<PAGE> 1
FORM 10-Q/A-1
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 March 30, 1997
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 April 27, 1997, there were 99,780,351 shares of
Service Merchandise Company, Inc. common stock outstanding.
<PAGE> 2
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I - FINANCIAL INFORMATION
Consolidated Statements of Operations (Unaudited) - First Quarter Ended
March 30, 1997 and March 31, 1996 ............................................... 3
Consolidated Balance Sheets - March 30, 1997 (Unaudited),
March 31, 1996 (Unaudited) and December 29, 1996 ................................ 4
Consolidated Statements of Cash Flows (Unaudited) - First Quarter
Ended March 30, 1997 and March 31, 1996 ......................................... 5
Notes to Consolidated Financial Statements (Unaudited) .......................... 6-8
Management's Discussion and Analysis of Financial Condition and Results
of Operations ................................................................... 9-12
PART II - OTHER INFORMATION
Other Information ............................................................... 13
Exhibits ........................................................................ 14
SIGNATURES .............................................................................. 15
</TABLE>
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<PAGE> 3
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
Consolidated Statements of Operations (Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
First Quarter Ended
----------------------
March 30, March 31,
--------- ---------
1997 1996
--------- ---------
<S> <C> <C>
Net sales $ 686,400 $ 715,628
Costs and expenses:
Cost of merchandise sold and buying and occupancy expenses 531,640 554,870
--------- ---------
Gross margin after cost of merchandise sold and buying and
occupancy expenses 154,760 160,758
Selling, general and administrative expenses 165,024 168,674
Restructuring charge 129,510 --
Depreciation and amortization 14,812 15,609
--------- ---------
Loss before interest and income taxes (154,586) (23,525)
Interest expense-debt 14,973 14,113
Interest expense-capitalized leases 1,989 2,225
--------- ---------
Loss before income tax benefit (171,548) (39,863)
Income tax benefit (64,331) (15,148)
--------- ---------
Net loss $(107,217) $ (24,715)
========= =========
Weighted average common shares and common
share equivalents outstanding 100,127 101,366
========= =========
Per common share:
Net loss per common share $ (1.07) $ (0.24)
========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
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<PAGE> 4
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except per share data)
<TABLE>
<CAPTION>
(Unaudited)
--------------------------
March 30, March 31, December 29,
1997 1996 1996 (1)
----------- ----------- ------------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 29,168 $ 27,248 $ 285,368
Accounts receivable, net of allowance of
$3,409, $3,074 and $4,593, respectively 45,592 42,926 61,454
Income taxes 50,912 2,898 --
Inventories 1,078,051 1,101,390 1,052,969
Prepaid expenses 21,221 31,978 15,461
----------- ----------- -----------
TOTAL CURRENT ASSETS 1,224,944 1,206,440 1,415,252
Property and equipment:
Owned assets, net of accumulated depreciation of
$540,681, $502,503 and $530,170, respectively 522,975 573,577 567,056
Capitalized leases, net of accumulated amortization of
$79,778, $83,492 and $86,710 respectively 36,481 42,909 37,701
Other assets and deferred charges 25,814 20,074 22,818
----------- ----------- -----------
TOTAL ASSETS $ 1,810,214 $ 1,843,000 $ 2,042,827
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes payable to banks $ 101,000 $ 185,000 --
Accounts payable 389,031 463,260 $ 595,262
Accrued expenses 166,262 156,212 212,223
State and local sales taxes 25,177 29,430 62,690
Accrued restructuring costs - current 27,066 -- --
Income taxes -- -- 33,898
Current maturities of long-term debt 7,116 1,932 6,842
Current maturities of capitalized lease obligations 7,445 8,066 7,303
Deferred income taxes 7,437 11,715 7,437
----------- ----------- -----------
TOTAL CURRENT LIABILITIES 730,534 855,615 925,655
Accrued restructuring costs 67,301 -- --
Long-term debt 628,331 556,401 623,615
Capitalized lease obligations 56,034 63,838 58,541
Deferred income taxes 7,922 4,888 7,922
----------- ----------- -----------
TOTAL LIABILITIES 1,490,122 1,480,742 1,615,733
----------- ----------- -----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, $1 par value, 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 99,758, 99,722 and 99,758 shares, respectively 49,879 49,861 49,879
Additional paid-in capital 5,653 5,591 5,670
Deferred compensation (1,019) (1,945) (1,251)
Retained earnings 265,579 308,751 372,796
----------- ----------- -----------
TOTAL SHAREHOLDERS' EQUITY 320,092 362,258 427,094
----------- ----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,810,214 $ 1,843,000 $ 2,042,827
=========== =========== ===========
</TABLE>
(1) Derived from fiscal year ended December 29, 1996 audited consolidated
financial statements.
See Notes to Consolidated Financial Statements.
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SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
First Quarter Ended
----------------------
March 30, March 31,
----------------------
1997 1996
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(107,217) $ (24,715)
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation and amortization 15,645 16,307
Gain on disposal of property and equipment (2,511) (2,789)
Write down of property and equipment due to restructuring 32,915 --
Changes in assets and liabilities (net of disposition):
Accounts receivable, net 15,862 10,695
Inventories (25,082) (66,923)
Prepaid expenses (5,760) (6,701)
Accounts payable (206,231) (157,409)
Accrued expenses and state and local sales taxes (83,049) (68,598)
Accrued restructuring costs 94,367 --
Income taxes (84,810) (32,107)
--------- ---------
NET CASH USED BY OPERATING ACTIVITIES (355,871) (332,240)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment - owned (4,388) (5,441)
Proceeds from the disposal of property and equipment 3,626 4,249
Other, net (3,473) 1,246
--------- ---------
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES (4,235) 54
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term borrowings 101,000 185,000
Proceeds from long-term debt 6,560 --
Repayment of long-term debt (1,583) (1,008)
Repayment of capitalized lease obligations (1,945) (1,875)
Debt issuance costs (108) --
Exercise of stock options (forfeiture of restricted stock), net (18) 3
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 103,906 182,120
--------- ---------
NET DECREASE IN CASH AND CASH EQUIVALENTS (256,200) (150,066)
CASH AND CASH EQUIVALENTS-BEGINNING OF PERIOD 285,368 177,314
--------- ---------
CASH AND CASH EQUIVALENTS-END OF PERIOD $ 29,168 $ 27,248
========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
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<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 December 29, 1996, 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. These financial statements should be read in conjunction
with the Company's Annual Report on Form 10-K for the fiscal year ended
December 29, 1996.
The Company has historically incurred a net loss for the first quarter
of the year due to the seasonality of its business. The results of
operations for the first quarter ended March 30, 1997 and March 31,
1996 are not necessarily indicative of the operating results for the
entire fiscal year.
B. On March 25, 1997, the Company adopted a business restructuring plan to
close 60 underperforming stores and one distribution center. As a
result, a pre-tax charge of $129.5 million for restructuring costs was
taken in the first quarter of 1997. Management anticipates that a
majority of these stores and the distribution center will be closed by
the end of the third quarter of 1997, with the remaining closures
completed by early 1998. In addition to the restructuring charge,
reduced margins will be reflected in the Company's operating results as
affected inventory associated with the closing stores is liquidated.
The components of the restructuring charge and an analysis of the
amounts charged against the accrual through March 30, 1997 are outlined
in the following table:
<TABLE>
<CAPTION>
Activity to Date
--------------------------------------------------
Accrued
Original Restructuring
Charge Restructuring Asset Costs as of
(In thousands) Recorded Costs Paid Write-downs March 30, 1997
--------- ------------- ----------- --------------
<S> <C> <C> <C> <C>
Lease termination and other real
estate costs $ 83,225 $ -- $ -- $ 83,225
Property and equipment write-downs 32,915 -- (32,915) --
Employee severance 4,869 (701) -- 4,168
Other exit costs 8,501 (1,527) -- 6,974
--------- --------- --------- ---------
Total $ 129,510 $ (2,228) $ (32,915) 94,367
========= ========= =========
Less: Current portion (27,066)
---------
$ 67,301
=========
</TABLE>
The stores planned for closure include both owned and leased
properties. Lease termination and other real estate costs consist
principally of the remaining rental payments required under the closing
stores' lease agreements, net of any actual or reasonably probable
sublease income.
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<PAGE> 7
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (continued)
After taking into effect the above asset write-downs, the Company's
carrying value of the property and equipment associated with the
closures is $31.3 million as of March 30, 1997. Management anticipates
selling substantially all owned property and equipment associated with
the closures.
The employee severance provision was recorded for the planned
termination of approximately 4,100 employees associated with the
closures, as well as the overall restructuring of store staffing levels
at the remaining stores. Other exit costs consist principally of
professional fees and other costs associated with closing the stores
and distribution center.
Net sales associated with the closing stores were approximately $68.6
million and $73.4 million for the three periods ended March 30, 1997
and March 31, 1996, respectively. The pre-tax operating losses
associated with the closing stores, excluding corporate allocations,
were approximately ($3.3) million and ($4.4) million for the three
periods ended March 30, 1997 and March 31, 1996, respectively. Net
sales associated with the closing stores were approximately $391.0
million and $405.4 million for fiscal years 1996 and 1995,
respectively. The pre-tax operating income associated with the closing
stores, excluding corporate allocations, was approximately $2.0 million
and $6.4 million for fiscal years 1996 and 1995, respectively.
C. The first quarter ended March 30, 1997 contained 90 selling days versus
the first quarter ended March 31, 1996 which contained 91 selling days.
D. The net loss per common share is computed by dividing the net loss by
the weighted average number of common shares and common share
equivalents outstanding.
E. Cash payments for interest for the first quarter ended March 30, 1997
and March 31, 1996 were $13.4 million and $10.1 million, respectively.
Cash payments for income taxes for the first quarter ended March 30,
1997 and March 31, 1996 were $19.9 million and $17.0 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.
F. The Company has available a Reducing Revolving Credit Facility ("Credit
Facility") with a maximum commitment level which reduces $25 million
annually until reaching $475 million at December 31, 1998. Currently,
the maximum commitment level is $525 million. Short-term borrowings
related to the Credit Facility were $101 million and $185 million as of
March 30, 1997 and March 31, 1996, respectively. The Credit Facility
matures on June 8, 1999.
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<PAGE> 8
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (continued)
The Company completed an amendment to the Credit Facility on March 25,
1997 which is expected to provide the Company with the flexibility to
effect the store closings and other strategic initiatives. The
amendment excludes from financial covenant calculations the impact of
up to $175 million in pre-tax charges and costs related to certain
strategic initiatives such as the store closing restructuring. The
amendment also provides increased operating flexibility with respect to
certain financial covenants. Under the amended Credit Facility, the
effective interest rate increased to LIBOR + 1 3/8% from LIBOR + 1%.
Subsequent changes in the Company's public debt rating have further
increased the effective interest rate on borrowings under the amended
Credit Facility to LIBOR + 1 3/4%. The interest rate is subject to
further change based on the Company's public debt rating. The facility
fee on the Credit Facility increased to 1/2% from 3/8% on the entire
committed amount. Additionally, the Company's bank group has obtained
security interests in the majority of unencumbered property and assets
(excluding inventory) of the Company. Certain other changes limit the
Company's level of capital spending, dividend payments and
indebtedness.
-8-
<PAGE> 9
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
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.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This report includes certain forward-looking information that is based upon
management's beliefs as well as on assumptions made by and data currently
available to management. This information, which has been, or in the future may
be, included in reliance on the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, is subject to a number of risks and
uncertainties, including but not limited to the factors identified in the
Company's Form 10-K for the fiscal year ended December 29, 1996 filed with the
Securities and Exchange Commission. Actual results may differ materially from
those anticipated in such forward-looking statements even if experience or
future changes make it clear that any projected results expressed or implied
therein may not be realized. The Company disclaims any obligation to update any
information contained herein.
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.
RESTRUCTURING CHARGE
On March 25, 1997, the Company adopted a business restructuring plan to close 60
underperforming stores and one distribution center. As a result, a pre-tax
charge of $129.5 million for restructuring costs was taken in the first quarter
of 1997. Management anticipates that a majority of these stores and the
distribution center will be closed by the end of the third quarter of 1997, with
the remaining closures completed by early 1998. In addition to the restructuring
charge, reduced margins will be reflected in the Company's operating results as
affected inventory associated with the closing stores is liquidated. The
components of the restructuring charge are outlined in a table in Note B of the
Notes to Consolidated Financial Statements.
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<PAGE> 10
Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
The restructuring was based on an analysis of individual store performance based
on cash flow return on committed capital, fit within marketing demographic
profiles and strategic geographic positioning. The Company anticipates that some
transfer sales may be attracted by other Service Merchandise stores operating in
the same geographic markets as some of the closed stores. After the effect of
charges and costs related specifically to the closings, the immediate ongoing
impact of the closings on net income will be immaterial because the stores to be
closed are near break-even contributors. The major benefit of the store closings
will be the freeing up of capital associated with these operations, rather than
a short-term opportunity to improve earnings. This capital will be redirected in
an effort to produce more appropriate returns. Additionally, the Company is
proceeding with a strategic assessment of its business including merchandising
strategies, product offerings and shopping format.
The net loss for the first quarter of 1997, including the impact of the $129.5
million pre-tax ($80.9 million after tax) restructuring charge, was $107.2
million, or $1.07 per share. Excluding the restructuring charge, net loss was
$26.3 million, or $0.26 per share, compared to a net loss of $24.7 million, or
$0.24 per share, for the first quarter of 1996.
FIRST QUARTER ENDED MARCH 30, 1997 VS. FIRST QUARTER ENDED MARCH 31, 1996
NET SALES
Net sales for the first quarter of 1997 were $686.4 million compared to $715.6
million for the first quarter of 1996. This represents a net sales decrease of
$29.2 million or 4.1% with comp store sales (adjusted for the shift in Easter)
decreasing 2.5%. Affecting the total sales decrease was the fact that the
Company operated 399 stores during the first quarter of 1997 compared to 409
stores during the first quarter of 1996. The comparable store sales decrease was
driven primarily by a storewide sales event in the first quarter of 1996 which
was not repeated in the first quarter of 1997. Jewelry sales and hardline sales
were both off in the low single digit percentages for the quarter.
GROSS MARGIN
Gross margin, after buying and occupancy expenses, was $154.8 million, or 22.5%
of net sales for the first quarter of 1997 compared to $160.8 million, or 22.5%
for the first quarter of 1996. The decrease in gross margin dollars was
primarily due to a higher inventory shrinkage expense accrual and lower cash
discounts on lower purchases.
-10-
<PAGE> 11
Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the first quarter of 1997 were
$165.0 million, or 24.0% of net sales compared to $168.7 million, or 23.6% of
net sales for the first quarter of 1996. Reduced employment costs and other
selling, general and administrative expenses contributed to the decrease of $3.7
million, although these reductions were partially offset by higher advertising
expenses. The increase as a percentage of net sales was attributable to lower
sales.
INTEREST EXPENSE
Interest expense for the first quarter of 1997 was $17.0 million as compared to
$16.3 million for the first quarter of 1996. Interest expense for the quarter
increased due to the issuance of $74.8 million in mortgage financing notes
primarily in the fourth quarter of 1996. This expense was partially offset by
lower borrowings against the Company's Credit Facility.
TAXES ON INCOME
The Company recognized an income tax benefit of $64.3 million and $15.1 million
for the first quarter ended March 30, 1997 and March 31, 1996, respectively.
This increase is primarily due to the restructuring charge outlined above. The
effective tax rates for the quarter ended March 30, 1997 and March 31, 1996 were
37.5% and 38%, respectively. For the fiscal year ended December 29, 1996 the
effective income tax rate was 37.5%.
LIQUIDITY AND CAPITAL RESOURCES
Working capital increased to $494.4 million at the end of the first quarter of
1997 from $350.8 million at March 31, 1996, an increase of $143.6 million or
40.9%. Short-term borrowings totaled $101 million ($402.6 million available for
borrowing) at March 30, 1997 compared to $185.0 million ($350.1 million
available for borrowing) at March 31, 1996, a decrease of $84.0 million. The
issuance of $74.8 million in mortgage financing notes primarily in the fourth
quarter of 1996 led to the decrease in short-term borrowings and had a
significant impact on increased working capital as payment obligations were
shifted from short-term to long-term. Additionally, reduced purchases
contributed to the decline in trade accounts payable. Furthermore, income taxes
classified as a current asset increased by $48.0 million primarily due to the
$129.5 million restructuring charge taken in the quarter. Partially offsetting
these items include accrued restructuring costs of $27.1 million classified as
short-term liabilities.
Working capital requirements fluctuate significantly during the year due to the
seasonal nature of the retail jewelry, gift and home business. These
requirements are financed through a combination of internally generated cash
flow from operating activities, short-term borrowings and long-term financing.
The current ratio at March 30, 1997 and March 31, 1996 was 1.7:1 and 1.4:1,
respectively.
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<PAGE> 12
Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
The Company has available a Reducing Revolving Credit Facility ("Credit
Facility") with a maximum commitment level which reduces $25 million annually
until reaching $475 million at December 31, 1998. Currently, the maximum
commitment level is $525 million. The Credit Facility matures on June 8, 1999.
The Company completed an amendment to the Credit Facility on March 25, 1997
which is expected to provide the Company with the flexibility to effect the
store closings and other strategic initiatives. The amendment excludes from
financial covenant calculations the impact of up to $175 million in pre-tax
charges and costs related to certain strategic initiatives such as the store
closing restructuring. The amendment also provides increased operating
flexibility with respect to certain financial covenants. Under the amended
Credit Facility, the effective interest rate increased to LIBOR + 1 3/8% from
LIBOR + 1%. Subsequent changes in the Company's public debt rating have further
increased the effective interest rate on borrowings under the amended Credit
Facility to LIBOR + 1 3/4%. The interest rate is subject to further change based
on the Company's public debt rating. The facility fee on the Credit Facility
increased to 1/2% from 3/8% on the entire committed amount. Additionally, the
Company's bank group has obtained security interests in the majority of
unencumbered property and assets (excluding inventory) of the Company. Certain
other changes limit the Company's level of capital spending, dividend payments
and indebtedness.
Total long-term debt, including current maturities and capitalized leases,
increased to $698.9 million at March 30, 1997 from $630.2 million at March 31,
1996. The increase in total long-term debt was primarily attributable to the
issuance of $74.8 million in mortgage financing notes slightly offset by
scheduled payments for capitalized lease obligations, mortgages and Industrial
Revenue Bonds.
Additions to owned property and equipment were $4.4 million for the first
quarter ended March 30, 1997 compared to $5.4 million for the same quarter last
year. The Company operated 399 stores as of March 30, 1997, a net decrease of 10
stores from March 31, 1996. The Company expects to incur capital expenditures of
approximately $50 million during fiscal 1996 and plans to fund these
expenditures through a combination of cash flows from operations and borrowings
under the Credit Facility.
ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per
Share". This pronouncement will be effective for financial statements for both
interim and annual periods ending after December 15, 1997. The Company
anticipates that this Statement will not have a material impact on its financial
statements.
-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 amended Credit Facility permits the payment of dividends
in an aggregate amount not to exceed (i) 25% of the Company's
cumulative consolidated net income (as defined) commencing March 31,
1997 less (ii) the amount of investments made in Credit Card
subsidiaries on or after March 25, 1997.
Item 3. Defaults by the Company on Its Senior Securities
Not applicable.
Item 4. Results of Votes of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
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<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 Item
601 of Regulation S-K Brief Description
4 Amendment No. 5 to Credit Agreement
effective March 25, 1997 among Service
Merchandise Company, Inc., various Banks and
The Chase Manhattan Bank as Administrative
Agent
11 Statement re: Computation of Net Loss Per
Common Share for the First Quarter Ended
March 30, 1997 and March 31, 1996
27 Financial Data Schedule for the First
Quarter Ended March 30, 1997
6(b) Reports on Form 8-K
There were no reports on Form 8-K during the first quarter ended March
30, 1997.
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<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: May 19, 1997 /s/ S. Cusano
-----------------------------------
S. Cusano
Executive Vice President and Chief
Financial Officer
(Chief Financial Officer)
(Chief Accounting Officer)
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<PAGE> 1
EXHIBIT 4
FIFTH AMENDMENT
FIFTH AMENDMENT (this "Amendment"), dated as of March 25, 1997, among
SERVICE MERCHANDISE COMPANY, INC. (the "Borrower"), the various lending
institutions party to the Credit Agreement referred to below (the "Banks"), and
THE CHASE MANHATTAN BANK (formerly known as CHEMICAL BANK), as Administrative
Agent (in such capacity, the "Administrative Agent"). All capitalized terms used
herein and not otherwise defined shall have the respective meanings provided
such terms in the Credit Agreement referred to below.
W I T N E S S E T H :
WHEREAS, the Borrower, the Banks and the Administrative Agent are
parties to a Credit Agreement, dated as of June 8, 1994 and amended by the First
Amendment thereto dated as of April 13, 1995, the Second Amendment thereto dated
May 23, 1996, the Third Amendment thereto dated as of September 16, 1996 and the
Fourth Amendment thereto dated as of January 15, 1997 (as so amended, the
"Credit Agreement"); and
WHEREAS, the parties hereto wish to amend the Credit Agreement as
herein provided;
NOW, THEREFORE, it is agreed:
1. (a) On the Fifth Amendment Effective Date (as defined hereinbelow),
the Credit Agreement shall be amended to read as set forth in Exhibit A hereto
(as so amended, the "Amended Credit Agreement"), with the same effect as if each
of the parties hereto had executed and delivered to the Administrative Agent a
counterpart of the Amended Credit Agreement.
(b) Notwithstanding anything herein to the contrary, this Amendment
shall terminate and be of no force and effect if the Fifth Amendment Effective
Date shall not have occurred on or prior to March 31, 1997.
2. In order to induce the undersigned Banks to enter into this
Amendment, the Borrower hereby represents and warrants that (x) no Default or
Event
<PAGE> 2
of Default exists on the Fifth Amendment Effective Date both before and after
giving effect to this Amendment and (y) all of the representations and
warranties contained in the Amended Credit Agreement shall be true and correct
in all material respects as of the Fifth Amendment Effective Date both before
and after giving effect to this Amendment, with the same effect as though such
representations and warranties had been made on and as of the Fifth Amendment
Effective Date (it being understood that any representation or warranty made as
of a specified date shall be required to be true and correct in all material
respects only as of such specific date).
3. This Amendment is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Credit
Agreement or any other Credit Document.
4. This Amendment may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A complete set of
counterparts shall be lodged with the Borrower and the Administrative Agent.
5. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK.
6. This Amendment shall become effective on the date (the "Fifth
Amendment Effective Date") when the Borrower and the Required Banks (i) shall
have signed a counterpart hereof (whether the same or different counterparts)
and (ii) shall have delivered (including by way of telecopier) the same to the
Administrative Agent at the Notice Office.
7. From and after the Fifth Amendment Effective Date all references in
the Credit Agreement and the other Credit Documents to the Credit Agreement
shall be deemed to be references to the Amended Credit Agreement.
-2-
<PAGE> 3
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Amendment to be duly executed and delivered as of the date first above
written.
Address:
7100 Service Merchandise Drive SERVICE MERCHANDISE
Brentwood, TN 37027 COMPANY, INC.
Attn: Thomas L. Garrett, Jr.
Telephone: (615) 660-6000 By /s/ Wade Smith
Telecopy: (615) 660-3667 --------------------------------------
Title: Vice President
and Assistant Treasurer
270 Park Avenue THE CHASE MANHATTAN BANK
10th Floor Individually, and as
New York, NY 10017 Administrative Agent
Attn: William P. Rindfuss
Telephone: (212) 270-4565 By
Telecopy: (212) 270-1474 --------------------------------------
Title:
<PAGE> 4
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Amendment to be duly executed and delivered as of the date first above
written.
Address:
7100 Service Merchandise Drive SERVICE MERCHANDISE
Brentwood, TN 37027 COMPANY, INC.
Attn: Thomas L. Garrett, Jr.
Telephone: (615) 660-6000 By
Telecopy: (615) 660-3667 --------------------------------------
Title:
270 Park Avenue THE CHASE MANHATTAN BANK
10th Floor Individually, and as
New York, NY 10017 Administrative Agent
Attn: William P. Rindfuss
Telephone: (212) 270-4565 By /s/ William P. Rindfuss
Telecopy: (212) 270-1474 --------------------------------------
Title: William P. Rindfuss
Vice President
<PAGE> 5
277 Park Avenue ARAB BANKING CORPORATION
32nd Floor
New York, NY 10172
Attn: Louise Bilbro
Telephone: (212) 583-4758 By /s/ Louise Bilbro
Telecopy: (212) 583-0921 --------------------------------------
Title: Louise Bilbro
Vice President
100 Federal Street, 01-09-05 THE FIRST NATIONAL BANK OF
Boston, MA 02110 BOSTON
Attn: Peter L. Griswold
Telephone: (617) 434-8312 By
Telecopy: (617) 434-6685 --------------------------------------
Title:
700 Louisiana THE BANK OF MONTREAL
Suite 4400
Houston, TX 77002
Attn: Tom McGraw
Telephone: (713) 546-9781 By
Telecopy: (713) 223-5551 --------------------------------------
Title:
One Wall Street THE BANK OF NEW YORK
New York, NY 10286
Attn: Paula DiPonzio
Telephone: (212) 635-7867 By /s/ Paula DiPonzio
Telecopy: (212) 635-1483 --------------------------------------
Title: Vice President
<PAGE> 6
1251 Avenue of the Americas THE BANK OF TOKYO-
12th Floor MITSUBISHI, LTD.
New York, NY 10020
Attn: Paul P. Malecki
Telephone: (212) 782-4343 By /s/ Paul P. Malecki
Telecopy: (212) 782-4981 --------------------------------------
Title: PAUL P. MALECKI
Vice President
1251 Avenue of the Americas THE BANK OF TOKYO-
12th Floor MITSUBISHI TRUST COMPANY
New York, NY 10020
Attn: Paul P. Malecki
Telephone: (212) 782-4343 By /s/ Paul P. Malecki
Telecopy: (212) 782-4981 --------------------------------------
Title: PAUL P. MALECKI
Vice President
787 7th Avenue BANQUE PARIBAS
32nd Floor
New York, NY 10019
Attn: Mary Finnegan
Telephone: (212) 841-2551 By /s/ Mary T. Finnegan
Telecopy: (212) 841-2333 --------------------------------------
Title: Mary T. Finnegan
Group Vice President
By /s/ Robert G. Carino
--------------------------------------
Title: Robert G. Carino
Vice President
<PAGE> 7
425 Lexington Avenue CIBC Inc.
8th Floor
New York, NY 10017
Attn: Christopher Kleczkowski
Telephone: (212) 856-3560 By /s/ Christopher P. Kleczkowski
Telecopy: (212) 856-3991 --------------------------------------
Title: Director, CIBC Wood Gundy
Securities Corp., AS AGENT
75 Wall Street DRESDNER BANK AG,
25th Floor NEW YORK BRANCH
New York, NY 10005
Attn: Anthony Berti
Telephone: (212) 429-2247 By
Telecopy: (212) 429-2781 --------------------------------------
Title:
By
--------------------------------------
Title:
Marquis One Tower THE FUJI BANK, LTD.
Suite 2100
245 Peachtree Center Ave., NE
Atlanta, GA 30303
Attn: David Hart
Telephone: (404) 215-3314 By /s/ Toshihiro Mitsui
Telecopy: (404) 653-2119 --------------------------------------
Title: Vice-President and Manager
Two World Trade Center THE HOKKAIDO TAKUSHOKU
99th Floor BANK, LTD.
New York, NY 10048
Attn: Scott D. Winston
Telephone: (212) 912-6914 By /s/ Kathleen M. Sweeney
Telecopy: (212) 466-6079 --------------------------------------
Title: SVP and Manager
<PAGE> 8
1251 Avenue of the Americas THE INDUSTRIAL BANK OF JAPAN,
New York, NY 10020 LIMITED - NEW YORK BRANCH
Attn: James Welch
Telephone: (212) 282-3690 By /s/ Takuya Honjo
Telecopy: (212) 282-4250 --------------------------------------
Title: TAKUYA HONJO
SENIOR VICE PRESIDENT
165 Broadway LTCB TRUST COMPANY
New York, NY 10006
Attn: Edna Astuto
Telephone: (212) 335-4560 By /s/ John J. Sullivan
Telecopy: (212) 608-2371 --------------------------------------
Title: Executive Vice President
140 Broadway HSBC AMERICAS, INC.
5th Floor
New York, NY 10005
Attn: Gina Sidorsky
Telephone: (212) 658-2750 By /s/ J.B. Lyons
Telecopy: (212) 658-2586 --------------------------------------
Title: SENIOR VICE PRESIDENT
500 West Jefferson St. PNC BANK, KENTUCKY, INC.
Louisville, Kentucky 40202
Attn: Ralph Phillips
Telephone: (502) 581-4543 By /s/ Ralph M. Bowman
Telecopy: (502) 581-2302 --------------------------------------
Title: Vice President
520 Madison Avenue THE MITSUBISHI TRUST AND
25th Floor BANKING CORPORATION
New York, NY 10022
Attn: Susan LeFevre
Telephone: (212) 891-8454 By /s/ Patricia Loret de Mola
Telecopy: (212) 644-6825 --------------------------------------
Title: Senior Vice President
<PAGE> 9
One NationsBank Plaza NATIONSBANK, N.A.
5th Floor
Nashville, TN 37239-1697
Attn: Kimberly Dupuy
Telephone: (615) 749-3174 By
Telecopy: (615) 749-4640 --------------------------------------
Title:
245 Park Avenue THE NIPPON CREDIT BANK, LTD.
30th Floor
New York, NY 10167
Attn: Barry Fein
Telephone: (212) 984-1261 By /s/ Barry S. Fein
Telecopy: (212) 490-3895 --------------------------------------
Title: Assistant Vice President
Marquis One Tower THE SAKURA BANK, LIMITED
Suite 2703
245 Peachtree Center Ave., N.E.
Atlanta, GA 30303
Attn: Chad Zimmerman
Telephone: (404) 521-3111 By /s/ Hiroyasu Imanishi
Telecopy: (404) 521-1133 --------------------------------------
Title: HIROYASU IMANISHI
V.P. & SENIOR MANAGER
Georgia Pacific Center THE SUMITOMO BANK, LIMITED
133 Peachtree Street, N.E.
Suite 3210
Atlanta, GA 30303
Attn: Thomas Lawson
Telephone: (404) 526-8513 By /s/ Masayuki Fukushima
Telecopy: (404) 521-1187 --------------------------------------
Title: JOINT GENERAL MANAGER
MASAYUKI FUKUSHIMA
<PAGE> 10
55 East 52nd Street THE TOKAI BANK, LTD.
New York, NY 10055 NEW YORK BRANCH
Attn: Haruyo Niki
Telephone: (212) 339-1123 By
Telecopy: (212) 832-1428 --------------------------------------
Title:
One Detroit Center COMERICA BANK
500 Woodward Avenue, MC 3280
Detroit, MI 48226
Attn: Kristine L. Andersen
Telephone: (313) 222-3648 By /s/ Kristine L. Andersen
Telecopy: (313) 222-3330 --------------------------------------
Title: Kristine L. Andersen,
Account Officer
640 5th Avenue BANK OF IRELAND, CAYMAN
2nd Floor ISLAND BRANCH
New York, NY 10019
Attn: Roger Burns
Telephone: (212) 397-1712 By /s/ Roger Burns
Telecopy: (212) 586-7752 --------------------------------------
Title: Vice President
1211 Avenue of the Americas WESTDEUTSCHE LANDESBANK
23rd Floor GIROZENTRALE, NEW YORK AND
New York, NY 10036 CAYMAN ISLAND BRANCHES
Attn: Alan Bookspan
Telephone: (212) 852-6023 By
Telecopy: (212) 852-6307 --------------------------------------
Title:
By
--------------------------------------
Title:
<PAGE> 11
1 Parkview Plaza VAN KAMPEN AMERICAN CAPITAL
Oakbrook Terrace, IL 60181 PRIME RATE INCOME TRUST
Attn: Jeffrey W. Maillet
Telephone: (630) 684-6436 By /s/ Jeffrey W. Maillet
Telecopy: (630) 684-6740 --------------------------------------
Title: JEFFREY W. MAILLET
Sr. Vice Pres. - Portfolio Mgr.
285 Peachtree Center Ave., N.E. THE YASUDA TRUST AND
Suite 2104 BANKING COMPANY, LTD.
Atlanta, GA 30303
Attn: Sanjay Sinha
Telephone: (404) 584-8230 By /s/ Morikazu Kimura
Telecopy: (404) 584-7816 --------------------------------------
Title: MORIKAZU KIMURA
CHIEF REPRESENTATIVE
One Ravinia Drive ABN AMRO BANK N.V.,
Suite 1200 ATLANTA AGENCY
Atlanta, GA 30346-2103
Attn: Linda Davis
Telephone: (770) 396-0066 By /s/ Steven L. Hipsman
Telecopy: (770) 395-9188 --------------------------------------
Title: VICE PRESIDENT
By /s/ Larry K. Kelley
--------------------------------------
Title: GROUP VICE PRESIDENT
<PAGE> 12
CREDIT AGREEMENT
among
SERVICE MERCHANDISE COMPANY, INC.,
VARIOUS BANKS
and
THE CHASE MANHATTAN BANK,
as ADMINISTRATIVE AGENT
----------------------------------
Dated as of June 8, 1994
----------------------------------
[Composite copy reflecting the First Amendment,
dated as of April 13, 1995, the Second Amendment,
dated as of May 23, 1996, the Third Amendment,
dated as of September 16, 1996, the Fourth Amendment,
dated as of January 15, 1997 and the Fifth Amendment,
dated as of March 25, 1997.]
<PAGE> 13
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
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....................................................................... 25
Section 3. Fees; Commitment; Reductions of
Commitments.................................................................... 26
3.01 Fees.................................................................................. 26
3.02 Voluntary Reduction of Commitments.................................................... 28
3.03 Mandatory Reduction of Commitments.................................................... 28
Section 4. Prepayments; Payments.................................................................... 31
4.01 Voluntary Prepayments................................................................. 31
4.02 Mandatory Repayments.................................................................. 32
(A) Requirements..................................................................... 32
(B) Application...................................................................... 33
4.03 Method and Place of Payment........................................................... 34
4.04 Net Payments.......................................................................... 34
Section 5. Conditions Precedent to Credit Events on
the Effective Date............................................................. 37
5.01 Execution of Agreement; Notes......................................................... 37
5.02 Fees, etc............................................................................. 37
</TABLE>
(i)
<PAGE> 14
<TABLE>
<CAPTION>
Page
<S> <C> <C>
5.03 Opinions of Counsel................................................................... 37
5.04 Corporate Documents; Proceedings; etc................................................. 37
5.05 Guaranty.............................................................................. 38
5.06 Adverse Change, etc................................................................... 38
5.07 Litigation............................................................................ 39
5.08 Solvency Certificate.................................................................. 39
5.09 Termination of the 1992 Credit Agreement.............................................. 39
5.10 UCC Searches.......................................................................... 40
Section 6. Conditions Precedent to Credit Events on
the Fifth Amendment Effective Date............................................. 41
6.01 Execution of Agreement; Notes......................................................... 41
6.02 Fees, etc............................................................................. 41
6.03 Opinions of Counsel................................................................... 41
6.04 Financial Projections................................................................. 41
6.05 Adverse Change, etc................................................................... 42
6.06 Security Agreements................................................................... 42
6.07 Company Pledge Agreement.............................................................. 43
6.08 Subsidiary Pledge Agreement........................................................... 44
6.09 Mortgages; Title Insurance; Etc....................................................... 44
6.10 No Default; Representations and Warranties............................................ 45
Section 7. Conditions Precedent to All Credit Events................................................ 45
7.01 No Default; Representations and Warranties............................................ 46
7.02 Notice of Borrowing; Letter of Credit
Request......................................................................... 46
Section 8. Representations, Warranties and
Agreements..................................................................... 46
8.01 Corporate or Partnership Status....................................................... 47
8.02 Corporate or Partnership Power and
Authority....................................................................... 47
8.03 No Violation.......................................................................... 47
8.04 Governmental Approvals................................................................ 48
8.05 Financial Statements; Financial Condition;
Undisclosed Liabilities; etc.................................................... 48
8.06 Litigation............................................................................ 50
8.07 True and Complete Disclosure.......................................................... 50
8.08 Use of Proceeds; Margin Regulations................................................... 51
8.09 Tax Returns and Payments.............................................................. 51
8.10 Compliance with ERISA................................................................. 51
8.11 Subsidiaries.......................................................................... 52
8.12 Compliance with Statutes, etc......................................................... 52
8.13 Investment Company Act................................................................ 52
8.14 Public Utility Holding Company Act.................................................... 53
8.15 Patents, Licenses, Franchises and Formulas............................................ 53
8.16 Restrictions on Subsidiaries.......................................................... 53
8.17 Properties............................................................................ 53
</TABLE>
(ii)
<PAGE> 15
<TABLE>
<CAPTION>
Page
<S> <C> <C>
8.18 Existing Subordinated Debt............................................................ 53
8.19 Environmental Matters................................................................. 53
8.20 Existing Indebtedness................................................................. 55
8.21 The Security Documents................................................................ 55
Section 9. Affirmative Covenants.................................................................... 57
9.01 Information Covenants................................................................. 57
9.02 Books, Records and Inspections........................................................ 60
9.03 Maintenance of Property, Insurance.................................................... 60
9.04 Corporate Franchises.................................................................. 60
9.05 Compliance with Statutes, etc......................................................... 60
9.06 ERISA................................................................................. 61
9.07 Compliance with Environmental Laws.................................................... 62
9.08 Performance of Obligations............................................................ 63
9.09 Additional Security; Further Assurances............................................... 63
9.10 Excluded Properties................................................................... 64
Section 10. Negative Covenants...................................................................... 65
10.01 Liens................................................................................ 65
10.02 Consolidation, Merger, Purchase or Sale of
Assets, etc.................................................................... 68
10.03 Restricted Payments.................................................................. 70
10.04 Transactions with Affiliates......................................................... 71
10.05 Minimum Consolidated Net Worth....................................................... 71
10.06 Consolidated Interest Coverage Ratio................................................. 71
10.07 Consolidated Fixed Charge Coverage Ratio............................................. 72
10.08 Consolidated Debt to Total Capitalization
Ratio.......................................................................... 72
10.09 Capital Expenditures................................................................. 73
10.10 Limitation on Modifications of the Existing
Senior Notes and Subordinated Debt............................................. 74
10.11 Indebtedness......................................................................... 74
10.12 Advances, Investments and Loans...................................................... 76
10.13 Limitation on Granting of Liens and on
Restrictions on Subsidiary Dividends
and Other Transfers............................................................ 78
10.14 Limitation on Issuances of Capital Stock............................................. 78
10.15 End of Fiscal Years; Fiscal Quarters................................................. 79
10.16 No Other Designated Senior Debt...................................................... 79
10.17 New Subsidiaries..................................................................... 79
10.18 Non-Facility Letters of Credit....................................................... 79
Section 11. Events of Default....................................................................... 80
11.01 Payments............................................................................. 80
11.02 Representations, etc................................................................. 80
11.03 Covenants............................................................................ 80
11.04 Default Under Other Agreements....................................................... 80
11.05 Bankruptcy, etc...................................................................... 81
</TABLE>
(iii)
<PAGE> 16
<TABLE>
<CAPTION>
Page
<S> <C> <C>
11.06 ERISA................................................................................ 81
11.07 Security Documents................................................................... 82
11.08 Guaranty............................................................................. 83
11.09 Judgments............................................................................ 83
11.10 Change in Control.................................................................... 83
Section 12. Definitions and Accounting Terms........................................................ 84
12.01 Defined Terms........................................................................ 84
12.02 Principles of Construction...........................................................119
Section 13. The Administrative Agent and the Issuing
Bank..........................................................................119
13.01 Appointment..........................................................................119
13.02 Nature of Duties.....................................................................119
13.03 Lack of Reliance on the Administrative
Agent or any Issuing Bank......................................................120
13.04 Certain Rights of the Administrative Agent
and any Issuing Bank...........................................................120
13.05 Reliance.............................................................................121
13.06 Indemnification......................................................................121
13.07 The Administrative Agent and each Issuing
Bank in their Individual Capacities............................................122
13.08 Holders..............................................................................122
13.09 Resignation by the Administrative Agent..............................................122
Section 14. Miscellaneous...........................................................................123
14.01 Payment of Expenses, etc.............................................................123
14.02 Right of Setoff......................................................................124
14.03 Notices..............................................................................125
14.04 Benefit of Agreement; Assignments;
Participations.................................................................125
14.05 No Waiver; Remedies Cumulative.......................................................128
14.06 Payments Pro Rata....................................................................129
14.07 Calculations; Computations...........................................................130
14.08 GOVERNING LAW; SUBMISSION TO JURISDICTION;
VENUE..............................................................................130
14.09 Counterparts.........................................................................132
14.10 Effectiveness........................................................................132
14.11 Headings Descriptive.................................................................132
14.12 Amendment or Waiver..................................................................132
14.13 Survival.............................................................................133
14.14 Domicile of Loans....................................................................134
14.15 Register.............................................................................134
14.16 Limitation of Additional Amounts.....................................................134
14.17 Post-Closing Matters.................................................................135
</TABLE>
(iv)
<PAGE> 17
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
Schedule IX Real Property as of the Fifth Amendment
Effective Date
Schedule X The 1997 Restructuring Program:
Description of Charges
Schedule XI Existing Indebtedness as of the Fifth
Amendment Effective Date
Schedule XII Subsidiaries as of the Fifth Amendment
Effective Date
Schedule XIII Liens Existing on the Fifth Amendment
Effective Date
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
Exhibit E-1 Opinion of Bass, Berry & Sims PLC,
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
Exhibit K-1 Company Security Agreement
Exhibit K-2 Subsidiary Security Agreement
Exhibit L-1 Company Pledge Agreement
Exhibit L-2 Subsidiary Pledge Agreement
Exhibit M-1 Opinion of Bass, Berry & Sims PLC,
(v)
<PAGE> 18
special counsel to the Borrower and its
Subsidiaries, as of the Fifth Amendment
Effective Date
Exhibit M-2 Opinion of the Vice President and Managing
Attorney of the Borrower and its
Subsidiaries, as of the Fifth Amendment
Effective Date
Exhibit N Swingline Note
(vi)
<PAGE> 19
CREDIT AGREEMENT, dated as of June 8, 1994, and amended by the First
Amendment, dated as of April 13, 1995, the Second Amendment, dated as of May 23,
1996, the Third Amendment, dated as of September 16, 1996, the Fourth Amendment,
dated as of January 15, 1997, and the Fifth Amendment, dated as of March 25,
1997 (as so amended, the "Agreement"), among SERVICE MERCHANDISE COMPANY, INC.,
a Tennessee corporation (the "Borrower"), the financial institutions listed in
Schedule I from time to time (the "Banks") and THE CHASE MANHATTAN BANK
(formerly known as CHEMICAL BANK), acting in the manner and to the extent
described in Section 13 (in such capacity, the "Administrative Agent"). All
capitalized terms used herein shall have the meanings provided in Section 12.
WITNESSETH:
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
<PAGE> 20
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 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,
Chase, 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, Chase 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 11.05), in which case a Borrowing of Revolving Loans constituting Base
Rate Loans (each such Borrowing, a "Mandatory Borrowing") shall be made on the
-2-
<PAGE> 21
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 11), and the proceeds
thereof shall be applied directly to Chase to repay Chase for such outstanding
Swingline Loans. Each Bank 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 Chase 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 7 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 Chase
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 11);
provided that all interest payable on the Swingline Loans shall be for the
account of Chase 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, Chase 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
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such time. Competitive Bid Loans may be repaid and reborrowed in accordance
with the provisions hereof.
(e) More than one Borrowing may occur on the same date, but
Eurodollar Loans comprising no more than 15 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
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Revolving Loans to be made pursuant to such Borrowing, (ii) the date of 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 Chase, 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, Chase may act
without liability upon the basis of telephonic notice of such Borrowing,
believed by Chase 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 Chase'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
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<PAGE> 24
Borrower to specify (i) the aggregate principal amount of the 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
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Interest Period and the last day 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
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<PAGE> 26
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 14.03.
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 of
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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, Chase 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
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"Revolving Notes"), (ii) if Swingline Loans, by a promissory note duly executed
and delivered by the Borrower to Chase 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 Chase and be dated the Fifth Amendment 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 Chase, 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.
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(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.
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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 Applicable Alternate Base Rate Margin in excess of 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.
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(f) Accrued (and theretofore unpaid) interest shall be payable (i)
in respect of each Base Rate Loan and 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
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calendar month; (iv) if any Interest Period would otherwise expire on a day
which is 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
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<PAGE> 33
applicable law or governmental rule, regulation, guideline, 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
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<PAGE> 34
thereof, submitted to the Borrower by such Bank 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 14.16 (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
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<PAGE> 35
the parties hereto. Each Bank, upon determining that any 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 14.16 (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 11) 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.
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<PAGE> 36
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 14.12(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 14.04(b) (and with all fees
payable pursuant to said Section 14.04(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) Chase 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 and, if so re-
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<PAGE> 37
quested 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 1992 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 would exceed either (x) $150,000,000 less
the sum of the
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<PAGE> 38
Trade Letter of Credit Outstandings at such time and the NonFacility 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 NonDefaulting 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 two sentences of Section
2.01(a), it shall give the respective Issuing Bank (with copies to be sent to
the Administrative Agent and each other Bank) at least five Business Days' prior
written
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<PAGE> 39
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 two sentences 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) Imme- diately 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 14.04 or as a result of a Bank Default, it is hereby agreed
that, with respect to all outstanding Letters of Credit and Unpaid Drawings,
there shall be an automatic adjustment to
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<PAGE> 40
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 such Issuing Bank
at the Federal Funds Rate. The failure of any Participant to make available to
the Issuing Bank its
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<PAGE> 41
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;
(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;
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(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 forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect;
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<PAGE> 43
(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 Applicable Alternate
Base Rate Margin in excess of the Alternate 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.
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),
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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 14.16 (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 Commitments.
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; provided that calculations of the Facility Fee
for periods prior to the Fifth Amendment Effective Date shall be computed
pursuant to this Agreement as in effect prior to the Fifth Amendment Effective
Date. 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 or Moody's, 1/2 of
1% per annum or (ii)
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<PAGE> 45
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 5
being the highest) in which the Borrower meets at least one of the criteria set
forth in the definitions for such Category:
<TABLE>
<CAPTION>
Category Facility Fee
-------- ------------
<S> <C>
Category 5 1/4 of 1%
Category 4 3/8 of 1%
Category 3 3/8 of 1%
Category 2 1/2 of 1%
Category 1 1/2 of 1%
</TABLE>
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.
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(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 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"):
<TABLE>
<CAPTION>
Date of Reduction Amount
----------------- ------
<S> <C>
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
</TABLE>
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<PAGE> 47
(c) In addition to but without duplicating 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 Net
Sale Proceeds from any sale of assets, including capital stock and securities
held thereby, but excluding (i) sales of inventory, material and equipment in
the ordinary course of business, (ii) dispositions of Cash Equivalents, (iii)
sales or transfers of receivables pursuant to the Credit Card Program, (iv)
sales or other dispositions of assets effected under Section 10.02(xii) and (v)
in each fiscal year of the Borrower, the first $50,000,000 in Net Sale Proceeds
other than Net Sale Proceeds resulting from dispositions described in clauses
(i) through (iv) or in paragraph (d) of this Section 3.03, an amount equal to
100% of such Net Sale Proceeds shall be applied as a mandatory reduction of the
Total Commitment; provided that to the extent that no Default or Event of
Default then exists, if the Borrower has delivered a Reinvestment Notice to the
Administrative 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 to the
extent of the Anticipated Reinvestment Amount specified in such Reinvestment
Notice.
(d) Notwithstanding anything to the contrary in this Section 3.03
but without duplicating any other mandatory commitment reductions pursuant to
this Section 3.03, on each date after the Fifth Amendment Effective Date upon
which the Borrower or any of its Subsidiaries receives (x) Net Sale Proceeds
from any sale of assets constituting Collateral that is effected pursuant to
Section 10.02(xiii) or (y) net proceeds from any Additional Permitted Sale
Leasebacks or Additional Permitted Mortgage Financing ("Net Financing
Proceeds"), but excluding (i) sales of equipment in the ordinary course of
business, (ii) dispositions of Cash Equivalents, (iii) sales or transfers of
receivables pursuant to the Credit Card Program, and (iv) sales or other
dispositions of assets effected under Section 10.02(xii), an amount equal to
100% of such Net Sale Proceeds or Net Financing Proceeds, as the case may be,
shall be applied as a mandatory reduction of the Total Commitment; provided that
to the extent that no Default or Event of Default then exists, if the Borrower
has delivered a Reinvestment Notice to the Administrative Agent on or prior to
the date of receipt of such Net Sale Proceeds or Net Financing Proceeds, as the
case may be, the Total Commitment shall not be required to be so reduced to the
extent of the Anticipated Reinvestment Amount specified in such Reinvestment
Notice.
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<PAGE> 48
(e) Within three Business Days of the delivery of a Reinvestment
Notice as described in clauses (c) and (d) above, the Anticipated Reinvestment
Amount shall be deposited with the Administrative Agent pursuant to a cash
collateral arrangement reasonably satisfactory to the Administrative Agent, and
any amounts needed to be expended prior to the Reinvestment Prepayment Date
applicable thereto in furtherance of the purchase, construction or other
acquisition of Reinvestment Assets shall be disbursed to the Borrower.
(f) In addition to but without duplicating 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.
(g) In addition to but without duplicating any other mandatory
commitment reductions pursuant to this Section 3.03, and subject to clause (y)
of paragraph (d) above, 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, without duplication, (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 Indebtedness which are not required to 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 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).
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<PAGE> 49
(h) At any time after the occurrence and during the continuance of
any Property Default, upon receipt by the Borrower of notice from the
Administrative Agent of the existence and continuance of a Property Default, the
Total Commitment shall be reduced as of the date of such notice by an amount
equal to the Release Price of the Mortgaged Property to which such Property
Default relates.
(i) The Total Commitment shall be terminated on June 30, 1994
unless the Effective Date shall have occurred on or prior to such date.
(j) Each reduction of the Total Commitment pursu- ant 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
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<PAGE> 50
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.
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 pre-paid 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.
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<PAGE> 51
(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
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 Euro-dollar 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
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<PAGE> 52
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 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
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<PAGE> 53
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 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 14.04 (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
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<PAGE> 54
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 14.04(b) and
the immediately succeeding sentence, (x) the Borrower 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
14.04(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).
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<PAGE> 55
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 14.10 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 Borrower, and to Chase
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 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 certifi-
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<PAGE> 56
cate, 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 7.01 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
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
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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 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 1992 Credit Agreement. (a) On or prior to
the Effective Date, the total commitments under the 1992 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 1992 Credit Agreement shall have been repaid
in full and the 1992 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.
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(b) On or prior to the Effective Date, the creditors under the
1992 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 the agent and/or the collateral
agent under the 1992 Credit Agreement which will (A) release security interests
in the collateral created pursuant to the 1992 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 1992 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 1992 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 1992 Credit Agreement
or any related security document or any other agent, collateral agent, or
trustee for the creditors under the 1992 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
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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 Credit Events on the Fifth Amendment
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 Fifth Amendment
Effective Date to the satisfaction of the following conditions:
6.01 Execution of Agreement; Notes. On or prior to the Fifth
Amendment Effective Date (i) the Fifth Amendment shall have been executed and
delivered in accordance with Section 14.12 and (ii) there shall have been
delivered to Chase the Swingline Note executed by the Borrower, in the amount,
maturity and as otherwise provided herein.
6.02 Fees, etc. On the Fifth Amendment 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.
6.03 Opinions of Counsel. On the Fifth Amendment Effective Date,
the Administrative Agent shall have received (i) from Bass, Berry & Sims PLC,
special counsel to the Borrower and its Subsidiaries, an opinion addressed to
the Administrative Agent and each of the Banks covering the matters set forth in
Exhibit M-1 and such other matters incident to the transactions as the
Administrative Agent may reasonably request and (ii) from the Vice President and
Managing Attorney of the Borrower and its Subsidiaries, an opinion addressed to
the Administrative Agent and each of the Banks covering the matters set forth in
Exhibit M-2 and such other matters incident to the transactions as the
Administrative Agent may reasonably request.
6.04 Financial Projections. On or prior to the Fifth Amendment
Effective Date, the Borrower shall have delivered to the Banks (i) the financial
statements referred to in Section 8.05(a) and (b) the financial projections of
the Borrower and its Subsidiaries taken as a whole (the "1997 Projections"),
after giving effect to the 1997 Restructuring
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Program and any other transactions contemplated thereby and in connection with
this Agreement as amended by the Fifth Amendment. The 1997 Projections shall be
reasonable estimates of the projected financial results of the Borrower and its
Subsidiaries on the Fifth Amendment Effective Date, and shall be in form and
substance reasonably satisfactory to the Administrative Agent and the Required
Banks.
6.05 Adverse Change, etc. (a) On the Fifth Amendment Effective
Date, nothing shall have occurred (and the Banks shall have become aware of no
facts, conditions or other information not previously known) 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 its 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 Fifth Amendment 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 as amended by the Fifth Amendment. 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 as amended by
the Fifth Amendment.
6.06 Security Agreements. On the Fifth Amendment Effective Date,
(i) the Borrower shall have duly authorized, executed and delivered a Company
Security Agreement in the form of Exhibit K-1 hereto (as modified, supplemented
or amended from time to time, the "Company Security Agreement") and (ii) each
Subsidiary Assignor shall have duly authorized, executed and delivered a
Subsidiary Security Agreement in the form of Exhibit K-2 hereto (as modified,
supplemented or amended from time to time the "Subsidiary Security
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Agreement", each a "Security Agreement", and together, the "Security
Agreements") covering all of such Credit Party's present and future Security
Agreement Collateral, in each case together with:
(i) executed copies of financing statements (Form UCC-1)
in appropriate form for filing under the Uniform Commercial Code of
each jurisdiction as may be necessary to perfect the security interests
purported to be created by each Security Agreement;
(ii) certified copies of Requests for Information or
Copies (Form UCC-11), or equivalent reports, dated any date within one
month prior to the Fifth Amendment Effective Date, listing
substantially all effective financing statements that name the Borrower
or such Subsidiary Assignor, as the case may be, and its predecessor(s)
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 such Subsidiary
Assignor has one or more store locations and, (ii) with respect to
states in which the Borrower or such Subsidiary Assignor has one or
more 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, in each case
to the extent the Administrative Agent reasonably determines such
Requests for Information can be obtained prior to the Fifth Amendment
Effective Date;
(iii) evidence that all other actions necessary or, in the
reasonable opinion of the Collateral Agent, desirable, to perfect and
protect the security interests purported to be created by each Security
Agreement have been taken; and
each Security Agreement shall be in full force and effect.
6.07 Company Pledge Agreement. On the Fifth Amendment Effective
Date, the Borrower (i) shall have duly authorized, executed and delivered a
Company Pledge Agreement in the form of Exhibit L-1 hereto (as modified,
amended or supplemented from time to time, the "Company Pledge Agreement")
and (ii) shall have delivered to the Collateral Agent, as pledgee thereunder,
all of the certificates representing the Pledged Securities referred to
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therein and owned by the Borrower on the Fifth Amendment Effective Date, (x)
endorsed in blank (in the case of promissory notes) or (y) accompanied by
executed and undated stock powers (in the case of capital stock), and the
Company Pledge Agreement shall be in full force and effect.
6.08 Subsidiary Pledge Agreement. On the Fifth Amendment Effective
Date, each Subsidiary Pledgor (i) shall have duly authorized, executed and
delivered a Subsidiary Pledge Agreement in the form of Exhibit L-2 hereto (as
modified, amended or supplemented from time to time, the "Subsidiary Pledge
Agreement", each a "Pledge Agreement", and together with the Company Pledge
Agreement, the "Pledge Agreements") and (ii) shall have delivered to the
Collateral Agent, as pledgee thereunder, all of the certificates representing
the Pledged Securities referred to therein and owned by such Subsidiary Pledgor
on the Fifth Amendment Effective Date, (x) endorsed in blank (in the case of
promissory notes) or (y) accompanied by executed and undated stock powers (in
the case of capital stock), and such Subsidiary Pledge Agreement shall be in
full force and effect.
6.09 Mortgages; Title Insurance; Etc. (a) On or prior to the Fifth
Amendment Effective Date, the Borrower will, or will cause its respective
Subsidiaries to, deliver to the Collateral Agent fully executed counterparts of
deeds of trust, leasehold deeds of trust, mortgages, leasehold mortgages and
similar documents, in each case in form and substance reasonably satisfactory to
the Collateral Agent (each a "Mortgage" and, collectively, the "Mortgages")
covering all of the Initial Mortgaged Properties, and counterparts of such
Mortgages shall have been duly recorded in all places to the extent necessary
or, in the judgment of the Collateral Agent, desirable, effectively to create a
valid and enforceable first priority mortgage Lien (or a second priority
mortgage lien, as the case may be), subject only to (x) the Permanent Mortgage
Financing, (y) any Permitted Mortgage Financing, and (z) other Permitted Liens
and Permitted Encumbrances, as the case may be, on each such Initial Mortgaged
Property in favor of the Collateral Agent (or such other trustee as may be
required or desirable under local law) for the benefit of the Banks.
(b) The Collateral Agent shall have received mortgage title
insurance policies or the equivalent thereof (or binding commitments to issue
such title insurance policies) reasonably satisfactory to the Collateral Agent
(the "Mortgage Policies") in amounts reasonably satisfactory to the Collateral
Agent and assuring the Collateral Agent
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that the Mortgages in respect of the Initial Mortgaged Properties are valid and
enforceable first priority mortgage Liens (or second priority mortgage Liens, as
the case may be) on the respective Initial Mortgaged Properties free and clear
of all defects and encumbrances except, (x) the Permanent Mortgage Financing,
(y) any Permitted Mortgage Financing, and (z) other Permitted Liens and
Permitted Encumbrances, and such Mortgage Policies shall be in form and
substance reasonably satisfactory to the Collateral Agent and shall include an
endorsement for future advances under this Agreement, the Notes and such
Mortgages, and for mechanics' liens and for any other matter that the Collateral
Agent in its discretion may reasonably request. With respect to each Initial
Mortgaged Property, delivery of a Mortgage Policy shall be required on the Fifth
Amendment Effective Date only to the extent the Administrative Agent reasonably
determines such Mortgaged Policy can be obtained prior to such date.
(c) The Collateral Agent shall also have received a survey, in
form and substance reasonably satisfactory to the Collateral Agent, of each
Initial Mortgaged Property, dated a recent date acceptable to the Collateral
Agent, certified in a manner reasonably satisfactory to the Collateral Agent by
a licensed professional surveyor reasonably satisfactory to the Collateral Agent
and each such survey shall be prepared in accordance with the standard detailed
requirements for land surveys adopted by the American Land Title Association and
the American Congress on Surveying and Mapping, as in effect on the date of
delivery of such survey, and be so certified to the Collateral Agent. With
respect to each Initial Mortgaged Property, delivery of a survey shall be
required on the Fifth Amendment Effective Date only to the extent the
Administrative Agent reasonably determines such survey can be obtained prior to
such date.
6.10 No Default; Representations and Warranties. The Borrower
hereby represents and warrants that as of the Fifth Amendment Effective Date
there exists (i) no Default or Event of Default both before and after giving
effect to the Fifth Amendment and (y) all of the representations and warranties
contained in this Agreement shall be true and correct in all material respects
both before and after giving effect to the Fifth Amendment, with the same effect
as though such representations and warranties had been made on and as of the
Fifth Amendment Effective Date, except for representations and warranties made
as of a specified date, which shall remain true and correct in all material
respects as of such specified date.
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Section 7. 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
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:
7.01 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).
7.02 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, Chase 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, Section 6 and in
this Section 7 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, Section 6 and in this Section 7, 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
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the Banks and shall be in form and substance reasonably satisfactory to the
Banks.
Section 8. Representations, Warranties and Agreements. In order to
induce the Banks to enter into this Agreement and the Fifth Amendment 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 8 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).
8.01 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.
8.02 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
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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.
8.03 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.
8.04 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.
8.05 Financial Statements; Financial Condition; Undisclosed
Liabilities; etc. (a) The consolidated balance sheet of the Borrower and its
Subsidiaries at December 29, 1996, the related consolidated statements of
financial condition of the Borrower and its Subsidiaries at December 29, 1996
and the related consolidated statements of income and retained earnings and cash
flows of the Borrower and its Subsidiaries for the fiscal year ended on such
date, 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
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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
such fiscal year. All such financial statements have been prepared in accordance
with GAAP consistently applied, subject to normal year-end audit adjustments.
Since December 29, 1996, and after giving effect to the effectiveness of this
Agreement as amended by the Fifth Amendment, and 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, unless and to
the extent that the 1997 Restructuring Program might be deemed to have caused
such a change.
(b) Except as fully reflected in the financial statements
delivered pursuant to Section 8.05(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 or were 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 Fifth Amendment 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 on a consolidated basis exceed
their debts; (b) the Borrower and its Subsidiaries on a consolidated basis 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 on a consolidated basis have sufficient capital with which to
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conduct their businesses. For purposes of this Section 8.05(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,
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.
(e) On and as of the Fifth Amendment Effective Date, the pro forma
consolidated balance sheet and the 1997 Projections previously delivered to the
Administrative Agent and the Banks have been prepared on a basis consistent with
the financial statements referred to in Section 9.01(a) and (b) (other than as
set forth in such pro forma consolidated balance sheet and in the 1997
Projections), and there are no statements or conclusions in either the pro forma
consolidated balance sheet or the 1997 Projections which are based upon or
include information known to the Borrower to be misleading or which fail to take
into account information believed by the Borrower to be material regarding the
matters reported therein. On the Fifth Amendment Effective Date, the Borrower
believed that the pro forma consolidated balance sheet and the 1997 Projections
were reasonable and attainable.
8.06 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.
8.07 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 factual 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
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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.
8.08 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.
8.09 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 payable 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.
8.10 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,
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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 multi-employer 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
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.
8.11 Subsidiaries. (a) 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.
(b) Schedule XII correctly sets forth as of the Fifth Amendment
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.
8.12 Compliance with Statutes, etc. The Borrower and each of its
Subsidiaries are 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, prop-
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erty, assets, condition (financial or otherwise) or prospects of the Borrower
and its Subsidiaries taken as a whole.
8.13 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.
8.14 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.
8.15 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.
8.16 Restrictions on Subsidiaries. Except as set forth in this
Agreement, there are no restrictions on the Borrower or any of its Subsidiaries
(other than Excluded 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 of the Borrower's Subsidiaries, other than
applicable restrictions of law imposed on Subsidiaries by the jurisdictions in
which such Subsidiaries are incorporated.
8.17 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 8.05(a) (except as sold or otherwise disposed of since the date of
such balance sheet in the ordinary course of business or since the Fifth
Amendment Effective Date, in accordance with Section 10.02), free and clear of
all Liens, other than (i) as referred to in the
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consolidated balance sheet or in the notes thereto or (ii) otherwise permitted
by Section 10.01.
8.18 Existing Subordinated Debt. All Obligations owing by the
Borrower constitute "Senior Indebtedness" under and as defined in the Existing
Subordinated Debt.
8.19 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 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,
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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 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.
8.20 Existing Indebtedness. Schedule XI sets forth a true
and complete list of all Indebtedness of the Borrower and its Subsidiaries as of
the Fifth Amendment Effective Date and which is to remain outstanding after
giving effect to the Fifth Amendment (all such Indebtedness,
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excluding the Loans and the Letters of Credit, the "Existing Indebtedness"), in
each case showing the aggregate principal amount thereof.
8.21 The Security Documents. (a) The provisions of the Security
Agreements are effective to create in favor of the Collateral Agent for the
benefit of the Secured Creditors a legal, valid and enforceable security
interest in all right, title and interest of the respective Credit Parties in
the Collateral described therein, and the Security Agreements, together with any
required public filings, create a fully perfected first lien on, and security
interest in, all right, title and interest of the respective Credit Parties, in
all of the Collateral described therein, subject to no Liens other than
Permitted Liens. The recordation of the Security Agreements in the United States
Patent and Trademark Office, together with filings on Form UCC-1 made pursuant
to such Security Agreements, are effective to perfect the security interest
granted to the Collateral Agent in the trademarks and patents covered by such
Security Agreements and the filing of such Security Agreements with the United
States Copyright Office, together with filings on Form UCC-1 made pursuant to
such Security Agreements, are effective to perfect the security interest granted
to the Collateral Agent in the copyrights covered by such Security Agreements.
Each of the Credit Parties party to a Security Agreement has good and
merchantable title to all Collateral described therein, free and clear of all
Liens except those described above in this clause (a).
(b) So long as the Collateral Agent, as pledgee, is in possession
of the Pledged Securities, the security interests created in favor of such
Pledgee for the benefit of the Secured Creditors under the Pledge Agreements
constitute first priority security interests in the Pledged Securities described
in the respective Pledge Agreements, subject to no Liens other than Permitted
Liens. No filings or recordings are required in order to perfect the security
interests created in the Pledged Securities under the Pledge Agreements so long
as the Collateral Agent, as Pledgee, is in possession of such Pledged
Securities.
(c) The Mortgages (or the applicable Additional Mortgages, as the
case may be), upon their recording and certain filings related to fixtures,
create or will create, as security for the obligations purported to be secured
thereby, valid and enforceable perfected security interests in and Liens on all
of the Mortgaged Properties in favor of the Collateral Agent (or such other
trustee as may be named
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therein) for the benefit of the Secured Creditors, superior to and prior to the
rights of all third persons (except that the Liens on the Mortgaged Properties
may be subject to the Permanent Mortgage Financing, a Permitted Mortgage
Financing, and other Permitted Encumbrances) and subject to no other Liens
(other than Permitted Liens). Schedule IX contains a true and complete list of
each Real Property owned or leased by the Borrower and each Subsidiary of the
Borrower on the Fifth Amendment Effective Date, and the type of interest therein
held by the Borrower and/or the respective Subsidiary.
Section 9. 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:
9.01 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 financial statements,
certified by Deloitte & Touche or other independent certified public accountants
of recognized national standing
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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 9.01(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 10.05 through 10.09,
inclusive, at the end of such fiscal quarter or year, as the case may be.
(e) After-Acquired Assets. At the time of the delivery of the
financial statements provided for in Section 9.01 (a) and (b), notice of (i) any
asset acquired by the Borrower or any of its Subsidiaries which asset
individually has a fair market value of greater than $1,000,000 and (ii) any
asset owned by the Borrower or any of its Subsidiaries that has not heretofore
been a part of the Collateral and
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that has been substantially improved such that it has a fair market value of
greater than $1,000,000.
(f) 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.
(g) 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.
(h) 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 presence of any Hazardous Material on any Real
Property owned or operated by the Borrower or any of its Subsidiaries as
required
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by any Environmental Law or any governmental or other administrative agency.
(i) 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.
9.02 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.
9.03 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.
9.04 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 9.04 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 (financial or otherwise)
or prospects of the Borrower and its
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Subsidiaries taken as a whole and (ii) any merger permitted pursuant to Section
10.02(vi).
9.05 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.
9.06 ERISA. As soon as possible and, in any event, within 30 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 liability
(including any contingent or secondary liability) to or on account of the
termination of or withdrawal from a
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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 30
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 30 days
after the date such notice has been received by the Borrower, the Subsidiary or
the ERISA Affiliate; provided that such notice reasonably could 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.
9.07 Compliance with Environmental Laws. Except for noncompliances,
failures 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
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and expenses incurred in connection with such compliance, and will keep
or cause to be kept all such 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.
9.08 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.
9.09 Additional Security; Further Assurances. (a) The Borrower will,
and will cause each of its Subsidiaries (other than the Excluded Subsidiaries)
to, grant to the Collateral Agent security interests and mortgages (each
such mortgage an "Additional Mortgage") in each item of property or asset
(whether real, personal or otherwise) of the Borrower and such Subsidiaries
acquired or substantially improved on or after the Fifth Amendment Effective
Date and which individually has a fair market value of at least $1,000,000,
excluding any inventory (in the case of Real Property, each such Real Property,
an "Additional Mortgaged Property"). All such security interests and Additional
Mortgages shall be granted pursuant to documentation reasonably satisfactory in
form and substance to the Administrative Agent and shall constitute valid and
enforceable Liens superior to and prior to the rights of all third Persons and
subject to no other Liens, in either case, except Permitted Liens or Permitted
Encumbrances. Any Additional Mortgages or instruments related thereto shall
have been duly recorded or filed within such manner and in such places as are
required by law to establish, perfect, preserve and protect the Liens in favor
of the Collateral
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Agent required to be granted, and all taxes, fees and other charges payable in
connection therewith shall have been paid in full by the Borrower.
Notwithstanding anything to the contrary contained above in this Section 9.09,
in connection with any (x) Leasehold that has been designated as an Additional
Mortgaged Property, none of the Borrower or any such Subsidiary shall be
required to grant an Additional Mortgage therein to the extent that such a grant
is prohibited by the applicable lease (and the lessor thereunder or its
mortgagee has refused consent thereto) and (y) Real Property that has been
designated as an Additional Mortgaged Property, none of the Borrower or any such
Subsidiaries shall be required to grant an Additional Mortgage therein to the
extent that such a grant is prohibited by the terms of any document evidencing a
prior Lien thereon to the extent permitted under Section 10.01 (and the senior
lienholder has refused consent thereto) or would contravene any other agreements
relating thereto. At the time the Borrower delivers each Additional Mortgage,
the Borrower and the Administrative Agent shall determine a Release Price for
such Additional Mortgaged Property.
(b) The Borrower will, and will cause each of its Subsidiaries
(other than the Excluded Subsidiaries) to, at the expense of the Borrower, make,
execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from
time to time such vouchers, invoices, schedules, confirmatory assignments,
conveyances, financing statements, transfer endorsements, powers of attorney,
certificates, real property surveys, reports and other assurances or instruments
and take such further steps relating to the Collateral covered by any of the
Security Documents as the Collateral Agent may reasonably require. Furthermore,
the Borrower will cause to be delivered to the Collateral Agent such opinions of
counsel, title insurance policies and other related documents as may be
reasonably requested by the Administrative Agent to assure itself that this
Section 9.09 has been complied with.
(c) In the event and to the extent the Administrative Agent
reasonably determines some are required or advisable under applicable law or
regulation, the Borrower shall obtain real estate appraisals with respect to
each Mortgaged Property, which real estate appraisal shall follow the valuation
procedures set forth in CFR, Part 34 - Subpart C, and shall otherwise be in form
and substance reasonably satisfactory to the Administrative Agent.
(d) The Borrower agrees that each action required by clause (a)
above in this Section 9.09 shall be completed
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as soon as possible, but in no event later than 180 days after such acquisition;
provided that in no event shall the Borrower be required to take any action,
other than using its reasonable commercial efforts without any material
expenditure, to obtain consents from third parties with respect to its
compliance with clauses (a) and (b).
9.10 Excluded Properties. Any Excluded Property which is not
mortgaged under the Permanent Mortgage Financing or disposed of pursuant to the
1997 Restructuring Program within one year of the Fifth Amendment Effective Date
shall immediately become subject to a first priority perfected Mortgage (or
second priority perfected Mortgage, as the case may be), subject only to any
Permitted Mortgage Financing, Permitted Encumbrances or other Permitted Liens,
as the case may be; provided, however, that with respect to any Excluded
Property that is made subject to a Mortgage pursuant to this Section 9.10, upon
the Borrower's request, (a) the Mortgage encumbering such Excluded Property will
be released in connection with any disposition of such property permitted by
Section 10.02(xii) or (b), if such Excluded Property is thereafter duly
mortgaged under the Permanent Mortgage Financing, the Mortgage encumbering such
Excluded Property will be released or, at the option of the Administrative
Agent, subordinated, to the mortgage on such Excluded Property securing the
Permanent Mortgage Financing.
Section 10. 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:
10.01 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 10.01 shall not prevent the creation, incurrence,
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assumption or existence of the following (with such Liens described below being
herein referred to as the "Permitted Liens"):
(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 Fifth Amendment Effective
Date which are listed, and the property subject thereto described, in
Schedule XIII 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
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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
improvements, 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 Existing Permitted Sale
Leasebacks and Liens securing the Permanent Mortgage Financing and any
Existing Permitted Mortgage Financing;
(viii) Liens arising under Additional Permitted Sale
Leasebacks and Liens securing any Additional Permitted Mortgage
Financing; provided that the aggregate amount of proceeds from such
Additional Permitted Sale Leasebacks and Additional Permitted Mortgage
Financing shall not exceed $25,000,000;
(ix) 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;
(x) Possessory Liens on commercial documents (and the
corresponding Liens on any underlying goods) securing Non-Facility
Letters of Credit;
(xi) Liens securing the refinancing of Indebtedness of the
Borrower and its Subsidiaries secured by Liens permitted under this
Section 10.01; provided that such Liens do not encumber any additional
assets or properties of the Borrower or any of its Subsidiaries;
(xii) Liens (other than (x) Liens related to Indebtedness
of the Borrower and its Subsidiaries for
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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;
(xiii) 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 Fifth Amendment
Effective Date;
(xiv) Other non-consensual Liens not securing Indebtedness
the existence of which does not 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; provided that any Lien permitted under
this clause (xiv) 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;
(xv) 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;
(xvi) Liens arising from the substitution of collateral
related to, and in accordance with the terms of, the Permanent Mortgage
Financing;
(xvii) Liens arising from UCC-1 security filings and grants
of security interests covering receivables and related assets owned by
the Borrower and its Subsidiaries in connection with the Credit Card
Program;
(xviii) Liens arising from offsets, deposits or restricted
assets granted by any Credit Card Subsidiary in respect of the Credit
Card Program; and
(xix) Liens arising from, and financing statements filed in
connection with, consignments of inventory to the Borrower and its
Subsidiaries.
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10.02 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) Existing Permitted Sale Leasebacks shall be
permitted;
(iv) Additional Permitted Sale Leasebacks shall be
permitted; provided that the aggregate amount of proceeds
thereof, together with the proceeds of any Additional Permitted
Mortgage Financing, shall not exceed $25,000,000;
(v) the Borrower and the Guarantors may transfer
assets among themselves;
(vi) any wholly-owned Subsidiary of the Borrower
may merge and consolidate with any other wholly-owned
Subsidiary of the Borrower or into the Borrower;
(vii) the Borrower and its Subsidiaries may lease or
sublease portions of their respective 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;
(viii) 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 Section 3.03(f);
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(ix) the Borrower and its Subsidiaries may purchase
inventory, materials and equipment in the ordinary
course of business;
(x) the Borrower and its Subsidiaries may enter
into operating leases in the ordinary course of
business;
(xi) the Borrower and its Subsidiaries may make
Capital Expenditures to the extent permitted under
Section 10.09;
(xii) the Borrower and its Subsidiaries may dispose
of any assets in connection with the 1997 Restructuring
Program;
(xiii) in addition to any other sales or transfers of assets
permitted by this Section 10.02, the Borrower and the Subsidiaries may
sell or transfer assets; provided that the aggregate fair market value
of such assets sold or transferred (excluding any assets sold in
connection with the 1997 Restructuring Program) does not exceed
$75,000,000 in any fiscal year of the Borrower;
(xiv) the Borrower or a Guarantor may enter into
transactions permitted under Section 10.03;
(xv) the Credit Card Subsidiaries may sell or
transfer receivables in conjunction with the Credit Card
Program;
(xvi) the Credit Card Subsidiaries may purchase
receivables and related assets in connection with the
Credit Card Program; and
(xvii) the Borrower and the Guarantors may acquire assets,
make Investments and enter into other transactions to the extent
permitted under Section 10.12.
To the extent that any Collateral is sold or
otherwise disposed of as permitted under this Section 10.02, or the Required
Banks waive any restriction or limitation of this Section 10.02 in connection
with any sale or disposition of Collateral, such Collateral shall be transferred
free and clear of the Liens created by the Security Documents, and the
Collateral Agent shall be authorized to execute and deliver such releases and
other instruments, and to take such other action, as it deems appropriate in
connection therewith.
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10.03 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) Dividends on the Borrower's common stock shall be
permitted in an aggregate amount equal to 25% of Cumulative
Consolidated Net Income commencing March 31, 1997 less the amount of
Investments made on and after the Fifth Amendment Effective Date
pursuant to clause (II) of paragraph (vii) of Section 10.12;
(iii) the redemption for a nominal amount of Series
A Junior Preferred Stock Purchase Rights shall be
permitted pursuant to the terms thereof; and
(iv) 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.
10.04 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 extent permitted by
Section 10.02, 10.03, 10.11 and 10.12.
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10.05 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:
<TABLE>
<CAPTION>
Fiscal Quarter
Ended Amount
-------------- -----
<S> <C>
Fiscal quarter ending
closest to December 31, 1996
and thereafter $360,000,000
</TABLE>
10.06 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:
<TABLE>
<CAPTION>
Fiscal Quarter
Ended Ratio
-------------- -----
<C> <C>
Fiscal quarter ending
closest to December 31, 1996 1.75:1
Fiscal quarters ending closest to March 31, 1997, June 30,
1997, September 30,
1997 and December 31, 1997 1.40:1
Fiscal quarter ending
closest to March 31, 1998 1.50:1
Fiscal quarters ending
closest to June 30, 1998
and thereafter 1.60:1
</TABLE>
10.07 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:
<TABLE>
<CAPTION>
Fiscal Quarter
Ended Ratio
-------------- -----
<S> <C>
Fiscal quarter ending
closest to December 31, 1996 1.35:1
</TABLE>
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<PAGE> 91
<TABLE>
<S> <C>
Fiscal quarters ending
closest to March 31, 1997, June 30,
1997, September 30,
1997 and December 31, 1997 1.50:1
Fiscal quarters ending
closest to March 31, 1998
and thereafter 1.60:1
</TABLE>
Capital Expenditures shall be deducted from Consolidated
EBITDAR in connection with any calculation of the Consolidated Fixed Charge
Coverage Ratio for any Test Period ending in any fiscal year prior to fiscal
year 1997 but shall not be deducted for any subsequent calculations.
10.08 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 period beginning on the last day of any
fiscal quarter set forth below and ending on the day before the last day of the
next fiscal quarter set forth below to be greater than the ratio set forth
opposite such date below:
<TABLE>
<CAPTION>
Fiscal Quarter
Ended Ratio
-------------- -----
<S> <C>
Fiscal quarter ending
closest to December 31, 1996 0.65:1
Fiscal quarters ending
closest to March 31, 1997
and thereafter 0.70:1
</TABLE>
10.09 Capital Expenditures. The Borrower will not, and will
not permit its Subsidiaries to, make any Capital Expenditures, except that
during any fiscal year set forth below, the Borrower and its Subsidiaries may
make Capital Expenditures so long as the aggregate of such Capital Expenditures
does not exceed in any fiscal year set forth below the amount set forth below
opposite such fiscal year:
<TABLE>
<CAPTION>
Fiscal Year Amount
----------- ------
<S> <C>
1997 (a) the 1997 Base Amount
plus (b) Self-Financed
Capital Expenditures
1998 (a) the 1998 Base Amount plus
(b) Self-Financed
</TABLE>
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<PAGE> 92
<TABLE>
<S> <C>
Capital Expenditures plus
(c) 100% of 1997 Free Cash Flow
1999 Self-financed Capital
Expenditures in an aggregate
amount not to exceed
$37,000,000, plus 50% of the
sum of ((a) the 1998 Base
Amount plus (b) 100% of
1998 Free Cash Flow).
</TABLE>
To the extent Capital Expenditures other than Self-Financed
Capital Expenditures made by the Borrower and its Subsidiaries during any fiscal
year set forth in the table above are less than the Base Amount applicable in
such year, such amount may be carried forward and utilized by the Borrower and
its Subsidiaries to make Capital Expenditures in the immediately succeeding
year. No amounts used in calculating the usage of Permitted Acquisition Amount
shall be included for purposes of the calculation of Capital Expenditures.
Notwithstanding anything to the contrary in this Section
10.09, Capital Expenditures cannot exceed $75 million in 1997 and $100 million
in each year thereafter.
10.10 Limitation on Modifications of the Existing Senior Notes
and 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 Senior Notes or any Subordinated Debt other than amendments or
modifications that are not reasonably likely to adversely affect the Banks.
10.11 Indebtedness. The Borrower will not, and will not permit
any of its Subsidiaries to, contract, create, incur, assume or suffer to exist
any Indebtedness, except:
(i) Indebtedness incurred pursuant to this
Agreement and the other Credit Documents;
(ii) Indebtedness existing as of the Fifth Amendment
Effective Date to the extent the same is listed on Schedule XI, and any
refinancings or renewals thereof, except to the extent specifically not
permitted to be so refinanced or renewed as set forth on such
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<PAGE> 93
Schedule XI, provided that any such refinancings and renewals shall not
exceed the principal amount of, and shall not be for a shorter maturity
than, such Existing Indebtedness outstanding at the time of the
refinancing or renewal thereof;
(iii) Indebtedness evidenced by Capitalized Lease Obligations,
Indebtedness secured by Liens permitted pursuant to Section 10.01(v)
and other purchase money Indebtedness of the Borrower and its
Subsidiaries;
(iv) Indebtedness of the Borrower (and guaranties by
Subsidiaries of the Borrower of such Indebtedness) under Interest Rate
Protection Agreements entered into to protect the Borrower against
fluctuations in interest rates so long as management of the Borrower
has determined that the entering into of such Interest Rate Protection
Agreements are bona fide hedging activities and the notional amounts
thereof do not exceed the aggregate principal amount of the
Indebtedness to which such Interest Rate Protection Agreements relate;
(v) Indebtedness created under, and Contingent
Obligations relating to, the Permanent Mortgage
Financing;
(vi) Indebtedness created under, and Contingent Obligations
relating to, Permitted Sale Leasebacks or any Permitted Mortgage
Financing; provided that such Indebtedness shall not exceed at any time
$100,000,000;
(vii) Acquired Indebtedness to the extent permitted
by Section 10.12(vi);
(viii) additional unsecured Indebtedness not otherwise
permitted by this Section 10.11, in an aggregate amount not to exceed
$25,000,000 outstanding at one time;
(ix) Subordinated Debt; provided that such Subordinated Debt
cannot mature or be subject to any required prepayment (including,
without limitation, upon the occurrence of an event which constitutes a
change of control as described in Section 11.10) in whole or in part,
on or prior to the first anniversary of the maturity date of the
Existing Subordinated Debt;
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(x) Indebtedness owing by any Guarantor to the
Borrower, by the Borrower to any Guarantor or by any
Guarantor to any other Guarantor;
(xi) Indebtedness incurred in connection with, and
Contingent Obligations relating to, the Credit Card
Program;
(xii) Indebtedness relating to reimbursement obligations under
Non-Facility Letters of Credit; provided that, at the time of issuance
of any thereof the Stated Amount of such Non-Facility Letter of Credit,
when added to the sum of Trade Letter of Credit Outstandings at such
time and Non-Facility Letter of Credit Outstandings at such time, would
not exceed $150,000,000;
(xiii) Indebtedness arising pursuant to Permitted
Inventory Financing;
(xiv) Indebtedness constituting current liabilities incurred
in the ordinary course of business and not represented by any note,
bond, debenture or other instrument, and which is not past due for a
period of more than thirty (30) days, or if overdue for more than
thirty (30) days, which is being contested in good faith and by
appropriate proceedings and for which adequate reserves in accordance
with GAAP have been established on the books of the primary obligor
with respect thereto;
(xv) Indebtedness relating to reimbursement obligations of
the Borrower or a Subsidiary of the Borrower with respect to letters of
credit (other than Standby Letters of Credit or Non-Facility Letters of
Credit) issued for the account of the Borrower or a Subsidiary, so long
as such letters of credit (i) secure obligations of the Borrower or a
Subsidiary under industrial revenue bonds outstanding on the Fifth
Amendment Effective Date and (ii) replace (x) existing Standby Letters
of Credit, which shall be returned to the Issuing Bank thereof for
cancellation by such Issuing Bank or (y) other letters of credit (other
than Standby Letters of Credit or Non-Facility Letters of Credit),
which shall be returned to the institutions issuing such letters of
credit for cancellation by such institutions;
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<PAGE> 95
(xvi) Contingent Obligations under guarantees of (x)
Indebtedness of the Borrower and its Subsidiaries permitted hereunder
other than the Existing Subordinated Debt and the Existing Senior Notes
(provided that any such Contingent Obligations with respect to
Subordinated Debt incurred on or after the Fifth Amendment Effective
Date shall also be subordinated obligations of the Person liable
therefor on the same terms as the corresponding Subordinated Debt) and
(y) obligations not constituting Indebtedness executed by the Borrower,
any Guarantor or any of their respective Subsidiaries in the ordinary
course of business;
(xvii) Contingent Obligations consisting of the indemnification
by the Borrower or any of its Subsidiaries of (i) the officers,
directors, employees and agents of the Borrower or such Subsidiary, to
the extent permissible under the corporation law of the jurisdiction in
which the Borrower or such Subsidiary is organized, (ii) commercial
bankers, investment bankers and other independent consultants or
professional advisors pursuant to agreements relating to the
underwriting of the Borrower's or such Subsidiary's securities or the
rendering of banking or professional services to the Borrower or such
Subsidiary and (iii) landlords, licensors, licensees and other parties
pursuant to agreements entered into in the ordinary course of business
by the Borrower or such Subsidiary;
(xviii) Indebtedness in an amount not to exceed $25,000,000 in
the aggregate owing by any of the Credit Card Subsidiaries to the
Borrower or by the Borrower to any of the Credit Card Subsidiaries; and
(xix) The Borrower and its Subsidiaries may enter into transactions
permitted under Section 10.12.
10.12 Advances, Investments and Loans. The Borrower will not, and will
not permit any of its Subsidiaries to, lend money or credit or make advances to
any Person, or purchase or acquire any stock, obligations or securities of, or
any other interest in, or make any capital contribution to, any other Person,
except that the following shall be permitted:
(i) the Borrower and its Subsidiaries may acquire
and hold accounts receivable owing to any of them, if
created or acquired in the ordinary course of business
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<PAGE> 96
and payable or dischargeable in accordance with customary terms;
(ii) the Borrower and its Subsidiaries may acquire
and hold cash and Cash Equivalents;
(iii) the Borrower and its Subsidiaries shall be
permitted to make Capital Expenditures to the extent
permitted under Section 10.09;
(iv) the Borrower and its Subsidiaries may enter
into transactions permitted under Sections 10.02, 10.03
and 10.11;
(v) the Borrower and its Subsidiaries may make loans and
advances to their respective employees in the ordinary course of
business so long as the aggregate principal amount at any time
outstanding shall not exceed $2,000,000;
(vi) the Borrower and its Subsidiaries may make Permitted
Investments and may acquire assets not otherwise permitted by Section
10.02; provided that with respect to each Permitted Investment
described in clause (iv) of the definition thereof and each asset
acquisition not otherwise permitted pursuant to Section 10.02, the
consideration paid (inclusive of Acquired Indebtedness) 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
Permitted Investment or acquisition); and provided further that the
aggregate cumulative amount of all such consideration that is in the
form of cash or Acquired Indebtedness (other than Subordinated Debt),
shall not exceed $50,000,000;
(vii) the Borrower and its Subsidiaries may make other
Investments in an aggregate amount equal to the sum of (I) the sum of
25% of Cumulative Consolidated Net Income from the Effective Date
through and including March 30, 1997 plus $25,000,000 and (II) 25% of
Cumulative Consolidated Net Income, commencing March 31, 1997, less the
amount of Dividends paid by the Borrower on its common stock after the
Fifth Amendment Effective Date;
(viii) the Borrower and its Subsidiaries may make
Investments (including Indebtedness of the Credit Card
Subsidiaries permitted by Section 10.11(xviii)) in the
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<PAGE> 97
Credit Card Subsidiaries in an amount not to exceed $50,000,000 (plus
the amount of any Investments made in such Credit Card Subsidiaries in
compliance with Section 10.12(vii)); and
(ix) the Credit Card Subsidiaries may make Investments in connection
with the Credit Card Program.
10.13 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 (other than the Excluded 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
(other than an Excluded Subsidiary) 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 Borrower 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 in effect on the Effective Date;
(vi) restrictions imposed by the terms of Permitted Inventory Financing on the
inventory financed pursuant thereto and restrictions imposed by the terms of the
First Union Permitted Mortgage Financing on the First Union Mortgage Financing
Subsidiaries and (vii) provisions in secured financing agreements (the Liens
pursuant to which are permitted by Section 10.01) that restrict junior liens on
the assets securing such financings.
10.14 Limitation on Issuances of Capital Stock. (a) The Borrower shall
not issue (i) any preferred stock or (ii) any class of redeemable common stock;
provided, however, that the Borrower may issue Qualified Preferred 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 pur-
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<PAGE> 98
chase, 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, (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, and (iv) any Credit Card Subsidiary
may issue capital stock to any Person so long as after giving effect thereto,
such Credit Card Subsidiary remains a Subsidiary.
10.15 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.
10.16 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.
10.17 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 (iv) of the
definition of Permitted Investments, any such Subsidiary shall become party to
the Guaranty immediately thereafter; provided that no Excluded Subsidiary shall
be subject to this clause (b).
10.18 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 $150,000,000 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 11. Events of Default. Upon the occurrence of any of
the following specified events (each an "Event of Default"):
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11.01 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
11.02 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
11.03 Covenants. The Borrower shall (i) default in the due
performance or observance by it of any term, covenant or agreement contained in
Section 10 or (ii) default in the due performance or observance by it of any
term, covenant or agreement (other than those referred to in Sections 11.01 and
11.02 and clause (i) of this Section 11.03) contained in this Agreement and such
default shall continue unremedied for a period of 30 days after written notice
to the Borrower by the Administrative Agent or the Required Banks; or
11.04 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 11.04 unless
the aggregate
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amount of all Indebtedness referred to in clauses (i) through (iii) above
exceeds $20,000,000 at any one time; or
11.05 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 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
11.06 ERISA. 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,
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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
11.07 Security Documents. At any time after the execution and
delivery thereof, any Security Document shall cease to be in full force and
effect or, except as expressly set forth in the Company Security Agreement or
the Subsidiary Security Agreement, shall cease to give the Collateral Agent any
perfected Lien encumbering Collateral, or shall cease to give the Collateral
Agent any material rights, powers and privileges, purported to be created
thereby (including, without limitation, perfected security interests in, and
Liens on, all of the Collateral) in favor of the Collateral Agent superior to
and prior to the rights of all third parties (except as permitted by Section
10.01) or any Credit Party shall default in any material respect in the due
performance or observance of any term, covenant or agreement on its part to be
performed or observed pursuant to any such Security Document and such default
shall continue unremedied beyond the grace periods set forth in the Mortgages,
or in the case of the other Security Documents, for a period of 30 days after
notice to the Borrower by the Administrative Agent or any Bank; provided that it
shall not be an Event of Default under this Agreement pursuant to this Section
11.07 if such Event of Default is a Property Default, unless at the time of such
Property Default, either (x) Property Defaults have occurred and are continuing
on that number of Mortgaged Properties which, when added to the number of
Mortgaged Properties as to which a Release Price Commitment reduction pursuant
to Section 3.03(h) has previously occurred, equals or exceeds five, or (y)
Property Defaults have occurred and
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are continuing with respect to Mortgaged Properties having an aggregate Release
Price which, when added to the aggregate Release Price Commitment reductions
previously made pursuant to Section 3.03(h), equals or exceeds $25,000,000; or
11.08 Guaranty. The Guaranty or any provision thereof shall
cease to be in full force and effect as to any 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
11.09 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
11.10 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 of the Borrower 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
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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 11.05 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 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 11.05
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 12. Definitions and Accounting Terms.
12.01 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.
"Additional Mortgage" shall have the meaning
provided in Section 9.09(a).
"Additional Mortgaged Property" shall have the
meaning provided in Section 9.09(a).
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"Additional Permitted Mortgage Financing" shall mean any
Permitted Mortgage Financing (and any extensions or other refinancings thereof)
occurring on or after the Fifth Amendment Effective Date.
"Additional Permitted Sale Leasebacks" shall mean those
Permitted Sale Leasebacks (and any extensions or other refinancings thereof)
occurring on or after the Fifth Amendment Effective Date.
"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 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
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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
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
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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.
"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.
"Aircraft Mortgage" shall mean an aircraft mortgage in form
and substance reasonably satisfactory to the Collateral Agent.
"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
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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 Chase.
"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 or Net
Financing Proceeds, as the case may be, that the Borrower or any of its
Subsidiaries intends to use to purchase, construct or otherwise acquire
Reinvestment Assets.
"Applicable Alternate Base Rate Margin" shall mean (i) if the
Borrower's senior unsecured indebtedness is not rated by S&P or Moody's, 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 5 being the highest) in which the Borrower
meets at least one of the criteria set forth in the definition for such
Category:
<TABLE>
<CAPTION>
Applicable Alternate
Category Base Rate Margin
-------- ----------------
<S> <C>
Category 5 0%
Category 4 0%
Category 3 3/8 of 1%
Category 2 3/4 of 1%
Category 1 1%
</TABLE>
"Applicable Credit Rating" shall mean (i) the S&P Credit
Rating and the Moody's Credit Rating at such time, if such Credit Ratings are at
equivalent levels or (ii) if the S&P Credit Rating and the Moody's Credit Rating
differ by one level (it being understood that a rating level shall include
numerical modifiers or (+) and (-) modifiers), the Applicable Credit Rating
shall be the higher of the two Credit Ratings or (iii) if the S&P Credit Rating
and the Moody's Credit Rating differ by more than one level, the Applicable
Credit Rating shall be the Credit Rating that is one level lower than the higher
of the two Credit Ratings. If any Credit Rating shall be changed by S&P or
Moody's, such change shall
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be effective for purposes of this definition as of the Business Day following
such change. Any change in the Applicable Credit Rating shall apply during the
period beginning on the effective date of such change and ending on the date
immediately preceding the effective date of the next such change.
"Applicable Eurodollar Margin" shall mean (i) if the
Borrower's senior unsecured indebtedness is not rated by S&P or Moody's, 2% 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 5 being the highest) in which the Borrower
meets at least one of the criteria set forth in the definition for such
Category:
<TABLE>
<CAPTION>
Applicable
Category Eurodollar Margin
-------- -----------------
<S> <C>
Category 5 1/2 of 1%
Category 4 7/8 of 1%
Category 3 1-3/8%
Category 2 1-3/4%
Category 1 2%
</TABLE>
"Assignment and Acceptance" shall have the meaning provided
in Section 14.04(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 14.04(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
11.05.
"Base Rate Loans" shall mean any Loan designated as such by
the Borrower at the time of the incurrence thereof or conversion thereto.
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"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
Chase, 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 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
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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 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, Category 3, Category 4 and Category 5.
"Category 1" shall mean the Category which is applicable when
the Borrower's Applicable Credit Rating is (i) B or lower as rated by S&P or
(ii) B2 or lower as rated by Moody's. Promptly following 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's Applicable Credit Rating is (i) B+ as rated by S&P or (ii) B1 as
rated by Moody's. Promptly following 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.
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"Category 3" shall mean the Category which is applicable when
the Borrower's Applicable Credit Rating is (i) BB+, BB or BB- as rated by S&P or
(ii) Ba1, Ba2 or Ba3 as rated 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.
"Category 4" shall mean the Category which is applicable when
the Borrower's Applicable Credit Rating is (i) BBB- as rated by S&P or (ii) Baa3
as rated by Moody's. Promptly following such time that the Borrower has received
a Category 4 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 5" shall mean the Category which is applicable when
the Borrower's Applicable Credit Rating is (i) BBB or higher as rated by S&P or
(ii) Baa2 or higher as rated by Moody's. Promptly following any such time that
the Borrower has received a Category 5 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. ss. 9601 et seq.
"Chase" shall mean The Chase Manhattan 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:
<TABLE>
<CAPTION>
Clean-Down
Period Amount
-------------- ----------
<S> <C>
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
</TABLE>
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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), (d), (f) or (g), 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.
"Collateral" shall mean all property (whether real or
personal) with respect to which any security interests have been granted (or
purported to be granted) pursuant to any Security Document, including, without
limitation, all Pledge Agreement Collateral, all Mortgaged Properties, all
Additional Mortgaged Properties and all cash and Cash Equivalents delivered as
collateral pursuant to this Agreement or any other Credit Document.
"Collateral Agent" shall mean the Administrative Agent acting
as collateral agent for the Secured Creditors pursuant to the Security
Documents.
"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 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 14.04(b).
"Company Pledge Agreement" shall have the meaning
provided in Section 6.07.
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"Company Security Agreement" shall have the meaning
provided in Section 6.06.
"Company Security Agreement Collateral" shall mean
the "Collateral" as defined in the Company Security
Agreement.
"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.
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"Consolidated Cash Interest Expense" shall mean, for any
period, the total consolidated cash interest expense (including accruals for
such period of consolidated interest 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 that have not been reimbursed to the issuer
thereof.
"Consolidated EBIT" shall mean, for any period, Consolidated
Net Income 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 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.
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"Consolidated Net Income" shall mean, for any period, net
income of the Borrower and its Subsidiaries on a consolidated basis for such
period; provided, however, that there shall be excluded from Consolidated Net
Income any gains, losses, expenses or other charges incurred in connection with
the 1997 Restructuring Program which would have been included therein but for
this proviso.
"Consolidated Net Worth" shall mean, at any time, the net
worth of the Borrower and its Subsidiaries determined on a consolidated basis;
provided, however, that there shall be excluded from the definition of
Consolidated Net Worth the effects of any gains, losses, expenses or other
charges incurred in connection with the 1997 Restructuring Program which would
have been included but for this proviso.
"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
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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 such Person is required to perform thereunder) as determined
by such Person in good faith; provided further, that the term Contingent
Obligation shall not include obligations of any Credit Card Subsidiary to the
Credit Card Issuer with respect to the Credit Card Program to the extent the
amount of such Contingent Obligations is less than or equal to the
capitalization of the Credit Card Subsidiary.
"Credit Card Issuer" shall mean any bank or other financial
institution and its affiliates which issues credit cards and extends credit to
cardholders in connection with the Credit Card Program.
"Credit Card Program" shall mean a customary private credit
card program and/or co-branded VISA, MASTERCARD or other credit card program
created and operated by the Credit Card Subsidiaries, pursuant to documentation
satisfactory to the Administrative Agent.
"Credit Card Subsidiaries" shall mean any direct or indirect
Subsidiary of the Borrower, and any wholly-owned Subsidiaries of such
Subsidiary, created in connection with the Credit Card Program, so long as (i)
they engage in no business or transactions other than (x) the issuance of credit
cards, the extension of credit to cardholders pursuant thereto, and all other
customary transactions incident thereto (including the sale or transfer of
receivables pursuant to asset backed financing transactions) and (y) the
entering into and performance of agreements with a Credit Card Issuer that
facilitate the Credit Card Issuer's doing business in connection with a Credit
Card Program and (ii) the liabilities of the Credit Card Subsidiaries are
without recourse to the Borrower and its Subsidiaries (other than the Credit
Card Subsidiaries); provided that the Borrower and its Subsidiaries may enter
into customary commitments and/or underwriting agreements on behalf of the
Credit Card Subsidiaries for the purpose of customary securities law
indemnifications.
"Credit Documents" shall mean this Agreement, the Guaranty,
and once executed and delivered pursuant to the terms of this Agreement, each
Note, each Security Document, each Letter of Credit Request, each Notice of
Borrowing, each Notice of Conversion and each Letter of Credit.
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"Credit Event" shall mean the making of any Loan or the
issuance of any Letter of Credit (including any Existing Letters of Credit that
become Letters of Credit hereunder).
"Credit Party" shall mean and include each of the Borrower and
each of its Subsidiaries party to any of the Credit Documents.
"Credit Rating" shall mean either (i) an S&P Credit Rating or
(ii) a Moody's Credit rating.
"Cumulative Consolidated Net Income" shall mean Consolidated
Net Income accrued on a cumulative basis for (x) the period from April 3, 1994
through the last day of the fiscal quarter immediately preceding the proposed
payment or (y) such other period as may be specified for a calculation of
Cumulative Consolidated Net Income by a specific provision of this Agreement.
"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) or (d) 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 purchase or otherwise acquire for a consideration any shares of
any class of the capital stock of such Person outstanding
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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 Sec-
tion 2.05(b).
"Effective Date" shall mean June 8, 1994.
"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 relief resulting from alleged injury or threat of injury to health,
safety or the environment due to the presence of Hazardous Materials.
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"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. ss. 1251 et seq.; the Toxic
Substances Control Act, 15 U.S.C. ss. 2601 et seq.; the Clean Air Act, 42 U.S.C.
ss. 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. ss. 3803 et seq.; the
Oil Pollution Act of 1990, 33 U.S.C. ss. 2701 et seq.; the Emergency Planning
and the Community Right-to-Know Act of 1986, 42 U.S.C. ss. 11001 et seq., the
Hazardous Material Transportation Act, 49 U.S.C. ss. 1801 et seq. and the
Occupational Safety and Health Act, 29 U.S.C. ss. 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 11.
"Excluded Property" shall mean (a) 7 to 9 replacement
properties (with further rights of substitution), which shall become subject to
a first priority mortgage under the Permanent Mortgage Financing and shall
replace (i) two Standby Letters of Credit previously delivered in connection
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with the release of two properties formerly securing the Permanent Mortgage
Financing and (ii) those properties presently securing the Permanent Mortgage
Financing which are to be disposed of pursuant to the 1997 Store Closing Program
and (b) those properties which are to be disposed of pursuant to the 1997
Restructuring Program, which Excluded Properties shall be listed on Schedule IX.
"Excluded Subsidiary" shall mean (a) the Credit Card
Subsidiaries, including Service Merchandise Co. No. 80, Inc., so long as it
remains a Credit Card Subsidiary, (b) the First Union Permitted Mortgage
Financing Subsidiaries, including SMC-SPE-1, Inc. and SMC-SPE-2, Inc., so long
as each remains a First Union Permitted Mortgage Financing Subsidiary, and (c)
Service Merchandise Showroom, Inc., The McNally Supply Co., Service Merchandise
Company of New York, Inc., Travel Management Consultants, Inc., The Lingerie
Store, Inc., A.F.S. Marketing Services, Inc., and Service Merchandise Office
Supply, Inc., so long as any such Subsidiary listed in this clause (c) owns no
assets and conducts no business.
"Existing Indebtedness" shall have the meaning
provided in Section 8.20.
"Existing Letter of Credit" shall have the meaning
provided in Section 2.01(a).
"Existing Permitted Mortgage Financing" shall mean any
Permitted Mortgage Financing incurred prior to and in existence on the Fifth
Amendment Effective Date (and any extensions or other refinancings thereof).
"Existing Permitted Sale Leasebacks" shall mean those
Permitted Sale Leasebacks incurred prior to and in existence on the Fifth
Amendment Effective Date (and any extensions or other refinancings thereof).
"Existing Senior Notes" shall mean the Borrower's 8-3/8%
Senior Notes due 2001 issued pursuant to the Existing Senior Notes Indenture.
"Existing Senior Notes Indenture" shall mean the Indenture,
dated as of October 15, 1993, between the Borrower and The First National Bank
of Boston, as trustee, as amended by a First Supplemental Indenture dated as of
October 15, 1993, pursuant to which the Existing Senior Notes were issued.
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"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 the 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.
"Fifth Amendment" shall mean the amendment to this Agreement
dated as of March 25, 1997.
"Fifth Amendment Effective Date" shall mean the effective date
of the Fifth Amendment.
"First Union Permitted Mortgage Financing" shall mean the
Permitted Mortgage Financing provided by First Union National Bank of North
Carolina substantially in accordance with its commitment letter to the Borrower
dated September 9, 1996.
"First Union Permitted Mortgage Financing Subsidiaries" shall
mean any direct or indirect wholly-owned Subsidiary which is wholly-owned,
directly or indirectly, by
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the Borrower or a Guarantor and which is created to be a borrower under the
First Union Permitted Mortgage Financing.
"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.
"GAAP" shall mean generally accepted accounting
principles in the United States.
"Guarantor" shall mean all existing and future material
Subsidiaries of the Borrower, excluding the Excluded Subsidiaries.
"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
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that Indebtedness shall not include trade payables and accrued expenses, in each
case arising in the ordinary course of business.
"Initial Mortgaged Properties" shall mean the Real Property of
the Borrower or any of its Subsidiaries designated as such on Schedule IX.
"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).
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"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.
"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 $50,000,000.
"Moody's" shall mean Moody's Investors Service,
Inc. and its successors.
"Moody's Credit Rating" shall mean the rating level (it being
understood that a rating level shall include numerical modifiers or (+) and (-)
modifiers) assigned by Moody's to the Borrower's senior unsecured long-term
debt.
"Mortgage" shall have the meaning provided in
Section 6.09(a).
"Mortgage Policies" shall have the meaning provided
in Section 6.09(b).
"Mortgaged Property" shall mean all Real Property of the
Borrower and its Subsidiaries listed on Schedule IX and designated as a
Mortgaged Property and, after the
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execution and delivery of any Additional Mortgage, shall include such respective
Additional Mortgaged Property, excluding, however, any Excluded Property that is
not required to be made subject to a Mortgage pursuant to Section 9.10.
"Net Financing Proceeds" shall have the meaning
provided in Section 3.03(d).
"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.
"1992 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.
"1997 Base Amount" shall mean an amount equal to
$75,000,000.
"1997 Free Cash Flow" shall equal at any time of determination
thereof (w) Consolidated Net Income for fiscal year 1997 plus (x) all
depreciation and amortization that was deducted in arriving at Consolidated Net
Income for fiscal year 1997 minus (y) the aggregate of the amount of all
scheduled debt repayments due or already paid in fiscal year 1998 (net of any
refinancings of such debt other than with Loans) at the time of such
determination minus (z) the 1998 Base Amount.
"1997 Projections" shall have the meaning provided
in Section 6.04.
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"1997 Related Expenses" shall mean those expenses incurred in
connection with the write-off of certain trademarks of the Borrower and other
miscellaneous expenses all in connection with the 1997 Restructuring Program.
"1997 Remerchandising Program" shall mean the writing-down and
liquidation of inventory consisting of certain products, product lines or
merchandising categories of the Borrower and its Subsidiaries in connection with
the 1997 Restructuring Program.
"1997 Restructuring Program" shall consist of (a) the 1997
Store Closing Program, (b) the 1997 Remerchandising Program, (c) the disposition
of approximately 10 surplus and/or vacant properties and (d) the 1997 Related
Expenses, and shall in no event aggregate more than $175 million in
losses, expenses and charges (see Schedule X).
"1997 Store Closing Program" shall mean a program of the
Borrower under which approximately 50-65 stores of the Borrower and its
Subsidiaries shall be sold or closed, certain real property related to such
stores shall be sold or leased, certain store leases shall be terminated,
subleased or assigned, certain inventory located in the stores to be sold shall
be written down and liquidated and the furniture, fixtures and equipment located
in such stores shall be liquidated.
"1998 Base Amount" shall mean an amount equal to
$50,000,000.
"1998 Free Cash Flow" shall equal at any time of determination
thereof (w) Consolidated Net Income for fiscal year 1998 plus (x) all
depreciation and amortization that was deducted in arriving at Consolidated Net
Income for fiscal year 1998 minus (y) the aggregate of the amount of all
scheduled debt repayments due or already paid in fiscal year 1999 (net of any
refinancings of such debt other than with Loans) at the time of such
determination minus (z) the 1998 Base Amount.
"Non-Defaulting Bank" shall mean and include each Bank other
than a Defaulting Bank.
"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.
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"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 and the corresponding Liens on any
underlying goods).
"Note" shall mean and include each Revolving Note,
Competitive Bid Note and Swingline Note.
"Notice of Borrowing" shall have the meaning pro-
vided 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.
"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
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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, an
amount equal to the sum of $100,000,000 plus 75% of Cumulative Consolidated Net
Income (commencing April 3, 1994) at such time, minus the aggregate amount of
Permitted Investments made and other assets acquired subject to the first
proviso of Section 10.12(vi) at or prior to such time. Capital Expenditures
shall not be taken into consideration in any calculation of the Permitted
Acquisition Amount.
"Permitted Encumbrances" shall mean, with respect to any Real
Property subject to a Mortgage or an Additional Mortgage, such exceptions to
title as are set forth in the title insurance policy or title commitment
delivered with respect thereto, all of which exceptions must be reasonably
acceptable to the Administrative Agent.
"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; provided, however, that from December 1 of each year until
January 29 of the following year, as long as the
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Borrower has no Revolving Outstandings, the amount of all such Indebtedness
shall not exceed the greater of (i) $60,000,000 and (ii) the sum of the amount
of Indebtedness required for the Borrower and its Subsidiaries to purchase 10%
of their inventory at such time pursuant to such arrangements and 100% of cash
and Cash Equivalents of the Borrower at such time.
"Permitted Investments" shall mean any of the
following activities of the Borrower and its Subsidiaries:
(i) the Borrower and its Subsidiaries may acquire
and hold Investments in Subsidiaries of the Borrower in
existence on the Fifth Amendment Effective Date or made
as permitted by this Agreement;
(ii) the Borrower and the Guarantors may make
unsecured loans and advances and may transfer assets
among one another in the ordinary course of business;
(iii) the Borrower and/or its Subsidiaries may, all in
connection with the First Union Permitted Mortgage Financing in a
manner satisfactory to the Administrative Agent and to the extent
allowed under the terms and conditions of this Agreement, (x) transfer
Real Property and related assets to the First Union Permitted Mortgage
Financing Subsidiaries and (y) provide security or escrow deposits or
Letters of Credit in lieu of security or escrow deposits, guaranties,
indemnities and similar items required by the terms of the First Union
Permitted Mortgage Financing; provided that on the date of each closing
thereof, the aggregate proceeds of such financing net of the
aforementioned items are not less than 60% of the aggregate fair market
value of the Real Property and related assets being encumbered in
connection therewith; and
(iv) 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 10.17(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).
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"Permitted Liens" shall have the meaning provided
in Section 10.01.
"Permitted Mortgage Financing" shall mean Indebtedness
incurred by the Borrower and/or its Subsidiaries to be secured by one or more
parcels of Real Property owned or leased by the Borrower and/or its
Subsidiaries; provided that (x) the proceeds thereof shall be entirely in cash
and shall not be less than 60% of the aggregate fair market value of the assets
being encumbered (as determined by the Borrower in good faith) and, (y) if
incurred on or after the Fifth Amendment Effective Date, such Permitted Mortgage
Financing shall contain terms and conditions reasonably satisfactory to the
Administrative Agent.
"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), and
the respective lease shall provide for substantially equal annual payments
(except that a balloon payment shall be permitted at the end of the lease term)
(x) based upon an amortization schedule of at least 10 years in the case of real
property and at least 3 years in the case of personal property.
"Person" shall mean any individual, partnership, joint
venture, firm, corporation, association, trust or other 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.
"Pledge Agreement" shall mean each of the Company
Pledge Agreement and the Subsidiary Pledge Agreement.
"Pledge Agreement Collateral" shall mean all Collateral under
and as defined in the Pledge Agreements.
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"Pledged Securities" shall mean all the Pledged Securities as
defined in the Company Pledge Agreement and the Subsidiary Pledge Agreement,
respectively.
"Post-Closing Mortgage" shall mean those Mortgages
covering the Post-Closing Mortgaged Properties.
"Post-Closing Mortgaged Property" shall mean the Real Property
of the Borrower or any of its Subsidiaries designated as such on Schedule IX.
"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.
"Property Default" shall have the meaning provided
in each of the Mortgages.
"Qualified Preferred Stock" shall mean any preferred stock of
the Borrower the express terms of which shall provide that it cannot mature, is
not redeemable and cannot be required to be repurchased (including, without
limitation, upon the occurrence of an event which constitutes a change of
control as described in Section 11.10) in whole or in part, on or prior to the
first anniversary of the maturity date of the Existing Subordinated Debt.
"RCRA" shall mean the federal Resource Conservation
and Recovery Act, 42 U.S.C. ss. 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 14.15.
"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.
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"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.
"Reinvestment Event" shall mean the receipt of any Net Sale
Proceeds or Net Financing Proceeds, as the case may be, to the extent the
Borrower has delivered, in connection therewith, a Reinvestment Notice as
permitted by Section 3.03(c) or (d).
"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 or
Net Financing Proceeds, as the case may be, 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.
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"Release Price" shall mean, with respect to any Initial
Mortgaged Property, Post-Closing Mortgaged Property or Excluded Property, the
amount set forth opposite such Initial Mortgaged Property, Post-Closing
Mortgaged Property or Excluded Property on Schedule IX hereto and, with respect
to any Additional Mortgaged Property, the amount determined pursuant to Section
11.07.
"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 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). For purposes of releasing all
or substantially all of the Collateral, Required Banks shall mean each Bank
which is directly affected thereby.
"Restricted Payments" shall mean (a) any authorization,
declaration or payment of any Dividends by the Borrower or its Subsidiaries and
(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 the Existing Senior Notes or any
Subordinated Debt (other than scheduled principal and interest payments).
"Revolving Loans" shall have the meaning provided
in Section 1.01(a).
"Revolving Note" shall have the meaning provided in
Section 1.06(a).
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"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.
"S&P Credit Rating" shall mean the rating level (it being
understood that a rating level shall include numerical modifiers or (+) and (-)
modifiers) assigned by S&P to the Borrower's senior unsecured long-term debt.
"Scheduled Reduction" shall have the meaning
provided in Section 3.03(b).
"SEC" shall have the meaning provided in Section
9.01(g).
"Section 4.04(b)(ii) Certificate" shall have the
meaning provided in Section 4.04(b).
"Secured Creditors" shall have the meaning provided that term
in the respective Security Documents.
"Security Agreement" shall have the meaning
provided in Section 6.06.
"Security Agreement Collateral" shall mean all
Collateral as defined in the Security Agreements.
"Security Documents" shall mean the Company Security
Agreement, the Subsidiary Security Agreement, the Company Pledge Agreement, the
Subsidiary Pledge Agreement, each Mortgage and each Additional Mortgage, if any,
and each Aircraft Mortgage described in Section 14.17(b); provided that after
the date on which all the security interests granted pursuant to any of the
foregoing agreements shall terminate in accordance with the respective terms of
such agreement (and so long as the agreement no longer applies to after-acquired
collateral), such agreement shall cease to constitute a Security Document
thereunder.
"Self-Financed Capital Expenditures" shall mean Capital
Expenditures financed directly or indirectly with net proceeds from the sale of
fixed assets in connection with the 1997 Restructuring Program, Capitalized
Lease Obligations, purchase money, equity and Subordinated Debt, and in any
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event shall not exceed in the aggregate $75,000,000 in any given fiscal year.
"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 Borrower 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 Assignor" shall mean each Subsidiary of the
Borrower (other than the Excluded Subsidiaries) which is a party to the
Subsidiary Security Agreement on the Fifth Amendment Effective Date or which
becomes a party to the Subsidiary Security Agreement in accordance with the
requirements of Section 9.09.
"Subsidiary Pledgor" shall mean each material Subsidiary of
the Borrower (other than the Excluded Subsidiaries) which is a party to the
Subsidiary Pledge Agreement on the Fifth Amendment Effective Date or which
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becomes a party to the Subsidiary Pledge Agreement in accordance with Section
9.09.
"Subsidiary Pledge Agreement" shall have the meaning provided
in Section 6.08.
"Subsidiary Security Agreement" shall have the meaning
provided in Section 6.06.
"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.
"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.
"Third Amendment Effective Date" shall mean September 16,
1996.
"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.
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"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, based upon the actuarial
assumptions used by the Plan's actuary in the most recent annual valuation of
the Plan.
"UCC" shall mean the Uniform Commercial Code as from time to
time in effect in the relevant jurisdiction.
"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 Chase, 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.
12.02 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.
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(b) All accounting terms not specifically defined herein shall
be construed in accordance with GAAP as more fully described in Section 14.07
(a).
Section 13. The Administrative Agent and the Issuing Bank.
13.01 Appointment. The Banks hereby designate Chase 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.
13.02 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.
13.03 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
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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.
13.04 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.
13.05 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
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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).
13.06 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 or disbursements resulting from the Administrative Agent's or any such
Issuing Bank's, as the case may be, gross negligence or willful misconduct.
13.07 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
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and otherwise without having to account for the same to the Banks.
13.08 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.
13.09 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 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.
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Section 14. Miscellaneous.
14.01 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 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
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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.
14.02 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 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 14.06(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.
14.03 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 mail-
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ed, 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.
14.04 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 14.04(b)) and the
transferee, assignee or participant, as the case may be, shall not constitute a
"Bank" hereunder and; provided 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)
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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 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 14.15 hereof. To the extent of any assignment
pursuant to this Section 14.04(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 14.04(b) to a Person which is not
already a Bank hereunder and which is not a United States person (as
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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 14.04(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 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 8.05 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
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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
14.04, 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 14.04
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 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.
14.05 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
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or the holder of any Note to any other or further action in any circumstances
without notice or demand.
14.06 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 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 14.06(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.
14.07 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 10.05 through 10.09, inclusive, shall
utilize accounting principles and
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policies in conformity with those used to prepare the financial statements
referred to in Section 8.05(a). To the extent that the Borrower or a Subsidiary
thereof provides a guaranty of the obligations of the Borrower or its
Subsidiaries as tenants under the Real Property operating leases contemplated by
the First Union Permitted Mortgage Financing, any Contingent Obligations
represented by such guaranty shall not be taken into account for purposes of
calculations under this Agreement involving the Indebtedness of the Borrower and
its Subsidiaries.
(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.
14.08 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 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
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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 afore-mentioned 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.
14.09 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.
14.10 Effectiveness. This Agreement shall become effective on
the 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
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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.
14.11 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.
14.12 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 14.12 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 substantially the same basis as the extensions of Commitments
are included on the Effective Date and this Section 14.12 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 (A) 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), (B) 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,
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(C) without the consent of the Administrative Agent, amend, modify or waive any
provision of Section 13 as same applies to such Administrative Agent or any
other provision as same relates to the rights or obligations of such
Administrative Agent or (D) without the consent of Chase, 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 14.12,
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 14.12(a).
14.13 Survival. All indemnities set forth herein including,
without limitation, in Sections 1.11, 1.12, 2.06, 4.04, 13.06, 14.01 and 14.06
shall survive the execution and delivery of this Agreement and the Notes and the
making and repayment of the Loans.
14.14 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.
14.15 Register. The Borrower hereby designates the
Administrative Agent to serve as the Borrower's agent, solely for purposes of
this Section 14.15, 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
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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 14.04(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 14.15, except to the extent caused by the Administrative Agent's
gross negligence or willful misconduct.
14.16 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 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.
14.17 Post-Closing Matters. (a) Notwithstanding anything to
the contrary contained in this Agreement as amended by the Fifth Amendment or
the Security Documents, the parties hereto acknowledge and agree that within
sixty days of the Fifth Amendment Effective Date, the Borrower will, or will
cause its respective Subsidiary to, deliver to the Collateral Agent fully
executed counterparts of all the Post-Closing Mortgages that are identified on
Schedule IX, and counterparts of such Post-Closing Mortgages shall have been
duly recorded in all places to the extent necessary or, in the judgment of the
Collateral Agent, desirable, effectively to create a valid and enforceable first
priority mortgage Lien (or second priority Lien, as the case may be) in favor of
the Collateral Agent (or such other trustee as may be required or desirable
under local law) for the benefit of the
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Banks, which Lien shall be subject only to (x) the Permanent Mortgage Financing,
(y) any Permitted Mortgage Financing and (z) other Permitted Liens and Permitted
Encumbrances. In addition, the Collateral Agent shall have received mortgage
title insurance policies and surveys in form and substance reasonably
satisfactory to the Collateral Agent and covering the aforementioned
Post-Closing Mortgaged Properties.
(b) On or prior to the date occurring 30 days after the Fifth
Amendment Effective Date, the Borrower shall have caused SMC Aviation, Inc. to
duly authorize, execute and deliver an Aircraft Mortgage covering the aircraft
then owned by such Person, together with evidence of filing for recording with
the Federal Aviation Administration of such Aircraft Mortgage and any other
evidence that all other actions necessary or, in the reasonable opinion of the
Collateral Agent, desirable, to perfect and protect the security interests
purported to be created by such Aircraft Mortgage have been taken, together with
an opinion of counsel relating to the foregoing.
All conditions precedent and representations contained in this
Agreement and the other Credit Documents shall be deemed modified to the extent
necessary to effect the foregoing (and to permit the satisfaction of the
conditions described above within the time periods required above, rather than
as elsewhere provided in the Credit Documents); provided that (x) to the extent
any representation and warranty would not be true because any actions required
by this Section 14.17 were not taken on the Fifth Amendment Effective Date, the
respective representation and warranty shall be required to be true and correct
in all material respects at the time the respective action is taken (or was
required to be taken in accordance with the foregoing provisions of this Section
14.17) and (y) all representations and warranties relating to the Security
Documents shall be required to be true immediately after the actions required to
be taken by this Section 14.17 have been taken (or were required to be taken).
The acceptance of the benefits of each Credit Event shall constitute a
representation, warranty and covenant by the Borrower to each of the Banks that
the actions required pursuant to this Section 14.17 will be taken within the
relevant time periods referred to in this Section 14.17 and that, at such time,
all representations and warranties contained in this Agreement and the other
Credit Documents shall then be true and correct without any modification
pursuant to this Section 14.17.
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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/ Sam 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> 156
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> 157
National Banking Department THE BANK OF TOKYO
1251 6th Avenue, 12th Floor TRUST 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
<PAGE> 158
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 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
New York, NY 10167 JAPAN, LIMITED -
Attn: Mr. Jim Welch NEW YORK BRANCH
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) 659-7210
Telecopy: (404) 658-9751
<PAGE> 159
140 Broadway MIDLAND BANK PLC
New York, NY 10005
Attn: Ms. Gina Sidorsky
Telephone: (212) 658-2750 By /s/ Gina Sidorsky
----------------------
Telecopy: (212) 658-2586 Title: Director
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
<PAGE> 160
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
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> 161
640 5th Avenue BANK OF IRELAND, CAYMAN
BRANCH
New York, NY 10019
Attn: Mr. Roger Burns
By /s/ Roger Burns
Telephone: (212) 397-1712 -----------------------
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
<PAGE> 162
SCHEDULE I
to
Credit Agreement
----------------
BANK COMMITMENTS
<TABLE> ----------------
<CAPTION>
Bank Commitment
- ---- ----------
<S> <C>
Chemical Bank $35,000,000
The Industrial Bank of Japan,
Limited - New York Branch 35,000,000
The First National Bank of Boston 35,000,000
The Bank of Tokyo Trust Company 35,000,000
Canadian Imperial Bank of Commerce 35,000,000
The Mitsubishi Bank, Limited -
New York Branch 35,000,000
Comerica Bank 30,000,000
The Fuji Bank, Ltd. 30,000,000
The Bank of New York 26,000,000
LTCB Trust Company 26,000,000
Midland Bank PLC 26,000,000
The Sakura Bank, Limited 26,000,000
The Bank of Montreal 20,000,000
The Mitsubishi Trust and
Banking Corporation 20,000,000
NationsBank of North Carolina, N.A. 20,000,000
The Nippon Credit Bank, Ltd. 17,000,000
The Tokai Bank, Ltd. New York Branch 17,000,000
Westdeutsche Landesbank Girozentrale 17,000,000
Arab Banking Corporation 15,000,000
ABN AMRO BANK N.V., Atlanta Agency 15,000,000
The Daiwa Bank, Limited 15,000,000
Dresdner Bank AG, New York Branch 15,000,000
Banque Paribas 15,000,000
Bank of Ireland, Cayman Branch 10,000,000
The Hokkaido Takushoku Bank, Ltd. 10,000,000
Midlantic National Bank 10,000,000
The Sumitomo Bank, Limited
Atlanta Agency 10,000,000
------------
Total $600,000,000
</TABLE>
<PAGE> 163
SCHEDULE II
to
Credit Agreement
EXISTING LETTERS OF CREDIT
<PAGE> 164
SCHEDULE III
to
Credit Agreement
UNDISCLOSED LIABILITIES
None
<PAGE> 165
SCHEDULE IV
to
Credit Agreement
ERISA
None
<PAGE> 166
SCHEDULE V
to
Credit Agreement
----------------
<TABLE>
<CAPTION>
SUBSIDIARIES
------------
<S> <C> <C>
Borrower's
Percentage
Ownership
(Direct and
Indirect) of Direct Owner
Each Class of Subsidiary's
Name of Subsidiary Capital Stock Capital Stock
- ------------------ ------------- -------------
</TABLE>
<PAGE> 167
SCHEDULE VI
to
Credit Agreement
PART A
ENVIRONMENTAL LICENSES, PERMITS AND REGISTRATIONS
None
PART B
ENVIRONMENTAL PROCEEDINGS
None
<PAGE> 168
SCHEDULE VII
to
Credit Agreement
INSURANCE
<PAGE> 169
SCHEDULE VIII
to
Credit Agreement
EXISTING LIENS
<PAGE> 170
SCHEDULE IX
to
Credit Agreement
PROPERTIES
<PAGE> 171
SCHEDULE X
to
Credit Agreement
THE 1997 RESTRUCTURING PROGRAM DESCRIPTION OF CHARGES
CHARGE DESCRIPTION
STORE CLOSINGS
Write-down of inventory Write-down to below cost
associated with closed
store inventory
Termination of leases Estimate of termination
costs, differential
between rent expenses and
sublease income
Disposal of FFE Write-off of entire book
value
Disposal of owned stores Estimate of loss from
sale below book value
DISPOSAL OF SURPLUS PROPERTIES Write-off book value
of vacant properties
REMERCHANDISING
Write-down of inventory Write-down to below cost
associated with exiting
product lines
RELATED EXPENSES
Write-off of trademarks Write-off book value of
unused trademark and
basket for other expenses
Disposal of surplus properties Expenses in connection
with the write off of
surplus or vacant
properties
TOTAL ESTIMATED CHARGES $175 million
------------
<PAGE> 172
SCHEDULE XI
to
Credit Agreement
EXISTING INDEBTEDNESS AS OF THE FIFTH
AMENDMENT EFFECTIVE DATE
<PAGE> 173
SCHEDULE XII
to
Credit Agreement
SUBSIDIARIES AS OF THE FIFTH AMENDMENT EFFECTIVE DATE
<PAGE> 174
SCHEDULE XIII
to
Credit Agreement
EXISTING LIENS AS OF THE FIFTH AMENDMENT EFFECTIVE DATE
<PAGE> 1
EXHIBIT 11
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
Computation of Net Loss Per Common Share (Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
First Quarter Ended
----------------------
March 30 March 31
1997 1996
--------- ---------
<S> <C> <C>
Primary
- -------
Net loss $(107,217) $ (24,715)
========= =========
Shares:
Weighted average common shares outstanding 99,259 99,184
Weighted average shares of restricted
stock outstanding 499 520
Additional shares assuming exercise of stock options 369 1,662
--------- ---------
Weighted average common shares and common
share equivalents outstanding - primary 100,127 101,366
========= =========
Primary net loss per common share $ (1.07) $ (0.24)
========= =========
Assuming Full Dilution
- ----------------------
Net loss $(107,217) $ (24,715)
========= =========
Shares:
Weighted average common shares outstanding 99,259 99,184
Weighted average shares of restricted
stock outstanding 499 520
Additional shares assuming exercise of stock options 369 1,674
--------- ---------
Weighted average common shares and common
share equivalents outstanding - fully diluted 100,127 101,378
========= =========
Fully diluted net loss per common share $ (1.07) $ (0.24)
========= =========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE SERVICE
MERCHANDISE COMPANY, INC. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 30,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
DETAILED IN PART I OF THE FORM 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-28-1997
<PERIOD-START> DEC-30-1996
<PERIOD-END> MAR-30-1997
<CASH> 29,168
<SECURITIES> 0
<RECEIVABLES> 49,001
<ALLOWANCES> 3,409
<INVENTORY> 1,078,051
<CURRENT-ASSETS> 1,224,944
<PP&E> 1,179,915
<DEPRECIATION> 620,459
<TOTAL-ASSETS> 1,810,214
<CURRENT-LIABILITIES> 730,534
<BONDS> 684,365
0
0
<COMMON> 99,758<F1>
<OTHER-SE> 270,213
<TOTAL-LIABILITY-AND-EQUITY> 1,810,214
<SALES> 686,400
<TOTAL-REVENUES> 686,400
<CGS> 531,640
<TOTAL-COSTS> 531,640
<OTHER-EXPENSES> 179,836<F2>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 16,962
<INCOME-PRETAX> (171,548)
<INCOME-TAX> (64,331)
<INCOME-CONTINUING> (107,217)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (107,217)
<EPS-PRIMARY> (1.07)
<EPS-DILUTED> (1.07)
<FN>
<F1>AMOUNT REPRESENTS THE NUMBER OF SHARES OF $0.50 PAR VALUE COMMON STOCK
ISSUED AND OUTSTANDING.
<F2>AMOUNT INCLUDES I) DEPRECIATION AND AMORTIZATION AND II) SELLING, GENERAL
AND ADMINISTRATIVE EXPENSES.
</FN>
</TABLE>
