if any) and the outstanding Holder Advances (if any).
(c) The Owner Trustee may, subject to the rights of the Lessee under
the Lease and the other Operative Agreements and to the Lien of the
applicable Security Documents but only with the prior written consent of
the Agent (which consent may be withheld by the Agent in its sole
discretion) and (provided, no Default or Event of Default has occurred and
--------
is continuing) with the consent of the Lessee, directly or indirectly,
assign, convey, appoint an agent with respect to enforcement of, or
otherwise transfer any of its right, title or interest in or to any
Property, the Lease, the Trust Agreement and the other Operative Agreements
(including without limitation any right to indemnification thereunder), or
any other document relating to a Property or any interest
44
<PAGE>
in a Property as provided in the Trust Agreement and the Lease. The
provisions of the immediately preceding sentence shall not apply to the
obligations of the Owner Trustee to transfer Property to the Lessee or a
third party purchaser pursuant to Article XXII of the Lease upon payment
for such Property in accordance with the terms and conditions of the Lease.
(d) No Credit Party may assign any of the Operative Agreements or any
of their respective rights or obligations thereunder or with respect to any
Property in whole or in part to any Person without the prior written
consent of the Agent, the Lenders, the Holders and the Lessor.
(e) Any participation, assignment or transfer effected in breach of
this Section 10.1 shall be void.
10.2. EFFECT OF TRANSFER.
------------------
From and after any transfer effected in accordance with this Section 10,
the transferor shall be released, to the extent of such transfer, from its
liability hereunder and under the other documents to which it is a party in
respect of obligations to be performed on or after the date of such transfer;
provided, however, that any transferor shall remain liable hereunder and under
- -------- -------
such other documents to the extent that the transferee shall not have assumed
the obligations of the transferor thereunder. Upon any transfer by the Owner
Trustee, a Holder or a Lender as above provided, any such transferee shall
assume the obligations of the Owner Trustee, the Holder or the Lender, as the
case may be, and shall be deemed an "Owner Trustee", "Holder", or "Lender", as
the case may be, for all purposes of such documents and each reference herein to
the transferor shall thereafter be deemed a reference to such transferee for all
purposes, except as provided in the preceding sentence. Notwithstanding any
transfer of all or a portion of the transferor's interest as provided in this
Section 10, the transferor shall be entitled to all benefits accrued and all
rights vested prior to such transfer including without limitation rights to
indemnification under any such document.
SECTION 11. INDEMNIFICATION.
11.1. GENERAL INDEMNITY.
-----------------
Subject to and limited by in all respects the provisions of Sections 11.6
through 11.8 and whether or not any of the transactions contemplated hereby
shall be consummated, the Indemnity Provider hereby assumes liability for and
agrees to defend, indemnify and hold harmless each Indemnified Person on an
After Tax Basis from and against any Claims, which may be imposed on, incurred
by or asserted against an Indemnified Person by any third party, including
without limitation Claims arising from the negligence of an Indemnified Person
(but not to the extent such Claims arise from the gross negligence or willful
misconduct of such Indemnified Person itself, as determined by a court of
competent jurisdiction, as opposed to gross negligence or willful misconduct
imputed to such Indemnified Person) in any way relating to or arising or alleged
to arise out of the execution, delivery, performance or enforcement of this
Agreement,
45
<PAGE>
the Lease or any other Operative Agreement or on or with respect to any Property
or any component thereof, including without limitation Claims in any way
relating to or arising or alleged to arise out of (a) the financing,
refinancing, purchase, acceptance, rejection, ownership, design, construction,
refurbishment, development, delivery, acceptance, nondelivery, leasing,
subleasing, possession, use, occupancy, operation, maintenance repair,
modification, transportation, condition, sale, return, repossession (whether by
summary proceedings or otherwise), or any other disposition of any Property or
any part thereof, including without limitation the acquisition, holding or
disposition of any interest in the Property, lease or agreement comprising a
portion of any thereof; (b) any latent or other defects in any Property or any
portion thereof whether or not discoverable by an Indemnified Person or the
Indemnity Provider; (c) a violation of Environmental Laws, Environmental Claims
or other loss of or damage to any property or the environment relating to the
Property, the Lease, the Agency Agreement or the Indemnity Provider; (d) the
Operative Agreements, or any transaction contemplated thereby; (e) any breach by
the Indemnity Provider of any of its representations or warranties under the
Operative Agreements to which the Indemnity Provider is a party or failure by
the Indemnity Provider to perform or observe any covenant or agreement to be
performed by it under any of the Operative Agreements; (f) the transactions
contemplated hereby or by any other Operative Agreement, in respect of the
application of Parts 4 and 5 of Subtitle B of Title I of ERISA; (g) personal
injury, death or property damage, including without limitation Claims based on
strict or absolute liability in tort; and (h) any fees, expenses and/or other
assessments by any business park or any other applicable entity with oversight
responsibility for the applicable Property.
If a written Claim is made against any Indemnified Person or if any
proceeding shall be commenced against such Indemnified Person (including without
limitation a written notice of such proceeding), for any Claim, such Indemnified
Person shall promptly notify the Indemnity Provider in writing and shall not
take action with respect to such Claim without the consent of the Indemnity
Provider for thirty (30) days after the receipt of such notice by the Indemnity
Provider; provided, however, that in the case of any such Claim, if action shall
-------- -------
be required by law or regulation to be taken prior to the end of such period of
thirty (30) days, such Indemnified Person shall endeavor to, in such notice to
the Indemnity Provider, inform the Indemnity Provider of such shorter period,
and no action shall be taken with respect to such Claim without the consent of
the Indemnity Provider before seven (7) days before the end of such shorter
period; provided, further, that the failure of such Indemnified Person to give
-------- -------
the notices referred to in this sentence shall not diminish the Indemnity
Provider's obligation hereunder except to the extent such failure precludes in
all respects the Indemnity Provider from contesting such Claim.
If, within thirty (30) days of receipt of such notice from the Indemnified
Person (or such shorter period as the Indemnified Person has notified the
Indemnity Provider is required by law or regulation for the Indemnified Person
to respond to such Claim), the Indemnity Provider shall request in writing that
such Indemnified Person respond to such Claim, the Indemnified Person shall, at
the expense of the Indemnity Provider, in good faith conduct and control such
action (including without limitation by pursuit of appeals) (provided, however,
-------- --------
that (A) if such Claim, in the Indemnity Provider's reasonable discretion, can
be pursued by the Indemnity Provider on behalf of or in the name of such
Indemnified Person, the Indemnified Person, at the Indemnity
46
<PAGE>
Provider's request, shall allow the Indemnity Provider to conduct and control
the response to such Claim and (B) in the case of any Claim (and notwithstanding
the provisions of the foregoing subsection (A)), the Indemnified Person may
request the Indemnity Provider to conduct and control the response to such Claim
(with counsel to be selected by the Indemnity Provider and consented to by such
Indemnified Person, such consent not to be unreasonably withheld; provided,
however, that any Indemnified Person may retain separate counsel at the expense
of the Indemnity Provider in the event of a conflict of interest between such
Indemnified Person and the Indemnity Provider)) by, in the sole discretion of
the Person conducting and controlling the response to such Claim (1) resisting
payment thereof, (2) not paying the same except under protest, if protest is
necessary and proper, (3) if the payment be made, using reasonable efforts to
obtain a refund thereof in appropriate administrative and judicial proceedings,
or (4) taking such other action as is reasonably requested by the Indemnity
Provider from time to time.
The party controlling the response to any Claim shall consult in good faith
with the non-controlling party and shall keep the non-controlling party
reasonably informed as to the conduct of the response to such Claim; provided,
--------
that all decisions ultimately shall be made in the discretion of the controlling
party. The parties agree that an Indemnified Person may at any time decline to
take further action with respect to the response to such Claim and may settle
such Claim if such Indemnified Person shall waive its rights to any indemnity
from the Indemnity Provider that otherwise would be payable in respect of such
Claim (and any future Claim, the pursuit of which is precluded by reason of such
resolution of such Claim) and shall pay to the Indemnity Provider any amount
previously paid or advanced by the Indemnity Provider pursuant to this Section
11.1 by way of indemnification or advance for the payment of an amount regarding
such Claim.
Notwithstanding the foregoing provisions of this Section 11.1, an
Indemnified Person shall not be required to take any action and the Indemnity
Provider shall not be permitted to respond to any Claim in its own name or that
of the Indemnified Person unless (A) the Indemnity Provider shall have agreed to
pay and shall pay to such Indemnified Person on demand and on an After Tax Basis
all reasonable costs, losses and expenses that such Indemnified Person actually
incurs in connection with such Claim, including without limitation all
reasonable legal, accounting and investigatory fees and disbursements and, if
the Indemnified Person has informed the Indemnity Provider that it intends to
contest such Claim (whether or not the control of the contest is then assumed by
the Indemnity Provider), the Indemnity Provider shall have agreed that the Claim
is an indemnifiable Claim hereunder; (B) in the case of a Claim that must be
pursued in the name of an Indemnified Person (or an Affiliate thereof), the
amount of the potential indemnity (taking into account all similar or logically
related Claims that have been or could be raised for which the Indemnity
Provider may be liable to pay an indemnity under this Section 11.1) exceeds
$25,000 (or such lesser amount as may be subsequently agreed between the
Indemnity Provider and the Indemnified Person); (C) the Indemnified Person shall
have reasonably determined that the action to be taken will not result in any
material danger of sale, forfeiture or loss of the Property, or any part thereof
or interest therein, will not interfere with the payment of Rent, and will not
result in risk of criminal liability; (D) if such Claim shall involve the
payment of any amount prior to the resolution of such Claim, the Indemnity
Provider shall
47
<PAGE>
provide to the Indemnified Person an interest-free advance in an amount equal to
the amount that the Indemnified Person is required to pay (with no additional
net after-tax cost to such Indemnified Person) prior to the date such payment is
due; (E) in the case of a Claim that must be pursued in the name of an
Indemnified Person (or an Affiliate thereof), the Indemnity Provider shall have
provided to such Indemnified Person an opinion of independent counsel selected
by the Indemnity Provider and reasonably satisfactory to the Indemnified Person
stating that a reasonable basis exists to contest such Claim (or, in the case of
an appeal of an adverse determination, an opinion of such counsel to the effect
that the position asserted in such appeal will more likely than not prevail);
and (F) no Event of Default shall have occurred and be continuing. In no event
shall an Indemnified Person be required to appeal an adverse judicial
determination to the United States Supreme Court. In addition, an Indemnified
Person shall not be required to contest any Claim in its name (or that of an
Affiliate) if the subject matter thereof shall be of a continuing nature and
shall have previously been decided adversely by a court of competent
jurisdiction pursuant to the contest provisions of this Section 11.1, unless
there shall have been a change in law (or interpretation thereof) and the
Indemnified Person shall have received, at the Indemnity Provider's expense, an
opinion of independent counsel selected by the Indemnity Provider and reasonably
acceptable to the Indemnified Person stating that as a result of such change in
law (or interpretation thereof), it is more likely than not that the Indemnified
Person will prevail in such contest. In no event shall the Indemnity Provider be
permitted to adjust or settle any Claim without the consent of the Indemnified
Person to the extent any such adjustment or settlement involves, or is
reasonably likely to involve, any performance by or adverse admission by or with
respect to the Indemnified Person.
11.2. GENERAL TAX INDEMNITY.
---------------------
(a) Subject to and limited by in all respects the provisions of
Sections 11.6 through 11.8, the Indemnity Provider shall pay and assume
liability for, and does hereby agree to indemnify, protect and defend each
Property and all Indemnified Persons, and hold them harmless against, all
Impositions on an After Tax Basis, and all payments pursuant to the
Operative Agreements shall be made free and clear of and without deduction
for any and all present and future Impositions.
(b) Notwithstanding anything to the contrary in Section 11.2(a)
hereof, the following shall be excluded from the indemnity required by
Section 11.2(a) (collectively, the "Excluded Taxes"):
---------------
(i) Taxes (other than Taxes that are, or are in the nature of,
sales, use, rental, value added, transfer or property taxes) that are
imposed on a Indemnified Person (other than the Lessor, the Owner
Trustee and the Trust) by the Uni ted States federal government that
are based on or measured by the net income (including without
limitation taxes based on capital gains and minimum taxes) of such
Person; provided, that this clause (i) shall not be interpreted to
prevent a payment from being made on an After Tax Basis if such
payment is otherwise required to be so made;
48
<PAGE>
(ii) Taxes (other than Taxes that are, or are in the nature of,
sales, use, rental, value added, transfer or property taxes) that are
imposed on any Indemnified Person (other than the Lessor, the Owner
Trustee and the Trust) by any state or local jurisdiction or taxing
authority within any state or local jurisdiction and that are based
upon or measured by the net income (including without limitation taxes
based on capital gains and minimum taxes) of such Person; provided
that such Taxes shall not be excluded under this subparagraph (ii) to
the extent such Taxes would have been imposed had the location,
possession or use of any Property in, the location or the operation of
the Lessee in, or the Lessee's making payments under the Operative
Agreements from, the jurisdiction imposing such Taxes been the sole
connection between such Indemnified Person and the jurisdiction
imposing such Taxes; provided further, that this clause (ii) shall not
be interpreted to prevent a tpayment from being made on an After Tax
Basis if such payment is otherwise required to be so made;
(iii) any Tax to the extent it relates to any act, event or
omission that occurs after the termination of the Lease and redelivery
or sale of the Property in accordance with the terms of the Lease (but
not any Tax that relates to such termination, redelivery or sale
and/or to any period prior to such termination, redelivery or sale);
and
(iv) any Taxes which are imposed on an Indemnified Person as a
result of the gross negligence or willful misconduct of such
Indemnified Person itself, as determined by a court of competent
jurisdiction (as opposed to gross negligence or willful misconduct
imputed to such Indemnified Person), but not Taxes imposed as a result
of ordinary negligence of such Indemnified Person.
(c) (i) Subject to the terms of Section 11.2(f), the Indemnity
Provider shall pay or cause to be paid all Impositions directly to the
taxing authorities where feasible and otherwise to the Indemnified
Person, as appropriate, and the Indemnity Provider shall at its own
expense, upon such Indemnified Person's reasonable request, furnish to
such Indemnified Person copies of official receipts or other
satisfactory proof evidencing such payment;
(ii) In the case of Impositions for which no contest is
conducted pursuant to Section 11.2(f) and which the Indemnity Provider
pays directly to the taxing authorities, the Indemnity Provider shall
pay such Impositions prior to the latest time permitted by the
relevant taxing authority for timely payment. In the case of
Impositions for which the Indemnity Provider reimburses an Indemnified
Person, the Indemnity Provider shall do so within thirty (30) days
after receipt by the Indemnity Provider of demand by such Indemnified
Person describing in reasonable detail the nature of the Imposition
and the basis for the demand (including without limitation the
computation of the amount payable), accompanied by receipts or other
reasonable evidence of such demand. In the case of Impositions for
which a contest is conducted pursuant to Section 11.2(f),
49
<PAGE>
the Indemnity Provider shall pay such Impositions or reimburse such
Indemnified Person for such Impositions, to the extent not previously
paid or reimbursed pursuant to subsection (a), prior to the latest
time permitted by the relevant taxing authority for timely payment
after conclusion of all contests under Section 11.2(f); and
(iii) At the Indemnity Provider's request, the amount of any
indemnification payment by the Indemnity Provider pursuant to
subsection (a) shall be verified and certified by an independent
public accounting firm mutually acceptable to the Indemnity Provider
and the Indemnified Person. The fees and expenses of such independent
public accounting firm shall be paid by the Indemnity Provider unless
such verification shall result in an adjustment in the Indemnity
Provider's favor of fifteen percent (15%) or more of the payment as
computed by the Indemnified Person, in which case such fee shall be
paid by the Indemnified Person.
(d) The Indemnity Provider shall be responsible for preparing and
filing any real and personal property or ad valorem tax returns in respect
of each Property and any other tax returns required for the Owner Trustee
respecting the transactions described in the Operative Agreements. In case
any other report or tax return shall be required to be made with respect to
any obligations of the Indemnity Provider under or arising out of
subsection (a) and of which the Indemnity Provider has knowledge or should
have knowledge, the Indemnity Provider, at its sole cost and expense, shall
notify the relevant Indemnified Person of such requirement and (except if
such Indemnified Person notifies the Indemnity Provider that such
Indemnified Person intends to prepare and file such report or return) (A)
to the extent required or permitted by and consistent with Legal
Requirements, make and file in the Indemnity Provider's name such return,
statement or report; and (B) in the case of any other such return,
statement or report required to be made in the name of such Indemnified
Person, advise such Indemnified Person of such fact and prepare such
return, statement or report for filing by such Indemnified Person or, where
such return, statement or report shall be required to reflect items in
addition to any obligations of the Indemnity Provider under or arising out
of subsection (a), provide such Indemnified Person at the Indemnity
Provider's expense with information sufficient to permit such return,
statement or report to be properly made with respect to any obligations of
the Indemnity Provider under or arising out of subsection (a). Such
Indemnified Person shall, upon the Indemnity Provider's request and at the
Indemnity Provider's expense, provide any data maintained by such
Indemnified Person (and not otherwise available to or within the control of
the Indemnity Provider) with respect to each Property which the Indemnity
Provider may reasonably require to prepare any required tax returns or
reports.
(e) As between the Indemnity Provider on one hand, and each Financing
Party on the other hand, the Indemnity Provider shall be responsible for,
and the Indemnity Provider shall indemnify and hold harmless each Financing
Party (without duplication of any indemnification required by subsection
(a)) on an After Tax Basis against, any
50
<PAGE>
obligation for United States or foreign withholding taxes or similar levies,
imposts, charges, fees, deductions or withholdings (collectively,
"Withholdings") imposed in respect of the interest payable on the Notes, Holder
------------
Yield payable on the Certificates or with respect to any other payments under
the Operative Agreements (all such payments being referred to herein as "Exempt
------
Payments" to be made without deduction, withholding or set off) (and, if any
- --------
Financing Party receives a demand for such payment from any taxing authority or
a Withholding is otherwise required with respect to any Exempt Payment, the
Indemnity Provider shall discharge such demand on behalf of such Financing
Party); provided, however, that the obligation of the Indemnity Provider under
-------- -------
this Section 11.2(e) shall not apply to:
(i) Withholdings on any Exempt Payment to any Financing Party
which is a non-U.S. Person unless such Financing Party is, on the date
hereof (or on the date it becomes a Financing Party hereunder) and on
the date of any change in the principal place of business or the
lending office of such Financing Party, entitled to submit a Form 1001
(relating to such Financing Party and entitling it to a complete
exemption from Withholding on such Exempt Payment) or Form 4224 or is
otherwise subject to exemption from Withholding with respect to such
Exempt Payment (except where the failure of the exemption results from
a change in the principal place of business of the Lessee; provided if
a failure of exemption for any Financing Party results from a change
in the principal place of business or lending office of any other
Financing Party, then such other Financing Party shall be liable for
any Withholding or indemnity with respect thereto), or
(ii) Any U.S. Taxes imposed solely by reason of the failure by a
non-U.S. Person to comply with applicable certification, information,
documentation or other reporting requirements concerning the
nationality, residence, identity or connections with the United States
of America of such non-U.S. Person if such compliance is required by
statute or regulation of the United States of America as a
precondition to relief or exemption from such U.S. Taxes.
For the purposes of this Section 11.2(e), (A) "U.S. Person" shall mean a
-----------
citizen, national or resident of the United States of America, a corporation,
partnership or other entity created or organized in or under any laws of the
United States of America or any State thereof, or any estate that is subject to
Federal income taxation regardless of the source of its income or a trust if a
court in the United States is able to exercise primary supervision over its
administration and one or more United States fiduciaries have the authority to
control all substantial decisions of the trust; (B) "U.S. Taxes" shall mean any
----------
present or future tax, assessment or other charge or levy imposed by or on
behalf of the United States of America or any taxing authority thereof or
therein; (C) "Form 1001" shall mean Form 1001 (Ownership, Exemption, or Reduced
---------
Rate Certificate) of the Department of the Treasury of the United States of
America; and (D) "Form 4224" shall mean Form 4224(R) (Exemption from Withholding
---------
of Tax on Income Effectively Connected with the Conduct of a Trade or Business
in the United States) of the Department of Treasury of the United States of
America (or in relation to either such Form such successor and related
51
<PAGE>
forms as may from time to time be adopted by the relevant taxing
authorities of the United States of America to document a claim to which
such Form relates). Each of the Forms referred to in the foregoing clauses
(C) and (D) shall include such successor and related forms as may from time
to time be adopted by the relevant taxing authorities of the United States
of America to document a claim to which such Form relates.
If a Financing Party or an Affiliate with whom such Financing Party
files a consolidated tax return (or equivalent) subsequently receives the
benefit in any country of a tax credit or an allowance resulting from U.S.
Taxes with respect to which it has received a payment of an additional
amount under this Section 11.2(e), such Financing Party will pay to the
Indemnity Provider such part of that benefit as in the opinion of such
Financing Party will leave it (after such payment) in a position no more
and no less favorable than it would have been in if no additional payment
had been required to be paid, provided always that (i) such Financing Party
--------
will be the sole judge of the amount of any such benefit and of the date on
which it is received, (ii) such Financing Party will have the absolute
discretion as to the order and manner in which it employs or claims tax
credits and allowances available to it, and (iii) such Financing Party will
not be obliged to disclose to the Indemnity Provider or any other Person
any information regarding its tax affairs or tax computations.
Each non-U.S. Person that shall become a Financing Party after the
date hereof shall, upon the effectiveness of the related transfer or
otherwise upon becoming a Financing Party hereunder, be required to provide
all of the forms and statements referenced above or other evidences of
exemption from Withholdings to which such Person shall be legally entitled.
(f) If a written Claim is made against any Indemnified Person or if
any proceeding shall be commenced against such Indemnified Person
(including without limitation a written notice of such proceeding), for any
Impositions, the provisions in Section 11.1 relating to notification and
rights to contest shall apply; provided, however, that the Indemnity
-------- -------
Provider shall have the right to conduct and control such contest only if
such contest involves a Tax other than a Tax on net income of the
Indemnified Person and can be pursued independently from and without
prejudice to any other proceeding involving a Tax liability of such
Indemnified Person.
11.3. INCREASED COSTS, ILLEGALITY, ETC.
---------------------------------
(a) If, due to either (i) the introduction of or any change in or in
the interpretation of any law or regulation or (ii) the compliance with any
guideline or request hereafter adopted, promulgated or made by any central
bank or other governmental authority (whether or not having the force of
law), there shall be any increase in the cost to any Financing Party of
agreeing to make or making, funding or maintaining Advances, then the
Lessee shall from time to time, upon demand by such Financing Party (with a
copy of such demand to the Agent but subject to the terms of Section 2.11
of the Credit Agreement and 3.9 of the Trust Agreement, as the case may
be), pay to the Agent for the
52
<PAGE>
account of such Financing Party additional amounts sufficient to compensate
such Financing Party for such increased cost. A certificate as to the
amount of such increased cost, submitted to the Lessee and the Agent by
such Financing Party, shall be conclusive and binding for all purposes,
absent manifest error.
(b) If any Financing Party determines that compliance with any law or
regulation or any guideline or request from any central bank or other
governmental authority (whether or not having the force of law, but in each
case promulgated or made after the date hereof) affects or would affect the
amount of capital required or expected to be maintained by such Financing
Party or any corporation controlling such Financing Party and that the
amount of such capital is increased by or based upon the existence of such
Financing Party's commitment to make Advances and other commitments of this
type or upon the Advances, then, upon demand by such Financing Party (with
a copy of such demand to the Agent but subject to the terms of Section 2.11
of the Credit Agreement and 3.9 of the Trust Agreement), the Lessee shall
pay to the Agent for the account of such Financing Party, from time to time
as specified by such Financing Party, additional amounts sufficient to
compensate such Financing Party or such corporation in the light of such
circumstances, to the extent that such Financing Party reasonably
determines such increase in capital to be allocable to the existence of
such Financing Party's commitment to make such Advances. A certificate as
to such amounts submitted to the Lessee and the Agent by such Financing
Party shall be conclusive and binding for all purposes, absent manifest
error.
(c) Without limiting the effect of the foregoing, the Lessee shall
pay to each Financing Party on the last day of the Interest Period therefor
so long as such Financing Party is maintaining reserves against
"Eurocurrency liabilities" under Regulation D an additional amount
(determined by such Financing Party and notified to the Lessee through the
Agent) equal to the product of the following for each Eurodollar Loan or
Eurodollar Holder Advance, as the case may be, for each day during such
Interest Period:
(i) the principal amount of such Eurodollar Loan or Eurodollar
Holder Advance, as the case may be, outstanding on such day; and
(ii) the remainder of (x) a fraction the numerator of which is
the rate (expressed as a decimal) at which interest accrues on such
Eurodollar Loan or Eurodollar Holder Advance, as the case may be, for
such Interest Period as provided in the Credit Agreement or the Trust
Agreement, as the case may be (less the Applicable Percentage), and
the denominator of which is one (1) minus the effective rate
-----
(expressed as a decimal) at which such reserve requirements are
imposed on such Financing Party on such day minus (y) such numerator;
and
(iii) 1/360.
(d) Without affecting its rights under Sections 11.3(a), 11.3(b) or
11.3(c) or any other provision of any Operative Agreement, each Financing
Party agrees that if there
53
<PAGE>
is any increase in any cost to or reduction in any amount receivable by
such Financing Party with respect to which the Lessee would be obligated to
compensate such Financing Party pursuant to Sections 11.3(a) or 11.3(b),
such Financing Party shall use reasonable efforts to select an alternative
office for Advances which would not result in any such increase in any cost
to or reduction in any amount receivable by such Financing Party; provided,
--------
however, that no Financing Party shall be obligated to select an
-------
alternative office for Advances if such Financing Party determines that (i)
as a result of such selection such Financing Party would be in violation of
any applicable law, regulation, treaty, or guideline, or would incur
additional costs or expenses or (ii) such selection would be inadvisable
for regulatory reasons or materially inconsistent with the interests of
such Financing Party.
(e) With reference to the obligations of the Lessee set forth in
Sections 11.3(a) through 11.3(d), the Lessee shall not have any obligation
to pay to any Financing Party amounts owing under such Sections for any
period which is more than one (1) year prior to the date upon which the
request for payment therefor is delivered to the Lessee.
(f) Notwithstanding any other provision of this Agreement, if any
Financing Party shall notify the Agent that the introduction of or any
change in or in the interpretation of any law or regulation makes it
unlawful, or any central bank or other governmental authority asserts that
it is unlawful, for any Financing Party to perform its obligations
hereunder to make or maintain Eurodollar Loans or Eurodollar Holder
Advances, as the case may be, then (i) each Eurodollar Loan or Eurodollar
Holder Advance, as the case may be, will automatically, at the earlier of
the end of the Interest Period for such Eurodollar Loan or Eurodollar
Holder Advance, as the case may be, or the date required by law, convert
into an ABR Loan or an ABR Holder Advance, as the case may be, and (ii) the
obligation of the Financing Parties to make, convert or continue Eurodollar
Loans or Eurodollar Holder Advances, as the case may be, shall be suspended
until the Agent shall notify the Lessee that such Financing Party has
determined that the circumstances causing such suspension no longer exist.
11.4. FUNDING/CONTRIBUTION INDEMNITY.
------------------------------
Subject to the provisions of Section 2.11(a) of the Credit Agreement and
3.9(a) of the Trust Agreement, as the case may be, the Lessee agrees to
indemnify each Financing Party and to hold each Financing Party harmless from
any loss or reasonable expense which such Financing Party may sustain or incur
as a consequence of (a) any default in connection with the drawing of funds for
any Advance, (b) any default in making any prepayment after a notice thereof has
been given in accordance with the provisions of the Operative Agreements or (c)
the making of a voluntary or involuntary payment of Eurodollar Loans or
Eurodollar Holder Advances, as the case may be, on a day which is not the last
day of an Interest Period with respect thereto. Such indemnification shall be
in an amount equal to the excess, if any, of (x) the amount of interest or
Holder Yield, as the case may be, which would have accrued on the amount so
paid, or not so borrowed, accepted, converted or continued for the period from
the date of such payment or of such failure to borrow, accept, convert or
continue to the last day of such Interest Period (or, in
54
<PAGE>
the case of a failure to borrow, accept, convert or continue, the Interest
Period that would have commenced on the date of such failure) in each case at
the applicable Eurodollar Rate plus the Applicable Percentage for such Loan or
Holder Advance, as the case may be, for such Interest Period over (y) the amount
of interest (as determined by such Financing Party in its reasonable discretion)
which would have accrued to such Financing Party on such amount by (i) (in the
case of the Lenders) reemploying such funds in loans of the same type and amount
during the period from the date of payment or failure to borrow to the last day
of the then applicable Interest Period (or, in the case of a failure to borrow,
the Interest Period that would have commenced on the date of such failure) and
(ii) (in the case of the Holders) placing such amount on deposit for a
comparable period with leading banks in the relevant interest rate market. This
covenant shall survive the termination of the Operative Agreements and the
payment of all other amounts payable hereunder.
11.5. EXPRESS INDEMNIFICATION FOR ORDINARY NEGLIGENCE, STRICT LIABILITY,
------------------------------------------------------------------
ETC.
---
SUBJECT TO AND LIMITED BY IN ALL RESPECTS THE PROVISIONS OF SECTION 11.6
THROUGH 11.8 AND WITHOUT LIMITING THE GENERALITY OF THE INDEMNIFICATION
PROVISIONS OF ANY AND ALL OF THE OPERATIVE AGREEMENTS, EACH PERSON PROVIDING
INDEMNIFICATION OF ANOTHER PERSON UNDER ANY OPERATIVE AGREEMENT HEREBY FURTHER
EXPRESSLY RELEASES EACH BENEFICIARY OF ANY SUCH INDEMNIFICATION FROM ALL CLAIMS
FOR LOSS OR DAMAGE, DESCRIBED IN ANY OPERATIVE AGREEMENT, CAUSED BY ANY ACT OR
OMISSION ON THE PART OF ANY SUCH BENEFICIARY ATTRIBUTABLE TO THE ORDINARY
NEGLIGENCE (WHETHER SOLE OR CONTRIBUTORY) OR STRICT LIABILITY OF ANY SUCH
BENEFICIARY, AND INDEMNIFIES, EXONERATES AND HOLDS EACH SUCH BENEFICIARY FREE
AND HARMLESS FROM AND AGAINST ANY AND ALL ACTIONS, CAUSES OF ACTION, SUITS,
CLAIMS, LOSSES, COSTS, LIABILITIES, DAMAGES AND EXPENSES (INCLUDING WITHOUT
LIMITATION ATTORNEY'S FEES AND EXPENSES), DESCRIBED ABOVE, INCURRED BY ANY SUCH
BENEFICIARY (IRRESPECTIVE OF WHETHER ANY SUCH BENEFICIARY IS A PARTY TO THE
ACTION FOR WHICH INDEMNIFICATION UNDER THIS AGREEMENT OR ANY OTHER OPERATIVE
AGREEMENT IS SOUGHT) ATTRIBUTABLE TO THE ORDINARY NEGLIGENCE (WHETHER SOLE OR
CONTRIBUTORY) OR STRICT LIABILITY OF ANY SUCH BENEFICIARY.
55
<PAGE>
11.6. Additional Provisions Regarding Environmental Indemnification.
-------------------------------------------------------------
Each and every Indemnified Person shall at all times have the rights and
benefits, and the Indemnity Provider shall have the obligations, in each case
provided pursuant to the Operative Agreements with respect to environmental
matters, violations of any Environmental Law, any Environmental Claim, or other
loss of or damage to any Property or the environment relating to any Property,
the Lease, the Agency Agreement or the Indemnity Provider (including without
limitation the rights and benefits provided pursuant to Section 11.1(c).
11.7. ADDITIONAL PROVISIONS REGARDING INDEMNIFICATION.
-----------------------------------------------
Notwithstanding the provisions of Sections 11.1, 11.2 and 11.5 (other than
with respect to matters concerning environmental indemnification referenced in
Section 11.6), (a) the Owner Trustee and each Holder shall be the only
beneficiary of the provisions set forth in Sections 11.1, 11.2 and 11.5 (again,
subject to the immediately preceding parenthetical phrase) with respect to each
Property during the Construction Period for such Property and (b) such limited
rights of indemnification referenced in Section 11.7(a) (to the extent relating
to third-party claims) shall be limited to third-party claims caused by or
resulting from the Indemnity Provider's acts or omissions and/or all other
Persons acting by, through or under the Indemnity Provider. After the
Construction Period for a Property, each Indemnified Person shall be a
beneficiary of the provisions set forth in Sections 11.1, 11.2 and 11.5.
11.8. INDEMNIFICATIONS PROVIDED BY THE OWNER TRUSTEE IN FAVOR OF THE OTHER
--------------------------------------------------------------------
INDEMNIFIED PERSONS.
-------------------
To the extent the Indemnity Provider is not obligated to indemnify each
Indemnified Person with respect to the various matters described in this Section
11.8, the Owner Trustee shall provide such indemnities (but only to the extent
amounts sufficient to pay such indemnity are funded by the Lenders and the
Holders) in favor of each Indemnified Person in accordance with this Section
11.8 and shall pay all such amounts owed with respect to this Section 11.8 with
amounts advanced by the Lenders and the Holders (a) to the extent, but only to
the extent, amounts are available therefor with respect to the Available
Commitments and the Available Holder Commitments and (b) unless each Lender and
each Holder has declined in writing to fund such amount. Notwithstanding any
other provision in any other Operative Agreement to the contrary, all amounts so
advanced shall be deemed added (ratably, based on the ratio of the Property Cost
for each Property individually to the Aggregate Property Cost of all Properties
at such time) to the Property Cost of all Properties then subject to the terms
of the Operative Agreements.
Whether or not any of the transactions contemplated hereby shall be
consummated, the Owner Trustee hereby assumes liability for and agrees to
defend, indemnify and hold harmless each Indemnified Person on an After Tax
Basis from and against any Claims, which may be imposed on, incurred by or
asserted against an Indemnified Person by any third party, including without
limitation Claims arising from the negligence of an Indemnified Person (but not
to the extent such Claims arise from the gross negligence or willful misconduct
of such Indemnified
56
<PAGE>
Person itself, as determined by a court of competent jurisdiction, as opposed to
gross negligence or willful misconduct imputed to such Indemnified Person or
breach of such Indemnified Person's obligations under this Agreement, the Lease
or any other Operative Agreement) in any way relating to or arising or alleged
to arise out of the execution, delivery, performance or enforcement of this
Agreement, the Lease or any other Operative Agreement or on or with respect to
any Property or any component thereof, including without limitation Claims in
any way relating to or arising or alleged to arise out of the matters set forth
in Sections 11.1(a) through 11.1(h).
The Owner Trustee shall pay and assume liability for, and does hereby agree
to indemnify, protect and defend each Property and all Indemnified Persons, and
hold them harmless against, all Impositions on an After Tax Basis, and all
payments pursuant to the Operative Agreements shall be made free and clear of
and without deduction for any and all present and future Impositions.
Notwithstanding anything to the contrary in this paragraph, the Excluded Taxes
shall be excluded from the indemnity provisions afforded by this paragraph.
THE INDEMNITY OBLIGATIONS UNDERTAKEN BY THE OWNER TRUSTEE PURSUANT TO THIS
SECTION 11.8 ARE IN ALL RESPECTS SUBJECT TO THE LIMITATIONS ON LIABILITY
REFERENCED IN SECTION 12.9.
SECTION 12. MISCELLANEOUS.
12.1. SURVIVAL OF AGREEMENTS.
----------------------
The representations, warranties, covenants, indemnities and agreements of
the parties provided for in the Operative Agreements, and the parties'
obligations under any and all thereof, shall survive the execution and delivery
of this Agreement, the transfer of any Property to the Owner Trustee, the
acquisition of any Property (or any of its components), the construction of any
Improvements, the Completion of any Property, any disposition of any interest of
the Owner Trustee in any Property or any interest of the Holders in the Trust
Estate, the payment of the Notes and any disposition thereof and shall be and
continue in effect notwithstanding any investigation made by any party and the
fact that any party may waive compliance with any of the other terms, provisions
or conditions of any of the Operative Agreements. Except as otherwise expressly
set forth herein or in other Operative Agreements, the indemnities of the
parties provided for in the Operative Agreements shall survive the expiration or
termination of any thereof.
12.2. NOTICES.
-------
All notices required or permitted to be given under any Operative Agreement
shall be in writing. Notices may be served by certified or registered mail,
postage paid with return receipt requested; by private courier, prepaid; by
telex, facsimile, or other telecommunication device capable of transmitting or
creating a written record; or personally. Mailed notices shall be deemed
delivered five (5) days after mailing, properly addressed. Couriered notices
shall be deemed delivered when delivered as addressed, or if the addressee
refuses delivery, when
57
<PAGE>
presented for delivery notwithstanding such refusal. Telex or telecommunicated
notices shall be deemed delivered when receipt is either confirmed by confirming
transmission equipment or acknowledged by the addressee or its office. Personal
delivery shall be effective when accomplished. Unless a party changes its
address by giving notice to the other party as provided herein, notices shall be
delivered to the parties at the following addresses:
If to the Construction Agent or the Lessee, to such entity at the
following address:
Smart & Final Inc.
600 Citadel Drive
Commerce, California 90040
Attention: Richard Phegley
Telephone: 323-869-7779
Telecopy: 323-869-7862
If to any Guarantor, to such entity in care of Smart & Final Inc. at
the following address:
Smart & Final Inc.
600 Citadel Drive
Commerce, California 90040
Attention: Richard Phegley
Telephone: 323-869-7779
Telecopy: 323-869-7862
If to the Owner Trustee, to it at the following address:
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Attention: Val T. Orton,
Vice President
Telephone: (801) 246-5300
Telecopy: (801) 246-5053
If to the Holders, to each such Holder at the address set forth for
such Holder on Schedule I of the Trust Agreement.
----------
If to the Agent, to it at the following address:
58
<PAGE>
515 South Flower Street
Los Angeles, California 90071
Attention: Rita Raychaudhuri
Telephone: 213-362-5954
Telecopy: 213-623-3437
If to any Lender, to it at the address set forth for such Lender in
Schedule 2.1 of the Credit Agreement.
------------
From time to time any party may designate additional parties and/or
another address for notice purposes by notice to each of the other parties
hereto. Each notice hereunder shall be effective upon receipt or refusal
thereof.
12.3. COUNTERPARTS.
------------
This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute but one (1) and the same
instrument.
12.4. TERMINATIONS, AMENDMENTS, WAIVERS, ETC.; UNANIMOUS VOTE MATTERS.
---------------------------------------------------------------
Each Basic Document may be terminated, amended, supplemented, waived or
modified only by an instrument in writing signed by, subject to Article VIII of
the Trust Agreement regarding termination of the Trust Agreement, the Majority
Secured Parties and each Credit Party (to the extent such Credit Party is a
party to such Basic Document); provided, to the extent no Default or Event of
--------
Default shall have occurred and be continuing, the Majority Secured Parties
shall not amend, supplement, waive or modify any provision of any Basic Document
in such a manner as to adversely affect the rights of any Credit Party without
the prior written consent (not to be unreasonably withheld or delayed) of such
Credit Party. Each Operative Agreement which is not a Basic Document may be
terminated, amended, supplemented, waived or modified only by an instrument in
writing signed by the parties thereto and (without the consent of any other
Financing Party) the Agent. In addition, the Unanimous Vote Matters shall
require the consent of each Lender and each Holder affected by such matter.
Each Operative Agreement which is not a Basic Document may be terminated,
amended, supplemented, waived or modified only by an instrument in writing
signed by the parties thereto and (without the consent of any other Financing
Party) the Agent.
Notwithstanding the foregoing, no such termination, amendment, supplement,
waiver or modification shall, without the consent of the Agent and, to the
extent affected thereby, each Lender and each Holder (collectively, the
"Unanimous Vote Matters") (i) reduce the amount of any Note or any Certificate,
- -----------------------
extend the scheduled date of maturity of any Note, extend the scheduled
Expiration Date, extend any payment date of any Note or Certificate, reduce the
stated rate of interest payable on any Note, reduce the stated Holder Yield
payable on any Certificate (other than as a result of waiving the applicability
of any post-default increase in interest rates or Holder Yields), modify the
priority of any Lien in favor of the Agent under any Security
59
<PAGE>
Document, subordinate any obligation owed to any Lender or Holder, reduce any
Lender Unused Fees or any Holder Unused Fees payable under this Participation
Agreement, extend the scheduled date of payment of any Lender Unused Fees or any
Holder Unused Fees, fund any Advance referenced in Section 2.1 of the Agency
Agreement in excess of the then current aggregate sum of the Available
Commitments and the Available Holder Commitments, elect to decline the funding
of any Transaction Expense with respect to Sections 7.1(a) or 7.1(b), elect to
decline the funding of any indemnity payment by the Owner Trustee with respect
to Section 12.9 or increase the amount or extend the expiration date of any
Lender's Commitment or the Holder Commitment of any Holder; or (ii) terminate,
amend, supplement, waive or modify any provision of this Section 12.4 or reduce
the percentages specified in the definitions of Majority Lenders, Majority
Holders or Majority Secured Parties, or consent to the assignment or transfer by
the Owner Trustee of any of its rights and obligations under any Credit Document
or release a material portion of the Collateral (except in accordance with
Section 8.8) or release any Credit Party from its obligations under any
Operative Agreement or otherwise alter any payment obligations of any Credit
Party to the Lessor or any Financing Party under the Operative Agreements; or
(iii) terminate, amend, supplement, waive or modify any provision of Section 7
of the Credit Agreement (which shall also require the consent of the Agent); or
(iv) eliminate the automatic option under Section 5.3(b) of the Agency Agreement
requiring that the Construction Agent pay certain liquidated damages in exchange
for the conveyance of a Property to the Construction Agent; or (v) permit the
extension of the Construction Period beyond the date that is two (2) years from
the Initial Closing Date. Any such termination, amendment, supplement, waiver or
modification shall apply equally to each of the Lenders and the Holders and
shall be binding upon all the parties to this Agreement. In the case of any
waiver, each party to this Agreement shall be restored to its former position
and rights under the Operative Agreements, and any Default or Event of Default
waived shall be deemed to be cured and not continuing; but no such waiver shall
extend to any subsequent or other Default or Event of Default, or impair any
right consequent thereon.
If at a time when the conditions precedent set forth in the Operative
Agreements to any Loan are, in the opinion of the Majority Lenders, satisfied,
any Lender shall fail to fulfill its obligations to make such Loan (any such
Lender, a "Defaulting Lender") then, for so long as such failure shall continue,
-----------------
the Defaulting Lender shall (unless the Lessee and the Majority Lenders,
determined as if the Defaulting Lender were not a "Lender", shall otherwise
consent in writing) be deemed for all purposes relating to terminations,
amendments, supplements, waivers or modifications under the Operative Agreements
to have no Loans, shall not be treated as a "Lender" when performing the
computation of Majority Lenders or Majority Secured Parties, and shall have no
rights under this Section 12.4; provided that any action taken pursuant to the
--------
second paragraph of this Section 12.4 shall not be effective as against the
Defaulting Lender.
If at a time when the conditions precedent set forth in the Operative
Agreements to any Holder Advance are, in the opinion of the Majority Holders,
satisfied, any Holder shall fail to fulfill its obligations to make such Holder
Advance (any such Holder, a "Defaulting Holder") then, for so long as such
-----------------
failure shall continue, the Defaulting Holder shall (unless the Lessee and the
Majority Holders, determined as if the Defaulting Holder were not a "Holder",
shall otherwise consent in writing) be deemed for all purposes relating to
terminations, amendments,
60
<PAGE>
supplements, waivers or modifications under the Operative Agreements to have no
Holder Advances, shall not be treated as a "Holder" when performing the
computation of Majority Holders or Majority Secured Parties, and shall have no
rights under this Section 12.4; provided that any action taken pursuant to the
--------
second paragraph of this Section 12.4 shall not be effective as against the
Defaulting Holder.
12.5. HEADINGS, ETC.
--------------
The Table of Contents and headings of the various Articles and Sections of
this Agreement are for convenience of reference only and shall not modify,
define, expand or limit any of the terms or provisions hereof.
12.6. PARTIES IN INTEREST.
-------------------
Except as expressly provided herein, none of the provisions of this
Agreement are intended for the benefit of any Person except the parties hereto.
12.7. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL;
----------------------------------------------------------------
VENUE.
-----
(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED, INTERPRETED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA. Any legal action or
proceeding with respect to this Agreement or any other Operative Agreement
may be brought in the courts of the State of California in Los Angeles
County or of the United States for the Southern District of California,
and, by execution and delivery of this Agreement, each of the parties to
this Agreement hereby irrevocably accepts for itself and in respect of its
property, generally and unconditionally, the nonexclusive jurisdiction of
such courts. Each of the parties to this Agreement further irrevocably
consents to the service of process out of any of the aforementioned courts
in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to it at the address set out
for notices pursuant to Section 12.2, such service to become effective
three (3) days after such mailing. Nothing herein shall affect the right of
any party to serve process in any other manner permitted by Law or to
commence legal proceedings or to otherwise proceed against any party in any
other jurisdiction.
(b) EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY, TO
THE FULLEST EXTENT ALLOWED BY APPLICABLE LAW, WAIVES TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, ANY OTHER OPERATIVE
AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
(c) Each of the parties to this Agreement hereby irrevocably waives
any objection which it may now or hereafter have to the laying of venue of
any of the
61
<PAGE>
aforesaid actions or proceedings arising out of or in connection with this
Agreement or any other Operative Agreement brought in the courts referred
to in subsection (a) above and hereby further irrevocably waives and agrees
not to plead or claim in any such court that any such action or proceeding
brought in any such court has been brought in an inconvenient forum.
(d) The Agent on behalf of the Lenders and the Holders shall have
the right to proceed in any court of proper jurisdiction or by self-help to
exercise or prosecute the following remedies, as applicable (i) all rights
to foreclose against any real or personal property or other security by
exercising a power of sale granted under any Operative Agreement or under
applicable Law or by judicial foreclosure and sale, including without
limitation a proceeding to confirm the sale; (ii) all rights of self-help
including without limitation peaceful occupation of real property and
collection of rents, set-off and peaceful possession of personal property;
(iii) obtaining provisional or ancillary remedies including without
limitation injunctive relief, sequestration, garnishment, attachment,
appointment of receiver and filing an involuntary bankruptcy proceeding;
and (iv) when applicable, a judgment by confession of judgment.
Preservation of these remedies does not limit the power of an arbitrator to
grant similar remedies that may be requested by a party in a Dispute.
The parties to this Agreement and/or any other Operative Agreement agree
that they shall not have a remedy of special, punitive or exemplary damages
against any other party in any Dispute and hereby waive any right or claim to
special, punitive or exemplary damages they have now or which may arise in the
future in connection with any Dispute.
12.8. SEVERABILITY.
------------
Any provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
12.9. LIABILITY LIMITED.
-----------------
(a) The Lenders, the Agent, the Credit Parties, the Owner Trustee
and the Holders each acknowledge and agree that the Owner Trustee is
(except as otherwise expressly provided herein or therein) entering into
this Agreement and the other Operative Agreements to which it is a party
(other than the Trust Agreement and to the extent otherwise provided in
Section 6.1 of this Agreement), solely in its capacity as trustee under the
Trust Agreement and not in its individual capacity and that the Trust
Company shall not be liable or accountable under any circumstances
whatsoever in its individual capacity for or on account of any statements,
representations, warranties, covenants or obligations stated to be those of
the Owner Trustee, except for its own gross
62
<PAGE>
negligence or willful misconduct and as otherwise expressly provided herein
or in the other Operative Agreements.
(b) Anything to the contrary contained in this Agreement, the
Credit Agreement, the Notes or in any other Operative Agreement
notwithstanding, no Exculpated Person shall be personally liable in any
respect for any liability or obligation arising hereunder or in any other
Operative Agreement including without limitation the payment of the
principal of, or interest on, the Notes, or for monetary damages for the
breach of performance of any of the covenants contained in the Credit
Agreement, the Notes, this Agreement, the Security Agreement or any of the
other Operative Agreements. The Lenders, the Holders and the Agent agree
that, in the event any remedies under any Operative Agreement are pursued,
neither the Lenders, the Holders nor the Agent shall have any recourse
against any Exculpated Person, for any deficiency, loss or Claim for
monetary damages or otherwise resulting therefrom and recourse shall be had
solely and exclusively against the Trust Estate (excluding Excepted
Payments) and the Credit Parties (with respect to the Credit Parties'
obligations under the Operative Agreements); but nothing contained herein
shall be taken to prevent recourse against or the enforcement of remedies
against the Trust Estate (excluding Excepted Payments) in respect of any
and all liabilities, obligations and undertakings contained herein and/or
in any other Operative Agreement. Notwithstanding the provisions of this
Section, nothing in any Operative Agreement shall: (i) constitute a waiver,
release or discharge of any indebtedness or obligation evidenced by the
Notes and/or the Certificates arising under any Operative Agreement or
secured by any Operative Agreement, but the same shall continue until paid
or discharged; (ii) relieve any Exculpated Person from liability and
responsibility for (but only to the extent of the damages arising by reason
of): active waste knowingly committed by any Exculpated Person with respect
to any Property, any fraud, gross negligence or willful misconduct on the
part of any Exculpated Person; (iii) relieve any Exculpated Person from
liability and responsibility for (but only to the extent of the moneys
misappropriated, misapplied or not turned over) (A) except for Excepted
Payments, misappropriation or misapplication by the Lessor (i.e.,
application in a manner contrary to any of the Operative Agreements) of any
insurance proceeds or condemnation award paid or delivered to the Lessor by
any Person other than the Agent, (B) except for Excepted Payments, any
deposits or any escrows or amounts owed by the Construction Agent under the
Agency Agreement held by the Lessor or (C) except for Excepted Payments,
any rent or other income received by the Lessor from any Credit Party that
is not turned over to the Agent; or (iv) affect or in any way limit the
Agent's rights and remedies under any Operative Agreement with respect to
the Rents and rights and powers of the Agent under the Operative Agreements
or to obtain a judgment against the Lessee's interest in the Properties or
the Agent's rights and powers to obtain a judgment against the Lessor or
any Credit Party (provided, that no deficiency judgment or other money
--------
judgment shall be enforced against any Exculpated Person except to the
extent of the Lessor's interest in the Trust Estate (excluding Excepted
Payments) or to the extent the Lessor may be liable as otherwise
contemplated in clauses (ii) and (iii) of this Section 12.9(b)).
63
<PAGE>
12.10. RIGHTS OF THE CREDIT PARTIES.
----------------------------
If at any time all obligations (i) of the Owner Trustee under the Credit
Agreement, the Security Documents and the other Operative Agreements and (ii) of
the Credit Parties under the Operative Agreements have in each case been
satisfied or discharged in full, then the Credit Parties shall be entitled to
(a) terminate the Lease and guaranty obligations under Section 6B and (b)
receive all amounts then held under the Operative Agreements and all proceeds
with respect to any of the Properties. Upon the termination of the Lease and
Section 6B pursuant to the foregoing clause (a), the Lessor shall transfer to
the Lessee all of its right, title and interest free and clear of the Lien of
the Lease, the Lien of the Security Documents and all Lessor Liens in and to any
Properties then subject to the Lease and any amounts or proceeds referred to in
the foregoing clause (b) shall be paid over to the Lessee.
12.11. FURTHER ASSURANCES.
------------------
The parties hereto shall promptly cause to be taken, executed, acknowledged
or delivered, at the sole expense of the Lessee, all such further acts,
conveyances, documents and assurances as the other parties may from time to time
reasonably request in order to carry out and effectuate the intent and purposes
of this Participation Agreement, the other Operative Agreements and the
transactions contemplated hereby and thereby (including without limitation the
preparation, execution and filing of any and all Uniform Commercial Code
financing statements, filings of Mortgage Instruments and other filings or
registrations which the parties hereto may from time to time request to be filed
or effected). The Lessee, at its own expense and without need of any prior
request from any other party, shall take such action as may be necessary
(including without limitation any action specified in the preceding sentence),
or (if the Owner Trustee shall so request) as so requested, in order to maintain
and protect all security interests provided for hereunder or under any other
Operative Agreement. In addition, in connection with the sale or other
disposition of any Property or any portion thereof, the Lessee agrees to execute
such instruments of conveyance as may be reasonably required in connection
therewith.
12.12. CALCULATIONS UNDER OPERATIVE AGREEMENTS.
---------------------------------------
The parties hereto agree that all calculations and numerical determinations
to be made under the Operative Agreements by the Owner Trustee shall be made by
the Agent and that such calculations and determinations shall be conclusive and
binding on the parties hereto in the absence of manifest error.
12.13. CONFIDENTIALITY.
---------------
Each Financing Party agrees to keep confidential any information furnished
or made available to it by any Credit Party or any of its Subsidiaries pursuant
to this Agreement that is marked confidential; provided that nothing herein
--------
shall prevent any Financing Party from disclosing such information (a) to any
other Financing Party or any Affiliate of any Financing Party, or any officer,
director, employee, agent, or advisor of any Financing Party or Affiliate of any
Financing Party; (b) to any other Person if reasonably incidental to the
administration of the
64
<PAGE>
credit facility provided herein; (c) as required by any law, rule, or
regulation; (d) upon the order of any court or administrative agency; (e) upon
the request or demand of any regulatory agency or authority; (f) that is or
becomes available to the public or that is or becomes available to any Financing
Party other than as a result of a disclosure by any Financing Party prohibited
by this Agreement; (g) in connection with any litigation to which such Financing
Party or any of its Affiliates may be a party; (h) to the extent necessary in
connection with the exercise of any remedy under this Agreement or any other
Operative Agreement; and (i) subject to provisions substantially similar to
those contained in this Section, to any actual or proposed participant or
assignee.
12.14. FINANCIAL REPORTING/TAX CHARACTERIZATION.
----------------------------------------
Lessee agrees to obtain advice from its own accountants and tax counsel
regarding the financial reporting treatment and the tax characterization of the
transactions described in the Operative Agreements. Lessee further agrees that
Lessee shall not rely upon any statement of any Financing Party or any of their
respective Affiliates and/or Subsidiaries regarding any such financial reporting
treatment and/or tax characterization.
12.15. 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 and after the occurrence of
any Event of Default and during the continuance thereof, the Lenders, the
Holders, their respective Affiliates and any assignee or participant of a Lender
or a Holder in accordance with the applicable provisions of the Operative
Agreements are hereby authorized by the Credit Parties at any time or from time
to time, without notice to the Credit Parties 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, time or demand, including without
limitation indebtedness evidenced by certificates of deposit, whether matured or
unmatured) and any other indebtedness at any time held or owing by the Lenders,
the Holders, their respective Affiliates or any assignee or participant of a
Lender or a Holder in accordance with the applicable provisions of the Operative
Agreements to or for the credit or the account of any Credit Party against and
on account of the obligations of any Credit Party under the Operative Agreements
irrespective of whether or not (a) the Lenders or the Holders shall have made
any demand under any Operative Agreement or (b) the Agent shall have declared
any or all of the obligations of any Credit Party under the Operative Agreements
to be due and payable and although such obligations shall be contingent or
unmatured. Notwithstanding the foregoing, neither the Agent nor any other
Financing Party shall exercise, or attempt to exercise, any right of setoff,
banker's lien, or the like, against any deposit account or property of any
Credit Party held by the Agent or any other Financing Party, without the prior
written consent of the Majority Secured Parties, and any Financing Party
violating this provision shall indemnify the Agent and the other Financing
Parties from any and all costs, expenses, liabilities and damages resulting
therefrom. The contractual restriction on the exercise of setoff rights
provided in the foregoing sentence is solely for the benefit of the Agent and
the Financing Parties and may not be enforced by any Credit Party.
65
<PAGE>
[signature pages follow]
66
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first above written.
CONSTRUCTION AGENT
- ------------------
AND LESSEE:
- -----------
SMART & FINAL INC., as the Construction Agent
and as the Lessee
By: /s/ DONALD G. ALVARADO
--------------------------
Name: Donald G. Alvarado
Title: Secretary
GUARANTORS:
- ----------
AMERICAN FOODSERVICE DISTRIBUTORS, a
California corporation, as a Guarantor
By: /s/ DONALD G. ALVARADO
--------------------------
Name: Donald G. Alvarado
-----------------------
Title: Secretary
-----------------------
SMART & FINAL STORES CORPORATION, a
California corporation, as a Guarantor
By: /s/ DONALD G. ALVARADO
--------------------------
Name: Donald G. Alvarado
-----------------------
Title: Secretary
-----------------------
SMART & FINAL OREGON, INC., a Oregon
corporation, as a Guarantor
By: /s/ DONALD G. ALVARADO
--------------------------
Name: Donald G. Alvarado
-----------------------
Title: Secretary
-----------------------
[signature pages continued]
<PAGE>
PORT STOCKTON FOOD DISTRIBUTORS,
INC., a California corporation, as a Guarantor
By: /s/ DONALD G. ALVARADO
------------------------------------
Name: Donald G. Alvarado
----------------------------------
Title: Secretary
---------------------------------
HENRY LEE COMPANY, a Florida corporation,
as a Guarantor
By: /s/ DONALD G. ALVARADO
------------------------------------
Name: Donald G. Alvarado
----------------------------------
Title: Secretary
---------------------------------
AMERIFOODS TRADING COMPANY, a Florida
corporation, as a Guarantor
By: /s/ DONALD G. ALVARADO
------------------------------------
Name: Donald G. Alvarado
----------------------------------
Title: Secretary
---------------------------------
OWNER TRUSTEE AND
- -----------------
LESSOR:
- ------
FIRST SECURITY BANK, NATIONAL ASSOCIATION, not
individually, except as expressly stated herein,
but solely as the Owner Trustee under the S&F
1998-1
By: /s/ C. SCOTT NIELSEN
------------------------------------
Name: C. Scott Nielsen
----------------------------------
Title: Vice President
---------------------------------
[signature pages continued]
<PAGE>
THE AGENT AND THE
- -----------------
LENDERS AND HOLDERS:
- -------------------
--, as a Lender, as co- lead arranger and as the
Agent
By: /s/ Dianne M. Scott
-----------------------------------
Name: Dianne M. Scott
---------------------------------
Title: First Vice President and Manager
--------------------------------
NATIONSBANC MONTGOMERY SECURITIES, LLC, as co-lead
arranger and as the syndication agent
By: /s/ CHAS MCDONNELL
-----------------------------------
Name: Chas McDonnell
---------------------------------
Title: Vice President
--------------------------------
COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK
B.A. "RABOBANK NEDERLAND", NEW YORK BRANCH, as a
Holder and as a Lender
By: /s/ BRADFORD F. SCOTT /s/ ROBERT S. BUCKLIN
--------------------------------------------
Name: Bradford F. Scott Robert S. Bucklin
------------------------------------------
Title: Vice President Chief
-----------------------------------------
Corporate Banking Officer
-------------------------
UNION BANK OF CALIFORNIA, N.A., AS A HOLDER AND AS
A LENDER
BY: /s/ Terry Rocha
-----------------------------------
NAME: Terry Rocha
---------------------------------
TITLE: Vice President
--------------------------------
<PAGE>
WELLS FARGO BANK, N.A., as a Lender
BY: /s/ Catherine M. Wallace
-----------------------------------
NAME: Catherine M. Wallace
---------------------------------
TITLE: Vice President
--------------------------------
/s/ DONALD A. HARTMANN
Donald A. Hartmann
Senior Vice President
CREDIT LYONNAIS LEASING CORP., as a Holder
BY: /S/ L.M. Wertheim
-----------------------------------
NAME: L.M. Wertheim
---------------------------------
TITLE: Vice President / Secretary
--------------------------------
NATIONSBANK, N.A. as a Holder and as a Lender
BY: /s/ Chas McDonnell
--------------------------------------
NAME: Chas McDonnell
------------------------------------
TITLE: Vice President
-----------------------------------
<PAGE>
EXHIBIT A
---------
Appendix A
Rules of Usage and Definitions
I. Rules of Usage
The following rules of usage shall apply to this Appendix A and the Operative
Agreements (and each appendix, schedule, exhibit and annex to the foregoing)
unless otherwise required by the context or unless otherwise defined therein:
(a) Except as otherwise expressly provided, any definitions set forth
herein or in any other document shall be equally applicable to the singular and
plural forms of the terms defined.
(b) Except as otherwise expressly provided, references in any document to
articles, sections, paragraphs, clauses, annexes, appendices, schedules or
exhibits are references to articles, sections, paragraphs, clauses, annexes,
appendices, schedules or exhibits in or to such document.
(c) The headings, subheadings and table of contents used in any document
are solely for convenience of reference and shall not constitute a part of any
such document nor shall they affect the meaning, construction or effect of any
provision thereof.
(d) References to any Person shall include such Person, its successors,
permitted assigns and permitted transferees.
(e) Except as otherwise expressly provided, reference to any agreement
means such agreement as amended, modified, extended, supplemented, restated
and/or replaced from time to time in accordance with the applicable provisions
thereof.
(f) Except as otherwise expressly provided, references to any law includes
any amendment or modification to such law and any rules or regulations issued
thereunder or any law enacted in substitution or replacement therefor.
(g) When used in any document, words such as "hereunder", "hereto",
"hereof" and "herein" and other words of like import shall, unless the context
clearly indicates to the contrary, refer to the whole of the applicable document
and not to any particular article, section, subsection, paragraph or clause
thereof.
(h) References to "including" means including without limiting the
generality of any description preceding such term and for purposes hereof the
rule of ejusdem generis shall not be
<PAGE>
applicable to limit a general statement, followed by or referable to an
enumeration of specific matters, to matters similar to those specifically
mentioned.
(i) References herein to "attorney's fees", "legal fees", "costs of
counsel" or other such references shall be deemed to include the allocated cost
of in-house counsel.
(j) Each of the parties to the Operative Agreements and their counsel have
reviewed and revised, or requested revisions to, the Operative Agreements, and
the usual rule of construction that any ambiguities are to be resolved against
the drafting party shall be inapplicable in the construction and interpretation
of the Operative Agreements and any amendments or exhibits thereto.
(k) Capitalized terms used in any Operative Agreements which are not
defined in this Appendix A but are defined in another Operative Agreement shall
----------
have the meaning so ascribed to such term in the applicable Operative Agreement.
II. Definitions
"ABR" shall mean, for any day, a rate per annum equal to the greater of (a)
the Prime Lending Rate in effect on such day, and (b) the Federal Funds
Effective Rate in effect on such day plus one-half of one percent (0.5%). For
purposes hereof: "Prime Lending Rate" shall mean the rate which Credit Lyonnais
------------------
New York Branch ("CLNY") announces from time to time as its prime lending rate
as in effect from time to time. The Prime Lending Rate is a reference rate and
does not necessarily represent the lowest or best rate actually charged to any
customer. Any Lender may make commercial loans or other loans at rates of
interest at, above or below the Prime Lending Rate. The Prime Lending Rate
shall change automatically and without notice from time to time as and when the
prime lending rate of CLNY changes. "Federal Funds Effective Rate" shall mean,
----------------------------
for any period, a fluctuating interest rate per annum equal for each day during
such period to the weighted average of the rates on overnight Federal funds
transactions with members or 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 CLNY
from three (3) Federal funds brokers of recognized standing selected by it. Any
change in the ABR due to a change in the Prime Lending Rate or the Federal Funds
Effective Rate shall be effective as of the opening of business on the effective
day of such change in the Prime Lending Rate or the Federal Funds Effective
Rate, respectively.
"ABR Holder Advance" shall mean a Holder Advance bearing a Holder Yield
based on the ABR.
"ABR Loans" shall mean Loans the rate of interest applicable to which is
based upon the ABR.
Appedix A-2
<PAGE>
"Acceleration" shall have the meaning given to such term in Section 6 of
the Credit Agreement.
"Accounts" shall have the meaning given to such term in Section 1 of the
Security Agreement.
"Acquisition Advance" shall have the meaning given to such term in Section
5.3 of the Participation Agreement.
"Acquisition Loan" shall mean any Loan made in connection with an
Acquisition Advance.
"Additional Incorporated Terms" shall have the meaning given to such term
in Section 28.1 of the Lease.
"Adjusted Leverage Ratio" shall have the meaning given to such term in the
Lessee Credit Agreement.
"Advance" shall mean a Construction Advance or an Acquisition Advance.
"Affiliate" shall mean, as to any Person, any other Person that, directly
or indirectly, controls, is controlled by or is under common control with such
Person or is a director or officer of such Person. For purposes of this
definition, the term "control" (including the terms "controlling," "controlled
by" and "under common control with") of a Person means to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of Voting Stock, by contract or otherwise.
"After Tax Basis" shall mean, with respect to any payment to be received,
the amount of such payment increased so that, after deduction of the amount of
all taxes required to be paid by the recipient calculated at the then maximum
marginal rates generally applicable to Persons of the same type as the
recipients with respect to the receipt by the recipient of such amounts (less
any tax savings realized as a result of the payment of the indemnified amount),
such increased payment (as so reduced) is equal to the payment otherwise
required to be made.
"Agency Agreement" shall mean the Agency Agreement, dated on or about the
Initial Closing Date between the Construction Agent and the Lessor.
"Agency Agreement Event of Default" shall mean an "Event of Default" as
defined in Section 5.1 of the Agency Agreement.
"Agent" shall mean Credit Lyonnais Los Angeles Branch, as agent for the
Lenders pursuant to the Credit Agreement, or any successor agent appointed in
accordance with the terms of the Credit Agreement and respecting the Security
Documents, for the Lenders and the Holders, to the extent of their interests.
Appendix A-3
<PAGE>
"Applicable Percentage" shall mean for Eurodollar Loans, the Lender Unused
Fee, Eurodollar Holder Advances and the Holder Unused Fee, the margin (expressed
as a percentage) to be used in determining the Eurodollar Rate and/or the
applicable Unused Fee, as the case may be, and shall, from the Initial Closing
Date until the receipt of the initial Margin Certificate, be (a) 2.50%, for the
Applicable Percentage for Eurodollar Loans, (b) 1.50%, for the ABR Loans, (c)
0.50%, for the Lender Unused Fee, (d) 3.25%, for the Eurodollar Holder Advances,
(e) 2.25%, for the ABR Holder Advances and (f) 0.50%, for the Holder Unused Fee,
and for each fiscal quarter ending after the Initial Closing Date shall be
determined, subject to the final paragraph of this definition, by reference to
the Adjusted Leverage Ratio set forth in the most recently delivered Margin
Certificate as follows:
<TABLE>
<CAPTION>
====================================================================================================================
Applicable
Applicable Applicable Percentage Applicable Applicable Applicable
Adjusted Percentage Percentage for Percentage Percentage Percentage
Leverage for for ABR Eurodollar for ABR for the for the
Ratio Eurodollar Loans Holder Holder Holder Lender
Loans Advances Advances Unused Fee Unused Fee
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Less than 3.25 1.50% 0.00% 2.25% 0.75% 0.30% 0.30%
- --------------------------------------------------------------------------------------------------------------------
Equal to or
greater than 3.25 1.75% 0.50% 2.50% 1.25% 0.35% 0.35%
but less than 3.75
- --------------------------------------------------------------------------------------------------------------------
Equal to or
greater than 3.75 2.00% 1.00% 2.75% 1.75% 0.40% 0.40%
but less than 4.25
- --------------------------------------------------------------------------------------------------------------------
Equal to or
greater than 4.25 2.25% 1.25% 3.00% 2.00% 0.50% 0.50%
but less than 4.75
- --------------------------------------------------------------------------------------------------------------------
Equal to or
greater than 4.75 2.50% 1.50% 3.25% 2.25% 0.50% 0.50%
====================================================================================================================
</TABLE>
Adjustments, if any, in the Applicable Percentage shall be made by the
Agent on the fifth (5th) Business Day after receipt by the Agent of quarterly
financial statements for Smart & Final Inc. and its Subsidiaries and the
accompanying Officer's Compliance Certificate setting forth the income and cash
flows of Smart & Final Inc. and its Consolidated Subsidiaries as of the most
recent fiscal quarter end. Subject to Section 2.8(b) of the Credit Agreement and
Section 3.2(b) of the Trust Agreement, in the event the Lessee fails to deliver,
or to cause the delivery of, such financial statements and certificate within
forty-five (45) days after the end of each fiscal quarter of Smart & Final Inc.,
the Applicable Percentage shall be the highest Applicable Percentage until five
(5) Business Days after receipt by the Agent of such financial statements and
certificates.
"Appraisal" shall mean, with respect to any Property, an appraisal to be
delivered in connection with the Participation Agreement or in accordance with
the terms of the Lease, in each case prepared by a reputable appraiser
reasonably acceptable to the Agent, which in the judgment of counsel to the
Agent, complies with all of the provisions of the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, as amended, the rules and regulations
adopted pursuant thereto, and all other applicable Legal Requirements.
Appendix A-4
<PAGE>
"Appraisal Procedure" shall have the meaning given such term in Section
22.4 of the Lease.
"Approved State" shall mean each state within the continental United
States.
"Appurtenant Rights" shall mean (a) all agreements, easements, rights of
way or use, rights of ingress or egress, privileges, appurtenances, tenements,
hereditaments and other rights and benefits at any time belonging or pertaining
to the Land underlying the Improvements or the Improvements, including without
limitation the use of any streets, ways, alleys, vaults or strips of land
adjoining, abutting, adjacent or contiguous to the Land and (b) all permits,
licenses and rights, whether or not of record, appurtenant to such Land or the
Improvements.
"Assignment and Acceptance" shall mean the Assignment and Acceptance in the
form attached to the Credit Agreement as Exhibit B.
---------
"Available Commitment" shall mean, as to any Lender at any time, an amount
equal to the excess, if any, of (a) the amount of such Lender's Commitment over
(b) the aggregate principal amount of all Loans made by such Lender as of such
date after giving effect to Section 5.2(d) of the Participation Agreement (but
without giving effect to any other repayments or prepayments of any Loans
hereunder).
"Available Holder Commitments" shall mean an amount equal to the excess, if
any, of (a) the aggregate amount of the Holder Commitments over (b) the
aggregate amount of the Holder Advances made since the Initial Closing Date
after giving effect to Section 5.2(d) of the Participation Agreement (but
without giving effect to any other repayments or prepayments of any Holder
Advances).
"Bankruptcy Code" shall mean Title 11 of the U. S. Code entitled
"Bankruptcy," as now or hereafter in effect or any successor thereto.
"Basic Documents" shall mean the following: the Participation Agreement,
the Agency Agreement, the Trust Agreement, the Certificates, the Credit
Agreement, the Notes, the Lease and the Security Agreement.
"Basic Rent" shall mean, the sum of (a) the Loan Basic Rent and (b) the
Lessor Basic Rent, calculated as of the applicable date on which Basic Rent is
due.
"Benefitted Lender" shall have the meaning specified in Section 9.10(a) of
the Credit Agreement.
"Bill of Sale" shall mean a Bill of Sale regarding Equipment in form and
substance satisfactory to the Agent.
Appendix A-5
<PAGE>
"Board" shall mean the Board of Governors of the Federal Reserve System of
the United States (or any successor).
"Borrower" shall mean the Owner Trustee, not in its individual capacity but
as Borrower under the Credit Agreement.
"Borrowing Date" shall mean any Business Day specified in a notice
delivered pursuant to Section 2.3 of the Credit Agreement as a date on which the
Lessor requests the Lenders to make Loans hereunder.
"Budgeted Total Property Cost" shall mean, at any date of determination
with respect to any Construction Period Property, an amount equal to the
aggregate amount which the Construction Agent in good faith expects to be
expended in order to achieve Completion with respect to such Property.
"Business Day" shall mean a day of the year on which banks are not required
or authorized by law to close in Los Angeles, California or New York, New York
and, if the applicable Business Day relates to any Eurodollar Rate Advances, on
which dealings are carried on in the London interbank market.
"Capital Lease" shall mean, as applied to any Person, any lease of any
property (whether real, personal, tangible, intangible or mixed of such Person)
by such Person as the lessee which would be capitalized on a balance sheet of
such Person prepared in accordance with GAAP.
"Capital Stock" shall mean any nonredeemable capital stock of any Credit
Party or any of its Subsidiaries, whether common or preferred.
"Casino" shall mean Casino USA, Inc. and its Affiliates.
"Casualty" shall mean any damage or destruction of all or any portion of
the Property as a result of a fire or other casualty.
"CERCLA" shall means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended or supplemented from time to time, and the
regulations promulgated pursuant thereto.
"Certificate" shall mean a Certificate in favor of each Holder regarding
the Holder Commitment of such Holder issued pursuant to the terms and conditions
of the Trust Agreement in favor of each Holder.
"Chattel Paper" shall have the meaning given to such term in Section 1 of
the Security Agreement.
Appendix A-6
<PAGE>
"Claims" shall mean any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, claims, demands, disbursements and
expenses (including without limitation reasonable attorney's fees and expenses)
of any nature whatsoever.
"Closing Date" shall mean the Initial Closing Date and each Property
Closing Date.
"Code" shall mean the Internal Revenue Code of 1986 together with rules and
regulations promulgated thereunder, as amended from time to time, or any
successor statute thereto.
"Collateral" shall mean all assets of the Lessor, the Construction Agent
and the Lessee, now owned or hereafter acquired, upon which a Lien is purported
to be created by one or more of the Security Documents.
"Commencement Date" shall have the meaning specified in Section 2.2 of the
Lease.
"Commerce Distribution Center" shall mean the Property commonly known as
the "Commerce Distribution Center", located at SWC Eastern Avenue and Sheila
Street, Commerce, California.
"Commitment" shall mean, as to any Lender, the obligation of such Lender to
make the portion of the Loans to the Lessor in an aggregate principal amount at
any time outstanding not to exceed the amount set forth opposite such Lender's
name on Schedule 2.1 of the Credit Agreement, as such amount may be increased or
------------
reduced from time to time in accordance with the provisions of the Operative
Agreements.
"Commitment Percentage" shall mean, as to any Lender at any time, the
percentage which such Lender's Commitment then constitutes of the aggregate
Commitments (or, at any time after the Commitments shall have expired or
terminated, the percentage which the aggregate principal amount of such Lender's
Loans then outstanding constitutes of the aggregate principal amount of all of
the Loans then outstanding), and such Commitment Percentage shall take into
account both the Lender's Tranche A Commitment and the Lender's Tranche B
Commitment.
"Commitment Period" shall mean the period from and including the Initial
Closing Date to and including the Construction Period Termination Date, or such
earlier date as the Commitments shall terminate as provided in the Credit
Agreement or the Holder Commitment shall terminate as provided in the Trust
Agreement.
"Company Obligations" shall mean the obligations of Smart & Final Inc., in
any and all capacities under and with respect to the Operative Agreements and
each Property.
"Completion" shall mean, with respect to a Property, such time as the
acquisition, installation, testing and final completion of the Improvements on
such Property has been achieved in accordance with the Plans and Specifications,
the Agency Agreement and/or the Lease, and in compliance with all Legal
Requirements and Insurance Requirements and a certificate of occupancy has been
issued with respect to such Property by the appropriate governmental entity
(except if non-compliance, individually or in the aggregate, shall not have
Appendix A-7
<PAGE>
and could not reasonably be expected to have a Material Adverse Effect). If the
Lessor purchases a Property that includes existing Improvements that are to be
immediately occupied by the Lessee without any improvements financed pursuant to
the Operative Agreements, the date of Completion for such Property shall be the
Property Closing Date.
"Completion Date" shall mean, with respect to a Property, the earlier of
(a) the date on which Completion for such Property has occurred or (b) the
Construction Period Termination Date.
"Condemnation" shall mean any taking or sale of the use, access, occupancy,
easement rights or title to any Property or any part thereof, wholly or
partially (temporarily or permanently), by or on account of any actual or
threatened eminent domain proceeding or other taking of action by any Person
having the power of eminent domain, including without limitation an action by a
Governmental Authority to change the grade of, or widen the streets adjacent to,
any Property or alter the pedestrian or vehicular traffic flow to any Property
so as to result in a change in access to such Property, or by or on account of
an eviction by paramount title or any transfer made in lieu of any such
proceeding or action.
"Consolidated Subsidiary" shall mean, as to any Person, any Subsidiary of
such Person which under the rules of GAAP consistently applied should have its
financial results consolidated with those of such Person for purposes of
financial accounting statements.
"Consolidated Total Capital" shall mean, at any time, the sum of
Stockholders' Equity and Funded Indebtedness.
"Construction Advance" shall mean an advance of funds to pay Property Costs
pursuant to Section 5.4 of the Participation Agreement.
"Construction Agent" shall mean Smart & Final Inc., a Delaware corporation,
as the construction agent under the Agency Agreement.
"Construction Agent Options" shall have the meaning given to such term in
Section 2.1 of the Agency Agreement.
"Construction Budget" shall mean the cost of acquisition, installation,
testing, constructing and developing any Property as determined by the
Construction Agent in its reasonable, good faith judgment.
"Construction Commencement Date" shall mean, with respect to Improvements,
the date on which construction of such Improvements commences pursuant to the
Agency Agreement.
"Construction Contract" shall mean any contract entered into between the
Construction Agent or the Lessee with a Contractor for the construction of
Improvements or any portion thereof on the Property.
Appendix A-8
<PAGE>
"Construction Loan" shall mean any Loan made in connection with a
Construction Advance.
"Construction Loan Property Cost" shall mean with respect to each
Construction Period Property at the date of determination, an amount equal to
(a) the aggregate principal amount of Construction Loans made on or prior to
such date with respect to the Property minus (b) the aggregate principal amount
-----
of prepayments or repayments of the Loans allocated to reduce the Construction
Loan Property Cost of such Property pursuant to Section 2.6(c) of the Credit
Agreement.
"Construction Period" shall mean, with respect to a Property, the period
commencing on the Construction Commencement Date for such Property and ending on
the Completion Date for such Property.
"Construction Period Property" means, at any date of determination, any
Property as to which the Rent Commencement Date has not occurred on or prior to
such date.
"Construction Period Termination Date" shall mean (a) the earlier of (i)
the date that the Commitments have been terminated in their entirety in
accordance with the terms of Section 2.5(a) of the Credit Agreement, or (ii) the
second anniversary of the Initial Closing Date or (b) such later date as may be
agreed to by the Majority Secured Parties.
"Contractor" shall mean each entity with whom the Construction Agent or the
Lessee contracts to construct any Improvements or any portion thereof on the
Property.
"Controlled Group" shall mean all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with any Credit Party, are treated as a single
employer under Section 414 of the Code.
"Co-Owner Trustee" shall have the meaning specified in Section 9.2 of the
Trust Agreement.
"Credit Agreement" shall mean the Credit Agreement, dated on or about the
Initial Closing Date, among the Lessor, the Agent and the Lenders, as specified
therein.
"Credit Agreement Default" shall mean any event or condition which, with
the lapse of time or the giving of notice, or both, would constitute a Credit
Agreement Event of Default.
"Credit Agreement Event of Default" shall mean any event or condition
defined as an "Event of Default" in Section 6 of the Credit Agreement.
"Credit Documents" shall mean the Participation Agreement, the Agency
Agreement, the Credit Agreement, the Notes and the Security Documents.
"Credit Parties" shall mean the Construction Agent, the Lessee and each
Guarantor.
Appendix A-9
<PAGE>
"Deed" shall mean a warranty deed regarding the Land and/or Improvements in
form and substance satisfactory to the Agent.
"Default" shall mean any Event of Default or any event that would
constitute an Event of Default but for the requirement that notice be given or
time elapse or both.
"Defaulting Holder" shall have the meaning given to such term in Section
12.4 of the Participation Agreement.
"Defaulting Lender" shall have the meaning given to such term in Section
12.4 of the Participation Agreement.
"Deficiency Balance" shall have the meaning given in Section 22.1(b) of the
Lease Agreement.
"Dispute" shall mean any judicial proceeding, dispute, claim or controversy
arising out of, connected with or related to any Operative Agreement between or
among parties to any Operative Agreement.
"Documents" shall have the meaning given to such term in Section 1 of the
Security Agreement.
"Dollars" and "$" shall mean dollars in lawful currency of the United
States of America.
"Domestic Subsidiary" shall mean, with respect to any Person, any
Subsidiary of such Person which is incorporated or organized under the laws of
any State of the United States or the District of Columbia.
"Election Notice" shall have the meaning given to such term in Section 20.1
of the Lease.
"Eligible Assignee" shall mean (i) a Lender or a Holder, as the case may
be; (ii) an Affiliate of a Lender or a Holder, as the case may be; and (iii) any
other Person approved by the Agent and, unless an Event of Default has occurred
and is continuing at the time any assignment is effected in accordance with the
Operative Agreements, the Lessee or the Construction Agent, such approval not to
be unreasonably withheld or delayed by the Lessee or the Construction Agent and
such approval to be deemed given by the Lessee or the Construction Agent if no
objection is received by the assigning Lender or Holder and the Agent from the
Lessee or the Construction Agent within two Business Days after notice of such
proposed assignment has been provided by the assigning Lender or Holder to the
Lessee or the Construction Agent; provided, however, that neither the Lessee or
-------- -------
the Construction Agent nor an Affiliate of the Lessee or the Construction Agent
shall qualify as an Eligible Assignee.
"Employee Benefit Plan" or "Plan" shall mean an employee benefit plan
(within the meaning of Section 3(3) of ERISA, including without limitation any
Multiemployer Plan), or any
Appendix A-10
<PAGE>
"plan" as defined in Section 4975(e)(1) of the Code and as interpreted by the
Internal Revenue Service and the Department of Labor in rules, regulations,
releases or bulletins in effect on any Closing Date.
"Environmental Claims" shall mean any federal, state or local law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
and any and all common law requirements, rules and bases of liability relating
to the environment, health, safety or Hazardous Materials, including, without
limitation, CERCLA, the Resource Conservation and Recovery Act, the Hazardous
Materials Transportation Act, the Clean Water Act, the Toxic Substances Control
Act, the Clean Air Act, the Safe Drinking Water Act, the Atomic Energy Act, the
Federal Insecticide, Fungicide and Rodenticide Act and the Occupational Safety
and Health Act.
"Environmental Laws" shall mean any Law, permit, consent, approval,
license, award, or other authorization or requirement of any Tribunal relating
to emissions, discharges, releases, threatened releases of any Hazardous
Substance into ambient air, surface water, ground water, publicly owned
treatment works, septic system, or land, or otherwise relating to the handling,
storage, treatment, generation, use, or disposal of Hazardous Substances,
pollution or to the protection of health or the environment, including without
limitation CERCLA, the Resource Conservation and Recovery Act, 42 U.S.C. (S)
6901, et seq., and state statutes analogous thereto.
"Environmental Violation" shall mean any activity, occurrence or condition
that violates or threatens (if the threat requires remediation under any
Environmental Law and is not remediated during any grace period allowed under
such Environmental Law) to violate or results in or threatens (if the threat
requires remediation under any Environmental Law and is not remediated during
any grace period allowed under such Environmental Law) to result in
noncompliance with any Environmental Law.
"Equipment" shall mean equipment, apparatus, furnishings, fittings and
personal property of every kind and nature whatsoever purchased, leased or
otherwise acquired using the proceeds of the Loans or the Holder Advances by the
Construction Agent, the Lessee or the Lessor and all improvements and
modifications thereto and replacements thereof, whether or not now owned or
hereafter acquired or now or subsequently attached to, contained in or used or
usable in any way in connection with any operation of any Improvements,
including but without limiting the generality of the foregoing, all equipment
described in the Appraisal including without limitation all heating, electrical,
and mechanical equipment, lighting, switchboards, plumbing, ventilation, air
conditioning and air-cooling apparatus, refrigerating, and incinerating
equipment, escalators, elevators, loading and unloading equipment and systems,
cleaning systems (including without limitation window cleaning apparatus),
telephones, communication systems (including without limitation satellite dishes
and antennae), televisions, computers, sprinkler systems and other fire
prevention and extinguishing apparatus and materials, security systems, motors,
engines, machinery, pipes, pumps, tanks, conduits, appliances, fittings and
fixtures of every kind and description.
Appendix A-11
<PAGE>
"Equipment Schedule" shall mean (a) each Equipment Schedule attached to the
applicable Requisition and (b) each Equipment Schedule attached to the
applicable Lease Supplement.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"ERISA Affiliate" shall mean each entity required to be aggregated with any
Credit Party pursuant to the requirements of Section 414(b) or (c) of the Code.
"Eurocurrency Reserve Requirements" shall mean for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the maximum rates
(expressed as a decimal) of reserve requirements in effect on such day
(including without limitation basic, supplemental, marginal and emergency
reserves under any regulations of the Board or other Governmental Authority
having jurisdiction with respect thereto) dealing with reserve requirements
prescribed on eurocurrency funding (currently referred to as "Eurocurrency
liabilities" in Regulation D) maintained by a member bank of the Federal Reserve
System.
"Eurodollar Holder Advance" shall mean a Holder Advance bearing a Holder
Yield based on the Eurodollar Rate.
"Eurodollar Loans" shall mean Loans the rate of interest applicable to
which is based upon the Eurodollar Rate.
"Eurodollar Rate" means, for any Eurodollar Loan or Eurodollar Holder
Advance comprising part of the same borrowing or advance (including without
limitation conversions, extensions and renewals), for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as the
London interbank offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period. If for any reason such
rate is not available, the term "Eurodollar Rate" shall mean, for any Eurodollar
Loan or Eurodollar Holder Advance for any Interest Period therefor, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on
Reuters Screen LIBO Page as the London interbank offered rate for deposits in
Dollars at approximately 11:00 a.m. (London time) two Business Days prior to the
first day of such Interest Period for a term comparable to such Interest Period;
provided, however, if more than one rate is specified on Reuters Screen LIBO
- -------- -------
Page, the applicable rate shall be the arithmetic mean of all such rates
(rounded upwards, if necessary, to the nearest 1/100 of 1%). As used herein,
"Reuters Screen LIBO Page" means the display designated as page "LIBO" on the
Reuters Monitor Money Rates Service (or such other page as may replace the LIBO
page on that service for the purpose of displaying London interbank offered
rates of major banks) ("RMMRS"). In the event the RMMRS is not then quoting such
offered rates, "Eurodollar Rate" shall mean for the Interest Period for each
Eurodollar Loan or Eurodollar Holder Advance comprising part of the same
borrowing or advance (including without limitation conversions, extensions and
renewals), the average (rounded upward to the nearest one sixteenth (1/16) of
one percent (1%)) per annum rate of interest determined by the office of the
Appendix A-12
<PAGE>
Agent (each such determination to be conclusive and binding) as of two (2)
Business Days prior to the first day of such Interest Period, as the effective
rate at which deposits in immediately available funds in U.S. dollars are being,
have been, or would be offered or quoted by the Agent to major banks in the
applicable interbank market for Eurodollar deposits at any time during the
Business Day which is the second Business Day immediately preceding the first
day of such Interest Period, for a term comparable to such Interest Period and
in the amount of the requested Eurodollar Loan and/or Eurodollar Holder Advance.
If no such offers or quotes are generally available for such amount, then the
Agent shall be entitled to determine the Eurodollar Rate by estimating in its
reasonable judgment the per annum rate (as described above) that would be
applicable if such quote or offers were generally available.
"Event of Default" shall mean a Lease Event of Default, an Agency Agreement
Event of Default or a Credit Agreement Event of Default.
"Excepted Payments" shall mean:
(a) all indemnity payments (including without limitation indemnity
payments made pursuant to Section 11 of the Participation Agreement),
whether made by adjustment to Basic Rent or otherwise, to which the Owner
Trustee, any Holder or any of their respective Affiliates, agents,
officers, directors or employees is entitled;
(b) any amounts (other than Basic Rent or Termination Value) payable
under any Operative Agreement to reimburse the Owner Trustee, any Holder or
any of their respective Affiliates (including without limitation the
reasonable expenses of the Owner Trustee, the Trust Company and the Holders
incurred in connection with any such payment) for performing or complying
with any of the obligations of any Credit Party under and as permitted by
any Operative Agreement;
(c) any amount payable to a Holder by any transferee of such interest
of a Holder as the purchase price of such Holder's interest in the Trust
Estate (or a portion thereof);
(d) any insurance proceeds (or payments with respect to risks self-
insured or policy deductibles) under liability policies other than such
proceeds or payments payable to the Agent or any Lender;
(e) any insurance proceeds under policies maintained by the Owner
Trustee or any Holder;
(f) Transaction Expenses or other amounts, fees, disbursements or
expenses paid or payable to or for the benefit of the Owner Trustee or any
Holder;
(g) all right, title and interest of any Holder or the Owner Trustee
to any Property or any portion thereof or any other property to the extent
any of the foregoing has been released from the Liens of the Security
Documents and the Lease pursuant to the terms thereof;
Appendix A-13
<PAGE>
has been released from the Liens of the Security Documents and the Lease
pursuant to the terms thereof;
(h) upon termination of the Credit Agreement pursuant to the terms
thereof, all remaining property covered by the Lease or Security Documents;
(i) all payments in respect of the Holder Yield;
(j) any payments in respect of interest to the extent attributable to
payments referred to in clauses (a) through (i) above; and
(k) any rights of either the Owner Trustee or the Trust Company to
demand, collect, sue for or otherwise receive and enforce payment of any of
the foregoing amounts, provided that such rights shall not include the
--------
right to terminate the Lease.
"Excess Proceeds" shall mean the excess, if any, of the aggregate of all
awards, compensation or insurance proceeds payable in connection with a Casualty
or Condemnation over the Termination Value paid by the Lessee pursuant to the
Lease with respect to such Casualty or Condemnation.
"Excluded Taxes" shall have the meaning given to such term in Section
11.2(b) of the Participation Agreement.
"Exculpated Persons" shall mean the Trust Company (except with respect to
the representations and warranties and the other obligations of the Trust
Company pursuant to the Operative Agreements expressly undertaken in its
individual capacity, including without limitation the representations and
warranties of the Trust Company pursuant to Section 6.1 of the Participation
Agreement, the obligations of the Trust Company pursuant to Section 8.2 of the
Participation Agreement and the obligations of the Trust Company pursuant to the
Trust Agreement), the Holders (except with respect to the obligations of the
Holders pursuant to the Participation Agreement and the Trust Agreement
expressly undertaken in their respective individual capacities), their officers,
directors, shareholders and partners.
"Exempt Payments" shall have the meaning specified in Section 11.2(e) of
the Participation Agreement.
"Expiration Date" shall have the meaning specified in Section 2.2 of the
Lease.
"Fair Market Sales Value" shall mean, with respect to any Property, the
amount, which in any event, shall not be less than zero (0), that would be paid
in cash in an arms-length transaction between an informed and willing purchaser
and an informed and willing seller, neither of whom is under any compulsion to
purchase or sell, respectively, such Property. Fair Market Sales Value of any
Property shall be determined based on the assumption that, except for purposes
of Section 17 of the Lease, such Property is in the condition and state of
repair required under
Appendix A-14
<PAGE>
Section 10.1 of the Lease and each Credit Party is in compliance with the other
requirements of the Operative Agreements.
"Federal Funds Effective Rate" shall have the meaning given to such term in
the definition of ABR.
"Financing Parties" shall mean the Lessor, the Owner Trustee, in its trust
capacity, the Agent, the Holders and the Lenders.
"Fixtures" shall mean all fixtures relating to the Improvements, including
without limitation all components thereof, located in or on the Improvements,
together with all replacements, modifications, alterations and additions
thereto.
"Force Majeure Event" shall mean any event beyond the control of the
Construction Agent, other than a Casualty or Condemnation, including without
limitation strikes or lockouts (but only when the Construction Agent is legally
prevented from securing replacement labor or materials as a result thereof),
adverse soil conditions, acts of God, adverse weather conditions, inability to
obtain labor or materials after all possible efforts have been expended by the
Construction Agent, governmental activities, civil commotion and enemy action;
but excluding any event, cause or condition that results from the Construction
Agent's financial condition.
"Form 1001" shall have the meaning specified in Section 11.2(e) of the
Participation Agreement.
"Form 4224" shall have the meaning specified in Section 11.2(e) of the
Participation Agreement.
"Funded Indebtedness" shall mean at any date all indebtedness of the Lessee
and its Consolidated Subsidiaries determined in accordance with GAAP on a
consolidated basis which by its terms (i) matures more than one year after the
date of its inception, including without limitation any payments required to be
made on such indebtedness within one year, and (ii) any such indebtedness
maturing within one year from such date which is renewable or extendible at the
option of any obligor to a date more than one year from such date.
"GAAP" shall mean generally accepted accounting principles set forth in the
opinions and pronouncements of the accounting principles board of the American
Institute of Certified Public Accountants, and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession, that are applicable to the circumstances as of the date of
determination.
"Giles Environmental Report" means the environmental audit prepared for the
Commerce Distribution Center by Giles Engineering Associates, Inc., as
supplemented by a letter dated as of May 18, 1998.
Appendix A-15
<PAGE>
"Governmental Action" shall mean all permits, authorizations,
registrations, consents, approvals, waivers, exceptions, variances, orders,
judgments, written interpretations, decrees, licenses, exemptions, publications,
filings, notices to and declarations of or with, or required by, any
Governmental Authority, or required by any Legal Requirement, and shall include,
without limitation, all environmental and operating permits and licenses that
are required for the full use, occupancy, zoning and operating of the Property.
"Governmental Authority" shall mean any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Ground Lease" shall mean a ground lease (in form and substance
satisfactory to the Agent) respecting any Property (a) owned by any Credit Party
(or a parent corporation or any Subsidiary of any Credit Party) and leased to
the Lessor where such lease has at least a ninety-nine (99) year term and
payments set at no more than $1.00 per year, or (b) where such lease is subject
to such other terms and conditions as are satisfactory to the Agent.
"Guarantors" shall mean the various parties to the Participation Agreement
from time to time, as guarantors of the Construction Agent and the Lessee with
respect to the Operative Agreements and the Properties.
"Guaranty Agreement" shall mean the Guaranty Agreement (Tranche A
Obligations) dated as of November 13, 1998, made by Smart & Final Inc. and the
guarantors to the Agent for the ratable benefit of the Tranche A Lenders.
"Hard Costs" shall mean all costs and expenses payable for supplies,
materials, labor and profit with respect to the Improvements under any
Construction Contract.
"Hazardous Substance" shall mean (a) petroleum or petroleum products,
natural or synthetic gas, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation and radon gas, (b) any substances defined as
or included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous wastes," "restricted hazardous
wastes," "toxic substances," "toxic pollutants," "contaminants" or "pollutants,"
or words of similar import, under any Environmental Law and (c) any other
substance exposure to which is regulated under any Environmental Law.
"Holder Advance" shall mean any advance made by any Holder to the Owner
Trustee pursuant to the terms of the Trust Agreement or the Participation
Agreement.
"Holder Amount" shall mean as of any date, the aggregate amount of Holder
Advances made by each Holder to the Trust Estate pursuant to Section 2 of the
Participation Agreement and Section 3.1 of the Trust Agreement less any payments
of any Holder Advances received by the Holders pursuant to Section 3.4 of the
Trust Agreement.
Appendix A-16
<PAGE>
"Holder Commitments" shall mean $3,600,000, as such amount may be increased
or reduced from time to time in accordance with the provisions of the Operative
Agreements; provided, if there shall be more than one (1) Holder, the Holder
--------
Commitment of each Holder shall be as set forth in Schedule I to the Trust
----------
Agreement as such Schedule I may be amended and replaced from time to time.
----------
"Holder Construction Property Cost" shall mean, with respect to each
Construction Period Property, at any date of determination, an amount equal to
the outstanding Holder Advances made with respect thereto under the Trust
Agreement.
"Holder Overdue Rate" shall mean the lesser of (a) the then current rate of
Holder Yield respecting the particular amount in question plus two percent (2%)
and (b) the highest rate permitted by applicable law.
"Holder Property Cost" shall mean with respect to a Property an amount
equal to the outstanding Holder Advances with respect thereto.
"Holder Unused Fee" shall have the meaning given to such term in Section
7.4 of the Participation Agreement.
"Holder Yield" shall mean with respect to Holder Advances from time to time
either the Eurodollar Rate plus the Applicable Percentage or the ABR as elected
by the Owner Trustee from time to time with respect to such Holder Advances in
accordance with the terms of the Trust Agreement; provided, however, (a) upon
-------- -------
delivery of the notice described in Section 3.7(c) of the Trust Agreement, the
outstanding Holder Advances of each Holder shall bear a yield at the ABR
applicable from time to time from and after the dates and during the periods
specified in Section 3.7(c) of the Trust Agreement, and (b) upon the delivery by
a Holder of the notice described in Section 11.3(f) of the Participation
Agreement, the Holder Advances of such Holder shall bear a yield at the ABR
applicable from time to time after the dates and during the periods specified in
Section 11.3(f) of the Participation Agreement.
"Holders" shall mean Credit Lyonnais Los Angeles Branch and shall include
the other banks and financial institutions which may be from time to time
holders of Certificates in connection with the S&F Trust 1998-1.
"Impositions" shall mean any and all liabilities, losses, expenses, costs,
charges and Liens of any kind whatsoever for fees, taxes, levies, imposts,
duties, charges, assessments or withholdings ("Taxes") including but not limited
-----
to (i) real and personal property taxes, including without limitation personal
property taxes on any property covered by the Lease that is classified by
Governmental Authorities as personal property, and real estate or ad valorem
taxes in the nature of property taxes; (ii) sales taxes, use taxes and other
similar taxes (including rent taxes and intangibles taxes); (iii) excise taxes;
(iv) real estate transfer taxes, conveyance taxes, stamp taxes and documentary
recording taxes and fees; (v) taxes that are or are in the nature of franchise,
income, value added, privilege and doing business taxes, license and
registration fees; (vi) assessments on any Property, including without
limitation all assessments for public Improvements or benefits, whether or not
such improvements are commenced or completed
Appendix A-17
<PAGE>
within the Term; and (vii) taxes, Liens, assessments or charges asserted,
imposed or assessed by the PBGC or any governmental authority succeeding to or
performing functions similar to, the PBGC; and in each case all interest,
additions to tax and penalties thereon, which at any time prior to, during or
with respect to the Term or in respect of any period for which the Lessee shall
be obligated to pay Supplemental Rent, may be levied, assessed or imposed by any
Governmental Authority upon or with respect to (a) any Property or any part
thereof or interest therein; (b) the leasing, financing, refinancing,
demolition, construction, substitution, subleasing, assignment, control,
condition, occupancy, servicing, maintenance, repair, ownership, possession,
activity conducted on, delivery, insuring, use, operation, improvement, sale,
transfer of title, return or other disposition of such Property or any part
thereof or interest therein; (c) the Notes, other indebtedness with respect to
any Property, or the Certificates, or any part thereof or interest therein; (d)
the rentals, receipts or earnings arising from any Property or any part thereof
or interest therein; (e) the Operative Agreements, the performance or
enforcement of performance or the nonperformance thereof, or any payment made or
accrued pursuant thereto; (f) the income or other proceeds received with respect
to any Property or any part thereof or interest therein upon the sale or
disposition thereof; (g) any contract (including the Agency Agreement) relating
to the construction, acquisition or delivery of the Improvements or any part
thereof or interest therein; (h) the issuance of the Notes or the Certificates;
(i) the Owner Trustee, the Trust or the Trust Estate; or (j) otherwise in
connection with the transactions contemplated by the Operative Agreements.
"Improvements" shall mean, with respect to the construction, renovations
and/or Modifications on any Land, all buildings, structures, Fixtures, and other
improvements of every kind existing at any time and from time to time on or
under the Land purchased or otherwise acquired using the proceeds of the Loans
or the Holder Advances or which is subject to a Ground Lease, together with any
and all appurtenances to such buildings, structures or improvements, including
without limitation sidewalks, utility pipes, conduits and lines, parking areas
and roadways, and including without limitation all Modifications and other
additions to or changes in the Improvements at any time, including without
limitation (a) any Improvements existing as of the Property Closing Date as such
Improvements may be referenced on the applicable Requisition and (b) any
Improvements made subsequent to such Property Closing Date.
"Incorporated Covenants" shall have the meaning given to such term in
Section 28.1 of the Lease.
"Incorporated Representations and Warranties" shall have the meaning given
to such term in Section 28.1 of the Lease.
"Indebtedness" of a Person shall mean, without duplication such Person's:
(a) obligations for borrowed money;
(b) obligations representing the deferred purchase price of Property
(whether real, personal, tangible, intangible or mixed) or services (other than
accounts payable arising in the
Appendix A-18
<PAGE>
ordinary course of such Person's business payable on terms customary in the
trade);
(c) obligations, whether or not assumed, secured by liens or payable out
of the proceeds or production from property now or hereafter owned or acquired
by such Person;
(d) obligations which are evidenced by notes, acceptances or other
instruments;
(e) Capital Lease obligations;
(f) net liabilities under interest rate swap, exchange or cap agreements;
and
(g) contingent obligations
"Indemnified Person" shall mean the Lessor, the Owner Trustee, in its
individual and its trust capacity, the Trust, the Trust Company, the Agent, the
Holders, the Lenders and their respective successors, assigns, directors,
shareholders, partners, officers, employees, agents and Affiliates.
"Indemnity Provider" shall mean, respecting each Property, the Lessee.
"Initial Closing Date" shall mean November 13, 1998.
"Initial Construction Advance" shall mean any initial Advance to pay for:
(a) Property Costs for construction of any Improvements; and (b) the Property
Costs of restoring or repairing any Property which is required to be restored or
repaired in accordance with Section 15.1(e) of the Lease.
"Instruments" shall have the meaning given to such term in Section 1 of the
Security Agreement.
"Insurance Requirements" shall mean all terms and conditions of any
insurance policy either required by the Lease to be maintained by the Lessee or
required by the Agency Agreement to be maintained by the Construction Agent, and
all requirements of the issuer of any such policy and, regarding self insurance,
any other requirements of the Lessee.
"Interest Period" shall mean (a) during the Commitment Period and
thereafter as to any Eurodollar Loan or Eurodollar Holder Advance (i) with
respect to the initial Interest Period, the period beginning on the date of the
first Eurodollar Loan and Eurodollar Holder Advance and ending one (1) month,
two (2) months, three (3) months or six (6) months thereafter, as selected by
the Lessor (in the case of a Eurodollar Loan) or the Owner Trustee (in the case
of a Eurodollar Holder Advance) in its applicable notice given with respect
thereto and (ii) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such Eurodollar Loan or Eurodollar
Holder Advance and ending one (1) month, two (2) months, three (3) months or six
(6) months thereafter, as selected by the Lessor by irrevocable notice to the
Agent (in the case of a Eurodollar Loan) or by the Owner Trustee (in the case of
a Eurodollar
Appendix A-19
<PAGE>
Holder Advance) in each case not less than three (3) Business Days prior to the
last day of the then current Interest Period with respect thereto; provided,
--------
however, that all of the foregoing provisions relating to Interest Periods are
- -------
subject to the following: (A) if any Interest Period would end on a day which is
not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day (except that where the next succeeding Business Day
falls in the next succeeding calendar month, then on the next preceding Business
Day), (B) no Interest Period shall extend beyond the Maturity Date or the
Expiration Date, as the case may be, (C) where an Interest Period begins on a
day for which there is no numerically corresponding day in the calendar month in
which the Interest Period is to end, such Interest Period shall end on the last
Business Day of such calendar month, (D) there shall not be more than four (4)
Interest Periods outstanding at any one (1) time; provided further, to the
extent payments of interest or Holder Yield, as the case may be, are to be made
at the end of an Interest Period and such Interest Period extends for longer
than three (3) months, then such payments shall also be made on the last
Business Day of the third month during such Interest Period.
"Investment Company Act" shall mean the Investment Company Act of 1940, as
amended, together with the rules and regulations promulgated thereunder.
"Joinder Agreement" shall mean a joinder agreement, in the form of Exhibit
-------
J to the Participation Agreement, executed from time to time between a Domestic
- -
Subsidiary of any Credit Party and the Agent.
"Land" shall mean a parcel of real property described on (a) the
Requisition issued by the Construction Agent on the Property Closing Date
relating to such parcel and (b) the schedules to each applicable Lease
Supplement executed and delivered in accordance with the requirements of Section
2.4 of the Lease.
"LCA Security Agreement" shall mean the "Security Agreement" as defined in
the Lessee Credit Agreement.
"Law" shall mean any statute, law, ordinance, regulation, rule, directive,
order, writ, injunction or decree of any Tribunal.
"Lease" or "Lease Agreement" shall mean the Lease Agreement dated on or
about the Initial Closing Date, between the Lessor and the Lessee, together with
any Lease Supplements thereto.
"Lease Default" shall mean any event or condition which, with the lapse of
time or the giving of notice, or both, would constitute a Lease Event of
Default.
"Lease Event of Default" shall have the meaning specified in Section 17.1
of the Lease.
"Lease Supplement" shall mean each Lease Supplement substantially in the
form of Exhibit A to the Lease, together with all attachments and schedules
---------
thereto.
Appendix A-20
<PAGE>
"Legal Requirements" shall mean all foreign, federal, state, county,
municipal and other governmental statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions affecting the Owner Trustee, any
Holder, the Lessor, any Credit Party, the Agent, any Lender or any Property,
Land, Improvement, Equipment or the taxation, demolition, construction, use or
alteration of such Improvements, whether now or hereafter enacted and in force,
including without limitation any that require repairs, modifications or
alterations in or to any Property or in any way limit the use and enjoyment
thereof (including without limitation all building, zoning and fire codes and
the Americans with Disabilities Act of 1990, 42 U.S.C. (S) 12101 et. seq., and
any other similar federal, state or local laws or ordinances and the regulations
promulgated thereunder) and any that may relate to environmental requirements
(including without limitation all Environmental Laws), and all permits,
certificates of occupancy, licenses, authorizations and regulations relating
thereto, and all covenants, agreements, restrictions and encumbrances contained
in any instruments which are either of record or known to any Credit Party
affecting any Property or the Appurtenant Rights.
"Lender Commitments" shall mean $86,400,000, as such amount may be
increased or reduced from time to time in accordance with the provisions of the
Operative Agreements; provided, if there shall be more than one (1) Lender, the
--------
Lender Commitment of each Lender shall be as set forth in Schedule 2.1 to the
------------
Credit Agreement as such Schedule 2.1 may be amended and replaced from time to
------------
time.
"Lender Financing Statements" shall mean UCC financing statements and
fixture filings appropriately completed and executed for filing in the
applicable jurisdiction in order to procure a security interest in favor of the
Agent in the Collateral subject to the Security Documents.
"Lender Unused Fee" shall have the meaning given to such term in Section
7.4 of the Participation Agreement.
"Lenders" shall mean Credit Lyonnais Los Angeles Branch and shall include
the other banks and financial institutions which may be from time to time party
to the Participation Agreement and the Credit Agreement.
"Lessee" shall have the meaning set forth in the Lease.
"Lessee Credit Agreement" shall mean that certain Credit Agreement dated as
of November 13, 1998 among the Lessee, as Borrower, the financial institutions
and other entities listed on the signature page thereof as lenders, Credit
Lyonnais Los Angeles Bank, as Co-Lead Arranger and as Administrative Agent,
NationsBank Montgomery Securities LLC, as Co-Lead Arranger and as Syndication
Agent, and Credit Lyonnais New York Branch, as L/C Bank, as such may hereafter
be amended, modified, supplemented, restated and/or replaced from time to time.
"Lessee Credit Agreement Commitment Amount" shall mean the aggregate
Revolving Commitments (as such term is defined in the Lessee Credit Agreement).
Appendix A-21
<PAGE>
"Lessee Credit Agreement Event of Default" shall mean any of the Events of
Default as defined in Section 7.01 of the Lessee Credit Agreement.
"Lessor" shall mean the Owner Trustee, not in its individual capacity, but
as the Lessor under the Lease.
"Lessor Basic Rent" shall mean the scheduled Holder Yield due on the Holder
Advances on any Scheduled Interest Payment Date pursuant to the Trust Agreement
(but not including interest on (a) any such scheduled Holder Yield due on the
Holder Advances prior to the Rent Commencement Date with respect to the Property
to which such Holder Advances relate or (b) overdue amounts under the Trust
Agreement or otherwise).
"Lessor Financing Statements" shall mean UCC financing statements and
fixture filings appropriately completed and executed for filing in the
applicable jurisdictions in order to protect the Lessor's interest under the
Lease to the extent the Lease is a security agreement or a mortgage.
"Lessor Lien" shall mean any Lien, true lease or sublease or disposition of
title arising as a result of (a) any claim against the Lessor or the Trust
Company, in its individual capacity, not resulting from the transactions
contemplated by the Operative Agreements, (b) any act or omission of the Lessor
or the Trust Company, in its individual capacity, which is not required by the
Operative Agreements or is in violation of any of the terms of the Operative
Agreements, (c) any claim against the Lessor or the Trust Company, in its
individual capacity, with respect to Taxes or Transaction Expenses against which
the Lessee is not required to indemnify the Lessor or the Trust Company, in its
individual capacity, pursuant to Section 11 of the Participation Agreement or
(d) any claim against the Lessor arising out of any transfer by the Lessor of
all or any portion of the interest of the Lessor in the Properties, the Trust
Estate or the Operative Agreements other than the transfer of title to or
possession of any Properties by the Lessor pursuant to and in accordance with
the Lease, the Credit Agreement, the Security Agreement or the Participation
Agreement or pursuant to the exercise of the remedies set forth in Article XVII
of the Lease.
"Lien" shall mean any lien, security interest or other charge or
encumbrance of any kind, or any other type of preferential arrangement,
including, without limitation, the lien or retained security title of a
conditional vendor and any easement, right of way or other encumbrance on title
to real property.
"Limited Recourse Amount" shall mean with respect to all the Properties on
an aggregate basis, an amount equal to the sum of the Termination Values with
respect to all the Properties on an aggregate basis on each Payment Date, less
the Maximum Residual Guarantee Amount as of such date with respect to all the
Properties on an aggregate basis.
"Loan Basic Rent" shall mean the scheduled interest due on the Loans on any
Scheduled Interest Payment Date pursuant to the Credit Agreement (but not
including interest on (a) any such Loan due prior to the Rent Commencement Date
with respect to the Property to which such
Appendix A-22
<PAGE>
Loan relates or (b) any overdue amounts under Section 2.8(c) of the Credit
Agreement or otherwise).
"Loan Property Cost" shall mean, with respect to each Property at any date
of determination, an amount equal to (a) the aggregate principal amount all
Loans (including without limitation all Acquisition Loans and Construction
Loans) made on or prior to such date with respect to such Property minus (b) the
-----
aggregate amount of prepayments or repayments as the case may be of the Loans
allocated to reduce the Loan Property Cost of such Property pursuant to Section
2.6(c) of the Credit Agreement.
"Loans" shall mean the loans extended pursuant to the Credit Agreement and
shall include both the Tranche A Loans and the Tranche B Loans.
"Majority Holders" shall mean at any time, Holders whose Holder Advances
outstanding represent at least sixty-six and 2/3 percent (66-2/3%) of (a) the
aggregate Holder Advances outstanding or (b) to the extent there are no Holder
Advances outstanding, the aggregate Holder Commitments.
"Majority Lenders" shall mean at any time, Lenders whose Loans outstanding
represent at least sixty-six and 2/3 percent (66-2/3%) of (a) the aggregate
Loans outstanding or (b) to the extent there are no Loans outstanding, the
aggregate of the Lender Commitments.
"Majority Secured Parties" shall mean at any time, Lenders and Holders
whose Loans and Holder Advances outstanding represent at least sixty-six and 2/3
percent (66-2/3%) of (a) the aggregate Advances outstanding or (b) to the extent
there are no Advances outstanding, the sum of the aggregate Holder Commitments
plus the aggregate Lender Commitments.
"Marketing Period" shall mean, if the Lessee has given a Sale Notice in
accordance with Section 20.1 of the Lease, the period commencing on the date
such Sale Notice is given and ending on the Expiration Date.
"Margin Certificate" shall have the meaning given to such term in Section
8.3(l) of the Participation Agreement.
"Material Adverse Effect" shall, mean a material adverse effect on (a) the
business, condition (financial or otherwise), assets, liabilities or operations
of the Credit Parties (on a consolidated basis), (b) the ability of any Credit
Party to perform its respective obligations under any Operative Agreement to
which it is a party, (c) the validity or enforceability of any Operative
Agreement or the rights and remedies of the Agent, the Lenders, the Holders, or
the Lessor thereunder, (d) the validity, priority or enforceability of any Lien
on any Property created by any of the Operative Agreements, or (e) the value,
utility or useful life of any Property or the use, or ability of the Lessee to
use, any Property for the purpose for which it was intended.
"Maturity Date" shall mean the Expiration Date.
Appendix A-23
<PAGE>
"Maximum Amount" shall mean (a) one hundred percent (100%) of the cost of
the Land or the Ground Lease (as the case may be) for all, but not less than
all, the Properties (collectively, the "Land Cost"), plus (b) the product of
--------- ----
eighty-nine and nine tenths percent (89.9%) multiplied by the following: (the
aggregate Termination Value for all, but not less than all, the Properties,
minus the Land Cost, minus accrued, unpaid Holder Yield respecting any and all
- ----- -----
Construction Period Properties) minus (c) the accreted value (calculated at a
-----
rate of seven and 81/100 percent (7.81%) per annum) of any payments previously
made by the Construction Agent or the Lessee regarding any and all Construction
Period Properties and not reimbursed.
"Maximum Residual Guarantee Amount" shall mean an amount equal to the
product of the aggregate Property Cost for all of the Properties times eighty-
six percent (86%), provided that, (a) the portion of the Maximum Residual
--------
Guarantee Amount allocated to the Land shall be in an amount not less than
eighty-eight percent (88%) of the amount of the aggregate Property Cost
attributable to the Land, and (b) the portion of the Maximum Residual Guarantee
Amount allocated to Improvements and Equipment shall be in an amount equal to
the Maximum Residual Guarantee Amount less the amount described in clause (a)
above.
"Modifications" shall have the meaning specified in Section 11.1(a) of the
Lease.
"Mortgage Instrument" shall mean any mortgage, deed of trust or any other
instrument executed by the Owner Trustee in favor of the Agent (for the benefit
of the Lenders and the Holders) and evidencing a Lien on the Property, in form
and substance reasonably acceptable to the Agent.
"Multiemployer Plan" shall mean any plan described in Section 4001(a)(3) of
ERISA to which contributions are or have been made or required by any Credit
Party or any of its Subsidiaries or ERISA Affiliates.
"Multiple Employer Plan" shall mean a plan to which any Credit Party or any
ERISA Affiliate and at least one (1) other employer other than an ERISA
Affiliate is making or accruing an obligation to make, or has made or accrued an
obligation to make, contributions.
"New Facility" shall have the meaning given to such term in Section 28.1 of
the Lease.
"Non-Integral Equipment" shall mean Equipment which (a) is personal
property that is readily removable without causing material damage to the
applicable Property and (b) is not integral or necessary, respecting the
applicable Property, for compliance with Section 8.3 of the Lease or otherwise
to the structure thereof, the mechanical operation thereof, the electrical
systems thereof or otherwise with respect to any aspect of the physical plant
thereof.
"Notes" shall mean those notes issued to the Lenders pursuant to the Credit
Agreement and shall include both the Tranche A Notes and the Tranche B Notes.
"Obligations" shall have the meaning given to such term in Section 1 of the
Security Agreement.
Appendix A-24
<PAGE>
"Officer's Certificate" with respect to any person shall mean a certificate
executed on behalf of such person by a Responsible Officer who has made or
caused to be made such examination or investigation as is necessary to enable
such Responsible Officer to express an informed opinion with respect to the
subject matter of such Officer's Certificate.
"Officer's Compliance Certificate" shall have the meaning given to such
term in Section 8.3(l) of the Participation Agreement.
"Operative Agreements" shall mean the following: the Participation
Agreement, the Agency Agreement, the Trust Agreement, the Certificates, the
Credit Agreement, the Notes, the Lease, the Lease Supplements (and memoranda of
the Lease and each Lease Supplement in a form reasonably acceptable to the
Agent), the Joinder Agreements, the Security Agreement, the Mortgage
Instruments, the Guaranty Agreement, the other Security Documents, the Ground
Leases, the Deeds and the Bills of Sale and any and all other agreements,
documents and instruments executed in connection with any of the foregoing.
"Original Executed Counterpart" shall have the meaning given to such term
in Section 5 of Exhibit A to the Lease.
---------
"Overdue Interest" shall mean any interest payable pursuant to Section
2.8(b) of the Credit Agreement.
"Overdue Rate" shall mean (a) with respect to the Loan Basic Rent, and any
other amount owed under or with respect to the Credit Agreement or the Security
Documents, the rate specified in Section 2.8(b) of the Credit Agreement, (b)
with respect to the Lessor Basic Rent, the Holder Yield and any other amount
owed under or with respect to the Trust Agreement, the Holder Overdue Rate, and
(c) with respect to any other amount, the amount referred to in clause (y) of
Section 2.8(b) of the Credit Agreement.
"Owner Trustee," "Borrower" or "Lessor" shall mean First Security Bank,
National Association, not individually, except as expressly stated in the
various Operative Agreements, but solely as the Owner Trustee under the S&F
Trust 1998-1 and any successor, replacement and/or additional Owner Trustee
expressly permitted under the Operative Agreements.
"Participant" shall have the meaning given to such term in Section 9.7 of
the Credit Agreement.
"Participation Agreement" shall mean that certain Participation Agreement
dated as of November 13, 1998 among Smart & Final Inc., as the Construction
Agent and as the Lessee, the various parties hereto from time to time, as the
Guarantors, First Security Bank, National Association, not individually, except
as expressly stated herein, but solely as the Owner Trustee under the S&F Trust
1998-1, the various banks and other lending institutions which are parties
hereto from time to time, as the Holders, the various banks and other lending
institutions which are parties hereto from time to time, as the Lenders and
Credit Lyonnais Los Angeles Branch, as
Appendix A-25
<PAGE>
the Administrative Agent for the Lenders and respecting the Security Documents,
as the Administrative Agent for the Lenders and the Holders, to the extent of
their interests, Co-Lead Arrangers: Credit Lyonnais Los Angeles Branch,
NationsBanc Montgomery Securities LLC, Syndication Agent: NationsBanc Montgomery
Securities LLC.
"Payment Date" shall mean any Scheduled Interest Payment Date and any date
on which interest or Holder Yield in connection with a prepayment of principal
on the Loans or of the Holder Advances is due under the Credit Agreement or the
Trust Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation created by
Section 4002(a) of ERISA or any successor thereto.
"Pension Plan" shall mean a "pension plan", as such term is defined in
section 3(2) of ERISA, which is subject to title IV of ERISA (other than a
Multiemployer Plan), and to which any Credit Party or any ERISA Affiliate may
have any liability, including without limitation any liability by reason of
having been a substantial employer within the meaning of section 4063 of ERISA
at any time during the preceding five (5) years, or by reason of being deemed to
be a contributing sponsor under section 4069 of ERISA.
"Permitted Facility" shall mean a retail grocery and restaurant supply
store or a food and restaurant supply distribution facility, in each case of the
type and size customarily used and operated by the Lessee or any of its
Subsidiaries in its ordinary course of business as of the Initial Closing Date.
"Permitted Liens" shall mean:
(a) the respective rights and interests of the parties to the
Operative Agreements as provided in the Operative Agreements;
(b) the rights of any sublessee or assignee under a sublease or an
assignment expressly permitted by the terms of the Lease for no longer than
the duration of the Lease;
(c) Liens for Taxes that either are not yet due or are being
contested in accordance with the provisions of Section 13.1 of the Lease;
(d) Liens arising by operation of law, materialmen's, mechanics',
workmen's, repairmen's, employees', carriers', warehousemen's and other
like Liens relating to the construction of the Improvements or in
connection with any Modifications or arising in the ordinary course of
business for amounts that either are not more than thirty (30) days past
due or are being diligently contested in good faith by appropriate
proceedings, so long as such proceedings satisfy the conditions for the
continuation of proceedings to contest Taxes set forth in Section 13.1 of
the Lease;
Appendix A-26
<PAGE>
(e) Liens of any of the types referred to in clause (d) above that
have been bonded for not less than the full amount in dispute (or as to
which other security arrangements satisfactory to the Lessor and the Agent
have been made), which bonding (or arrangements) shall comply with
applicable Legal Requirements, and shall have effectively stayed any
execution or enforcement of such Liens;
(f) Liens arising out of judgments or awards with respect to which
appeals or other proceedings for review are being prosecuted in good faith
and for the payment of which adequate reserves have been provided as
required by GAAP or other appropriate provisions have been made, so long as
such proceedings have the effect of staying the execution of such judgments
or awards and satisfy the conditions for the continuation of proceedings to
contest Taxes set forth in Section 13.1 of the Lease; and
(g) Liens in favor of municipalities to the extent agreed to by the
Lessor.
"Person" shall mean an individual, partnership, limited liability company,
corporation (including a business trust), joint stock company, trust,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency thereof.
"Plans and Specifications" shall mean, with respect to Improvements, the
plans and specifications for such Improvements to be constructed or already
existing, as such Plans and Specifications may be amended, modified or
supplemented from time to time in accordance with the terms of the Operative
Agreements.
"Prime Lending Rate" shall have the meaning given to such term in the
definition of ABR.
"Property" shall mean, with respect to each Permitted Facility that is (or
is to be) acquired, constructed and/or renovated pursuant to the terms of the
Operative Agreements, the Land and each item of Equipment and the various
Improvements, in each case located on such Land, including without limitation
each Construction Period Property, each Property subject to a Ground Lease and
each Property for which the Term has commenced.
"Property Acquisition Cost" shall mean the cost to the Lessor to purchase a
Property on a Property Closing Date.
"Property Closing Date" shall mean the date on which the Lessor purchases a
Property or, with respect to the first Advance, the date on which the Lessor
seeks reimbursement for Property previously purchased by the Lessor.
"Property Cost" shall mean with respect to a Property the aggregate amount
(and/or the various items and occurrences giving rise to such amounts) of the
Loan Property Cost plus the Holder Property Cost for such Property (as such
amounts shall be increased equally among all Properties respecting the Holder
Advances and the Loans extended from time to time to pay for the Transaction
Expenses, fees, expenses and other disbursements referenced in Sections 7.1(a)
Appendix A-27
<PAGE>
and 7.1(b) and indemnity payments pursuant to Section 11.8, in each case of the
Participation Agreement).
"Purchase Option" shall have the meaning given to such term in Section 20.1
of the Lease.
"Purchasing Lender" shall have the meaning given to such term in Section
9.8(a) of the Credit Agreement.
"Register" shall have the meaning given to such term in Section 9.9(a) of
the Credit Agreement.
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.
"Release" shall mean any release, pumping, pouring, emptying, injecting,
escaping, leaching, dumping, seepage, spill, leak, flow, discharge, disposal or
emission of a Hazardous Substance.
"Rent" shall mean, collectively, the Basic Rent and the Supplemental Rent,
in each case payable under the Lease.
"Rent Commencement Date" shall mean, regarding each Property, the
Completion Date.
"Reportable Event" shall have the meaning specified in ERISA.
"Requested Funds" shall mean any funds requested by the Lessee or the
Construction Agent, as applicable, in accordance with Section 5 of the
Participation Agreement.
"Requisition" shall have the meaning specified in Section 4.2 of the
Participation Agreement.
"Responsible Officer" shall mean the Chairman or Vice Chairman of the Board
of Directors, the Chairman or Vice Chairman of the Executive Committee of the
Board of Directors, the President, any Senior Vice President or Executive Vice
President, any Vice President, the Secretary, any Assistant Secretary, the
Treasurer, or any Assistant Treasurer, except that when used with respect to the
Trust Company or the Owner Trustee, "Responsible Officer" shall also include the
Cashier, any Assistant Cashier, any Trust Officer or Assistant Trust Officer,
the Controller and any Assistant Controller or any other officer of the Trust
Company or the Owner Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.
Appendix A-28
<PAGE>
"S&F Trust 1998-1" shall mean the grantor trust created pursuant to the
terms and conditions of the Trust Agreement.
"Sale Date" shall have the meaning given to such term in Section 22.1(a) of
the Lease.
"Sale Notice" shall mean a notice given to the Lessor in connection with
the election by the Lessee of its Sale Option.
"Sale Option" shall have the meaning given to such term in Section 20.1 of
the Lease.
"Sale Proceeds Shortfall" shall mean the amount by which the proceeds of a
sale described in Section 22.1 of the Lease are less than the Limited Recourse
Amount with respect to the Properties if it has been determined that the Fair
Market Sales Value of the Properties at the expiration of the term of the Lease
has been impaired by greater than ordinary wear and tear during the Term of the
Lease.
"Scheduled Interest Payment Date" shall mean (a) as to any Eurodollar Loan
or Eurodollar Holder Advance, the last day of the Interest Period applicable to
such Eurodollar Loan or Eurodollar Holder Advance, (b) as to any ABR Loan or any
ABR Holder Advance, the fifteenth day of each month, unless such day is not a
Business Day and in such case on the next occurring Business Day and (c) as to
all Loans and Holder Advances, the date of any voluntary or involuntary payment,
prepayment, return or redemption, and the Maturity Date or the Expiration Date,
as the case may be.
"Secured Parties" shall have the meaning given to such term in the Security
Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.
"Security Agreement" shall mean the Security Agreement dated on or about
the Initial Closing Date between the Lessor and the Agent, for the benefit of
the Secured Parties, and accepted and agreed to by the Lessee.
"Security Documents" shall mean the collective reference to the Security
Agreement, the Mortgage Instruments, (to the extent the Lease is construed as a
security instrument) the Lease, the UCC Financing Statements, the Guaranty
Agreement and all other security documents hereafter delivered to the Agent
granting a lien on any asset or assets of any Person to secure the obligations
and liabilities of the Lessor under the Credit Agreement and/or under any of the
other Credit Documents or to secure any guarantee of any such obligations and
liabilities.
"Smart & Final Inc." shall mean Smart & Final Inc., a Delaware corporation,
and its successors and permitted assigns.
"Soft Costs" shall mean all costs which are ordinarily and reasonably
incurred in relation to the acquisition, development, installation,
construction, improvement and testing of the
Appendix A-29
<PAGE>
Properties other than Hard Costs, including without limitation structuring fees,
administrative fees, legal fees, upfront fees, fees and expenses related to
appraisals, title examinations, title insurance, document recordation, surveys,
environmental site assessments, geotechnical soil investigations and similar
costs and professional fees customarily associated with a real estate closing,
the Lender Unused Fee, the Holder Unused Fee, fees and expenses of the Owner
Trustee payable or reimbursable under the Operative Agreements and costs and
expenses incurred pursuant to Sections 7.3(a) and 7.3(b) of the Participation
Agreement.
"Stockholders' Equity" shall mean, at any time, the shareholders' equity of
the Lessee and its Consolidated Subsidiaries, as set forth or reflected on the
most recent consolidated balance sheet of the Lessee and its Consolidated
Subsidiaries prepared in accordance with GAAP. Stockholders' Equity includes
without limitation (i) the par or stated value of all outstanding Capital Stock,
(ii) capital surplus, (iii) retained earnings and (iv) various deductions such
as (A) purchases of treasury stock, (B) valuation allowances, (C) receivables
due from an employee stock ownership plan, (D) employee stock ownership plan
debt guarantees (to the extent not duplicative of (C)) and (E) translation
adjustments for foreign currency transactions.
"Subsidiary" shall mean, as to any Person, any corporation partnership,
limited liability company, joint venture, trust or estate of which (or in which)
more than 50% of (a) the issued and outstanding capital stock having ordinary
voting power to elect a majority of the Board of Directors of such corporation
(irrespective of whether at the time capital stock of any other class or classes
of such corporation shall or might have voting power upon the occurrence of any
contingency) (b) the interest in the capital or profits of such partnership,
limited liability company or joint venture or (c) the beneficial interest in
such trust or estate is at the time directly or indirectly owned or controlled
by such Person, by such Person and one or more of its other Subsidiaries or by
one or more of such Person's other Subsidiaries.
"Supplemental Amounts" shall have the meaning given to such term in Section
9.18 of the Credit Agreement.
"Supplemental Rent" shall mean all amounts, liabilities and obligations
(other than Basic Rent) which the Lessee assumes or agrees to pay to the Lessor,
the Trust Company, the Holders, the Agent, the Lenders or any other Person under
the Lease or under any of the other Operative Agreements including without
limitation payments of the Termination Value and the Maximum Residual Guarantee
Amount and all indemnification amounts, liabilities and obligations.
"Taxes" shall have the meaning specified in the definition of
"Impositions".
"Term" shall have the meaning specified in Section 2.2 of the Lease.
"Termination Date" shall have the meaning specified in Section 16.2(a) of
the Lease.
"Termination Event" shall mean (a) with respect to any Pension Plan, the
occurrence of a Reportable Event or an event described in Section 4062(e) of
ERISA, (b) the withdrawal of any Credit Party or any ERISA Affiliate from a
Multiple Employer Plan during a plan year in which
Appendix A-30
<PAGE>
it was a substantial employer (as such term is defined in Section 4001(a)(2) of
ERISA), or the termination of a Multiple Employer Plan, (c) the distribution of
a notice of intent to terminate a Plan or Multiemployer Plan pursuant to Section
4041(a)(2) or 4041A of ERISA, (d) the institution of proceedings to terminate a
Plan or Multiemployer Plan by the PBGC under Section 4042 of ERISA, (e) any
other event or condition which might constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Plan or Multiemployer Plan, or (f) the complete or partial withdrawal of any
Credit Party or any ERISA Affiliate from a Multiemployer Plan.
"Termination Notice" shall have the meaning specified in Section 16.1 of
the Lease.
"Termination Value" shall mean the sum of (a) either (i) with respect to
all Properties, an amount equal to the aggregate outstanding Property Cost for
all the Properties, in each case as of the last occurring Payment Date, or (ii)
with respect to a particular Property, an amount equal to the Property Cost
allocable to such Property, plus (b) respecting the amounts described in each of
the foregoing subclause (i) or (ii), as applicable, any and all accrued but
unpaid interest on the Loans and any and all Holder Yield on the Holder Advances
related to the applicable Property Cost, plus (c) to the extent the same is not
duplicative of the amounts payable under clause (b) above, all other Rent and
other amounts then due and payable or accrued under the Agency Agreement, Lease
and/or under any other Operative Agreement (including without limitation amounts
under Sections 11.1 and 11.2 of the Participation Agreement and all costs and
expenses referred to in clause FIRST of Section 22.2 of the Lease).
-----
"Tranche A Commitments" shall mean the obligation of the Tranche A Lenders
to make the Tranche A Loans to the Lessor in an aggregate principal amount at
any one (1) time outstanding not to exceed the aggregate of the amounts set
forth opposite each Tranche A Lender's name on Schedule 2.1 to the Credit
------------
Agreement, as such amount may be reduced from time to time in accordance with
the provisions of the Operative Agreements; provided, no Tranche A Lender shall
--------
be obligated to make Tranche A Loans in excess of such Tranche A Lender's share
of the Tranche A Commitments as set forth adjacent to such Tranche A Lender's
name on Schedule 2.1 to Credit Agreement.
------------
"Tranche A Lenders" shall mean Credit Lyonnais Los Angeles Branch and shall
include the several banks and other financial institutions from time to time
party to the Credit Agreement that commit to make the Tranche A Loans.
"Tranche A Loans" shall mean the Loans made pursuant to the Tranche A
Commitment.
"Tranche A Note" shall have the meaning given to it in Section 2.2 of the
Credit Agreement.
"Tranche B Commitments" shall mean the obligation of the Tranche B Lenders
to make the Tranche B Loans to the Lessor in an aggregate principal amount at
any one (1) time outstanding not to exceed the aggregate of the amounts set
forth opposite each Tranche B Lender's name on Schedule 2.1 to the Credit
------------
Agreement, as such amount may be reduced from
Appendix A-31
<PAGE>
time to time in accordance with the provisions of the Operative Agreements;
provided, no Tranche B Lender shall be obligated to make Tranche B Loans in
- --------
excess of such Tranche B Lender's share of the Tranche B Commitments as set
forth adjacent to such Tranche B Lender's name on Schedule 2.1 to Credit
------------
Agreement.
"Tranche B Lenders" shall mean Credit Lyonnais Los Angeles Branch and shall
include the several banks and other financial institutions from time to time
party to the Credit Agreement that commit to make the Tranche B Loans.
"Tranche B Loan" shall mean the Loans made pursuant to the Tranche B
Commitment.
"Tranche B Note" shall have the meaning given to it in Section 2.2 of the
Credit Agreement.
"Transaction Expenses" shall mean all Soft Costs and all other costs and
expenses incurred in connection with the preparation, execution and delivery of
the Operative Agreements and the transactions contemplated by the Operative
Agreements including without limitation all costs and expenses described in
Section 7.1 of the Participation Agreement and the following:
(a) the reasonable fees, out-of-pocket expenses and disbursements of
counsel in negotiating the terms of the Operative Agreements and the other
transaction documents, preparing for the closings under, and rendering
opinions in connection with, such transactions and in rendering other
services customary for counsel representing parties to transactions of the
types involved in the transactions contemplated by the Operative
Agreements;
(b) the reasonable fees, out-of-pocket expenses and disbursements of
accountants for any Credit Party in connection with the transaction
contemplated by the Operative Agreements;
(c) any and all other reasonable fees, charges or other amounts
payable to the Lenders, the Agent, the Holders, the Owner Trustee or any
broker which arises under any of the Operative Agreements;
(d) any other reasonable fee, out-of-pocket expenses, disbursement or
cost of any party to the Operative Agreements or any of the other
transaction documents; and
(e) any and all Taxes and fees incurred in recording or filing any
Operative Agreement or any other transaction document, any deed,
declaration, mortgage, security agreement, notice or financing statement
with any public office, registry or governmental agency in connection with
the transactions contemplated by the Operative Agreement.
"Tribunal" shall mean any state, commonwealth, federal, foreign,
territorial, or other court or government body, subdivision agency, department,
commission, board, bureau or instrumentality of a governmental body.
Appendix A-32
<PAGE>
"Trust" shall mean the S&F Trust 1998-1.
"Trust Agreement" shall mean the Trust Agreement dated on or about the
Initial Closing Date between the Holders and the Owner Trustee.
"Trust Company" shall mean First Security Bank, National Association, in
its individual capacity, and any successor owner trustee under the Trust
Agreement in its individual capacity.
"Trust Estate" shall have the meaning specified in Section 2.2 of the Trust
Agreement.
"Type" shall mean, as to any Loan, whether it is an ABR Loan or a
Eurodollar Loan.
"UCC Financing Statements" shall mean collectively the Lender Financing
Statements and the Lessor Financing Statements.
"Unanimous Vote Matters" shall have the meaning given it in Section 12.4 of
the Participation Agreement.
"Unfunded Amount" shall have the meaning specified in Section 3.2 of the
Agency Agreement.
"Unfunded Liability" shall mean, with respect to any Plan, at any time, the
amount (if any) by which (a) the present value of all benefits under such Plan
exceeds (b) the fair market value of all Plan assets allocable to such benefits,
all determined as of the then most recent valuation date for such Plan, but only
to the extent that such excess represents a potential liability of the Company
or any member of the Controlled Group to the PBGC or such Plan under Title IV of
ERISA.
"Uniform Commercial Code" and "UCC" shall mean the Uniform Commercial Code
as in effect in any applicable jurisdiction.
"United States Bankruptcy Code" shall mean Title 11 of the United States
Code.
"Unused Fee" shall mean, collectively, the Holder Unused Fee and the Lender
Unused Fee.
"Unused Fee Payment Date" shall mean the last Business Day of each February,
May, August and November and the last Business Day of the Commitment Period, or
such earlier date as the Commitments shall terminate as provided in the Credit
Agreement or the Holder Commitment shall terminate as provided in the Trust
Agreement.
"U.S. Person" shall have the meaning specified in Section 11.2(e) of the
Participation Agreement.
Appendix A-33
<PAGE>
"U.S. Taxes" shall have the meaning specified in Section 11.2(e) of the
Participation Agreement.
"Voting Stock" shall mean capital stock issued by a corporation, or
equivalent interests in any other Person, the holders of which are ordinarily,
in the absence of contingencies, entitled to vote for the election of directors
(or persons performing similar functions) of such Person, even though the right
so to vote has been suspended by the happening of such a contingency.
"Wholly-Owned Entity" shall mean a Person all of the shares of capital
stock or other ownership interest of which are owned by Smart & Final Inc.
and/or one of its wholly-owned Subsidiaries or other wholly-owned entities.
"Withdrawal Liability" shall have the meaning specified in Part I of
Subtitle E of Title IV of ERISA.
"Withholdings" shall have the meaning specified in Section 11.2(e) of the
Participation Agreement.
"Work" shall mean the furnishing of labor, materials, components,
furniture, furnishings, fixtures, appliances, machinery, equipment, tools,
power, water, fuel, lubricants, supplies, goods and/or services with respect to
any Property.
"Year 2000 Compliant" shall have the meaning specified in Section 6.2(w) of
the Participation Agreement.
"Year 2000 Problem" shall mean any significant risk that computer hardware,
software or equipment containing embedded microchips essential to the business
or operations of any Credit Party or any Subsidiary of any Credit Party will
not, in the case of dates or time periods occurring after December 31, 1999,
function at least as effectively and reliably as in the case of times or time
periods occurring before January 1, 2000, including the making of accurate leap
year calculations. No Credit Party has knowledge of the existence of a Year
2000 Problem with respect to any of its vendors or suppliers that could have a
Material Adverse Effect.
Appendix A-34
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 10-MOS
<FISCAL-YEAR-END> JAN-03-1999
<PERIOD-START> JAN-05-1998
<PERIOD-END> OCT-11-1998
<CASH> 23,916
<SECURITIES> 0
<RECEIVABLES> 82,660
<ALLOWANCES> 2,781
<INVENTORY> 146,405
<CURRENT-ASSETS> 274,742
<PP&E> 298,490
<DEPRECIATION> 102,941
<TOTAL-ASSETS> 551,794
<CURRENT-LIABILITIES> 233,611
<BONDS> 92,079
0
0
<COMMON> 225
<OTHER-SE> 203,712
<TOTAL-LIABILITY-AND-EQUITY> 551,794
<SALES> 1,261,289
<TOTAL-REVENUES> 1,261,289
<CGS> 1,100,801
<TOTAL-COSTS> 1,100,801
<OTHER-EXPENSES> 142,945
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,610
<INCOME-PRETAX> 9,383
<INCOME-TAX> 3,546
<INCOME-CONTINUING> 6,027
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 1,090
<NET-INCOME> 4,937
<EPS-PRIMARY> $0.22
<EPS-DILUTED> $0.22
</TABLE>
