<PAGE> 1 FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 3, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 1-9223
SERVICE MERCHANDISE COMPANY, INC.
(Exact name of registrant as specified in its charter)
TENNESSEE 62-0816060
(State or other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P. O. Box 24600, Nashville, TN
37202-4600
(Mailing Address)
7100 Service Merchandise Drive, Brentwood, TN
(Address of principal executive offices)
37027
(Zip code)
(615) 660-6000
(Registrant's telephone number including Area Code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock as of the latest practicable date.
As of July 31, 1994, there were 99,362,325 shares of
Service Merchandise Company, Inc. common stock outstanding.
This document contains 140 pages.
<PAGE> 2
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
Page No.
PART I - FINANCIAL INFORMATION
Consolidated Statements of Operations (Unaudited)
- Three and Six Periods Ended July 3, 1994 and
June 30, 1993 . . . . . . . . . . . . . . . . . . 3
Consolidated Balance Sheets - July 3, 1994
(Unaudited), June 30, 1993 (Unaudited) and
January 1, 1994 . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows (Unaudited)
- Six Periods Ended July 3, 1994 and June 30,
1993 . . . . . . . . . . . . . . . . . . . . . . 5
Notes to Consolidated Financial Statements
(Unaudited) . . . . . . . . . . . . . . . . . . . 6-7
Management's Discussion and Analysis of Financial
Condition and Results of Operations (Unaudited). 8-12
PART II - OTHER INFORMATION
Other Information . . . . . . . . . . . . . . . . 13
Exhibits . . . . . . . . . . . . . . . . . . . . 14
SIGNATURES . . . . . . . . . . . . . . . . . . . . . 15
-2-
<PAGE> 3
<TABLE>
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
Consolidated Statements of Operations (Unaudited)
(In thousands, except per share data)
<CAPTION>
Three Periods Ended Six Periods Ended
------------------- -------------------
July 3, June 30, July 3, June 30,
------------------- -------------------
1994 1993 1994 1993
-------- --------- -------- ---------
<S> <C> <C> <C> <C>
Net sales $845,934 $803,112 $1,570,143 $1,475,975
Costs and expenses:
Cost of merchandise sold and
buying and occupancy
expenses 645,702 601,689 1,203,313 1,120,080
-------- -------- ---------- ----------
Gross margin after cost of
merchandise sold and buying
and occupancy expenses 200,232 201,423 366,830 355,895
Selling, general and
administrative expenses 168,538 154,146 323,751 293,320
Depreciation and
amortization 15,900 15,245 31,762 30,471
-------- -------- ---------- ---------
Earnings before interest and
taxes 15,794 32,032 11,317 32,104
Interest expense-debt 15,336 15,415 29,583 30,419
Interest expense-capitalized
leases 2,582 2,814 5,226 5,681
-------- -------- ---------- ---------
Earnings (loss) before income
taxes (benefit) (2,124) 13,803 (23,492) (3,996)
Income taxes (benefit) (850) 5,383 (9,397) (1,559)
-------- -------- ---------- ---------
Earnings (loss) before
extraordinary loss and
cumulative effect of change
in accounting principle (1,274) 8,420 (14,095) (2,437)
Extraordinary loss from early
extinguishment of debt, net
of tax benefit of $2,708,
$0, $3,551 and $4,858,
respectively (4,061) - (5,326) (7,598)
Cumulative effect of change in
accounting principle - - - 7,742
-------- -------- ---------- ---------
Net earnings (loss) ($5,335) $8,420 ($19,421) ($2,293)
======== ======== ========== =========
Weighted average common shares
and common share equivalents
outstanding 101,377 102,053 101,534 102,107
======== ======== ========== =========
Per common share:
Earnings (loss) before
extraordinary loss and
cumulative effect of change
in accounting principle ($0.01) $0.08 ($0.14) ($0.03)
Extraordinary loss from early
extinguishment of debt, net
of tax benefit (0.04) - (0.05) (0.07)
Cumulative effect of change in
accounting principle - - - 0.08
-------- -------- ---------- ---------
Net loss per common share ($0.05) $0.08 ($0.19) ($0.02)
======== ======== ========== =========
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
-3-
<PAGE> 4
<TABLE>
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except per share data)
<CAPTION>
(Unaudited)
-------------------
July 3, June 30, January 1,
1994 1993 1994 (1)
-------- -------- ----------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $19,497 $16,259 $325,092
Accounts receivable, net of
allowance of $3,002, $3,405 and
$2,894, respectively 41,350 45,185 53,014
Refundable income taxes 2,083 - -
Inventories 1,081,806 1,005,472 939,259
Prepaid expenses 29,657 27,660 29,898
---------- ---------- ----------
TOTAL CURRENT ASSETS 1,174,393 1,094,576 1,347,263
Property and equipment:
Owned assets, net of accumulated
depreciation of $432,138, $389,342
and $408,696, respectively 568,891 520,716 575,712
Capitalized leases, net of
accumulated amortization of
$72,109, $75,493 and $68,245,
respectively 55,855 64,230 60,128
Deferred income taxes - 823 -
Other assets and deferred charges 20,991 29,130 28,472
---------- ---------- ----------
TOTAL ASSETS $1,820,130 $1,709,475 $2,011,575
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes payable to banks $281,600 $207,700 -
Accounts payable 462,519 403,231 $630,723
Accrued expenses 138,399 135,804 188,050
State and local sales tax 32,334 26,566 59,035
Income taxes - 2,333 54,914
Current maturities of long-term
debt 13,097 40,966 91,751
Current maturities of capitalized
leases 7,863 9,088 8,075
---------- ---------- ----------
TOTAL CURRENT LIABILITIES 935,812 825,688 1,032,548
Long-term debt 545,307 604,524 616,752
Capitalized lease obligations 77,593 85,710 81,769
Deferred income taxes 968 - 968
---------- ---------- ----------
TOTAL LIABILITIES 1,559,680 1,515,922 1,732,037
---------- ---------- ----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, $1 par value,
cumulative, authorized 4,600
shares, undesignated as to rate
and other rights, none issued
Series A Junior Preferred Stock, $1
par value, authorized 400 shares,
none issued
Common stock, $.50 par value,
authorized 500,000 shares, issued
and outstanding 99,352, 99,250 and
99,368 shares, respectively 49,676 49,625 49,684
Additional paid-in capital 3,781 3,654 4,055
Deferred compensation (572) (1,836) (1,187)
Retained earnings 207,565 142,110 226,986
---------- ---------- ----------
TOTAL SHAREHOLDERS' EQUITY 260,450 193,553 279,538
---------- ---------- ----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $1,820,130 $1,709,475 $2,011,575
========== ========== ==========
<FN>
(1) Derived from fiscal year ended January 1, 1994 audited financial
statements.
See Notes to Consolidated Financial Statements.
</TABLE>
-4-
<PAGE> 5
<TABLE>
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
<CAPTION>
Six Periods Ended
--------------------
July 3, June 30,
--------------------
1994 1993
--------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($19,421) ($2,293)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization 35,074 34,554
Deferred taxes on income - (10,042)
(Gain) loss on disposal of property and
equipment 1,772 (610)
Write-off debt issuance cost 6,830 5,094
Changes in assets and liabilities:
Accounts receivable, net 11,664 8,126
Inventories (142,547) (147,832)
Prepaid expenses 241 (7,206)
Accounts payable (168,204) (93,715)
Accrued expenses and state and local sales
tax (76,352) (44,289)
Income taxes (56,997) (50,227)
-------- --------
NET CASH USED BY OPERATING ACTIVITIES (407,940) (308,440)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment - owned (22,965) (32,145)
Proceeds from the disposal of property and
equipment 135 1,264
Other, net (654) (1,294)
-------- --------
NET CASH USED BY INVESTING ACTIVITIES (23,484) (32,175)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt issuance costs (1,763) (7,987)
Proceeds from short-term borrowings 281,600 207,700
Proceeds from long-term debt - 300,000
Repayment of long-term debt (150,125) (304,601)
Repayment of capitalized lease obligations (4,163) (4,820)
Exercise of stock options 280 1,265
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 125,829 191,557
-------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS (305,595) (149,058)
CASH AND CASH EQUIVALENTS-BEGINNING OF PERIOD 325,092 165,317
-------- --------
CASH AND CASH EQUIVALENTS-END OF PERIOD $19,497 $16,259
======== ========
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
-5-
<PAGE> 6
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
A. The consolidated financial statements, except for the
consolidated balance sheet as of January 1, 1994, have been
prepared by the Company without audit.
In management's opinion, the information and amounts furnished in
this report reflect all adjustments (consisting of normal
recurring adjustments) considered necessary for the fair
presentation of the financial position and results of operations
for the interim periods presented. Certain prior period amounts
have been reclassified to conform to the current year's
presentation. These financial statements should be read in
conjunction with the Company's Annual Report on Form 10-K for the
fiscal year ended January 1, 1994.
The Company has historically incurred a net loss for the first
half of the year due to the seasonality of its business. The
results of operations for the second quarter ended July 3, 1994
and June 30, 1993 are not necessarily indicative of the operating
results for the entire fiscal year.
B. Effective January 2, 1994, the Company began reporting
quarterly interim results as 13-week periods versus three
calendar months. Accordingly, the second quarter of fiscal 1994
ended July 3, 1994 and contained 91 selling days versus the second
quarter of fiscal 1993 which ended June 30, 1993 and contained 90
selling days. The six periods ended July 3, 1994 contained 182
selling days and the six months ended June 30, 1993 contained 178
days. The change had no significant impact on the comparability
of the results of operations for the second quarter of fiscal
1994 and the second quarter of fiscal 1993 and the comparability
of the year-to-date fiscal 1994 and year-to-date fiscal 1993
results of operations.
C. The net earnings (loss) per common share is computed by dividing
the net earnings (loss) by the weighted average number of common
shares and common share equivalents outstanding.
D. Cash payments for interest for the six periods ended July 3, 1994
and June 30, 1993 were $33.0 million and $35.6 million,
respectively. Cash payments for income taxes for the six periods
ended July 3, 1994 and June 30, 1993 were $44.0 million and $46.1
million, respectively. The Company considers all highly liquid
investments purchased as part of its daily cash management
activities to be cash equivalents. Such investments are
generally made for periods covering 1 to 30 days.
E. In June 1994, the Company completed a new $600 million Reducing
Revolving Credit Facility which replaced its existing $475
million Revolving Credit Facility and $122 million Term Loan.
The new $600 million Reducing Revolving Credit Facility,
negotiated during the second quarter, extends the maturity of the
Company's working capital facility from December 31, 1995 to
June 8, 1999, reducing the effective interest rate on those
borrowings from LIBOR +1.5% to LIBOR + 1.0% (both rates include a
3/8% facility fee on all commitments), releasing the majority of
property and assets of the Company from security interests held
in connection with the prior facility and providing for generally
less restrictive covenants. The maximum commitment level for the
new facility reduces $25 million annually until reaching $475
million in 1999.
-6-
<PAGE> 7
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)(continued)
F. During the first half of fiscal 1994, the Company incurred an
extraordinary loss of $5.3 million, or $0.05 per share. This
extraordinary loss included a $1.3 million charge in the first
quarter resulting from the early extinguishment of $17 million of
high-coupon mortgages with interest rates ranging between 10% and
12.5% and a non-cash extraordinary loss of $4.0 million, or $0.04
per share, related to a write-off of deferred finance charges, in
the second quarter, associated with the refinancing of the
Company's $475 million Revolving Credit Facility and $122 million
Term Loan (See Note E).
G. The Company adopted SFAS 109 "Accounting for Income Taxes,"
effective the first day of fiscal 1993. The adoption of SFAS 109
changed the Company's method of accounting for income taxes from
the deferred method (APB 11) to an asset and liability approach.
The asset and liability approach requires recognition of deferred
tax assets and liabilities for expected future tax consequences
of temporary differences between the carrying amounts and the tax
bases of assets and liabilities.
The adjustment to the January 3, 1993 consolidated balance sheet
to adopt SFAS 109 was a benefit of $7.7 million. This benefit
was reflected in net loss for the first quarter of 1993 as the
cumulative effect of change in accounting principle. The
adjustment primarily represents the impact of adjusting deferred
taxes to reflect the 34% federal income tax rate at the time of
the change as opposed to the higher income tax rates in effect
when the temporary differences originated. There was no material
impact to the deferred tax liability resulting from the statutory
federal income tax rate increase enacted by the Omnibus Budget
Reconciliation Act of 1993.
-7-
<PAGE> 8
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (UNAUDITED)
For comparative purposes, interim balance sheets are more meaningful
when compared to the balance sheets at the same point in time of the
prior year. Comparisons to balance sheets of the most recent fiscal
year end may not be meaningful due to the seasonal nature of the
Company's business.
RESULTS OF OPERATIONS
The nature of the Company's business is highly seasonal.
Historically, sales in the fourth quarter have been substantially
higher than sales achieved in each of the first three quarters of the
fiscal year. Thus expenses and, to a greater extent, operating
income vary greatly by quarter. Caution, therefore, is advised when
appraising results for a period shorter than a full year, or when
comparing any period other than to the same period of the previous
year.
SECOND QUARTER ENDED JULY 3, 1994 VS. SECOND QUARTER ENDED
JUNE 30, 1993
NET SALES
Net sales for the second quarter of 1994 were $845.9 million compared
to $803.1 million last year, representing an increase of $42.8
million, or 5.3%. The second quarter of fiscal 1994 contained 91
selling days as compared with 90 selling days in the year-earlier
period. Adjusting for the difference in selling days, comparable
store sales decreased 0.7% for the second quarter. The decline
principally reflected an overall intense competitive environment,
particularly in consumer electronics. At the close of the second
quarter, Service Merchandise was operating a total of 391 stores, up
a net 19 from a year ago.
GROSS MARGIN
Gross margin for the second quarter of fiscal 1994, including buying
and occupancy expense, was $200.2 million, or 23.7% of net sales,
compared with $201.4 million, or 25.1% of net sales, a year ago. The
decline in gross margin was primarily due to more competitive
pricing, particularly in hardlines, as well as a shift in jewelry
sales to lower margin categories and, to a lesser extent, an increase
in the accrual for shrinkage.
-8-
<PAGE> 9
Management's Discussion and Analysis of Financial Condition
and Results of Operations (Unaudited) (continued)
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses were $168.5 million, or
19.9% of net sales, for the second quarter versus $154.1 million, or
19.2% of net sales, in the year-earlier quarter. The higher expenses
related to the operating of the net 19 new catalog stores and the
planned increase in store payroll to improve customer service by
providing additional personnel to enhance customers' shopping
experience. The Company expects the strategy of adding personnel to
stores will increase sales in the long run, but may limit near term
earnings due to higher payroll costs.
Selling, general and administrative expenses for the second quarter
of the current fiscal year also include a $1.6 million non-cash write-
off of fixtures related to discontinuing the sale of car stereos and
terminating two real estate leases relating to closed stores.
INTEREST EXPENSE
Interest expense for the second quarter of 1994 was $17.9 million as
compared to the second quarter of 1993 of $18.2 million. Interest
expense decreased $0.3 million, or 1.7%, as a result of a scheduled
reduction of the Term Loan principal and lower interest rates, in
general.
TAXES ON INCOME
The Company recognized an income tax benefit of $0.9 million and an
income tax expense of $5.4 million for the second quarter ended July
3, 1994 and June 30, 1993, respectively. The Company historically
incurs a net loss in the first half of the year, but has net income
on an annual basis. The effective tax rate for the quarters ended
July 3, 1994 and June 30, 1993 was 40% and 39%, respectively. For
the fiscal year ended January 1, 1994 the effective income tax rate
was 40%.
SIX PERIODS ENDED JULY 3, 1994 VS. SIX MONTHS ENDED JUNE 30, 1993
NET SALES
Net sales for the first half ended July 3, 1994 were $1,570.1
million, an increase of $94.1 million, or 6.4% compared with $1,476.0
million in the first half of fiscal 1993. There were four more
selling days in the first half of the current fiscal year (182 days
versus 178 days) than the comparable 1993 reporting period.
Adjusting for the different number of days, comparable store sales
decreased 0.8% for the first half from a year ago. The Company expects
to implement various long-term sales strategies which may not increase near
term earnings. These strategies are designed to improve sales in the long run.
If the sales trends of the first half of fiscal 1994 continue through
year-end, the Company anticipates it will experience lower earnings than
fiscal 1993 reported earnings.
-9-
<PAGE> 10
Management's Discussion and Analysis of Financial Condition
and Results of Operations (Unaudited) (continued)
GROSS MARGIN
Gross margin for the six periods ended July 3, 1994, after taking
into account buying and occupancy expenses, was $366.8 million, or
23.4% of net sales, as compared to $355.9 million, or 24.1% of net
sales, for the same period a year ago. The decrease in gross margin
as a percentage of net sales reflects a shift in jewelry sales to
lower margin categories and, to a lesser extent, an increase in the
accrual for shrinkage.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses increased to $323.8
million, or 20.6% of net sales, for the six periods ended July 3,
1994 as compared to $293.3 million, or 19.9% of net sales, for the
same sales period a year ago. The increase, as a percentage of
sales, is attributable to the lower comparable store sales for the
period and to the planned increase in store payroll occurring in the
second quarter of fiscal 1994.
INTEREST EXPENSE
For the six periods ended July 3, 1994, interest expense on debt and
capitalized leases was $34.8 million as compared to the same period
last year of $36.1 million. This $1.3 million, or 3.6%, decrease was
primarily attributable to the refinancing of the $300 million Senior
Subordinated Debt from 11 3/4% to 9% which occurred in the first
quarter of fiscal 1993.
TAXES ON INCOME
The Company recognized an income tax benefit of $9.4 million for the
six periods ended July 3, 1994 compared to an income tax benefit of
$1.6 million for the same period a year ago. The estimated annual
effective tax rate for the six periods ended July 3, 1994 and June
30, 1993 was 40% and 39%, respectively. For fiscal year ended
January 1, 1994 the effective income tax rate was 40%.
The Company adopted SFAS 109 "Accounting for Income Taxes," effective
the first day of fiscal 1993. The adoption of SFAS 109 changed the
Company's method of accounting for income taxes from the deferred
method (APB 11) to an asset and liability approach. The asset and
liability approach requires recognition of deferred tax assets and
liabilities for expected future tax consequences of temporary
differences between the carrying amounts and the tax bases of assets
and liabilities.
The adjustment to the January 3, 1993 consolidated balance sheet to
adopt SFAS 109 was a benefit of $7.7 million. This benefit was
reflected in net loss for the first quarter of 1993 as the
cumulative effect of change in accounting principle. The adjustment
primarily represents the impact of adjusting deferred taxes to
reflect the 34% federal income tax rate at the time of the change as
opposed to the higher income tax rates in effect when the temporary
differences originated. There was no material impact to the deferred
tax liability resulting from the statutory federal income tax rate
increase enacted by the Omnibus Budget Reconciliation Act of 1993.
-10-
<PAGE> 11
Management's Discussion and Analysis of Financial Condition
and Results of Operations (Unaudited) (continued)
EXTRAORDINARY ITEMS
During the first half of fiscal 1994, the Company incurred an
extraordinary loss of $5.3 million, or $0.05 per share. This
included a $1.3 million extraordinary loss resulting from the early
extinguishment in the first quarter of $17 million high-coupon
mortgages with interest ranging between 10% and 12.5%. Also included
was a non-cash extraordinary loss of $4.0 million, or $0.04 per
share, related to a write-off of deferred finance charges, in the
second quarter, associated with the refinancing of the Company's $475
million Revolving Credit Facility and $122 million Term Loan.
On February 17, 1993, the Company issued $300 million of 9% Senior
Subordinated Debentures due in equal installments in 2003 and 2004.
Net proceeds of $294 million, together with cash on hand, were used
to redeem the existing $300 million of 11 3/4% Senior Subordinated
Notes due 1996 at a premium of 101.68% plus accrued interest. The
Company recorded an extraordinary loss of $7.5 million, net of tax
benefit of $5.0 million, in connection with the early extinguishment
of this debt.
LIQUIDITY AND CAPITAL RESOURCES
Working capital totaled $238.6 million at the end of the second
quarter of 1994, a decrease of 11.3% from working capital at June 30,
1993 of $268.9 million. The current ratio at both
July 3, 1994 and June 30, 1993 was 1.3.
Working capital requirements fluctuate significantly during the year
due to the seasonal nature of the retail catalog store business.
These requirements are financed through a combination of internally
generated cash flow from operating activities and short-term seasonal
borrowings. At July 3, 1994, short-term borrowings totaled $281.6
million ($318.4 million available for borrowing) compared to $207.7
million ($267.3 million available for borrowing) at June 30, 1993, an
increase of $73.9 million. Approximately $122 million of the
Company's short-term borrowings at July 3, 1994 resulted from the
prepayment of the Company's $122 million Term Loan with short-term
borrowings under the Company's new Credit Facility.
In June 1994, the Company completed a new $600 million Reducing
Revolving Credit Facility which replaced its existing $475 million
Revolving Credit Facility and $122 million Term Loan. The new $600
million Reducing Revolving Credit Facility, negotiated during the
second quarter, extends the maturity of the Company's working capital
facility from December 31, 1995 to June 8, 1999, reducing the
effective interest rate on those borrowings from LIBOR +1.5% to LIBOR
+ 1.0% (both rates include a 3/8% facility fee on all commitments),
releasing the majority of property and assets of the Company from
security interests held in connection with the prior facility and
providing for generally less restrictive covenants. The maximum
commitment level for the new facility reduces $25 million annually until
reaching $475 million in 1999.
-11-
<PAGE> 12
Management's Discussion and Analysis of Financial Condition
and Results of Operations (Unaudited) (continued)
Total long-term debt, including current maturities and capitalized
leases, decreased to $643.9 million at July 3, 1994 from $740.3
million at June 30, 1993. The decrease in total long-term debt was
the result of the prepayment of the $122 million Term Loan, the early
extinguishment of $27.1 million in mortgages, and scheduled payments
of approximately $50 million on capitalized leases, mortgages, IRB's
and the Term Loan. This decrease was partially offset by the
issuance of $100 million senior notes in October 1993. At July 3,
1994, the Company was in compliance with various financial and other
covenants included in the new Credit Facility and other financial
instruments.
Additions to owned property and equipment were $23.0 million for the
six periods ended July 3, 1994 compared to $32.1 million for the same
period last year. The Company opened 4 new catalog stores and closed
4 catalog stores during the six periods ended July 3, 1994 and has
plans to open approximately a net of 18 catalog stores by the end of
the year. In fiscal 1993, the Company opened a net of 20 new catalog
stores. The Company expects to incur capital expenditures of
approximately $100 million during fiscal 1994 and to fund these
expenditures through a combination of cash flow from operations and
borrowings under the new Credit Facility.
-12-
<PAGE> 13
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in the Rights of the Company's Security Holders
The Company's new $600 million Reducing Revolving Credit
Facility permits the payment of dividends and the making
of certain other "restricted payments" (as defined) under
certain circumstances in an aggregate amount not to
exceed the sum of (i) 25% of the Company's cumulative
consolidated net income (as defined) since June 8, 1994
plus (ii) $25 million. The Credit Facility also contains
various financial covenants that could result in
restrictions on working capital.
Item 3. Defaults by the Company on Its Senior Securities
Not applicable.
Item 4. Results of Votes of Security Holders
At the Company's Annual meeting of Shareholders which was
held on April 20, 1994, the following two proposals were
approved:
1) The election of two Class II directors to serve a
term of three years and until their successors are
duly elected and qualified. The persons nominated
for election to the Board of Directors received the
number of votes shown opposite their respective names:
For Against Withheld Non-Vote
---------- ------- --------- --------
R. Maynard Holt 89,242,096 305,258 2,015,657 -
James E. Poole 89,162,960 345,739 2,054,312 -
2) Selection of Deloitte & Touche as the Company's
independent public accountants for fiscal year 1994.
The proposal received the following votes:
For Against Withheld Non-Vote
---------- ------- --------- --------
89,106,551 219,612 2,124,288 112,560
Item 5. Other Information
Not applicable.
-13-
<PAGE> 14
PART II - OTHER INFORMATION (continued)
Item 6. Exhibits and Reports on Form 8-K
6(a) Exhibits filed with this Form 10-Q
Exhibit No. Under Items
601 of Regulation S-K Brief Description
--------------------- -----------------
4.1 Credit Agreement dated
as of June 8, 1994 among
Service Merchandise Co., Inc.,
various Banks and Chemical
Bank as Administrative Agent.
11 Statement re
Computation of Earnings (Loss)
Per Common Share for
the Three Periods Ended
and Six Periods Ended
July 3, 1994 and June 30,
1993.
6(b) Reports on Form 8-K
There were no reports on Form 8-K during the three periods
ended July 3, 1994.
-14-
<PAGE> 15
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.
SERVICE MERCHANDISE
COMPANY, INC.
Date: August 12, 1994 /s/ Raymond Zimmerman
----------------------------
Raymond Zimmerman
President and Chairman of the
Board (Chief Executive
Officer)
Date: August 12, 1994 /s/ S. Cusano
----------------------------
S. Cusano
Vice President and Chief
Financial Officer (Chief
Financial Officer)
(Chief Accounting Officer)
-15-
<PAGE> 16
<TABLE>
EXHIBIT 11
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
Computation of Earnings (Loss) Per Common Share (Unaudited)
(In thousands, except per share data)
<CAPTION>
Three Periods Ended Six Periods Ended
------------------- --------------------
July 3, June 30, July 3, June 30,
------------------- --------------------
1994 1993 1994 1993
-------- --------- --------- ---------
<S> <C> <C> <C> <C>
Primary
- -------
Earnings (loss) before
extraordinary loss and
cumulative effect of change in
accounting principle ($1,274) $8,420 ($14,095) ($2,437)
Extraordinary loss from early
extinguishment of debt, net of
tax benefit of $2,708, $ 0,
$3,551 and $4,858, respectively (4,061) - (5,326) (7,598)
Cumulative effect of change in
accounting principle - - - 7,742
------- ------- -------- -------
Net earnings (loss) ($5,335) $8,420 ($19,421) ($2,293)
======= ======= ======== =======
Shares:
Weighted average common shares
outstanding 98,540 98,268 98,511 98,192
Weighted average shares of
restricted stock outstanding 829 960 858 974
Additional shares assuming
exercise of stock options 2,008 2,825 2,165 2,941
------- ------- -------- -------
Weighted average common shares
and common share equivalents
outstanding - primary 101,377 102,053 101,534 102,107
======= ======= ======== =======
Earnings (loss) before
extraordinary loss and
cumulative effect of change in
accounting principle ($0.01) $0.08 ($0.14) ($0.03)
Extraordinary loss from early
extinguishment of debt, net of
tax benefit (0.04) - (0.05) (0.07)
Cumulative effect of change in
accounting principle - - - 0.08
------- ------- -------- -------
Net earnings (loss) ($0.05) $0.08 ($0.19) ($0.02)
======= ======= ======== =======
Assuming Full Dilution
- ----------------------
Earnings (loss) before
extraordinary loss and
cumulative effect of change in
accounting principle ($1,274) $8,420 ($14,095) ($2,437)
Extraordinary loss from early
extinguishment of debt, net of
tax benefit of $2,708, $ 0,
$3,551 and $4,858, respectively (4,061) - (5,326) (7,598)
Cumulative effect of change in
accounting principle - - - 7,742
------- ------- -------- -------
Net earnings (loss) ($5,335) $8,420 ($19,421) ($2,293)
======= ======= ======== =======
Shares:
Weighted average common shares
outstanding 98,540 98,268 98,511 98,192
Weighted average shares of
restricted stock outstanding 829 960 858 974
Additional shares assuming
exercise of stock options 2,015 2,842 2,169 2,964
------- ------- -------- -------
Weighted average common shares
and common share equivalents
outstanding - fully diluted 101,384 102,070 101,538 102,130
======= ======= ======== =======
Earnings (loss) before
extraordinary loss and
cumulative effect of change in
accounting principle ($0.01) $0.08 ($0.14) ($0.03)
Extraordinary loss from early
extinguishment of debt, net of
tax benefit (0.04) - (0.05) (0.07)
Cumulative effect of change in
accounting principle - - - 0.08
------- ------- -------- -------
Net earnings (loss) ($0.05) $0.08 ($0.19) ($0.02)
======= ======= ======== =======
</TABLE>
<PAGE> 17
EXHIBIT 4.1
CREDIT AGREEMENT
among
SERVICE MERCHANDISE COMPANY, INC.,
VARIOUS BANKS
and
CHEMICAL BANK
as ADMINISTRATIVE AGENT
__________________________________
Dated as of June 8, 1994
__________________________________
<PAGE> 18
TABLE OF CONTENTS
Page
------
Section 1. Amount and Terms of Credit . . . . . . . . . . . 1
1.01 The Commitments . . . . . . . . . . . . . . . . 1
1.02 Minimum Amount of Each Borrowing . . . . . . . . 4
1.03 Notice of Borrowing . . . . . . . . . . . . . . 4
1.04 Competitive Bid Procedures . . . . . . . . . . . 6
1.05 Disbursement of Funds . . . . . . . . . . . . . 8
1.06 Notes . . . . . . . . . . . . . . . . . . . . . 9
1.07 Conversions . . . . . . . . . . . . . . . . . . 11
1.08 Pro Rata Borrowings . . . . . . . . . . . . . . 11
1.09 Interest . . . . . . . . . . . . . . . . . . . . 12
1.10 Interest Periods . . . . . . . . . . . . . . . . 13
1.11 Increased Costs, Illegality, etc. . . . . . . . 14
1.12 Compensation . . . . . . . . . . . . . . . . . . 17
1.13 Change of Lending Office . . . . . . . . . . . . 17
1.14 Replacement of Banks . . . . . . . . . . . . . . 18
Section 2. Letters of Credit . . . . . . . . . . . . . . . 19
2.01 Letters of Credit . . . . . . . . . . . . . . . 19
2.02 Minimum Stated Amount . . . . . . . . . . . . . 20
2.03 Letter of Credit Requests . . . . . . . . . . . 20
2.04 Letter of Credit Participations . . . . . . . . 21
2.05 Agreement to Repay Letter of Credit Drawings . 25
2.06 Increased Costs . . . . . . . . . . . . . . . . 26
Section 3. Fees; Commitment; Reductions of Commitments . . 26
3.02 Voluntary Reduction of Commitments . . . . . . . 28
3.03 Mandatory Reduction of Commitments . . . . . . 28
Section 4. Prepayments; Payments . . . . . . . . . . . . . 30
4.01 Voluntary Prepayments . . . . . . . . . . . . . 30
4.02 Mandatory Repayments . . . . . . . . . . . . . . 31
(A) Requirements . . . . . . . . . . . . . . . 31
(B) Application . . . . . . . . . . . . . . . . 32
4.03 Method and Place of Payment . . . . . . . . . . 32
4.04 Net Payments . . . . . . . . . . . . . . . . . . 33
Section 5. Conditions Precedent to Credit Events on the
Effective Date . . . . . . . . . . . . . . . 35
5.01 Execution of Agreement; Notes . . . . . . . . . 35
5.02 Fees, etc. . . . . . . . . . . . . . . . . . . . 36
5.03 Opinions of Counsel . . . . . . . . . . . . . . 36
(i)
<PAGE> 19
Page
----
5.04 Corporate Documents; Proceedings; etc. . . . . . 36
5.05 Guaranty . . . . . . . . . . . . . . . . . . . . 37
5.06 Adverse Change, etc. . . . . . . . . . . . . . . 37
5.07 Litigation . . . . . . . . . . . . . . . . . . . 37
5.08 Solvency Certificate . . . . . . . . . . . . . . 38
5.09 Termination of the Existing Credit Agreement . . 38
5.10 UCC Searches . . . . . . . . . . . . . . . . . . 39
Section 6. Conditions Precedent to All Credit Events . . . . 39
6.01 No Default; Representations and Warranties . . . 40
6.02 Notice of Borrowing; Letter of Credit Request . 40
Section 7. Representations, Warranties and Agreements . . . 40
7.01 Corporate or Partnership Status . . . . . . . . . 41
7.02 Corporate or Partnership Power and Authority . . 41
7.03 No Violation . . . . . . . . . . . . . . . . . . 42
7.04 Governmental Approvals . . . . . . . . . . . . . 42
7.05 Financial Statements; Financial Condition;
Undisclosed Liabilities; etc. . . . . . . . . 42
7.06 Litigation . . . . . . . . . . . . . . . . . . . 44
7.07 True and Complete Disclosure . . . . . . . . . . 44
7.08 Use of Proceeds; Margin Regulations . . . . . . . 44
7.09 Tax Returns and Payments . . . . . . . . . . . . 44
7.10 Compliance with ERISA . . . . . . . . . . . . . . 45
7.11 Subsidiaries . . . . . . . . . . . . . . . . . . 46
7.12 Compliance with Statutes, etc. . . . . . . . . . 46
7.13 Investment Company Act . . . . . . . . . . . . . 46
7.14 Public Utility Holding Company Act . . . . . . . 46
7.15 Patents, Licenses, Franchises and Formulas . . . 46
7.16 Restrictions on Subsidiaries . . . . . . . . . . 46
7.17 Properties . . . . . . . . . . . . . . . . . . . 47
7.18 Existing Subordinated Debt . . . . . . . . . . . 47
7.19 Environmental Matters . . . . .. . . . . . . . . 47
Section 8. Affirmative Covenants . . . . . . . . . . . . . . 49
8.01 Information Covenants . . . . . . . . . . . . . . 49
8.02 Books, Records and Inspections . . . . . . . . . 52
8.03 Maintenance of Property, Insurance . . . . . . . 52
8.04 Corporate Franchises . . . . . . . . . . . . . . 52
8.05 Compliance with Statutes, etc. . . . . . . . . . 53
8.06 ERISA . . . . . . . . . . . . . . . . . . . . . . 53
8.07 Compliance with Environmental Laws . . . . . . . 54
8.08 Performance of Obligations . . . . . . . . . . . 55
(ii)
<PAGE> 20
Page
----
Section 9. Negative Covenants . . . . . . . . . . . . . . . 55
9.01 Liens . . . . . . . . . . . . . . . . . . . . . . 55
9.02 Consolidation, Merger, Purchase or Sale of
Assets, etc. . . . . . . . . . . . . . . . . . 58
9.03 Restricted Payments . . . . . . . . . . . . . . . 60
9.04 Transactions with Affiliates . . . . . . . . . . 60
9.05 Minimum Consolidated Net Worth . . . . . . . . . 61
9.06 Consolidated Interest Coverage Ratio . . . . . . 61
9.07 Consolidated Fixed Charge Coverage Ratio . . . . 62
9.08 Consolidated Debt to Total Capitalization Ratio 62
9.09 Consolidated Senior Debt to Total Capitalization
Ratio . . . . . . . . . . . . . . . . . . . . 63
9.10 Limitation on Modifications of Existing
Subordinated Debt. . . . . . . . . . . . . . . 63
9.11 Limitation on Granting of Liens and on
Restrictions on Subsidiary Dividends and Other
Transfers . . . . . . . . . . . . . . . . . . 63
9.12 Limitation on Issuances of Capital Stock . . . . 64
9.13 End of Fiscal Years; Fiscal Quarters . . . . . . 64
9.14 No Other Designated Senior Debt . . . . . . . . . 64
9.15 New Subsidiaries . . . . . . . . . . . . . . . . 65
9.16 Non-Facility Letters of Credit . . . . . . . . . 65
Section 10. Events of Default . . . . . . . . . . . . . . . . 65
10.01 Payments . . . . . . . . . . . . . . . . . . . . 65
10.02 Representations, etc. . . . . . . . . . . . . . . 65
10.03 Covenants . . . . . . . . . . . . . . . . . . . . 65
10.04 Default Under Other Agreements . . . . . . . . . 66
10.05 Bankruptcy, etc. . . . . . . . . . . . . . . . . 66
10.06 ERISA . . . . . . . . . . . . . . . . . . . . . . 67
10.07 Guaranty. . . . . . . . . . . . . . . . . . . . . 67
10.08 Judgments . . . . . . . . . . . . . . . . . . . . 68
10.09 Change in Control . . . . . . . . . . . . . . . . 68
Section 11. Definitions and Accounting Terms . . . . . . . . 69
11.01 Defined Terms . . . . . . . . . . . . . . . . . . 69
11.02 Principles of Construction . . . . . . . . . . . 95
Section 12. The Administrative Agent and the Issuing Bank 95
12.01 Appointment . . . . . . . . . . . . . . . . . . . 95
12.02 Nature of Duties . . . . . . . . . . . . . . . . 96
12.03 Lack of Reliance on the Administrative Agent or
any Issuing Bank . . . . . . . . . . . . . . . 96
12.04 Certain Rights of the Administrative Agent and
any Issuing Bank . . . . . . . . . . . . . . . 97
12.05 Reliance . . . . . . . . . . . . . . . . . . . . 97
(iii)
<PAGE> 21
Page
----
12.06 Indemnification . . . . . . . . . . . . . . . . 97
12.07 The Administrative Agent and each Issuing Bank
in their Individual Capacities . . . . . . . 98
12.08 Holders . . . . . . . . . . . . . . . . . . . . 98
12.09 Resignation by the Administrative Agent . . . . 98
Section 13. Miscellaneous . . . . . . . . . . . . . . . . . 99
13.01 Payment of Expenses, etc. . . . . . . . . . . . 99
13.02 Right of Setoff . . . . . . . . . . . . . . . . 100
13.03 Notices . . . . . . . . . . . . . . . . . . . . 101
13.04 Benefit of Agreement; Assignments;
Participations . . . . . . . . . . . . . . . 101
13.05 No Waiver; Remedies Cumulative . . . . . . . . . 105
13.06 Payments Pro Rata . . . . . . . . . . . . . . . 105
13.07 Calculations; Computations . . . . . . . . . . . 106
13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE 106
13.09 Counterparts . . . . . . . . . . . . . . . . . . 108
13.10 Effectiveness . . . . . . . . . . . . . . . . . 108
13.11 Headings Descriptive . . . . . . . . . . . . . . 108
13.12 Amendment or Waiver . . . . . . . . . . . . . . 108
13.13 Survival . . . . . . . . . . . . . . . . . . . . 109
13.14 Domicile of Loans . . . . . . . . . . . . . . . 110
13.15 Register . . . . . . . . . . . . . . . . . . . . 110
13.16 Limitation of Additional Amounts . . . . . . . . 110
Schedule I Bank Commitments
Schedule II Existing Letters of Credit
Schedule III Undisclosed Liabilities
Schedule IV ERISA
Schedule V Subsidiaries
Schedule VI-A Environmental Licenses, Permits and Regulations
Schedule VI-B Environmental Proceedings
Schedule VII Insurance
Schedule VIII Existing Liens
Exhibit A-1 Notice of Borrowing
Exhibit A-2 Notice of Competitive Bid Borrowing
Exhibit A-3 Form of Notice of Competitive Bid Request
Exhibit A-4 Form of Competitive Bid
Exhibit A-5 Form of Competitive Bid Accept/Reject Letter
Exhibit B-1 Revolving Note
Exhibit B-2 Swingline Note
Exhibit B-3 Competitive Bid Note
Exhibit C Letter of Credit Request
Exhibit D Section 4.04(b)(ii) Certificate
(iv)
<PAGE> 22
Exhibit E-1 Opinion of Bass, Berry & Sims, special counsel to
the Borrower and its Subsidiaries
Exhibit E-2 Opinion of Glen A. Bodzy, general counsel of the
Borrower and its Subsidiaries
Exhibit F Officers' Certificate
Exhibit G Guaranty
Exhibit H Solvency Certificate
Exhibit I Assignment and Acceptance
Exhibit J Confidentiality Letter
(v)
<PAGE> 23
CREDIT AGREEMENT, dated as of June 8, 1994, among
SERVICE MERCHANDISE COMPANY, INC., a Tennessee corporation (the
"Borrower"), the financial institutions listed in Schedule I from
time to time (the "Banks") and CHEMICAL BANK, acting in the
manner and to the extent described in Section 12 (in such
capacity, the "Administrative Agent"). All capitalized terms
used herein shall have the meanings provided in Section 11.
W I T N E S S E T H :
WHEREAS, subject to and upon the terms and conditions
herein set forth, the Banks are willing to make available to the
Borrower the credit facilities provided for herein;
NOW, THEREFORE, IT IS AGREED:
Section 1. Amount and Terms of Credit.
1.01 The Commitments. (a) Subject to and upon the
terms and conditions set forth herein, each Bank with a
Commitment severally agrees to make, at any time and from time to
time after the Effective Date and prior to the Expiry Date, a
loan or loans, (each a "Revolving Loan" and collectively the
"Revolving Loans") to the Borrower, which Revolving Loans (i)
shall, at the option of the Borrower, be either Base Rate Loans
or Eurodollar Loans, provided that except as otherwise
specifically provided in Section 1.11(b), all Revolving Loans
made by all the Banks pursuant to the same Borrowing shall
consist of Revolving Loans of the same Type, (ii) may be repaid
and reborrowed in accordance with the provisions hereof and (iii)
shall not exceed for any Bank at any time outstanding that
aggregate principal amount which, when added to the product of
(x) such Bank's Adjusted Percentage and (y) the sum of (I) the
aggregate amount of all Letter of Credit Outstandings (exclusive
of Unpaid Drawings which are repaid with the proceeds of, and
simultaneously with the incurrence of, the respective incurrence
of Revolving Loans) at such time and (II) the aggregate principal
amount of all Swingline Loans (exclusive of Swingline Loans which
are repaid with the proceeds of, and simultaneously with the
incurrence of, the respective incurrence of Revolving Loans) then
outstanding, equals the Commitment of
<PAGE> 24
such Bank at such time and (iv) shall not exceed for all Banks at
any time outstanding that aggregate principal amount which, when
added to (x) the amount of all Letter of Credit Outstandings
(exclusive of Unpaid Drawings which are repaid with the proceeds
of, and simultaneously with the incurrence of, the respective
incurrence of Revolving Loans) at such time, (y) the aggregate
principal amount of all Swingline Loans (exclusive of Swingline
Loans which are repaid with the proceeds of, and simultaneously
with the incurrence of, the respective incurrence of Revolving
Loans) then outstanding and (z) the aggregate principal amount of
all Competitive Bid Loans then outstanding, equals the Total
Commitment at such time.
(b) Subject to and upon the terms and conditions
herein set forth, Chemical in its individual capacity, agrees to
make at any time and from time to time after the Effective Date
and prior to the Expiry Date, a loan or loans to the Borrower,
(each a "Swingline Loan," and collectively the "Swingline
Loans"), which Swingline Loans (v) shall be made and maintained
as (A) Base Rate Loans or (B) Alternate Swingline Rate Loans
(provided that on the date of any Mandatory Borrowing described
below, all Swingline Loans giving rise to such Mandatory
Borrowing shall automatically become Base Rate Loans), (w) may be
repaid and reborrowed in accordance with the provisions hereof,
(x) shall not exceed in aggregate principal amount at any time
outstanding, when combined with the aggregate principal amount of
all Revolving Loans and all Competitive Bid Loans made by Non-
Defaulting Banks then outstanding and all Letter of Credit
Outstandings, an amount equal to the Adjusted Total Commitment
then in effect (after giving effect to any reductions to the
Adjusted Total Commitment on such date) and (y) shall not exceed
in aggregate principal amount the Maximum Swingline Amount.
(c) On any Business Day, Chemical may, in its sole
discretion, give notice to the Banks that its outstanding
Swingline Loans shall be funded with a Borrowing of Revolving
Loans (provided that such notice shall be deemed to have been
automatically given upon the occurrence of an Event of Default
under Section 10.05), in which case a Borrowing of Revolving
Loans constituting Base Rate Loans (each such Borrowing, a
"Mandatory Borrowing") shall be made on the immediately
succeeding Business Day by all Banks pro rata based on each
Bank's Adjusted Percentage (determined before giving effect to
any termination of the Commitments pursuant to the last paragraph
of Section 10), and the proceeds thereof shall be applied
directly to Chemical to repay Chemical for such outstanding
Swingline Loans. Each Bank
-2-
<PAGE> 25
hereby irrevocably agrees to make Revolving Loans upon one
Business Day's notice pursuant to each Mandatory Borrowing in the
amount and in the manner specified in the preceding sentence and
on the date specified in writing by Chemical notwithstanding (i)
the amount of the Mandatory Borrowing may not comply with the
minimum amount for Borrowings otherwise required hereunder, (ii)
whether any conditions specified in Section 6 are then satisfied,
(iii) whether a Default or an Event of Default then exists, (iv)
the date of such Mandatory Borrowing and (v) any reduction in the
Adjusted Total Commitment or Total Commitment after any such
Swingline Loans were made. In the event that any Mandatory
Borrowing cannot for any reason be made on the date otherwise
required above (including, without limitation, as a result of the
commencement of a proceeding under the Bankruptcy Code with
respect to the Borrower), each Bank hereby agrees that it shall
forthwith purchase from Chemical such assignments in the
outstanding Swingline Loans as shall be necessary to cause the
Banks to share in such Swingline Loans ratably based upon their
respective Adjusted Percentages (determined before giving effect
to any termination of the Commitments pursuant to the last
paragraph of Section 10), provided that all interest payable on
the Swingline Loans shall be for the account of Chemical until
the date the respective assignment is purchased and, to the
extent attributable to the purchased assignment, shall be payable
to the assignee from and after such date of purchase.
Notwithstanding anything to the contrary in this Section 1.01,
Chemical will not make a Swingline Loan after it has received
written notice from any Bank that a Default exists.
(d) Subject to and upon the terms and conditions
herein set forth, each Bank severally agrees that the Borrower
may incur a Competitive Bid Loan or Competitive Bid Loans
pursuant to a Competitive Bid Borrowing from time to time on and
after the Effective Date and prior to the Expiry Date, provided
that after giving effect to any Competitive Bid Borrowing and the
use of the proceeds thereof, the aggregate outstanding principal
amount of Competitive Bid Loans shall not exceed at any time
outstanding, (x) the Maximum Competitive Bid Loan Amount and (y)
when combined with the aggregate outstanding principal amount of
all Revolving Loans and Swingline Loans then outstanding, plus
the Letter of Credit Outstandings at such time, the Total
Commitment at such time. Competitive Bid Loans may be repaid and
reborrowed in accordance with the provisions hereof.
-3-
<PAGE> 26
(e) More than one Borrowing may occur on the same
date, but Eurodollar Loans comprising no more than 10 Borrowings
may be outstanding at any time.
1.02 Minimum Amount of Each Borrowing. (a) The
aggregate principal amount of each Borrowing of Revolving Loans
shall be not less than $25,000,000, provided that (i) Borrowings
of Revolving Loans comprised of Base Rate Loans may be made in
amounts not less than $10,000,000 except as otherwise provided in
Section 1.03(a) (or, if less, the amount of the Total Unutilized
Commitment) and (ii) Mandatory Borrowings of Revolving Loans
shall be made in the amounts required by Section 1.01(c).
(b) The aggregate principal amount of each Borrowing
of Swingline Loans shall be not less than $1,000,000 and, if
greater, shall be in an integral multiple of $100,000.
(c) The aggregate principal amount of each Borrowing
of Competitive Bid Loans shall be not less than $10,000,000 and,
if greater, shall be in an integral multiple of $1,000,000.
1.03 Notice of Borrowing. (a) Whenever the Borrower
desires to incur Revolving Loans hereunder, it shall give the
Administrative Agent at its Notice Office at least one Business
Day's prior notice of each Base Rate Loan and at least three
Business Days' prior notice of each Eurodollar Loan to be made
hereunder, provided that (x) any such notice shall be deemed to
have been given on a certain day only if given before 12:00 Noon
(New York time) on such day and (y) if on the date of any
proposed Competitive Bid Borrowing of Fixed Rate Loans the
aggregate amount of Competitive Bids made by the Banks and/or
accepted by the Borrower in accordance with Section 1.04 (such
amount, the "Accepted Amount") is less than the amount of Fixed
Rate Loans requested by the Borrower in the related Notice of
Competitive Bid Borrowing (such amount, the "Requested Amount"),
the Borrower may incur a Borrowing of Revolving Loans
constituting Base Rate Loans in an aggregate amount equal to the
Requested Amount less the Accepted Amount and shall give the
Administrative Agent notice at its Notice Office not later than
11:00 a.m. (New York time) of any such Base Rate Loan to be made
on such date. Each such notice (each a "Notice of Borrowing")
shall be in the form of Exhibit A-1, appropriately completed by
the Borrower to specify (i) the aggregate principal amount of the
Revolving Loans to be made pursuant to such Borrowing, (ii) the
date of
-4-
<PAGE> 27
such Borrowing (which shall be a Business Day) and (iii) whether
the Revolving Loans being made pursuant to such Borrowing are to
be initially maintained as Base Rate Loans or Eurodollar Loans
and, if Eurodollar Loans, the initial Interest Period to be
applicable thereto. The Administrative Agent shall promptly give
each Bank notice of such proposed Borrowing, of such Bank's
proportionate share thereof and of the other matters required by
the immediately preceding sentence to be specified in the Notice
of Borrowing.
(b) Whenever the Borrower desires to make a Borrowing
of Swingline Loans hereunder, it shall give Chemical not later
than 1:00 p.m. (New York time) on the day such Swingline Loan is
to be made, written notice or telephonic notice promptly
confirmed in writing of each Swingline Loan to be made hereunder.
Each such notice shall be irrevocable and specify in each case
(i) the date of Borrowing (which shall be a Business Day), (ii)
the aggregate principal amount of the Swingline Loans to be made
pursuant to such Borrowing and (iii) any other terms to be
applicable to such Borrowing of Swingline Loans. Without in any
way limiting the obligation of the Borrower to confirm in writing
any telephonic notice of such Borrowing of Swingline Loans,
Chemical may act without liability upon the basis of telephonic
notice of such Borrowing, believed by Chemical in good faith to
be from the President, a Vice President, Treasurer or Assistant
Treasurer of the Borrower or any other person authorized by any
such officer in writing prior to receipt of written confirmation.
In each such case, the Borrower hereby waives the right to
dispute Chemical's record of the terms of such telephonic notice.
(c) Mandatory Borrowings shall be made upon the notice
specified in Section 1.01(c), with the Borrower irrevocably
agreeing, by its incurrence of any Swingline Loan, to the making
of Mandatory Borrowings as set forth in Section 1.01(c).
(d) Whenever the Borrower desires to incur a
Competitive Bid Borrowing, it shall give the Administrative
Agent, at its Notice Office, at least one Business Day's prior
notice of each proposed Fixed Rate Loan and at least four
Business Days prior notice of each proposed Eurodollar Loan to be
made hereunder, provided that any such notice shall be deemed to
have been given on a certain day only if given before 12:00 Noon
(New York time) on such day. Each such notice (a "Notice of
Competitive Bid Borrowing") shall be in the form of Exhibit A-2
appropriately completed by the Borrower to specify (i) the
aggregate principal amount of the
-5-
<PAGE> 28
proposed Competitive Bid Loans to be made pursuant to such
Borrowing, (ii) the date of such Borrowing (which shall be a
Business Day), (iii) whether the Competitive Bid Loans proposed
to be made pursuant to such Borrowing are to be maintained as
Fixed Rate Loans or Eurodollar Loans and the maturity date for
repayment of each Competitive Bid Loan to be made as part of such
Competitive Bid Borrowing (which maturity date shall be the
earliest of (x) the date a repayment is required to be made under
Section 4.02(A)(b), (y) the last day of the Interest Period
relating thereto and (z) the Expiry Date) and (iv) the Interest
Period relating thereto. A Notice of Competitive Bid Borrowing
that does not conform substantially to the format of Exhibit A-2
may be rejected in the Administrative Agent's sole discretion,
and the Administrative Agent shall promptly notify the Borrower
of such rejection. The Administrative Agent shall promptly
notify each Bank of each such request for a Competitive Bid
Borrowing received by it from a Borrower and not rejected by it
by telecopying such Bank a notice in the form of Exhibit A-3
hereto (a "Notice of Competitive Bid Request").
1.04 Competitive Bid Procedures. (a) Each Bank may,
in its sole discretion, make one or more Competitive Bids to the
Borrower responsive to a Notice of Competitive Bid Request. Each
Competitive Bid by a Bank must be received by the Administrative
Agent via telecopier, in the form of Exhibit A-4 hereto, (i) in
the case of a proposed Competitive Bid Borrowing of Eurodollar
Loans, not later than 10:00 a.m., New York time, three Business
Days before a proposed Competitive Bid Borrowing and (ii) in the
case of a proposed Competitive Bid Borrowing of Fixed Rate Loans,
not later than 10:00 a.m., New York time, on the day of a
proposed Competitive Bid Borrowing. Multiple bids will be
accepted by the Administrative Agent. Competitive Bids that do
not conform substantially to the format of Exhibit A-4 may be
rejected by the Administrative Agent after conferring with, and
upon the instruction of, the Borrower, and the Administrative
Agent shall notify the Bank making such nonconforming bid of such
rejection as soon as practicable. Each Competitive Bid shall
refer to this Agreement and specify (x) the principal amount
(which shall be in a minimum principal amount of $5,000,000 and
in an integral multiple of $1,000,000 and which may equal the
entire principal amount of the Competitive Bid Borrowing
requested by the Borrower) of the Competitive Bid Loan or
Competitive Bid Loans that the Bank is willing to make to the
Borrower, (y) the Competitive Bid Rate or Competitive Bid Rates
at which the Bank is prepared to make the Competitive Bid Loan or
Competitive Bid Loans and (z) the respective Interest Period and
the last day
-6-
<PAGE> 29
thereof. If any Bank shall elect not to make a Competitive Bid,
such Bank shall so notify the Administrative Agent via telecopier
(I) in the case of Eurodollar Loans, not later than 10:00 a.m.,
New York time, three Business Days before a proposed Competitive
Bid Borrowing, and (II) in the case of Fixed Rate Loans, not
later than 10:00 a.m., New York time, on the day of a proposed
Competitive Bid Borrowing; provided, however, that failure by any
Bank to give such notice shall not cause such Bank to be
obligated to make any Competitive Bid Loan as part of such
Competitive Bid Borrowing or to incur any liability as a result
thereof. A Competitive Bid submitted by a Bank pursuant to this
paragraph (a) shall be irrevocable.
(b) The Administrative Agent shall promptly notify the
Borrower by telecopier of all the Competitive Bids made, the
Competitive Bid Rate and the principal amount of each Competitive
Bid Loan in respect of which a Competitive Bid was made and the
identity of the Bank that made each Competitive Bid. The
Administrative Agent shall send a copy of all Competitive Bids to
the Borrower for its records as soon as practicable after
completion of the bidding process set forth in this Section 1.04.
(c) The Borrower may in its sole and absolute
discretion, subject only to the provisions of this paragraph (c),
accept or reject any Competitive Bid referred to in paragraph (b)
above. The Borrower shall notify the Administrative Agent by
telephone, confirmed by telecopier in the form of a Competitive
Bid Accept/Reject Letter, whether and to what extent it has
decided to accept or reject any of or all the bids referred to in
paragraph (b) above, (x) in the case of a Borrowing of Eurodollar
Loans, not later than 11:00 a.m., New York time, three Business
Days before a proposed Competitive Bid Borrowing, and (y) in the
case of a Borrowing of Fixed Rate Loans, not later than 11:00
a.m., New York time, on the day of a proposed Competitive Bid
Borrowing; provided, however, that (i) the failure by the
Borrower to give such notice shall be deemed to be a rejection of
all the bids referred to in paragraph (b) above, (ii) the
Borrower shall not accept a bid made at a particular Competitive
Bid Rate if the Borrower has decided to reject a bid made at a
lower Competitive Bid Rate, (iii) the aggregate amount of the
Competitive Bids accepted by the Borrower shall not exceed the
principal amount specified in the Notice of Competitive Bid
Borrowing, (iv) if the Borrower shall accept a bid or bids made
at a particular Competitive Bid Rate but the amount of such bid
or bids shall cause the total amount of bids to be accepted by
the Borrower to exceed the amount
-7-
<PAGE> 30
specified in the Competitive Bid Request, then the Borrower shall
accept a portion of such bid or bids in an amount equal to the
amount specified in the Competitive Bids accepted with respect to
such Competitive Bid Request, which acceptance, in the case of
multiple bids at such Competitive Bid Rate, shall be made pro
rata in accordance with the amount of each such bid at such
Competitive Bid Rate and (v) except pursuant to clause (iv)
above, no bid shall be accepted for a Competitive Bid Loan unless
such Competitive Bid Loan is in a minimum principal amount of
$5,000,000 and an integral multiple of $1,000,000; provided
further, however, that if a Competitive Bid Loan must be in an
amount less than $5,000,000 because of the provisions of clause
(iv) above, such Competitive Bid Loan may be for a minimum of
$1,000,000 or any integral multiple thereof, and in calculating
the pro rata allocation of acceptances of portions of multiple
bids at a particular Competitive Bid Rate pursuant to clause (iv)
the amounts shall be rounded to integral multiples of $1,000,000
in a manner which shall be in the discretion of the Borrower. A
notice given by the Borrower pursuant to this paragraph (c) shall
be irrevocable.
(d) The Administrative Agent shall promptly notify
each bidding Bank whether or not its Competitive Bid has been
accepted (and if so, in what amount and at what Competitive Bid
Rate) by telecopy sent by the Administrative Agent, and each
successful bidder will thereupon become bound, subject to the
other applicable conditions hereof, to make the Competitive Bid
Loan in respect of which its bid has been accepted.
(e) If the Administrative Agent shall elect to submit
a Competitive Bid in its capacity as a Bank, it shall submit such
bid directly to the Borrower one quarter of an hour earlier than
the latest time at which the other Banks are required to submit
their bids to the Administrative Agent pursuant to paragraph (a)
above.
(f) All notices required by this Section 1.04 shall be
given in accordance with Section 13.03.
1.05 Disbursement of Funds. (a) No later than 12:00
Noon (New York time) on the date specified in each Notice of
Borrowing or Notice of Competitive Bid Request, each Bank will
make available its portion of each Borrowing requested to be made
on such date to the Administrative Agent, in Dollars and in
immediately available funds at the Payment Office, and the
Administrative Agent will make available to the Borrower at the
Payment Office the aggregate
-8-
<PAGE> 31
of the amounts so made available by the Banks. Unless the
Administrative Agent shall have been notified by any Bank prior
to the date of any Borrowing that such Bank does not intend to
make available to the Administrative Agent such Bank's portion of
any Borrowing to be made on such date, the Administrative Agent
may assume that such Bank has made such amount available to the
Administrative Agent on such date of Borrowing and the
Administrative Agent may, in reliance upon such assumption, make
available to the Borrower a corresponding amount. If such
corresponding amount is not in fact made available to the
Administrative Agent by such Bank, the Administrative Agent shall
be entitled to recover such corresponding amount on demand from
such Bank. If such Bank does not pay such corresponding amount
forthwith upon the Administrative Agent's demand therefor, the
Administrative Agent shall promptly notify the Borrower and the
Borrower shall immediately pay such corresponding amount to the
Administrative Agent. The Administrative Agent shall also be
entitled to recover on demand from such Bank or the Borrower, as
the case may be, interest on such corresponding amount in respect
of each day from the date such corresponding amount was made
available by the Administrative Agent to the Borrower until the
date such corresponding amount is recovered by the Administrative
Agent, at a rate per annum equal to (i) if recovered from such
Bank, the Federal Funds Rate and (ii) if recovered from the
Borrower, the then applicable rate for Base Rate Loans or
Eurodollar Loans, as the case may be, as determined in accordance
with Section 1.09. Nothing in this Section 1.05 shall be deemed
to relieve any Bank from its obligation to fulfill its Commitment
hereunder or to prejudice any rights which the Borrower may have
against any Bank as a result of any default by such Bank
hereunder.
(b) No later than 12:00 noon (New York time) or, in
the event that notice of a Borrowing of Swingline Loans is given
on the proposed date of such Borrowing, no later than 3:00 P.M.
(New York time), on the date specified by the Borrower for each
Borrowing of Swingline Loans, Chemical will make the full amount
thereof available to the Borrower at the Payment Office and in
immediately available funds. The proceeds of each Mandatory
Borrowing shall be applied as provided in Section 1.01(c).
1.06 Notes. (a) The Borrower's obligation to pay the
principal of, and interest on, the Loans made by each Bank shall
be evidenced (i) if Revolving Loans, by its promissory note
substantially in the form of Exhibit B-1 hereto with blanks
appropriately completed in conformity herewith (each a "Revolving
Note" and collectively the
-9-
<PAGE> 32
"Revolving Notes"), (ii) if Swingline Loans, by a promissory note
duly executed and delivered by the Borrower to Chemical
substantially in the form of Exhibit B-2 hereto with blanks
appropriately completed in conformity herewith (the "Swingline
Note") and (iii) if Competitive Bid Loans, by its promissory note
substantially in the form of Exhibit B-3 hereto with blanks
appropriately completed in conformity herewith (each a
"Competitive Bid Note" and collectively, the "Competitive Bid
Notes").
(b) Each Revolving Note issued to each Bank shall (i)
be payable to the order of such Bank and be dated the Effective
Date, (ii) be in a stated principal amount equal to the
Commitment of such Bank as in effect on the Effective Date and be
payable in the outstanding principal amount of the Revolving
Loans evidenced thereby from time to time, (iii) mature on the
Expiry Date, (iv) bear interest as provided in Section 1.09 in
respect of the Base Rate Loans or Eurodollar Loans, as the case
may be, evidenced thereby and (v) be entitled to the benefits of
this Agreement and all other Credit Documents.
(c) The Swingline Note issued by the Borrower shall
(i) be payable to the order of Chemical and be dated the
Effective Date, (ii) be in a stated principal amount equal to the
Maximum Swingline Amount and be payable in the amount of
Swingline Loans evidenced thereby, (iii) mature on the Expiry
Date, (iv) bear interest (A) as provided in Section 1.09 in the
case of the Base Rate Loans evidenced thereby or (B) at such
other rate from time to time agreed upon between the Borrower and
Chemical, and (v) be entitled to the benefits of this Agreement
and all other Credit Documents.
(d) Each Competitive Bid Note issued to each Bank
shall (i) be payable to the order of such Bank and be dated the
Effective Date, (ii) be in a stated principal amount equal to the
Maximum Competitive Bid Loan Amount and be payable in the
outstanding principal amount of Competitive Bid Loans evidenced
thereby from time to time, (iii) mature with respect to each
Competitive Bid Loan evidenced thereby on the earliest of (x) the
date a repayment is required to be made under Section 4.02(A)(b),
(y) the last day of the Interest Period applicable thereto and
(z) the Expiry Date, (iv) bear interest as provided in Section
1.09 in respect of Fixed Rate Loans or Eurodollar Loans, as the
case may be, evidenced thereby and (v) be entitled to the
benefits of this Agreement and the other Credit Documents.
-10-
<PAGE> 33
(e) Each Bank will note on its internal records the
amount of each Loan made by it and each payment and conversion in
respect thereof and will prior to any transfer of any of its
Notes endorse on the reverse side thereof the outstanding
principal amount of Loans evidenced thereby. Failure to make any
such notation shall not affect the Borrower's obligations in
respect of such Loans.
1.07 Conversions. The Borrower shall have the option
to convert all or a portion equal to not less than $25,000,000
($10,000,000 in the case of a conversion into Base Rate Loans) of
the outstanding principal amount of one Type of Loan (other than
(i) Swingline Loans and (ii) Competitive Bid Loans) made pursuant
to one or more Borrowings into a Borrowing of the other Type of
Loan, provided that, (i) except as otherwise provided in Section
1.11(b), Eurodollar Loans may be converted into Base Rate Loans
only on the last day of an Interest Period applicable thereto and
no such partial conversion of Eurodollar Loans shall reduce the
outstanding principal amount of Eurodollar Loans made pursuant to
any single Borrowing to less than $25,000,000, (ii) Base Rate
Loans may only be converted into Eurodollar Loans if no Default
or Event of Default is in existence on the date of the conversion
and (iii) no conversion pursuant to this Section 1.07 shall
result in a greater number of Borrowings than is permitted under
Section 1.01(e). Each such conversion shall be effected by the
Borrower giving the Administrative Agent at its Notice Office
prior to 12:00 Noon (New York time) at least three Business Days'
in the case of conversions into Eurodollar Loans, or one Business
Day's in the case of conversions into Base Rate Loans, prior
notice (each a "Notice of Conversion") specifying the Loans to be
so converted and, if to be converted into Eurodollar Loans, the
Interest Period to be initially applicable thereto. The
Administrative Agent shall give each Bank prompt notice of any
such proposed conversion affecting any of its Loans.
1.08 Pro Rata Borrowings. All Revolving Loans under
this Agreement shall be incurred from the Banks pro rata on the
basis of their respective Commitments; provided that all
Borrowings of Revolving Loans made pursuant to a Mandatory
Borrowing shall be incurred from the Banks pro rata on the basis
of their Adjusted Percentages. It is understood that no Bank
shall be responsible for any default by any other Bank of its
obligation to make Loans hereunder and that each Bank shall be
obligated to make the Loans provided to be made by it hereunder
regardless of the failure of any other Bank to fulfill its
Commitment hereunder.
-11-
<PAGE> 34
1.09 Interest. (a) The Borrower agrees to pay
interest in respect of the unpaid principal amount of each Base
Rate Loan made to the Borrower from the date the proceeds thereof
are made available to the Borrower until maturity thereof
(whether by acceleration or otherwise) at a rate per annum which
shall be the Alternate Base Rate in effect from time to time.
(b) The Borrower agrees to pay interest in respect of
the unpaid principal amount of each Eurodollar Loan (other than a
Competitive Bid Loan) made to the Borrower from the date the
proceeds thereof are made available to the Borrower until
maturity thereof (whether by acceleration or otherwise) at a rate
per annum which shall, during each Interest Period applicable
thereto, be the Applicable Eurodollar Margin in excess of the
Adjusted Eurodollar Rate for such Interest Period.
(c) The Borrower agrees to pay interest in respect of
the unpaid principal amount of each Competitive Bid Loan made to
the Borrower from the date the proceeds are made available to the
Borrower until maturity thereof (whether by acceleration or
otherwise) at a rate per annum which shall, during each Interest
Period applicable thereto, be (i) if such Competitive Bid Loan is
a Fixed Rate Loan, the fixed rate of interest offered by the Bank
making such Loan and accepted by the Borrower pursuant to Section
1.04 and (ii) if such Competitive Bid Loan is a Eurodollar Loan,
the Adjusted Eurodollar Rate plus the applicable Spread offered
by the Bank making such Loan and accepted by the Borrower,
pursuant to Section 1.04.
(d) The Borrower agrees to pay interest in respect of
the unpaid principal amount of each Alternate Swingline Rate Loan
made to the Borrower from the date the proceeds are made
available to the Borrower until maturity thereof (whether by
acceleration or otherwise) at a rate per annum which shall be the
Alternate Swingline Rate.
(e) Overdue principal and, to the extent permitted by
law, overdue interest in respect of each Loan shall bear interest
at a rate per annum equal to the greater of (x) 2% per annum in
excess of the Alternate Base Rate in effect from time to time and
(y) the rate which is 2% in excess of the rate then borne by such
Loans, in each case with such interest to be payable on demand.
(f) Accrued (and theretofore unpaid) interest shall be
payable (i) in respect of each Base Rate Loan and
-12-
<PAGE> 35
each Alternate Swingline Rate Loan, quarterly in arrears on the
last Business Day of each March, June, September and December,
(ii) in respect of each Eurodollar Loan, on the last day of each
Interest Period applicable thereto and, in the case of an
Interest Period in excess of three months, on each date occurring
at the end of 90-day intervals after the first day of such
Interest Period, (iii) with respect to any Competitive Bid Loan,
at such times as specified in the Notice of Competitive Bid
Borrowing relating thereto and (iv) in respect of each Loan, on
any prepayment or conversion (on the amount prepaid or
converted), at maturity (whether by acceleration or otherwise)
and, after such maturity, on demand.
1.10 Interest Periods. At the time it gives any
Notice of Competitive Bid Borrowing in respect of the making of a
Borrowing of Competitive Bid Loans or at any time it gives any
Notice of Borrowing or Notice of Conversion in respect of the
making of, or conversion into, a Borrowing of Eurodollar Loans
(in the case of the initial Interest Period applicable thereto)
or by 12:00 Noon (New York time) on the third Business Day prior
to the expiration of an Interest Period applicable to such a
Borrowing (in the case of subsequent Interest Periods), the
Borrower shall have the right to elect, by giving the
Administrative Agent notice thereof, the interest period (each an
"Interest Period") applicable to the Borrowing, which Interest
Period shall, at the option of the Borrower, be (x) in the case
of a Eurodollar Loan, a one, two, three or six month period and
(y) in the case of a Fixed Rate Loan, a period commencing on the
date of such Borrowing and ending on the date specified in the
Competitive Bid in which the offer to make such Fixed Rate Loans
comprising such Borrowing was extended and accepted pursuant to
Section 1.04, which shall not be earlier than 7 days after the
date of such Borrowing or later than 360 days after the date of
such Borrowing, provided that: (i) all Loans comprising a
Borrowing shall have the same Interest Period; (ii) the initial
Interest Period for any Borrowing of Eurodollar Loans shall
commence on the date of such Borrowing (including the date of any
conversion from a Borrowing of a different Type) and each
Interest Period occurring thereafter in respect of such Borrowing
shall commence on the day on which the next preceding Interest
Period expires; (iii) if any Interest Period relating to a
Borrowing of Eurodollar Loans begins on a day for which there is
no numerically corresponding day in the calendar month at the end
of such Interest Period, such Interest Period shall end on the
last Business Day of such calendar month; (iv) if any Interest
Period would otherwise expire on a day which is
-13-
<PAGE> 36
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided, however, that if any Interest
Period would otherwise expire on a day which is not a Business
Day but is a day of the month after which no further Business Day
occurs in such month, such Interest Period shall expire on the
next preceding Business Day; (v) no Interest Period in respect of
a Borrowing of Loans shall extend beyond the Expiry Date; (vi) no
Interest Period may be selected which would end after the date of
any Scheduled Reduction if as a result of and after giving effect
to such Scheduled Reduction, Loans with Interest Periods ending
after such date would be required to be repaid by Section
4.02(A)(a)(i); and (vii) no Interest Period may be selected while
a Default or Event of Default exist. If upon the expiration of
any Interest Period applicable to a Borrowing of Eurodollar
Loans, the Borrower has failed, or is unable, to elect a new
Interest Period to be applicable to such Borrowing as provided
above, such Borrower shall be deemed to have elected to convert
such Borrowing into a Borrowing of Base Rate Loans effective as
of the expiration date of such current Interest Period.
1.11 Increased Costs, Illegality, etc. (a) In the
event that any Bank shall have determined (which determination
shall, absent manifest error, be final and conclusive and binding
upon all parties hereto but, with respect to clause (i) below,
may be made only by the Administrative Agent):
(i) on any date for the determination of the Adjusted
Eurodollar Rate that, by reason of any changes arising after
the date of this Agreement affecting the London interbank
market, adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis
provided for in the definition of Adjusted Eurodollar Rate;
or
(ii) at any time, that such Bank shall incur increased
costs or reductions in the amounts received or receivable
hereunder with respect to any Eurodollar Loan or any
Competitive Bid Loan because of any change (excluding (x)
any change in gross or net income taxes imposed by any
jurisdiction or political subdivision or taxing authority
having authority over such Bank and (y) any change in
respect of Taxes) since the date of this Agreement (or, in
the case of any such cost or reduction with respect to any
Competitive Bid Loan, since the date of the making of such
Competitive Bid Loan) in any applicable law or governmental
rule, regulation, guide-
-14-
<PAGE> 37
line, order or request (whether or not having the force of
law) (or in the interpretation or administration thereof and
including the introduction of any new law or governmental
rule, regulation, guideline or order) such as, for example,
but not limited to, a change in official reserve
requirements, but, in all events, excluding all reserves
included in the computation of the Adjusted Eurodollar Rate;
or
(iii) at any time, that the making or continuance of any
Eurodollar Loan has become unlawful by compliance by such
Bank with any law, governmental rule, regulation, guideline
or order issued, promulgated, amended or otherwise becoming
effective after the date of this Agreement, or has become
impracticable as a result of a contingency occurring after
the date of this Agreement which materially and adversely
affects the London interbank market;
then, and in any such event, such Bank (or the Administrative
Agent, in the case of clause (i) above) shall on such date give
notice (by telephone confirmed in writing) to the Borrower and,
except in the case of clause (i) above, to the Administrative
Agent of such determination (which notice the Administrative
Agent shall promptly transmit to each of the other Banks).
Thereafter (x) in the case of clause (i) above, Eurodollar Loans
shall no longer be available until such time as the
Administrative Agent notifies the Borrower and the Banks that the
circumstances giving rise to such notice by the Administrative
Agent no longer exist, and (A) any Notice of Borrowing, Notice of
Competitive Bid Borrowing or Notice of Conversion given by the
Borrower with respect to Eurodollar Loans which have not yet been
incurred (including by way of conversion) shall be deemed
rescinded by the Borrower or (B) if such determination is made in
respect of establishing the Adjusted Eurodollar Rate for a new
Interest Period to be applicable to Loans then outstanding as
Eurodollar Loans, such Loans shall be converted into Base Rate
Loans on the first day of the proposed new Interest Period, (y)
in the case of clause (ii) above, the Borrower shall pay to such
Bank, within ten days of receipt of the notice referred to below,
such additional amounts (in the form of an increased rate of, or
a different method of calculating, interest or otherwise as the
Bank shall determine) as shall be required to compensate such
Bank for such increased costs or reductions in amounts received
or receivable hereunder (a written notice as to the additional
amounts owed to such Bank, setting forth the basis for the
calculation thereof, submitted to the Borrower by such Bank
-15-
<PAGE> 38
shall, absent manifest error, be final and conclusive and binding
upon all parties hereto) and (z) in the case of clause (iii)
above, the Borrower shall take one of the actions specified in
Section 1.11(b) as promptly as possible and, in any event, within
the time period required by law.
(b) At any time that any Loan is affected by the
circumstances described in Section 1.11(a)(ii) or (iii), the
Borrower may (and in the case of a Loan affected pursuant to
Section 1.11(a)(iii) shall) either (x) if the affected Loan is
then being made pursuant to a Borrowing or a conversion, either
cancel said Borrowing or conversion or convert the Notice of
Borrowing, Notice of Competitive Bid Borrowing or Notice of
Conversion therefor into a Notice of Borrowing or Notice of
Conversion, as the case may be, for Base Rate Loans, in either
case by giving the Administrative Agent telephonic notice
(confirmed in writing) thereof on the same date that the Borrower
was notified by the Bank or the Administrative Agent pursuant to
Section 1.11(a)(ii) or (iii) or (y) if the affected Loan is then
outstanding, upon at least three Business Days' written notice to
the Administrative Agent, require the affected Bank to convert
such Loan into a Base Rate Loan; provided that, if more than one
Bank is similarly affected at any time, then all similarly
affected Banks must be treated the same pursuant to this Section
1.11(b).
(c) If any Bank determines at any time that any change
in or effectiveness of any applicable law or governmental rule,
regulation, guideline or order concerning capital adequacy
(including without limitation those announced or published prior
to the date of this Agreement), or any change in interpretation
or administration thereof by any governmental authority, central
bank or comparable agency, will have the effect of increasing the
amount of capital required or expected to be maintained by such
Bank based on the existence of such Bank's Commitment hereunder
or its obligations hereunder, then the Borrower agrees, subject
to Section 13.16 (to the extent applicable), to pay to such Bank,
within ten days of the receipt of the notice referred to below,
such additional amounts as shall be required to compensate such
Bank for the increased cost to such Bank as a result of such
increase of capital. In determining such additional amounts,
each Bank will act reasonably and in good faith and will use
averaging and attribution methods which are reasonable, provided
that such Bank's determination of compensation owing under this
Section 1.11(c) shall, absent manifest error, be final and
conclusive and binding on all the parties hereto. Each Bank,
upon determining that any
-16-
<PAGE> 39
additional amounts will be payable pursuant to this Section
1.11(c), will give prompt written notice thereof to the Borrower,
which notice shall show the basis for calculation of such
additional amounts, although the failure to give any such notice
shall not release or diminish the Borrower's obligation to pay
additional amounts pursuant to this Section 1.11(c).
1.12 Compensation. The Borrower shall, subject to
Section 13.16 (to the extent applicable), compensate each Bank,
upon its written request (which request shall set forth the basis
for requesting such compensation), for all losses, expenses and
liabilities (including, without limitation, any loss, expense or
liability incurred by reason of the liquidation or reemployment
of deposits or other funds required by such Bank to fund its
Loans) which such Bank may sustain: (i) if for any reason (other
than a default by such Bank or the Administrative Agent) a
Borrowing of, or conversion from or into, Eurodollar Loans or
Competitive Bid Loans does not occur on a date specified therefor
in a Notice of Borrowing, Notice of Competitive Bid Borrowing or
Notice of Conversion (whether or not withdrawn or deemed
withdrawn pursuant to Section 1.11); (ii) if any repayment
(including any repayment made pursuant to Section 4.02 or as a
result of an acceleration of Loans pursuant to Section 10) or
conversion of any Eurodollar Loans or Competitive Bid Loans
occurs on a date which is not the last day of an Interest Period
with respect thereto; (iii) if any prepayment of any Eurodollar
Loans or Competitive Bid Loans is not made on any date specified
in a notice of prepayment given by the Borrower; or (iv) as a
consequence of any election made pursuant to Section 1.11(b).
1.13 Change of Lending Office. Each Bank agrees that,
upon the occurrence of any event giving rise to the operation of
Section 1.11(a)(ii) or (iii), 2.06 or 4.04 with respect to such
Bank, it will upon the delivery of any demand with respect to
increased costs relating thereto or, if otherwise reasonably
requested by the Borrower, use reasonable efforts (subject to
overall policy considerations of such Bank) to designate another
lending office for its Commitment or any Loans or Letters of
Credit affected by such event, provided that such designation is
made on such terms that such Bank and its lending office suffer
no economic, legal or regulatory disadvantage, with the object of
avoiding the consequence of the event giving rise to the
operation of any such Section. Nothing in this Section 1.13
shall affect or postpone any of the obligations of any Borrower
or the right of any Bank provided in Section 1.11, 2.06 or 4.04.
-17-
<PAGE> 40
1.14 Replacement of Banks. If (x) any Bank becomes a
Defaulting Bank or otherwise defaults in its obligations to make
Loans or fund Unpaid Drawings, (y) upon the occurrence of any
event giving rise to the operation of Section 1.11(a)(ii) or
(iii), Section 1.11(c), Section 2.06 or Section 4.04 with respect
to any Bank which results in such Bank charging to the Borrower
increased costs in excess of those generally being charged by the
other Banks or (z) as provided in Section 13.12(b) in the case of
certain refusals by a Bank to consent to certain proposed
changes, waivers, discharges or terminations with respect to this
Agreement which have been approved by the Required Banks, the
Borrower shall have the right, if no Default or Event of Default
then exists, to either replace such Bank (the "Replaced Bank")
with one or more other Eligible Assignee or Assignees, none of
whom shall constitute a Defaulting Bank at the time of such
replacement (collectively, the "Replacement Bank") reasonably
acceptable to the Administrative Agent, provided that (i) at the
time of any replacement pursuant to this Section 1.14, the
Replacement Bank shall enter into one or more Assignment and
Acceptances pursuant to Section 13.04(b) (and with all fees
payable pursuant to said Section 13.04(b) to be paid by the
Replacement Bank) pursuant to which the Replacement Bank shall
acquire all of the Commitments and outstanding Revolving Loans
of, and in each case participations in Letters of Credit by, the
Replaced Bank and, in connection therewith, shall pay to (x) the
Replaced Bank in respect thereof an amount equal to the sum of
(A) an amount equal to the principal of, and all accrued interest
on, all outstanding Revolving Loans of the Replaced Bank, (B) an
amount equal to all Unpaid Drawings that have been funded by (and
not reimbursed to) such Replaced Bank, together with all then
unpaid interest with respect thereto at such time and (C) an
amount equal to all accrued, but theretofore unpaid, Fees owing
to the Replaced Bank pursuant to Section 3.01 and (y) Chemical an
amount equal to such Replaced Bank's Adjusted Percentage (for
this purpose, determined as if the adjustment described in clause
(y) of the immediately succeeding sentence had been made with
respect to such Replaced Bank) of any Unpaid Drawing (which at
such time remains an Unpaid Drawing) to the extent such amount
was not theretofore funded by such Replaced Bank, and (ii) all
obligations of the Borrower owing to the Replaced Bank (other
than those specifically described in clause (i) above in respect
of which the assignment purchase price has been, or is
concurrently being, paid) shall be paid in full to such Replaced
Bank concurrently with such replacement. Upon the execution of
the respective Assignment and Acceptances, the payment of amounts
referred to in clauses (i) and (ii) above
-18-
<PAGE> 41
and, if so requested by the Replacement Bank, delivery to the
Replacement Bank of the appropriate Note or Notes executed by the
Borrower, (x) the Replacement Bank shall become a Bank hereunder
and the Replaced Bank shall cease to constitute a Bank hereunder,
except with respect to indemnification provisions under this
Agreement, which shall survive as to such Replaced Bank and (y)
the Adjusted Percentages of the Banks shall be automatically
adjusted at such time to give effect to such replacement (and to
give effect to the replacement of a Defaulting Bank with one or
more Non-Defaulting Banks).
Section 2. Letters of Credit.
2.01 Letters of Credit. (a) Subject to and upon the
terms and conditions herein set forth, the Borrower may request
any Issuing Bank at any time and from time to time on or after
the Effective Date and prior to the Expiry Date, to issue, and
subject to the terms and conditions contained herein such Issuing
Bank shall issue, for the account of the Borrower and for the
benefit of any holder (or any trustee, agent or other similar
representative for any such holders) of L/C Supportable
Obligations of the Borrower and its Subsidiaries (i) one or more
irrevocable standby or direct-pay letters of credit in the form
customarily used by such Issuing Bank, or in such other form as
has been approved by such Issuing Bank and the Administrative
Agent (each a "Standby Letter of Credit"), in support of such L/C
Supportable Obligations and (ii) one or more irrevocable trade
letters of credit, on an offering and as available basis in the
form acceptable to, and customarily used by, the Issuing Bank, or
in such other form as has been approved by the Issuing Bank (each
a "Trade Letter of Credit", together with any Standby Letters of
Credit, collectively, the "Letters of Credit") for the account of
the Borrower and in support of trade obligations of the Borrower
or its Subsidiaries, or in support of such other obligations
relating to its or their working capital requirements, in either
case as are acceptable to such Issuing Bank and the
Administrative Agent. Schedule II hereto contains a description
of all letters of credit which the Issuing Banks issued pursuant
to the Existing Credit Agreement and remain outstanding on the
Effective Date. Each such letter of credit (each an "Existing
Letter of Credit") shall constitute a "Letter of Credit" for all
purposes of this Agreement.
(b) Notwithstanding the foregoing, (i) no Trade Letter
of Credit shall be issued the Stated Amount of which
-19-
<PAGE> 42
would exceed either (x) $120,000,000 less the sum of the Trade
Letter of Credit Outstandings at such time and the Non-Facility
Letter of Credit Outstandings at such time or (y) when added to
the sum of Letter of Credit Outstandings at such time plus the
aggregate principal amount of Revolving Loans made by Non-
Defaulting Banks then outstanding and Swingline Loans and
Competitive Bid Loans then outstanding, an amount equal to the
Adjusted Total Commitment at such time, (ii) no Standby Letter of
Credit shall be issued the Stated Amount of which would exceed
either (x) $60,000,000 less the Standby Letter of Credit
Outstandings at such time or (y) when added to the sum of Letter
of Credit Outstandings at such time plus the aggregate principal
amount of Revolving Loans made by Non-Defaulting Banks then
outstanding and Swingline Loans and Competitive Bid Loans then
outstanding, an amount equal to the Adjusted Total Commitment at
such time, (iii) no Letter of Credit shall be issued the Stated
Amount of which, when added to (x) the aggregate principal amount
of Competitive Bid Loans, Revolving Loans made by Non-Defaulting
Banks and Swingline Loans then outstanding plus (y) all Letter of
Credit Outstandings at such time, would exceed the Adjusted Total
Commitment at such time, (iv) each Standby Letter of Credit
issued in support of obligations other than Indebtedness relating
to industrial revenue bonds shall by its terms terminate not
later than one year after the date of issuance thereof and in any
event no Standby Letter of Credit shall terminate later than the
Expiry Date, (v) each Trade Letter of Credit shall by its terms
terminate not later than one year after the date of issuance
thereof, and in any event no Trade Letter of Credit shall
terminate later than 30 days prior to the Expiry Date and (vi) no
Issuing Bank shall be required to issue any Letter of Credit (x)
unless the Borrower and such Issuing Bank have agreed upon the
fees described in Section 3.01(c) or (y) in excess of any dollar
limit on the Stated Amounts thereof set forth in any agreement
setting forth the fees described in Section 3.01(c).
2.02 Minimum Stated Amount. The Stated Amount of each
Letter of Credit shall not be less than (i) in the case of Trade
Letters of Credit, $5,000 and (ii) in the case of Standby Letters
of Credit, $25,000.
2.03 Letter of Credit Requests. (a) Whenever the
Borrower desires that a Letter of Credit be issued for its
account, other than Letters of Credit that replace Existing
Letters of Credit pursuant to the last sentence of Section
2.01(a), it shall give the respective Issuing Bank (with copies
to be sent to the Administrative Agent and each other
-20-
<PAGE> 43
Bank) at least five Business Days' prior written request
therefor, or such shorter period of notice as the respective
Issuing Bank may agree upon with the Borrower from time to time.
Each such request shall be executed by the Borrower, and shall be
in the form of Exhibit C attached hereto (each a "Letter of
Credit Request").
(b) The execution and delivery of each Letter of
Credit Request shall be deemed to be a representation and
warranty by the Borrower that such Letter of Credit may be issued
in accordance with, and will not violate the requirements of,
Section 2.01. Unless the respective Issuing Bank has received
notice from the Administrative Agent or the Required Banks before
it issues the respective Letter of Credit that a Default or Event
of Default then exists, or that the issuance of such Letter of
Credit would violate Section 2.01, then such Issuing Bank may
issue the requested Letter of Credit for the account of the
Borrower in accordance with such Issuing Bank's usual and
customary practices. Upon its issuance of any Letter of Credit,
other than Letters of Credit that replace Existing Letters of
Credit pursuant to the last sentence of Section 2.01(a), the
respective Issuing Bank shall promptly notify the Administrative
Agent and each Bank of such issuance, which notice to the
Administrative Agent shall be accompanied by a copy of the Letter
of Credit actually issued.
2.04 Letter of Credit Participations. (a)
Immediately upon the issuance by any Issuing Bank of any Letter
of Credit, such Issuing Bank shall be deemed to have sold and
transferred to each Bank, including such Issuing Bank (each such
Bank, in its capacity under this Section 2, a "Participant"), and
each such Participant shall be deemed irrevocably and
unconditionally to have purchased and received from such Issuing
Bank, without recourse or warranty, an undivided interest and
participation, to the extent of such Participant's Adjusted
Percentage, in such Letter of Credit of such Issuing Bank, each
substitute letter of credit, each drawing made thereunder and the
obligations of the Borrower under this Agreement with respect
thereto, and any security therefor or guaranty pertaining
thereto. Such Issuing Bank may, or upon the request of the
Administrative Agent or the Required Banks shall, take such
actions in order to transfer such guaranties or security
interests, and any documents and instruments relating thereto, to
the Administrative Agent. Upon any change in the Commitments or
Adjusted Percentages of the Banks pursuant to Section 1.14 or
13.04 or as a result of a Bank Default, it is hereby agreed that,
with respect to all outstanding Letters
-21-
<PAGE> 44
of Credit and Unpaid Drawings, there shall be an automatic
adjustment to the participations pursuant to this Section 2.04 to
reflect the new Adjusted Percentages of the assignor and assignee
Bank or of all Non-Defaulting Banks, as the case may be.
(b) In determining whether to pay under any Letter of
Credit, the respective Issuing Bank shall not have any obligation
relative to the Banks other than to confirm that any documents
required to be delivered under such Letter of Credit appear to
have been delivered and that they appear to comply on their face
with the requirements of such Letter of Credit. In taking any
actions with respect to any security or guaranty relating to any
Letter of Credit issued by it, the respective Issuing Bank shall
be entitled to the protections and indemnities afforded the
Administrative Agent hereunder, and shall only be required to
take any actions in accordance with the obligations of the
Administrative Agent, provided that such Issuing Bank shall only
enforce such guaranties if instructed to do so by the
Administrative Agent or the Required Banks. Any action taken or
omitted to be taken by any Issuing Bank under or in connection
with any Letter of Credit if taken or omitted in the absence of
gross negligence or willful misconduct, shall not create for the
Issuing Bank any resulting liability to any Bank.
(c) In the event that any Issuing Bank makes any
payment under any Letter of Credit and the Borrower shall not
have reimbursed such amount in full to such Issuing Bank pursuant
to Section 2.05(a), such Issuing Bank shall promptly notify the
Administrative Agent, which shall promptly notify each
Participant of such failure, and each Participant shall promptly
and unconditionally pay to the Administrative Agent for the
account of such Issuing Bank the amount of such Participant's
Adjusted Percentage of such unreimbursed payment in Dollars and
in same day funds. If the respective Issuing Bank so notifies
the Administrative Agent, and the Administrative Agent so
notifies, prior to 11:00 A.M. (New York time) on any Business
Day, any Participant required to fund a payment under a Letter of
Credit, such Participant shall make available to such Issuing
Bank such Participant's Adjusted Percentage of the amount of such
payment on such Business Day in same day funds. If and to the
extent such Participant shall not have so made its Adjusted
Percentage of the amount of such payment available to the
respective Issuing Bank, such Participant agrees to pay to such
Issuing Bank, forthwith on demand such amount, together with
interest thereon, for each day from such date until the date such
amount is paid to the Administrative Agent for the account of
-22-
<PAGE> 45
such Issuing Bank at the Federal Funds Rate. The failure of any
Participant to make available to the Issuing Bank its Adjusted
Percentage of any payment under any Letter of Credit shall not
relieve any other Participant of its obligation hereunder to make
available to the Issuing Bank its Adjusted Percentage of any
payment under any Letter of Credit on the date required, as
specified above, but no Participant shall be responsible for the
failure of any other Participant to make available to such
Issuing Bank such other Participant's Adjusted Percentage of any
such payment.
(d) Whenever any Issuing Bank receives a payment of a
reimbursement obligation as to which it has received any payments
from the Participants pursuant to clause (c) above, such Issuing
Bank shall pay to each Participant which has paid its Adjusted
Percentage thereof, in Dollars and in same day funds, an amount
equal to such Participant's Adjusted Percentage thereof.
(e) Upon the request of any Participant, any Issuing
Bank which has issued a Letter of Credit shall furnish to such
Participant copies of any such Letter of Credit and such other
documentation as may reasonably be requested by such Participant.
(f) As between the Borrower and any Issuing Bank, the
Borrower assumes all risks of the acts and omissions of, or
misuse of the Letters of Credit by the respective beneficiaries
of such Letters of Credit. Further, and not in limitation of the
foregoing, no Issuing Bank shall be responsible, subject to the
provisions of Section 2.05(b), for the following:
(i) the form, validity, sufficiency, accuracy,
genuineness or legal effect of any documents submitted by
any party in connection with the application for and
issuance of or any drawing under such Letters of Credit,
even if it should in fact prove to be in any and all
respects invalid, insufficient, inaccurate, fraudulent or
forged;
(ii) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or
assign any such Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which
may prove to be invalid or ineffective for any reason;
-23-
<PAGE> 46
(iii) failure of the beneficiary of any such Letter of
Credit to comply fully with conditions required in order to
draw upon such Letter of Credit;
(iv) errors, omissions, interruptions or delays in the
transmission or delivery of any messages by mail, cable,
telegraph, telecopier, telex or otherwise, whether or not
they be in cipher;
(v) errors in interpretation of technical terms;
(vi) any loss or delay in the transmission or otherwise
of any document required in order to make a drawing under
any such Letter of Credit or the proceeds thereof;
(vii) the misapplication by the beneficiary of any such
Letter of Credit of the proceeds of any drawing of any such
Letter of Credit; and
(viii) any consequences arising from causes beyond the
control of such Issuing Bank, including without limitation
any acts of governments.
(g) The obligations of the Participants to make
payments to the Administrative Agent for the account of an
Issuing Bank with respect to any Letter of Credit issued by it in
accordance with Section 2.03(b) shall be irrevocable and not
subject to any qualification or exception whatsoever and shall be
made in accordance with the terms and conditions of this
Agreement under all circumstances, including, without limitation,
any of the following circumstances:
(i) any lack of validity or enforceability of this
Agreement or any of the Credit Documents;
(ii) the existence of any claim, setoff, defense or
other right which the Borrower may have at any time against
a beneficiary named in a Letter of Credit, any transferee of
any Letter of Credit (or any Person for whom any such
transferee may be acting), the Administrative Agent, such
Issuing Bank, any Participant, any other Bank, or any other
Person, whether in connection with this Agreement, any
Letter of Credit, the transactions contemplated herein or
any unrelated transactions;
(iii) any draft, certificate or any other document
presented under any Letter of Credit proving to be
-24-
<PAGE> 47
forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any
respect;
(iv) the surrender or impairment of any security for
the performance or observance of any of the terms of any of
the Credit Documents; or
(v) the occurrence of any Default or Event of Default.
2.05 Agreement to Repay Letter of Credit Drawings.
(a) The Borrower hereby agrees to reimburse the Issuing Bank, by
making payment to the Administrative Agent for the account of
such Issuing Bank in immediately available funds at the Payment
Office, for any payment made by such Issuing Bank under any
Letter of Credit (each such amount so paid until reimbursed, an
"Unpaid Drawing") immediately after, and in any event on the date
of, such payment, with interest on the amount so paid by such
Issuing Bank, to the extent not reimbursed prior to 1:00 P.M.
(New York time) on the date of such payment, from and including
the date paid to but excluding the date reimbursement is made as
provided above, at a rate per annum which shall be the
Alternative Base Rate (plus 2% if not reimbursed by 1:00 P.M.
(New York time) on the third Business Day following notice to the
Borrower of such payment) in effect from time to time, such
interest to be payable on demand.
(b) The obligations of the Borrower under this Section
2.05 to reimburse the respective Issuing Bank with respect to
Unpaid Drawings (including, in each case, interest thereon) shall
be absolute and unconditional under any and all circumstances and
irrespective of any setoff, counterclaim or defense to payment
which the Borrower may have or have had against any Bank
(including any Participant or any Issuing Bank in its capacity as
issuer of any Letter of Credit), including, without limitation,
any defense based upon the failure of any drawing under a Letter
of Credit (each a "Drawing") to conform to the terms of the
Letter of Credit or any non-application or misapplication by the
beneficiary of the proceeds of such Drawing; provided, however,
that the Borrower shall not be obligated to reimburse the
respective Issuing Bank for any wrongful payment made by such
Issuing Bank under a Letter of Credit as a result of acts or
omissions constituting willful misconduct or gross negligence on
the part of such Issuing Bank.
-25-
<PAGE> 48
2.06 Increased Costs. If at any time the introduction
or effectiveness of or any change in any applicable law, rule or
regulation (including without limitation those announced or
published prior to the date of this Agreement), or in the
interpretation or administration thereof by any governmental
authority charged with the interpretation or administration
thereof, or compliance by any Bank with any request or directive
by any such authority (whether or not having the force of law)
shall either (i) impose, modify or make applicable any reserve,
deposit, capital adequacy or similar requirement against letters
of credit issued, or participated in, by any Issuing Bank or
Participant, or (ii) impose on any Issuing Bank or Participant
any other conditions affecting this Agreement or any Letter of
Credit; and the result of any of the foregoing is to increase the
cost to any Issuing Bank or Participant of issuing, maintaining
or participating in any Letter of Credit, or reduce the amount of
any sum received or receivable by any Issuing Bank or Participant
hereunder with respect to Letters of Credit, then, within ten
days of the receipt of the certificate referred to below (which
certificate shall be given by the respective Issuing Bank or
Participant promptly after it determines such increased cost or
reduction is applicable to Letters of Credit or its participation
therein) to the Borrower by the respective Issuing Bank or
Participant (a copy of which certificate shall be sent by such
Issuing Bank or Participant to the Administrative Agent), the
Borrower shall, subject to Section 13.16 (to the extent
applicable), pay to such Issuing Bank or Participant such
additional amount or amounts as will compensate such Issuing Bank
or Participant for such increased cost or reduction. A
certificate submitted to the Borrower by such Issuing Bank or
Participant, setting forth the basis for the calculation of such
additional amount or amounts necessary to compensate such Issuing
Bank or Participant as aforesaid shall be conclusive and binding
on the Borrower absent manifest error.
Section 3. Fees; Commitment; Reductions of Commit-
ments.
3.01 Fees. (a) The Borrower agrees to pay to the
Administrative Agent for distribution to each Non-Defaulting Bank
a facility fee (the "Facility Fee") for the period commencing for
each Bank on the Effective Date until the Expiry Date, or such
earlier date as the Commitment of such Bank shall have been
terminated as provided herein. The Facility Fee shall be
computed at a rate equal to (i) if the Borrower's senior
unsecured indebtedness is not rated by S&P
-26-
<PAGE> 49
or Moody's, 3/8 of 1% per annum or (ii) if the Borrower's senior
unsecured indebtedness is rated by S&P or Moody's, the respective
percentage per annum on the average daily Commitment of such Bank
set forth below as determined by reference to the highest
Category (with Category 3 being the highest) in which the
Borrower meets at least one of the criteria set forth in the
definitions for such Category:
Category Facility Fee
-------- ------------
Category 3 1/5 of 1%
Category 2 1/4 of 1%
Category 1 3/8 of 1%
Accrued Facility Fees shall be due and payable quarterly in
arrears on the last Business Day of each March, June, September
and December of each year and on the Expiry Date, or such earlier
date upon which the Total Commitment is terminated.
(b) The Borrower agrees to pay the Administrative
Agent for pro rata distribution to the respective Issuing Banks
and the Participants (based upon their respective Adjusted
Percentages) a fee in respect of each Letter of Credit (the
"Letter of Credit Fee") for the period from and including the
date of issuance of such Letter of Credit to and including the
termination date of such Letter of Credit, computed at the
percentage equal to the Applicable Eurodollar Margin on the
average daily Stated Amount thereof. Accrued Letter of Credit
Fees shall be due and payable quarterly in arrears on the last
Business Day of each March, June, September and December of each
year and on the Expiry Date, or such earlier date as the Total
Commitment is terminated.
(c) The Borrower agrees to pay each Issuing Bank for
its account a facing fee in respect of each Letter of Credit
issued by such respective Issuing Bank (the "Facing Fee"), for
the period from and including the date of issuance of such Letter
of Credit to and including the date of termination of such Letter
of Credit, computed at a rate to be negotiated by the Borrower
and such Issuing Bank. Accrued Facing Fees shall be due and
payable quarterly in arrears on the last Business Day of each
March, June, September and December of each year and on the
Expiry Date, or such earlier date as the Total Commitment is
terminated.
(d) The Borrower agrees to pay to each Issuing Bank
upon each drawing under a Letter of Credit issued by such Issuing
Bank such amount as shall at the time of such
-27-
<PAGE> 50
drawing be such Issuing Bank's usual administrative charge for
drawings on similar letters of credit.
(e) The Borrower shall pay to the Administrative
Agent, for its own account, such other fees as have been agreed
to in writing by the Borrower and the Administrative Agent.
3.02 Voluntary Reduction of Commitments. Upon at
least two Business Days' prior notice to the Administrative Agent
at its Notice Office (which notice the Administrative Agent shall
promptly transmit to each of the Banks), the Borrower shall have
the right, without premium or penalty, to reduce permanently the
Total Commitment in whole or in part, in integral multiples of
$25,000,000, provided that (i) each such reduction shall apply
proportionately to permanently reduce the Commitment of each Bank
and (ii) the reduction to the Total Unutilized Commitment shall
in no case be in an amount which would cause the Commitment of
any Bank to be reduced (as required by preceding clause (i)) by
an amount which exceeds the remainder of (x) the Unutilized
Commitment of such Bank as in effect immediately before giving
effect to such reduction minus (y) such Bank's Adjusted
Percentage of the aggregate principal amount of Swingline Loans
then outstanding.
3.03 Mandatory Reduction of Commitments. (a) The
Total Commitment shall terminate on the Expiry Date unless
terminated earlier pursuant to Section 3.02.
(b) In addition to any other mandatory commitment
reductions pursuant to this Section 3.03, the Total Commitment
shall be permanently reduced (to the extent not otherwise
previously reduced) on each date set forth below to the amount
set forth opposite such date (each a "Scheduled Reduction"):
Date of Reduction Amount
----------------- ------------
December 31, 1994 $575,000,000
December 31, 1995 $550,000,000
December 31, 1996 $525,000,000
December 31, 1997 $500,000,000
December 31, 1998 $475,000,000
(c) In addition to any other mandatory commitment
reductions pursuant to this Section 3.03, on each date after the
Effective Date upon which the Borrower or any of its Subsidiaries
receives proceeds from any sale of assets
-28-
<PAGE> 51
(including capital stock and securities held thereby, but
excluding (i) sales of inventory, material and equipment in the
ordinary course of business, (ii) in any fiscal year of the
Borrower the first $50,000,000 in Net Sale Proceeds (other than
Net Sale Proceeds resulting from sales described in clause (i))
and (iii) dispositions of Cash Equivalents), an amount equal to
100% of the Net Sale Proceeds therefrom shall be applied as a
mandatory reduction to the Total Commitment, provided that to the
extent no Default or Event of Default then exists, if the
Borrower has delivered a Reinvestment Notice to the Agent on or
prior to the date of receipt of such Net Sale Proceeds, the Total
Commitment shall not be required to be so reduced by an amount
equal to the Anticipated Reinvestment Amount specified in such
Reinvestment Notice.
(d) In addition to any other mandatory commitment
reductions pursuant to this Section 3.03, on each Reinvestment
Prepayment Date, the Total Commitment shall be permanently
reduced by an amount equal to the Reinvestment Prepayment Amount
with respect to the applicable Reinvestment Event.
(e) In addition to any other mandatory commitment
reductions pursuant to this Section 3.03, on each date after the
Effective Date upon which the Borrower or any of its Subsidiaries
receives proceeds (net of costs and expenses) from any incurrence
by the Borrower or any of its Subsidiaries of Indebtedness for
borrowed money (excluding (x) the first $100,000,000 of aggregate
net proceeds of any Indebtedness incurred by the Borrower and its
Subsidiaries from and after the Effective Date, (y) the proceeds
of Indebtedness incurred by the Borrower and its Subsidiaries
from and after the Effective Date the aggregate amount of which
is in excess of the sum of (i) $100,000,000 and (ii) the then
applicable Clean-Down Amount and (z) the proceeds of which do not
reduce the Total Commitment pursuant to the immediately following
sentence), an amount equal to 100% of the cash proceeds of the
respective incurrence of Indebtedness (net of underwriting or
placement discounts and commissions and other reasonable costs
associated therewith) shall be applied as a mandatory reduction
to the Total Commitment, provided that in no event shall the
operation of this Section 3.03(e) result in the reduction of the
Total Commitment to an amount below $475,000,000.
Notwithstanding anything to the contrary contained in this
Section 3.03(e), if for each and every day of any Clean-Down
Period the Borrower reduces the Revolving Outstandings to $0,
then for the period commencing at the end of such Clean-Down
Period
-29-
<PAGE> 52
and ending the following December 1 the Borrower will not be
required to make any commitment reduction otherwise required by
this Section 3.03(e).
(f) The Total Commitment shall be terminated on June
30, 1994 unless the Effective Date shall have occurred on or
prior to such date.
(g) Each reduction of the Total Commitment pursuant to
this Section 3.03 shall apply proportionately to the Commitment
of each Bank.
Section 4. Prepayments; Payments.
4.01 Voluntary Prepayments. The Borrower shall have
the right to prepay the Loans (other than Competitive Bid Loans)
made to it, without premium or penalty, in whole or in part from
time to time on the following terms and conditions: (i) such
Borrower shall give the Administrative Agent prior to 11:00 A.M.
(New York time) at its Notice Office at least three Business
Days' (one Business Day's notice in the case of Base Rate Loans)
prior notice of its intent to prepay the Loans (other than
Competitive Bid Loans), the amount of such prepayment and the
Type of Loans to be prepaid and, in the case of Eurodollar Loans,
the specific Borrowing or Borrowings pursuant to which made,
which notice (other than in the case of one relating to Swingline
Loans) the Administrative Agent shall promptly transmit to each
of the Banks; (ii) each partial prepayment of any Borrowing shall
be in an aggregate principal amount of at least $10,000,000,
provided that (x) partial prepayments of a Borrowing of Swingline
Loans are permitted in minimum amounts of $100,000 and (y) if any
partial prepayment of Eurodollar Loans made pursuant to any
Borrowing shall reduce the outstanding Eurodollar Loans made
pursuant to such Borrowing to an amount less than $25,000,000,
such Borrowing of Eurodollar Loan shall be converted at the end
of the then current Interest Period to a Borrowing of Base Rate
Loans; (iii) prepayments of Eurodollar Loans may be made pursuant
to this Section 4.01 only on the last day of an Interest Period
applicable thereto; and (iv) each prepayment pursuant to this
Section 4.01 in respect of any Loans (other than Competitive Bid
Loans) made pursuant to a Borrowing shall be applied pro rata
among such Loans (other than Competitive Bid Loans), provided
that at the Borrower's election in connection with any prepayment
of Revolving Loans pursuant to this Section 4.01, such prepayment
shall not be applied to any Revolving Loans of a Defaulting Bank.
The Borrower shall not have the right to voluntarily prepay any
Competitive Bid Loans.
-30-
<PAGE> 53
4.02 Mandatory Repayments
(A) Requirements:
(a) (i) On any day on which the sum of the aggregate
outstanding principal amount of the Revolving Loans and
Competitive Bid Loans made by Non-Defaulting Banks, Swingline
Loans and the Letter of Credit Outstandings exceeds the Adjusted
Total Commitment as then in effect, the Borrower shall prepay
principal of Swingline Loans and, after the Swingline Loans have
been repaid in full, Revolving Loans of Non-Defaulting Banks in
an amount equal to such excess. If, after giving effect to the
prepayment of all outstanding Swingline Loans and Revolving Loans
of Non-Defaulting Banks, the aggregate amount of the Letter of
Credit Outstandings exceeds the Adjusted Total Commitment minus
the aggregate principal amount of all Competitive Bid Loans as
then in effect, the Borrower shall pay to the Administrative
Agent at the Payment Office on such date an amount of cash or
Cash Equivalents equal to the amount of such excess (up to a
maximum amount equal to the Letter of Credit Outstandings at such
time), such cash or Cash Equivalents to be held as security for
all obligations of the Borrower to Non-Defaulting Banks hereunder
in a cash collateral account to be established by the
Administrative Agent. If, after giving effect to the prepayment
of all outstanding Swingline Loans, Revolving Loans and Unpaid
Drawings and the cash collateralization of all Letters of Credit,
the aggregate outstanding principal amount of Competitive Bid
Loans exceeds the Total Commitment, the Borrower shall repay on
such date the principal of Competitive Bid Loans in an aggregate
amount equal to such excess, provided that no Competitive Bid
Loan shall be prepaid pursuant to this sentence unless the Bank
that made same consents to such prepayment.
(ii) On any day on which the aggregate outstanding
principal amount of the Revolving Loans made by any Defaulting
Bank exceeds the Commitment of such Defaulting Bank, the Borrower
shall prepay principal of Revolving Loans of such Defaulting Bank
in an amount equal to such excess.
(b) If on any January 29, there has not been a Clean-
Down Period since January 29 of the prior year, then the Borrower
shall on such January 29 repay outstanding Revolving Loans,
Swingline Loans and Unpaid Drawings in respect of Trade Letters
of Credit and the Borrower shall deposit in the Cash Reserve an
amount which, when added to the amount, if any, then held in the
Cash Reserve, equals the aggregate Stated Amount of outstanding
Trade Letters of
-31-
<PAGE> 54
Credit and Competitive Bid Loans, and thereafter no Loans may be
incurred and no new Trade Letters of Credit may be issued (unless
the amounts held in the Cash Reserve are increased at the time of
such issuance so that the aggregate amounts held in the Cash
Reserve will equal the aggregate Stated Amount of outstanding
Trade Letters of Credit after giving effect to such issuance)
until such time as there has occurred a period of 30 consecutive
days during each day of which the Revolving Outstandings shall
not have exceeded the then applicable Clean-Down Amount.
(c) Each Alternate Swingline Rate Loan shall be due
and payable on the first Business Day following the incurrence
thereof.
(d) All Loans shall be due and payable in full on the
Expiry Date.
(B) Application:
With respect to each repayment of Revolving Loans
required by Section 4.02(A)(a), the Borrower may designate the
Types of Loans which are to be prepaid and the specific Borrowing
or Borrowings pursuant to which made, provided that (i) each
repayment of any Revolving Loans made pursuant to a Borrowing
shall be applied pro rata among such Revolving Loans; provided
that no repayment of Revolving Loans pursuant to Section
4.02(A)(a)(i) shall be applied to the Revolving Loans of a
Defaulting Bank; (ii) if any repayment of Eurodollar Loans made
pursuant to a single Borrowing shall reduce the outstanding
Eurodollar Loans made pursuant to such Borrowing to an amount
less than $25,000,000 for such Eurodollar Loans, such Borrowing
shall be converted at the end of the then current Interest Period
into a Borrowing of Base Rate Loans; and (iii) repayments of
Revolving Loans of Defaulting Banks pursuant to Section
4.02(A)(a)(ii) shall be applied pro rata among such Revolving
Loans. In the absence of a designation by the Borrower as
described in the preceding sentence, the Administrative Agent
shall, subject to the above, make such designation in its sole
discretion with a view, but no obligation, to minimize breakage
costs owing under Section 1.12.
4.03 Method and Place of Payment. Except as otherwise
specifically provided herein, all payments under this Agreement
or any Note shall be made to the Administrative Agent for the
account of the Bank or Banks entitled thereto not later than
12:00 Noon (New York time) on the date when due and shall be made
in Dollars and in immediately available
-32-
<PAGE> 55
funds at the Payment Office of the Administrative Agent. Whenever
any payment to be made hereunder or under any Note shall be
stated to be due on a day which is not a Business Day, the due
date thereof shall be extended to the next succeeding Business
Day and, with respect to payments of principal, interest shall be
payable at the applicable rate during such extension.
4.04 Net Payments. (a) All payments made by the
Borrower hereunder or under any Note will be made without setoff,
counterclaim or other defense. Except as provided in Section
4.04(b), all such payments will be made free and clear of, and
without deduction or withholding for, any present or future
taxes, levies, imposts, duties, fees, assessments or other
charges of whatever nature now or hereafter imposed by any
jurisdiction or by any political subdivision or taxing authority
thereof or therein with respect to such payments (but excluding,
except as provided in the second succeeding sentence, any tax
imposed on or measured by the gross or net income or profits of a
Bank pursuant to the laws of any jurisdiction (including, without
limitation, the laws of the United States of America) (or any
political subdivision or taxing authority thereof) having taxing
authority over such Bank) and all interest, penalties or similar
liabilities with respect thereto (all such non-excluded taxes,
levies, imports, duties, fees, assessments or other charges being
referred to collectively as "Taxes"). If any Taxes are so levied
or imposed, the Borrower agrees to pay the full amount of such
Taxes, and such additional amounts as may be necessary so that
every payment of amounts due under this Agreement or under any
Note, after withholding or deduction for or on account of any
Taxes, will not be less than the amount provided for under this
Agreement or under any Note. If any amounts are payable in
respect of Taxes pursuant to the preceding sentence, the Borrower
agrees to reimburse each Bank, upon the written request of such
Bank, for taxes imposed on or measured by the net income or
profits of such Bank pursuant to the laws of the jurisdiction in
which such Bank is organized or in which the principal office or
applicable lending office of such Bank is located or under the
laws of any political subdivision or taxing authority of any such
jurisdiction in which such Bank is organized or in which the
principal office or applicable lending office of such Bank is
located and for any withholding of income or similar taxes
imposed by the United States of America as such Bank shall
determine are payable by, or withheld from, such Bank in respect
of such amounts so paid to or on behalf of such Bank pursuant to
the preceding sentence and in respect of any amounts paid to or
on behalf of such Bank pursuant to
-33-
<PAGE> 56
this sentence. The Borrower will furnish to the Administrative
Agent within 45 days after the date the payment of any Taxes is
due pursuant to applicable law and to the extent paid by the
Borrower certified copies of tax receipts evidencing such payment
by the Borrower. The Borrower agrees to indemnify and hold
harmless each Bank, and reimburse such Bank upon its written
request, for the amount of any Taxes so levied or imposed and
paid by such Bank.
(b) Each Bank that is not a United States person (as
such term is defined in Section 7701(a)(30) of the Code) agrees
to deliver to the Borrower and the Administrative Agent on or
prior to the Effective Date, or in the case of a Bank that is an
assignee or transferee of an interest under this Agreement
pursuant to Section 1.14 or 13.04 (unless the respective Bank was
already a Bank hereunder immediately prior to such assignment or
transfer), on the date of such assignment or transfer to such
Bank, (i) two accurate and complete original signed copies of
Internal Revenue Service Form 4224 or 1001 (or successor forms)
certifying to such Bank's entitlement to a complete exemption
from United States withholding tax with respect to payments to be
made under this Agreement and under any Note, or (ii) if the Bank
is not a "bank" within the meaning of Section 881(c)(3)(A) of the
Code and cannot deliver either Internal Revenue Service Form 1001
or 4224 pursuant to clause (i) above, (x) a certificate
substantially in the form of Exhibit D (any such certificate, a
"Section 4.04(b)(ii) Certificate") and (y) two accurate and
complete original signed copies of Internal Revenue Service Form
W-8 (or successor form) certifying to such Bank's entitlement to
a complete exemption from United States withholding tax with
respect to payments to be made under this Agreement and under any
Note. In addition, each Bank agrees that from time to time after
the Effective Date, when a lapse in time or change in
circumstances renders the previous certification obsolete or
inaccurate in any material respect, it will deliver to the
Borrower and the Administrative Agent two new accurate and
complete original signed copies of Internal Revenue Service Form
4224 or 1001, or Form W-8 and a Section 4.04(b)(ii) Certificate,
as the case may be, and such other forms as may be required in
order to confirm or establish the entitlement of such Bank to a
continued exemption from or reduction in United States
withholding tax with respect to payments under this Agreement and
any Note, or it shall immediately notify the Borrower and the
Administrative Agent of its inability to deliver any such Form or
Certificate. Notwithstanding anything to the contrary contained
in Section 4.04(a), but subject to Section 13.04(b) and the
immediately succeeding sentence, (x) the Borrower
-34-
<PAGE> 57
shall be entitled, to the extent it is required to do so by law,
to deduct or withhold income or similar taxes imposed by the
United States (or any political subdivision or taxing authority
thereof or therein) from interest, fees or other amounts payable
hereunder for the account of any Bank which is not a United
States person (as such term is defined in Section 7701(a)(30) of
the Code) for U.S. Federal income tax purposes to the extent that
such Bank has not provided to the Borrower U.S. Internal Revenue
Service Forms that establish a complete exemption from such
deduction or withholding and (y) the Borrower shall not be
obligated pursuant to Section 4.04(a) hereof to gross-up payments
to be made to a Bank in respect of income or similar taxes
imposed by the United States if (I) such Bank has not provided to
the Borrower the Internal Revenue Service Forms required to be
provided to the Borrower pursuant to this Section 4.04(b) or (II)
in the case of a payment, other than interest, to a Bank
described in clause (ii) above, to the extent that such Forms do
not establish a complete exemption from withholding of such
taxes. Notwithstanding anything to the contrary contained in the
preceding sentence or elsewhere in this Section 4.04 and except
as set forth in Section 13.04(b), the Borrower agrees to pay
additional amounts and to indemnify each Bank in the manner set
forth in Section 4.04(a) (without regard to the identity of the
jurisdiction requiring the deduction or withholding) in respect
of any amounts deducted or withheld by it as described in the
immediately preceding sentence as a result of any changes after
the Effective Date in any applicable law, treaty, governmental
rule, regulation, guideline or order, or in the interpretation
thereof, relating to the deducting or withholding of income or
similar Taxes (it being understood that the Borrower shall not be
required to indemnify the Banks in respect of amounts withheld in
respect of obligations other than Taxes).
Section 5. Conditions Precedent to Credit Events on
the Effective Date. The obligation of each Bank to make Loans
and participate in Letters of Credit, and the obligation of each
Issuing Bank to issue Letters of Credit, is subject at the time
of such Credit Event on the Effective Date to the satisfaction of
the following conditions:
5.01 Execution of Agreement; Notes. On or prior to
the Effective Date (i) this Agreement shall have been executed
and delivered in accordance with Section 13.10 and (ii) there
shall have been delivered to the Administrative Agent for the
account of each of the Banks the appropriate Revolving Note and
Competitive Bid Note executed by the
-35-
<PAGE> 58
Borrower, and to Chemical the Swingline Note executed by the
Borrower, in each case in the amount, maturity and as otherwise
provided herein.
5.02 Fees, etc. On the Effective Date, the Borrower
shall have paid to the Administrative Agent and the Banks all
costs, fees and expenses (including, without limitation, legal
fees and expenses) payable to the Administrative Agent and the
Banks to the extent then due.
5.03 Opinions of Counsel. On the Effective Date, the
Administrative Agent shall have received (i) from Bass, Berry &
Sims, special counsel to the Borrower and its Subsidiaries, an
opinion addressed to the Administrative Agent and each of the
Banks and dated the Effective Date covering the matters set forth
in Exhibit E-1 and such other matters incident to the
transactions contemplated herein as the Administrative Agent may
reasonably request and (ii) from Glen A. Bodzy, Esq., General
Counsel of the Borrower and its Subsidiaries, an opinion
addressed to the Administrative Agent and each of the Banks and
dated the Effective Date covering the matters set forth in
Exhibit E-2 and such other matters incident to the transactions
contemplated herein as the Administrative Agent may reasonably
request.
5.04 Corporate Documents; Proceedings; etc. (a) On
the Effective Date, the Administrative Agent shall have received
a certificate, dated the Effective Date, signed by the President,
any Vice President or the Treasurer of each Credit Party, and
attested to by the Secretary or any Assistant Secretary of such
Credit Party, in the form of Exhibit F with appropriate
insertions, together with copies of the certificate of
incorporation (or equivalent organizational document) and by-laws
of such Credit Party and the resolutions of such Credit Party
referred to in such certificate, and the foregoing shall be
reasonably acceptable to the Administrative Agent.
(b) On the Effective Date, the Administrative Agent
shall have received a certificate, dated the Effective Date,
signed by the President, any Vice President or the Treasurer of
the Borrower stating that all the conditions in Sections 5.06,
5.07, 5.09 and 6.01 have been satisfied on such date.
(c) All corporate and legal proceedings and all
instruments and agreements in connection with the transactions
contemplated by this Agreement and the other Credit Documents
shall be reasonably satisfactory in form and
-36-
<PAGE> 59
substance to the Administrative Agent and the Required Banks, and
the Administrative Agent shall have received all information and
copies of all documents and papers, including records of
corporate proceedings, governmental approvals, good standing
certificates and bring-down telegrams or facsimiles, if any,
which the Administrative Agent reasonably may have requested in
connection therewith, such documents and papers where appropriate
to be certified by proper corporate or governmental authorities.
5.05 Guaranty. On the Effective Date, each Guarantor
shall have duly authorized, executed and delivered a Guaranty in
the form of Exhibit G (as modified, supplemented or amended from
time to time, the "Guaranty"), which Guaranty shall be in full
force and effect.
5.06 Adverse Change, etc. (a) On the Effective Date,
nothing shall have occurred (and the Banks shall have become
aware of no facts, conditions or other information not previously
known) since April 3, 1994 which the Administrative Agent or the
Required Banks shall determine has, or could reasonably be
expected to have, a material adverse effect on the rights or
remedies of the Administrative Agent or the Banks, or on the
ability of any Credit Party to perform their respective
obligations to the Administrative Agent and the Banks or which
has, or could reasonably be expected to have, a material adverse
effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of
the Borrower or of the Borrower and its Subsidiaries taken as a
whole.
(b) On or prior to the Effective Date, all necessary
governmental (domestic and foreign) and third party approvals in
connection with the transactions contemplated by the Credit
Documents and otherwise referred to herein or therein shall have
been obtained and remain in effect, and all applicable waiting
periods shall have expired without any action being taken by any
competent authority which restrains, prevents or imposes
materially adverse conditions upon the consummation of the
transactions contemplated by this Agreement. Additionally, there
shall not exist any judgment, order, injunction or other
restraint issued or filed or a hearing seeking injunctive relief
or other restraint pending or notified prohibiting or imposing
materially adverse conditions upon the consummation of the
transactions contemplated by this Agreement.
5.07 Litigation. On the Effective Date, no litigation
by any entity (private or governmental) shall be
-37-
<PAGE> 60
pending or threatened with respect to this Agreement or any
documentation executed in connection herewith or therewith, or
the transactions contemplated hereby, or with respect to any
material Indebtedness of the Borrower or any of its Subsidiaries
which is to remain outstanding after the Effective Date, or which
the Administrative Agent or the Required Banks shall determine
could reasonably be expected to have a materially adverse effect
on the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of the Borrower,
or of the Borrower and its Subsidiaries taken as a whole.
5.08 Solvency Certificate. On or prior to the Effective
Date, there shall have been delivered to the Administrative Agent
a certificate in the form of Exhibit H, addressed to the
Administrative Agent and each of the Banks and dated the
Effective Date, from the chief financial officer of the Borrower,
providing the opinion of such chief financial officer as to the
solvency of the Borrower and of the Borrower and its Subsidiaries
taken as a whole.
5.09 Termination of the Existing Credit Agreement.
(a) On or prior to the Effective Date, the total commitments
under the Existing Credit Agreement shall have been terminated,
and all loans thereunder shall have been repaid in full, together
with interest thereon, all letters of credit issued thereunder
shall have been terminated or assumed hereunder as described in
Section 2.01 and all other amounts owing pursuant to the Existing
Credit Agreement shall have been repaid in full and the Existing
Credit Agreement shall have been terminated and be of no further
force or effect. The Administrative Agent shall have received
evidence in form, scope and substance satisfactory to it and the
Required Banks that the matters set forth in this Section 5.09(a)
have been satisfied on such date.
(b) On or prior to the Effective Date, the creditors
under the Existing Credit Agreement shall have terminated and
released all security interests and Liens on the assets owned by
the Borrower or its Subsidiaries. The Administrative Agent shall
have received such releases of security interests in and Liens on
the assets owned by the Borrower or its Subsidiaries as may have
been requested by the Administrative Agent or the Required Banks,
which releases shall be in form and substance satisfactory to the
Administrative Agent and the Required Banks. Notwithstanding the
foregoing, such security interests and Liens shall be treated as
having been released if there shall have been delivered (i) a
termination and release agreement executed by
-38-
<PAGE> 61
the agent and/or the collateral agent under the Existing Credit
Agreement which will (A) release security interests in the
collateral created pursuant to the Existing Credit Agreement and
the documentation related thereto and (B) include an agreement by
such agent and/or collateral agent to execute termination
statements for filing under the UCC of jurisdictions where a
financing statement (Form UCC-1 or the appropriate equivalent)
was filed pursuant to the Existing Credit Agreement, or other
instruments or documents, as the Borrower or the Administrative
Agent may from time to time request, (ii) a termination or
assignment of any security interest in, or Lien on, any patents,
trademarks, copyrights, or similar interests of the Borrower or
its Subsidiaries on which filings have been made, (iii) releases
or terminations of all mortgages, leasehold mortgages and deeds
of trust created with respect to property of the Borrower or its
Subsidiaries, in each case to secure the obligations under the
Existing Credit Agreement, all of which shall be in form and
substance satisfactory to the Administrative Agent and the
Required Banks and (iv) all collateral owned by the Borrower and
its Subsidiaries in the possession of the agent and/or collateral
agent under the Existing Credit Agreement or any related security
document or any other agent, collateral agent, or trustee for the
creditors under the Existing Credit Agreement.
5.10 UCC Searches. On or prior to the Effective Date,
the Administrative Agent shall have received certified copies of
Requests for Information or Copies (Form UCC-11), or equivalent
reports, dated any date within two months prior to the Effective
Date, listing substantially all effective financing statements
that name the Borrower, each of the Guarantors and their
predecessors in interest as debtor and that are filed in (i) the
"central filing office" (as such term is used in the Uniform
Commercial Code as enacted by each state) of all states in which
the Borrower or the Guarantors have store locations and, (ii)
with respect to states in which the Borrower or the Guarantors
have store locations and which do not provide a central filing
office, in all jurisdictions in such states where such financing
statements would create effective Liens on the assets of such
Persons, together, in either case, with copies of such financing
statements.
Section 6. Conditions Precedent to All Credit Events.
The obligation of each Bank to make Loans (including Loans made
on the Effective Date but excluding Mandatory Borrowings made
thereafter, which shall be made as provided
-39-
<PAGE> 62
in Section 1.01(c)) and participate in Letters of Credit, and the
obligation of an Issuing Bank to issue any Letter of Credit, is
subject, at the time of each such Credit Event (except as
hereinafter indicated), to the satisfaction of the following
conditions:
6.01 No Default; Representations and Warranties. At
the time of each such Credit Event and also after giving effect
thereto (i) there shall exist no Default or Event of Default and
(ii) all representations and warranties contained herein or in
any other Credit Document shall be true and correct in all
material respects with the same effect as though such
representations and warranties had been made on the date of the
making of such Credit Event (it being understood and agreed that
any representation or warranty which by its terms is made as of a
specified date shall be required to be true and correct in all
material respects only as of such specified date).
6.02 Notice of Borrowing; Letter of Credit Request.
(a) Prior to the making of each Revolving Loan, the
Administrative Agent shall have received a Notice of Borrowing
required by Section 1.03(a). Prior to the making of each
Swingline Loan, Chemical shall have received the notice required
by Section 1.03(b). Prior to the making of each Competitive Bid
Loan, the Administrative Agent shall receive a Notice of
Competitive Bid Borrowing required by Section 1.04.
(b) Prior to the issuance of each Letter of Credit,
the Administrative Agent and the respective Issuing Bank shall
have received a Letter of Credit Request meeting the requirements
of Section 2.03.
The acceptance of the proceeds of each Credit Event
shall constitute a representation and warranty by the Borrower to
the Administrative Agent and each of the Banks that all the
conditions specified in Section 5 and in this Section 6 and
applicable to such Credit Event exist as of that time. All of the
Notes, certificates, legal opinions and other documents and
papers referred to in Section 5 and in this Section 6, unless
otherwise specified, shall be delivered to the Administrative
Agent at the Notice Office for the account of each of the Banks
and, except for the Notes, in sufficient counterparts or copies
for each of the Banks and shall be in form and substance
reasonably satisfactory to the Banks.
Section 7. Representations, Warranties and Agree-
ments. In order to induce the Banks to enter into this
-40-
<PAGE> 63
Agreement and to make the Loans, and issue (or participate in)
the Letters of Credit as provided herein, the Borrower makes the
following representations, warranties and agreements, all of
which shall survive the execution and delivery of this Agreement
and the Notes and the making of the Loans and issuance of the
Letters of Credit, with the occurrence of each Credit Event on or
after the Effective Date being deemed to constitute a
representation and warranty that the matters specified in this
Section 7 are true and correct on and as of the Effective Date
and in all material respects on the date of each such Credit
Event (it being understood and agreed that any representation or
warranty which by its terms is made as of a specified date shall
be required to be true and correct in all material respects only
as of such specified date).
7.01 Corporate or Partnership Status. Each of the
Borrower and its Subsidiaries (i) is a duly organized and validly
existing corporation, partnership or business trust, as the case
may be, in good standing (if applicable) under the laws of the
jurisdiction of its organization, (ii) has the corporate or other
organizational power and authority to own its property and assets
and to transact the business in which it is engaged and (iii) is
duly qualified and is authorized to do business and is in good
standing (if applicable) in each jurisdiction where the
ownership, leasing or operation of property or the conduct of its
business requires such qualification except where the failure to
be so qualified could not have a material adverse effect on the
business, operations, property, assets, condition (financial or
otherwise) or prospects of the Borrower or of the Borrower and
its Subsidiaries taken as a whole.
7.02 Corporate or Partnership Power and Authority.
Each of the Credit Parties has the corporate or other
organizational power and authority, as the case may be, to
execute, deliver and perform the terms and provisions of each of
the Credit Documents to which it is a party and has taken all
necessary corporate or other organizational action, as the case
may be, to authorize the execution, delivery and performance by
it of each of such Credit Documents. Each of the Credit Parties
has duly executed and delivered each of the Credit Documents to
which it is a party, and each of such Credit Documents
constitutes its legal, valid and binding obligation enforceable
in accordance with its terms, except to the extent that the
enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws generally
affecting creditors' rights.
-41-
<PAGE> 64
7.03 No Violation. Neither the execution, delivery or
performance by any Credit Party of the Credit Documents to which
it is a party, nor compliance by it with the terms and provisions
thereof, (i) will contravene any provision of any law, statute,
rule or regulation or any order, writ, injunction or decree of
any court or governmental instrumentality applicable to the
Borrower or any of its Subsidiaries, (ii) will conflict or be
inconsistent with or result in any breach of any of the terms,
covenants, conditions or provisions of, or constitute a default
under, or result in the creation or imposition of (or the
obligation to create or impose) any Lien upon any of the property
or assets of any Credit Party or any of its Subsidiaries pursuant
to the terms of any indenture, mortgage, deed of trust, credit
agreement, loan agreement or any other material agreement,
contract or instrument to which such Credit Party or any of its
Subsidiaries is a party or by which it or any of its property or
assets are bound or to which it may be subject, or (iii) will
violate any provision of the Certificate of Incorporation or By-
Laws of the Borrower or any of its Subsidiaries.
7.04 Governmental Approvals. No order, consent,
approval, license, authorization or validation of, or filing,
recording or registration with (except as have been obtained or
made) or exemption by, any governmental or public body or
authority, or any subdivision thereof, is required to authorize,
or is required in connection with, (i) the execution, delivery
and performance of any Credit Document or (ii) the legality,
validity, binding effect or enforceability of any Credit
Document.
7.05 Financial Statements; Financial Condition;
Undisclosed Liabilities; etc. (a) The consolidated balance
sheet of the Borrower and its Subsidiaries at January 1, 1994,
and April 3, 1994, the related consolidated statements of
financial condition of the Borrower and its Subsidiaries at
January 1, 1994 and April 3, 1994, and the related consolidated
statements of income and retained earnings and cash flows of the
Borrower and its Subsidiaries for the fiscal year and three-month
period ended on such date, as the case may be, and heretofore
furnished to the Banks present fairly the consolidated financial
condition of the Borrower and its Subsidiaries at the date of
such statements of financial condition and the consolidated
results of the operations of the Borrower and its Subsidiaries at
the date of such statements of financial condition and the
consolidated results of the operations of the Borrower and its
Subsidiaries for the respective fiscal year or three-month
period, as
-42-
<PAGE> 65
the case may be. All such financial statements have been
prepared in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments and the omission of footnote
disclosures in the case of the April 3, 1994 financial
statements. Since April 3, 1994, after giving effect to the
effectiveness of this Agreement, there has been no material
adverse change in the business, property, assets, liabilities,
condition (financial or otherwise), operations, results of
operations or prospects of the Borrower or of the Borrower and
its Subsidiaries taken as a whole.
(b) Except as fully reflected in the financial
statements delivered pursuant to Section 7.05(a) or in Schedule
III hereto, there were as of the Effective Date no liabilities or
obligations (excluding current obligations incurred in the
ordinary course of business) with respect to the Borrower or any
of its Subsidiaries of any nature whatsoever (whether absolute,
accrued, contingent or otherwise and whether or not due), and the
Borrower does not know of any basis for the assertion against the
Borrower or any of its Subsidiaries of any such liability or
obligation which, either individually or in aggregate, are or
would be reasonably likely to be material to the Borrower, or to
the Borrower and its Subsidiaries taken as a whole.
(c) The projections prepared by the Borrower and
delivered to the Banks prior to the Effective Date (the
"Projections") are based on good faith estimates and assumptions
made by the management of the Borrower and its Subsidiaries and
on the Effective Date, the management believed that the
Projections were reasonable and attainable.
(d) On and as of the Effective Date, both before and
after giving effect to all Indebtedness (including the Loans and
the Letters of Credit) incurred (and repaid), and to be incurred,
assumed or guaranteed by each Credit Party in connection
therewith, (a) the sum of the assets, at a fair valuation, of the
Borrower and its Subsidiaries taken as a whole will exceed their
debts; (b) the Borrower and its Subsidiaries taken as a whole
have not incurred and do not intend to, or believe that they
will, incur debts beyond their ability to pay such debts as such
debts mature; and (c) the Borrower and its Subsidiaries taken as
a whole will have sufficient capital with which to conduct their
businesses. For purposes of this Section 7.05(d) "debt" means any
liability on a claim, and "claim" means (i) right to payment,
whether or not such a right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured,
-43-
<PAGE> 66
or unsecured; or (ii) right to an equitable remedy for breach of
performance if such breach gives rise to a payment, whether or
not such right to an equitable remedy is reduced to judgment,
fixed, contingent, matured, unmatured, disputed, undisputed,
secured or unsecured.
7.06 Litigation. There are no actions, suits or
proceedings pending or, to the best knowledge of the Borrower,
threatened (i) with respect to any Credit Document, or (ii) that
are reasonably likely to materially and adversely affect the
business, property, assets, liabilities, condition (financial or
otherwise), operations, results of operations or prospects of the
Borrower and its Subsidiaries taken as a whole.
7.07 True and Complete Disclosure. All factual
information (taken as a whole) heretofore or contemporaneously
furnished by or on behalf of the Borrower or any of its
Subsidiaries in writing to any Bank (including without limitation
all information contained in the Credit Documents) for purposes
of or in connection with this Agreement, or any transaction
contemplated herein or therein is, and all other factual
information (taken as a whole) hereafter furnished by the
Borrower or any of its Subsidiaries in writing to any Bank will
be, true and accurate in all material respects on the date as of
which such information is dated or certified and does not omit to
state any material fact necessary to make such information (taken
as a whole) not materially misleading at such time in light of
the circumstances under which such information was provided.
7.08 Use of Proceeds; Margin Regulations. (a) All
proceeds of Loans shall be used by the Borrower for its and its
Subsidiaries' general corporate purposes.
(b) No part of the proceeds of any Loan will be used
by the Borrower or any Subsidiary thereof to purchase or carry
any Margin Stock or to extend credit to others for the purpose of
purchasing or carrying any Margin Stock. Neither the making of
any Loan nor the use of the proceeds thereof will violate or be
inconsistent with the provisions of Regulations G, T, U or X of
the Board of Governors of the Federal Reserve System.
7.09 Tax Returns and Payments. The Borrower and each
of its Subsidiaries has filed all federal and other material tax
returns required to be filed by it and has paid all income taxes
payable by it which have become due pursuant to such tax returns
and all other taxes and assessments pay-
-44-
<PAGE> 67
able by it which have become due, other than those not yet
delinquent and except for those contested in good faith and for
which adequate reserves have been established. The Borrower and
each of its Subsidiaries has paid, or has provided adequate
reserves (in the good faith judgment of the management of the
Borrower or such Subsidiary) for the payment of, all federal and
state income taxes applicable for all prior fiscal years and for
the current fiscal year to the date hereof to the extent required
by generally accepted accounting principles.
7.10 Compliance with ERISA. Except as set forth on
Schedule IV, each Plan is in substantial compliance with ERISA
and the Code; no Reportable Event has occurred with respect to a
Plan; no Plan is insolvent or in reorganization; no Plan has an
Unfunded Current Liability which, when added to the aggregate
amount of Unfunded Current Liabilities with respect to all other
Plans, would exceed $20,000,000; no Plan has an accumulated or
waived funding deficiency or has applied for an extension of any
amortization period within the meaning of Section 412 of the
Code; all contributions required to be made with respect to a
Plan have been timely made; neither the Borrower, nor any
Subsidiary of the Borrower nor any ERISA Affiliate has incurred
any material liability to or on account of a Plan pursuant to
Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201,
4204 or 4212 of ERISA or Section 401(a)(29), 4971, 4975 or 4980
of the Code or expects to incur any material liability (including
any contingent or secondary liability) under any of the foregoing
Sections with respect to any Plan; no proceedings have been
instituted to terminate or appoint a trustee to administer any
Plan pursuant to Section 4042 of ERISA; no condition exists which
presents a material risk to the Borrower or any Subsidiary of the
Borrower or any ERISA Affiliate of incurring a liability to or on
account of a Plan pursuant to the foregoing provisions of ERISA
and the Code; and using actuarial assumptions and computation
methods consistent with Part 1 of subtitle E of Title IV of
ERISA, the aggregate liabilities of the Borrower and its
Subsidiaries and its ERISA Affiliates to all Plans which are
multiemployer plans (as defined in Section 4001(a)(3) of ERISA)
in the event of a complete withdrawal therefrom, as of the close
of the most recent fiscal year of each such Plan ended prior to
the date of the most recent Credit Event, would not exceed
$1,000,000; no lien imposed under the Code or ERISA on the assets
of the Borrower or any Subsidiary of the Borrower or any ERISA
Affiliate exists or is likely to arise on account of any Plan;
and the Borrower and its Subsidiaries do not maintain or
contribute to any Employee
-45-
<PAGE> 68
Benefit Plan the obligation with respect to which could
reasonably be expected to have a material adverse effect on the
ability of the Borrower to perform its obligations under this
Agreement.
7.11 Subsidiaries. Schedule V correctly sets forth as
of the Effective Date the percentage ownership (direct and
indirect) of the Borrower in each class of capital stock of each
of its Subsidiaries and also identifies the direct owner thereof.
7.12 Compliance with Statutes, etc. The Borrower and
each of its Subsidiaries is in compliance with all applicable
statutes, regulations and orders of, and all applicable
restrictions imposed by, all governmental bodies, domestic or
foreign, in respect of the conduct of their businesses and the
ownership of their property, except such noncompliances as are
not likely to, in the aggregate, have a material adverse effect
on the business, operations, property, assets, condition
(financial or otherwise) or prospects of the Borrower and its
Subsidiaries taken as a whole.
7.13 Investment Company Act. Neither the Borrower nor
any of its Subsidiaries is or is controlled by an "investment
company" within the meaning of the Investment Company Act of
1940, as amended.
7.14 Public Utility Holding Company Act. Neither the
Borrower nor any of its Subsidiaries is a "holding company," or a
"subsidiary company" of a "holding company," or an "affiliate" of
a "holding company" or of a "subsidiary company" of a "holding
company" within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
7.15 Patents, Licenses, Franchises and Formulas. Each
of the Borrower and its Subsidiaries owns all the patents,
trademarks, permits, service marks, trade names, copyrights,
licenses, franchises and formulas, or rights with respect to the
foregoing, or each has obtained assignments of all licenses and
other rights of whatever nature, necessary for the present
conduct of its businesses, without any known conflict with the
rights of others which, or the failure to obtain which, as the
case may be, is likely to result in a material adverse effect on
the business, operations, property, assets, condition (financial
or otherwise) or prospects of the Borrower and its Subsidiaries
taken as a whole.
7.16 Restrictions on Subsidiaries. Except as set
forth in this Agreement, there are no restrictions on the
-46-
<PAGE> 69
Borrower or any of its Subsidiaries which prohibit or otherwise
restrict the transfer of cash or other assets (x) between the
Borrower and any of its Subsidiaries or (y) between any
Subsidiaries of the Borrower, other than applicable restrictions
of law imposed on Subsidiaries by the jurisdictions in which such
Subsidiaries are incorporated.
7.17 Properties. The Borrower and each of its
Subsidiaries have good marketable title to, or a validly
subsisting leasehold interest in, all properties owned or leased
by them, including all property reflected in the consolidated
balance sheet of the Borrower and its Subsidiaries as referred to
in Section 7.05(a) (except as sold or otherwise disposed of since
the date of such balance sheet in the ordinary course of business
or since the Effective Date, in accordance with Section 9.02),
free and clear of all Liens, other than (i) as referred to in the
consolidated balance sheet or in the notes thereto or (ii)
otherwise permitted by Section 9.01.
7.18 Existing Subordinated Debt. All Obligations
owing by the Borrower constitute "Senior Indebtedness" under and
as defined in the Existing Subordinated Debt.
7.19 Environmental Matters. Except as listed on
Schedule VI and except for failures, noncompliances and other
matters of the types described below that in the aggregate could
not reasonably be expected to have a material adverse effect on
the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of the Borrower
and its Subsidiaries taken as a whole:
(a) the Borrower and each of its Subsidiaries have
complied with, and on the date of such Credit Event are in
compliance with, all applicable Environmental Laws and the
requirements of any permits issued under such Environmental
Laws;
(b) there are no pending or, to the best knowledge of
the Borrower, past or threatened Environmental Claims
against the Borrower or any of its Subsidiaries or any Real
Property owned or operated by the Borrower or any of its
Subsidiaries;
(c) there are no facts, circumstances, conditions or
occurrences on any Real Property owned or operated by the
Borrower or any of its Subsidiaries that, to the best
knowledge of the Borrower, could reasonably be expected (i)
to form the basis of an Environmental Claim
-47-
<PAGE> 70
against the Borrower or any of its Subsidiaries or any such
Real Property or (ii) to cause any such Real Property to be
subject to any restrictions on the ownership, occupancy, use
or transferability of such Real Property by the Borrower or
any of its Subsidiaries under any applicable Environmental
Law;
(d) all licenses, permits or registrations required
for the business of the Borrower and its Subsidiaries, as
conducted as of the Effective Date, under any Environmental
Law, regulations or ordinances have been secured and each of
the Borrower and its Subsidiaries is in substantial
compliance therewith
(e) neither the Borrower nor any of its Subsidiaries
is in any material respect in noncompliance with, breach of
or default under any applicable writ, order, judgment,
injunction, or decree to which any such Person is a party
and that was issued pursuant to an applicable Environmental
Law, and no event has occurred and is continuing which, with
the passage of time or the giving of notice or both, would
constitute noncompliance, breach of or default thereunder;
(f) there are as of the Effective Date, no legal or
governmental proceedings pending or, to the best of the
Borrower's knowledge threatened, which question the
validity, term or entitlement of the Borrower or any of its
Subsidiaries for any permit, license, order or registration
required under any applicable Environmental Law for the
operation of any facility which the Borrower or any of its
Subsidiaries currently operates in the United States;
(g) Hazardous Materials have not at any time been
generated, used, treated or stored on, or transported to or
from, any Real Property owned or operated by the Borrower or
any of its Subsidiaries during such ownership or operation
by the Borrower or any of its Subsidiaries or, to the best
knowledge of the Borrower, at any time prior thereto and
where such generation, use, treatment or storage has
violated or could reasonably be expected to violate any
applicable Environmental Law;
(h) Hazardous Materials have not at any time been
Released on or from any Real Property owned or operated by
the Borrower or any of its Subsidiaries during such
ownership or operation by the Borrower or any of its
-48-
<PAGE> 71
Subsidiaries or, to the best knowledge of the Borrower, at
any time prior thereto and where such Release has violated
or could reasonably be expected to violate any applicable
Environmental Law; and
(i) there are not now any underground storage tanks
located on any Real Property owned or operated by the
Borrower or any of its Subsidiaries that were installed
during such ownership or operation by the Borrower or any of
its Subsidiaries nor, to the best knowledge of the Borrower,
that were installed prior thereto.
Section 8. Affirmative Covenants. The Borrower
covenants and agrees that on and after the Effective Date and
until the Total Commitment and all Letters of Credit have
terminated, and the Loans, any Unpaid Drawings and the Notes,
together with interest, Fees and all other obligations incurred
hereunder and thereunder, are paid in full:
8.01 Information Covenants. The Borrower will furnish
to each Bank:
(a) Quarterly Financial Statements. Within 45 days
after the close of each quarterly accounting period in each
fiscal year of the Borrower other than the last such quarter
of any fiscal year, the consolidated balance sheet of the
Borrower as at the end of such quarterly period and the
related consolidated statements of income and cash flows for
such quarterly period and for the elapsed portion of the
fiscal year ended with the last day of such quarterly
period, in each case setting forth comparative figures for
the related period in the prior fiscal year, all of which
shall be certified by the chief financial officer of the
Borrower as being prepared, to the best of his knowledge, in
accordance with GAAP consistently applied subject to normal
year-end audit adjustments and provided that such statements
may omit footnote disclosures required by GAAP.
(b) Annual Financial Statements. Within 90 days after
the close of each fiscal year of the Borrower, the
consolidated balance sheets of the Borrower and its
Subsidiaries as at the end of such fiscal year and the
related consolidated statements of income and retained
earnings and cash flows for such fiscal year, in each case
setting forth comparative figures for the preceding fiscal
year and, in the case of said consolidated
-49-
<PAGE> 72
financial statements, certified by Deloitte & Touche or
other independent certified public accountants of recognized
national standing acceptable to the Administrative Agent,
together with a report of such accounting firm stating that
in the course of its regular audit of the financial
statements of the Borrower, which audit was conducted in
accordance with generally accepted auditing standards, such
accounting firm obtained no knowledge of any Default or
Event of Default which has occurred and is continuing or, if
in the opinion of such accounting firm such a Default or
Event of Default has occurred and is continuing, a statement
as to the nature thereof.
(c) Budgets. Within 60 days after the first day of
each fiscal year of the Borrower, a budget in form
satisfactory to the Administrative Agent prepared by the
Borrower for the twelve months beginning on the first day of
such fiscal year accompanied by the statement of the chief
financial officer of the Borrower to the effect that, to the
best of his knowledge, such budget is a reasonable estimate
for the period covered thereby. Within 30 days after the
first day of the third fiscal quarter of the Borrower, the
chief financial officer of the Borrower shall deliver either
(i) a certificate to the effect that, to the best of his
knowledge, the budget previously delivered remains a
reasonable estimate for the remainder of the period covered
thereby or (ii) a budget summary for such remaining period
covering any significant changes to the budget previously
delivered.
(d) Officer's Certificates. At the time of the
delivery of the financial statements provided for in Section
7.01(a) and (b), a certificate of the chief financial
officer of the Borrower to the effect that to the best of
his knowledge, no Default or Event of Default has occurred
and is continuing, or if the chief financial officer is
unable to make such certification, such officer shall supply
a statement setting forth the reasons for such inability,
specifying the nature and extent of such reasons. Such
certificate shall also set forth the calculations required
to establish whether the Borrower was in compliance with the
provisions of Sections 4.02(A)(b) and 9.05 through 9.09,
inclusive, at the end of such fiscal quarter or year, as the
case may be.
-50-
<PAGE> 73
(e) Notice of Default or Litigation. Promptly, and in
any event within five Business Days after an officer of the
Borrower obtains actual knowledge thereof, notice of (i) the
occurrence of any event which constitutes a Default or Event
of Default or (ii) any litigation or governmental proceeding
pending (x) against the Borrower or any of its Subsidiaries
which could materially and adversely affect the business,
property, assets, liabilities, condition (financial or
otherwise), operations, results of operations or prospects
of the Borrower or of the Borrower and its Subsidiaries
taken as a whole or (y) with respect to any Credit Document.
(f) Other Reports and Filings. Promptly, copies of
all financial information, proxy materials and other
information and reports, if any, which the Borrower (x) has
filed with the Securities and Exchange Commission or any
governmental agencies substituted therefor (the "SEC") or
(y) has delivered to holders of, or to any agent or trustee
with respect to, Indebtedness of the Borrower in their
capacity as such a holder, agent or trustee.
(g) Environmental Matters. Promptly upon, and in any
event within ten Business Days after, an officer of the
Borrower or any of its Subsidiaries obtains knowledge
thereof, notice of one or more of the following
environmental matters, unless such environmental matters
could not, individually or, to the officer's knowledge, when
aggregated with all other such environmental matters, be
reasonably expected to have a material and adverse effect on
the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of the
Borrower and its Subsidiaries taken as a whole: (i) any
pending Environmental Claim against the Borrower or any of
its Subsidiaries or any Real Property owned or operated by
the Borrower or any of its Subsidiaries; (ii) any condition
or occurrence on or arising from any Real Property owned or
operated by the Borrower or any of its Subsidiaries that (a)
results in noncompliance by the Borrower or any of its
Subsidiaries with any applicable Environmental Law or (b)
could reasonably be expected to cause such Real Property to
be subject to any restrictions on the ownership, occupancy,
use or transferability by the Borrower or any of its
Subsidiaries of such Real Property under any Environmental
Law; and (iii) the taking of any removal or remedial action
in response to the actual or alleged
-51-
<PAGE> 74
presence of any Hazardous Material on any Real Property
owned or operated by the Borrower or any of its Subsidiaries
as required by any Environmental Law or any governmental or
other administrative agency.
(h) Other Information. From time to time, such other
information or documents (financial or otherwise) as the
Administrative Agent or the Required Banks may reasonably
request.
8.02 Books, Records and Inspections. The Borrower
will, and will cause each of its Subsidiaries to, keep proper
books of record and account in which full, true and correct
entries in conformity with GAAP and all requirements of
applicable law shall be made of all dealings and transactions in
relation to its business and activities. The Borrower will, and
will cause each of its Subsidiaries to, permit officers and
designated representatives of the Administrative Agent or the
Required Banks, upon one Business Day's notice, to visit and
inspect any of the properties of the Borrower or such Subsidiary,
and to examine the books of account of the Borrower or such
Subsidiary and discuss the affairs, finances and accounts of the
Borrower or such Subsidiary with, and be advised as to the same
by, its and their officers, all at such reasonable times and
intervals and to such reasonable extent as the Administrative
Agent or the Required Banks may request.
8.03 Maintenance of Property, Insurance. The Borrower
will, and will cause each of its Subsidiaries to, (i) keep all
property useful and necessary in its business in good working
order and condition, ordinary wear and tear excepted, (ii)
maintain with financially sound and reputable insurance companies
insurance which provides substantially the same (or greater)
coverage and against at least such risks as are described in
Schedule VII and (iii) furnish to each Bank, upon written
request, full information as to the insurance carried.
8.04 Corporate Franchises. The Borrower will, and
will cause each of its Subsidiaries to, do or cause to be done,
all things necessary to preserve and keep in full force and
effect its existence and its rights, franchises, licenses and
patents; provided, however, that nothing in this Section 8.04
shall prevent (i) the withdrawal by the Borrower or any of its
Subsidiaries of its qualification to do business as a foreign
corporation in any jurisdiction where such withdrawal is not
reasonably likely to have a material adverse effect on the
business, operations, property, assets, condition (finan-
-52-
<PAGE> 75
cial or otherwise) or prospects of the Borrower and its
Subsidiaries taken as a whole and (ii) any merger permitted
pursuant to Section 9.02(v).
8.05 Compliance with Statutes, etc. The Borrower
will, and will cause each of its Subsidiaries to, comply with all
applicable statutes, regulations and orders of, and all
applicable restrictions imposed by, all governmental bodies,
domestic or foreign, in respect of the conduct of its business
and the ownership of its property (including applicable statutes,
regulations, orders and restrictions relating to environmental
standards and controls), except such noncompliances as are not
reasonably likely to, in the aggregate, have a material adverse
effect on the business, operations, property, assets, condition
(financial or otherwise) or prospects of the Borrower and its
Subsidiaries taken as a whole.
8.06 ERISA. As soon as possible and, in any event,
within 20 days after the Borrower or any Subsidiary of the
Borrower or any ERISA Affiliate knows or has reason to know of
the occurrence of any of the following, the Borrower will deliver
to each of the Banks a certificate of the chief financial officer
of the Borrower setting forth details as to such occurrence and
the action, if any, that the Borrower, such Subsidiary or such
ERISA Affiliate is required or proposes to take, together with
any notices required or proposed to be given to or filed with or
by the Borrower, the Subsidiary, the ERISA Affiliate, the PBGC, a
Plan participant or the Plan administrator with respect thereto:
that a Reportable Event has occurred, that an accumulated funding
deficiency within the meaning of Section 412 of the Code has been
incurred or an application is reasonably likely to be or has been
made to the Secretary of the Treasury for a waiver or
modification of the minimum funding standard (including any
required installment payments) or an extension of any
amortization period under Section 412 of the Code with respect to
a Plan; that a contribution required to be made to a Plan has not
been timely made; that a Plan has been or is reasonably likely to
be terminated, reorganized, partitioned or declared insolvent
under Title IV of ERISA; that a Plan has an Unfunded Current
Liability giving rise to a lien under ERISA or the Code; that
proceedings are reasonably likely to be or have been instituted
to terminate or appoint a trustee to administer a Plan pursuant
to Section 4042 of ERISA; that a proceeding has been instituted
pursuant to Section 515 of ERISA to collect a delinquent
contribution to a Plan; that the Borrower, any Subsidiary of the
Borrower or any ERISA Affiliate will or is reasonably likely to
incur any material
-53-
<PAGE> 76
liability (including any contingent or secondary liability) to or
on account of the termination of or withdrawal from a Plan under
Section 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or
with respect to a Plan under Section 401(a)(29), 4971, 4975 or
4980 of the Code or Section 409 or 502(i) or 502(l) of ERISA; or
that the Borrower or any Subsidiaries of the Borrower, as a
result of the adoption or amendment of a plan or plans or the
assumption of a plan or plans pursuant to a corporate merger or
acquisition of assets or equity of another Person after the
Effective Date, has incurred any liability (including any
contingent or secondary liability) pursuant to any employee
welfare benefit plan (as defined in Section 3(1) of ERISA) that
provides benefits to retired employees or other former employees
(other than as required by Section 601 of ERISA) or any employee
pension benefit plan (as defined in Section 3(2) of ERISA)) which
could reasonably be expected to have a material adverse effect on
the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of the Borrower
and its Subsidiaries taken as a whole. The Borrower will deliver
to the Administrative Agent a complete copy of the annual report
(Form 5500) of each Plan required to be filed with the Internal
Revenue Service no later than 20 days after such report has been
filed with the Internal Revenue Service. In addition to any
certificates or notices delivered to the Banks pursuant to the
first two sentences hereof, copies of any material notices
received by the Borrower, any Subsidiary of the Borrower or any
ERISA Affiliate with respect to any Plan shall be delivered to
the Administrative Agent no later than 20 days after the date
such notice has been received by the Borrower, the Subsidiary or
the ERISA Affiliate.
8.07 Compliance with Environmental Laws. Except for
noncompliances, failure to pay and Liens that, in the aggregate,
could not reasonably be expected to have a material adverse
effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of
the Borrower and its Subsidiaries taken as a whole:
(a) the Borrower will comply, and will cause each of
its Subsidiaries to comply, with all Environmental Laws
applicable to its ownership or use of its Real Property now
or hereafter owned or operated by the Borrower or any of its
Subsidiaries, will promptly (subject to rights of appeal)
pay or cause to be paid all costs and expenses incurred in
connection with such compliance, and will keep or cause to
be kept all such
-54-
<PAGE> 77
Real Property free and clear of any Liens imposed pursuant
to such Environmental Laws; and
(b) neither the Borrower nor any of its Subsidiaries
will generate, use, treat, store, release or dispose of, or
permit the generation, use, treatment, storage, release or
disposal of Hazardous Materials on any Real Property now or
hereafter owned or operated by the Borrower or any of its
Subsidiaries, or transport or permit the transportation of
Hazardous Materials to or from any such Real Property except
for Hazardous Materials used or stored at, or transported to
or from, any such Real Properties, in material compliance
with all applicable Environmental Laws.
8.08 Performance of Obligations. The Borrower will,
and will cause each of its Subsidiaries to, perform all of its
obligations under the terms of each mortgage, indenture, security
agreement and other agreement by which it is bound, except such
non-performances as are not reasonably likely to, in the
aggregate, have a material adverse effect on the business,
operations, property, assets, condition (financial or otherwise)
or prospects of the Borrower and its Subsidiaries taken as a
whole.
Section 9. Negative Covenants. The Borrower agrees
that on and after the Effective Date and until the Total
Commitment and all Letters of Credit have terminated and the
Loans, any Unpaid Drawings and the Notes, together with interest,
Fees and all other obligations incurred hereunder and thereunder,
are paid in full:
9.01 Liens. The Borrower will not, and will not
permit any of its Subsidiaries to, create, incur, assume or
suffer to exist any Lien upon or with respect to any property or
assets (real or personal, tangible or intangible) of the Borrower
or any of its Subsidiaries, whether now owned or hereafter
acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to
repurchase such property or assets (including sales of accounts
receivable with recourse to the Borrower or any of its
Subsidiaries), or assign any right to receive income or permit
the filing of any financing statement under the UCC or any other
similar notice of Lien under any similar recording or notice
statute; provided that the provisions of this Section 9.01 shall
not prevent the creation, incurrence, assumption or existence of
the following:
-55-
<PAGE> 78
(i) Liens for taxes, governmental assessments or
charges in the nature of taxes not yet delinquent, or Liens
for taxes, governmental assessments or charges in the nature
of taxes being contested in good faith and by appropriate
proceedings for which adequate reserves (in the good faith
judgment of the management of the Borrower) have been
established;
(ii) Liens in respect of property or assets of the
Borrower or any of its Subsidiaries imposed by law, which
were incurred in the ordinary course of business, such as
carriers', warehousemen's, materialmen's, repairmen's and
mechanics' liens and other similar Liens arising in the
ordinary course of business, and (x) which do not in the
aggregate materially detract from the value of such property
or assets or materially impair the use thereof in the
operation of the business of the Borrower and its
Subsidiaries or (y) which are being contested in good faith
by appropriate proceedings, which proceedings have the
effect of preventing the forfeiture or sale of the property
or assets subject to any such Lien;
(iii) Liens in existence on the Effective Date which are
listed, and the property subject thereto described, in
Schedule VIII hereto, without giving effect to any
extensions thereof encumbering new or additional property;
(iv) Utility deposits and pledges or deposits in
connection with worker's compensation, unemployment
insurance and other social security legislation;
(v) Liens securing Indebtedness of or upon (i) any
property or assets acquired (whether by purchase, merger or
otherwise) after the date hereof (and not theretofore owned
by the Borrower or any of its Subsidiaries), or (ii)
improvements made on any property or assets now owned or
hereafter acquired, securing the purchase price thereof or
created or incurred simultaneously with, or within 180 days
after, such acquisition or the making of such improvements
or existing at the time of such acquisition (whether or not
assumed) or the making of such improvements, as the case may
be, if (x) such Lien shall be limited to the property or
assets so acquired or the improvements so made, (y) the
amount of the obligations or Indebtedness secured by such
Liens shall not be increased after the date of the
acquisition of such property or assets or the making of such
improve-
-56-
<PAGE> 79
ments, except to the extent improvements are made to such
property or assets after the date of the acquisition or the
making of the initial improvements, and (z) in each instance
where the obligation or Indebtedness secured by such Lien
constitutes an obligation or Indebtedness of, or is assumed
by, the Borrower or any of its Subsidiaries, the principal
amount of the obligation or Indebtedness secured by such
Lien shall not exceed 100% of the cost or fair value (which
may be determined in good faith by the chief financial
officer of the Borrower), whichever is lower, of the
property or assets or improvements at the time of the
acquisition or making thereof;
(vi) Liens arising under Capitalized Lease Obligations;
(vii) Liens arising under Permitted Sale Leasebacks and
Liens securing the Permitted Mortgage Financing, provided
that the aggregate amount of proceeds from such Permitted
Sale Leasebacks and Permitted Mortgage Financing shall not
exceed $100,000,000 for assets owned by the Borrower or any
of its Subsidiaries on the Effective Date;
(viii) Liens relating to Permitted Inventory Financing so
long as such Liens are created simultaneously with the
acquisition of the inventory so acquired, and such Liens
encumber only the inventory so acquired;
(ix) Possessory Liens on commercial documents securing
Non-Facility Letters of Credit;
(x) Liens securing the refinancing of Indebtedness of
the Borrower and its Subsidiaries secured by Liens permitted
under this Section 9.01, provided that such Liens do not
encumber any additional assets or properties of the Borrower
or any of its Subsidiaries;
(xi) Liens (other than (x) Liens related to
Indebtedness of the Borrower and its Subsidiaries for
borrowed money and (y) Liens the existence of which would be
disclosed on Requests for Information or Copies (Form UCC-
11)) relating to Real Property owned or leased by the
Borrower or any of its Subsidiaries on the Effective Date;
(xii) Other non-consensual Liens not securing
Indebtedness the existence of which do not in the
-57-
<PAGE> 80
aggregate have a material adverse effect on the business,
operations, property, assets, condition (financial or
otherwise) or prospects of the Borrower and its Subsidiaries
taken as a whole, provided that any Lien permitted under
this clause (xii) shall only be permitted so long as the
Borrower and/or the affected Subsidiary uses its best
efforts to remove such Lien as soon as practicable after any
officer of the Borrower or such Subsidiary has notice of the
existence thereof;
(xiii) Liens with respect to Acquired Indebtedness,
provided that any such Lien only extends to the assets that
were subject to such Lien prior to and not in anticipation
of the related acquisition by the Borrower or any of its
Subsidiaries;
(xiv) Liens arising from the substitution of collateral
related to, and in accordance with the terms of, the
Permanent Mortgage Financing; and
(xv) Liens not otherwise described in clauses (i)
through (xiv) of this Section 9.01 securing Indebtedness of
the Borrower and its Subsidiaries in an amount not to exceed
10% of the Consolidated Net Worth determined at the time any
such Liens are created.
9.02 Consolidation, Merger, Purchase or Sale of
Assets, etc. The Borrower will not, and will not permit any of
its Subsidiaries to, wind up, liquidate or dissolve its affairs
or enter into any transaction of merger or consolidation, or
convey, sell, lease or otherwise dispose of (or agree to do any
of the foregoing at any future time) all or any part of its
property or assets, or enter into any partnerships, joint
ventures or sale-leaseback transactions, or purchase or otherwise
acquire (in one or a series of related transactions) any part of
the property or assets of any Person except that:
(i) the Borrower and its Subsidiaries may sell and
lease inventory, materials and equipment in the ordinary
course of business;
(ii) the Borrower and its Subsidiaries may sell or
otherwise dispose of any assets which, in the reasonable
judgment of such Person, have become uneconomical, obsolete
or worn out;
(iii) Permitted Sale Leasebacks shall be permitted,
provided that the aggregate amount of proceeds thereof,
-58-
<PAGE> 81
together with the proceeds used in connection with the
Permitted Mortgage Financing, shall not exceed $100,000,000
for assets owned by the Borrower or any of its Subsidiaries
on the Effective Date;
(iv) the Borrower and the Guarantors may transfer
assets among themselves;
(v) any wholly-owned Subsidiary of the Borrower may
merge and consolidate with any other wholly-owned Subsidiary
of the Borrower or into the Borrower;
(vi) the Borrower and its Subsidiaries may lease or
sublease portions of its properties, and deal with such
leases and subleases and the tenants thereunder, including,
without limitation, the cancellation, termination, amendment
or other modification thereof, in the ordinary course of
business in a manner consistent with past practices;
(vii) the Borrower and any Guarantor may acquire
Reinvestment Assets with the proceeds from any Reinvestment
Event which are not required to reduce the Total Commitment
pursuant to Sections 3.03(c) or (d);
(viii) the Borrower and its Subsidiaries may purchase
inventory, materials and equipment in the ordinary course of
business;
(ix) the Borrower and its Subsidiaries may enter into
operating leases in the ordinary course of business;
(x) the Borrower and its Subsidiaries may make Capital
Expenditures;
(xi) the Borrower and the Guarantors may acquire assets
not otherwise permitted pursuant to this Section 9.02 and
not in the ordinary course of business in an amount of
consideration paid (including Acquired Indebtedness) not to
exceed the Permitted Acquisition Amount (after giving effect
to all reductions to such amount made prior to, or on the
date of, such acquisition);
(xii) in addition to any other sales or transfers of
assets permitted by this Section 9.02, the Borrower and its
Subsidiaries may sell or transfer assets, provided that the
aggregate fair market value of such assets sold
-59-
<PAGE> 82
or transferred does not exceed $75,000,000 in any fiscal
year of the Borrower; and
(xiii) the Borrower or a Guarantor may enter into
transactions permitted under Section 9.03.
9.03 Restricted Payments. The Borrower shall not
authorize, declare or pay, or permit any of its Subsidiaries to
authorize, declare or pay, any Restricted Payments, except that:
(i) any Subsidiary of the Borrower may pay Dividends
to the Borrower or any wholly-owned Subsidiary of the
Borrower;
(ii) so long as no Default or Event of Default shall
exist (both before and after giving effect to the payment
thereof on a pro forma basis), the Borrower may make
Restricted Payments in an aggregate amount from and after
the Effective Date not to exceed the sum of (x) 25% of
Cumulative Consolidated Net Income at such time plus (y)
$25,000,000;
(iii) the Borrower and its Subsidiaries may make
Permitted Investments;
(iv) the redemption for a nominal amount of Series A
Junior Preferred Stock Purchase Rights shall be permitted
pursuant to the terms thereof; and
(v) the granting of options, restricted stock, stock
appreciation rights and similar rights to employees,
including directors, and the issuance of common stock of the
Borrower or its Subsidiaries in satisfaction thereof and the
repurchase, cancellation, or surrender of options, shares or
other rights pursuant thereto shall be permitted.
9.04 Transactions with Affiliates. The Borrower will
not, and will not permit any of its Subsidiaries to, enter into
any transaction or series of related transactions, whether or not
in the ordinary course of business, with any Affiliate of the
Borrower or its Subsidiaries, other than on terms and conditions
substantially as favorable to the Borrower or its Subsidiary or
as would be obtainable by the Borrower or its Subsidiary at the
time in a comparable arm's-length transaction with a Person other
than an Affiliate, except that intercompany transactions may be
made to the
-60-
<PAGE> 83
extent permitted by Section 9.02 and intercompany loans and
advances may be made to the extent permitted by Section 9.03.
9.05 Minimum Consolidated Net Worth. The Borrower
will not permit Consolidated Net Worth on the last day of any
fiscal quarter ended on any date set forth below to be less than
the amount set forth opposite such date:
Fiscal Quarter
Ended Amount
-------------- ------
Fiscal quarters ending
closest to June 30, 1994
and September 30, 1994 $225,000,000
Fiscal quarters ending
closest to December 31, 1994,
March 31, 1995,
June 30, 1995 and
September 30, 1995 $280,000,000
Fiscal quarters ending
closest to December 31, 1995
and thereafter $360,000,000
9.06 Consolidated Interest Coverage Ratio. The
Borrower will not permit the Consolidated Interest Coverage Ratio
for any Test Period ended on the last day of any fiscal quarter
set forth below to be less than the amount set forth opposite
such fiscal quarter below:
Fiscal Quarter
Ended Ratio
-------------- -----
Fiscal quarters ending
closest to June 30, 1994,
September 30, 1994,
December 31, 1994,
March 31, 1995,
June 30, 1995 and
September 30, 1995 2.00:1
Fiscal quarters ending
closest to December 31, 1995
and thereafter 2.25:1
-61-
<PAGE> 84
9.07 Consolidated Fixed Charge Coverage Ratio. The
Borrower will not permit the Consolidated Fixed Charge Coverage
Ratio for any Test Period ended on the last day of any fiscal
quarter set forth below to be less than the amount set forth
opposite such fiscal quarter below:
Fiscal Quarter
Ended Ratio
-------------- -----
Fiscal quarters ending
closest to June 30, 1994,
September 30, 1994,
December 31, 1994,
March 31, 1995,
June 30, 1995 and
September 30, 1995 1.25:1
Fiscal quarters ending
closest to December 31, 1995
and thereafter 1.35:1
9.08 Consolidated Debt to Total Capitalization Ratio.
The Borrower will not permit the ratio of (i) Consolidated Debt
to (ii) Total Capitalization at any time during any fiscal
quarter ended on a date set forth below to be greater than the
ratio set forth opposite such date below:
Fiscal Quarter
Ended Ratio
-------------- -----
Fiscal quarters ending
closest to June 30, 1994 and
September 30, 1994 .80:1
Fiscal quarters ending
closest to December 31, 1994,
March 31, 1995,
June 30, 1995 and
September 30, 1995 .75:1
Fiscal quarters ending
closest to December 31, 1995,
March 31, 1996,
June 30, 1996 and
September 30, 1996 .70:1
Fiscal quarters ending
-62-
<PAGE> 85
closest to December 31, 1996
and thereafter .65:1
9.09 Consolidated Senior Debt to Total Capitalization
Ratio. The Borrower will not permit the Ratio of (i)
Consolidated Senior Debt to (ii) Total Capitalization at any time
during any fiscal quarter ended on a date set forth below to be
greater than the ratio set forth opposite such date below:
Fiscal Quarter
Ended Ratio
-------------- -----
Fiscal quarters ending
closest to June 30, 1994, and
September 30, 1994 .55:1
Fiscal quarters ending
closest to December 31, 1994,
March 31, 1995,
June 30, 1995 and
September 30, 1995 .50:1
Fiscal quarters ending
closest to December 31, 1995
and thereafter .45:1
9.10 Limitation on Modifications of Existing
Subordinated Debt. The Borrower will not, and will not permit
any of its Subsidiaries to amend or modify, or permit the
amendment or modification of, any provision of any agreement
(including, without limitation, any purchase agreement,
indenture, loan agreement or security agreement) relating to the
Existing Subordinated Debt other than amendments or modifications
that are not reasonably likely to adversely affect the Banks.
9.11 Limitation on Granting of Liens and on
Restrictions on Subsidiary Dividends and Other Transfers. The
Borrower will not, and it will not permit any of its Subsidiaries
to, directly or indirectly, create or otherwise cause or suffer
to exist or become effective any encumbrance or restriction on
the ability of any Subsidiary of the Borrower to (a) pay
dividends or make any other distributions on its capital stock or
any other interest or participation in its profits, owned by the
Borrower or any Subsidiary of the Borrower, or pay or repay any
Indebtedness owed to the Bor-
-63-
<PAGE> 86
rower or a Subsidiary of the Borrower, (b) make loans or advances
to the Borrower, (c) transfer any of its properties or assets to
the Borrower or its Subsidiaries or (d) grant Liens or security
interests in assets of such Person in favor of the Banks, except
for such encumbrances or restrictions existing under or by reason
of (i) applicable law, (ii) this Agreement, (iii) customary
provisions restricting subletting or assignment of any lease
governing a leasehold interest of the Borrower or any of its
Subsidiaries, (iv) customary restrictions on dispositions of real
property interests found in reciprocal easement agreements of the
Borrower or any of its Subsidiaries, (v) restrictions in
agreements on the Effective Date; (vi) restrictions imposed by
the terms of Permitted Inventory Financing on the inventory
financed pursuant thereto and (vii) provisions in secured
financing agreements (the Liens pursuant to which are permitted
by Section 9.01) that restrict junior liens on the assets
securing such financings.
9.12 Limitation on Issuances of Capital Stock. (a)
The Borrower shall not issue (i) any preferred stock or (ii) any
class of redeemable common stock.
(b) The Borrower shall not permit any of its
Subsidiaries to issue any capital stock (including by way of
sales of treasury stock) or any options or warrants to purchase,
or securities convertible into, capital stock, except for (i)
replacements of then outstanding shares of capital stock, (ii)
stock splits, stock dividends and similar issuances which do not
decrease the percentage ownership of the Borrower or any of its
Subsidiaries in any class of the capital stock of such Subsidiary
and (iii) upon the formation of any new Subsidiary as permitted
by this Agreement, such newly formed Subsidiary may issue capital
stock to the Borrower or another Subsidiary.
9.13 End of Fiscal Years; Fiscal Quarters. The
Borrower shall not, and shall not permit any of its Subsidiaries
to, change from that in effect on the Effective Date the date on
which any of their fiscal quarters or fiscal years shall end.
9.14 No Other Designated Senior Debt. The Borrower
shall not create any "Designated Senior Debt" other than the
Obligations of the Borrower hereunder pursuant to the indenture
for the Existing Subordinated Debt without the prior written
consent of the Required Banks.
-64-
<PAGE> 87
9.15 New Subsidiaries. (a) The Borrower shall not,
and shall not permit any of its Subsidiaries to, create any
Subsidiaries unless any such Subsidiary shall comply with clause
(b) below.
(b) In connection with any establishment, creation or
acquisition of any Subsidiary pursuant to clause (a) above or
clause (v) of the definition of Permitted Investments, any such
Subsidiary shall become party to the Guaranty immediately
thereafter.
9.16 Non-Facility Letters of Credit. The Borrower
shall not, and shall not permit any of its Subsidiaries to,
obtain and become obligated to make reimbursement payments under
any Non-Facility Letter of Credit if the Stated Amount thereof
would exceed $120,000,000 less the sum of the Trade Letter of
Credit Outstandings at such time and the Non-Facility Letter of
Credit Outstandings at such time.
Section 10. Events of Default. Upon the occurrence of
any of the following specified events (each an "Event of
Default"):
10.01 Payments. The Borrower shall (i) default in the
payment when due of any principal of its Loans or Notes, or (ii)
default, and such default shall continue for at least two
Business Days, of any payment of interest on its Loans or Notes,
of any Unpaid Drawing, of any Fees or any Obligations or any
other amounts owing by it hereunder or thereunder; provided that
unless otherwise required by the terms of this Agreement, any
payments not stated to be due on a date certain or determinable
shall be due on demand by the Person entitled thereto; or
10.02 Representations, etc. Any representation,
warranty or statement made by any Credit Party herein or in any
other Credit Document or in any certificate delivered pursuant
hereto or thereto shall prove to be untrue in any material
respect, on the date as of which made or deemed made; or
10.03 Covenants. The Borrower shall (i) default in
the due performance or observance by it of any term, covenant or
agreement contained in Section 9 or (ii) default in the due
performance or observance by it of any term, covenant or
agreement (other than those referred to in Sections 10.01 and
10.02 and clause (i) of this Section 10.03) contained in this
Agreement and such default shall continue unremedied for
-65-
<PAGE> 88
a period of 30 days after written notice to the Borrower by the
Administrative Agent or the Required Banks; or
10.04 Default Under Other Agreements. The Borrower or
any of its Subsidiaries shall (i) default in any payment of any
Indebtedness (other than the Obligations) beyond the period of
grace, if any, provided in the instrument or agreement under
which such Indebtedness was created, (ii) default in the
observance or performance of any agreement or condition relating
to any Indebtedness (other than the Obligations) or contained in
any instrument or agreement evidencing, securing or relating
thereto, or any other event shall occur or condition exist, the
effect of which default or other event or condition is to cause,
or to permit the holder or holders of such Indebtedness (or a
trustee or agent on behalf of such holder or holders) to cause
(determined without regard to whether any notice is required),
any such Indebtedness to become due prior to its stated maturity
or (iii) any Indebtedness of the Borrower or any of its
Subsidiaries shall be declared to be due and payable, or required
to be prepaid other than by a regularly scheduled or other
mandatory required prepayment, prior to the stated maturity
thereof; provided that it shall not constitute an Event of
Default pursuant to this Section 10.04 unless the aggregate
amount of all Indebtedness referred to in clauses (i) through
(iii) above exceeds $20,000,000 at any one time; or
10.05 Bankruptcy, etc. The Borrower or any of its
Subsidiaries shall commence a voluntary case concerning itself
under Title 11 of the United States Code entitled "Bankruptcy,"
as now or hereafter in effect, or any successor thereto (the
"Bankruptcy Code"); or an involuntary case is commenced against
the Borrower or any Guarantor, and the petition is not
controverted within 10 days, or is not dismissed within 45 days,
after commencement of the case; or a custodian (as defined in the
Bankruptcy Code) is appointed for, or takes charge of, all or
substantially all of the property of the Borrower or any of its
Subsidiaries, or the Borrower or any of its Subsidiaries
commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction
whether now or hereafter in effect relating to the Borrower or
any of its Subsidiaries, or there is commenced against the
Borrower or any of its Subsidiaries any such proceeding which
remains undismissed or unstayed for a period of 45 days, or the
Borrower or any of its Subsidiaries is adjudicated insolvent or
bankrupt; or any order of relief or other order approving
-66-
<PAGE> 89
any such case or proceeding is entered; or the Borrower or any of
its Subsidiaries suffers any appointment of any custodian or the
like for it or any substantial part of its property to continue
undischarged or unstayed for a period of 45 days; or the Borrower
or any of its Subsidiaries makes a general assignment for the
benefit of creditors; or any corporate action is taken by the
Borrower or any of its Subsidiaries for the purpose of effecting
any of the foregoing; or
10.06 ERISA. (a) Any Plan shall fail to satisfy the
minimum funding standard required for any plan year or part
thereof or a waiver of such standard or extension of any
amortization period is sought or granted under Section 412 of the
Code, any Plan shall have had or is likely to have a trustee
appointed to administer such Plan pursuant to Section 4042 of
ERISA, any Plan is, shall have been or is likely to be terminated
or to be the subject of termination proceedings under ERISA, any
Plan shall have an Unfunded Current Liability, a contribution
required to be made to a Plan has not been timely made, the
Borrower or any Subsidiary of the Borrower or any ERISA Affiliate
has incurred or is likely to incur a liability to or on account
of a Plan under Section 409, 502(i), 502(l), 515, 4062, 4063,
4064, 4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29),
4971, 4975 or 4980 of the Code, or the Borrower or any Subsidiary
of the Borrower, as a result of the adoption or amendment of a
plan or plans or the assumption of a plan or plans pursuant to a
corporate merger or an acquisition of assets or equity of another
Person after the Effective Date, has incurred or is likely to
incur liabilities pursuant to one or more employee welfare
benefit plans (as defined in Section 3(1) of ERISA) that provide
benefits to retired employees or other former employees (other
than as required by Section 601 of ERISA) or employee pension
benefit plans (as defined in Section 3(2) of ERISA); (b) there
shall result from any such event or events the imposition of a
lien, the granting of a security interest, or a liability or a
material risk of incurring a liability to the PBGC or to the
Internal Revenue Service or a Plan or a trustee appointed under
Section 4042 of ERISA or a tax under Section 4971 of the Code;
(c) which lien, security interest or liability, in the opinion of
the Required Banks, will have a material adverse effect upon the
business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of the Borrower and its
Subsidiaries taken as a whole; or
10.07 Guaranty. The Guaranty or any provision thereof
shall cease to be in full force and effect as to any
-67-
<PAGE> 90
Guarantor (other than in accordance with the express terms
thereof), or any Guarantor or any Person acting by or on behalf
of any Guarantor shall deny or disaffirm such Guarantor's
obligations under the Guaranty or the respective Guarantor shall
default in the due performance or observance of any term,
covenant or agreement on its part to be performed or observed
pursuant to the Guaranty; or
10.08 Judgments. One or more judgments or decrees
shall be entered after the date of this Agreement against the
Borrower or any of its Subsidiaries involving in the aggregate
for the Borrower and its Subsidiaries a liability (not paid or
fully covered by insurance) of $20,000,000 or more, and all such
judgments or decrees shall not have been vacated, discharged or
stayed or bonded pending appeal within 30 days from the entry
thereof; or
10.09 Change in Control. (a) At any time or during
any calendar year, 50% or more of the members of the full Board
of Directors of the Borrower shall have resigned or been removed
or replaced provided that a director who has resigned or is
replaced during any year shall not be included in any
determination of whether an Event of Default has occurred
pursuant to this clause (a) to the extent such director is
replaced by a successor director elected by a majority of those
directors who were directors at the commencement of such year,
(b) the acquisition, whether directly or indirectly, by any
Person or "group" (as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended) (other than an
employee benefit or stock ownership plan of the Borrower) of more
than 50% of the common stock or other voting stock of the
Borrower shall have occurred or (c) any "change of control" or
similar event shall have occurred under the agreements relating
to any one or more issues of Indebtedness in the aggregate
principal amount in excess of $20,000,000;
then, and in any such event, and at any time thereafter, if any
Event of Default shall then be continuing, the Administrative
Agent shall upon the written request of the Required Banks, by
written notice to the Borrower, take any or all of the following
actions, without prejudice to the rights of the Administrative
Agent, any Bank or the holder of any Note to enforce its claims
against any Credit Party (provided, that, if an Event of Default
specified in Section 10.05 shall occur with respect to the
Borrower, the result which would occur upon the giving of written
notice by the Administrative Agent to the Borrower as specified
in clauses (i) and (ii) below shall occur automatically without
the
-68-
<PAGE> 91
giving of any such notice): (i) declare the Total Commitment
terminated, whereupon the Commitment of each Bank shall forthwith
terminate immediately and any Facility Fee and other Fees then
due, owing and unpaid hereunder shall forthwith become due and
payable without any other notice of any kind; (ii) declare the
principal of and any accrued interest in respect of all Loans,
Unpaid Drawings and Notes and all obligations owing hereunder and
thereunder to be, whereupon the same shall become, forthwith due
and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Borrower;
(iii) take actions necessary to terminate any Letter of Credit
which may be terminated in accordance with its terms; and (iv)
direct the Borrower to pay (and the Borrower agrees that upon
receipt of such notice, or upon the occurrence of an Event of
Default specified in Section 10.05 in respect of the Borrower, it
will pay) to the Administrative Agent at the Payment Office such
additional amounts of cash, to be held as security for the
Borrower's reimbursement obligations for Drawings that may
subsequently occur thereunder, equal to the aggregate Stated
Amount of all Letters of Credit issued and then outstanding.
Section 11. Definitions and Accounting Terms.
11.01 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):
"Acquired Indebtedness" shall mean Indebtedness of a
Person (a) assumed in connection with the purchase of assets from
such Person or (b) existing at the time such Person becomes a
Subsidiary; provided that such Indebtedness is not created in
contemplation of such purchase or such Person becoming a
Subsidiary.
"Adjusted Certificate of Deposit Rate" shall mean, on
any day, the sum (rounded to the nearest 1/100 of 1%) of (1) the
rate obtained by dividing (x) the most recent weekly average
dealer offering rate for negotiable certificates of deposit with
a three-month maturity in the secondary market as published in
the most recent Federal Reserve System publication entitled
"Select Interest Rates," published weekly on Form H.15 as of the
date hereof, or if such publication or a substitute containing
the foregoing rate information shall not be published by the
Federal Reserve System for any week, the weekly average offering
rate determined by the
-69-
<PAGE> 92
Administrative Agent on the basis of quotations for such
certificates received by it from three certificate of deposit
dealers in New York of recognized standing or, if such quotations
are unavailable, then on the basis of other sources reasonably
selected by the Administrative Agent, by (y) a percentage equal
to 100% minus the stated maximum rate of all reserve requirements
as specified in Regulation D applicable on such day to a three-
month certificate of deposit of a member bank of the Federal
Reserve System in excess of $100,000 (including, without
limitation, any marginal, emergency, supplemental, special or
other reserves), plus (2) the then daily net annual assessment
rate as estimated by the Administrative Agent for determining the
current annual assessment payable by the Administrative Agent to
the Federal Deposit Insurance Corporation for insuring three
month certificates of deposit.
"Adjusted Eurodollar Rate" shall mean, with respect to
any Eurodollar Loan for any Interest Period, an interest rate per
annum (rounded upwards, if necessary, to the next 1/16 of 1%)
equal to the product of (a) LIBOR in effect for such Interest
Period and (b) a fraction (expressed as a decimal) the numerator
of which is the number one and the denominator of which is the
number one minus the then stated maximum rate of all reserve
requirements (including, without limitation, any marginal,
emergency, supplemental, special or other reserves) applicable to
any member bank of the Federal Reserve System in respect of
Eurocurrency liabilities as defined in Regulation D (or any
successor category of liabilities under Regulation D). For
purposes hereof, the term "LIBOR" shall mean the arithmetic
average (rounded upwards, if necessary, to the next 1/16 of 1%)
determined by the Administrative Agent at which dollar deposits
approximately equal in principal amount to the Administrative
Agent's portion of such Eurodollar Loan (or if such Eurodollar
Loan is a Competitive Bid Loan, an amount equal to the
Administrative Agent's Percentage multiplied by the amount of
such Eurodollar Loan) and for a maturity comparable to such
Interest Period are offered to the principal London office of
such Administrative Agent in immediately available funds in the
London interbank market at approximately 11:00 a.m., London time,
two Business Days prior to the commencement of such Interest
Period.
"Adjusted Percentage" shall mean (x) at a time when no
Bank Default exists, for each Bank, such Bank's Percentage and
(y) at a time when a Bank Default exists (i) for each Bank that
is a Defaulting Bank, zero and (ii) for each Bank that is a Non-
Defaulting Bank, the percentage determined by
-70-
<PAGE> 93
dividing such Bank's Commitment at such time by the Adjusted
Total Commitment at such time, it being understood that all
references herein to Commitments and the Adjusted Total
Commitment at a time when the Total Commitment or Adjusted Total
Commitment, as the case may be, has been terminated shall be
references to the Commitments or Adjusted Total Commitment, as
the case may be, in effect immediately prior to such termination,
provided that (A) no Bank's Adjusted Percentage shall change upon
the occurrence of a Bank Default from that in effect immediately
prior to such Bank Default if after giving effect to such Bank
Default, and any repayment of Revolving Loans and Swingline Loans
at such time pursuant to Section 4.02(A)(a) or otherwise, the sum
of (i) the aggregate outstanding principal amount of Revolving
Loans of all Non-Defaulting Banks plus (ii) the aggregate
outstanding principal amount of Swingline Loans plus (iii) the
Letter of Credit Outstandings, exceed the Adjusted Total
Commitment; (B) the changes to the Adjusted Percentage that would
have become effective upon the occurrence of a Bank Default but
that did not become effective as a result of the preceding clause
(A) shall become effective on each date after the occurrence of
the relevant Bank Default (until such changes have been made in
full) on which the sum of (i) the aggregate outstanding principal
amount of the Revolving Loans of all Non-Defaulting Banks plus
(ii) the aggregate outstanding principal amount of the Swingline
Loans plus (iii) the Letter of Credit Outstandings is equal to or
less than the Adjusted Total Commitment; and (C) if (i) a Non-
Defaulting Bank's Adjusted Percentage is changed pursuant to the
preceding clause (B) and (ii) any repayment of such Bank's
Revolving Loans, or of Unpaid Drawings with respect to Letters of
Credit or of Swingline Loans, that were made during the period
commencing after the date of the relevant Bank Default and ending
on the date such changes have been made in full to its Adjusted
Percentage must be returned to the Borrower as a preferential or
similar payment in any bankruptcy or similar proceeding of the
Borrower, then the change to such Non-Defaulting Bank's Adjusted
Percentage effected pursuant to said clause (B) shall be reduced
to that positive change, if any, as would have been made to its
Adjusted Percentage if (x) such repayments had not been made and
(y) the maximum change to its Adjusted Percentage would have
resulted in the sum of the outstanding principal of Revolving
Loans made by such Bank plus such Bank's new Adjusted Percentage
of the outstanding principal amount of Swingline Loans and of
Letter of Credit Outstandings equaling such Bank's Commitment at
such time.
-71-
<PAGE> 94
"Adjusted Total Commitment" shall mean at any time the
Total Commitment less the aggregate Commitments of all Defaulting
Banks.
"Administrative Agent" shall have the meaning provided
in the first paragraph of this Agreement.
"Affiliate" shall mean, with respect to any Person, any
other Person (i) directly or indirectly controlling (including,
but not limited to, all directors and officers of such Person),
controlled by, or under direct or indirect common control with,
such Person or (ii) that directly or indirectly owns more than 5%
of the voting securities of such Person. A Person shall be
deemed to control a corporation if such Person possesses,
directly or indirectly, the power to direct or cause the
direction of the management and policies of such corporation,
whether through the ownership of voting securities, by contract
or otherwise.
"Agreement" shall mean this Credit Agreement, as
modified, supplemented or amended from time to time.
"Alternate Base Rate" at any time shall mean on any day
the highest of (x) the rate which is 1/2 of 1% in excess of the
Adjusted Certificate of Deposit Rate, (y) the Prime Rate for such
day, and (z) the rate which is 1/2 of 1% in excess of the Federal
Funds Rate.
"Alternate Swingline Rate" at any time shall mean a
rate agreed upon between the Borrower and Chemical.
"Alternate Swingline Rate Loan" shall mean any
overnight Swingline Loan (i) the rate of which is based upon the
Alternate Swingline Rate and (ii) which must be repaid on the
first Business Day following the date of its incurrence.
"Anticipated Reinvestment Amount" shall mean, with
respect to any Reinvestment Event, the amount specified in the
Reinvestment Notice with respect thereto as the amount of the
respective Net Sale Proceeds from an asset sale that the Borrower
or any of its Subsidiaries intends to use to purchase, construct
or otherwise acquire Reinvestment Assets.
"Applicable Eurodollar Margin" shall mean (i) if the
Borrower's senior unsecured indebtedness is not rated by S&P or
Moody's, 5/8 of 1% per annum or (ii) if the Borrower's senior
unsecured indebtedness is rated by S&P or Moody's, a percentage
per annum set forth below as determined by reference to the
highest Category (with Category 3 being the
-72-
<PAGE> 95
highest) in which the Borrower meets at least one of the criteria
set forth in the definition for such Category:
Applicable
Category Eurodollar Margin
-------- -----------------
Category 3 3/10 of 1%
Category 2 1/2 of 1%
Category 1 5/8 of 1%
"Assignment and Acceptance" shall have the meaning
provided in Section 13.04(b).
"Bank" shall mean each financial institution listed in
Schedule I and any institution which becomes a "Bank" hereunder
pursuant to Section 1.14 or 13.04(b).
"Bank Default" shall mean (i) the refusal (which has
not been retracted) of a Bank to make available its portion of
any Borrowing (including any Mandatory Borrowing) or to fund its
portion of any unreimbursed payment under Section 2.04(c) or
(ii) a Bank having notified in writing the Borrower and/or the
Administrative Agent that it does not intend to comply with its
obligations under Section 1.01(a) or 1.01(c) or Section 2, in the
case of either clause (i) or (ii) as a result of any takeover of
such Bank by any regulatory authority or agency.
"Bankruptcy Code" shall have the meaning provided in
Section 10.05.
"Base Rate Loans" shall mean any Loan designated as
such by the Borrower at the time of the incurrence thereof or
conversion thereto.
"Borrower" shall have the meaning provided in the first
paragraph of this Agreement.
"Borrowing" shall mean the incurrence of one Type of
Loan by the Borrower from all the Banks, or the incurrence of
Swingline Loans from Chemical, on a given date (or resulting from
conversions on a given date), or the incurrence of Competitive
Bid Loans made by the Bank or Banks whose Competitive Bids have
been accepted pursuant to Section 1.04 having in the case of
Revolving Loans which are Eurodollar Loans the same Interest
Period.
"Business Day" shall mean (i) for all purposes other
than as covered by clause (ii) below, any day except
-73-
<PAGE> 96
Saturday, Sunday and any day which shall be in New York City a
legal holiday or a day on which banking institutions are
authorized by law or other government action to close and (ii)
with respect to all notices and determinations in connection
with, and payments of principal and interest on, Eurodollar
Loans, any day which is a Business Day described in clause (i)
above and which is also a day for trading by and between banks in
the London interbank market.
"Capital Expenditures" shall mean, with respect to any
Person, all expenditures by such Person which should be
capitalized in accordance with GAAP and the amount of Capitalized
Lease Obligations incurred by such Person.
"Capitalized Lease Obligations" shall mean all
obligations under any lease of property (whether real, personal
or mixed) of the Borrower and its Subsidiaries as lessee which,
in conformity with GAAP, are accounted for as capital leases on a
consolidated balance sheet of such Person, in each case taken at
the amount thereof accounted for as a liability in accordance
with GAAP.
"Cash Equivalents" shall mean, as to any Person, (i)
securities issued or directly and fully guaranteed or insured by
the United States or any agency or instrumentality thereof
(provided that the full faith and credit of the United States is
pledged in support thereof) having maturities of not more than
six months from the date of acquisition; (ii) time deposits and
certificates of deposit of any Bank or any other commercial bank
incorporated in the United States of recognized standing having
capital and surplus in excess of $100,000,000 with maturities of
not more than six months from the date of acquisition by such
Person; (iii) repurchase obligations with a term of not more than
seven days for underlying securities of the types described in
clauses (i) and (iv) hereof, provided, however, that the maturity
limitation set forth in clause (i) above shall not be applicable
to such underlying securities; (iv) (A) commercial paper issued
by the parent corporation of any commercial bank of recognized
standing having capital and surplus in excess of $500,000,000 and
(B) commercial paper issued by any Person, in either case, rated
at least A-1 or the equivalent thereof by S&P or at least P-1 or
the equivalent thereof by Moody's and in each case maturing not
more than six months after the date of acquisition by such
Person; (v) investments in money market funds substantially all
of whose assets are comprised of securities of the types
described in clauses (i) through (iv) above; (vi) obligations the
return with respect to which is excluded from gross
-74-
<PAGE> 97
income under Section 103 of the Code with a maturity of not more
than six months or with the right of the holder to put such
obligations for purchase at par upon not more than seven day's
notice and which are rated A-1 or higher by S&P or rated P-1 or
higher by Moody's; and (vii) (A) tax free money market funds
that invest solely in the securities described in clause (vi)
above or (B) money market preferred municipal bond funds which
have a term of not more than seven days and which are rated at
least AAA or the equivalent thereof by S&P or at least Aaa or the
equivalent thereof by Moody's.
"Cash Reserve" shall mean a specific cash reserve
account maintained by the Borrower in a manner satisfactory to
the Administrative Agent.
"Category" shall mean and include each of Category 1,
Category 2 and Category 3.
"Category 1" shall mean the Category which is
applicable when the Borrower then has received with respect to
its senior unsecured indebtedness either (i) a rating of BB+ or
lower by S&P or (ii) a rating of Ba1 or lower by Moody's.
Promptly following any such time that the Borrower has received a
Category 1 rating, the chief financial officer of the Borrower
shall deliver an officer's certificate to the Administrative
Agent certifying the existence of such rating.
"Category 2" shall mean the Category which is
applicable when the Borrower then has received with respect to
its senior unsecured indebtedness either (i) a rating of BBB- by
S&P or (ii) a rating of Baa3 by Moody's. Promptly following any
such time that the Borrower has received a Category 2 rating, the
chief financial officer of the Borrower shall deliver an
officer's certificate to the Administrative Agent certifying the
existence of such rating.
"Category 3" shall mean the Category which is
applicable when the Borrower then has received with respect to
its senior unsecured indebtedness either (i) a rating of BBB or
higher by S&P or (ii) a rating of Baa2 or higher by Moody's.
Promptly following any such time that the Borrower has received a
Category 3 rating, the chief financial officer of the Borrower
shall deliver an officer's certificate to the Administrative
Agent certifying the existence of such rating.
"CERCLA" shall mean the Comprehensive Environmental
Response Compensation and Liability Act of 1980, as same may be
amended, 42 U.S.C. 9601 et seq.
-75-
<PAGE> 98
"Chemical" shall mean Chemical Bank, a New York banking
corporation, in its individual capacity.
"Clean-Down Amount" shall mean the amount during each
period set forth below opposite such period below:
Clean-Down
Period Amount
-------------- ------------
Effective Date
through January 29, 1995 $125,000,000
January 30, 1995
through January 29, 1996 $100,000,000
January 30, 1996
through January 29, 1997 $ 75,000,000
January 30, 1997
through January 29, 1998 $ 50,000,000
January 30, 1998
through January 29, 1999 $ 25,000,000
In the event that any reductions to the Total
Commitment are made pursuant to Section 3.03(c) or (e), each of
the above amounts shall be reduced by the amount of such
reductions; provided, however, that at no time shall the Clean-
Down Amount be less than $0.
"Clean-Down Period" shall mean a 30 consecutive day
period which shall commence on or after December 1 of each year
and terminate on or before January 29 of the following year
during which the Revolving Outstandings shall have been reduced
to an outstanding aggregate amount of no greater than the Clean-
Down Amount then in effect for such consecutive 30 day period.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time and the regulations promulgated and
rulings issued thereunder. Section references to the Code are to
the Code, as in effect at the date of this Agreement, and to any
subsequent provisions of the Code amendatory thereof,
supplemental thereto or substituted therefor.
"Commitment" shall mean, with respect to each Bank, the
amount set forth opposite such Bank's name in Schedule I,
directly below the column entitled "Commitment," as the same may
(x) be reduced from time to time pursuant to Sections
-76-
<PAGE> 99
3.02, 3.03 and/or 10 or (y) adjusted from time to time as a
result of assignments to or from such Bank pursuant to Section
1.14 or 13.04(b).
"Competitive Bid" shall mean an offer by a Bank to make
a Competitive Bid Loan pursuant to Section 1.04.
"Competitive Bid Accept/Reject Letter" shall mean a
notification made by the Borrower pursuant to Section 1.04 in the
form of Exhibit A-5.
"Competitive Bid Borrowing" shall mean a borrowing
consisting of a Competitive Bid Loan or concurrent Competitive
Bid Loans from the Bank or Banks whose Competitive Bids for such
Borrowing have been accepted by the Borrower under the bidding
procedure described in Section 1.04.
"Competitive Bid Loan" shall mean a Loan from a Bank to
the Borrower pursuant to the bidding procedures set forth in
Section 1.04. Each Competitive Bid Loan shall be a Eurodollar
Loan bearing interest at the Adjusted Eurodollar Rate plus the
Spread applicable thereto or a Fixed Rate Loan.
"Competitive Bid Note" shall have the meaning provided
in Section 1.06.
"Competitive Bid Rate" shall mean, as to any
Competitive Bid made by a Bank pursuant to Section 1.04, (i) in
the case of a Eurodollar Loan, the Spread, and (ii) in the case
of a Fixed Rate Loan, the fixed rate of interest offered by the
Bank making such Competitive Bid.
"Consolidated Capital Expenditures" shall mean, for any
period collectively for the Borrower and its Subsidiaries
determined on a consolidated basis, any expenditure during such
period, by the Borrower or any of its Subsidiaries, for fixed or
capital assets (including, without limitation, expenditures for
maintenance and repairs which should be capitalized in accordance
with GAAP and Capitalized Lease Obligations but excluding the
value of any store exchanged for a store owned by a Person not an
Affiliate of the Borrower) less the proceeds from Permitted Sale
Leasebacks for the prior 12 month period involving assets of the
Borrower acquired after the Effective Date.
"Consolidated Cash Interest Expense" shall mean, for
any period, the total consolidated cash interest expense
(including accruals for such period of consolidated interest
-77-
<PAGE> 100
expense which are to be paid, or have been paid, in cash) of the
Borrower and its Subsidiaries on a consolidated basis for such
period plus, without duplication, that portion of Capitalized
Lease Obligations of the Borrower and its Subsidiaries
representing the interest factor for such period.
"Consolidated Debt" shall mean, at the time of
determination, the sum of the aggregate outstanding principal
amount of all Indebtedness of the Borrower and its Subsidiaries
on a consolidated basis; provided that Indebtedness hereunder
shall be included in Consolidated Debt in an amount not to exceed
the Clean-Down Amount then in effect and provided further that if
for each and every day of any Clean-Down Period completed within
13 months of the date of the determination of the Consolidated
Debt the Borrower reduced the Revolving Outstandings to $0, then
no Indebtedness hereunder shall be included in Consolidated Debt
at such time of determination. For the purposes of this
definition, letters of credit shall constitute Indebtedness only
to the extent of any amounts drawn thereunder.
"Consolidated EBIT" shall mean, for any period, the
consolidated net income of the Borrower and its Subsidiaries on a
consolidated basis, before Consolidated Cash Interest Expense and
provision for income taxes and without giving effect to any
extraordinary gains or losses or gains or losses from sales of
assets other than inventory sold in the ordinary course of
business.
"Consolidated EBITDAR" shall mean, for any period,
Consolidated EBIT, adjusted by adding thereto the amount of all
amortization and depreciation that was deducted in arriving at
Consolidated EBIT for such period and Consolidated Rents for such
period.
"Consolidated Fixed Charge Coverage Ratio" shall mean,
for any period, the ratio of (i) Consolidated EBITDAR minus
Consolidated Capital Expenditures to (ii) Consolidated Fixed
Charges for such period.
"Consolidated Fixed Charges" shall mean, for any
period, the sum of the (i) Consolidated Cash Interest Expense and
(ii) Consolidated Rents for such period.
"Consolidated Interest Coverage Ratio" shall mean, for
any period, the ratio of (i) Consolidated EBIT to (ii)
Consolidated Cash Interest Expense for such period.
-78-
<PAGE> 101
"Consolidated Net Income" shall mean, for any period,
net income of the Borrower and its Subsidiaries on a consolidated
basis for such period.
"Consolidated Net Worth" shall mean, at any time, the
net worth of the Borrower and its Subsidiaries determined on a
consolidated basis.
"Consolidated Rents" shall mean for any period, the
aggregate payments (including, without limitation, any property
taxes paid as additional rent or lease payments) by the Borrower
and its Subsidiaries on a consolidated basis for such period
under agreements to rent or lease any real or personal property
(excluding payments in respect of Capitalized Lease Obligations)
as recorded in accordance with GAAP.
"Consolidated Senior Debt" shall mean the aggregate
amount of any Consolidated Debt of the Borrower and its
Subsidiaries which is not by it terms subordinated to other
Indebtedness.
"Contingent Obligation" shall mean, as to any Person,
any obligation of such Person guaranteeing any Indebtedness,
leases, dividends or other obligations ("primary obligations") of
any other Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, any
obligation of such Person, whether or not contingent, (i) to
purchase any such primary obligation or any property constituting
direct or indirect security therefor, (ii) to advance or supply
funds (x) for the purchase or payment of any such primary
obligation or (y) to maintain working capital or equity capital
of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (iii) to purchase property,
securities or services primarily for the purpose of assuring the
owner of any such primary obligation of the ability of the
primary obligor to make payment of such primary obligation or
(iv) otherwise to assure or hold harmless the holder of such
primary obligation against loss in respect thereof; provided,
however, that the term Contingent Obligation shall not include
endorsements of instruments for deposit or collection in the
ordinary course of business. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which
such Contingent Obligation is made or, if not stated or
determinable, the maximum reasonably anticipated liability in
respect thereof (assuming
-79-
<PAGE> 102
such Person is required to perform thereunder) as determined by
such Person in good faith.
"Credit Documents" shall mean this Agreement, the
Guaranty, and once executed and delivered pursuant to the terms
of this Agreement, each Note, each Letter of Credit Request, each
Notice of Borrowing, each Notice of Conversion and each Letter of
Credit.
"Credit Event" shall mean the making of any Loan or the
issuance of any Letter of Credit (including Existing Letters of
Credit that become Letters of Credit hereunder).
"Credit Party" shall mean and include each of the
Borrower and each Guarantor.
"Cumulative Consolidated Net Income" shall mean
Consolidated Net Income accrued on a cumulative basis for the
period from April 3, 1994 through the last day of the fiscal
quarter immediately preceding the proposed payment.
"Default" shall mean any event, act or condition which
with notice or lapse of time, or both, would constitute an Event
of Default.
"Defaulting Bank" shall mean any Bank with respect to
which a Bank Default is in effect.
"Deferred Repayment Amount" shall mean, with respect to
any Reinvestment Event, the aggregate amount that (i) would have
been applied to reduce the Total Commitment pursuant to Section
3.03(c) had the Borrower not delivered a Reinvestment Notice and
(ii) is not so applied to reduce the Total Commitment as a result
of being designated as an Anticipated Reinvestment Amount in such
Reinvestment Notice so delivered.
"Dividend" with respect to any Person shall mean that
such Person has declared or paid any dividend or returned any
capital to, its stockholders or authorized or made any other
distribution, payment or delivery of property (other than capital
stock of the Borrower) or cash to its stockholders as such, or
redeemed, retired, purchased, or otherwise acquired, directly or
indirectly, for consideration, any shares of any class of its
capital stock outstanding on or after the Effective Date (or any
options or warrants issued by such Person with respect to its
capital stock), or set aside any funds for any of the foregoing
purposes, or shall have permitted any of its Subsidiaries to
-80-
<PAGE> 103
purchase or otherwise acquire for a consideration any shares of
any class of the capital stock of such Person outstanding on or
after the Effective Date (or any options or warrants issued by
such Person with respect to its capital stock). Without limiting
the foregoing, "Dividends" with respect to any Person shall also
include all payments made or required to be made by such Person
with respect to any stock appreciation rights plans, equity
incentive or achievement plans or any similar plans or the
setting aside of any funds for the foregoing purposes.
"Dollars" and the sign "$" shall each mean freely
transferable lawful money of the United States (expressed in
dollars).
"Drawing" shall have the meaning provided in Section
2.05(b).
"Effective Date" shall have the meaning provided in
Section 13.10.
"Eligible Assignee" means (a) a commercial bank having
total assets in excess of $5,000,000,000; or (b) a finance
company, insurance company, other financial institution or fund,
acceptable to the Administrative Agent and the Borrower, which is
regularly engaged in making, purchasing or investing in loans and
having total assets in excess of $300,000,000.
"Employee Benefit Plans" shall mean all profit sharing
plans, deferred compensation plans, employee benefit plans, stock
appreciation rights, stock options, restricted stock plans and
any other similar plans or arrangements for the benefit of the
employees of the Borrower or any of its Subsidiaries.
"Environmental Claims" shall mean any and all
administrative, regulatory or judicial actions, suits, demands,
demand letters, directives, claims, liens, notices of
noncompliance or violation, investigations or proceedings
relating in any way to any applicable Environmental Law or any
permit issued, or any approval given, under any such
Environmental Law (hereafter, "Claims"), including, without
limitation, (a) any and all Claims by governmental or regulatory
authorities for enforcement, cleanup, removal, response, remedial
or other actions or damages pursuant to any applicable
Environmental Law, and (b) any and all Claims by any third party
seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive
-81-
<PAGE> 104
relief resulting from alleged injury or threat of injury to
health, safety or the environment due to the presence of
Hazardous Materials.
"Environmental Law" shall mean any applicable Federal,
state, foreign or local statute, law, rule, regulation,
ordinance, code, binding and enforceable guideline, binding and
enforceable written policy and rule of common law now or
hereafter in effect and in each case as amended, and any judicial
or administrative interpretation thereof, including any judicial
or administrative order, consent decree or judgment relating to
the environment, employee health and safety or Hazardous
Materials, including, without limitation, CERCLA; RCRA; the
Federal Water Pollution Control Act, 33 U.S.C. 1251 et seq.;
the Toxic Substances Control Act, 15 U.S.C. 2601 et seq.; the
Clean Air Act, 42 U.S.C. 7401 et seq.; the Safe Drinking Water
Act, 42 U.S.C. 3803 et seq.; the Oil Pollution Act of 1990, 33
U.S.C. 2701 et seq.; the Emergency Planning and the Community
Right-to-Know Act of 1986, 42 U.S.C. 11001 et seq., the
Hazardous Material Transportation Act, 49 U.S.C. 1801 et seq.
and the Occupational Safety and Health Act, 29 U.S.C. 651 et
seq. (to the extent it regulates occupational exposure to
Hazardous Materials); and any state and local or foreign
counterparts or equivalents, in each case as amended from time to
time.
"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. Section
references to ERISA are to ERISA, as in effect at the date of
this Agreement, and to any subsequent provisions of ERISA,
amendatory thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in
Section 3(9) of ERISA) which together with the Borrower or any of
its Subsidiaries would be deemed to be a "single employer" within
the meaning of Section 414(b), (c), (m) or (o) of the Code.
"Eurodollar Loans" shall mean any Loan designated as
such by the Borrower at the time of the incurrence thereof or
conversion thereto.
"Event of Default" shall have the meaning provided in
Section 10.
-82-
<PAGE> 105
"Existing Credit Agreement" shall mean the Amended and
Restated Credit Agreement, dated as of May 20, 1992, as amended
from time to time through the Effective Date, among the Borrower,
the financial institutions party thereto, and Chemical, as Agent.
"Existing Letter of Credit" shall have the meaning
provided in Section 2.01(a).
"Existing Subordinated Debt" shall mean the Borrower's
9% Senior Subordinated Debentures due 2004 issued pursuant to the
Existing Subordinated Indenture.
"Existing Subordinated Indenture" shall mean the
Indenture, dated as of February 15, 1993, between the Borrower
and First American National Bank, as amended by a First
Supplemental Indenture dated as of February 15, 1993, pursuant to
which Existing Subordinated Debt was issued.
"Expiry Date" shall mean June 8, 1999.
"Facility Fee" shall have the meaning provided in
Section 3.01(a).
"Facing Fee" shall have the meaning provided in Section
3.01(c).
"Federal Funds Rate" shall mean for any day, the
interest rate equal to the weighted average of the rates on
overnight Federal Funds transactions with members of the Federal
Reserve System arranged by Federal Funds brokers, as published
for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three
Federal Funds brokers of recognized standing selected by the
Administrative Agent.
"Fees" shall mean all amounts payable pursuant to or
referred to in Section 3.01.
"Fixed Rate Loan" shall mean any Competitive Bid Loan
bearing interest at a fixed percentage rate per annum (expressed
in the form of a decimal to no more than four decimal places)
specified by the Bank making such Loan in its Competitive Bid.
-83-
<PAGE> 106
"GAAP" shall mean generally accepted accounting
principles in the United States.
"Guarantor" shall mean any Subsidiary of the Borrower
other than Service Merchandise Showrooms, Inc., The McNally
Supply Co., Cherry Tolleson, Inc., Wholesale Supply, Inc.,
Service Merchandise Co. of New York, Inc., Travel Management
Consultants, Inc., The Lingerie Store, Inc., A.F.S. Marketing
Services, Inc., Porta-File, Inc., H.J. Wilson Realty, Inc.,
Service Merchandise Office Supply, Inc. and Service Merchandise
Company of West Virginia, Inc. so long as each such respective
Subsidiary owns no assets and conducts no business.
"Guaranty" shall have the meaning provided in Section
5.05.
"Hazardous Materials" shall mean (a) any petroleum or
petroleum products, radioactive materials, asbestos in any form
that is or becomes friable, urea formaldehyde foam insulation,
transformers or other equipment that contain dielectric fluid
containing levels of polychlorinated biphenyls, and radon gas;
(b) any chemicals, materials or substances defined as or included
in the definition of "hazardous substances," "hazardous waste,"
"hazardous materials," "extremely hazardous substances,"
"restricted hazardous waste," "toxic substances," "toxic
pollutants," "contaminants," or "pollutants," or words of similar
import, under any applicable Environmental Law; and (c) any other
chemical, material or substance, exposure to which is prohibited,
limited or regulated by any governmental authority under
applicable Environmental Laws.
"Indebtedness" shall mean, as to any Person, without
duplication, (i) all indebtedness of such Person for borrowed
money or for the deferred purchase price of property or services,
(ii) the face amount of all letters of credit issued for the
account of such Person and all drafts drawn thereunder, (iii) all
liabilities of the types described in clauses (i), (ii), (iv),
(v) and (vi) secured by any Lien on any property owned by such
Person, whether or not such liabilities have been assumed by such
Person, (iv) the aggregate amount required to be capitalized
under leases under which such Person is the lessee, (v) all
Contingent Obligations of such Person and (vi) all obligations
(marked to market on the date of determination) of such Person
under Interest Rate Protection Agreements or other similar
agreements; provided that Indebtedness shall not include
-84-
<PAGE> 107
trade payables and accrued expenses, in each case arising in the
ordinary course of business.
"Interest Period" shall have the meaning provided in
Section 1.10.
"Interest Rate Protection Agreement" shall mean and
include any interest rate protection agreement or similar hedging
transaction (including without limitation, interest rate swaps,
caps, floors, collars and similar agreements).
"Investments" shall mean (i) the lending of money or
credit or the making of advances to any Person, (ii) the purchase
or acquisition of any stock, obligations or securities of, or any
other interest in, or the making of capital contributions to, or
other evidences of Indebtedness issued by, any other Person.
"Issuing Bank" shall mean, with the consent of the
Administrative Agent and the Borrower, any Bank, to the extent
such Bank agrees, in its sole discretion, to become an Issuing
Bank for the purpose of issuing Letters of Credit pursuant to
Section 2.
"L/C Supportable Obligations" shall mean (i)
obligations of the Borrower or its Subsidiaries incurred in the
ordinary course of business with respect to workers compensation,
surety bonds and other similar statutory obligations, (ii)
industrial revenue bond obligations and (iii) such other
obligations of the Borrower or any of its Subsidiaries as are
reasonably acceptable to the Issuing Bank and the Administrative
Agent and otherwise permitted to exist pursuant to the terms of
this Agreement.
"Leasehold" of any Person means all of the right, title
and interest of such Person as lessee or licensee in, to and
under leases or licenses of land, improvements and/or fixtures.
"Letter of Credit" shall have the meaning provided in
Section 2.01.
"Letter of Credit Fee" shall have the meaning provided
in Section 3.01(b).
"Letter of Credit Outstandings" shall mean, at any
time, the sum of (i) Standby Letter of Credit Outstandings and
(ii) Trade Letter of Credit Outstandings.
-85-
<PAGE> 108
"Letter of Credit Request" shall have the meaning
provided in Section 2.03.
"Lien" shall mean any mortgage, pledge, hypothecation,
encumbrance, lien (statutory or other), preference, priority or
other security agreement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other
title retention agreement and any lease having substantially the
same effect as any of the foregoing and any assignment or deposit
arrangement in the nature of a security device).
"Loan" shall mean any Revolving Loan, Swingline Loan or
Competitive Bid Loan.
"Mandatory Borrowings" shall have the meaning provided
in Section 1.01(c).
"Margin Stock" shall have the meaning provided in
Regulation U of the Board of Governors of the Federal Reserve
System.
"Maximum Competitive Bid Loan Amount" shall mean
$400,000,000.
"Maximum Swingline Amount" shall mean $30,000,000.
"Moody's" shall mean Moody's Investors Service, Inc.
and its successors.
"Net Sale Proceeds" shall mean, with respect to any
sale of assets by any Person, the aggregate amount of cash
(including all cash received by way of deferred payment of
principal pursuant to a note or installment receivable or
otherwise, but only as and when received) received by such Person
in connection with such sale after deducting therefrom only (i)
reasonable and customary brokerage commissions, legal fees,
finder's fees and other similar fees and commissions, (ii) the
amount of filing, recording, registration, transfer or other
incremental governmental taxes, costs and expenses payable in
connection with or as a result of such transaction and (iii)
payments made by the Borrower or any of its Subsidiaries to
retire Indebtedness of the Borrower or any of its Subsidiaries
(other than the Loans) where payment of such Indebtedness is
required in connection with such, transfer or other disposition.
"Non-Defaulting Bank" shall mean and include each Bank
other than a Defaulting Bank.
-86-
<PAGE> 109
"Non-Facility Letter of Credit Outstandings" shall
mean, at any time, the sum of (i) the aggregate Stated Amount of
all outstanding Non-Facility Letters of Credit and (ii) the
aggregate amount of all unpaid reimbursement obligations
thereunder.
"Non-Facility Letters of Credit" shall mean each letter
of credit (other than any Letter of Credit issued pursuant to
this Agreement) issued for the account of the Borrower or any of
its Subsidiaries, which has reimbursement obligations which are
not secured (other than by possessory security interests in
commercial documents).
"Note" shall mean and include each Revolving Note,
Competitive Bid Note and Swingline Note.
"Notice of Borrowing" shall have the meaning provided
in Section 1.03.
"Notice of Competitive Bid Borrowing" shall have the
meaning provided in Section 1.03(d).
"Notice of Competitive Bid Request" shall have the
meaning provided in Section 1.03(d).
"Notice of Conversion" shall have the meaning provided
in Section 1.07.
"Notice Office" shall mean the office of the
Administrative Agent shown opposite its name on the signature
pages hereof, or such other office as the Administrative Agent
may hereafter designate in writing as such to the other parties
hereto.
"Obligations" shall mean all amounts owing by the
Borrower or any Guarantor to the Administrative Agent or any Bank
pursuant to the terms of this Agreement or any other Credit
Document.
"Participant" shall have the meaning provided in
Section 2.04(a).
"Payment Office" shall mean the office of the
Administrative Agent located at 270 Park Avenue, New York, New
York 10017, or such other office as the Administrative Agent may
hereafter designate in writing as such to the other parties
hereto.
-87-
<PAGE> 110
"PBGC" shall mean the Pension Benefit Guaranty
Corporation established pursuant to Section 4002 of ERISA or any
successor thereto.
"Percentage" of any Bank at any time shall mean a
fraction (expressed as a percentage) the numerator of which is
the Commitment of such Bank at such time and the denominator of
which is the Total Commitment at such time, provided that if the
Percentage of any Bank is to be determined after the Total
Commitment has been terminated, then the Percentages of the Banks
shall be determined immediately prior (and without giving effect)
to such termination.
"Permanent Mortgage Financing" shall mean Indebtedness
in an aggregate amount of $90,000,000 secured by Real Property
owned by the Borrower and/or its Subsidiaries pursuant to the
terms set forth in that certain Indenture dated June 28, 1990,
among the Borrower, H.J. Wilson Co., The Long-Term Credit Bank of
Japan, Limited, New York Branch and NationsBank of Tennessee
(formerly, Sovran Bank/Central South), as trustee.
"Permitted Acquisition Amount" shall mean, at any time,
(x) the sum of $100,000,000 plus 75% of Cumulative Consolidated
Net Income at such time, minus (y) the sum of (A) the aggregate
amount of assets acquired pursuant to Section 9.02(xi) at or
prior to such time and (B) all amounts invested in Subsidiaries
pursuant to clause (v) of the definition of Permitted Investments
at or prior to such time.
"Permitted Inventory Financing" shall mean Indebtedness
of the Borrower to (i) Nations Credit Commercial Corporation
(formerly Chrysler First Wholesale Credit, Inc.) and Thompson
Consumer Electronics, Inc. pursuant to the Inventory Financing
and Security Agreement, effective as of February 1, 1989, among
the aforementioned parties, as amended, (ii) Transamerica
Commercial Finance Corporation pursuant to an Inventory Security
Agreement dated as of August 27, 1993 between such parties, and
(iii) Indebtedness of the Borrower and its Subsidiaries pursuant
to any similar arrangement provided that the amount of all such
Indebtedness shall not exceed at any time outstanding the greater
of (i) $60,000,000 and (ii) the amount of Indebtedness required
for the Borrower and its Subsidiaries to purchase 10% of its
inventory at any time pursuant to such arrangement.
"Permitted Investments" shall mean any of the following
activities of the Borrower and its Subsidiaries:
-88-
<PAGE> 111
(i) the Borrower and its Subsidiaries may acquire and
hold receivables owing to it, if created or acquired in the
ordinary course of business and payable or dischargeable in
accordance with customary trade terms;
(ii) the Borrower and its Subsidiaries may acquire and
hold Cash Equivalents;
(iii) the Borrower and its Subsidiaries may make
advances to employees for moving, relocation and travel
expenses, drawing accounts and similar expenditures in the
ordinary course of business not to exceed $1,000,000 at any
time outstanding;
(iv) the Borrower and the Guarantors may make unsecured
loans and advances among one another in the ordinary course
of business; and
(v) the Borrower or its Subsidiaries may acquire the
capital stock or other equity interest in any other Person,
provided that immediately following any such acquisition (a)
such Person is a Subsidiary of the Borrower or such
acquiring Subsidiary, (b) such Subsidiary becomes a
Guarantor as required by Section 9.15(b) and (c) the amount
of consideration paid (including Acquired Indebtedness) by
the Borrower or such acquiring Subsidiary shall not exceed
the Permitted Acquisition Amount (after giving effect to all
reductions to such amount made prior to, or on the date of,
such acquisition).
"Permitted Mortgage Financing" shall mean Indebtedness
incurred by the Borrower to be secured by one or more parcels of
Real Property owned or leased by the Borrower, provided that the
proceeds thereof shall be entirely in cash and shall not be less
than 75% of the fair market value of the respective asset being
sold (as determined by the Borrower in good faith).
"Permitted Sale Leasebacks" shall mean any sale by the
Borrower or any of its Subsidiaries of assets which are then
leased back to the respective seller, provided that the proceeds
of the respective sale shall be entirely in cash and shall not be
less than 75% of the fair market value of the respective asset
being sold (as determined by the Borrower in good faith).
"Person" shall mean any individual, partnership, joint
venture, firm, corporation, association, trust or other
-89-
<PAGE> 112
enterprise or any government or political subdivision or any
agency, department or instrumentality thereof.
"Plan" shall mean any multiemployer or single-employer
plan, as defined in Section 4001 of ERISA and subject to Title IV
of ERISA, which is maintained or contributed to by (or to which
there is an obligation to contribute of) the Borrower or a
Subsidiary of the Borrower or an ERISA Affiliate, and each such
plan for the five year period immediately following the latest
date on which the Borrower or a Subsidiary of Borrower or an
ERISA Affiliate maintained, contributed to or had an obligation
to contribute to such plan.
"Prime Rate" shall mean the rate which the
Administrative Agent announces from time to time at its principal
office as its prime lending rate for domestic commercial loans,
the Prime Rate to change when and as such prime lending rate
changes. The Prime Rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged to
any customer. The Administrative Agent may make commercial loans
or other loans at rates of interest at, above or below the Prime
Rate.
"Projections" shall have the meaning provided in
Section 7.05(c).
"RCRA" shall mean the federal Resource Conservation and
Recovery Act, 42 U.S.C. 6901 et seq.
"Real Property" of any Person shall mean all of the
right, title and interest of such Person in and to land,
improvements and fixtures, including Leaseholds.
"Register" shall have the meaning provided in Section
13.15.
"Regulations D, G, T, U and X" shall mean Regulations
D, G, T, U and X of the Board of Governors of the Federal Reserve
System as from time to time in effect and any successor to all or
a portion thereof.
"Reinvestment Assets" shall mean, with respect to any
Reinvestment Event, assets to be employed in, and/or the capital
stock of any Person engaged in, the business in which the
Borrower or any of its Subsidiaries is engaged on the Effective
Date.
-90-
<PAGE> 113
"Reinvestment Event" shall mean the receipt of any Net
Sale Proceeds from any asset sale, to the extent the Borrower has
delivered, in connection therewith, a Reinvestment Notice as
permitted by Section 3.03(c).
"Reinvestment Notice" shall mean a written notice
signed by the President, any Vice President or the Treasurer of
the Borrower stating that the Borrower, in good faith, intends
and expects to use (directly or through its Subsidiaries) within
a period of not in excess of one year all or a specified portion
equal to the Anticipated Reinvestment Amount of the Net Sale
Proceeds from any asset sale to purchase, construct or otherwise
acquire Reinvestment Assets.
"Reinvestment Prepayment Amount" shall mean with
respect to any Reinvestment Event, the Deferred Repayment Amount
relating thereto less, in each case, any amount expended prior to
the Reinvestment Prepayment Date applicable thereto in
furtherance of the purchase, construction or other acquisition of
Reinvestment Assets.
"Reinvestment Prepayment Date" shall mean, with respect
to any Reinvestment Event, the earliest of (i) the date, if any,
upon which the Administrative Agent, on behalf of the Required
Banks, shall have delivered a written termination notice to the
Borrower, provided that such notice may only be given while an
Event of Default exists, (ii) the date occurring one year after
such Reinvestment Event to the extent there exists any
Reinvestment Prepayment Amount relating thereto and (iii) the
date on which the Borrower or any of its Subsidiaries shall have
determined not to, or shall have otherwise ceased to, proceed
with the purchase, construction or other acquisition of
Reinvestment Assets.
"Release" means disposing, discharging, injecting,
spilling, pumping, leaking, leaching, dumping, emitting,
escaping, emptying, seeping, placing, pouring and the like, into
or upon any land or water or air, or otherwise entering into the
environment.
"Replaced Bank" shall have the meaning provided in
Section 1.14.
"Replacement Bank" shall have the meaning provided in
Section 1.14.
"Reportable Event" shall mean an event described in
Section 4043(b) of ERISA with respect to a Plan as to which
-91-
<PAGE> 114
the 30-day notice requirement has not been waived by the PBGC.
"Required Banks" shall mean Non-Defaulting Banks, the
sum of whose Commitments (or after the termination thereof,
outstanding Revolving Loans and Adjusted Percentage of
outstanding Swingline Loans and Letter of Credit Outstandings)
represent an amount greater than fifty percent of the Adjusted
Total Commitment (or after the termination thereof, the sum of
the then total outstanding Revolving Loans of Non-Defaulting
Banks, and the aggregate Adjusted Percentages of all Non-
Defaulting Banks of the total outstanding Swingline Loans and
Letter of Credit Outstandings at such time).
"Restricted Payments" shall mean (a) any authorization,
declaration or payment of any Dividends with respect to the
Borrower or its Subsidiaries, (b) the making (or the giving of
any notice in respect thereof) by the Borrower or any of its
Subsidiaries of any voluntary or mandatory payment, purchase,
acquisition or redemption, whether by the making of any cash
payments of the principal, interest or otherwise, in respect of
any Subordinated Debt (other than scheduled principal and
interest payments on any Subordinated Debt) and (c) Investments
made by the Borrower or its Subsidiaries.
"Revolving Loans" shall have the meaning provided in
Section 1.01(a).
"Revolving Note" shall have the meaning provided in
Section 1.06(a).
"Revolving Outstandings" shall mean (i) outstanding
Revolving Loans, Competitive Bid Loans, and Swingline Loans and
(ii) Trade Letter of Credit Outstandings in excess of the amount
then held in Cash Reserve.
"S&P" shall mean Standard & Poor's Corporation and its
successors.
"Scheduled Reduction" shall have the meaning provided
in Section 3.03(b).
"SEC" shall have the meaning provided in Section
8.01(f).
"Section 4.04(b)(iii) Certificate" shall have the
meaning provided in Section 4.04(b).
-92-
<PAGE> 115
"Series A Junior Preferred Stock Purchase Rights" shall
mean the Rights, as such term is used and defined in the Rights
Agreement, dated February 8, 1988, between the Company and Third
National Bank in Nashville, as Rights Agent, as the same may be
amended from time to time.
"Spread" shall mean, as to any Competitive Bid Loan
bearing interest at the Adjusted Eurodollar Rate, the margin
(expressed as a percentage rate per annum in the form of a
decimal to no more than four decimal places) to be added or
subtracted from the Adjusted Eurodollar Rate in order to
determine the interest rate applicable to such Competitive Bid
Loan, as specified in the Competitive Bid relating to such
Competitive Bid Loan.
"Standby Letter of Credit" shall have the meaning
provided in Section 2.01(a).
"Standby Letter of Credit Outstandings" shall mean, at
any time, the sum of (i) the aggregate Stated Amount of all
outstanding Standby Letters of Credit and (ii) the aggregate
amount of all Unpaid Drawings with respect to Standby Letters of
Credit.
"Stated Amount" of each letter of credit shall mean the
maximum amount available to be drawn thereunder, determined
without regard to whether any conditions to drawing could then be
met.
"Subordinated Debt" shall mean the Existing
Subordinated Debt and any other Indebtedness of the Borrower and
its Subsidiaries which is by its terms subordinate in right of
payment to any other Indebtedness (including the Obligations).
"Subsidiary" shall mean, as to any Person, (i) any
corporation more than 50% of whose stock of any class or classes
having by the terms thereof ordinary voting power to elect a
majority of the directors of such corporation (irrespective of
whether or not at the time stock of any class or classes of such
corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time owned by such
Person and/or one or more Subsidiaries of such Person and (ii)
any partnership, association, joint venture or other entity in
which such Person and/or one or more Subsidiaries of such Person
has more than a 50% equity interest at the time.
-93-
<PAGE> 116
"Swingline Loan" shall have the meaning provided in
Section 1.01(b).
"Swingline Note" shall have the meaning provided in
Section 1.06(a).
"Taxes" shall have the meaning provided in Section
4.04.
"Test Period" shall mean for any determination under
this Agreement the four consecutive fiscal quarters of the
Borrower ended on the date of determination (or, if such date of
determination is not the last day of a fiscal quarter of the
Borrower, the four consecutive fiscal quarters of the Borrower
last ended prior to such date of determination), in each case
taken as one accounting period.
"Total Capitalization" shall mean, at any time, the sum
of the Consolidated Debt and Consolidated Net Worth at such time.
"Total Commitment" shall mean, at any time, the sum of
the Commitments of each of the Banks.
"Total Unutilized Commitment" at any time shall mean
(i) the Total Commitment then in effect less (ii) the sum of (x)
the aggregate outstanding principal amount of Revolving Loans and
Swingline Loans and (y) the Letter of Credit Outstandings at such
time.
"Trade Letter of Credit" shall have the meaning
provided in Section 2.01(a).
"Trade Letter of Credit Outstandings" shall mean, at
any time, the sum of (i) the aggregate Stated Amount of all
outstanding Trade Letters of Credit and (ii) the aggregate amount
of all Unpaid Drawings with respect to Trade Letters of Credit.
"Type" shall mean any type of Loan determined with
respect to the interest option applicable thereto, i.e., a Base
Rate Loan or a Eurodollar Loan.
"Unfunded Current Liability" of any Plan means the
amount, if any, by which the actuarial present value of the
accumulated Plan benefits under the Plan as of the close of its
most recent plan year exceeds the fair market value of the assets
allocable thereto, each determined in accordance with statement
of Financial Accounting Standards No. 35,
-94-
<PAGE> 117
based upon the actuarial assumptions used by the Plan's actuary
in the most recent annual valuation of the Plan.
"United States" and "U.S." shall each mean the United
States of America.
"Unpaid Drawings" shall have the meaning provided in
Section 2.05(a).
"Unutilized Commitment" of any Bank at any time shall
mean the Commitment of such Bank less (i) the aggregate
outstanding principal amount of Revolving Loans made by such Bank
and, in the case of Chemical, the aggregate outstanding principal
amount of its Swingline Loans plus (ii) the product of such
Bank's Adjusted Percentage and Letter of Credit Outstandings at
such time.
11.02 Principles of Construction. (a) All references
to sections, schedules and exhibits are to sections, schedules
and exhibits in or to this Agreement unless otherwise specified.
(b) All accounting terms not specifically defined
herein shall be construed in accordance with GAAP as more fully
described in Section 13.07(a).
Section 12. The Administrative Agent and the Issuing
Bank.
12.01 Appointment. The Banks hereby designate
Chemical as Administrative Agent to act as specified herein and
in the other Credit Documents. Each Bank hereby irrevocably
authorizes, and each holder of any Note by the acceptance of such
Note shall be deemed irrevocably to authorize, the Administrative
Agent to take such action on its behalf under the provisions of
this Agreement, the other Credit Documents and any other
instruments and agreements referred to herein or therein and to
exercise such powers and to perform such duties hereunder and
thereunder as are specifically delegated to or required of the
Administrative Agent by the terms hereof and thereof and such
other powers as are reasonably incidental thereto. Each of the
Administrative Agent and any Issuing Bank may perform any of its
duties hereunder by or through its affiliates, officers,
directors, agents or employees.
-95-
<PAGE> 118
12.02 Nature of Duties. Neither the Administrative
Agent nor any Issuing Bank shall have any duties or
responsibilities except those expressly set forth in this
Agreement. Neither the Administrative Agent, any Issuing Bank
nor any of their respective affiliates, officers, directors,
agents or employees shall be liable for any action taken or
omitted by it or them hereunder or under any other Credit
Document or in connection herewith or therewith, unless caused by
its or their gross negligence or willful misconduct. The duties
of the Administrative Agent and any Issuing Bank shall be
mechanical and administrative in nature; neither the
Administrative Agent nor any Issuing Bank shall have by reason of
this Agreement or any other Credit Document a fiduciary
relationship in respect of any Bank; and nothing in this
Agreement or any other Credit Document, expressed or implied, is
intended to or shall be so construed as to impose upon the
Administrative Agent or any Issuing Bank any obligations in
respect of this Agreement or any other Credit Document except as
expressly set forth herein.
12.03 Lack of Reliance on the Administrative Agent or
any Issuing Bank. Independently and without reliance upon the
Administrative Agent or any Issuing Bank, each Bank, to the
extent it deems appropriate, has made and shall continue to make
(i) its own independent investigation of the financial condition
and affairs of each Credit Party in connection with the making
and the continuance of the Loans and the taking or not taking of
any action in connection herewith and (ii) its own appraisal of
the creditworthiness of each Credit Party and, except as
expressly provided in this Agreement, neither the Administrative
Agent nor any Issuing Bank shall have a duty or responsibility,
either initially or on a continuing basis, to provide any Bank
with any credit or other information with respect thereto,
whether coming into its possession before the making of the Loans
or the issuing of Letters of Credit, or at any time or times
thereafter. Neither the Administrative Agent nor any Issuing Bank
shall be responsible to any Bank for any recitals, statements,
information, representations or warranties herein or in any
document, certificate or other writing delivered in connection
herewith or for the execution, effectiveness, genuineness,
validity, enforceability, perfection, collectibility, priority or
sufficiency of this Agreement or any other Credit Document or the
financial condition of any Credit Party or be required to make
any inquiry concerning either the performance or observance of
any of the terms, provisions or conditions of this Agreement or
any other Credit Document, or the financial condition of any
Credit Party or the existence or possible existence of any
Default or Event of Default.
-96-
<PAGE> 119
12.04 Certain Rights of the Administrative Agent and
any Issuing Bank. If either the Administrative Agent or any
Issuing Bank shall request instructions from the Required Banks
with respect to any act or action (including failure to act) in
connection with this Agreement or any other Credit Document, the
Administrative Agent or such Issuing Bank, as the case may be,
shall be entitled to refrain from such act or taking such action
unless and until the Administrative Agent or such Issuing Bank,
as the case may be, shall have received instructions from the
Required Banks; and neither the Administrative Agent nor such
Issuing Bank shall incur liability to any Person by reason of so
refraining. Without limiting the foregoing, no Bank shall have
any right of action whatsoever against the Administrative Agent
or any Issuing Bank as a result of the Administrative Agent or
any such Issuing Bank, as the case may be, acting or refraining
from acting hereunder or under any other Credit Document in
accordance with the instructions of the Required Banks.
12.05 Reliance. The Administrative Agent or any
Issuing Bank shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message,
cablegram, radiogram, order or other document or telephone
message signed, sent or made by any Person that the
Administrative Agent or any such Issuing Bank, as the case may
be, believed (in the absence of gross negligence or willful
misconduct on its part) to be the proper Person and, with respect
to all legal matters pertaining to this Agreement and any other
Credit Document and its duties hereunder and thereunder, upon
advice of counsel selected by it (which may be counsel for the
Borrower).
12.06 Indemnification. To the extent the
Administrative Agent or any Issuing Bank is not reimbursed and
indemnified by the Borrower, the Banks will reimburse and
indemnify the Administrative Agent or any such Issuing Bank, as
the case may be, in proportion to their respective "percentages"
hereunder, for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by or asserted against the
Administrative Agent or any such Issuing Bank, as the case may
be, in performing its duties hereunder or under any other Credit
Document, in any way relating to or arising out of this Agreement
or any other Credit Document; provided that no Bank shall be
liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses
-97-
<PAGE> 120
or disbursements resulting from the Administrative Agent's or any
such Issuing Bank's, as the case may be, gross negligence or
willful misconduct.
12.07 The Administrative Agent and each Issuing Bank
in their Individual Capacities. With respect to their
obligations to make Loans and participate in Letters of Credit
under this Agreement, the Administrative Agent and each Issuing
Bank shall have the rights and powers specified herein for a
"Bank" and may exercise the same rights and powers as though they
were not performing the duties specified herein; and the term
"Banks," "Required Banks," "holders of Notes" or any similar
terms shall, unless the context clearly otherwise indicates,
include the Administrative Agent and each Issuing Bank in their
respective individual capacities. Each of the Administrative
Agent, each Issuing Bank and/or their respective Affiliates may
own stock of any Credit Party and may accept deposits from, lend
money to, and generally engage in any kind of banking, trust or
other business with any Credit Party or any Affiliate of any
Credit Party as if it were not performing the duties specified
herein, and may accept fees and other consideration from any
Credit Party for services in connection with this Agreement and
otherwise without having to account for the same to the Banks.
12.08 Holders. The Administrative Agent may deem and
treat the payee of any Note as the owner thereof for all purposes
hereof unless and until a written notice of the assignment,
transfer or endorsement thereof, as the case may be, shall have
been filed with the Administrative Agent. Any request, authority
or consent of any Person or entity who, at the time of making
such request or giving such authority or consent, is the holder
of any Note shall be conclusive and binding on any subsequent
holder, transferee, assignee or indorsee, as the case may be, of
such Note or of any Note or Notes issued in exchange therefor.
12.09 Resignation by the Administrative Agent. (a)
The Administrative Agent may resign from the performance of all
its functions and duties hereunder and/or under the other Credit
Documents at any time by giving 25 Business Days' prior written
notice to the Borrower and the Banks. Such resignation shall take
effect upon the appointment of a successor Administrative Agent
pursuant to clauses (b) and (c) below or as otherwise provided
below.
(b) Upon any such notice of resignation, the Required
Banks shall appoint a successor Administrative Agent
-98-
<PAGE> 121
hereunder or thereunder who shall be a commercial bank or trust
company reasonably acceptable to the Borrower.
(c) If a successor Administrative Agent shall not have
been so appointed within such 25 Business Day period, the
Administrative Agent, with the consent of the Borrower, shall
then appoint a successor Administrative Agent who shall serve as
Administrative Agent hereunder or thereunder until such time, if
any, as the Required Banks appoint a successor Administrative
Agent as provided above.
(d) If no successor Administrative Agent has been
appointed pursuant to clause (b) or (c) above by the 30th
Business Day after the date such notice of resignation was given
by the Administrative Agent, the resignation of the
Administrative Agent shall become effective and the Required
Banks shall perform the duties of the Administrative Agent until
a successor Administrative Agent is appointed.
Section 13. Miscellaneous.
13.01 Payment of Expenses, etc. The Borrower
shall: (i) whether or not the transactions herein contemplated
are consummated, pay all out-of-pocket costs and expenses of the
Administrative Agent (including, without limitation, the
reasonable fees and disbursements of White & Case) in connection
with the preparation, execution and delivery of this Agreement
and the other Credit Documents and the documents and instruments
referred to herein and therein and any amendment, waiver or
consent relating hereto or thereto, of the Administrative Agent
in connection with its syndication efforts with respect to this
Agreement and of the Administrative Agent and, following and
during the continuation of an Event of Default, each of the Banks
in connection with the enforcement of this Agreement and the
other Credit Documents and the documents and instruments referred
to herein and therein (including, without limitation, the
reasonable fees and disbursements of counsel for the
Administrative Agent and, following and during the continuation
of an Event of Default, for each of the Banks); (ii) pay and hold
each of the Banks harmless from and against any and all present
and future stamp, excise and other similar taxes with respect to
the foregoing matters and save each of the Banks harmless from
and against any and all liabilities with respect to or resulting
from any delay or omission (other than to the extent attributable
to such Bank) to pay such taxes; and (iii) indemnify the
Administrative Agent and each Bank, and each of their respective
affiliates, officers, directors, employees, representatives and
agents
-99-
<PAGE> 122
from and hold each of them harmless against any and all
liabilities, obligations (including removal or remedial actions),
losses, damages, penalties, claims, actions, judgments, suits,
costs, expenses and disbursements (including reasonable
attorneys' and consultants' fees and disbursements) incurred by,
imposed on or assessed against any of them as a result of, or
arising out of, or in any way related to, or by reason of, (a)
any investigation, litigation or other proceeding (whether or not
the Administrative Agent or any Bank is a party thereto) related
to the entering into and/or performance of this Agreement or any
other Credit Document or the use of any Letter of Credit or the
proceeds of any Loans hereunder or the consummation of any
transactions contemplated herein or in any other Credit Document
or the exercise of any of their rights or remedies provided
herein or in the other Credit Documents or (b) the actual or
alleged presence of Hazardous Materials in the air, surface water
or groundwater or on the surface or subsurface of any Real
Property owned or at any time operated by the Borrower or any of
its Subsidiaries, the generation, storage, transportation,
handling or disposal of Hazardous Materials by the Borrower or
any of its Subsidiaries at any location, whether or not owned or
operated by the Borrower or any of its Subsidiaries, the non-
compliance of any Real Property with foreign, federal, state and
local laws, regulations, and ordinances (including applicable
permits thereunder) applicable to any Real Property, or any
Environmental Claim asserted against the Borrower, any of its
Subsidiaries or any Real Property owned or at any time operated
by the Borrower or any of its Subsidiaries, including, in each
case, without limitation, the reasonable fees and disbursements
of counsel and other consultants incurred in connection with any
such investigation, litigation or other proceeding. To the
extent that the undertaking to indemnify, pay or hold harmless
the Administrative Agent or any Bank set forth in the preceding
sentence may be unenforceable because it is violative of any law
or public policy, the Borrower shall make the maximum
contribution to the payment and satisfaction of each of the
indemnified liabilities which is permissible under applicable
law.
13.02 Right of Setoff. In addition to any rights now
or hereafter granted under applicable law or otherwise, and not
by way of limitation of any such rights, upon the occurrence and
continuance of an Event of Default, each Bank is hereby
authorized at any time or from time to time, without presentment,
demand, protest or other notice of any kind to any Credit Party
or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate
-100-
<PAGE> 123
and apply any and all deposits (general or special) and any other
Indebtedness at any time held or owing by such Bank (including,
without limitation, by branches and agencies of such Bank
wherever located) to or for the credit or the account of such
Credit Party against and on account of the Obligations and
liabilities of such Credit Party to such Bank under this
Agreement or under any of the other Credit Documents, including,
without limitation, all interests in Obligations of such Party
purchased by such Bank pursuant to Section 13.06(b), and all
other claims of any nature or description arising out of or
connected with this Agreement or any other Credit Document,
irrespective of whether or not such Bank shall have made any
demand hereunder and although said Obligations, liabilities or
claims, or any of them, shall be contingent or unmatured.
13.03 Notices. Except as otherwise expressly provided
herein, all notices and other communications provided for
hereunder shall be in writing (including telegraphic, telex,
telecopier or cable communication) and mailed, telegraphed,
telexed, telecopied, cabled or delivered, if to any Credit Party,
at its address specified opposite its signature below or in the
Credit Document executed by it; if to any Bank, at its address
specified opposite its signature below; and if to the
Administrative Agent, at its Notice Office; or, as to the
Borrower, the Administrative Agent or any Bank, at such other
address as shall be designated by such party in a written notice
to the other parties hereto and, as to each other party, at such
other address as shall be designated by such party in a written
notice to the Borrower and the Administrative Agent. All such
notices and communications shall, when mailed, telegraphed,
telexed, telecopied, or cabled or sent by overnight courier, be
effective upon receipt.
13.04 Benefit of Agreement; Assignments;
Participations. (a) This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto; provided, however,
the Borrower may not assign or transfer any of its rights,
obligations or interest hereunder without the prior written
consent of the Banks and, provided further, that, although any
Bank may transfer, assign or grant participations in its rights
hereunder, such Bank shall remain a "Bank" for all purposes
hereunder (and may not transfer or assign all or any portion of
its Commitments hereunder except as provided in Sections 1.14 and
13.04(b)) and the transferee, assignee or participant, as the
case may be, shall not constitute a "Bank" hereunder and,
provided
-101-
<PAGE> 124
further, that no Bank shall transfer or grant any participation
under which the participant shall have rights to approve any
amendment to or waiver of this Agreement or any other Credit
Document except to the extent such amendment or waiver would (i)
extend the final scheduled maturity of any Loan, Note or Letter
of Credit (unless such Letter of Credit is not extended beyond
the Expiry Date or any extension thereof) in which such
participant is participating, or reduce the rate or extend the
time of payment of interest or Fees thereon (except in connection
with a waiver of applicability of any post-default increase in
interest rates) or reduce the principal amount thereof, or
increase the amount of the participant's participation over the
amount thereof then in effect (it being understood that waivers
of conditions precedent, covenants, Defaults or Events of Default
or of a mandatory reduction in the Total Commitment shall not
constitute a change in the terms of such participation, and that
an increase in any Commitment, Loan or Letter of Credit shall be
permitted without the consent of any participant if the
participant's participation is not increased as a result thereof)
or (ii) consent to the assignment or transfer by the Borrower of
any of its rights and obligations under this Agreement. In the
case of any such participation, the participant shall not have
any rights under this Agreement or any of the other Credit
Documents (the participant's rights against such Bank in respect
of such participation to be those set forth in the agreement
executed by such Bank in favor of the participant relating
thereto) and all amounts payable by the Borrower hereunder shall
be determined as if such Bank had not sold such participation.
(b) Notwithstanding the foregoing, any Bank (or any
Bank together with one or more other Banks) may (x) assign all or
a portion of its Commitment and related outstanding Obligations
hereunder to its parent company and/or any affiliate of such Bank
which is at least 50% owned by such Bank or its parent company or
to one or more Banks or (y) assign all, or if less than all, a
portion equal to at least $10,000,000 in the aggregate for the
assigning Bank or assigning Banks, of such Commitments and
related outstanding Obligations hereunder to one or more Eligible
Assignees, each of which assignees shall become a party to this
Agreement as a Bank by execution of an assignment and acceptance
agreement (the "Assignment and Acceptance") in the form of
Exhibit I (appropriately completed), provided that, (i) at such
time Schedule I shall be deemed modified to reflect the
Commitments of such new Bank and of the existing Banks, (ii) new
Notes will be issued, at the Borrower's expense, to such
-102-
<PAGE> 125
new Bank and to the assigning Bank upon the request of such new
Bank or assigning Bank, such new Notes to be in conformity with
the requirements of Section 1.06 (with appropriate modifications)
to the extent needed to reflect the revised Commitments, (iii)
the consent of the Administrative Agent, the Borrower and each
Issuing Bank shall be required in connection with any assignment,
which consent shall not be unreasonably withheld, (iv) the
Administrative Agent shall receive at the time of each such
assignment, from the assigning or assignee Bank, the payment of a
non-refundable assignment fee of $3,000 and (v) any Bank
assigning less than all of its Commitment under clause (y) shall
retain a Commitment of at least $10,000,000; and provided
further, that such transfer or assignment will not be effective
until recorded by the Administrative Agent on the Register
pursuant to Section 13.15 hereof. To the extent of any
assignment pursuant to this Section 13.04(b), the assigning Bank
shall be relieved of its obligations hereunder with respect to
its assigned Commitment. At the time of each assignment pursuant
to this Section 13.04(b) to a Person which is not already a Bank
hereunder and which is not a United States person (as such term
is defined in Section 7701(a)(30) of the Code) for Federal income
tax purposes, the respective assignee Bank shall, to the extent
legally entitled to do so, provide to the Borrower in the case of
a Bank described in clause (ii) of Section 4.04(b), the forms
described in such clause (ii). To the extent that an assignment
of all or any portion of a Bank's Commitments and related
outstanding Obligations pursuant to Section 1.14 or this Section
13.04(b) would, at the time of such assignment, result in
increased costs under Section 1.11 or 1.12 from those being
charged by the respective assigning Bank prior to such
assignment, then the Borrower shall not be obligated to pay such
increased costs (although the Borrower shall be obligated to pay
any other increased costs of the type described above resulting
from changes after the date of the respective assignment).
(c) By executing and delivering an Assignment and
Acceptance, the Bank assignor thereunder and the assignee
thereunder confirm to and agree with each other and the other
parties hereto as follows: (i) other than the representation and
warranty that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse
claim, such Bank assignor makes no representation or warranty and
assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the
Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this
-103-
<PAGE> 126
Agreement or any other instrument or document furnished pursuant
hereto; (ii) such Bank assignor makes no representation or
warranty and assumes no responsibility with respect to the
financial condition of the Borrower or the performance or
observance by the Borrower of any of its obligations under this
Agreement or any other instrument or document furnished pursuant
hereto; (iii) such assignee confirms that it has received a copy
of this Agreement, together with copies of the financial
statements referred to in Section 7.05 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 Bank assignor or any
other Bank and based on such documents and information as it
shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this
Agreement; (v) such assignee appoints and authorizes the
Administrative Agent to take such action as agent on its behalf
and to exercise such powers under this Agreement as are delegated
to the Administrative Agent by the terms hereof, together with
such powers as are reasonably incidental thereto; and (vi) such
assignee agrees that it will perform in accordance with their
terms all the obligations that by the terms of this Agreement are
required to be performed by it as a Bank.
(d) Any Bank may, in connection with any assignment or
participation or proposed assignment or participation pursuant to
this Section 13.04, disclose to the assignee or participant or
proposed assignee or participant, any information relating to the
Borrower furnished to such Bank by or on behalf of the Borrower;
provided that prior to any such disclosure, each such assignee or
participant or proposed assignee or participant shall have
executed a Confidentiality Letter in the form of Exhibit J and
returned such executed Confidentiality Letter to the
Administrative Agent and the Borrower with respect to the
preservation of the confidentiality of any confidential
information relating to the Borrower and its Subsidiaries
received from such Bank.
(e) Any assignment by a Bank pursuant to this Section
13.04 shall not result in any single Bank holding in excess of
25% of the Total Commitment at any one time.
(f) Notwithstanding any other provision set forth in
this Agreement any Bank may at any time create a security
interest in all or any portion of its rights under this Agreement
(including, without limitation, the Loans owing to
-104-
<PAGE> 127
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.
13.05 No Waiver; Remedies Cumulative. No failure or
delay on the part of the Administrative Agent or any Bank or any
holder of a Note in exercising any right, power or privilege
hereunder or under any other Credit Document and no course of
dealing between any Credit Party and the Administrative Agent or
any Bank or the holder of any Note shall operate as a waiver
thereof; nor shall any single or partial exercise of any right,
power or privilege hereunder or under any other Credit Document
preclude any other or further exercise thereof or the exercise of
any other right, power or privilege hereunder or thereunder. The
rights and remedies herein expressly provided are cumulative and
not exclusive of any rights or remedies which the Administrative
Agent or any Bank or the holder of any Note would otherwise have.
No notice to or demand on any Credit Party in any case shall
entitle such Credit Party to any other or further notice or
demand in similar or other circumstances or constitute a waiver
of the rights of the Administrative Agent, the Banks or the
holder of any Note to any other or further action in any
circumstances without notice or demand.
13.06 Payments Pro Rata. (a) The Administrative
Agent agrees that promptly after its receipt of each payment from
or on behalf of any Credit Party in respect of any Obligations of
such Credit Party hereunder or under any Credit Document, it
shall distribute such payment to the Banks pro rata based upon
their respective shares (other than to any Bank which has waived
in writing its receipt of such distribution), if any, of the
Obligations with respect to which such payment was received.
(b) Each of the Banks agrees that, if it should
receive any amount hereunder (whether by voluntary payment, by
realization upon security, by the exercise of the right of setoff
or banker's lien, by counterclaim or cross action, by the
enforcement of any right under the Credit Documents, or
otherwise), which is applicable to the payment of the principal
of, or interest on, the Loans pursuant to any Borrowing, Unpaid
Drawings or Facility Fee, of a sum which with respect to the
related sum or sums received by other Banks is in a greater
proportion than the total of such Obligation then owed and due to
such Bank bears to the total of such Obligation then owed and due
to all of the Banks immediately prior to such receipt, then such
Bank receiving such excess payment shall purchase for cash
without recourse
-105-
<PAGE> 128
or warranty from the other Banks an interest in the Obligations
of such Credit Party to such Banks in such amount as shall result
in a proportional participation by all the Banks in such amount;
provided that if all or any portion of such excess amount is
thereafter recovered from such Bank, such purchase shall be
rescinded and the purchase price restored to the extent of such
recovery, but without interest.
(c) Notwithstanding anything to the contrary contained
herein, the provisions of the preceding Sections 13.06(a) and (b)
shall be subject to the express provisions of this Agreement
which require, or permit, differing payments to be made to Non-
Defaulting Banks as opposed to Defaulting Banks.
13.07 Calculations; Computations. (a) The financial
statements to be furnished to the Banks pursuant hereto shall be
made and prepared in accordance with GAAP consistently applied
throughout the periods involved (except as set forth in the notes
thereto). All calculations and computations determining
compliance with Sections 9.05 through 9.09, inclusive, shall
utilize accounting principles and policies in conformity with
those used to prepare the financial statements referred to in
Section 7.05(a).
(b) All computations of interest, the Facility Fee and
other Fees hereunder shall be made on the actual number of days
elapsed over a period of 360 days, except that interest
calculations on Base Rate Loans on which the applicable rate is
determined by reference to the Prime Rate shall be made on the
actual number of days elapsed over a 365 or 366 day year. All
interest shall accrue from the date funds are made available to
the Borrower to, but not including, the date of repayment thereof
or of the end of an Interest Period therefor; provided that if
any Loan is repaid on the same day on which it is borrowed
hereunder, one day's interest shall be paid on such Loan.
13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION;
VENUE. (a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND
THE RIGHTS AND OBLIGATIONS OF THE BORROWER HEREUNDER AND
THEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED
BY THE LAW OF THE STATE OF NEW YORK. Any legal action or
proceeding with respect to this Agreement or any other Credit
Document may be brought in the courts of the State of New York or
of the United States for the Southern District of New York, and,
by execution and delivery of this Agreement, the Borrower hereby
irrevocably accepts for itself and in
-106-
<PAGE> 129
respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts. The Borrower hereby
irrevocably designates, appoints and empowers CT Corporation
System, with offices on the date hereof at 1633 Broadway, New
York, New York 10019 as its designee, appointee and agent to
receive, accept and acknowledge for and on its behalf, and in
respect of its property, service of any and all legal process,
summons, notices and documents which may be served in any such
action or proceeding. The Administrative Agent agrees to use
reasonable good faith efforts to mail, by registered or certified
mail, to the Borrower, at its address set forth opposite its
signature below, copies of any correspondence mailed or delivered
to CT Corporation in connection with the immediately preceding
sentence; provided that no failure of the Borrower to receive,
for any reason, copies of such correspondence shall in any way
affect the effectiveness of the delivery of any legal process,
summons, notice or documents delivered to CT Corporation. If for
any reason such designee, appointee and agent shall cease to be
available to act as such, the Borrower agrees to designate a new
designee, appointee and agent in New York City on the terms and
for the purposes of this provision satisfactory to the
Administrative Agent. The Borrower 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 such
Borrower at its address set forth opposite its signature below,
such service to become effective thirty days after such mailing.
Nothing herein shall affect the right of the Administrative
Agent, any Bank or the holder of any Note to serve process in any
other manner permitted by law or to commence legal proceedings or
otherwise proceed against the Borrower in any other jurisdiction.
(b) The Borrower hereby irrevocably waives any
objection which it may now or hereafter have to the laying of
venue of any of the aforesaid actions or proceedings arising out
of or in connection with this Agreement or any other Credit
Document brought in the courts referred to in clause (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. THE BORROWER FURTHER WAIVES ANY RIGHT IT MAY HAVE TO
TRIAL BY JURY IN ANY COURT OR JURISDICTION, INCLUDING WITHOUT
LIMITATION, THE JURISDICTIONS AND COURTS REFERRED TO IN CLAUSE
(A) ABOVE.
-107-
<PAGE> 130
13.09 Counterparts. This Agreement may be executed in
any number of counterparts and by the different parties hereto on
separate counterparts, each of which when so executed and
delivered shall be an original, but all of which shall together
constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the
Borrower and the Administrative Agent.
13.10 Effectiveness. This Agreement shall become
effective on the date (the "Effective Date") on which the
Borrower and each of the Banks shall have signed a copy hereof
(whether the same or different copies) and shall have delivered
the same to the Administrative Agent at its Notice Office or, in
the case of the Banks, shall have given to the Administrative
Agent telephonic (confirmed in writing), written, telex or
facsimile notice (actually received) at such office that the same
has been signed and mailed to it. The Administrative Agent will
give the Borrower and each Bank prompt written notice of the
occurrence of the Effective Date.
13.11 Headings Descriptive. The headings of the
several sections and subsections of this Agreement are inserted
for convenience only and shall not in any way affect the meaning
or construction of any provision of this Agreement.
13.12 Amendment or Waiver. (a) Neither this
Agreement nor any other Credit Document nor any terms hereof or
thereof may be changed, waived, discharged or terminated unless
such change, waiver, discharge or termination is in writing
signed by the respective Credit Parties party thereto and the
Required Banks, provided that no such change, waiver, discharge
or termination shall, without the consent of each Bank (other
than a Defaulting Bank) (with Obligations being directly affected
in the case of following clause (i)), (i) extend the final
scheduled maturity of any Loan or Note or extend the stated
maturity of any Letter of Credit beyond the Expiry Date or any
extension of the Expiry Date, or reduce the rate or extend the
time of payment of interest or Fees thereon (except in connection
with a waiver of applicability of any post-default increase in
interest rates), or reduce the principal amount thereof, (ii)
amend, modify or waive any provision of this Section 13.12 or
reduce the percentage specified in the definition of Required
Banks (it being understood that, with the consent of the Required
Banks, additional extensions of credit pursuant to this Agreement
may be included in the determination of the Required Banks on
-108-
<PAGE> 131
substantially the same basis as the extensions of Commitments are
included on the Effective Date and this Section 13.12 may be
amended to permit such inclusions on such substantially the same
basis) or (iii) consent to the assignment or transfer by the
Borrower of any of its rights and obligations under this
Agreement; provided further, that no such change, waiver,
discharge or termination shall (v) increase the Commitments of
any Bank over the amount thereof then in effect without the
consent of such Bank (it being understood that waivers or
modifications of conditions precedent, covenants, Defaults or
Events of Default or of a mandatory reduction in the Total
Commitment shall not constitute an increase of the Commitment of
any Bank, and that an increase in the available portion of any
Commitment of any Bank shall not constitute an increase in the
Commitment of such Bank), (w) without the consent of each Issuing
Bank, amend, modify or waive any provision of Section 2 or alter
its rights or obligations with respect to Letters of Credit
issued by it, (x) without the consent of the Administrative
Agent, amend, modify or waive any provision of Section 12 as same
applies to such Administrative Agent or any other provision as
same relates to the rights or obligations of such Administrative
Agent or (y) without the consent of Chemical, amend, modify or
waive any provisions relating to its rights or obligations with
respect to Swingline Loans.
(b) If, in connection with any proposed change,
waiver, discharge or termination to any of the provisions of this
Agreement as contemplated by clause (a)(i) through (iii),
inclusive, of this Section 13.12, the consent of the Required
Banks is obtained but the consent of one or more of the other
Banks whose consent is required is not obtained, then the
Borrower shall have the right to replace each such non-consenting
Bank or Banks (so long as all non-consenting Banks are so
replaced) with one or more Replacement Banks pursuant to Section
1.14 so long as at the time of such replacement, each such
Replacement Bank consents to the proposed change, waiver,
discharge or termination, provided that the Borrower shall not
have the right to replace a Bank solely as a result of the
exercise of such Bank's rights (and the withholding of any
required consent by such Bank) pursuant to the second proviso to
Section 13.12(a).
13.13 Survival. All indemnities set forth herein
including, without limitation, in Sections 1.11, 1.12, 2.06,
4.04, 12.06, 13.01 and 13.06 shall survive the execution and
delivery of this Agreement and the Notes and the making and
repayment of the Loans.
-109-
<PAGE> 132
13.14 Domicile of Loans. Subject to Section 1.13,
each Bank may transfer and carry its Loans at, to or for the
account of any branch, office, Subsidiary or Affiliate of such
Bank.
13.15 Register. The Borrower hereby designates the
Administrative Agent to serve as the Borrower's agent, solely for
purposes of this Section 13.15, to maintain a register (the
"Register") on which it will record the Commitment from time to
time of each of the Banks, the Loans made by each of the Banks
and each repayment in respect of the principal amount of the
Loans of each Bank. Failure to make any such recordation, or any
error in such recordation shall not affect the Borrower's
obligations in respect of such Loans. With respect to any Bank,
the transfer of the Commitment of such Bank and the rights to the
principal of, and interest on, any Loan made pursuant to such
Commitment shall not be effective until such transfer is recorded
on the Register maintained by the Administrative Agent with
respect to ownership of such Commitment and Loans and prior to
such recordation all amounts owing to the transferor with respect
to such Commitment and Loans shall remain owing to the
transferor. The registration of assignment or transfer of all or
part of the Commitments and Loans shall be recorded by the
Administrative Agent on the Register only upon the acceptance by
the Administrative Agent of a properly executed and delivered
Assignment and Acceptance pursuant to Section 13.04(b).
Coincident with the delivery of such an Assignment and Acceptance
to the Administrative Agent for acceptance and registration of
assignment or transfer of all or part of a Loan, or as soon
thereafter as practicable, the assigning or transferor Bank shall
surrender the Note evidencing such Loan, and thereupon one or
more new Notes in the same aggregate principal amount shall be
issued to the assigning or transferor Bank and/or the new Bank.
The Borrower agrees to indemnify the Administrative Agent from
and against any and all losses, claims, damages and liabilities
of whatsoever nature which may be imposed on, asserted against or
incurred by the Administrative Agent in performing its duties
under this Section 13.15, except to the extent caused by the
Administrative Agent's gross negligence or willful misconduct.
13.16 Limitation of Additional Amounts.
Notwithstanding anything in this Agreement to the contrary, to
the extent any notice required by Section 1.11, 1.12, 2.06 or
4.04 is given by any Bank more than 180 days after the occurrence
of the event giving rise to the additional costs of the type
described in such Section, such Bank shall not be
-110-
<PAGE> 133
entitled to compensation under Section 1.11, 1.12, 2.06 or 4.04
for any amounts incurred or accruing prior to the giving of such
notice to the Borrower.
-111-
<PAGE> 134
IN WITNESS WHEREOF, the parties hereto have caused
their duly authorized officers to execute and deliver this
Agreement as of the date first above written.
Address:
7100 Service Merchandise Drive SERVICE MERCHANDISE COMPANY,
Brentwood, TN 37027 INC.
Attn: Treasurer
Telephone: (615) 660-6000 By /s/ Samuel Cusano
-------------------------
Telecopy: (615) 660-3667 Title: Vice President &
CFO
270 Park Avenue CHEMICAL BANK
10th Floor Individually, and as
New York, New York 10017 Administrative Agent
Attn: Christopher C. Wardell
Telephone: (212) 270-2053 By /s/ Christopher C. Wardell
---------------------------
Telecopy: (212) 270-3860 Title: Managing Director
With a copy to:
Chemical Securities Inc.
10 South LaSalle Street
Suite 2300
Chicago, Illinois 60603
Attn: Steven J. Faliski
Telephone: (312) 807-4073
Telecopy: (312) 443-1964
<PAGE> 135
One Ravinia Drive ABN AMRO BANK N.V.,
Suite 1200 ATLANTA AGENCY
Atlanta, GA 30346-2103
Attn: Mr. Adam Greene
Telephone: (404) 399-7378 By /s/ Pat Fischer
------------------------
Telecopy: (404) 395-9188 Title: Senior Vice
President
By /s/ Adam Greene
------------------------
Title: Assistant Vice
President
245 Park Avenue ARAB BANKING CORPORATION
New York, NY 10167
Attn: Ms. Louise Bilbro
Telephone: (212) 850-0665 By /s/ Ms. Louise Bilbro
------------------------
Telecopy: (212) 599-8385 Title: Vice President
400 Perimeter Center Terrace THE FIRST NATIONAL BANK OF
Suite 745 BOSTON
Atlanta, GA 30346
Attn: Mr. Chuck Biggers
Telephone: (404) 393-4676 By /s/ William Purinton
------------------------
Telecopy: (404) 393-4166 Title: Vice President
430 Park Avenue THE BANK OF MONTREAL
New York, NY 10022
Attn: Ms. Lisa Megeaski
Telephone: (212) 605-1441 By /s/ Earnest Cechetto
------------------------
Telecopy: (212) 605-1455 Title: Managing Director
One Wall Street THE BANK OF NEW YORK
22nd Floor
New York, NY 10286
Attn: Mr. Greg Batson By /s/ Gregory L. Batson
------------------------
Title: Assistant Vice
President
Telephone: (212) 635-6898
Telecopy: (212) 635-6434
<PAGE> 136
National Banking Department THE BANK OF TOKYO TRUST
1251 6th Avenue, 12th Floor COMPANY
New York, NY 10116
Attn: Mr. William J. Darby
By /s/ William J. Darby
------------------------
Title: Assistant Vice
President
Telephone: (212) 782-4318
Telecopy: (212) 782-6440
787 7th Avenue BANQUE PARIBAS
New York, NY 10019
Attn: Ms. Ann Pifer
Telephone: (212) 841-2383 By /s/ David Canavan
------------------------
Telecopy: (212) 841-2333 Title: Group Vice
President
By /s/ Ann Pifer
------------------------
Title: Assistant Vice
President
Two Paces West CANADIAN IMPERIAL BANK
2727 Paces Ferry Road OF COMMERCE
Atlanta, GA 30339
Attn: Ms. Kathryn W. Sax
Telephone: (404) 319-4903 By /s/ Kathryn W. Sax
------------------------
Telecopy: (404) 319-4954 Title: Authorized
Signatory
New York Branch THE DAIWA BANK, LIMITED
75 Rockefeller Plaza
New York, NY 10019
Attn: Mr. Prescot Vann
Telephone: (212) 554-7043 By /s/ Kenro Kojima
------------------------
Telecopy: (212) 554-7210 Title: Vice President
75 Wall Street DRESDNER BANK AG,
New York, NY 10005 NEW YORK BRANCH
Attn: Mr. Peter Becker
Telephone: (212) 574-0100 By /s/ Peter Becker
------------------------
Telecopy: (212) 574-0129 Title: Vice President
By /s/ Terry L. Darby
------------------------
Title: Vice President
<PAGE> 137
Marquis One Tower THE FUJI BANK, LTD.
Suite 2100
245 Peachtree Center Ave., NE
Atlanta, GA 30303-1208
Attn: Mr. Brett Johnson By /s/ A. Inove
------------------------
Title: Vice President and
Manager
Telephone: (404) 653-2100
Telecopy: (404) 653-2119
Two World Trade Center THE HOKKAIDO TAKUSHOKU BANK,
99th Floor LTD.
New York, NY 10048
Attn: Mr. Scott D. Winston
Telephone: (212) 912-6914 By /s/ Hitoshi Sato
------------------------
Telecopy: (212) 466-6079 Title: Senior Vice
President and
Manager
245 Park Avenue THE INDUSTRIAL BANK OF JAPAN,
New York, NY 10167 LIMITED - NEW YORK BRANCH
Attn: Mr. Jim Welch
Telephone: (212) 309-6577 By /s/ Junri Oda
------------------------
Telecopy: (212) 682-2870 Title: Senior Vice
President and Senior
Manager
245 Peachtree Center Ave, NE LTCB TRUST COMPANY
Suite 2801
Atlanta, GA 30303
Attn: Ms. Becky Sedler By /s/ Philip A. Marsden
------------------------
Title: Senior Vice
President
Telephone: (404)
Telecopy: (404)
156 West 56th Street MIDLAND BANK PLC
New York, NY 10019
Attn: Ms. Gina Sidorsky
Telephone: (212) 969-7232 By /s/ Gina Sidorsky
------------------------
Telecopy: (212) 969-7240 Title: Director
<PAGE> 138
499 Thornall Street MIDLANTIC NATIONAL BANK
9th Floor
Edison, NJ 08818
Attn: Ms. Lynn Conover By /s/ M. Lynn Conover
------------------------
Title: Assistant Vice
President
Telephone: (908) 321-2140
Telecopy: (908) 321-2144
225 Liberty Street THE MITSUBISHI BANK,
39th Floor LIMITED - NEW YORK BRANCH
Two World Financial Center
New York, NY 10281
Attn: Mr. William Brennan
By /s/ Hiroaki Fuchida
------------------------
Telephone: (212) 667-2905 Title: Vice President
Telecopy: (212) 667-3562 Manager
520 Madison Avenue THE MITSUBISHI TRUST AND
25th Floor BANKING CORPORATION
New York, NY 10022
Attn: Ms. Pat Loret de Mola
Telephone: (212) 891-8454 By /s/ Mastaka Ushio
------------------------
Telecopy: (212) 755-2349 Title: Senior Vice
(212) 486-0970 President and Chief
Manager
One NationsBank Plaza M-5 NATIONSBANK OF NORTH
311 Union Street CAROLINA, N.A.
Nashville, TN 37239-1697
Attn: Ms. Kimberly Dupuy
Telephone: (615) 749-3174 By /s/ Kimberly Dupuy
------------------------
Telecopy: (615) 749-4640 Title: Assistant Vice
President
245 Park Avenue THE NIPPON CREDIT BANK, LTD.
30th Floor
New York, NY 10167
Attn: Mr. Yasuhide Yahiro
Telephone: (212) 984-1217 By /s/ Ronald A. Fisher
------------------------
Telecopy: (212) 490-3895 Title: Vice President
<PAGE> 139
Marquis One Tower THE SAKURA BANK, LIMITED
Suite 2703
245 Peachtree Center Ave., N.E.
Atlanta, GA 30303
Attn: Mr. Chad Zimmerman By /s/ M. Inaba
------------------------
Title: Vice President
Telephone: (404) 521-3111 and Senior Manager
Telecopy: (404) 521-1133
Georgia Pacific Center THE SUMITOMO BANK, LIMITED
Suite 3210 ATLANTA AGENCY
133 Peachtree Street, N.E.
Atlanta, GA 30303
Attn: Mr. Gary Franke By /s/ Masami Sumii
------------------------
Title: General Manager
Telephone: (404) 526-8511
Telecopy: (404) 521-1187
55 East 52nd Street THE TOKAI BANK, LTD.
New York, NY 10055 NEW YORK BRANCH
Attn: Ms. Haruyo Niki
Telephone: (212) 339-1123 By /s/ Masaharu Muto
------------------------
Telecopy: (212) 754-2170 Title: Deputy General
Manager
One Detroit Center COMERICA BANK
500 Woodward Avenue, MC 3281
9th Floor
Detroit, MI 48226
Attn: Mr. James R. Phillips By /s/ James R. Phillips
------------------------
Title: Assistant Vice
Telephone: (313) 222-6272 President
Telecopy: (313) 222-3330
<PAGE> 140
640 5th Avenue BANK OF IRELAND, CAYMAN BRANCH
New York, NY 10019
Attn: Mr. Roger Burns
Telephone: (212) 397-1712 By /s/ Roger Burns
------------------------
Telecopy: (212) 586-7752 Title: Vice President
1211 Avenue of the Americas WESTDEUTSCHE LANDESBANK
New York, NY 10036 GIROZENTRALE, NEW YORK
Attn: Mr. Alan Bookspan AND CAYMAN ISLAND BRANCHES
Telephone: (212) 852-6023
Telecopy: (212) 852-6307 By /s/ Alan S. Bookspan
------------------------
Title: Vice President
By /s/ Sal Battinelli
------------------------
Title: Vice President
