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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 25, 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 number 1-13380
-------
OFFICEMAX, INC.
---------------
(Exact name of registrant as specified in its charter)
OHIO 34-1573735
---- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3605 WARRENSVILLE CENTER ROAD, SHAKER HEIGHTS, OHIO 44122
---------------------------------------------------------
(Address of principal executive offices)
(zip code)
(216) 921-6900
--------------
(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 .
--- ---
Title of Class Shares Outstanding as of
-------------- November 25, 1997
Common Shares -----------------
(without par value) 124,101,418
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OFFICEMAX, INC.
INDEX
Part I - Financial Information Page
- ------------------------------ ----
Item 1. Financial Statements 3-8
Item 2. Management's Discussion and Analysis of Financial 9-10
Condition and Results of Operations
Part II - Other Information
- ---------------------------
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
2
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PART I - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
- ------- - --------------------
<TABLE>
<CAPTION>
OFFICEMAX, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
October 25, January 25,
ASSETS 1997 1997
--------------- ---------------
Current assets:
<S> <C> <C>
Cash and equivalents $ 80,585 $ 258,111
Accounts receivable, net of allowances
of $845 and $861, respectively 82,278 24,072
Merchandise inventories 1,097,583 894,407
Other current assets 25,634 28,691
--------------- ---------------
Total current assets 1,286,080 1,205,281
Property and equipment:
Buildings and land 19,203 16,843
Leasehold improvements 172,035 167,527
Furniture and fixtures 270,997 224,582
--------------- ---------------
Total property and equipment 462,235 408,952
Less: Accumulated depreciation and amortization (157,480) (116,084)
--------------- ---------------
Property and equipment, net 304,755 292,868
Other assets and deferred charges 43,161 35,377
Goodwill, net of accumulated amortization
of $48,884 and $41,842, respectively 326,702 333,744
=============== ===============
$ 1,960,698 $ 1,867,270
=============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable - trade $ 561,822 $ 490,417
Accrued expenses and other liabilities 116,389 161,815
Accrued salaries and related expenses 39,796 32,504
Taxes other than income taxes 51,928 45,865
Revolving credit facility - -
Mortgage loan, current portion 1,300 1,300
--------------- ---------------
Total current liabilities 771,235 731,901
Mortgage loan 18,050 18,700
Other long-term liabilities 54,899 53,105
--------------- ---------------
Total liabilities 844,184 803,706
--------------- ---------------
Commitments and contingencies -- --
Shareholders' equity:
Common shares, without par value; 200,000,000 shares
authorized; 124,037,068 and 123,766,614 shares issued 856,730 854,094
and outstanding, respectively
Deferred stock compensation (450) (1,149)
Retained earnings 260,234 210,619
--------------- ---------------
Total shareholders' equity 1,116,514 1,063,564
=============== ===============
$ 1,960,698 $ 1,867,270
=============== ===============
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these balance sheets.
3
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<TABLE>
<CAPTION>
OFFICEMAX, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
(Unaudited)
13 Weeks Ended 39 Weeks Ended
------------------------------------ --------------------------------------
October 25, October 26, October 25, October 26,
1997 1996 1997 1996
---------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Sales $ 992,365 $ 859,781 $ 2,657,149 $ 2,212,508
Cost of merchandise sold, including
buying and occupancy costs 756,952 669,794 2,050,206 1,727,046
---------------- ----------------- ----------------- -----------------
Gross profit 235,413 189,987 606,943 485,462
Store operating and selling expenses 156,107 131,488 448,081 369,495
Pre-opening expenses 4,054 2,410 10,211 4,811
General and administrative expenses 21,980 16,641 62,048 46,741
Goodwill amortization 2,347 2,346 7,042 7,041
---------------- ----------------- ----------------- ------------------
Total operating expenses 184,488 152,885 527,382 428,088
Operating income 50,925 37,102 79,561 57,374
Interest income, net 438 1,635 1,507 6,060
---------------- ----------------- ----------------- ------------------
Income before income taxes 51,363 38,737 81,068 63,434
Income taxes 19,928 15,018 31,453 24,803
---------------- ----------------- ----------------- -----------------
Net income $ 31,435 $ 23,719 $ 49,615 $ 38,631
================ ================= ================= =================
EARNINGS PER COMMON SHARE DATA:
Earnings per common share $ 0.25 $ 0.19 $ 0.40 $ 0.31
================ ================= ================= =================
Weighted average number of
common shares outstanding 125,874,000 125,191,000 125,320,000 125,447,000
================ ================= ================= =================
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
4
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<TABLE>
<CAPTION>
OFFICEMAX, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
39 Weeks Ended
----------------------------------------
October 25, October 26,
1997 1996
----------------- ----------------
CASH PROVIDED BY (USED FOR):
<S> <C> <C>
OPERATIONS
Net income $ 49,615 $ 38,631
Adjustments to reconcile net income to net cash from
operating activities:
Depreciation and amortization 49,201 37,173
Increase (decrease) in deferred income taxes 891 (575)
Increase in other long-term liabilities 1,794 1,843
Other, net (3,282) 744
Change in current assets and current liabilities:
(Increase) in inventories (203,176) (218,982)
Increase in accounts payable 71,405 103,684
(Increase) in accounts receivable (58,206) (36,009)
Increase (decrease) in accrued liabilities 8,372 (42,192)
---------------- --------------
Net cash (used for) operations (83,386) (115,683)
---------------- --------------
INVESTING
Capital expenditures (92,314) (54,253)
Other, net (3,813) (1,332)
---------------- --------------
Net cash (used for) investing (96,127) (55,585)
---------------- --------------
FINANCING
Reduction in long term debt and capital lease obligations -- (16)
Payments of mortgage principal (650) --
Proceeds from issuance of common stock 2,637 2,687
---------------- --------------
Net cash provided by financing 1,987 2,671
---------------- --------------
CASH AND CASH EQUIVALENTS
Net (decrease) for the period (177,526) (168,597)
Balance, beginning of period 258,111 365,863
---------------- --------------
Balance, end of period $ 80,585 $ 197,266
================ ==============
SUPPLEMENTAL INFORMATION
Interest paid $ 1,120 $ --
================ ==============
Income taxes paid $ 35,789 $ 15,054
================ ==============
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
5
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<TABLE>
<CAPTION>
OFFICEMAX, INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(Dollars in thousands)
(Unaudited)
Common Shares Deferred
------------------------------- Stock Retained
Shares Amount Compensation Earnings Total
---------------- -------------- ----------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Balance at January 25, 1997 123,766,614 $ 854,094 $ (1,149) $ 210,619 $1,063,564
Issuance of common shares
under director plan 1,396 18 (18) -- --
Exercise of stock options 224,473 1,267 -- -- 1,267
Sale/(forfeiture) of shares
under management share (13,085) (88) -- -- (88)
purchase plan
Sale of shares under employee 57,670 1,439 -- -- 1,439
share purchase plan
Amortization of deferred -- -- 717 -- 717
compensation
Net income -- -- -- 49,615 49,615
---------------- -------------- ----------------- -------------- -------------
Balance at October 25, 1997 124,037,068 $ 856,730 $ (450) $ 260,234 $1,116,514
================ ============== ================= ============== =============
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
6
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OFFICEMAX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 13 AND 39 WEEKS ENDED
OCTOBER 25, 1997 AND OCTOBER 26, 1996
Significant Accounting and Reporting Policies
- ---------------------------------------------
1. The accompanying consolidated financial statements have been prepared from
the financial records of OfficeMax, Inc. and its subsidiaries (the
"Company" or "OfficeMax") without audit and reflect all adjustments which
are, in the opinion of management, necessary to fairly present the results
of the interim periods covered in this report. The results for any interim
period are not necessarily indicative of the results to be expected for the
full fiscal year.
2. The Company's consolidated financial statements for the 13 and 39 weeks
ended October 25, 1997 and October 26, 1996 included in this Quarterly
Report on Form 10-Q, have been prepared in accordance with the accounting
policies described in the Notes to Consolidated Financial Statements for
the fiscal year ended January 25, 1997 which were included in the Company's
Annual Report on Form 10-K filed with the Securities and Exchange
Commission (File No. 1-13380) on April 24, 1997. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted in accordance with the rules and regulations of the
Securities and Exchange Commission. These financial statements should be
read in conjunction with the financial statements and the notes thereto
included in the Form 10-K referred to above. Certain reclassifications have
been made to prior year amounts to conform to the current presentation.
3. The Company's fiscal year ends on the Saturday prior to the last Wednesday
in January.
4. At October 25, 1997, the Company operated a chain of 659 office products
superstores, two call centers and 17 catalog delivery centers in over 260
markets, 48 states and Puerto Rico.
5. The Company's policy is to expense pre-opening expenses during the first
month of each new store's operation. Consequently, pre-opening expense in
each period is generally a function of the number of new stores opened
during that period.
6. The average common and common equivalent shares utilized in computing
earnings per share for the 13 and 39 weeks ended October 25, 1997 include
1,850,092 and 1,362,410 shares, respectively, resulting from the
application of the treasury stock method to outstanding stock options.
7. On July 3, 1997, the Company entered into a five year, $500,000,000
revolving credit facility with a group of 23 banks, including The Bank of
New York as the administrative agent and KeyBank National Association as
the documentation agent. The revolving credit facility provides for
borrowings bearing an interest rate at the bank's prime or Eurodollar rate
plus .1450% to .3125% (fixed at .16% for the first year). In addition, the
Company must also pay quarterly fees on the full amount of the revolving
credit facility, fixed for the first year at .09% per annum, and varying
between .08% and .1875% per annum for years two through five. This credit
facility replaced the Company's $100,000,000 agreement.
8. A receivable, valued at $19,000,000 and $15,000,000 on October 25, 1997 and
January 25, 1997, respectively, has been recorded in other assets. The
Company has recorded this receivable based on management's and outside
legal counsel's interpretation of the terms and conditions of a terminated
service contract.
9. The Company is required to adopt the Statement of Financial Accounting
Standards No. 128, "Earnings Per Share" (SFAS 128), for the period ended
January 24, 1998. Earlier application is not permitted. SFAS 128 specifies
the computation, presentation and disclosure requirements for earnings per
share. The Company does
7
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not believe that the adoption of SFAS 128 will have a material effect on
the Company's method of calculation or display of earnings per share
amount.
10. In June 1997, Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related Information" (SFAS
131) was issued. The statement is effective for fiscal years beginning
after December 15, 1997. SFAS 131 establishes standards for reporting
information about operating segments in annual reports and selected
information in interim financial reports. It also establishes standards for
related disclosures about products and services, geographic areas and major
customers. Operating segments are defined as enterprises for which separate
financial information is available that is evaluated regularly by the chief
operating decision maker in deciding how to allocate resources and in
assessing performance. The Company has not determined the impact, if any,
that SFAS 131 will have on its consolidated financial statements and
disclosures.
11. On November 12, 1997, the Company's Board of Directors authorized the
Company to purchase up to $100,000,000 of its common shares in open market
transactions.
8
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ITEM 2. MANAGEMENT'S DISSCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
- --------------------------------------------------------------------------------
OF OPERATIONS
- -------------
RESULTS OF OPERATIONS
- ---------------------
SALES for the 13 and 39 weeks ended October 25, 1997 increased 15% and 20% to
$992,365,000 and $2,657,149,000, respectively, from $859,781,000 and
$2,212,508,000 for the comparable periods a year earlier. These sales increases
were primarily attributable to a full period of sales from the 96 stores opened
during fiscal 1996, the additional sales from 96 new superstores opened at
various points during the 39-week period and a comparable store sales increase
of 2% for the 39-week period. Same-store sales for the 13 weeks, excluding
computers, increased 3% over last year's third quarter. Comparable store sales
for the 13 weeks, including computers, which were adversely affected by
declining retail prices and the Company's deliberate decision to drastically
curtail "giveaway" price promotions this year versus last year, resulted in a
same-store sales decline of 2%.
COST OF MERCHANDISE SOLD, INCLUDING BUYING AND OCCUPANCY COSTS, decreased as a
percentage of sales to 76.3% and 77.2% for the 13 and 39 weeks ended October 25,
1997, respectively, from 77.9% and 78.1% of sales for the same periods a year
earlier. Correspondingly, gross profit for the 13 and 39 week periods ended
October 25, 1997, was 23.7% and 22.8%, respectively, as compared to 22.1% and
21.9% for the same periods a year earlier. The increase in gross profit was
primarily attributable to reductions in the number of giveaway computer
promotions this year versus last year and the enhanced marketing of higher
margin office supply items and furniture.
STORE OPERATING AND SELLING EXPENSES, which consist primarily of store payroll,
operating and advertising expenses, increased as a percentage of sales to 15.7%
and 16.9% for the 13 and 39 weeks ended October 25, 1997, respectively, from
15.3% and 16.7% of sales for the same periods a year earlier. The Company
experienced a decrease in leverage of these items primarily due to the greater
number of immature stores as the percentage of stores opened less than one year
increased from 17% to 22%. New stores typically begin to leverage the fixed cost
components in their second year of operations. This increase in costs was
partially offset by improved leveraging of advertising expenses as the Company
opened additional stores in existing markets.
PRE-OPENING EXPENSE was $4,054,000 and $10,211,000 for the 13 and 39 weeks ended
October 25, 1997, respectively, as compared to $2,410,000 and $4,811,000 for the
same periods a year earlier, reflecting the opening of 39 and 96 superstores
during the 13 and 39 weeks ended October 25, 1997, respectively, compared to 24
and 49 for the same periods a year earlier. Pre-opening expenses increased to an
average of approximately $85,000 per store for the current year from the $75,000
incurred in the prior year. This increase is due to the Company's business
decision to accelerate certain training and other costs to facilitate higher
levels of customer service when the store opens. Pre-opening expenses consist
primarily of store payroll, supplies and grand opening advertising. For the 39
weeks ended October 25, 1997, the Company also opened 36 FurnitureMax hubs and
43 CopyMax hubs, for which pre-opening expenses averaged approximately $25,000
and $35,000, respectively, per store.
GENERAL AND ADMINISTRATIVE EXPENSES were 2.2% and 2.3% of sales for the 13 and
39 weeks ended October 25, 1997, respectively, as compared to 1.9% and 2.1% of
sales for the same periods a year earlier, as a result of the Company continuing
to enhance its management team and infrastructure to support the planned growth
both in the United States and internationally.
GOODWILL AMORTIZATION was $2,347,000 and $7,042,000 for the 13 and 39 weeks
ended October 25, 1997, respectively, as compared to $2,346,000 and $7,041,000
for the same periods a year earlier. Goodwill is capitalized and amortized over
40 years using the straight-line method.
9
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OPERATING INCOME increased to $50,925,000 and $79,561,000 or 5.1% and 3.0% of
sales, for the 13 and 39 weeks ended October 25, 1997, respectively, as compared
to operating income of $37,102,000 and $57,374,000, or 4.3% and 2.6% of sales,
for the same periods a year earlier.
INTEREST INCOME, NET was $438,000 and $1,507,000 for the 13 and 39 weeks ended
October 25, 1997, respectively, as compared to $1,635,000 and $6,060,000 for the
same periods a year earlier. Interest income decreased due to the Company's use
of cash and equivalents to fund the aggressive expansion plans and seasonal
inventory requirements.
INCOME TAXES were $19,928,000 and $31,453,000 for the 13 and 39 weeks ended
October 25, 1997, respectively, as compared to $15,018,000 and $24,803,000 for
the same periods a year ago. The effective tax rates are different from the
federal statutory income tax rate primarily as a result of goodwill
amortization, tax exempt interest, and state and local taxes.
NET INCOME as a result of the foregoing factors, was $31,435,000 and $49,615,000
for the 13 and 39 weeks ended October 25, 1997, respectively, as compared to
$23,719,000 and $38,631,000 for the same periods a year earlier.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Net cash used for operations for the 39 weeks ended October 25, 1997 was
$83,386,000. Major uses of working capital included increases in inventory and
an increase in the accounts receivable balance. The inventory increase was
attributable to seasonal inventory buys and new store openings while the
increase in accounts receivable was due to additional funding from vendors as a
result of higher merchandise purchase volumes and the fact that most funding is
collected at year end. Net cash used for investing activities was $96,127,000,
principally due to capital expenditures for new and remodeled stores as well as
the Company's continued investment in systems. Net cash received from financing
was $1,987,000, primarily representing net proceeds received from the sale of
shares under the Company's share purchase plans.
During the 13 weeks ending January 24, 1998, the Company plans to open
approximately 54 new OfficeMax superstores, 14 new FurnitureMax stores, 13 new
CopyMax stores and remodel 8 existing superstores. Management estimates that the
Company's cash requirements for these openings and remodels, exclusive of
pre-opening expenses, will be approximately $1,200,000, $215,000, $430,000, and
$196,000, respectively, for each additional OfficeMax, FurnitureMax, CopyMax,
and store remodel. For an OfficeMax superstore, the requirements include an
average of approximately $450,000 for leasehold improvements, fixtures,
point-of-sales terminals and other equipment, and approximately $750,000 for the
portion of store inventory that is not financed by accounts payable to vendors.
Pre-opening expenses are expected to average approximately $85,000 for an
OfficeMax superstore, $25,000 for a FurnitureMax store and $35,000 for a CopyMax
store.
On November 12, 1997, the Company's Board of Directors authorized the Company to
purchase up to $100,000,000 of its common shares in open market transactions. As
of November 25, 1997, the Company had not purchased any common shares. The
Company will reissue the acquired shares to satisfy its obligations under
certain of its equity-based employee plans. Future purchases of common shares
will depend on the Company's cash position and market conditions.
In order to finance its operations and capital requirements, including its
expansion strategy, the Company expects to use funds generated from operations
as well as its current cash reserves, and, to the extent necessary, seasonal
short-term borrowings. The Company has available through June 2002 a
$500,000,000 revolving credit facility. As of October 25, 1997, the Company had
no outstanding debt associated with the revolving credit facility.
The Company's business is seasonal to a certain extent, with the fourth quarter
of each year accounting for approximately 30% of sales and 40% of earnings for
the full year. Sales are the slowest during the May through July second quarter,
primarily because of lower consumption of office supplies during the summer
vacation period.
10
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PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
Exhibits:
(a) Exhibits:
10.1 Credit agreement dated as of July 3, 1997, by and
among OfficeMax, Inc., the lenders party thereto,
the co-agents party thereto, KeyBank National
Association, as documentation agent, and The Bank
of New York, as administrative agent and as swing
line lender
27.0 Financial Data Schedule for the period ended
October 25, 1997
(b) Reports on Form 8-K: None
11
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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.
OFFICEMAX, INC.
Date: December 4, 1997 By: /s/ Jeffrey L. Rutherford
---------------------------------------
Jeffrey L. Rutherford
Senior Vice President,
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
12
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================================================================================
CREDIT AGREEMENT
BY AND AMONG
OFFICEMAX, INC.,
THE LENDERS PARTY HERETO,
THE CO-AGENTS PARTY HERETO,
KEYBANK NATIONAL ASSOCIATION, AS DOCUMENTATION AGENT
AND
THE BANK OF NEW YORK, AS ADMINISTRATIVE AGENT
AND AS SWING LINE LENDER
----------------
$500,000,000
----------------
DATED AS OF JULY 3, 1997
ARRANGED BY: BNY CAPITAL MARKETS, INC.
- --------------------------------------------------------------------------------
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TABLE OF CONTENTS
<TABLE>
<S> <C>
1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION ............................................................ 1
1.1. Definitions .................................................................................... 1
1.2. Principles of Construction .................................................................... 19
2. AMOUNT AND TERMS OF LOANS AND LETTERS OF CREDIT ...................................................... 20
2.1. Revolving Credit Loans ........................................................................ 20
2.2. Revolving Credit Notes ........................................................................ 20
2.3. Swing Line Loans .............................................................................. 20
2.4. Swing Line Note ............................................................................... 22
2.5. Procedure for Borrowing ....................................................................... 22
2.6. Competitive Bid Procedure ..................................................................... 24
2.7. Termination or Reduction of Commitments ....................................................... 27
2.8. Prepayments of the Loans ...................................................................... 27
2.9. Use of Proceeds ............................................................................... 28
2.10. Letter of Credit Sub-Facility ................................................................ 28
2.11. Letter of Credit Participation and Funding
Commitments .................................................................................. 29
2.12. Absolute Obligation With Respect to Letter of
Credit Payments .............................................................................. 30
2.13. Payments ..................................................................................... 31
2.14. Cash Collateral Account ...................................................................... 31
2.15. Extension of Maturity Date ................................................................... 32
3. INTEREST, FEES, YIELD PROTECTIONS, ETC. .............................................................. 33
3.1. Interest Rate and Payment Dates ............................................................... 33
3.2. Fees .......................................................................................... 34
3.3. Conversions ................................................................................... 35
3.4. Concerning Eurodollar Interest Periods and
Swing Line Interest Periods ................................................................... 36
3.5. Indemnification for Loss ...................................................................... 37
3.6. Capital Adequacy .............................................................................. 37
3.7. Reimbursement for Increased Costs ............................................................. 38
3.8. Illegality of Funding ......................................................................... 38
3.9. Substituted Interest Rate ..................................................................... 39
3.10. Taxes ........................................................................................ 39
3.11. Option to Fund ............................................................................... 41
3.12. Replacement of Lenders ....................................................................... 41
4. REPRESENTATIONS AND WARRANTIES ....................................................................... 42
4.1. Subsidiaries; Capitalization .................................................................. 42
4.2. Existence and Corporate Power ................................................................. 42
4.3. Authority and Execution ....................................................................... 43
4.4. Binding Agreement ............................................................................. 43
</TABLE>
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<TABLE>
<S> <C>
4.5. Litigation .................................................................................... 43
4.6. Required Consents ............................................................................. 43
4.7. Absence of Defaults; No Conflicting Agreements ................................................ 43
4.8. Compliance with Applicable Laws ............................................................... 44
4.9. Taxes ......................................................................................... 44
4.10. Governmental Regulations ..................................................................... 44
4.11. Federal Reserve Regulations; Use of Loan
Proceeds ..................................................................................... 44
4.12. Plans ........................................................................................ 45
4.13. Financial Statements ......................................................................... 45
4.14. Property ..................................................................................... 45
4.15. Authorizations ............................................................................... 46
4.16. Environmental Matters ........................................................................ 46
4.17. Absence of Certain Restrictions .............................................................. 46
4.18. No Misrepresentation ......................................................................... 46
5. CONDITIONS TO EFFECTIVENESS .......................................................................... 47
5.1. Evidence of Corporate Action .................................................................. 47
5.2. This Agreement ................................................................................ 47
5.3. Notes ......................................................................................... 47
5.4. Absence of Litigation ......................................................................... 47
5.5. Approvals and Consents ........................................................................ 48
5.6. KeyBank Loan Documents ........................................................................ 48
5.7. Financial Officer's Certificate ............................................................... 48
5.8. Opinion of Counsel to the Borrower and its
Subsidiaries .................................................................................. 48
5.9. Opinion of Special Counsel .................................................................... 48
5.10. Fees and Expenses ............................................................................ 48
5.11. Other Documents .............................................................................. 49
6. CONDITIONS OF LENDING - ALL LOANS AND LETTERS OF
CREDIT ............................................................................................... 49
6.1. Compliance .................................................................................... 49
6.2. Borrowing Request; Letter of Credit Request ................................................... 49
7. AFFIRMATIVE COVENANTS ................................................................................ 49
7.1. Financial Statements and Information .......................................................... 50
7.2. Certificates; Other Information ............................................................... 50
7.3. Legal Existence ............................................................................... 51
7.4. Taxes ......................................................................................... 51
7.5. Insurance ..................................................................................... 52
7.6. Performance of Obligations .................................................................... 52
7.7. Condition of Property ......................................................................... 52
7.8. Observance of Legal Requirements .............................................................. 52
7.9. Inspection of Property; Books and Records;
Discussions ................................................................................... 52
7.10. Authorizations ............................................................................... 53
7.11. Financial Covenants .......................................................................... 53
</TABLE>
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<TABLE>
<S> <C>
8. NEGATIVE COVENANTS ................................................................................... 53
8.1. Subsidiary Indebtedness ....................................................................... 53
8.2. Liens ......................................................................................... 53
8.3. Merger or Consolidation, Etc. ................................................................. 54
8.4. Acquisitions .................................................................................. 55
8.5. Dispositions .................................................................................. 55
8.6. Investments, Loans, Etc. ...................................................................... 55
8.7. Restricted Payments ........................................................................... 56
8.8. Nature of Business ............................................................................ 56
8.9. ERISA ......................................................................................... 57
8.10. Amendments, Etc. of Certain Agreements ....................................................... 57
8.11. Transactions with Affiliates ................................................................. 57
8.12. Limitation on Upstream Dividends by Domestic
Subsidiaries ................................................................................. 57
8.13. Limitation on Negative Pledges ............................................................... 58
9. DEFAULT .............................................................................................. 58
9.1. Events of Default ............................................................................. 58
9.2. Contract Remedies ............................................................................. 60
10. THE ADMINISTRATIVE AGENT ............................................................................ 61
10.1. Appointment .................................................................................. 61
10.2. Delegation of Duties ......................................................................... 61
10.3. Exculpatory Provisions ....................................................................... 61
10.4. Reliance by the Administrative Agent ......................................................... 62
10.5. Notice of Default ............................................................................ 62
10.6. Non-Reliance on the Administrative Agent and
Other Lenders ................................................................................ 62
10.7. Indemnification .............................................................................. 63
10.8. Administrative Agent in Its Individual
Capacity ..................................................................................... 64
10.9. Successor Administrative Agent ............................................................... 64
10.10. Documentation Agent; Co-Agents .............................................................. 64
11. OTHER PROVISIONS .................................................................................... 65
11.1. Amendments and Waivers ....................................................................... 65
11.2. Notices ...................................................................................... 66
11.3. No Waiver; Cumulative Remedies ............................................................... 67
11.4. Survival of Representations and Warranties
and Certain Obligations ...................................................................... 68
11.5. Expenses ..................................................................................... 68
11.6. Lending Offices .............................................................................. 69
11.7. Successors and Assigns ....................................................................... 69
11.8. Indemnity .................................................................................... 71
11.9. Counterparts ................................................................................. 71
</TABLE>
<PAGE> 5
<TABLE>
<S> <C>
11.10. Adjustments; Set-off ........................................................................ 72
11.11. Construction ................................................................................ 73
11.12. Governing Law ............................................................................... 73
11.13. Headings Descriptive ........................................................................ 73
11.14. Severability ................................................................................ 73
11.15. Integration ................................................................................. 73
11.16. Consent to Jurisdiction ..................................................................... 73
11.17. Service of Process .......................................................................... 74
11.18. No Limitation on Service or Suit ............................................................ 74
11.19. WAIVER OF TRIAL BY JURY ..................................................................... 74
11.20. Confidentiality ............................................................................. 74
</TABLE>
EXHIBITS
- --------
Exhibit A List of Commitments
Exhibit B-1 Form of Revolving Credit Note
Exhibit B-2 Form of Swing Line Note
Exhibit B-3 Form of Competitive Bid Note
Exhibit C-1 Form of Borrowing Request
Exhibit C-2 Form of Letter of Credit Request
Exhibit D Form of Notice of Conversion
Exhibit E Form of Compliance Certificate
Exhibit F Form of Opinion of Counsel to the Borrower and its
Subsidiaries
Exhibit G Form of Opinion of Special Counsel
Exhibit H Form of Assignment and Acceptance Agreement
Exhibit I Form of Competitive Bid Request
Exhibit J Form of Invitation to Bid
Exhibit K Form of Competitive Bid
Exhibit L Form of Competitive Bid Accept/Reject Letter
Exhibit M Form of Extension Request
SCHEDULES
- ---------
Schedule 1.1 List of Existing Letters of Credit
Schedule 4.1 List of Subsidiaries; Capitalization
Schedule 4.5 List of Litigation
Schedule 8.1 List of Existing Subsidiary Indebtedness
Schedule 8.2 List of Existing Liens
Schedule 8.6 List of Existing Investments
Schedule 8.11 Exceptions to Section 8.11
Schedule 11.2 List of Addresses for Notice
<PAGE> 6
CREDIT AGREEMENT, dated as of July 3, 1997, by and among OFFICEMAX,
INC., an Ohio corporation (the "BORROWER"), the lenders party hereto (together
with the Swing Line Lender and their respective assigns, the "LENDERS", each a
"LENDER"), the Co-Agents party hereto (each, a "CO-AGENT" and, collectively, the
"CO-AGENTS"), KEYBANK NATIONAL ASSOCIATION ("KEYBANK"), as documentation agent
(in such capacity, the "DOCUMENTATION AGENT"), and THE BANK OF NEW YORK ("BNY"),
as agent for the Lenders (in such capacity, the "ADMINISTRATIVE AGENT"), and as
swing line lender (in such capacity, the "SWING LINE LENDER").
I. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION
------------------------------------------
A. Definitions
As used in this Agreement, terms defined in the preamble have
the meanings therein indicated, and the following terms have the following
meanings:
"ABR ADVANCES": the Revolving Credit Loans (or any portions
thereof), at such time as they (or such portions) are made and/or being
maintained at a rate of interest based upon the Alternate Base Rate.
"ACCOUNTANTS": Price Waterhouse LLP (or any successor
thereto), or such other firm of certified public accountants of recognized
national standing selected by the Borrower and reasonably satisfactory to the
Administrative Agent.
"ACCUMULATED FUNDING DEFICIENCY": as defined in Section 302 of
ERISA.
"ACQUISITION": with respect to any Person, the purchase or
other acquisition by such Person, by any means whatsoever (including through a
merger, dividend or otherwise and whether in a single transaction or in a series
of related transactions), of (i) any Capital Stock of any other Person if,
immediately thereafter, such other Person would be either a Subsidiary of such
Person or otherwise under the control of such Person, (ii) any business, going
concern or division or segment of any other Person, or (iii) any Property of any
other Person other than in the ordinary course of business, PROVIDED, HOWEVER,
that no acquisition of all or substantially all of the assets of such other
Person shall be deemed to be in the ordinary course of business.
"ADVANCE": an ABR Advance or a Eurodollar Advance, as the case
may be.
"AFFECTED ADVANCE": as defined in Section 3.9.
"AFFILIATE": as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person. For purposes of this definition, control of a Person
shall mean the power,
<PAGE> 7
direct or indirect, (i) to vote 10% or more of the securities or other interests
having ordinary voting power for the election of directors or other managing
Persons thereof or (ii) to direct or cause the direction of the management and
policies of such Person, whether by contract or otherwise.
"AGGREGATE CREDIT EXPOSURE": at any time, the sum at such time
of (i) the outstanding principal balance of the Revolving Credit Loans and
Competitive Bid Loans of all Lenders, PLUS (ii) the outstanding principal
balance of the Swing Line Loans, PLUS (iii) an amount equal to the Letter of
Credit Exposure of all Lenders.
"AGGREGATE REVOLVING CREDIT COMMITMENT AMOUNT": at any time,
the sum at such time of the Revolving Credit Commitment Amounts of all Lenders.
"AGREEMENT": this Credit Agreement, as the same may be
amended, supplemented or otherwise modified from time to time.
"ALTERNATE BASE RATE": on any date, a rate of interest per
annum equal to the higher of (i) the Federal Funds Rate in effect on such date
PLUS 1/2 of 1% or (ii) the BNY Rate in effect on such date.
"APPLICABLE FEE PERCENTAGE": with respect to the Facility Fee
and Letter of Credit Commissions, at all times during which the applicable
Pricing Level set forth below is in effect, the percentage set forth below next
to such Pricing Level and under the applicable column:
<TABLE>
Applicable Fee Percentage
-------------------------
<CAPTION>
Letter of
Facility Credit
Pricing Level Fee Commissions
------------- -------- -----------
<S> <C> <C>
Pricing Level I 0.0800% 0.1450%
Pricing Level II 0.0900% 0.1600%
Pricing Level III 0.1050% 0.1950%
Pricing Level IV 0.1250% 0.2500%
Pricing Level V 0.1875% 0.3125%.
</TABLE>
Changes in the Applicable Fee Percentage resulting from a
change in a Pricing Level shall be based upon the Compliance Certificate most
recently delivered pursuant to Section 7.1(c) and shall become effective on the
date such Compliance Certificate is delivered to the Administrative Agent and
the Lenders. Notwithstanding anything to the contrary contained in this
definition, (i) if, at any time and from time to time, the Borrower shall be in
Default of its obligations under Section 7.1(c), Pricing Level V shall apply
until such Default is cured, and (ii) during the period commencing on the
Effective Date and ending on the first anniversary thereof, Pricing Level II
shall apply.
"APPLICABLE MARGIN": with respect to the unpaid principal
balance of Eurodollar Advances, in each case at all times during which the
applicable Pricing Level set forth below is in effect, the percentage set forth
below next to such Pricing Level and under the applicable column:
<PAGE> 8
<TABLE>
<CAPTION>
Pricing Level Applicable Margin
------------- -----------------
<S> <C>
Pricing Level I 0.1450%
Pricing Level II 0.1600%
Pricing Level III 0.1950%
Pricing Level IV 0.2500%
Pricing Level V 0.3125%.
</TABLE>
Changes in the Applicable Margin resulting from a change in a
Pricing Level shall be based upon the Compliance Certificate most recently
delivered pursuant to Section 7.1(c) and shall become effective on the date such
Compliance Certificate is delivered to the Administrative Agent and the Lenders.
Notwithstanding anything to the contrary contained in this definition, (i) if,
at any time and from time to time, the Borrower shall be in Default of its
obligations under Section 7.1(c), Pricing Level V shall apply until such Default
is cured, and (ii) during the period commencing on the Effective Date and ending
on the first anniversary thereof, Pricing Level II shall apply.
"APPROVED BANK": any bank whose (or whose parent company's)
unsecured non-credit supported long-term debt rating from (i) Standard & Poor's
is at least A- or the equivalent thereof or (ii) Moody's is at least A3 or the
equivalent thereof and organized under the laws of the United States.
"ASSIGNMENT": as defined in Section 11.7(c).
"ASSIGNMENT AND ACCEPTANCE AGREEMENT": an assignment and
acceptance agreement executed by an assignor and an assignee, substantially in
the form of Exhibit H.
"AUTHORIZED SIGNATORY": as to (i) any Person which is a
corporation, the chairman of the board, the president, any vice president, the
chief financial officer or any other officer (acceptable to the Administrative
Agent) thereof and (ii) any Person which is not a corporation, the general
partner or other managing Person (acceptable to the Administrative Agent)
thereof.
"BENEFITTED LENDER": as defined in Section 11.10(a).
"BNY CAPITAL MARKETS": BNY Capital Markets, Inc.
"BNY RATE": a rate of interest per annum equal to the rate of
interest publicly announced in New York City by BNY from time to time as its
prime commercial lending rate, such rate to be adjusted automatically (without
notice) on the effective date of any change in such publicly announced rate.
<PAGE> 9
"BORROWING DATE": any Business Day on which (i) the Lenders
make Revolving Credit Loans in accordance with a Borrowing Request, (ii) one or
more Lenders make Competitive Bid Loans pursuant to Competitive Bids which have
been accepted by the Borrower, (iii) the Swing Line Lender makes one or more
Swing Line Loans, or (iv) any Issuing Bank issues a Letter of Credit.
"BORROWING REQUEST": a request for Revolving Credit Loans or a
Swing Line Loan in the form of Exhibit C-1.
"BUSINESS DAY": for all purposes other than as set forth in
clause (ii) below, (i) any day other than a Saturday, a Sunday or a day on which
commercial banks located in New York City are authorized or required by law or
other governmental action to close, and (ii) with respect to all notices and
determinations in connection with, and payments of principal and interest on,
Eurodollar Advances and Competitive Bid Index Rate Loans, any day which is a
Business Day described in clause (i) above and which is also a day on which
eurodollar funding between banks may be carried on in London, England.
"CAPITAL LEASE OBLIGATIONS": with respect to any Person,
obligations of such Person with respect to leases which are required to be
capitalized for financial reporting purposes in accordance with GAAP.
"CAPITAL STOCK": as to any Person, all shares, interests,
partnership interests, limited liability company interests, participations,
rights in or other equivalents (however designated) of such Person's equity
(however designated) and any rights, warrants or options exchangeable for or
convertible into such shares, interests, participations, rights or other equity.
"CASH COLLATERAL": as defined in Section 2.14.
"CASH COLLATERAL ACCOUNT": as defined in Section 2.14.
"CASH EQUIVALENTS": (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in full support thereof) having maturities of not
more than one year from the date of the issuance thereof, (ii) certificates of
deposit of or time deposits (including, without limitation, eurodollar deposits)
with, and bankers' acceptances issued by, (x) any Lender or (y) any Approved
Bank, in any such case with maturities of not more than one year from the date
of acquisition, (iii) commercial paper rated at least A-1 by Standard & Poor's
or P-1 by Moody's, in each case having a maturity at the time of issuance not
exceeding one year, (iv) marketable direct obligations issued by any state of
the United States of America or any political subdivision of any such state or
any public instrumentality thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either Standard & Poor's or Moody's, and (v)
investments in money market funds substantially all the assets of which are
comprised of securities of the types described in clauses (i) through (iv)
above.
"CHANGE OF CONTROL": the occurrence of any one or more of the
following
<PAGE> 10
events:
(i) Any person or group (other than the executive
officers of the Borrower as of the Effective Date and their respective immediate
family members, heirs, devisees, legatees or trusts for the benefit of any of
the foregoing):
(A) in the case of a transaction otherwise
permitted by Section 8.3(iii)(B) in which the Borrower becomes a wholly-owned
Subsidiary of another Person, shall have become the beneficial owner of more
than 33 1/3% of the outstanding voting stock of such other Person or shall
otherwise acquire the power (whether by contract, by proxy or otherwise) to
elect a majority of such Person's board of directors; or
(B) in all other cases, shall have become
the beneficial owner of more than 33 1/3% of the outstanding voting stock of the
Borrower or shall otherwise acquire the power (whether by contract, by proxy or
otherwise) to elect a majority of the Borrower's board of directors.
(ii) During any twelve month period:
(A) in the case of a transaction described
in clause (i)(A) above, Continuing Directors shall cease to constitute a
majority of the board of directors of such other Person; or
(B) in all other cases, individuals who were
Continuing Directors of the Borrower shall cease to constitute a majority of the
board of directors of the Borrower.
For purposes of this definition, (i) the terms "person",
"group", "executive officers" and "beneficial owner" shall have the meanings
ascribed thereto in the Exchange Act and (ii) the term "Continuing Directors"
shall mean (x) in the case of a transaction described in clause (i)(A) above,
individuals who were directors either of such other Person or of the Borrower at
the beginning of such twelve month period or were elected to the board of
directors of such other Person with the approval of a majority of the directors
of such other Person or, in the case of individuals who were elected either to
the board of directors of such other Person or of the Borrower within such
twelve month period and prior to the transaction described in clause (i)(A)
above, such individuals were elected with the approval of a majority of the
board of directors of either such other Person or the Borrower, and (y) in all
other cases, individuals who were directors of the Borrower at the beginning of
such period or were elected to the board or directors of the Borrower with the
approval of a majority of such directors.
"CODE": the Internal Revenue Code of 1986, as the same may be
amended from time to time, or any successor thereto, and the rules and
regulations issued thereunder, as from time to time in effect.
<PAGE> 11
"COMMITMENT PERCENTAGE": as to any Lender in respect of such
Lender's Commitment and its obligations with respect to Letters of Credit, the
percentage equal to such Lender's Revolving Credit Commitment Amount divided by
the Aggregate Revolving Credit Commitment Amount (or, if no Commitments then
exist, the percentage equal to such Lender's Revolving Credit Commitment Amount
on the last day upon which Commitments did exist divided by the Aggregate
Revolving Credit Commitment Amount on such day).
"COMMITMENTS": the Revolving Credit Commitment and the Swing
Line Commitment, each, a "COMMITMENT".
"COMPENSATORY INTEREST PAYMENT": as defined in Section 3.1(c).
"COMPETITIVE BID": an offer by a Lender, substantially in the
form of Exhibit K, to make a Competitive Bid Loan.
"COMPETITIVE BID ACCEPT/REJECT LETTER": a notification made by
the Borrower pursuant to Section 2.6(d), substantially in the form of Exhibit L.
"COMPETITIVE BID INDEX RATE LOAN": any Competitive Bid Loan
which is designated as a "Competitive Bid Index Rate Loan" in the Competitive
Bid applicable thereto.
"COMPETITIVE BID LOAN": each loan from a Lender to the
Borrower pursuant to Section 2.6.
"COMPETITIVE BID NOTE": as defined in Section 2.6(i).
"COMPETITIVE BID RATE": as to any Competitive Bid made by a
Lender pursuant to Section 2.6(b), (i) with respect to each Competitive Bid
Index Rate Loan, the applicable Eurodollar Rate therefor, PLUS or MINUS the
fixed margin or spread offered by such Lender with respect thereto as set forth
in such Competitive Bid, and (ii) with respect to each other Competitive Bid
Loan, the fixed rate of interest offered by such Lender with respect thereto as
set forth in such Competitive Bid.
"COMPETITIVE BID REQUEST": a request by the Borrower,
substantially in the form of Exhibit I, for Competitive Bids.
"COMPETITIVE INTEREST PERIOD": as to any Competitive Bid Loan,
the period commencing on the Borrowing Date with respect to such Competitive Bid
Loan and ending on the date requested in the Competitive Bid Request with
respect to such Competitive Bid Loan, which ending date (i) shall be one, two,
three or six months after such Borrowing Date, in the case of Competitive Bid
Index Rate Loans, and (ii) shall not be earlier than seven days after such
Borrowing Date or later than 180 after such Borrowing Date, in all other cases;
PROVIDED, HOWEVER, that (A) if any Competitive Interest Period would otherwise
end on a day which is not a Business Day, such Competitive Interest Period shall
be extended to the next succeeding Business Day, (1) unless such next succeeding
Business Day would be a date on or after the Maturity Date or such earlier date
upon which the Revolving Credit Commitments
<PAGE> 12
shall have been voluntarily terminated by the Borrower in accordance with
Section 2.7, in which event such Competitive Interest Period shall end on the
next preceding Business Day, and (2) in the case of Competitive Bid Index Rate
Loans, the result of such extension would be to carry such Competitive Interest
Period into another calendar month, in which event such Competitive Interest
Period shall end on the next preceding Business Day, and (B) no Competitive
Interest Period shall end after the Maturity Date or such earlier date upon
which the Revolving Credit Commitments shall have been voluntarily terminated by
the Borrower in accordance with Section 2.7. Interest shall accrue from and
including the first day of a Competitive Interest Period to, but excluding, the
last day of such Competitive Interest Period.
"COMPLIANCE CERTIFICATE": a certificate substantially in the
form of Exhibit E.
"CONFIDENTIAL INFORMATION": as defined in Section 11.20.
"CONSOLIDATED": the Borrower and its Subsidiaries on a
consolidated basis in accordance with GAAP.
"CONSOLIDATED EBITDA": for any period, net income of the
Borrower and its Subsidiaries, determined on a Consolidated basis in accordance
with GAAP for such period PLUS (i) the sum of, without duplication, each of the
following with respect to the Borrower and its Subsidiaries, to the extent
utilized in determining such net income for such period, (a) all interest
expense, (b) provision for income taxes, (c) depreciation, amortization and
other non-cash charges, (d) extraordinary losses from sales, exchanges and other
dispositions of Property (other than in the ordinary course of business) and (e)
other non-recurring expenses in connection with a Permitted Acquisition which
are disclosed separately in the Consolidated Statements of Income of the
Borrower and its Subsidiaries for such period, MINUS (ii) the sum of, without
duplication, each of the following with respect to the Borrower and its
Subsidiaries, to the extent utilized in determining such net income: (a)
extraordinary gains from sales, exchanges and other dispositions of Property not
in the ordinary course of business, and (b) other non-recurring items of income
in connection with a Permitted Acquisition.
"CONSOLIDATED NET RENTAL EXPENSE": for any period, all rental
expenses of the Borrower and its Subsidiaries (whether paid or accrued in cash)
arising from all capital leases and operating leases for such period MINUS all
sublease rental payments received or accrued in cash by the Borrower and its
Subsidiaries in respect of all capital leases and operating leases in respect of
which it is the lessor, in each case determined on a Consolidated basis in
accordance with GAAP.
"CONSOLIDATED NET WORTH": at any date of determination, the
sum of all amounts which would be included under "Stockholders' Equity" or any
analogous entry on a Consolidated balance sheet of the Borrower determined in
accordance with GAAP.
<PAGE> 13
"CONTINGENT INDEMNITY OBLIGATIONS": as defined in Section
11.4(b).
"CONTINGENT OBLIGATION": as to any Person (a "SECONDARY
OBLIGOR"), any obligation of such secondary obligor (i) guaranteeing or in
effect guaranteeing any return on any investment made by another Person, or (ii)
guaranteeing or in effect guaranteeing any Indebtedness, lease, dividend or
other obligation (a "PRIMARY OBLIGATION") of any other Person (a "PRIMARY
OBLIGOR") in any manner, whether directly or indirectly, including any
obligation of such secondary obligor, whether contingent, (a) to purchase any
primary obligation or any Property constituting direct or indirect security
therefor, (b) to advance or supply funds (A) for the purchase or payment of any
primary obligation or (B) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of a primary
obligor, (c) to purchase Property, securities or services primarily for the
purpose of assuring the beneficiary of any primary obligation of the ability of
a primary obligor to make payment of a primary obligation, (d) otherwise to
assure or hold harmless the beneficiary of a primary obligation against loss in
respect thereof, and (e) in respect of the liabilities of any partnership in
which a secondary obligor is a general partner, except to the extent that such
liabilities of such partnership are nonrecourse to such secondary obligor and
its separate Property, provided, however, that the term "Contingent Obligation"
shall not include the indorsement of instruments for deposit or collection in
the ordinary course of business. The amount of any Contingent Obligation of a
Person shall be deemed to be an amount equal to the stated or determinable
amount of a 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 as determined by such Person in good faith.
"CONTINUING LENDERS": as defined in Section 2.15.
"CONTROL PERSON": as defined in Section 3.6.
"CONVERSION DATE": the date on which: (i) a Eurodollar Advance
is converted to an ABR Advance, (ii) an ABR Advance is converted to a Eurodollar
Advance or (iii) a Eurodollar Advance is converted to a new Eurodollar Advance.
"CORESTATES": CoreStates Bank, N.A.
"CREDIT EXPOSURE": with respect to any Lender as at any time,
the sum at such time of (i) the outstanding principal balance of such Lender's
Revolving Credit Loans and (ii) the Swing Line Exposure of such Lender.
"DEFAULT": any event or condition which constitutes an Event
of Default or which, with the giving of notice, the lapse of time, or any other
condition, would, unless cured or waived, become an Event of Default.
"DEFAULTING LENDER": a Lender which shall not have made its
Commitment Percentage of a Revolving Credit Loan available to the Administrative
Agent in accordance with Section 2.3.
"DISPOSITION": with respect to any Person, any sale,
assignment,
<PAGE> 14
transfer or other disposition by such Person by any means, of: (i) the Capital
Stock of any other Person, (ii) any business, operating entity, division or
segment thereof, or (iii) any other Property of such Person, other than in the
ordinary course of business (it being understood that the sale of inventory in
connection with bulk transfers shall not be deemed to be in the ordinary course
of business), (x) the sale or other disposition of Property which in the
reasonable opinion of such Person is obsolete or no longer useful in the conduct
of its business, (y) the disposition of equipment and (z) the sale of
Investments described in Section 8.6(a), (f), (h) or (i) or in Section 8.6(b) to
the extent such Investments are of the types described in Section 8.6(a), (f),
(h) or (i).
"DOCUMENTARY LETTER OF CREDIT": any Letter of Credit issued by
an Issuing Bank hereunder in support of trade obligations of the Borrower
incurred in the ordinary course of business and that requires, as a condition to
drawing thereunder, the presentation to such Issuing Bank of negotiable bills of
lading, invoices or other documents as may be specified therein.
"DOLLARS" and "$": lawful currency of the United States.
"DOMESTIC SUBSIDIARY": any Subsidiary of the Borrower which is
organized under the laws of the United States or the Commonwealth of Puerto
Rico.
"EFFECTIVE DATE": July 3, 1997.
"ERISA": the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the rules and regulations issued thereunder,
as from time to time in effect.
"ERISA AFFILIATE": when used with respect to a Pension Plan,
ERISA, the PBGC or a provision of the Code pertaining to employee benefit plans,
any Person which is a member of any group of organizations within the meaning of
Sections 414(b) or (c) of the Code (or, solely for purposes of potential
liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of the Code
and the lien created under Section 302(f) of ERISA and Section 412(n) of the
Code, Sections 414(m) or (o) of the Code) of which the Borrower or any of its
Subsidiaries is a member.
"EURODOLLAR ADVANCES": collectively, the Revolving Credit
Loans (or any portions thereof), at such time as they (or such portions) are
made and/or being maintained at a rate of interest based upon the Eurodollar
Rate.
"EURODOLLAR INTEREST PERIOD": with respect to any Eurodollar
Advance requested by the Borrower, the period commencing on, as the case may be,
the Borrowing Date or Conversion Date with respect to such Eurodollar Advance
and ending one, two, three or six months thereafter, as selected by the Borrower
in its irrevocable Borrowing Request or its irrevocable Notice of Conversion,
provided, however, that (i) if any Eurodollar Interest Period would otherwise
end on a day which is
<PAGE> 15
not a Business Day, such Eurodollar Interest Period shall be extended to the
next succeeding Business Day unless the result of such extension would be to
carry such Eurodollar Interest Period into another calendar month, in which
event such Eurodollar Interest Period shall end on the immediately preceding
Business Day and (ii) any Eurodollar Interest Period which begins on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Eurodollar Interest
Period) shall end on the last Business Day of a calendar month. Eurodollar
Interest Periods shall be subject to the provisions of Section 3.4.
"EURODOLLAR RATE": with respect to each Eurodollar Advance and
each Competitive Bid Index Rate Loan, a rate of interest per annum, as
determined by the Administrative Agent, obtained by dividing (and then rounding
to the nearest 1/16 of 1% or, if there is no nearest 1/16 of 1%, then to the
next higher 1/16 of 1%):
(a)(i) the rate per annum for deposits having a
maturity most nearly comparable to the Eurodollar Interest Period in respect of
such Eurodollar Advance or the Competitive Interest Period in respect of such
Competitive Bid Index Rate Loan, as the case may be, in Dollars which appears on
page 3750 of the Dow Jones Telerate Screen (or any successor page) as of 11:00
a.m. London time on the date that is two Business Days prior to the first day of
such Eurodollar Interest Period or such Competitive Interest Period, as the case
may be, or (ii) if such rate does not appear on page 3750 of the Dow Jones
Telerate Screen (or any successor page), the rate, as reported by BNY to the
Administrative Agent, quoted by BNY to leading banks in the interbank eurodollar
market as the rate at which BNY is offering Dollar deposits in an amount equal
approximately to the Eurodollar Advance of BNY or such Competitive Bid Index
Rate Loan for a period equal to the applicable Eurodollar Interest Period or
Competitive Interest Period, respectively, as quoted at approximately 11:00 a.m.
two Business Days prior to the first day of such Interest Period, by
(b) a number equal to 1.00 MINUS the aggregate of the
then stated maximum rates during such Interest Period of all reserve
requirements (including marginal, emergency, supplemental and special reserves),
expressed as a decimal, established by the Board of Governors of the Federal
Reserve System and any other banking authority to which BNY and other major
United States money center banks are subject, in respect of eurocurrency funding
(currently referred to as "Eurocurrency Liabilities" in Regulation D of the
Board of Governors of the Federal Reserve System), without benefit of credit for
proration, exceptions or offsets which may be available from time to time to
BNY.
"EVENT OF DEFAULT": as defined in Section 9.1.
"EXCHANGE ACT": the Securities Exchange Act of 1934, as
amended.
"EXISTING LETTERS OF CREDIT": collectively, the Letters of
Credit which are outstanding on the Effective Date and which are listed on
Schedule 1.1, each of which was issued by CoreStates under the KeyBank Loan
Documents.
"EXPIRATION DATE": as defined in Section 2.15.
<PAGE> 16
"EXTENDING LENDER": with respect to any assignment by a
Non-Extending Lender of its rights and obligations under the Loans Documents
pursuant to Section 2.15(b), any other Lender selected by the Borrower which is
willing to assume such rights and obligations in accordance with such Section
or, to the extent no other Lender shall be so willing, any other bank, insurance
company, financial institution, pension fund, mutual fund or other similar fund
selected by the Borrower and acceptable to the Administrative Agent, the Swing
Line Lender and the Issuing Banks which is so willing.
"EXTENSION REQUEST": as defined in Section 2.15.
"FACILITY FEE": as defined in Section 3.2(b).
"FEDERAL FUNDS RATE": for any day, a rate per annum (expressed
as a decimal, rounded upwards, if necessary, to the next higher 1/100 of 1%)
equal to the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by federal
funds brokers on such day, as published by the Federal Reserve Bank of New York
on the Business Day next succeeding such day, provided that (i) if the day for
which such rate is to be determined is not a Business Day, the Federal Funds
Rate for such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day, and (ii) if
such rate is not so published for any day, the Federal Funds Rate for such day
shall be the average of the quotations for such day on such transactions
received by BNY as determined by BNY and reported to the Administrative Agent.
"FEES": as defined in Section 2.13.
"FINANCIAL OFFICER": as to any Person, the chief financial
officer or treasurer of such Person or such other officer as shall be reasonably
satisfactory to the Administrative Agent.
"FINANCIAL STATEMENTS": as defined in Section 4.13.
"FIXED CHARGE COVERAGE RATIO": as of the last day of any
fiscal quarter, the ratio of (i) the sum of (x) Consolidated EBITDA PLUS (y)
Consolidated Net Rental Expense for the period of four consecutive fiscal
quarters ending on such date to (ii) the sum of (x) interest expense of the
Borrower and its Subsidiaries, determined on a Consolidated basis in accordance
with GAAP PLUS (y) Consolidated Net Rental Expense for such period.
"FOREIGN SUBSIDIARY": any Subsidiary of the Borrower other
than a Domestic Subsidiary.
"GAAP": subject to Section 1.2(b), generally accepted
accounting prin-
<PAGE> 17
ciples set forth in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and in the
statements and pronouncements of the Financial Accounting Standards Board or in
such other statement by such other entity as may be approved by a significant
segment of the accounting profession, which are applicable to the circumstances
as of the date of determination, consistently applied.
"GOVERNMENTAL AUTHORITY": any foreign, federal, state,
municipal or other government, or any department, commission, board, bureau,
agency, public authority or instrumentality thereof, or any court or arbitrator.
"HIGHEST LAWFUL RATE": as to any Lender or any Issuing Bank,
the maximum rate of interest, if any, that at any time or from time to time may
be contracted for, taken, charged or received by such Lender on the Notes held
by it or by such Issuing Bank on the Reimbursement Agreements, as the case may
be, or which may be owing to such Lender or such Issuing Bank pursuant to the
Loan Documents under the laws applicable to such Lender or such Issuing Bank and
this transaction.
"INDEBTEDNESS": as to any Person, at a particular time, all
items which constitute, without duplication, (i) Indebtedness for Borrowed
Money, (ii) obligations with respect to any conditional sale or title retention
agreement, (iii) indebtedness arising under acceptance facilities and the amount
available to be drawn under all letters of credit issued for the account of such
Person and, without duplication, all drafts drawn thereunder to the extent such
Person shall not have reimbursed the issuer in respect of the issuer's payment
thereof, (iv) all liabilities secured by any Lien on any Property owned by such
Person even though such Person has not assumed or otherwise become liable for
the payment thereof (other than carriers', warehousemen's, mechanics',
repairmen's or other like non-consensual statutory Liens arising in the ordinary
course of business), and (v) all Contingent Obligations of such Person in
respect of any of the foregoing.
"INDEBTEDNESS FOR BORROWED MONEY": as to any Person, at a
particular time, all items which constitute, without duplication, (i)
indebtedness for borrowed money, (ii) indebtedness in respect of the deferred
purchase price of Property (other than trade payables incurred in the ordinary
course of business), (iii) indebtedness evidenced by notes, bonds, debentures or
similar instruments, (iv) Capital Lease Obligations, (v) all obligations of such
Person in respect of Capital Stock subject to mandatory redemption or redemption
at the option of the holder thereof, in whole or in part and (vi) all Contingent
Obligations of such Person in respect of any of the foregoing.
"INDEMNIFIED LIABILITIES": as defined in Section 11.5.
"INDEMNIFIED PERSON": as defined in Section 11.8.
"INDEMNIFIED TAX": as defined in Section 3.10(a).
"INDEMNIFIED TAX PERSON": as defined in Section 3.10(a).
"INTERCOMPANY DISPOSITION": a disposition of Property by the
Borrower
<PAGE> 18
or any of its Subsidiaries to the Borrower or to any of the other Subsidiaries
of the Borrower, provided that such disposition does not materially and
adversely affect the interests of the Lenders under the Loan Documents.
"INTERCOMPANY INDEBTEDNESS": loans or other advances which are
(i) made by the Borrower to any of its direct or indirect Subsidiaries or (ii)
made by any direct or indirect Subsidiary of the Borrower to the Borrower or to
any other direct or indirect Subsidiary of the Borrower.
"INTEREST PAYMENT DATE": (i) as to any ABR Advance, the last
day of each March, June, September and December commencing on the first of such
days to occur after such ABR Advance is made or any Eurodollar Advance is
converted to an ABR Advance, (ii) as to any Swing Line Loan, the date on which
the outstanding principal balance of such Swing Line Loan shall become due and
payable in accordance with Section 2.3, (iii) as to any Eurodollar Advance as to
which the Borrower has selected a Eurodollar Interest Period of one, two or
three months, the last day of such Eurodollar Interest Period, (iv) as to any
Eurodollar Advance as to which the Borrower has selected a Eurodollar Interest
Period of six months, the last day of each three month interval occurring during
such Eurodollar Interest Period and the last day of such Eurodollar Interest
Period; (v) as to any Competitive Bid Loan as to which the Borrower has selected
a Competitive Interest Period of 90 days or less or one, two or three months, as
the case may be, the last day of such Competitive Interest Period, (vi) as to
any Competitive Bid Loan as to which the Borrower has selected a Competitive
Interest Period of more than 90 days or three months, as the case may be, the
last day of each 90 day or three month, as the case may be, interval occurring
during such Competitive Interest Period and the last day of such Competitive
Interest Period; and (vii) as to all Advances, all Competitive Bid Loans and all
Swing Line Loans, the Maturity Date.
"INTEREST PERIOD": a Eurodollar Interest Period, a Competitive
Interest Period or a Swing Line Interest Period, as the case may be.
"INTEREST RATE PROTECTION ARRANGEMENT": any interest rate
swap, cap or collar arrangement or any other derivative product customarily
offered by banks or other financial institutions to their customers in order to
reduce the exposure of such customers to interest rate fluctuations, as the same
may be amended, supplemented or otherwise modified from time to time.
"INVESTMENTS": as defined in Section 8.6.
"ISSUING BANK": collectively, (i) BNY and (ii) at any time and
from time to time, with the consent of the Administrative Agent (such consent
not to be unreasonably withheld) and the Borrower, and any Lender (in the sole
and absolute discretion of such Lender), such Lender, to the extent such Lender
issues Letters of Credit pursuant to Section 2.10.
<PAGE> 19
"KEYBANK LOAN DOCUMENTS": collectively, the Credit Agreement,
dated as of December 22, 1994, as amended, among the Borrower, the banks party
thereto and KeyBank, as agent, as amended, and all other agreements, instruments
and documents executed or delivered in connection therewith, including
guarantees thereof.
"LEASE GUARANTY": the Lease Guaranty, Indemnification and
Reimbursement Agreement, dated as of November 9, 1994, between the Borrower and
Kmart Corporation, a true and complete copy of which has been filed with the
SEC, as the same may be amended, supplemented or otherwise modified from time to
time.
"LETTER OF CREDIT": as defined in Section 2.10.
"LETTER OF CREDIT COMMISSIONS": as defined in Section 3.2(a).
"LETTER OF CREDIT COMMITMENT": the commitment of the Issuing
Banks to issue Letters of Credit having an aggregate outstanding face amount
(together with the Existing Letters of Credit) up to the Letter of Credit
Commitment Amount, and the commitment of the Lenders to participate in the
Letter of Credit Exposure as set forth in Section 2.11.
"LETTER OF CREDIT COMMITMENT AMOUNT": $100,000,000.
"LETTER OF CREDIT EXPOSURE": at any time, (i) in respect of
all the Lenders, the sum at such time, without duplication, of (x) the aggregate
undrawn face amount of the outstanding Letters of Credit, (y) the aggregate
amount of unpaid drafts drawn on all Letters of Credit, and (z) the aggregate
unpaid Reimbursement Obligations (after giving effect to any Revolving Credit
Loans made on such date to pay any such Reimbursement Obligations), and (ii) in
respect of any Lender, an amount equal to such Lender's Commitment Percentage
multiplied by the amount determined under clause (i) of this definition.
"LETTER OF CREDIT PARTICIPATION": with respect to each Lender,
its obligations to the Issuing Banks hereunder.
"LETTER OF CREDIT REQUEST": a request in the form of Exhibit
C-2.
"LEVERAGE RATIO": as of the last day of any fiscal quarter,
the ratio of (i) Indebtedness for Borrowed Money of the Borrower and its
Subsidiaries determined on a Consolidated basis in accordance with GAAP, to (ii)
Consolidated EBITDA for the period of four consecutive fiscal quarters ending on
such day.
"LIEN": any mortgage, pledge, hypothecation, assignment,
deposit or preferential arrangement, encumbrance, lien (statutory or other), or
other security agreement or security interest of any kind or nature whatsoever,
including any conditional sale or other title retention agreement and any
capital or financing lease having substantially the same economic effect as any
of the foregoing.
"LOAN": a Revolving Credit Loan, a Competitive Bid Loan, or a
Swing Line Loan, as the case may be.
<PAGE> 20
"LOAN DOCUMENTS": collectively, this Agreement, the Notes, the
Reimbursement Agreements, and all other agreements, instruments and documents
executed or delivered in connection herewith, in each case as amended,
supplemented or otherwise modified from time to time.
"LOANS": the Revolving Credit Loans, the Competitive Bid Loans
and/or the Swing Line Loans, as the case may be.
"MANDATORY BORROWING": as defined in Section 2.3(c).
"MARGIN STOCK": any "margin stock", as defined in Regulation U
of the Board of Governors of the Federal Reserve System, as amended,
supplemented or otherwise modified from time to time.
"MATERIAL ADVERSE CHANGE": a material adverse change in (i)
the financial condition, operations, business or Property of the Borrower and
its Subsidiaries taken as a whole, (ii) the ability of the Borrower to perform
its obligations under the Loan Documents or (iii) the ability of the
Administrative Agent and the Lenders to enforce the Borrower's payment and other
material obligations under the Loan Documents.
"MATERIAL ADVERSE EFFECT": a material adverse effect on (i)
the financial condition, operations, business or Property of the Borrower and
its Subsidiaries taken as a whole, (ii) the ability of the Borrower to perform
its obligations under the Loan Documents or (iii) the ability of the
Administrative Agent and the Lenders to enforce the Borrower's payment and other
material obligations under the Loan Documents.
"MATERIAL SUBSIDIARY GROUP": any Subsidiary or group of
Subsidiaries of the Borrower as to which, individually or in the aggregate, any
of the following tests are met: (i) the Borrower and its other Subsidiaries'
investments in and advances to such Subsidiary or group of Subsidiaries exceed
10% of the total assets of the Borrower and its Subsidiaries on a Consolidated
basis as of the last day of the most recently completed fiscal year, (ii) such
Subsidiary's or group of Subsidiaries' proportionate share of the total assets
(after intercompany eliminations) of the Borrower and its Subsidiaries on a
Consolidated basis exceeds 10% of the total assets of the Borrower and its
Subsidiaries on a Consolidated basis as of the last day of the most recently
completed fiscal year, or (iii) the equity in the income from continuing
operations before income taxes, extraordinary items and the cumulative effect of
a change in accounting principles of such Subsidiary or group of Subsidiaries
exceeds 10% of such income of the Borrower and its Subsidiaries on a
Consolidated basis as of the last day of the most recently completed fiscal
year.
"MATURITY DATE": July 3, 2002, or as the same may be extended
from time to time in accordance with Section 2.15, or such earlier date on which
the Notes
<PAGE> 21
shall become due and payable, whether by acceleration or otherwise.
"MOODY'S": Moody's Investors Service, Inc., or any successor
thereto.
"MULTIEMPLOYER PLAN": a Pension Plan which is a multiemployer
plan as defined in Section 4001(a)(3) of ERISA.
"NEGOTIATED RATE": with respect to each Swing Line Negotiated
Rate Advance, the rate per annum agreed to by the Borrower and the Swing Line
Lender in accordance with Section 2.5(b) as the interest rate that such Swing
Line Negotiated Rate Advance shall bear.
"NON-EXTENDING LENDER": as defined in Section 2.15.
"NOTE": a Revolving Credit Note, a Competitive Bid Note or the
Swing Line Note, as the case may be.
"NOTES": the Revolving Credit Notes, the Competitive Bid Notes
and/or the Swing Line Note, as the case may be.
"NOTICE OF CONVERSION": a notice substantially in the form of
Exhibit D.
"OBLIGATIONS": as defined in Section 2.14.
"OTHER TAXES": as defined in Section 3.10(c).
"OUTSTANDING PERCENTAGE": as of any date and with respect to
any Lender, any Issuing Bank and the Swing Line Lender, as the case may be, a
fraction, the numerator of which is the Outstandings of such Lender, such
Issuing Bank or the Swing Line Lender, as applicable, on such date, and the
denominator of which is the aggregate Outstandings of all Lenders, all Issuing
Banks and the Swing Line Lender on such date.
"OUTSTANDINGS": as of any date, an amount equal to (i) with
respect to any Lender, the outstanding principal balance on such date of all the
Revolving Credit Loans and Competitive Bid Loans of such Lender PLUS the excess
as of such date of (A) the aggregate sum of all payments made by such Lender
after the Effective Date in participation of the Reimbursement Obligations and
the Swing Line Loans, over (B) all reimbursements of such Lender after the
Effective Date in respect thereof; (ii) with respect to any Issuing Bank, the
excess as of such date of (A) the aggregate sum of all drafts honored under all
Letters of Credit issued by such Issuing Bank after the Effective Date, over (B)
all payments made after the Effective Date to such Issuing Bank by the Borrower
and the Lenders in reimbursement thereof or participation therein, as the case
may be; and (iii) with respect to the Swing Line Lender, the outstanding
principal balance on such date of all Swing Line Loans MINUS the aggregate sum
of all payments by any Lender in participation of such Swing Line Loans.
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA, or any Governmental Authority
succeeding to the
<PAGE> 22
functions thereof.
"PENSION PLAN": any "employee pension benefit plan" as such
term is defined in Section 3(3) of ERISA (other than a Multiemployer Plan),
which is subject to Title IV of ERISA and is maintained by the Borrower, any of
its Subsidiaries or any of its ERISA Affiliates or to which Borrower, any of its
Subsidiaries or any of its ERISA Affiliates contributes or has an obligation to
contribute.
"PERMITTED ACQUISITION": an Acquisition permitted by Section
8.4.
"PERMITTED LIEN": a Lien permitted to exist under Section 8.2.
"PERSON": any individual, firm, partnership, limited liability
company, joint venture, corporation, association, business enterprise, joint
stock company, unincorporated association, trust, Governmental Authority or any
other entity, whether acting in an individual, fiduciary, or other capacity, and
for the purpose of the definition of "ERISA Affiliate", a trade or business.
"PRICING LEVEL": Pricing Level I, Pricing Level II, Pricing
Level III, Pricing Level IV or Pricing Level V, as applicable.
"PRICING LEVEL I": the applicable Pricing Level at any time
when the Leverage Ratio is less than or equal to 1.25:1.00.
"PRICING LEVEL II": the applicable Pricing Level at any time
when the Leverage Ratio is greater than 1.25:1.00 but less than or equal to
1.50:1.00.
"PRICING LEVEL III": the applicable Pricing Level at any time
when the Leverage Ratio is greater than 1.50:1.00 but less than or equal to
2.00:1.00.
"PRICING LEVEL IV": the applicable Pricing Level at any time
when the Leverage Ratio is greater than 2.00:1.00 but less than or equal to
2.50:1.00.
"PRICING LEVEL V": the applicable Pricing Level at any time
when the Leverage Ratio is greater than 2.50:1.00.
"PROHIBITED TRANSACTION": a transaction which is prohibited
under Section 4975 of the Code or Section 406 of ERISA and not exempt under
Section 4975 of the Code or Section 408 of ERISA.
"PROPERTY": all types of real, personal, tangible, intangible
or mixed property.
"PROPOSED LENDER": as defined in Section 3.12.
"RELEVANT DATE": (i) in the case of each Lender listed on the
signature
<PAGE> 23
pages hereof, the Effective Date, and (ii) in the case of each other Lender, the
effective date of the Assignment and Acceptance Agreement or other document
pursuant to which it became a Lender.
"REGULATORY CHANGE": (i) the introduction or phasing in of any
law, rule or regulation after the Relevant Date, (ii) the issuance or
promulgation after the Relevant Date of any directive, guideline or request from
any Governmental Authority (whether or not having the force of law), or (iii)
any change after the Relevant Date in the interpretation of any existing law,
rule, regulation, directive, guideline or request by any Governmental Authority
charged with the administration thereof.
"REIMBURSEMENT AGREEMENT": as defined in Section 2.10(b).
"REIMBURSEMENT OBLIGATION": the obligation of the Borrower to
reimburse an Issuing Bank for amounts drawn under a Letter of Credit issued by
such Issuing Bank.
"REPORTABLE EVENT": with respect to any Pension Plan, (i) any
event set forth in Sections 4043(c) (other than a Reportable Event as to which
the 30 day notice requirement is waived by the PBGC under applicable
regulations), 4062(c) or 4063(a) of ERISA or the regulations thereunder, (ii) an
event requiring the Borrower, any of its Subsidiaries or any ERISA Affiliate to
provide security to a Pension Plan under Section 401(a)(29) of the Code, or
(iii) any failure to make any payment required by Section 412(m) of the Code.
"REQUIRED LENDERS": at any time (i) prior to the Revolving
Credit Commitment Termination Date, Lenders having Revolving Credit Commitment
Amounts greater than or equal to 51% of the Aggregate Revolving Credit
Commitment Amount, and (ii) at all other times, the Issuing Banks and the
Lenders having Outstandings greater than or equal to 51% of the aggregate
Outstandings of the Issuing Banks and the Lenders.
"RESTRICTED PAYMENT": as to any Person (i) any dividend or
other distribution, direct or indirect, on account of any shares of Capital
Stock in such Person now or hereafter outstanding (other than a dividend payable
solely in shares of such Capital Stock to the holders of such shares) and (ii)
any redemption, retirement, sinking fund or similar payment, purchase or other
acquisition, direct or indirect, of any shares of any class of Capital Stock in
such Person now or hereafter outstanding.
"REVOLVING CREDIT COMMITMENT": in respect of any Lender, such
Lender's undertaking during the Revolving Credit Commitment Period to make
Revolving Credit Loans, subject to the terms and conditions hereof, in an
aggregate outstanding principal amount not exceeding the Revolving Credit
Commitment Amount of such Lender.
"REVOLVING CREDIT COMMITMENT AMOUNT": as of any date and with
respect to any Lender, the amount set forth adjacent to its name under the
heading "Revolving Credit Commitment Amount" in Exhibit A on such date or, in
the event that such Lender is not listed in Exhibit A, the "Revolving Credit
Commitment Amount"
<PAGE> 24
which such Lender shall have assumed from another Lender in accordance with
Section 11.7 on or prior to such date, in each case as the same may be adjusted
from time to time pursuant to Sections 2.7 and 11.7.
"REVOLVING CREDIT COMMITMENT PERIOD": the period from the
Effective Date until the Revolving Credit Commitment Termination Date.
"REVOLVING CREDIT COMMITMENT TERMINATION DATE": the earlier of
the Business Day immediately preceding the Maturity Date or such other date upon
which the Revolving Credit Commitments shall have been terminated in accordance
herewith.
"REVOLVING CREDIT EXPOSURE": with respect to any Lender as of
any date, the sum as of such date of (i) the outstanding principal balance of
such Lender's Revolving Credit Loans, PLUS (ii) an amount equal to such Lender's
Letter of Credit Exposure.
"REVOLVING CREDIT LOAN" and "REVOLVING CREDIT LOANS": as
defined in Section 2.1.
"REVOLVING CREDIT NOTE" and "REVOLVING CREDIT NOTES": as
defined in Section 2.2.
"SEC": the Securities and Exchange Commission or any
Governmental Authority succeeding to the functions thereof.
"SPECIAL COUNSEL": Emmet, Marvin & Martin, LLP, special
counsel to the Administrative Agent.
"STANDARD & POOR'S": Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc., or any successor thereto.
"STANDBY LETTER OF CREDIT": a Letter of Credit issued by an
Issuing Bank hereunder other than a Documentary Letter of Credit.
"SUBSIDIARY": as to any Person, any corporation, association,
partnership, limited liability company, joint venture or other business entity
of which such Person or any Subsidiary of such Person, directly or indirectly,
either (i) in respect of a corporation, owns or controls more than 50% of the
outstanding Capital Stock having ordinary voting power to elect a majority of
the board of directors or other analogous managing body or person thereof,
irrespective of whether a class or classes shall or might have voting power by
reason of the happening of any contingency, or (ii) in respect of an
association, partnership, limited liability company, joint venture or other
business entity, is entitled to share in more than 50% of the profits and
losses, however determined.
<PAGE> 25
"SWING LINE ABR ADVANCES": the Swing Line Loans (or any
portions thereof), at such time as they (or such portions) are made and/or being
maintained at a rate of interest based upon the Alternate Base Rate.
"SWING LINE COMMITMENT": the undertaking of the Swing Line
Lender during the Swing Line Commitment Period to make Swing Line Loans, subject
to the terms and conditions hereof, in an aggregate outstanding principal amount
not in excess of the Swing Line Commitment Amount, and the commitment of the
Lenders to participate therein as set forth in Section 2.3, as the same may be
reduced pursuant to Section 2.6.
"SWING LINE COMMITMENT AMOUNT": $15,000,000.
"SWING LINE COMMITMENT PERIOD": the period from the Effective
Date to, but excluding, the Swing Line Termination Date.
"SWING LINE EXPOSURE": at any time, in respect of any Lender,
an amount equal to the aggregate outstanding principal amount of the Swing Line
Loans at such time multiplied by such Lender's Commitment Percentage at such
time.
"SWING LINE INTEREST PERIOD": subject to the provisions of
Section 3.4, with respect to any Swing Line Loan requested by the Borrower, the
period commencing on the Borrowing Date with respect to such Swing Line Loan and
ending on or between one and seven days thereafter, as selected by the Borrower
in its irrevocable Borrowing Request, provided, however, that (i) if any Swing
Line Interest Period would otherwise end on a day that is not a Business Day,
such Swing Line Interest Period shall be extended to the next succeeding
Business Day, and (ii) the Borrower shall select Swing Line Interest Periods so
as not to have more than three different Swing Line Interest Periods outstanding
at any one time for all Swing Line Loans.
"SWING LINE LOAN" and "SWING LINE LOANS": as defined in
Section 2.3(a).
"SWING LINE NEGOTIATED RATE ADVANCES": the Swing Line Loans
(or any portions thereof), at such time as they (or such portions) are made
and/or being maintained at a rate of interest based upon a Negotiated Rate.
"SWING LINE NOTE": as defined in Section 2.4.
"SWING LINE PARTICIPATION AMOUNT": as defined in Section
2.3(d).
"SWING LINE TERMINATION DATE": the date which is five Business
Days prior to the Maturity Date.
"TAX ON THE INCOME": as defined in Section 3.10(a).
"TAXES": as defined in Section 3.10(a).
"TERMINATION EVENT": with respect to any Pension Plan, (i) a
Reportable Event, (ii) the termination of a Pension Plan, or the filing of a
notice of intent to
<PAGE> 26
terminate a Pension Plan, or the treatment of a Pension Plan amendment as a
termination under Section 4041(c) of ERISA, (iii) the institution of proceedings
to terminate a Pension Plan under Section 4042 of ERISA, or (iv) the appointment
of a trustee to administer any Pension Plan under Section 4042 of ERISA.
"TYPE": with respect to any Revolving Credit Loan, the
character of such Revolving Credit Loan as an ABR Advance or a Eurodollar
Advance, each of which constitutes a type of loan.
"UNITED STATES": the United States of America (including the
States thereof and the District of Columbia).
"UNQUALIFIED AMOUNT": as defined in Section 3.1(c).
"UPSTREAM DIVIDENDS": as defined in Section 8.12.
"U.S. PERSON": a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in or under any
laws of the United States, or any estate or trust that is subject to United
States federal income taxation regardless of the source of its income.
B. Principles of Construction
--------------------------
1. All terms defined in a Loan Document shall have the
meanings given such terms therein when used in the other Loan Documents or any
certificate, opinion or other document made or delivered pursuant thereto,
unless otherwise defined therein.
2. As used in the Loan Documents and in any certificate,
opinion or other document made or delivered pursuant thereto, accounting terms
not defined in Section 1.1, and accounting terms partly defined in Section 1.1,
to the extent not defined, shall have the respective meanings given to them
under GAAP. For purposes of calculating any financial ratio or requirements
contained in this Agreement (including for purposes of determining the
applicable Pricing Level), GAAP as in effect on the Effective Date shall be
utilized, PROVIDED, HOWEVER, that if at any time any change in GAAP would affect
the computation of any such financial ratio or requirement, the Administrative
Agent, the Lenders and the Borrower shall negotiate in good faith to amend such
ratio or requirement to reflect such change in GAAP (subject to the approval of
the Required Lenders), provided that, until so amended, (i) such ratio or
requirement shall continue to be computed in accordance with GAAP prior to such
change therein and (ii) the Borrower shall provide to the Administrative Agent
and the Lenders financial statements and other documents required under this
Agreement or as reasonably requested hereunder setting forth a reconciliation
between calculations of such ratio or requirement made before and after giving
effect to such change in GAAP.
<PAGE> 27
3. The words "hereof", "herein", "hereto" and "hereunder" and
similar words when used in a Loan Document shall refer to such Loan Document as
a whole and not to any particular provision thereof, and Section, schedule and
exhibit references contained therein shall refer to Sections thereof or
schedules or exhibits thereto unless otherwise expressly provided therein.
4. The phrase "may not" is prohibitive and not permissive.
5. Unless the context otherwise requires, words in the
singular number include the plural, and words in the plural include the
singular.
6. Unless specifically provided in a Loan Document to the
contrary, any reference to a time shall refer to such time in New York.
7. Unless specifically provided in a Loan Document to the
contrary, in the computation of periods of time from a specified date to a later
specified date, the word "from" means "from and including" and the words "to"
and "until" each means "to but excluding".
8. References in any Loan Document to a fiscal period shall
refer to that fiscal period of the Borrower.
9. The words "include" and "including", when used in each Loan
Document, shall mean that the same shall be included "without limitation",
unless otherwise expressly provided therein.
II. AMOUNT AND TERMS OF LOANS AND LETTERS OF CREDIT
-----------------------------------------------
A. Revolving Credit Loans
----------------------
Subject to the terms and conditions hereof, each Lender
severally (and not jointly) agrees to make revolving credit loans (each a
"REVOLVING CREDIT LOAN" and, as the context may require, collectively with all
other Revolving Credit Loans of such Lender and with the Revolving Credit Loans
of all other Lenders, the "REVOLVING CREDIT LOANS") to the Borrower from time to
time during the Revolving Credit Commitment Period, provided that immediately
after giving effect thereto a. such Lender's Revolving Credit Exposure would not
exceed such Lender's Revolving Credit Commitment Amount, and b. the Aggregate
Credit Exposure would not exceed the Aggregate Revolving Credit Commitment
Amount. During the Revolving Credit Commitment Period, the Borrower may borrow,
prepay in whole or in part and reborrow under the Revolving Credit Commitments,
all in accordance with the terms and conditions of this Agreement. Subject to
the provisions of Sections 2.5 and 3.3, at the option of the Borrower, Revolving
Credit Loans may be made as one or more (i) ABR Advances, (ii) Eurodollar
Advances or (iii) any combination thereof.
B. Revolving Credit Notes
----------------------
The Revolving Credit Loans made by each Lender shall be
evidenced by a promissory note of the Borrower, substantially in the form of
Exhibit B-1 (each, as
<PAGE> 28
indorsed or modified from time to time, a "REVOLVING CREDIT NOTE" and,
collectively with the Revolving Credit Notes of all other Lenders, the
"REVOLVING CREDIT NOTES"), payable to the order of such Lender. The outstanding
principal balance of the Revolving Credit Loans shall be due and payable on the
Maturity Date.
C. Swing Line Loans
----------------
1. Subject to the terms and conditions of this Agreement, the
Swing Line Lender agrees to make swing line loans (each a "SWING LINE LOAN" and,
collectively, the "SWING LINE LOANS") to the Borrower from time to time during
the Swing Line Commitment Period, PROVIDED THAT immediately after making each
Swing Line Loan, a. the Swing Line Lender's Credit Exposure would not exceed the
Swing Line Lender's Revolving Credit Commitment Amount, b. the aggregate unpaid
balance of the Swing Line Loans would not exceed the Swing Line Commitment
Amount, and c. the Aggregate Credit Exposure would not exceed the Aggregate
Revolving Credit Commitment Amount. During the Swing Line Commitment Period, the
Borrower may borrow, prepay in whole or in part and reborrow under the Swing
Line Commitment, all in accordance with the terms and conditions of this
Agreement. The initial Swing Line Loan shall be made either contemporaneously
with or after the making of the first Revolving Credit Loans on the first
Borrowing Date.
2. The Swing Line Lender shall not be obligated to make any
Swing Line Loan at a time when any Lender shall be in default of its obligations
under this Agreement unless the Swing Line Lender has entered into arrangements
satisfactory to it and the Borrower to eliminate the Swing Line Lender's risk
with respect to such defaulting Lender's participation in such Swing Line Loan.
The Swing Line Lender will not make a Swing Line Loan if the Administrative
Agent, or any Lender by notice to the Swing Line Lender and the Borrower no
later than one Business Day prior to the Borrowing Date with respect to such
Swing Line Loan, shall have determined that the conditions set forth in Section
6 have not been satisfied and such conditions remain unsatisfied as of the
requested time of the making such Loan. Each Swing Line Loan shall be due and
payable on the day being the earliest of the last day of the Swing Line Interest
Period applicable thereto, the date on which the Swing Line Commitment shall
have been voluntarily terminated by the Borrower in accordance with Section 2.7,
and the date on which the Swing Line Loans shall become due and payable pursuant
to the provisions hereof, whether by acceleration or otherwise.
3. On any Business Day on which a Swing Line Loan shall be due
and payable and shall remain unpaid, the Swing Line Lender may, in its sole
discretion, give notice to the Lenders and the Borrower that such outstanding
Swing Line Loan shall be funded with a borrowing of Revolving Credit Loans
(provided that such notice shall be deemed to have been automatically given upon
the occurrence of an Event of Default under Sections 9.1(h) or (i)), in which
case a borrowing of Revolving Credit Loans made as ABR Advances (each such
borrowing, a "MANDATORY BORROWING"), shall be made by all Lenders pro rata based
on each such Lender's Commitment Percentage on the Business Day immediately
succeeding the giving of such
<PAGE> 29
notice. The proceeds of each Mandatory Borrowing shall be remitted directly to
the Swing Line Lender to repay such outstanding Swing Line Loan. Each Lender
irrevocably agrees to make a Revolving Credit Loan 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 the Swing Line Lender notwithstanding:
a. the amount of such Mandatory Borrowing may not comply with the minimum amount
for Loans otherwise required hereunder, b. whether any condition specified in
Section 6 is then unsatisfied, c. whether a Default then exists, d. the
Borrowing Date of such Mandatory Borrowing, e. the aggregate principal amount of
all Loans then outstanding, f. the Aggregate Credit Exposure at such time and g.
the Aggregate Revolving Credit Commitment Amount at such time.
4. Upon each receipt by a Lender of notice of an Event of
Default from the Administrative Agent pursuant to Section 10.5, such Lender
shall purchase unconditionally, irrevocably, and severally (and not jointly)
from the Swing Line Lender a participation in the outstanding Swing Line Loans
(including accrued interest thereon) in an amount equal to the product of its
Commitment Percentage and the outstanding amount of the Swing Line Loans (the
"SWING LINE PARTICIPATION AMOUNT"). Each Lender shall also be liable for an
amount equal to the product of its Commitment Percentage and any amounts paid by
the Borrower pursuant to this subsection (d) that are subsequently rescinded or
avoided, or must otherwise be restored or returned. Such liabilities shall be
unconditional and without regard to the occurrence of any Default or the
compliance by the Borrower with any of its obligations under the Loan Documents.
5. In furtherance of subsection (d) above, upon each receipt
by a Lender of notice of an Event of Default from the Administrative Agent
pursuant to Section 10.5, such Lender shall promptly make available to the
Administrative Agent for the account of the Swing Line Lender its Swing Line
Participation Amount at the office of the Administrative Agent specified in
Section 11.2, in lawful money of the United States and in immediately available
funds. The Administrative Agent shall deliver the payments made by each Lender
pursuant to the immediately preceding sentence to the Swing Line Lender promptly
upon receipt thereof in like funds as received. Each Lender shall indemnify and
hold harmless the Administrative Agent and the Swing Line Lender from and
against any and all losses, liabilities (including liabilities for penalties),
actions, suits, judgments, demands, reasonable out-of-pocket costs and expenses,
resulting from any failure on the part of such Lender to pay, or from any delay
in paying the Administrative Agent any amount such Lender is required to pay in
accordance with this subsection (e) upon receipt of notice of Event of Default
from the Administrative Agent pursuant to Section 10.5 (except in respect of
losses, liabilities or other obligations suffered by the Administrative Agent or
the Swing Line Lender, as the case may be, resulting from the gross negligence
or willful misconduct of the Administrative Agent or the Swing Line Lender, as
the case may be), and such Lender shall be required to pay interest to the
Administrative Agent for the account of the Swing Line Lender from the date such
amount was due until paid in full, on the unpaid portion thereof, at a rate of
interest per annum equal to (i) from the date such amount was due until the
third day therefrom, the Federal Funds Rate, and (ii) thereafter, the Federal
Funds Rate plus 2%, payable upon demand by the Swing Line Lender. The
Administrative Agent shall distribute such interest payments to the Swing Line
Lender upon receipt thereof in like funds as received.
<PAGE> 30
6. Whenever the Administrative Agent is reimbursed by the
Borrower, for the account of the Swing Line Lender, for any payment in
connection with Swing Line Loans and such payment relates to an amount
previously paid by a Lender pursuant to this Section, the Administrative Agent
will promptly pay over such payment to such Lender. In the event that amounts
are due to more than one Lender under this subsection, such reimbursements shall
be paid over to such Lenders on a pro rata basis.
D. Swing Line Note
---------------
The Swing Line Loans made by the Swing Line Lender shall be
evidenced by a promissory note of the Borrower, substantially in the form of
Exhibit B-2 (as indorsed or modified from time to time, including all
replacements thereof and substitutions therefor, the "SWING LINE NOTE"), payable
to the order of the Swing Line Lender.
E. Procedure For Borrowing
-----------------------
1. REVOLVING CREDIT LOANS. The Borrower may borrow under the
Revolving Credit Commitments on any Business Day during the Revolving Credit
Commitment Period, provided that the Borrower shall notify the Administrative
Agent by the delivery of a Borrowing Request, which shall be sent by telecopy
and shall be irrevocable (confirmed promptly, and in any event within five
Business Days, by the delivery to the Administrative Agent of a Borrowing
Request manually signed by the Borrower), no later than: 12:00 noon, three
Business Days prior to the requested Borrowing Date, in the case of Eurodollar
Advances, and 12:00 noon, one Business Day prior to the requested Borrowing
Date, in the case of ABR Advances, specifying (1) the aggregate principal amount
to be borrowed under the Revolving Credit Commitments, (2) the requested
Borrowing Date, (3) whether such borrowing is to consist of one or more
Eurodollar Advances, ABR Advances, or a combination thereof and (4) if the
borrowing is to consist of one or more Eurodollar Advances, the length of the
Interest Period for each such Eurodollar Advance. Each (i) Eurodollar Advance to
be made on a Borrowing Date, when aggregated with all amounts to be converted to
a Eurodollar Advance on such date and having the same Interest Period as such
first Eurodollar Advance, shall equal no less than $2,000,000 or such amount
PLUS a whole multiple of $1,000,000 in excess thereof and (ii) each ABR Advance
made on each Borrowing Date shall equal no less than $2,000,000 or such amount
PLUS a whole multiple of $1,000,000 in excess thereof or, if less, the unused
portion of the Aggregate Revolving Credit Commitment Amount.
2. SWING LINE LOANS. The Borrower may borrow under the Swing
Line Commitment on any Business Day during the Swing Line Commitment Period,
provided that the Borrower shall notify the Administrative Agent and the Swing
Line Lender (by telephone or telecopy confirmed promptly, and in any event
within five Business Days, by the delivery to the Administrative Agent and the
Swing Line Lender
<PAGE> 31
of a Borrowing Request manually signed by the Borrower) no later than: 12:00
noon, on the requested Borrowing Date, in the case of Swing Line Negotiated Rate
Advances and 3:00 p.m. on the requested Borrowing Date, in the case of Swing
Line ABR Advances, specifying a. the aggregate principal amount to be borrowed
under the Swing Line Commitment, b. the requested Borrowing Date, c. whether
such borrowing is to consist of one or more Swing Line Negotiated Rate Advances,
Swing Line ABR Advances, or a combination thereof and d. the length of the Swing
Line Interest Period for each Swing Line Loan, provided, however, that no Swing
Line Interest Period selected in respect of any Swing Line Loan shall end after
the Swing Line Termination Date. The Swing Line Lender will then, subject to its
determination that the terms and conditions of this Agreement have been
satisfied and, in the case of a Swing Line Negotiated Rate Advance, subject to
its agreement with the Borrower on the Negotiated Rate to be applicable thereto,
make the requested amount available promptly on that same day, to the
Administrative Agent who, thereupon, will promptly make such amount available to
the Borrower at the office of the Administrative Agent specified in Section 11.2
by crediting the account of the Borrower on the books of such office of the
Administrative Agent. Each borrowing of Swing Line Loans shall be in an
aggregate principal amount equal to $500,000 or such amount plus a whole
multiple of $100,000 in excess thereof or, if less, the unused portion of the
Swing Line Commitment Amount.
3. FUNDING OF REVOLVING CREDIT LOANS. Upon receipt of each
Borrowing Request requesting Revolving Credit Loans, the Administrative Agent
shall promptly notify each Lender thereof. Subject to its receipt of the notice
referred to in the preceding sentence, each Lender will make the amount of its
Commitment Percentage of the requested Revolving Credit Loans available to the
Administrative Agent for the account of the Borrower at the office of the
Administrative Agent set forth in Section 11.2 not later than 12:00 noon on the
relevant Borrowing Date requested by the Borrower, in funds immediately
available to the Administrative Agent at such office. The amounts so made
available to the Administrative Agent on such Borrowing Date will then, subject
to the satisfaction of the terms and conditions of this Agreement, as reasonably
determined by the Administrative Agent, be made available on such date to the
Borrower by the Administrative Agent at the office of the Administrative Agent
specified in Section 11.2 by crediting the account of the Borrower on the books
of such office with the aggregate of said amounts received by the Administrative
Agent.
4. FAILURE TO FUND. Unless the Administrative Agent shall have
received prior notice from a Lender (by telephone or otherwise, such notice to
be promptly confirmed by telecopy or other writing) that such Lender will not
make available to the Administrative Agent such Lender's Commitment Percentage
of the Revolving Credit Loans requested by the Borrower, the Administrative
Agent may assume that such Lender has made such share available to the
Administrative Agent on the Borrowing Date in accordance with this Section,
provided that such Lender received notice of the requested Revolving Credit
Loans from the Administrative Agent, and the Administrative Agent may, in
reliance upon such assumption, make available to the Borrower on the Borrowing
Date a corresponding amount. If and to the extent such Lender shall not have so
made its Commitment Percentage of such Revolving Credit Loans available to the
Administrative Agent, such Lender and the Borrower severally agree to pay to the
Administrative Agent forthwith on demand such cor-
<PAGE> 32
responding amount (to the extent not previously paid by the other), together
with interest thereon for each day from the date such amount is made available
to the Borrower to the date such amount is paid to the Administrative Agent, at
a rate per annum equal to, in the case of the Borrower, the applicable interest
rate set forth in Section 3.1 for ABR Advances, and, in the case of such Lender,
at a rate of interest per annum equal to the Federal Funds Rate for the first
three days after the due date of such payment until the date such payment is
received by the Administrative Agent and the Federal Funds Rate plus 2%
thereafter. Such payment by the Borrower, however, shall be without prejudice to
its rights against such Lender. If such Lender shall pay to the Administrative
Agent such corresponding amount, such amount so paid shall constitute such
Lender's Revolving Credit Loan as part of the Revolving Credit Loans for
purposes of this Agreement, which Loan shall be deemed to have been made by such
Lender on the Borrowing Date applicable to such Revolving Credit Loans.
5. NETTING. If a Lender makes a new Revolving Credit Loan on a
Borrowing Date on which the Borrower is to repay a Revolving Credit Loan from
such Lender, such Lender shall apply the proceeds of such new Revolving Credit
Loan to make such repayment, and only the excess of the proceeds of such new
Revolving Credit Loan over the Revolving Credit Loan being repaid need be made
available to the Administrative Agent.
F. Competitive Bid Procedure
-------------------------
1. The Borrower may, provided that no Default shall have
occurred and be continuing, request Competitive Bids during the Revolving Credit
Commitment Period by delivering by hand or telecopy to the Administrative Agent
a duly completed Competitive Bid Request not later than 1:00 p.m. three Business
Days prior to the proposed Borrowing Date therefor, in the case of Competitive
Bid Index Rate Loans, and not later than 1:00 p.m. two Business Days prior to
the proposed Borrowing Date therefor in all other cases. A request for
Competitive Bids that does not conform substantially to the format of Exhibit I
may be rejected in the Administrative Agent's sole discretion, and the
Administrative Agent shall promptly notify the Borrower of such rejection by
telecopy. Each Competitive Bid Request shall specify a. the amount of each
Competitive Bid Loan requested and, if applicable, its nature as a Competitive
Bid Index Rate Loan, b. the proposed Borrowing Date for each such Competitive
Bid Loan, and c. the Competitive Interest Period with respect to each such
Competitive Bid Loan, provided that the number of different Competitive Interest
Periods in a single Competitive Bid Request shall not exceed four. Promptly
after its receipt of each Competitive Bid Request that is not rejected as
aforesaid, the Administrative Agent shall invite by telecopy (in the form of
Exhibit J) the Lenders to bid, on the terms and conditions of this Agreement, to
make Competitive Bid Loans pursuant to such Competitive Bid Request.
2. Each Lender may, in its sole and absolute discretion, make
one or more Competitive Bids to the Borrower in response to a Competitive Bid
Request.
<PAGE> 33
Each Competitive Bid by a Lender must be received by the Administrative
Agent not later than 10:00 a.m., two Business Days prior to the requested
Borrowing Date in the case of a Competitive Bid Index Rate Loan and not later
than 10:00 a.m. one Business Day prior to the requested Borrowing Date in all
other cases. Bids to make Competitive Bid Loans that do not conform
substantially to the format of Exhibit K shall be rejected by the Administrative
Agent after conferring with, and upon the instruction of, the Borrower, and the
Administrative Agent shall notify the Lender making such nonconforming bid of
such rejection as soon as practicable. Each Competitive Bid shall be irrevocable
and shall specify a. the amount (which (1) shall be in a minimum principal
amount of $2,000,000, or a whole multiple of $1,000,000 in excess thereof, and
(2) may equal the entire principal amount requested by the Borrower) of such
Competitive Bid Loan, b. whether the Competitive Bid Loan that the Lender is
willing to make is to be a Competitive Bid Index Rate Loan, c. the Competitive
Bid Rate with respect to such Competitive Bid Loan, and d. the Competitive
Interest Period with respect to such Competitive Bid Loan and the last day
thereof. If any Lender shall elect not to make a Competitive Bid, such Lender
shall so notify the Administrative Agent by telecopy not later than 10:00 a.m.,
two Business Days prior to the requested Borrowing Date in the case of a
Competitive Bid Index Rate Loan and not later than 10:00 a.m. one Business Day
prior to the requested Borrowing Date in all other cases, provided that the
failure by any Lender to give any such notice shall not obligate such Lender to
make any Competitive Bid Loan in connection with the relevant Competitive Bid
Request.
3. With respect to each Competitive Bid Request, the
Administrative Agent shall (i) promptly notify the Borrower by telecopy of each
Competitive Bid made, the amount of each Competitive Bid Loan offered thereby
and its nature, if applicable, as a Competitive Bid Index Rate Loan, the
Competitive Bid Rate applicable thereto, and the identity of the Lender that
made such Competitive Bid, and (ii) send a list of all Competitive Bids to the
Borrower for its records as soon as practicable after completion of the bidding
process.
4. The Borrower may in its sole and absolute discretion,
subject only to the provisions of this Section 2.6(d), accept or reject any
Competitive Bid made in accordance with the procedures set forth in this Section
2.6, and the Borrower shall notify the Administrative Agent by telephone,
confirmed by telecopy in the form of a Competitive Bid Accept/Reject Letter,
whether and to what extent it has decided to accept or reject any or all of such
Competitive Bids, not later than 12:00 noon, two Business Days prior to the
requested Borrowing Date in the case of a Competitive Bid Index Rate Loan and
not later than 12:00 noon, one Business Day prior to the requested Borrowing
Date in all other cases, provided, however, that the failure by the Borrower to
give such notice shall be deemed to be a rejection of all such Competitive Bids.
In connection with each acceptance of one or more Competitive Bids by the
Borrower:
a. the Borrower shall not accept a Competitive Bid made at a
particular Competitive Bid Rate if the Borrower has decided to reject a
Competitive Bid made at a lower Competitive Bid Rate,
b. the aggregate amount of the Competitive Bids accepted by
the Borrower shall not exceed the principal amount specified in the
Competitive
<PAGE> 34
Bid Request therefor,
c. if the Borrower shall desire to accept a Competitive Bid
made at a particular Competitive Bid Rate, it must accept all other
Competitive Bids at such Competitive Bid Rate, provided, however, that
if the acceptance of all such other Competitive Bids would cause the
aggregate amount of all such accepted Competitive Bids to exceed the
amount requested, then such acceptance shall be made pro rata in
accordance with the amount of each such Competitive Bid at such
Competitive Bid Rate,
d. except pursuant to Section 2.6(d)(iii), no Competitive Bid
shall be accepted unless the Competitive Bid Loan with respect thereto
shall be in (1) a minimum principal amount of $2,000,000, or a whole
multiple of $1,000,000 in excess thereof, or (2) if less, an aggregate
principal amount equal to the excess of the Aggregate Revolving Credit
Commitment Amount over the outstanding principal balance of all Loans;
and
e. a Lender's obligation to lend its Commitment Percentage of
Revolving Credit Loans requested by the Borrower shall not be affected
by such Lender making a Competitive Bid Loan.
5. The Administrative Agent shall promptly notify each bidding
Lender whether or not each Competitive Bid of such Lender has been accepted
(and, if so, in what amount) by telecopy sent by the Administrative Agent, and,
if such Competitive Bid has been accepted by the Borrower, in whole or in part,
such bidding Lender shall, after its receipt of such notice and no later than
12:00 noon on the proposed Borrowing Date for such Competitive Bid Loan, make
immediately available funds available to the Administrative Agent at the address
therefor set forth in Section 11.2, in the amount in which such Competitive Bid
was accepted by the Borrower, and the amount so made available to the
Administrative Agent on such Borrowing Date will then, subject to the
satisfaction of the terms and conditions of this Agreement, as reasonably
determined by the Administrative Agent, be made available on such Borrowing Date
to the Borrower by the Administrative Agent at such office by crediting the
account of the Borrower on the books of such office with the aggregate of said
amount received by the Administrative Agent. Notwithstanding anything to the
contrary contained herein, no Lender shall be obligated to make a Competitive
Bid Loan if immediately after making such Competitive Bid Loan, the Aggregate
Credit Exposure would exceed the Aggregate Revolving Credit Commitment Amount.
6. A Competitive Bid Request shall not be made within five
Business Days after the date of any previous Competitive Bid Request, unless the
Borrower has accepted one or more Competitive Bids pursuant to a Competitive Bid
Request made within such five Business Days.
7. If the Administrative Agent shall elect to submit a
Competitive
<PAGE> 35
Bid in its capacity as a Lender, it shall submit such bid directly
to the Borrower fifteen minutes earlier than the latest time at which the other
Lenders are required to submit their bids to the Administrative Agent pursuant
to Section 2.6(b).
8. All notices required by this Section 2.6 shall be given in
accordance with Section 11.2.
9. The Competitive Bid Loans made by each Lender shall be
evidenced by a promissory note of the Borrower, substantially in the form of
Exhibit B-3 (each, as indorsed or modified from time to time, a "COMPETITIVE BID
NOTE"), payable to the order of such Lender and dated the Effective Date. Each
Competitive Bid Loan shall be due and payable on the last day of the Competitive
Interest Period applicable thereto.
G. Termination or Reduction of Commitments
---------------------------------------
1. VOLUNTARY TERMINATION OR REDUCTIONS. Except as provided in
Section 2.15(b), at the Borrower's option and upon at least three Business Days'
prior irrevocable notice to the Administrative Agent, the Borrower may (i) at
any time when the Aggregate Credit Exposure shall be zero, terminate the
Revolving Credit Commitments, the Swing Line Commitment and the Letter of Credit
Commitment, or (ii) at any time and from time to time permanently reduce the
Aggregate Revolving Credit Commitment Amount, the Swing Line Commitment Amount
or the Letter of Credit Commitment Amount, PROVIDED that a. each such partial
reduction shall be in an amount equal to at least to $1,000,000 or such amount
PLUS a whole multiple of $1,000,000 in excess thereof, b. the Swing Line
Commitment Amount and the Letter of Credit Commitment Amount shall not exceed
the Aggregate Revolving Credit Commitment Amount after giving effect to any such
reduction, and c. immediately after giving effect to each such reduction, the
Aggregate Revolving Credit Commitment Amount shall equal or exceed the Aggregate
Credit Exposure MINUS the amount, if any, on deposit in the Cash Collateral
Account. Notwithstanding the foregoing, if at any time the Aggregate Credit
Exposure is greater than zero but there are no Loans outstanding, the Borrower
may terminate the Revolving Credit Commitments so long as it deposits Cash
Collateral in the Cash Collateral Account in an amount at least equal to the
Aggregate Credit Exposure.
2. IN GENERAL. Except as otherwise provided in Section
2.15(b), each reduction of the Aggregate Revolving Credit Commitment Amount
shall be made by reducing each Lender's Revolving Credit Commitment Amount by an
amount equal to such Lender's Commitment Percentage of such reduction.
Simultaneously with each reduction of the Aggregate Revolving Credit Commitment
Amount under this Section, the Borrower shall pay the Facility Fee accrued on
the amount by which the Aggregate Revolving Credit Commitment Amount has been
reduced.
H. Prepayments of the Loans
------------------------
1. VOLUNTARY PREPAYMENTS. The Borrower may, at its option,
prepay the Revolving Credit Loans, without premium or penalty (but subject to
Section 3.5), in full at any time or in part from time to time by notifying the
Administrative Agent in writing at least one Business Day prior to the proposed
prepayment date, in the case of Revolving Credit Loans consisting of ABR
Advances, and at least three Business Days prior to the proposed prepayment
date, in the case
<PAGE> 36
of Revolving Credit Loans consisting of Eurodollar Advances, specifying whether
the Revolving Credit Loans to be prepaid consist of ABR Advances, Eurodollar
Advances, or a combination thereof, the amount to be prepaid and the date of
prepayment. Each such notice shall be irrevocable and the amount specified in
each such notice shall be due and payable on the date specified, together with
accrued interest to the date of such payment on the amount prepaid. Upon receipt
of such notice, the Administrative Agent shall promptly notify each Lender
thereof. Each partial prepayment of the Revolving Credit Loans pursuant to this
subsection shall be in an aggregate principal amount of $2,000,000 or such
amount PLUS a whole multiple of $1,000,000 in excess thereof, or, if less, the
outstanding principal balance of the Revolving Credit Loans. Competitive Bid
Loans may not be prepaid.
(b) IN GENERAL. Simultaneously with each prepayment of a Loan,
the Borrower shall prepay all accrued interest on the amount prepaid through the
date of prepayment. If any prepayment is made in respect of any Eurodollar
Advance, in whole or in part, prior to the last day of the applicable Interest
Period, the Borrower agrees to indemnify the Lenders in accordance with Section
3.5.
I. Use of Proceeds
---------------
The Borrower agrees that the proceeds of the Loans or Letters
of Credit shall be used solely, directly or indirectly, to a. repay the
Borrower's Indebtedness under the KeyBank Loan Documents, b. pay all of the Fees
due hereunder, c. pay the reasonable out-of-pocket fees and expenses incurred by
the Borrower in connection with the Loan Documents and d. for the Borrower's
working capital and general corporate purposes not inconsistent with the
provisions hereof. Notwithstanding anything to the contrary contained in any
Loan Document, the Borrower agrees that no part of the proceeds of any Loan or
Letter of Credit will be used, directly or indirectly, for a purpose which
violates any law, including the provisions of Regulations G, T, U or X of the
Board of Governors of the Federal Reserve System, as amended.
J. Letter of Credit Sub-Facility
-----------------------------
1. CoreStates issued the Existing Letters of Credit under the
KeyBank Loan Documents. As of the Effective Date, each Lender (other than
CoreStates) assumes a portion of the risk associated with the Existing Letters
of Credit in accordance with its Commitment Percentage. Subject to the terms and
conditions of this Agreement, each Issuing Bank agrees, in reliance on the
agreement of the other Lenders set forth in Section 2.11, to issue Documentary
Letters of Credit and Standby Letters of Credit (together with the Existing
Letters of Credit, the "LETTERS OF CREDIT", and each individually, a "LETTER OF
CREDIT") denominated in Dollars during the Revolving Credit Commitment Period
for the account of the Borrower, provided that immediately after the issuance of
each Letter of Credit, (i) the Letter of Credit Exposure of all Lenders (whether
or not the conditions for drawing under any
<PAGE> 37
Letter of Credit have or may be satisfied) would not exceed the Letter of
Credit Commitment Amount and (ii) the Aggregate Credit Exposure would not
exceed the Aggregate Revolving Credit Commitment Amount. Each Letter of Credit
shall have an expiration date which shall be not later than the earlier of (i)
twelve months after the date of issuance thereof or (ii) ten Business Days
before the Maturity Date. No Letter of Credit shall be issued by an Issuing
Bank if such Issuing Bank, or any Lender by notice to the Issuing Banks and
the Administrative Agent no later than 1:00 p.m. one Business Day prior to
the requested date of issuance of such Letter of Credit, shall have determined
that any condition set forth in Sections 5 or 6 has not been satisfied.
2. Each Letter of Credit shall be issued for the account of
the Borrower in support of an obligation of the Borrower or any of its
Subsidiaries in favor of a beneficiary who has requested the issuance of such
Letter of Credit as a condition to a transaction entered into in the ordinary
course of business. The Borrower shall have the option of designating which of
the Issuing Banks shall issue a Letter of Credit. The Borrower shall give the
applicable Issuing Bank (with a copy to the Administrative Agent) a Letter of
Credit Request (which may be given by electronic means) for the issuance of each
Letter of Credit to be issued by such Issuing Bank. Each Letter of Credit to be
issued hereunder shall be issued pursuant to the applicable Issuing Bank's
standard and customary form of application and agreement for Documentary Letters
of Credit or Standby Letters of Credit, as applicable, or Master Letter of
Credit Agreement for Documentary Letters of Credit or Standby Letters of Credit,
as applicable (or any equivalent agreement however named) then in use (each a
"REIMBURSEMENT AGREEMENT"), and shall identify: a. respective dates of issuance
and expiry of such Letter of Credit (which date of expiry shall conform to the
requirements of subsection (a) above), b. the amount of such Letter of Credit,
c. the beneficiary of such Letter of Credit and d. the drafts or other documents
(if any) necessary to be presented to the Issuing Bank upon a drawing
thereunder.
3. Upon each payment by an Issuing Bank of a draft drawn under
a Letter of Credit, the Borrower shall pay to such Issuing Bank an amount equal
to such payment.
4. The Issuing Bank shall notify the Administrative Agent of
the issuance by it of a Letter of Credit including the information set forth in
the last sentence of subsection (b), and shall provide the Administrative Agent
such other information with respect thereto as the Administrative Agent may from
time to time request.
5. Notwithstanding anything to the contrary contained herein
or in any Reimbursement Agreement, to the extent that the terms of this
Agreement shall be inconsistent with the terms of such Reimbursement Agreement,
the terms of this Agreement shall govern.
K. Letter of Credit Participation and Funding Commitments
------------------------------------------------------
1. Each Lender hereby unconditionally, irrevocably and
severally (and not jointly) for itself only and without any notice to or the
taking of any action
<PAGE> 38
by such Lender, takes (i) on the Effective Date with respect to the Existing
Letters of Credit, and (ii) on the issuance of any Letter of Credit issued on or
after the Effective Date, an undivided participating interest in the obligations
of each Issuing Bank under and in connection with each of its Letters of Credit
in an amount equal to such Lender's Commitment Percentage of the amount of such
Letter of Credit. Each Lender shall be liable to each Issuing Bank for its
Commitment Percentage of the unreimbursed amount of any draft drawn and honored
under each of its Letters of Credit. Each Lender shall also be liable for its
Commitment Percentage of any amounts paid by the Borrower pursuant to Sections
2.10(c) or 2.12 that are subsequently rescinded or avoided, or must otherwise be
restored or returned. Such liabilities shall be unconditional and without regard
to the occurrence of any Default or the compliance by the Borrower with any of
its obligations under the Loan Documents.
2. Each Issuing Bank will promptly notify the Administrative
Agent, and the Administrative Agent will promptly notify each Lender (which
notice shall be promptly confirmed in writing) of the date and the amount of any
draft presented under each of its Letters of Credit with respect to which full
reimbursement is not made as provided in Section 2.10(c), and forthwith upon
receipt of each such notice, such Lender (other than such Issuing Bank in its
capacity as a Lender) shall make available to the Administrative Agent for the
account of such Issuing Bank its Commitment Percentage of the amount of such
unreimbursed draft at the office of the Administrative Agent specified in
Section 11.2, in lawful money of the United States and in immediately available
funds, before 4:00 p.m., on the day such notice was given by the Administrative
Agent, if the relevant notice was given by the Administrative Agent at or prior
to 1:00 p.m., on such day, and before 12:00 noon, on the next Business Day, if
the relevant notice was given by the Administrative Agent after 1:00 p.m., on
such day. The Administrative Agent shall distribute the payments made pursuant
to the immediately preceding sentence to such Issuing Bank promptly upon receipt
thereof in like funds as received. Each Lender shall indemnify and hold harmless
the Administrative Agent and such Issuing Bank from and against any and all
losses, liabilities (including liabilities for penalties), actions, suits,
judgments, demands, reasonable out-of-pocket costs and expenses (including
reasonable attorneys' fees and expenses), resulting from any failure on the part
of such Lender perform its obligations in accordance with this Section (except
in respect of losses, liabilities or other obligations suffered by such Issuing
Bank to the extent resulting from the gross negligence or willful misconduct of
such Issuing Bank). If a Lender does not make any payment required under this
Section 2.11 when due, such Lender shall be required to pay interest to the
Administrative Agent for the account of such Issuing Bank (upon demand therefor)
on the amount of such payment at a rate of interest per annum equal to the
Federal Funds Rate for the first three days after the due date of such payment
and the Federal Funds Rate plus 2% thereafter until the date such payment is
received by the Administrative Agent. The Administrative Agent shall distribute
such interest payments to such Issuing Bank upon receipt thereof in like funds
as received.
<PAGE> 39
3. Whenever any Issuing Bank is reimbursed by the Borrower, or
the Administrative Agent is reimbursed by the Borrower, for the account of such
Issuing Bank, for any payment under a Letter of Credit and such payment relates
to an amount previously paid by a Lender pursuant to this Section 2.11, the
Administrative Agent (or such Issuing Bank, to the extent that it has received
the same) will pay over such payment to such Lender a. before 4:00 p.m. on the
day such payment from the Borrower is received, if such payment is received at
or prior to 1:00 p.m. on such day, or b. before 12:00 noon on the next
succeeding Business Day, if such payment from the Borrower is received after
1:00 p.m. on such day. In the event that amounts are due to more than one Lender
under this subsection, such reimbursements shall be paid over to such Lenders on
a pro rata basis.
L. Absolute Obligation With Respect to Letter of Credit Payments
-------------------------------------------------------------
The Borrower's obligation to reimburse the Administrative
Agent for the account of each Issuing Bank in respect of each payment under or
in respect of such Issuing Bank's Letters of Credit shall be absolute and
unconditional under any and all circumstances and irrespective of any set-off,
counterclaim or defense to payment which the Borrower may have or have had
against the beneficiary of such Letter of Credit, the Administrative Agent, any
Issuing Bank, as issuer of such Letter of Credit, any Lender or any other
Person, including, without limitation, any defense based on the failure of any
drawing to conform to the terms of such Letter of Credit, any drawing document
proving to be forged, fraudulent or invalid, or the legality, validity,
regularity or enforceability of such Letter of Credit; provided, that, with
respect to any Letter of Credit, the foregoing shall not relieve any Issuing
Bank of any liability it may have to the Borrower for any actual damages
sustained by the Borrower arising from a wrongful payment under such Letter of
Credit made as a result of such Issuing Bank's gross negligence or willful
misconduct.
M. Payments
--------
1. Each payment, including each prepayment, of principal and
interest on the Loans, of the Facility Fee, the Letter of Credit Commissions and
of all of the other fees to be paid to the Administrative Agent and the Lenders
in connection with this Agreement (the Facility Fee and the Letter of Credit
Commissions, together with all of such other fees, being sometimes hereinafter
collectively referred to as the "FEES") shall be made by the Borrower prior to
1:00 p.m. on the date such payment is due to the Administrative Agent for the
account of the applicable Lenders at the Administrative Agent's office specified
in Section 11.2, in each case in lawful money of the United States, in
immediately available funds and without set-off or counterclaim. As between the
Borrower and the Lenders, any payment by the Borrower to the Administrative
Agent for the account of the Lenders shall be deemed to be payment by the
Borrower to the Lenders. The failure of the Borrower to make any such payment by
such time shall not constitute a Default, provided that such payment is made on
such due date, but any such payment made after 1:00 p.m. on such due date shall
be deemed to have been made on the next Business Day for the purpose of
calculating interest on amounts outstanding on the Loans. Subject to Section
9.2(b), promptly upon receipt by the Administrative Agent of each payment,
including each prepayment, pursuant to this Section, the Administrative Agent
shall remit such payment in like funds as received as follows: a. in the case of
the Facility Fee and the
<PAGE> 40
Letter of Credit Commissions, to each Lender according to its Commitment
Percentage, and b. in the case of principal and interest on the Loans, to each
Lender pro rata according to its Outstanding Percentage of the amount of
principal or interest, as the case may be, which is then due and payable to the
Lenders.
2. If any payment hereunder, under the Notes or under any
Reimbursement Agreement shall be due and payable on a day which is not a
Business Day, the due date thereof (except as otherwise provided in the
definition of Interest Period) shall be extended to the next Business Day and
(except with respect to payments in respect of the Fees) interest shall be
payable at the applicable rate specified herein during such extension, provided,
however that if such next Business Day is after the Maturity Date, any such
payment shall be due on the immediately preceding Business Day.
N. Cash Collateral Account
-----------------------
At, or at any time before, the time the Borrower shall be
required to make a deposit into the Cash Collateral Account, the Administrative
Agent shall establish and maintain at its offices at One Wall Street, New York,
New York in the name of the Borrower but under the sole dominion and control of
the Administrative Agent, a cash collateral account designated as "OfficeMax,
Inc./Cash Collateral Account" (the "CASH COLLATERAL ACCOUNT"). The Borrower may
from time to time make one or more deposits into the Cash Collateral Account.
The Borrower hereby pledges to the Administrative Agent for its benefit, the
benefit of the Administrative Agent, the Issuing Banks and the pro rata benefit
of the Lenders, a Lien on and security interest in the Cash Collateral Account
and all sums at any time and from time to time on deposit therein (the Cash
Collateral Account, together with all sums on deposit therein, being sometimes
hereinafter collectively referred to as the "CASH COLLATERAL"), as collateral
security for the prompt payment in full when due, whether at stated maturity, by
acceleration or otherwise, of all the obligations of the Borrower under the Loan
Documents (the "OBLIGATIONS"). The Borrower agrees that at any time and from
time to time at its expense, it will promptly execute and deliver to the
Administrative Agent any further instruments and documents, and take any further
actions, that may be necessary or that the Administrative Agent may reasonably
request, in order to perfect and protect any security interest granted or
purported to be granted hereby or to enable the Administrative Agent to exercise
and enforce its rights and remedies hereunder with respect to any Cash
Collateral. The Borrower agrees that it will not a. sell or otherwise dispose of
any of the Cash Collateral, or b. create or permit to exist any Lien upon any of
the Cash Collateral other than Liens in favor of the Administrative Agent, the
Issuing Banks and the Lenders. The Borrower hereby authorizes the Administrative
Agent, promptly after each drawing under any Letter of Credit shall become due
and payable, to apply any and all cash on deposit in the Cash Collateral Account
towards the reimbursement of the applicable Issuing Bank for all sums paid in
respect of such drawing, and all other Obligations which shall then be due and
owing.
<PAGE> 41
O. Extension of Maturity Date
--------------------------
1. Provided that no Default shall exist, the Borrower may
request that the Maturity Date be extended for additional years (but in no event
by more than one year per request) by giving written notice thereof (each an
"EXTENSION REQUEST"), substantially in the form of Exhibit M, to the
Administrative Agent at any time (but in no event later than one year prior to
the then Maturity Date in the case of the initial Extension Request) and, upon
receipt of each such notice, the Administrative Agent shall promptly notify each
Lender thereof. Subject to Section 2.15(b), the then current Maturity Date shall
not be extended unless and until each Lender, in its sole and absolute
discretion, shall have consented in writing to such request, in which event such
then current Maturity Date shall be extended to the day which is one year after
the then current Maturity Date, PROVIDED THAT if such day is not a Business Day,
then such then current Maturity Date shall be extended to the immediately
preceding Business Day. Subject to Section 2.15(b), in the event that any Lender
shall not have granted its consent to an Extension Request, the then current
Maturity Date shall remain in effect. Each Lender shall respond to each
Extension Request by no later than the 30th day following the date of the
relevant Extension Request (each an "EXPIRATION DATE"), provided that each
Lender which shall have failed so to respond by such time shall be deemed not to
have consented thereto. In the event that any Lender declines to grant an
Extension Request, the Administrative Agent shall promptly notify the Borrower
of the name of each such Lender but the Administrative Agent shall have no
liability for any delay in delivering, or any failure to deliver, such notice.
2. Notwithstanding any provision of Section 2.15(a) to the
contrary, in the event that Lenders having Revolving Credit Commitment Amounts
equal to or more than 66-2/3% of the Aggregate Revolving Credit Commitment
Amount desire to extend the Maturity Date pursuant to Section 2.15(a)
(collectively, the "CONTINUING LENDERS"), the Borrower shall have the right,
provided that no Default shall have occurred and be continuing, to replace or
remove any Lender that does not desire to extend the Maturity Date (each a
"NON-EXTENDING LENDER") by giving the Administrative Agent notice, no later than
20 days after the later of the relevant Expiration Date and the Borrower's
receipt from the Administrative Agent of the names of Non-Extending Lenders, of
its intent to extend the Maturity Date. On or prior to the then current Maturity
Date, the Borrower shall, with respect to each Non-Extending Lender, either a.
reduce the Aggregate Revolving Credit Commitment Amount to an amount equal to
the Aggregate Revolving Credit Commitment Amounts of the Continuing Lenders and
pay or cause to be paid to the Administrative Agent for the account of such
Non-Extending Lender all principal, interest, fees and other amounts accrued or
owing to such Non-Extending Lender under the Loan Documents (in which case, the
Commitment of such Non-Extending Lender shall automatically terminate), or b.
replace such Non-Extending Lender. In the event that the Borrower shall not have
replaced a Non-Extending Lender for any reason by the then current Maturity
Date, the Borrower shall be deemed to have elected to reduce the Aggregate
Revolving Credit Commitment Amount by the Revolving Credit Commitment Amount of
such Non-Extending Lender. In the event of a replacement of a Non-Extending
Lender, such Non-Extending Lender agrees to assign, without recourse,
representation or warranty, all of its rights and obligations under the Loan
Documents, with the prior consent of the Administrative Agent (which consent
shall not be unrea-
<PAGE> 42
sonably withheld), to one or more Extending Lenders in such percentages as shall
be determined by the Borrower, upon payment by such Extending Lender(s) to such
Non-Extending Lender of all principal, interest, fees and other amounts accrued
or owing to such Non-Extending Lender under the Loan Documents. In the event
that the Borrower shall have elected (or be deemed to have elected) to replace
or remove a Non-Extending Lender pursuant to this Section 2.15(b), then, on the
date, if any, upon which all of the Borrower's obligations under this Section
2.15(b) shall have been satisfied, the then current Maturity Date shall be
extended to the day which is one year thereafter, PROVIDED THAT (1) if such day
is not a Business Day, then such then current Maturity Date shall be extended to
the immediately preceding Business Day, and (2) if the Borrower shall not have
satisfied such obligations on or prior to the then current Maturity Date, then
such Maturity Date shall not be extended.
III. INTEREST, FEES, YIELD PROTECTIONS, ETC.
---------------------------------------
A. Interest Rate And Payment Dates
-------------------------------
1. PRIOR TO MATURITY. Except as otherwise provided in Section
3.1(b) and 3.1(c), prior to maturity, the Loans shall bear interest on the
outstanding principal balance thereof at the applicable interest rate or rates
per annum set forth below:
ADVANCES/LOANS RATE
-------------- ----
Each ABR Advance Alternate Base Rate.
Each Eurodollar Advance Eurodollar Rate for the
applicable Interest Period
PLUS the Applicable Margin.
Each Competitive Bid Loan Competitive Bid Rate
applicable thereto.
Each Swing Line ABR Advance Alternate Base Rate.
Each Swing Line Negotiated
Rate Advance Negotiated Rate applicable to
such Swing Line Negotiated
Rate Advance.
2. LATE CHARGES. Upon the occurrence and during the
continuance of an Event of Default under Sections 9.1(a) or (b), the unpaid
principal balance of the Loans shall bear interest payable on demand at a rate
per annum (whether before or after the entry of a judgment thereon) equal to
2% PLUS the rate which would otherwise be applicable under Section 3.1(a), and
any overdue interest or other amount payable under the Loan Documents shall
bear interest (whether before
<PAGE> 43
or after the entry of a judgment thereon) payable on demand at a rate per annum
equal to 2% PLUS the Alternate Base Rate.
3. HIGHEST LAWFUL RATE. At no time shall the interest rate
payable on the Loans of any Lender, together with the Fees and all other amounts
payable under the Loan Documents to such Lender, to the extent the same are
construed to constitute interest, exceed the Highest Lawful Rate applicable to
such Lender. If with respect to any Lender for any period during the term of
this Agreement, any amount paid to such Lender under the Loan Documents, to the
extent the same shall (but for the provisions of this Section) constitute or be
deemed to constitute interest, would exceed the maximum amount of interest
permitted by the Highest Lawful Rate applicable to such Lender during such
period (such amount being hereinafter referred to as an "UNQUALIFIED AMOUNT"),
then (i) such Unqualified Amount shall be applied or shall be deemed to have
been applied as a prepayment of the Loans of such Lender, and (ii) if in any
subsequent period during the term of this Agreement, all amounts payable under
the Loan Documents to such Lender in respect of such period which constitute or
shall be deemed to constitute interest shall be less than the maximum amount of
interest permitted by the Highest Lawful Rate applicable to such Lender during
such period, then the Borrower shall pay to such Lender in respect of such
period an amount (each a "COMPENSATORY INTEREST PAYMENT") equal to the lesser of
(x) a sum which, when added to all such amounts, would equal the maximum amount
of interest permitted by the Highest Lawful Rate applicable to such Lender
during such period, and (y) an amount equal to the Unqualified Amount less all
other Compensatory Interest Payments made in respect thereof.
4. IN GENERAL. Interest on a. ABR Advances and Swing Line ABR
Advances to the extent based on the BNY Rate shall be calculated on the basis of
a 365 or 366-day year (as the case may be), and b. ABR Advances and Swing Line
ABR Advances to the extent based on the Federal Funds Rate, on Eurodollar
Advances, on Competitive Bid Loans and on Swing Line Negotiated Rate Advances
shall be calculated on the basis of a 360-day year, in each case, for the actual
number of days elapsed. Except as otherwise provided in Section 3.1(b), interest
shall be payable in arrears on each Interest Payment Date and upon each payment
(including prepayment) of the Loans. Any change in the interest rate on the
Loans resulting from a change in the Alternate Base Rate or reserve requirements
shall become effective as of the opening of business on the day on which such
change shall become effective. The Administrative Agent shall, as soon as
practicable, notify the Borrower and the Lenders of the effective date and the
amount of each such change in the BNY Rate, but any failure to so notify shall
not in any manner affect the obligation of the Borrower to pay interest on the
Loans in the amounts and on the dates required. Each determination of the
Alternate Base Rate or a Eurodollar Rate by the Administrative Agent pursuant to
this Agreement shall be conclusive and binding on all parties hereto absent
manifest error. The Borrower acknowledges that to the extent interest payable on
ABR Advances and on Swing Line ABR Advances is based on the BNY Rate, such rate
is only one of the bases for computing interest on loans made by the Lenders,
and by basing interest payable on ABR Advances on the BNY Rate, the Lenders have
not committed to charge, and the Borrower has not in any way bargained for,
interest based on a lower or the lowest rate at which the Lenders may now or in
the future make loans to other borrowers.
<PAGE> 44
B. Fees
----
1. LETTER OF CREDIT COMMISSIONS. The Borrower agrees to pay to
the Administrative Agent, for the account of the Lenders in accordance with each
Lender's Commitment Percentage, commissions (the "LETTER OF CREDIT COMMISSIONS")
with respect to the Letters of Credit for the period from and including the date
of issuance of each thereof to and including the expiration date thereof, at a
rate per annum equal to a. in the case of each Standby Letter of Credit, the
Applicable Fee Percentage in effect on the date of issuance thereof on the
average daily maximum amount available under any contingency to be drawn under
such Standby Letter of Credit and b. in the case of each Documentary Letter of
Credit, the product of the Applicable Fee Percentage in effect on the date of
issuance thereof on the average daily maximum amount available under any
contingency to be drawn under such Documentary Letter of Credit MULTIPLIED BY
30%. The Letter of Credit Commissions shall be c. calculated on the basis of a
360-day year for the actual number of days elapsed and d. payable quarterly in
arrears on the last day of each March, June, September and December of each year
and on the date that the Revolving Credit Commitments shall expire. In addition
to the Letter of Credit Commissions, the Borrower agrees to pay to the
applicable Issuing Bank, for its own account, such Issuing Bank's standard fees
and charges, if any, customarily charged to customers similar to the Borrower
with respect to any Letter of Credit issued by such Issuing Bank or such other
fees and charges as agreed upon between the Borrower and such Issuing Bank.
2. FACILITY FEE. The Borrower agrees to pay to the
Administrative Agent, for the account of the Lenders in accordance with each
Lender's Commitment Percentage, a fee (the "FACILITY FEE"), during the period
from the Effective Date through the later of the Maturity Date and the date on
which all Loans shall have been paid in full, at a rate per annum equal to the
Applicable Fee Percentage on the average daily Aggregate Revolving Credit
Commitment Amount, regardless of usage or, after the Commitments have been
terminated on the average daily Aggregate Credit Exposure. The Facility Fee
shall be payable a. quarterly in arrears on the last day of each March, June,
September and December during such period commencing on the first such day
following the Effective Date, b. on the date of any reduction in the Aggregate
Revolving Credit Commitment Amount (to the extent of such reduction), c. on the
Maturity Date and d. after the Maturity Date, on demand. The Facility Fee shall
be calculated on the basis of a 360-day year for the actual number of days
elapsed.
3. ADMINISTRATIVE AGENT'S AND ISSUING BANKS' FEES. The
Borrower agrees to pay to the Administrative Agent and each Issuing Bank, for
their own respective accounts, such other fees as have been agreed to in writing
by the Borrower, the Administrative Agent and such Issuing Bank.
C. Conversions
-----------
<PAGE> 45
1. The Borrower may elect from time to time to convert one or
more Eurodollar Advances to ABR Advances by giving the Administrative Agent at
least one Business Day's prior irrevocable notice of such election, specifying
the amount to be converted, provided, that any such conversion of Eurodollar
Advances shall only be made on the last day of the Eurodollar Interest Period
applicable thereto. In addition, the Borrower may elect from time to time to
convert a. ABR Advances to Eurodollar Advances and b. Eurodollar Advances to new
Eurodollar Advances by selecting a new Eurodollar Interest Period therefor, in
each case by giving the Administrative Agent at least three Business Days' prior
irrevocable notice of such election, in the case of a conversion to Eurodollar
Advances, specifying the amount to be so converted and the initial Eurodollar
Interest Period relating thereto, provided that any such conversion of ABR
Advances to Eurodollar Advances shall only be made on a Business Day and any
such conversion of Eurodollar Advances to new Eurodollar Advances shall only be
made on the last day of the Eurodollar Interest Period applicable to the
Eurodollar Advances which are to be converted to such new Eurodollar Advances.
Each such notice shall be irrevocable and shall be given by the delivery by
telecopy of a Notice of Conversion (confirmed promptly, and in any event within
five Business Days, by the delivery to the Administrative Agent of a Notice of
Conversion manually signed by the Borrower). The Administrative Agent shall
promptly provide the Lenders with notice of each such election. Advances may be
converted pursuant to this Section in whole or in part, provided that the amount
to be converted to each Eurodollar Advance, when aggregated with any Eurodollar
Advance to be made on such date in accordance with Section 2.5 and having the
same Eurodollar Interest Period as such first Eurodollar Advance, shall equal no
less than $2,000,000 or such amount PLUS a whole multiple of $1,000,000 in
excess thereof.
2. Notwithstanding anything in this Agreement to the contrary,
upon the occurrence and during the continuance of a Default, the Borrower shall
have no right to elect to convert any existing ABR Advance to a new Eurodollar
Advance or to convert any existing Eurodollar Advance to a new Eurodollar
Advance. In such event, all ABR Advances shall be automatically continued as ABR
Advances and all Eurodollar Advances shall be automatically converted to ABR
Advances on the last day of the Eurodollar Interest Period applicable to such
Eurodollar Advance.
3. Each conversion shall be effected by each Lender by
applying the proceeds of its new ABR Advance or Eurodollar Advance, as the case
may be, to its Advances (or portion thereof) being converted (it being
understood that any such conversion shall not constitute a borrowing for
purposes of Sections 4, 5 or 6).
4. Competitive Bid Loans may not be converted.
D. Concerning Eurodollar Interest Periods and Swing Line Interest
--------------------------------------------------------------
Periods
-------
Notwithstanding any other provision of any Loan Document:
1. If the Borrower shall have failed to elect a
Eurodollar Advance under Section 2.5 or 3.3, as the case may be, in connection
with any borrowing of new Revolving Credit Loans or expiration of an Eurodollar
Interest Period with respect to any existing Eurodollar Advance, the amount of
the Revolving Credit
<PAGE> 46
Loans subject to such borrowing or such existing Eurodollar Advance shall
thereafter be an ABR Advance until such time, if any, as the Borrower shall
elect a new Eurodollar Advance pursuant to Section 3.3.
2. No Interest Period selected in respect of the
borrowing or conversion of any Eurodollar Advance comprising a Revolving Credit
Loan or any Swing Line Loan shall end after the Maturity Date.
3. The Borrower shall not be permitted to have more
than eight Eurodollar Advances outstanding at any one time, it being agreed that
each borrowing of a Eurodollar Advance pursuant to a single Borrowing Request
shall constitute the making of one Eurodollar Advance for the purpose of
calculating such limitation.
E. Indemnification for Loss
------------------------
Notwithstanding anything contained herein to the contrary, a.
if the Borrower shall fail for any reason to borrow a Revolving Credit Loan in
respect of which it shall have requested a Eurodollar Advance or convert an
Advance to a Eurodollar Advance after it shall have notified the Administrative
Agent of its intent to do so, or b. if the Borrower shall fail for any reason to
borrow a Competitive Bid Loan in any instance in which it shall have accepted
one or more offers of Competitive Bid Loans, or c. if the Borrower shall fail to
borrow a Swing Line Negotiated Rate Advance after the Swing Line Lender shall
have agreed to a Negotiated Rate with respect thereto in accordance with Section
2.5, or d. if a Eurodollar Advance, Competitive Bid Loan or Swing Line
Negotiated Rate Advance shall terminate for any reason prior to the last day of
the Interest Period applicable thereto, or e. if the Borrower shall prepay or
repay all or any part of the principal amount of a Eurodollar Advance,
Competitive Bid Loan or Swing Line Negotiated Rate Advance prior to the last day
of the Interest Period applicable thereto, the Borrower agrees to indemnify each
Lender against, and to pay on demand directly to such Lender the amount
(calculated by such Lender using any method chosen by such Lender which is
customarily used by such Lender for such purpose) equal to any loss or
out-of-pocket expense suffered by such Lender as a result of such failure to
borrow or convert, or such termination, repayment or prepayment, including any
loss, cost or expense suffered by such Lender in liquidating or employing
deposits acquired to fund or maintain the funding of such Eurodollar Advance,
Competitive Bid Loan or Swing Line Negotiated Rate Advance, as the case may be,
or redeploying funds prepaid or repaid, in amounts which correspond to such
Eurodollar Advance, Competitive Bid Loan or Swing Line Negotiated Rate Advance,
as the case may be, and any internal processing charge customarily charged by
such Lender in connection therewith.
F. Capital Adequacy
----------------
If the amount of capital required or expected to be maintained
by any
<PAGE> 47
Lender or any Issuing Bank or any Person directly or indirectly owning or
controlling such Lender or such Issuing Bank (each a "CONTROL PERSON"), shall be
affected by the occurrence of a Regulatory Change and such Lender or such
Issuing Bank shall have determined that such Regulatory Change shall have had or
will thereafter have the effect of reducing a. the rate of return on such
Lender's such Issuing Bank's or such Control Person's capital, or b. the asset
value to such Lender or such Issuing Bank or such Control Person of the Loans
made or maintained by such Lender, or of the Reimbursement Obligations or any
participation therein, in any case to a level below that which such Lender or
such Issuing Bank or such Control Person could have achieved or would thereafter
be able to achieve but for such Regulatory Change (after taking into account
such Lender's or such Issuing Bank's or such Control Person's policies regarding
capital adequacy) by an amount deemed by such Lender or such Issuing Bank to be
material to such Lender or such Issuing Bank or Control Person, then, within
thirty days after demand by such Lender or such Issuing Bank, the Borrower shall
pay to such Lender or such Issuing Bank or such Control Person such additional
amount or amounts as shall be sufficient to compensate such Lender or such
Issuing Bank or such Control Person, as the case may be, for such reduction. A
statement setting forth the calculations of any additional amounts payable
pursuant to this Section submitted by a Lender, the Administrative Agent or an
Issuing Bank, as the case may be, to the Borrower shall be conclusive absent
manifest error.
G. Reimbursement for Increased Costs
---------------------------------
If any Lender, the Administrative Agent or any Issuing Bank
shall determine that a Regulatory Change:
1. does or shall subject it to any Taxes of any kind
whatsoever with respect to any Eurodollar Advances or its obligations under this
Agreement to make Eurodollar Advances, or change the basis of taxation of
payments to it of principal, interest or any other amount payable hereunder in
respect of its Eurodollar Advances, or impose on the Administrative Agent, such
Issuing Bank or such Lender any other condition regarding the Letters of Credit
including any Taxes required to be withheld from any amounts payable under the
Loan Documents (except for imposition of, or change in the rate of, Tax on the
Income of such Lender or such Issuing Bank); or
2. does or shall impose, modify or make applicable
any reserve, special deposit, compulsory loan, assessment, increased cost or
similar requirement against assets held by, or deposits of, or advances or loans
by, or other credit extended by, or any other acquisition of funds by, any
office of such Lender in respect of its Eurodollar Advances which is not
otherwise included in the determination of a Eurodollar Rate or against any
Letters of Credit issued by such Issuing Bank or participated in by any Lender;
and the result of any of the foregoing is to increase the cost to such Lender of
making, renewing, converting or maintaining its Eurodollar Advances or its
commitment to make such Eurodollar Advances, or to reduce any amount receivable
hereunder in respect of its Eurodollar Advances, or to increase the cost to such
Issuing Bank of issuing or maintaining the Letters of Credit or the cost to any
Lender
<PAGE> 48
of participating therein or the cost to the Administrative Agent or such
Issuing Bank of performing its respective functions hereunder with respect to
the Letters of Credit, then, in any such case, the Borrower shall pay such
Lender, the Administrative Agent, or such Issuing Bank, as the case may be,
within thirty days after demand therefor, such additional amounts as are
sufficient to compensate such Lender, such Issuing Bank or the Administrative
Agent, as the case may be, for such additional cost or reduction in such amount
receivable which such Lender, such Issuing Bank or the Administrative Agent
deems to be material as determined by such Lender, such Issuing Bank or the
Administrative Agent, as the case may be; provided, however, that nothing in
this Section shall require the Borrower to indemnify the Lenders, the
Administrative Agent, or the Issuing Banks, as the case may be, with respect to
withholding Taxes for which the Borrower has no obligation under Section 3.10.
No failure by any Lender or the Administrative Agent, or any Issuing Bank to
demand, and no delay in demanding, compensation for any increased cost shall
constitute a waiver of its right to demand such compensation at any time. A
statement setting forth the calculations of any additional amounts payable
pursuant to this Section submitted by a Lender, the Administrative Agent or an
Issuing Bank, as the case may be, to the Borrower shall be conclusive absent
manifest error.
H. Illegality of Funding
---------------------
Notwithstanding any other provision hereof, if any Lender
shall reasonably determine that any law, regulation, treaty or directive, or any
change therein or in the interpretation or application thereof, shall make it
unlawful for such Lender to make or maintain any Eurodollar Advance as
contemplated by this Agreement, such Lender shall promptly notify the Borrower
and the Administrative Agent thereof, and a. the commitment of such Lender to
make such Eurodollar Advances or convert ABR Advances to Eurodollar Advances
shall forthwith be suspended, b. such Lender shall fund its portion of each
requested Eurodollar Advance as an ABR Advance and c. such Lender's Revolving
Credit Loans then outstanding as such Eurodollar Advances, if any, shall be
converted automatically to ABR Advances on the last day of the then current
Eurodollar Interest Period applicable thereto or at such earlier time as may be
required by law. If the commitment of any Lender with respect to Eurodollar
Advances is suspended pursuant to this Section and such Lender shall have
obtained actual knowledge that it is once again legal for such Lender to make or
maintain Eurodollar Advances, such Lender shall promptly notify the
Administrative Agent and the Borrower thereof and, upon receipt of such notice
by each of the Administrative Agent and the Borrower, such Lender's commitment
to make or maintain Eurodollar Advances shall be reinstated.
I. Substituted Interest Rate
-------------------------
In the event that a. the Administrative Agent shall have
determined (which determination shall be conclusive and binding upon the
Borrower) that by reason of circumstances affecting the interbank eurodollar
market either adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate applicable
<PAGE> 49
pursuant to Section 3.1 or b. the Required Lenders shall have notified the
Administrative Agent that they have determined (which determination shall be
conclusive and binding on the Borrower) that the applicable Eurodollar Rate will
not adequately and fairly reflect the cost to such Lenders of maintaining or
funding loans bearing interest based on such Eurodollar Rate, with respect to
any portion of the Revolving Credit Loans that the Borrower has requested be
made as Eurodollar Advances or Eurodollar Advances that will result from the
requested conversion of any portion of the Advances into or of Eurodollar
Advances (each, an "AFFECTED ADVANCE"), the Administrative Agent shall promptly
notify the Borrower and the Lenders (by telephone or otherwise, to be promptly
confirmed in writing) of such determination, on or, to the extent practicable,
prior to the requested Borrowing Date or Conversion Date for such Affected
Advances. If the Administrative Agent shall give such notice, (a) any Affected
Advances shall be made as ABR Advances, (b) the Advances (or any portion
thereof) that were to have been converted to Affected Advances shall be
converted to ABR Advances and (c) any outstanding Affected Advances shall be
converted, on the last day of the then current Eurodollar Interest Period with
respect thereto, to ABR Advances. Until any notice under clauses (i) or (ii), as
the case may be, of this Section has been withdrawn by the Administrative Agent
(by notice to the Borrower promptly upon either (x) the Administrative Agent
having determined that such circumstances affecting the interbank eurodollar
market no longer exist and that adequate and reasonable means do exist for
determining the Eurodollar Rate pursuant to Section 3.1 or (y) the
Administrative Agent having been notified by such Required Lenders that
circumstances no longer render the Advances (or any portion thereof) Affected
Advances, no further Eurodollar Advances shall be required to be made by the
Lenders, nor shall the Borrower have the right to convert all or any portion of
the Revolving Credit Loans to or as Eurodollar Advances.
J. Taxes
-----
1. PAYMENTS TO BE FREE AND CLEAR. All payments by the Borrower
under the Loan Documents to or for the account of the Administrative Agent, any
Issuing Bank or any Lender (each, an "INDEMNIFIED TAX PERSON") shall be made
free and clear of, and without any deduction or withholding for or on account
of, any and all present or future income, stamp or other taxes, levies, imposts,
duties, fees, assessments, deductions, withholdings, or other charges of
whatever nature, now or hereafter imposed, levied, collected, withheld, or
assessed by any jurisdiction, or by any department, agency, state or other
political subdivision thereof or therein (collectively, "TAXES"), excluding as
to any Indemnified Tax Person, (i) a Tax on the Income (as defined below)
imposed on such Indemnified Tax Person and (ii) any interest, fees, additions to
tax or penalties for late payment thereof (each such nonexcluded Tax, an
"INDEMNIFIED TAX"). For purposes hereof, "TAX ON THE INCOME" shall mean, as to
any Person, a Tax imposed by one of the following jurisdictions or by any
political subdivision or taxing authority thereof: (i) the United States, (ii)
the jurisdiction in which such Person is organized, or (iii) the jurisdiction in
which such Person's principal office or lending offices are located; which Tax
is an income tax or franchise tax imposed on all or part of the net income or
net profits of such Person or which Tax represents interest, fees, or penalties
for late payment of such an income tax or franchise tax.
<PAGE> 50
2. GROSSING UP OF PAYMENTS. If the Borrower or any other
Person is required by any law, rule, regulation, order, directive, treaty or
guideline to make any deduction or withholding (which deduction or withholding
would constitute an Indemnified Tax) from any amount required to be paid by the
Borrower to or on behalf of an Indemnified Tax Person under any Loan Document a.
the Borrower shall pay such Indemnified Tax within thirty days after demand
therefor, but in no event later than the date on which penalties attach thereto,
such payment to be made for its own account (if the liability to pay is imposed
on the Borrower) or on behalf of and in the name of such Indemnified Tax Person
(if the liability is imposed on such Indemnified Tax Person), and b. the sum
payable to such Indemnified Tax Person shall be increased as may be necessary so
that after making all required deductions and withholdings (including deductions
and withholdings applicable to additional sums payable under this Section) such
Indemnified Tax Person receives an amount equal to the sum it would have
received had no such deductions or withholdings been made.
3. OTHER TAXES. The Borrower agrees to pay any current or
future stamp or documentary taxes or any other excise or property taxes, charges
or similar levies that arise from any payment made hereunder or from the
execution, delivery or registration of, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, the Loan
Documents or otherwise with respect to, the Loan Documents (collectively, the
"OTHER TAXES") within thirty days after demand therefor.
4. EVIDENCE OF PAYMENT. Within 30 days after the reasonable
request therefor by the Administrative Agent in connection with any payment of
Indemnified Taxes or Other Taxes, the Borrower will furnish to the
Administrative Agent the original or a certified copy of an official receipt
from the jurisdiction to which payment is made evidencing payment thereof or, if
unavailable, a certificate from a Financial Officer that states that such
payment has been made and that sets forth the date and amount of such payment.
5. EXCEPTION FOR EXISTING TAXES. No amount shall be required
to be paid to any Indemnified Tax Person under Section 3.10(a) or (b) with
respect to any Indemnified Tax to the extent that such Indemnified Tax would
have been required to have been paid under any law, rule, regulation, order,
directive, treaty or guideline in effect on the Relevant Date.
6. U.S. TAX CERTIFICATES. Each Indemnified Tax Person that is
organized under the laws of any jurisdiction other than the United States or any
political subdivision thereof that is exempt from United States federal
withholding tax, or that is subject to such tax at a reduced rate under an
applicable treaty, with respect to payments under the Loan Documents shall
deliver to the Administrative Agent for transmission to the Borrower, on or
prior to the Effective Date (in the case of each Indemnified Tax Person listed
on the signature pages hereof) or on the effective date of the Assignment and
Acceptance Agreement or other document pursuant
<PAGE> 51
to which it becomes an Indemnified Tax Person (in the case of each other
Indemnified Tax Person), and at such other times as the Borrower or the
Administrative Agent may reasonably request Internal Revenue Form 4224 or Form
1001 or other certificate or document required under United States law to
establish entitlement to such exemption or reduced rate. The Borrower shall not
be required to pay any additional amount to any such Indemnified Tax Person
under subsections (a) and (b) above if such Indemnified Tax Person shall have
failed to satisfy the requirements of the immediately preceding sentence;
provided that if such Indemnified Tax Person shall have satisfied such
requirements on the Relevant Date, nothing in this subsection shall relieve the
Borrower of its obligation to pay any additional amounts pursuant to subsections
(a) and (b) above in the event that, as a result of any change in applicable law
or treaty (including any change in the interpretation thereof), such Indemnified
Tax Person is no longer properly entitled to deliver certificates, documents or
other evidence at a subsequent date establishing the fact that such Indemnified
Tax Person is not subject to withholding as described in the immediately
preceding sentence.
K. Option to Fund
--------------
Each Lender (including the Swing Line Lender) has indicated
that, if the Borrower requests a Eurodollar Advance, such Lender makes a
Competitive Bid Loan to the Borrower or the Swing Line Lender makes a Swing Line
Negotiated Rate Advance to the Borrower, as the case may be, such Lender may
wish to purchase one or more deposits in order to fund or maintain its funding
of its Commitment Percentage of such Eurodollar Advance, its Competitive Bid
Loans or Swing Line Negotiated Rate Advances, as the case may be, during the
Interest Period applicable thereto; it being understood that the provisions of
this Agreement relating to such funding are included only for the purpose of
determining the rate of interest to be paid in respect of such Eurodollar
Advance, Competitive Bid Loan and Swing Line Negotiated Rate Advance, as the
case may be, and any amounts owing under Sections 3.5 and 3.7. Each Lender shall
be entitled to fund and maintain its funding of all or any part of each
Eurodollar Advance, Competitive Bid Loan or Swing Line Negotiated Rate Advance,
as the case may be, in any manner it sees fit, but all such determinations under
Sections 3.5 and 3.7 shall be made as if each Lender had actually funded and
maintained its Commitment Percentage of each such Eurodollar Advance or the
amount of each of its Competitive Bid Loans or Swing Line Negotiated Rate
Advances, as the case may be, during the applicable Interest Period through the
purchase of deposits in an amount equal to the amount of its Commitment
Percentage of such Eurodollar Advance or the amount of its Competitive Bid Loan
or Swing Line Negotiated Rate Advance, as the case may be, having a maturity
corresponding to such Interest Period. Any Lender may fund its Commitment
Percentage of each Eurodollar Advance, Competitive Bid Loan or Swing Line
Negotiated Rate Advance, as the case may be, from or for the account of any
branch or office of such Lender as such Lender may choose from time to time.
L. Replacement of Lenders
----------------------
Notwithstanding the foregoing, if a. any Lender shall request
compensation pursuant to Section 3.6 or 3.7, b. the Borrower shall be required
to pay any additional amounts pursuant to Section 3.10 in respect of any Lender,
c. any Lender
<PAGE> 52
shall be a Defaulting Lender or d. any Lender determines that it is unlawful for
it to make a Eurodollar Advance as provided in Section 3.8 and Required Lenders
have not made such determination, then, in each such case, provided that no
Default shall then exist and be continuing, during the 120 day period after the
receipt of such request, the Borrower may require that such Lender transfer all
of its right, title and interest under this Agreement and such Lender's Notes to
any lender identified by the Borrower (a "PROPOSED LENDER") if such Proposed
Lender agrees to assume all of the obligations of such Lender for consideration
equal to the outstanding principal amount of such Lender's Loans and all
unreimbursed sums paid by such Lender under Section 2.11(b), together with
interest thereon to the date of such transfer and all other amounts payable
under the Loan Documents to such Lender on or prior to the date of such transfer
(including any fees accrued hereunder and any amounts which would be payable
under Section 3.5 as if all of such Lender's Loans were being prepaid in full on
such date). Subject to the execution and delivery of new Notes, an instrument of
assignment and assumption, and such other documents as such Lender may
reasonably require, such Proposed Lender shall be a "Lender" for all purposes
hereunder. Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements of the Borrower contained in Sections 3.5,
3.6, 3.7, 11.5, 11.8 and 11.9 (without duplication of any payments made to such
Lender by the Borrower or the Proposed Lender) shall survive for the benefit of
any Lender replaced under this Section with respect to the time prior to such
replacement.
IV. REPRESENTATIONS AND WARRANTIES
------------------------------
In order to induce the Administrative Agent and the Lenders to enter
into this Agreement, the Lenders to make the Revolving Credit Loans, each
Issuing Bank to issue Letters of Credit and the Lenders to participate therein,
and the Swing Line Lender to make the Swing Line Loans and the Lenders to
participate therein, the Borrower makes the following representations and
warranties to the Administrative Agent, each Issuing Bank, the Swing Line Lender
and each Lender:
A. Subsidiaries; Capitalization
----------------------------
As of the Effective Date, the Borrower has only the
Subsidiaries set forth on, and the jurisdiction of formation of each such
Subsidiary and the percentage of the authorized, issued and outstanding Capital
Stock thereof which is owned or controlled by the Borrower, directly or
indirectly, is as set forth on, Schedule 4.1.
B. Existence And Corporate Power
-----------------------------
Each of the Borrower and each of its Subsidiaries is duly
organized or formed and validly existing in good standing under the laws of the
jurisdiction of its incorporation or formation, has all requisite corporate
power and authority to own its Property and to carry on its business as now
conducted, and is in good standing
<PAGE> 53
and authorized to do business in each jurisdiction in which the nature of the
business conducted therein or the Property owned by it therein makes such
qualification necessary, except where such failure to qualify would not
reasonably be expected to have a Material Adverse Effect.
C. Authority and Execution
-----------------------
The Borrower has full corporate power and authority to enter
into, execute, deliver and perform the terms of the Loan Documents, all of which
have been duly authorized by all proper and necessary corporate action and are
in full compliance with its Articles of Incorporation and Code of Regulations,
and the Borrower has duly executed and delivered the Loan Documents.
D. Binding Agreement
-----------------
The Loan Documents constitute, and the Notes, when issued and
delivered pursuant hereto for value received, will constitute, the valid and
legally binding obligations of the Borrower, enforceable in accordance with
their respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally.
E. Litigation
----------
Except as set forth on Schedule 4.5, there are no actions,
suits or proceedings at law or in equity or by or before any Governmental
Authority (whether purportedly on behalf of the Borrower or any of its
Subsidiaries) pending or, to the knowledge of the Borrower, threatened against
the Borrower or any of its Subsidiaries or maintained by the Borrower or any of
its Subsidiaries or which may affect the Property of the Borrower or any of its
Subsidiaries or any of their respective Properties or rights, which a. would
reasonably be expected to have a Material Adverse Effect, b. call into question
the validity or enforceability of, or otherwise seek to invalidate, any Loan
Document, or c. would, individually or in the aggregate, reasonably be expected
to materially and adversely affect any of the transactions contemplated by any
Loan Document.
F. Required Consents
-----------------
Except for information filings required to be made in the
ordinary course of business which are not a condition to the performance by the
Borrower under the Loan Documents, no consent, authorization or approval of,
filing with, notice to, or exemption by, shareholders or holders of any other
equity interest, any Governmental Authority or any other Person is required to
authorize, or is required in connection with the execution, delivery or
performance of the Loan Documents to which the Borrower or any of its
Subsidiaries is a party or is required as a condition to the validity or
enforceability of the Loan Documents to which any of the same is a party. Except
for information filings required to be made in the ordinary course of business
which are not a condition to the performance by the Borrower under the Loan
Documents, the Borrower, prior to each borrowing by it hereunder, has obtained
all necessary approvals and consents of, and has filed or caused to be filed all
reports,
<PAGE> 54
applications, documents, instruments and information required to be filed
pursuant to all applicable laws, rules, regulations and requests of, all
Governmental Authorities in connection with such borrowing.
G. Absence of Defaults; No Conflicting Agreements
----------------------------------------------
1. Neither the Borrower nor any of its Subsidiaries is in
default under any mortgage, indenture, contract or agreement to which it is a
party or by which it or any of its Property is bound, the effect of which
default would reasonably be expected to have a Material Adverse Effect. The
execution, delivery or carrying out of the terms of the Loan Documents will not
constitute a default under, or result in the creation or imposition of, or
obligation to create, any Lien upon any Property of the Borrower or any of its
Subsidiaries or result in a breach of or require the mandatory repayment of or
other acceleration of payment under or pursuant to the terms of any such
mortgage, indenture, contract or agreement.
2. Neither the Borrower nor any of its Subsidiaries is in
default with respect to any judgment, order, writ, injunction, decree or
decision of any Governmental Authority which default would reasonably be
expected to have a Material Adverse Effect.
H. Compliance With Applicable Laws
-------------------------------
The Borrower and each of its Subsidiaries is complying in all
material respects with all statutes, regulations, rules and orders of all
Governmental Authorities which are applicable to the Borrower or such
Subsidiary, a violation of which would reasonably be expected to have a Material
Adverse Effect.
I. Taxes
-----
Each of the Borrower and each of its Subsidiaries has filed or
caused to be filed all tax returns required to be filed and has paid, or has
made adequate provision for the payment of, all taxes shown to be due and
payable on said returns or in any assessments made against it (other than those
being contested as required under Section 7.4) which would be material to the
Borrower or any of its Subsidiaries, and no tax Liens have been filed with
respect thereto. The charges, accruals and reserves on the books of the Borrower
and each of its Subsidiaries with respect to all taxes are, to the knowledge of
the Borrower, adequate for the payment of such taxes, and the Borrower knows of
no unpaid assessment which is due and payable against the Borrower or any of its
Subsidiaries or any claims being asserted which would reasonably be expected to
have a Material Adverse Effect, except such thereof as are being contested as
required under Section 7.4, and for which adequate reserves have been set aside
in accordance with GAAP.
J. Governmental Regulations
------------------------
<PAGE> 55
Neither the Borrower, any of its Subsidiaries nor any Person
controlled by, controlling, or under common control with, the Borrower or any of
its Subsidiaries, is subject to regulation under the Public Utility Holding
Company Act of 1935, as amended, the Federal Power Act, as amended, or the
Investment Company Act of 1940, as amended, or is subject to any statute or
regulation which prohibits or restricts the incurrence of Indebtedness,
including statutes or regulations relative to common or contract carriers or to
the sale of electricity, gas, steam, water, telephone, telegraph or other public
utility services.
K. Federal Reserve Regulations; Use of Loan Proceeds
-------------------------------------------------
Neither the Borrower nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any Margin Stock. After giving
effect to the making of each Loan and the issuance of each Letter of Credit,
Margin Stock will constitute less than 25% of the assets (as determined by any
reasonable method) of the Borrower and its Subsidiaries.
L. Plans
-----
1. With respect to each Pension Plan a. such Pension Plan
complies in all material respects with ERISA and any other applicable laws to
the extent that noncompliance would reasonably be expected to have a Material
Adverse Effect, b. such Pension Plan has not incurred any Accumulated Funding
Deficiency that would reasonably be expected to have a Material Adverse Effect,
c. no Reportable Event has occurred that would reasonably be expected to have a
Material Adverse Effect, and d. neither the Borrower, any of its Subsidiaries
nor any of its ERISA Affiliates has engaged in any Prohibited Transactions that
would reasonably be expected to have a Material Adverse Effect.
2. Neither the Borrower, any of its Subsidiaries nor any of
its ERISA Affiliates has incurred or expects to occur any withdrawal liability
to any Multiemployer Plan that would reasonably be expected to have a Material
Adverse Effect.
M. Financial Statements
--------------------
The Borrower has heretofore delivered to the Administrative
Agent and the Lenders copies of its Form 10-K for the fiscal year ended January
25, 1997, containing the audited Consolidated Balance Sheets of the Borrower and
its Subsidiaries as of January 25, 1997 and January 27, 1996, and the related
Consolidated Statements of Income, Changes in Stockholders' Equity and Cash
Flows for the such fiscal year, and its Form 10-Q for the fiscal quarter ended
April 26, 1997, containing the unaudited Consolidated Balance Sheet of the
Borrower and its Subsidiaries for such fiscal quarter, together with the related
Consolidated Statements of Income and Cash Flows for such fiscal quarter (with
the applicable related notes and schedules, the "FINANCIAL STATEMENTS"). The
Financial Statements fairly present in all material respects the Consolidated
financial condition and results of the operations of the Borrower and its
Subsidiaries as of the dates and for the periods indicated therein (subject, in
the case of such unaudited statements, to normal year-end
<PAGE> 56
adjustments and the absence of footnotes) and have been prepared in conformity
with GAAP. Except as reflected in the Financial Statements or in the footnotes
thereto, neither the Borrower nor any of its Subsidiaries has any material
obligation or liability of any kind (whether fixed, accrued, contingent,
unmatured or otherwise) which, in accordance with GAAP, should have been shown
in the Financial Statements and was not. Since January 25, 1997, there has been
no Material Adverse Change.
N. Property
--------
Each of the Borrower and each of its Subsidiaries has good and
marketable title to, or a valid leasehold interest in, all of its real Property,
and is the owner of, or has a valid lease of, all personal property, in each
case which is material to the Borrower and its Subsidiaries, taken as a whole,
subject to no Liens, except Permitted Liens. All leases of Property to the
Borrower or any of its Subsidiaries are in full force and effect, the Borrower
or such Subsidiary, as the case may be, enjoys quiet and undisturbed possession
under all leases of real property and neither the Borrower nor any of its
Subsidiaries is in default beyond any applicable grace period of any provision
thereof, the effect of any of the foregoing which would reasonably be expected
to have a Material Adverse Effect.
O. Authorizations
--------------
Each of the Borrower and each of its Subsidiaries possesses or
has the right to use all franchises, licenses and other rights as are material
and necessary for the conduct of its business, and with respect to which it is
in compliance, with no known conflict with the valid rights of others which
would reasonably be expected to have a Material Adverse Effect. No event has
occurred which permits or, to the knowledge of the Borrower, after notice or the
lapse of time or both, or any other condition, would reasonably be expected to
permit, the revocation or termination of any such franchise, license or other
right which revocation or termination would reasonably be expected to have a
Material Adverse Effect.
P. Environmental Matters
---------------------
No claim, demand, action, event, condition, report or
investigation indicating or concerning any potential or actual liability which
individually or in the aggregate would reasonably be expected to have a Material
Adverse Effect, arising in connection with (1) any non-compliance with or
violation of the requirements of any applicable federal, state or local
environmental health or safety statute or regulation, or (2) the release or
threatened release of any toxic or hazardous waste, substance or constituent, or
other substance into the environment has been made, occurred, exists or is
pending, as the case may be. To the knowledge of the Borrower, a. neither the
Borrower nor any of its Subsidiaries has any threatened or actual liability in
connection with the release or threatened release of any toxic or hazardous
waste, substance or constituent, or other substance into the environment which
individually or in the aggregate would reasonably be expected to have a Material
Adverse Effect,
<PAGE> 57
b. is subject to any federal or state investigation evaluating whether any
remedial action is needed to respond to a release or threatened release of any
toxic or hazardous waste, substance or constituent or other substance into the
environment for which the Borrower or any of its Subsidiaries is or would be
liable, which would reasonably be expected to have a Material Adverse Effect, or
c. is or may be liable to any Person under the Comprehensive Environmental
Response, Compensation and Liability Act, as amended, 42 U.S.C. Section 9601 ET
SEQ., or any analogous state law, which liability would reasonably be expected
to have a Material Adverse Effect. The Borrower and each of its Subsidiaries is
in compliance with the financial responsibility requirements of federal and
state environmental laws to the extent applicable, including those contained in
40 C.F.R., parts 264 and 265, subpart H, and any analogous state law, except in
those cases in which the failure so to comply would not reasonably be expected
to have a Material Adverse Effect.
Q. Absence of Certain Restrictions
-------------------------------
As of the Effective Date, no indenture, certificate of
designation for preferred stock, agreement or instrument to which the Borrower
or any of its Domestic Subsidiaries is a party (other than this Agreement),
prohibits or limits in any way, directly or indirectly the ability of any
Domestic Subsidiary of the Borrower to make Restricted Payments or repay any
Indebtedness to the Borrower or to another Subsidiary of the Borrower.
R. No Misrepresentation
--------------------
No representation or warranty contained in any Loan Document
and no certificate or report from time to time furnished by the Borrower or any
of its Subsidiaries in connection with the transactions contemplated thereby,
contains or will contain a misstatement of material fact or omits or will omit
to state a material fact required to be stated in order to make the statements
therein contained not misleading in the light of the circumstances under and for
the purposes for which made, provided that any projections or pro-forma
financial information contained therein are based upon good faith estimates and
assumptions believed by the Borrower to be reasonable at the time made, it being
recognized by the Administrative Agent, the Issuing Banks and the Lenders that
such projections as to future events are not to be viewed as facts, and that
actual results during the period or periods covered thereby may differ from the
projected results.
V. CONDITIONS TO EFFECTIVENESS
---------------------------
The effectiveness of this Agreement shall be subject to the fulfillment
of the following conditions precedent:
A. Evidence of Corporate Action
----------------------------
The Administrative Agent shall have received a certificate,
dated the Effective Date, of the Secretary or Assistant Secretary or other
analogous counterpart of the Borrower a. attaching a true and complete copy of
the resolutions of its Board of Directors and of all documents evidencing all
necessary corporate action (in form
<PAGE> 58
and substance satisfactory to the Administrative Agent) taken by it to authorize
the Loan Documents and the transactions contemplated thereby, b. attaching a
true and complete copy of its Articles of Incorporation and Code of Regulations,
c. setting forth the incumbency of its officer or officers or other analogous
counterpart who may sign the Loan Documents, including therein a signature
specimen of such officer or officers and d. attaching a certificate of good
standing issued by the Secretary of State of the State of Ohio.
B. This Agreement
--------------
The Administrative Agent shall have received counterparts of
this Agreement signed by each of the parties hereto (or receipt by the
Administrative Agent from a party hereto of a telecopy signature page signed by
such party which shall have agreed to promptly provide the Administrative Agent
with originally executed counterparts hereof).
C. Notes
-----
The Administrative Agent shall have received the Revolving
Credit Notes, the Competitive Bid Notes and the Swing Line Note, duly executed
by an Authorized Signatory of the Borrower.
D. Absence of Litigation
---------------------
There shall be no injunction, writ, preliminary restraining
order or other order of any nature issued by any Governmental Authority in any
respect affecting the transactions provided for in the Loan Documents and no
action or proceeding by or before any Governmental Authority has been commenced
and is pending or, to the knowledge of the Borrower, threatened, seeking to
prevent or delay the transactions contemplated by the Loan Documents or
challenging any other terms and provisions hereof or thereof or seeking any
damages in connection therewith, and the Administrative Agent shall have
received a certificate, in all respects satisfactory to the Administrative
Agent, of an executive officer of the Borrower to the foregoing effects.
E. Approvals and Consents
----------------------
All approvals and consents of all Persons required to be
obtained in connection with the consummation of the transactions contemplated by
the Loan Documents shall have been obtained and shall be in full force and
effect, and all required notices have been given and all required waiting
periods shall have expired, and the Administrative Agent shall have received a
certificate, in all respects satisfactory to the Administrative Agent, of an
executive officer of the Borrower to the foregoing effects.
F. Keybank Loan Documents
----------------------
<PAGE> 59
All commitments to lend and to issue letters of credit under
the KeyBank Loan Documents shall have been terminated, all loans, interest, fees
and other amounts owing thereunder shall have been paid in full, all Liens, if
any, securing the same shall have been terminated, and the Administrative Agent
shall have received satisfactory evidence thereof.
G. Financial Officer's Certificate
-------------------------------
The Administrative Agent shall have received a certificate of
a Financial Officer of the Borrower, dated the Effective Date, in all respects
satisfactory to the Administrative Agent certifying that on the Effective Date
and after giving effect to any Loans made and Letters of Credit issued thereon,
a. there shall exist no Default, b. the representations and warranties contained
in this Agreement are true and correct in all material respects, c. the Property
owned by the Borrower or any of its Subsidiaries are owned free and clear of all
Liens except Permitted Liens and d. the incurrence of Indebtedness under this
Agreement on the first Borrowing Date will not result in a default under the
Lease Guaranty.
H. Opinion of Counsel to the Borrower and its Subsidiaries
-------------------------------------------------------
The Administrative Agent shall have received an opinion of
Baker & Hostetler, LLP counsel to the Borrower and its Subsidiaries, addressed
to the Administrative Agent and the Lenders (and permitting Special Counsel to
rely thereon), and dated the Effective Date, substantially in the form of
Exhibit F.
I. Opinion of Special Counsel
--------------------------
The Administrative Agent shall have received an opinion of
Special Counsel, addressed to the Administrative Agent and the Lenders and dated
the first Effective Date substantially in the form of Exhibit G.
J. Fees and Expenses
-----------------
All fees payable to the Administrative Agent on or prior to
the Effective Date shall have been paid, and the reasonable fees and expenses of
Special Counsel in connection with the preparation, negotiation and closing of
the Loan Documents shall have been paid.
K. Other Documents
---------------
Each of the Administrative Agent, the Issuing Banks and the
Lenders shall have received such other documents, each in form and substance
reasonably satisfactory to it, as it shall reasonably require in connection with
the effectiveness of the Agreement.
VI. CONDITIONS OF LENDING - ALL LOANS AND LETTERS OF CREDIT
-------------------------------------------------------
The obligation of each Lender (including the Swing Line Lender) to make
any
<PAGE> 60
Loan or each Issuing Bank to issue any Letter of Credit on a Borrowing Date
and each Lender to participate therein is subject to the prior satisfaction on
the Effective Date of the conditions precedent set forth in Section 5 and the
satisfaction of the following conditions precedent as of the date of such Loan
or the issuance of such Letter of Credit, as the case may be:
A. Compliance
----------
On each Borrowing Date and after giving effect to the Loans to
be made and the Letters of Credit to be issued thereon a. there shall exist no
Default or Event of Default, and b. the representations and warranties contained
in the Loan Documents shall be true and correct in all material respects with
the same effect as though such representations and warranties had been made on
such Borrowing Date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case such representations and
warranties shall have been true and correct on and as of such earlier date. Each
borrowing by the Borrower and each request by the Borrower for the issuance of a
Letter of Credit shall constitute a certification by the Borrower as of such
Borrowing Date that each of the foregoing matters is true and correct in all
respects.
B. Borrowing Request; Letter of Credit Request
-------------------------------------------
With respect to the Revolving Credit Loans to be made, and the
Letters of Credit to be issued, on each Borrowing Date, the Administrative Agent
shall have received, (i) in the case of Revolving Credit Loans, a Borrowing
Request and (ii) in the case of Letters of Credit, a Letter of Credit Request,
in each case duly executed by an Authorized Signatory of the Borrower.
VII. AFFIRMATIVE COVENANTS
---------------------
The Borrower agrees that, so long as this Agreement is in effect, any
Loan or Reimbursement Obligation (contingent or otherwise) in respect of any
Letter of Credit remains outstanding and unpaid, or any other amount is owing
under any Loan Document to any Lender, any Issuing Bank or the Administrative
Agent (other than the Contingent Indemnity Obligations), the Borrower shall:
A. Financial Statements and Information
------------------------------------
Maintain, and cause each of its Subsidiaries to maintain, a
standard system of accounting in accordance with GAAP, and furnish or cause to
be furnished to the Administrative Agent with sufficient copies for each Lender:
1. FORM 10K. As soon as available, but in any event
within 95 days after the end of each fiscal year of the Borrower, a copy of the
annual audited financial statements of the Borrower and its Subsidiaries,
prepared on a
<PAGE> 61
Consolidated basis in accordance with GAAP, as filed with the SEC. Such
financial statements shall be certified without qualification by the
Accountants, which certification shall a. state that the examination by such
Accountants in connection with such financial statements has been made in
accordance with generally accepted auditing standards and, accordingly, included
such tests of the accounting records and such other auditing procedures as were
considered necessary in the circumstances, and b. include the opinion of such
Accountants that such financial statements have been prepared in accordance with
GAAP in a manner consistent with prior fiscal periods, except as otherwise
specified in such opinion.
2. FORM 10Q. As soon as available, but in any event
within 50 days after the end of each fiscal quarter (except the last fiscal
quarter) of each fiscal year of the Borrower, copies of the unaudited financial
statements of the Borrower and its Subsidiaries, prepared on a Consolidated
basis in accordance with GAAP, as filed with the SEC.
3. COMPLIANCE CERTIFICATE. Within 50 days after the
end of each of the first three fiscal quarters (95 days after the end of the
last fiscal quarter), a Compliance Certificate, certified by a Financial Officer
of the Borrower.
4. Such other information as the Administrative
Agent or any Lender may reasonably request from time to time.
B. Certificates; Other Information
-------------------------------
Furnish to the Administrative Agent with sufficient copies for
each Lender:
1. Prompt written notice if: a. any Indebtedness of
the Borrower or any of its Subsidiaries in an aggregate amount in excess of
$10,000,000 is declared or shall become due and payable prior to its stated
maturity, or is called and not paid when due, b. a default shall have occurred
under, or the holder or obligee of, any note (other than the Notes),
certificate, security or other evidence of Indebtedness, with respect to any
other Indebtedness of the Borrower or any of its Subsidiaries has the right to
declare Indebtedness in an aggregate amount in excess of $10,000,000 due and
payable prior to its stated maturity, c. there shall occur and be continuing a
Default, d. a Change of Control should occur or e. a default shall have occurred
under the Lease Guaranty involving a claim against the Borrower in an aggregate
amount in excess of $7,500,000;
2. Prompt written notice of: a. any citation,
summons, subpoena, order to show cause or other document naming the Borrower or
any of its Subsidiaries a party to any proceeding before any Governmental
Authority which would reasonably be expected to have a Material Adverse Effect
or which calls into question the validity or enforceability of any of the Loan
Documents, and include with such notice a copy of such citation, summons,
subpoena, order to show cause or other document, b. any lapse or other
termination of any license, permit, franchise or other authorization issued to
the Borrower or any of its Subsidiaries by any Person or Governmental Authority,
which lapse or other termination would reasonably be expected to have a Material
Adverse Effect, and c. any refusal by any Person or
<PAGE> 62
Governmental Authority to renew or extend any such license, permit, franchise or
other authorization, which refusal would reasonably be expected to have a
Material Adverse Effect;
3. Promptly upon becoming available, copies of all
a. registration statements, regular, periodic or special reports (including
current reports on Form 8-K), schedules and other material which the Borrower or
any of its Subsidiaries may now or hereafter be required to file with or deliver
to any securities exchange or the SEC, and b. material news releases and annual
reports relating to the Borrower or any of its Subsidiaries;
4. Prompt written notice in the event that the
Borrower, any of its Subsidiaries or any ERISA Affiliate becomes aware of the
occurrence of any Reportable Event, Termination Event or Prohibited Transaction
in connection with any Pension Plan or any trust created thereunder, specifying
the nature thereof and specifying what action the Borrower, its Subsidiaries or
any ERISA Affiliate is taking or proposes to take with respect thereto, and,
when known, any action taken by the Internal Revenue Service with respect
thereto;
5. Such other information as the Administrative
Agent or any Lender shall reasonably request from time to time.
C. Legal Existence
---------------
Except as may otherwise be permitted by Sections 8.3 and 8.5,
maintain, and cause each of its Subsidiaries to maintain, its corporate,
partnership or analogous existence, as the case may be, in good standing in the
jurisdiction of its incorporation or formation and in each other jurisdiction in
which the failure so to do would reasonably be expected to have a Material
Adverse Effect, except that the corporate, partnership or other analogous
existence of any Subsidiary may be terminated if such termination would not
reasonably be expected to have a Material Adverse Effect.
D. Taxes
-----
Pay and discharge when due, and cause each Subsidiary so to
do, all material taxes, assessments, governmental charges, license fees and
levies upon or with respect to the Borrower and such Subsidiary, and upon the
income, profits and Property thereof unless, and only to the extent, that either
(i)(a) such taxes, assessments, governmental charges, license fees and levies
shall be contested in good faith and by appropriate proceedings diligently
conducted by the Borrower or such Subsidiary, and (b) such reserve or other
appropriate provision as shall be required by GAAP shall have been made
therefor, or (ii) the failure to pay or discharge such taxes, assessments,
governmental charges, license fees and levies would not reasonably be expected
to have a Material Adverse Effect.
<PAGE> 63
E. Insurance
---------
Maintain, and cause each of its Subsidiaries to maintain, with
financially sound and reputable insurance companies insurance in at least such
amounts and against at least such risks (but including in any event public
liability, product liability and business interruption coverage) as are usually
insured against in the same general area by companies engaged in the same or a
similar business; and furnish to the Administrative Agent, upon written request,
full information as to the insurance carried, except that the Borrower or any of
its Subsidiaries may effect insurance with respect to risks not in excess of
$25,000,000 in the aggregate, by causing to be maintained a system or systems of
self-insurance which is in accord with any applicable laws and sound business
practice.
F. Performance of Obligations
--------------------------
Pay and discharge when due, and cause each of its Subsidiaries
so to do, all lawful Indebtedness, obligations and claims for labor, materials
and supplies or otherwise which, if unpaid, would reasonably be expected to a.
have a Material Adverse Effect, or b. become a Lien upon Property of the
Borrower or any of its Subsidiaries other than a Permitted Lien, PROVIDED,
HOWEVER that neither the Borrower nor such Subsidiary shall be required to pay
or discharge or cause to be paid or discharged any such Indebtedness, obligation
or claim so long as (1) the validity thereof shall be contested in good faith
and by appropriate proceedings diligently conducted by the Borrower or such
Subsidiary, and (2) such reserve or other appropriate provision as shall be
required by GAAP shall have been made therefor.
G. Condition of Property
---------------------
At all times, maintain, protect and keep in good repair,
working order and condition (ordinary wear and tear excepted), and cause each of
its Subsidiaries so to do, all Property necessary to the operation of the
Borrower's or such Subsidiary's business, except to the extent that any failure
to do the same would not reasonably be expected to have a Material Adverse
Effect.
H. Observance of Legal Requirements
--------------------------------
Observe and comply in all material respects, and cause each of
its Subsidiaries so to do, with all laws, ordinances, orders, judgments, rules,
regulations, certifications, franchises, permits, licenses, directions and
requirements of all Governmental Authorities, which now or at any time hereafter
may be applicable to it, a violation of which would reasonably be expected to
have a Material Adverse Effect, except such thereof as shall be contested in
good faith and by appropriate proceedings diligently conducted by it, provided
that the Borrower shall give the Administrative Agent prompt notice of such
contest and that such reserve or other appropriate provision as shall be
required by the Accountants in accordance with GAAP shall have been made
therefor.
I. Inspection of Property; Books and Records; Discussions
------------------------------------------------------
At all reasonable times, upon reasonable prior notice, permit
<PAGE> 64
representatives of the Administrative Agent and each Lender to visit the offices
of the Borrower and each of its Subsidiaries, to examine the books and records
thereof and Accountants' reports relating thereto, and to make copies or
extracts therefrom, to discuss the affairs of the Borrower and each such
Subsidiary with the respective officers thereof, and to examine and inspect the
Property of the Borrower and each such Subsidiary and to meet and discuss the
affairs of the Borrower and each such Subsidiary with the Accountants.
J. Authorizations
--------------
Maintain, and cause each of its Subsidiaries to maintain, in
full force and effect, all material licenses, franchises, permits, licenses,
authorizations and other rights as are necessary for the conduct of its
business, except to the extent that the failure to so maintain would not
reasonably be expected to have a Material Adverse Effect.
K. Financial Covenants
-------------------
1. Fixed Charge Coverage Ratio. Maintain as of the last day of
each fiscal quarter a Fixed Charge Coverage Ratio of not less than 1.50:1.00
2. Leverage Ratio. Maintain as of the last day of each fiscal
quarter a Leverage Ratio of not more than 3.00:1.00.
VIII. NEGATIVE COVENANTS
------------------
The Borrower agrees that, so long as this Agreement is in effect, any
Loan or Reimbursement Obligation (contingent or otherwise) in respect of any
Letter of Credit remains outstanding and unpaid, or any other amount is owing
under any Loan Document to any Lender, any Issuing Bank or the Administrative
Agent (other than the Contingent Indemnity Obligations), the Borrower shall not,
directly or indirectly:
A. Subsidiary Indebtedness
-----------------------
Permit any Subsidiary to create, incur, assume or suffer to
exist any liability for Indebtedness, except a. Intercompany Indebtedness to the
extent permitted by Section 8.6(c), b. in the case of Domestic Subsidiaries, (1)
Indebtedness existing on the Effective Date as set forth on Schedule 8.1,
including refinancings but not increases thereof, (2) any Indebtedness of a
Person or business acquired by a Domestic Subsidiary in a Permitted Acquisition,
provided that such Indebtedness existed at the time of such Permitted
Acquisition and was not incurred in contemplation thereof, and (3) other
Indebtedness in an aggregate outstanding principal amount not exceeding
$5,000,000, c. in the case of Foreign Subsidiaries, Indebtedness (on a combined
basis) at any one time outstanding not in excess of
<PAGE> 65
15% of Consolidated Net Worth and d. Contingent Obligations not exceeding
$5,000,000 in the aggregate in respect of real Property leases that have been
assigned (which term shall also include new leases entered into between a
landlord and a third party in respect of real Property being vacated by a
Subsidiary) by a Subsidiary, the terms of which assignment, or the landlord's
consent therefor or any such Contingent Obligation, require the Subsidiary to
remain liable for rent and other performance in respect of the assigned lease.
B. Liens
-----
Create, incur, assume or suffer to exist any Lien upon any of
its Property, whether now owned or hereafter acquired, or permit any of its
Subsidiaries so to do, except a. Liens in connection with workers' compensation,
unemployment insurance or other social security obligations (which phrase shall
not be construed to refer to ERISA or the minimum funding obligations under
Section 412 of the Code), b. Liens to secure the performance of bids, tenders,
letters of credit, contracts (other than contracts for the payment of
Indebtedness), leases, statutory obligations, surety, customs, appeal,
performance and payment bonds and other obligations of like nature, in each such
case arising in the ordinary course of business, c. Liens arising by operation
of law such as mechanics', workmen's, carriers', warehousemen's, materialmen's,
landlords', banker's or other like Liens arising in the ordinary course of
business with respect to obligations which are not due or which are being
contested in good faith and by appropriate proceedings diligently conducted, d.
Liens for Taxes in the ordinary course of business which are not delinquent or
which are being contested in accordance with Section 7.4, provided that
enforcement of such Liens is stayed pending such contest, e. easements, rights
of way, restrictions, leases of Property to others, easements for installations
of public utilities, title imperfections and restrictions, zoning ordinances and
other similar encumbrances affecting Property which in the aggregate do not
materially impair its use for the operation of the business of the Borrower or
such Subsidiary, f. Liens on Property of the Borrower and its Subsidiaries
existing on the Effective Date as set forth on Schedule 8.2 as renewed from time
to time, but not any increases in the amounts secured thereby or extensions
thereof to additional Property, g. Liens on Property of the Borrower or any of
its Subsidiaries under capital leases not prohibited under Section 8.1, h. Liens
on Property of the Borrower or any of its Subsidiaries acquired, constructed or
improved after the Effective Date to secure Indebtedness of the Borrower or such
Subsidiary incurred in connection with the acquisition, construction or
improvement of such Property (including renewals and extensions thereof),
provided that (1) such Lien is limited to such Property so acquired, constructed
or improved and the proceeds thereof and (2) the Indebtedness secured by such
Lien is not prohibited by Section 8.1, i. Liens on Property acquired by the
Borrower or any of its Subsidiaries after the Effective Date, provided that such
Liens are limited to the Property so acquired and were not created in
contemplation of such acquisition, j. statutory Liens in favor of lessors
arising in connection with Property leased to the Borrower or any of the
Subsidiaries, k. Liens of attachments, judgments or awards against the Borrower
or any of the Subsidiaries that do not constitute an Event of Default, l. Liens
securing Indebtedness of a Subsidiary to the Borrower or another Subsidiary, m.
Liens on Margin Stock to the extent that a prohibition on such Liens would
result in the Administrative Agent, the Issuing Banks and the Lenders being
deemed to be "indirectly secured" by Margin Stock
<PAGE> 66
under Regulation U of the Board of Governors of the Federal Reserve System, as
amended, taking into account the value of Margin Stock owned by the Borrower and
its Subsidiaries and any other relevant facts and circumstances, n. additional
Liens securing Indebtedness of the Borrower and the Subsidiaries in an aggregate
outstanding Consolidated principal amount not exceeding 10% of Consolidated Net
Worth, and o. any transfer of a check or other medium of payment for deposit or
collection through normal banking channels or any similar transaction in the
normal course of business.
C. Merger or Consolidation, Etc.
-----------------------------
Consolidate with, be acquired by, or merge into or with any
Person, or permit any of its Subsidiaries so to do, except that the Borrower or
any of its Subsidiaries may merge with any other Person (including, in the case
of any such Subsidiary, a merger into or with the Borrower or any of its other
Subsidiaries), PROVIDED THAT a. immediately before and after giving effect
thereto no Default shall exist, b. the representations and warranties contained
in Section 4 shall be true and correct in all material respects, and c. in the
case of a merger involving the Borrower, either (1) the Borrower shall be the
surviving Person or (2) if no Change of Control shall result therefrom, another
Person may be the survivor provided that (a) such surviving Person is organized
under the laws of the United States of America or any State thereof and (b)
contemporaneously therewith, the Administrative Agent receives an instrument
assuming the obligations of the Borrower under the Facility Documents, duly
executed by such surviving Person, together with such certificates and opinions
and other documents which the Administrative Agent shall require, each of which
shall be in form and substance reasonably satisfactory to the Administrative
Agent.
D. Acquisitions
------------
Make any Acquisition, or permit any of its Subsidiaries so to
do, if a. immediately before and after giving effect thereto a Default would
exist or b. the representations and warranties contained in Section 4 are not
true and correct in all material respects.
E. Dispositions
------------
1. Make any Disposition, or permit any of its Subsidiaries so
to do, of all or substantially all of the Property of the Borrower and the
Subsidiaries on a Consolidated basis, except that any Subsidiary of the Borrower
may make a Disposition of all or substantially all of its Property to the
Borrower or any of its other Subsidiaries.
2. Make any Disposition of any of its Property to one or more
of its Subsidiaries except an Intercompany Disposition.
<PAGE> 67
3. Make any other Disposition or permit any of its
Subsidiaries so to do, if a. a Default would exist before or after giving effect
thereto or b. the representations and warranties contained in Section 4 are not
true and correct in all material respects as if then made.
F. Investments, Loans, Etc.
------------------------
At any time, directly or indirectly, purchase or otherwise
hold, own, acquire or invest in the Capital Stock (other than in a Permitted
Acquisition) of, evidence of indebtedness or other obligation or security issued
by, any other Person, or make any loan or advance to, or enter into any
arrangement for the purpose of providing funds or credit to, or make any
Acquisition (other than a Permitted Acquisition), or become a partner or joint
venturer in any partnership or joint venture, or make any other investment
(whether in cash or other Property) in any other Person, or make any commitment
or otherwise to agree to do any of the foregoing (all of which are sometimes
referred to herein as "INVESTMENTS"), or permit any of its Subsidiaries so to
do, or except:
1. Investments in cash or Cash Equivalents;
2. Investments existing on the Effective Date as set
forth on Schedule 8.6;
3. Investments in Intercompany Indebtedness, provided
that any obligations of the Borrower to any of its Subsidiaries in respect of
Intercompany Indebtedness shall be subordinated to the Indebtedness of the
Borrower under the Loan Documents in form and substance reasonably satisfactory
to the Administrative Agent;
4. Investments consisting of loans or advances to any
officer, director or employee of the Borrower or any of its Subsidiaries not to
exceed in the aggregate at any time outstanding $10,000,000;
5. Investments acquired as part of a Permitted
Acquisition, provided that such Investments existed immediately prior to the
consummation of such Permitted Acquisition was made and were not made in
anticipation thereof;
6. Investments in debt obligations issued by a State
of the United States of America or a municipal entity with a final maturity of,
or that may be put within, one year or less after the date of purchase and rated
SP-1 or AA by Standard & Poor's or MIG-1 or Aa by Moody's;
7. any financing provided by the Borrower to a
purchaser of a portion of the business of the Borrower or any Subsidiary
pursuant to any Disposition thereof which is otherwise permitted;
8. Investments in investment-grade tax-exempt
securities;
9. Investments in repurchase agreements having terms
of less than 180 days which are backed by Investments described in clause (i) of
the
<PAGE> 68
definition of Cash Equivalents and which are issued by (A) an Approved Bank or
an investment bank whose (or whose parent company's) long-term debt securities
are, at the time of any acquisition thereof by the Borrower or any of its
Subsidiaries, accorded a rating of A or better by either of Standard & Poor's or
Moody's or (B) a primary securities dealer;
10. Investments in Interest Rate Protection
Arrangements to the extent used for hedging purposes; and
11. other Investments (including, without limitation,
Investments in joint ventures and Intercompany Dispositions to the extent
permitted by 8.5) in an aggregate amount not to exceed 10% of Consolidated Net
Worth.
G. Restricted Payments
-------------------
Declare or pay any Restricted Payments payable in cash or
otherwise or apply any of its Property thereto or set apart any sum therefor, or
permit any of its Subsidiaries so to do, except that: a. a Subsidiary may
declare and pay Restricted Payments to the Borrower, b. provided that no Event
of Default described in Section 9.1(a), (b), (h) or (i) has occurred and is then
continuing or would occur giving effect thereto, the Borrower may declare and
pay Restricted Payments.
H. Nature of Business
------------------
Materially change the nature of the business of the Borrower
and its Subsidiaries as conducted on the Effective Date, or alter or change its
fiscal year from that in effect on the Effective Date, or permit any of its
Subsidiaries so to do; provided, however, that the foregoing shall not prohibit
the Borrower or any of its Subsidiaries from expanding its business operations
into any geographic area where such operations are not currently located or into
any related businesses.
I. ERISA
-----
1. Establish or contribute, or permit any of its Subsidiaries
so to do, to any Pension Plan or Multiemployer Plan except to the extent that
the same would not reasonably be expected to result in a Material Adverse
Effect.
2. Permit any Pension Plan to: a. engage in any Prohibited
Transaction, b. fail to comply with ERISA or any other applicable laws, c. incur
any Accumulated Funding Deficiency (as defined in Section 302 of ERISA); or d.
terminate in any manner, which, with respect to each event listed above, would
reasonably be expected to result in a Material Adverse Effect.
3. Withdraw, completely or partially, from any Multiemployer
Plan if to do so would reasonably be expected to have a Material Adverse Effect.
<PAGE> 69
J. Amendments, Etc. of Certain Agreements
--------------------------------------
Enter into or agree to any amendment, modification or waiver
of any term or condition of a. its Articles of Incorporation or Code of
Regulations, in any way which would adversely affect the interests of the
Administrative Agent and the Lenders under any of the Loan Documents or permit
any of its Subsidiaries so to do or b. the Lease Guaranty which would be more
restrictive to the Borrower or which, in any other way, would reasonably be
expected to have a Material Adverse Effect.
K. Transactions with Affiliates
----------------------------
Except as set forth on Schedule 8.11, become a party to any
transaction with an Affiliate, or permit any of its Subsidiaries so to do,
unless the Borrower's or such Subsidiaries board of directors or other analogous
managing person shall have determined that the terms and conditions relating
thereto are as favorable to the Borrower or such Subsidiary as those which would
be obtainable at the time in a comparable arms-length transaction with a Person
other than an Affiliate.
L. Limitation on Upstream Dividends by Domestic Subsidiaries
---------------------------------------------------------
Permit or cause any of its Domestic Subsidiaries to enter into
or agree, or otherwise be or become subject, to any agreement, contract or other
arrangement (other than this Agreement and other than as provided by applicable
law) with any Person pursuant to the terms of which a. such Subsidiary is or
would be prohibited from declaring or paying any cash dividends on any class of
its Capital Stock owned directly or indirectly by the Borrower or any of the
other Subsidiaries or from making any other distribution on account of any class
of any such Capital Stock (herein referred to as "UPSTREAM DIVIDENDS"), or b.
the declaration or payment of Upstream Dividends by a Domestic Subsidiary to the
Borrower or another Subsidiary, on an annual or cumulative basis, is or would be
otherwise limited or restricted.
M. Limitation on Negative Pledges
------------------------------
Enter into any agreement, other than a. this Agreement, b.
purchase money mortgages or capital leases permitted by this Agreement (in which
cases, any prohibition or limitation shall only be effective against the assets
financed thereby), or c. operating leases (in which case, any prohibition or
limitation shall only be effective against the assets leased thereby), or permit
any of its Domestic Subsidiaries so to do, which prohibits or limits the ability
of the Borrower or such Domestic Subsidiary to create, incur, assume or suffer
to exist any Lien upon any of its Property or revenues, whether now owned or
hereafter acquired.
IX. DEFAULT
-------
A. Events of Default
-----------------
The following shall each constitute an "EVENT OF DEFAULT"
hereunder:
<PAGE> 70
1. The failure of the Borrower to make a. any payment
of principal on any Note, or any reimbursement payment hereunder or under any
Reimbursement Agreement, when due and payable, or b. any deposit into the Cash
Collateral Account when required hereby; or
2. The failure of the Borrower to make any payment of
interest, Fees, expenses or other amounts payable under any Loan Document or
otherwise to the Administrative Agent with respect to the loan facilities
established hereunder within five Business Days of the date when due and
payable; or
3. The failure of the Borrower to observe or perform
any covenant or agreement contained in Sections 2.9, 7.3, 7.11, or Section 8; or
4. The failure of the Borrower to observe or perform
any other term, covenant, or agreement contained in any Loan Document and such
failure shall have continued unremedied for a period of 30 days after the
Borrower shall have obtained knowledge thereof; or
5. Any representation or warranty made by the
Borrower (or by an officer thereof on its behalf) in any Loan Document or in any
certificate, report, opinion (other than an opinion of counsel) or other
document delivered or to be delivered pursuant thereto, shall prove to have been
incorrect or misleading (whether because of misstatement or omission) in any
material respect when made; or
6. Obligations of the Borrower (other than its
obligations hereunder) or any of its Subsidiaries, whether as principal,
guarantor, surety or other obligor, for the payment of any Indebtedness or
operating leases in an aggregate amount in excess of $20,000,000 a. shall become
or shall be declared to be due and payable prior to the expressed maturity
thereof, or b. shall not be paid when due or within any grace period for the
payment thereof, c. any holder of any such obligation shall have the right to
declare such obligation due and payable prior to the expressed maturity thereof
or (iv) as a consequence of the occurrence or continuation of any event or
condition, the Borrower or any of its Subsidiaries has become obligated to
purchase or repay any Indebtedness before its regularly scheduled maturity date;
7. The occurrence of a Change of Control; or
8. The Borrower or any of its Subsidiaries
representing a Material Subsidiary Group shall a. suspend or discontinue its
business, b. make an assignment for the benefit of creditors, c. generally not
be paying its debts as such debts become due, d. admit in writing its inability
to pay its debts as they become due, e. file a voluntary petition in bankruptcy,
f. become insolvent (however such insolvency shall be evidenced), g. file any
petition or answer seeking for itself any reorganization, arrangement,
composition, readjustment of debt, liquidation or
<PAGE> 71
dissolution or similar relief under any present or future statute, law or
regulation of any jurisdiction, h. petition or apply to any tribunal for any
receiver, custodian or any trustee for any substantial part of its Property, i.
be the subject of any such proceeding filed against it which remains undismissed
for a period of 60 days, j. file any answer admitting or not contesting the
material allegations of any such petition filed against it or any order,
judgment or decree approving such petition in any such proceeding, k. seek,
approve, consent to, or acquiesce in any such proceeding, or in the appointment
of any trustee, receiver, sequestrator, custodian, liquidator, or fiscal agent
for it, or any substantial part of its Property, or an order is entered
appointing any such trustee, receiver, custodian, liquidator or fiscal agent and
such order remains in effect for 60 days, or l. take any formal action for the
purpose of effecting any of the foregoing or looking to the liquidation or
dissolution of the Borrower or such Subsidiary; or
9. An order for relief is entered under the
bankruptcy or insolvency laws of any jurisdiction or any other decree or order
is entered by a court having jurisdiction a. adjudging the Borrower or any of
its Subsidiaries representing a Material Subsidiary Group bankrupt or insolvent,
b. approving as properly filed a petition seeking reorganization, liquidation,
arrangement, adjustment or composition of or in respect of the Borrower or any
of its Subsidiaries representing a Material Subsidiary Group under the
bankruptcy or insolvency laws of any jurisdiction, c. appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator (or other similar
official) of the Borrower or any of its Subsidiaries representing a Material
Subsidiary Group or of any substantial part of the Property of any thereof, or
d. ordering the winding up or liquidation of the affairs of the Borrower or any
of its Subsidiaries representing a Material Subsidiary Group and any such decree
or order continues unstayed and in effect for a period of 60 days; or
10. Judgments or decrees against the Borrower or any
of its Subsidiaries aggregating in excess of $20,000,000 (unless adequately
insured by a solvent unaffiliated insurance company which has acknowledged
coverage) shall remain unpaid, unstayed on appeal, undischarged, unbonded or
undismissed for a period of 30 days; or
11. a. Any Termination Event shall occur; b. any
Accumulated Funding Deficiency, whether waived, shall exist with respect to any
Pension Plan; c. any Person shall engage in any Prohibited Transaction involving
any Pension Plan; d. the Borrower, any of its Subsidiaries or any ERISA
Affiliate shall fail to pay when due an amount which is payable by it to the
PBGC or to a Pension Plan under Title IV of ERISA; e. the imposition of any tax
under Section 4980B(a) of the Code; f. the assessment of a civil penalty with
respect to any Pension Plan under Section 502(c) of ERISA; or g. any other event
or condition shall occur or exist with respect to an Pension Plan which in the
case of clauses (i) through (vii) would, individually or in the aggregate, have
a Material Adverse Effect.
B. Contract Remedies
-----------------
1. Upon the occurrence of an Event of Default and during the
continuance thereof, a. if such event is an Event of Default specified in
Sections 9.1(h) or 9.1 (i) above, the Commitments and the Letter of Credit
Commitment shall
<PAGE> 72
immediately and automatically terminate and the Loans, all accrued and unpaid
interest thereon and all other amounts owing under the Loan Documents shall
immediately become due and payable, and the Administrative Agent may, and, upon
the direction of the Required Lenders shall, exercise any and all remedies and
other rights provided in the Loan Documents, and b. if such event is any other
Event of Default, any or all of the following actions may be taken: (1) with the
consent of the Required Lenders, the Administrative Agent may, and upon the
direction of the Required Lenders shall, by notice to the Borrower, declare the
Commitments and the Letter of Credit Commitment terminated forthwith, whereupon
such Commitments and the Letter of Credit Commitment shall immediately
terminate, and (2) with the consent of the Required Lenders, the Administrative
Agent may, and upon the direction of the Required Lenders shall, by notice of
default to the Borrower, declare the Loans, all accrued and unpaid interest
thereon and all other amounts owing under the Loan Documents to be due and
payable forthwith, whereupon the same shall immediately become due and payable,
and the Administrative Agent may, and upon the direction of the Required Lenders
shall, exercise any and all remedies and other rights provided in the Loan
Documents. Except as otherwise provided in this Section, presentment, demand,
protest and all other notices of any kind are hereby expressly waived. The
Borrower hereby further expressly waives and covenants not to assert any
appraisement, valuation, stay, extension, redemption or similar laws, now or at
any time hereafter in force which might delay, prevent or otherwise impede the
performance or enforcement of any Loan Document.
2. In the event that the Commitments and the Letter of Credit
Commitment shall have been terminated or the Loans, all accrued and unpaid
interest thereon and all other amounts owing under the Loan Documents shall have
been declared due and payable pursuant to the provisions of this Section, any
funds received by the Administrative Agent and the Lenders from or on behalf of
the Borrower shall be applied by the Administrative Agent and the Lenders in
liquidation of the Loans and the other obligations of the Borrower under the
Loan Documents in the following manner and order: a. first, to the payment of
interest on, and then the principal portion of, any Loans which the
Administrative Agent may have advanced on behalf of any Lender for which the
Administrative Agent has not then been reimbursed by such Lender or the
Borrower; b. second, to the payment of any fees or expenses due the
Administrative Agent from the Borrower, c. third, to reimburse the
Administrative Agent and the Lenders for any expenses (to the extent not paid
pursuant to clause (ii) above) due from the Borrower pursuant to the provisions
of Section 11.5; d. fourth, to the payment of accrued Fees and all other fees,
expenses and amounts due under the Loan Documents (other than principal and
interest on the Loans), e. fifth, to the payment, pro rata according to the
Outstanding Percentage of each Lender, of interest due on the Loans of each
Lender; f. sixth, to the payment, pro rata according to the Outstanding
Percentage of each Lender, of principal outstanding on the Loans; and g.
seventh, to the payment of any other amounts due and owing to the Administrative
Agent, the Issuing Banks and the Lenders under any Loan Document.
<PAGE> 73
X. THE ADMINISTRATIVE AGENT
------------------------
A. Appointment
-----------
Each Issuing Bank and each Lender hereby irrevocably
designates and appoints BNY as the Administrative Agent of such Issuing Bank and
such Lender under the Loan Documents and each Issuing Bank and each Lender
hereby irrevocably authorizes the Administrative Agent, to take such action on
its behalf under the provisions of the Loan Documents and to exercise such
powers and perform such duties as are expressly delegated to the Administrative
Agent by the terms of the Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document, the
Administrative Agent shall not have any duties or responsibilities except those
expressly set forth herein or therein, or any fiduciary relationship with any
Lender or any Issuing Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into the Loan
Documents or otherwise exist against the Administrative Agent.
B. Delegation of Duties
--------------------
The Administrative Agent may execute any of its duties under
the Loan Documents by or through agents or attorneys-in-fact and shall be
entitled to rely upon and shall be fully protected in, and shall not be under
any liability for, relying upon, the advice of counsel concerning all matters
pertaining to such duties.
C. Exculpatory Provisions
----------------------
Neither the Administrative Agent nor any of its respective
officers, directors, employees, agents, attorneys-in-fact or affiliates shall be
(i) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with the Loan Documents (except the Administrative
Agent for its own gross negligence or willful misconduct), or (ii) responsible
in any manner to any Issuing Bank or any of the Lenders for any recitals,
statements, representations or warranties made by the Borrower or any officer
thereof contained in the Loan Documents or in any certificate, report, statement
or other document referred to or provided for in, or received by the
Administrative Agent under or in connection with, the Loan Documents or for the
value, validity, effectiveness, genuineness, enforceability or sufficiency of
any of the Loan Documents or for any failure of the Borrower or any other Person
to perform its obligations thereunder. The Administrative Agent shall not be
under any obligation to the Issuing Banks or any Lender to ascertain or to
inquire as to the observance or performance of any of the agreements contained
in, or conditions of, the Loan Documents, or to inspect the Property, books or
records of the Borrower. The Issuing Banks and the Lenders acknowledge that the
Administrative Agent shall not be under any duty to take any discretionary
action permitted under the Loan Documents unless the Administrative Agent shall
be instructed in writing to do so by the Issuing Banks and Required Lenders and
such instructions shall be binding on the Issuing Banks and all Lenders and all
holders of the Notes; provided, however, that the Administrative Agent shall not
be required to take any action which exposes it to personal liability or is
contrary to law or any provision of the Loan
<PAGE> 74
Documents. The Administrative Agent shall not be under any liability or
responsibility whatsoever, as Administrative Agent, to the Borrower or any other
Person as a consequence of any failure or delay in performance, or any breach,
by any Issuing Bank or any Lender of any of its obligations under any of the
Loan Documents.
D. Reliance by the Administrative Agent
------------------------------------
The Administrative Agent shall be entitled to rely, and shall
be fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, opinion, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document or conversation believed by
it to be genuine and correct and to have been signed, sent or made by a proper
Person or Persons and upon advice and statements of legal counsel (including
counsel to the Borrower), independent accountants and other experts selected by
the Administrative Agent. The Administrative Agent may treat each Issuing Bank
or each Lender, as the case may be, or the Person designated in the last notice
filed with the Administrative Agent under this Section, as the holder of all of
the interests of such Issuing Bank or such Lender, as the case may be, in its
Loans, Notes, the Letters of Credit and the Reimbursement Obligations, as
applicable, until written notice of transfer, signed by such Issuing Bank or
such Lender (or the Person designated in the last notice filed with the
Administrative Agent) and by the Person designated in such written notice of
transfer, in form and substance satisfactory to the Administrative Agent, shall
have been filed with the Administrative Agent. The Administrative Agent shall
not be under any duty to examine or pass upon the validity, effectiveness,
enforceability or genuineness of the Loan Documents or any instrument, document
or communication furnished pursuant thereto or in connection therewith, and the
Administrative Agent shall be entitled to assume that the same are valid,
effective and genuine, have been signed or sent by the proper parties and are
what they purport to be. The Administrative Agent shall be fully justified in
failing or refusing to take any action under the Loan Documents unless it shall
first receive such advice or concurrence of the Required Lenders as it deems
appropriate. The Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, under the Loan Documents in accordance
with a request or direction of the Required Lenders, and such request or
direction and any action taken or failure to act pursuant thereto shall be
binding upon the Issuing Banks, all the Lenders and all future holders of the
Notes and the Reimbursement Obligations.
E. Notice of Default
-----------------
The Administrative Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default unless the
Administrative Agent has received written notice thereof from an Issuing Bank, a
Lender or the Borrower. In the event that the Administrative Agent receives such
a notice, the Administrative Agent shall promptly give notice thereof to each
Issuing Bank, each Lender and the Borrower. The Administrative Agent shall take
such action with respect to such Default or Event of Default as shall be
directed by the Required
<PAGE> 75
Lenders, PROVIDED, HOWEVER, that unless and until the Administrative Agent shall
have received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem to be in the best interests
of the Lenders and the Issuing Banks.
F. Non-Reliance on the Administrative Agent and Other Lenders
----------------------------------------------------------
Each Issuing Bank and each Lender expressly acknowledges that
neither the Administrative Agent nor any of its respective officers, directors,
employees, agents, attorneys-in-fact or affiliates has made any representations
or warranties to it and that no act by the Administrative Agent hereinafter,
including any review of the affairs of the Borrower, shall be deemed to
constitute any representation or warranty by the Administrative Agent to any
Lender. Each Issuing Bank and each Lender represents to the Administrative Agent
that it has, independently and without reliance upon the Administrative Agent,
any Issuing Bank or any Lender, and based on such documents and information as
it has deemed appropriate made its own evaluation of and investigation into the
business, operations, Property, financial and other condition and
creditworthiness of the Borrower and the value and Lien status of any collateral
security and made its own decision to enter into this Agreement. Each Issuing
Bank and each Lender also represents that it will, independently and without
reliance upon the Administrative Agent, any Issuing Bank or any Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, evaluations and decisions in
taking or not taking action under any Loan Document, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, Property, financial and other condition and creditworthiness of the
Borrower and the value and Lien status of any collateral security. Except for
notices, reports and other documents expressly required to be furnished to the
Issuing Banks and/or the Lenders by the Administrative Agent hereunder, the
Administrative Agent shall not have any duty or responsibility to provide any
Issuing Bank or any Lender with any credit or other information concerning the
business, operations, Property, financial and other condition or
creditworthiness of the Borrower which at any time may come into the possession
of the Administrative Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates.
G. Indemnification
---------------
Each Lender agrees to indemnify and hold harmless the
Administrative Agent in its capacity as such (to the extent not promptly
reimbursed by the Borrower and without limiting the obligation of the Borrower
to do so), pro rata according to its Outstanding Percentage (or at any time when
no Loans are outstanding and there are no unpaid Reimbursement Obligations,
according to its Commitment Percentage), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
reasonable out-of-pocket costs, expenses or disbursements, of any kind
whatsoever including any amounts paid to the Lenders (through the Administrative
Agent) by the Borrower pursuant to the terms of the Loan Documents, that are
subsequently rescinded or avoided, or must otherwise be restored or returned)
which may at any time (including at any time following the payment of the Loans,
the Notes and the Reimbursement Obligations) be imposed on,
<PAGE> 76
incurred by or asserted against the Administrative Agent in any way relating to
or arising out of the Loan Documents or any other documents contemplated by or
referred to therein or the transactions contemplated thereby or any action taken
or omitted to be taken by the Administrative Agent under or in connection with
any of the foregoing; provided, however, that no Lender shall be liable to the
Administrative Agent for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements to the extent resulting solely from the finally
adjudicated gross negligence or willful misconduct of the Administrative Agent.
Without limitation of the foregoing, each Lender agrees to reimburse the
Administrative Agent promptly upon demand for its pro rata share of any unpaid
fees owing to the Administrative Agent, and any costs and expenses (including
reasonable fees and expenses of counsel) payable by the Borrower under Section
11.5, to the extent that the Administrative Agent has not been paid such fees or
has not been reimbursed for such costs and expenses, by the Borrower. The
failure of any Lender to reimburse the Administrative Agent promptly upon demand
for its pro rata share of any amount required to be paid by the Lenders to the
Administrative Agent as provided in this Section shall not relieve any other
Lender of its obligation hereunder to reimburse the Administrative Agent for its
pro rata share of such amount, but no Lender shall be responsible for the
failure of other Lender to reimburse the Administrative Agent for such other
Lender's pro rata share of such amount. The agreements in this Section shall
survive the termination of the Commitments of all of the Lenders, the Letter of
Credit Commitment, and the payment of all amounts payable under the Loan
Documents.
H. Administrative Agent in Its Individual Capacity
-----------------------------------------------
BNY and each affiliate thereof may make secured or unsecured
loans to, accept deposits from, issue letters of credit for the account of, act
as trustee under indentures of, and generally engage in any kind of business
with, the Borrower as though BNY were not Administrative Agent hereunder and BNY
Capital Markets did not arrange the transactions contemplated hereby. With
respect to the Commitments made or renewed by BNY and the Notes issued to, and
the Reimbursement Obligations owing to, BNY, BNY shall have the same rights and
powers under the Loan Documents as any Lender and may exercise the same as
though it were not the Administrative Agent, and the terms "Lender" and
"Lenders" shall in each case include BNY.
I. Successor Administrative Agent
------------------------------
If at any time the Administrative Agent deems it advisable, in
its sole discretion, it may submit to the Issuing Banks and each of the Lenders
a written notice of its resignation as Administrative Agent under the Loan
Documents, such resignation to be effective upon the earlier of a. the written
acceptance of the duties of the Administrative Agent under the Loan Documents by
a successor Administrative Agent and b. on the 30th day after the date of such
notice. Upon any such resignation, the Required Lenders shall have the right to
appoint from among the Lenders a
<PAGE> 77
successor Administrative Agent. If no successor Administrative Agent shall have
been so appointed by the Required Lenders and accepted such appointment in
writing within 30 days after the retiring Administrative Agent's giving of
notice of resignation, then the retiring Administrative Agent may, on behalf of
the Issuing Banks and the Lenders, appoint a successor Administrative Agent,
which successor Administrative Agent shall be a commercial bank organized under
the laws of the United States or any State thereof and having a combined
capital, surplus, and undivided profits of at least $100,000,000. Upon the
acceptance of any appointment as Administrative Agent hereunder by a successor
Administrative Agent, such successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Administrative Agent, and the retiring Administrative Agent's
rights, powers, privileges and duties as Administrative Agent under the Loan
Documents shall be terminated. The Borrower, the Issuing Banks and the Lenders
shall execute such documents as shall be necessary to effect such appointment.
After any retiring Administrative Agent's resignation as Administrative Agent,
the provisions of the Loan Documents shall inure to its benefit as to any
actions taken or omitted to be taken by it, and any amounts owing to it, while
it was Administrative Agent under the Loan Documents. If at any time there shall
not be a duly appointed and acting Administrative Agent, the Borrower agrees to
make each payment due under the Loan Documents directly to the Issuing Banks and
the Lenders entitled thereto during such time.
J. Documentation Agent; Co-Agents
------------------------------
Neither the Documentation Agent nor any Co-Agent shall have
any duties or obligations under the Loan Documents in their capacity as
Documentation Agent or as Co-Agent, as the case may be. The Documentation Agent
and the Co-Agents in such capacities shall be entitled to the same protections,
indemnities and rights, and subject to the same standards with respect to their
actions or inactions, as the Administrative Agent.
XI. OTHER PROVISIONS
----------------
A. Amendments and Waivers
----------------------
Notwithstanding anything to the contrary contained in any Loan
Document, with the written consent of the Required Lenders, the Administrative
Agent, on behalf of the Issuing Banks, the Swing Line Lender and the Lenders,
and the appropriate parties to the Loan Documents may, from time to time, enter
into written amendments, supplements or modifications thereof and, with the
consent of the Required Lenders, the Administrative Agent on behalf of the
Issuing Bank and the Lenders, may execute and deliver to any such parties a
written instrument waiving or consenting to the departure from, on such terms
and conditions as the Administrative Agent may specify in such instrument, any
of the requirements of the Loan Documents or any Default and its consequences;
PROVIDED, HOWEVER, that no such amendment, supplement, modification, waiver or
consent shall:
1. without the consent of all of the Lenders a. increase the
Aggregate Revolving Credit Commitment
<PAGE> 78
Amount or Revolving Credit Commitment Amount of any Lender, b. extend the
Commitment Period or the Maturity Date (except as provided in Section 2.15), c.
reduce the rate at which the Facility Fee or the Letter of Credit Commissions
are calculated, or extend the time of payment of either thereof, d. reduce the
rate, or extend the time of payment of, interest on any Revolving Credit Loan or
any Revolving Credit Note (except as provided in Section 2.15), e. reduce the
amount, or extend the time of payment of any installment or other payment of
principal on any Revolving Credit Loan or any Revolving Credit Note, f. decrease
or forgive the principal amount of any Revolving Credit Loan or any Revolving
Credit Note, g. consent to any assignment or delegation by the Borrower of any
of its rights or obligations under any Loan Document, h. release all or
substantially all of the obligations of the Borrower under any Loan Document, i.
change the provisions of Section 3.5, 3.6, 3.7, 3.9, 3.10, 9.1(a), or this
Section 11.1, j. change the definition of "Required Lenders", k. change the
several nature of the Lenders' obligations, l. change any provision governing
the sharing of payments and liabilities among the Lenders; and
2. without the written consent of each Issuing Bank, amend,
modify or waive any provision of Sections 2.10, 2.11 or 2.12, or otherwise
change any of the rights or obligations of any Issuing Bank under any Loan
Document;
3. without the written consent of the Swing Line Lender, no
such amendment, supplement, modification or waiver shall change the Swing Line
Commitment or change any other term or provision that relates to the Swing Line
Commitment or the Swing Line Loans; and
4. without the written consent of the Administrative Agent,
amend, modify or waive any provision of Section 10 or otherwise change any of
the rights or obligations of the Administrative Agent under any Loan Document.
Any such amendment, supplement, modification, waiver or
consent shall apply equally to the Administrative Agent, the Swing Line Lender,
each Issuing Bank and each of the Lenders and shall be binding upon the parties
to the applicable Loan Document, the Lenders, the Swing Line Lender, the Issuing
Banks, the Administrative Agent and all future holders of the Notes and the
Reimbursement Obligations. In the case of any waiver, the parties to the
applicable Loan Document, the Swing Line Lender, the Issuing Banks, the Lenders
and the Administrative Agent shall be restored to their former position and
rights hereunder and under the outstanding Notes and other Loan Documents to the
extent provided for in such waiver, and any Default or Event of Default waived
shall not extend to any subsequent or other Default or Event of Default, or
impair any right consequent thereon.
B. Notices
-------
All notices, requests and demands to or upon the respective
parties to the Loan Documents to be effective shall be in writing and, unless
otherwise expressly provided therein, shall be deemed to have been duly given or
made when
<PAGE> 79
delivered by hand, one Business Day after having been sent by overnight courier
service, or five Business Days after being deposited in the mail, first-class
postage prepaid, or, in the case of notice by telecopy, when sent, addressed as
follows in the case of the Borrower or the Administrative Agent, and as set
forth on Schedule 11.2 in the case of each Lender and each Issuing Bank, or
addressed to such other addresses as to which the Administrative Agent may be
hereafter notified by the respective parties thereto or any future holders of
the Notes:
The Borrower:
OfficeMax, Inc.
3605 Warrensville Center Road
Shaker Heights, Ohio 44122-5203
Attention: Jeffrey L. Rutherford,
Senior Vice President,
Chief Financial Officer
Telephone: (216) 295-6439
Telecopy: (216) 921-8790
with a copy to:
OfficeMax, Inc.
3605 Warrensville Center Road
Shaker Heights, Ohio 44122-5203
Attention: Ross H. Pollock
Telephone: (216) 295-6439
Telecopy: (216) 921-8790
and, in the case of notices of any Default, with a
copy to
Baker & Hostetler, LLP
3200 National City Center
1900 East 9th Street
Cleveland, Ohio 44114-3485
Attention: Robert G. Markey
Telephone: (216) 861-7596
Telecopy: (216) 696-0740
The Administrative Agent:
The Bank of New York
One Wall Street
Agency Function Administration
18th Floor
New York, New York 10286
Attention: Carolyn Surles
Telephone: (212) 635-4695
Telecopy: (212) 635-6365 or 6366 or 6367
<PAGE> 80
with a copy to:
The Bank of New York
One Wall Street
New York, New York 10286
Attention: Paula M. DiPonzio,
Vice President
Telephone: (212) 635-7867
Telecopy: (212) 635-1483,
except that any notice, request or demand by the Borrower to or upon the
Administrative Agent, the Swing Line Lender, the Issuing Banks or the Lenders
pursuant to Sections 2.5, 2.6 or 3.3 shall not be effective until received. Any
party to a Loan Document may rely on signatures of the parties thereto which are
transmitted by telecopy or other electronic means as fully as if originally
signed.
C. No Waiver; Cumulative Remedies
------------------------------
No failure to exercise and no delay in exercising, on the part
of the Administrative Agent or any Lender, any right, remedy, power or privilege
under any Loan Document shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, remedy, power or privilege under any Loan
Document preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. The rights, remedies, powers and
privileges under the Loan Documents are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.
D. Survival of Representations and Warranties and Certain
------------------------------------------------------
Obligations
-----------
1. All representations and warranties made under the Loan
Documents and in any document, certificate or statement delivered pursuant
thereto or in connection therewith shall survive the execution and delivery of
the Loan Documents.
2. The obligations of the Borrower under Sections 3.5, 3.6,
3.7, 3.8, 3.9, 3.10, 3.11, 11.5 and 11.8 shall survive the termination of the
Commitments of all of the Lenders, the Letter of Credit Commitment and the
payment of the Revolving Credit Loans, the Reimbursement Obligations and all
other amounts payable under the Loan Documents (collectively, the "CONTINGENT
INDEMNITY OBLIGATIONS").
E. Expenses
--------
The Borrower agrees, promptly upon presentation of a statement
or invoice therefor, and whether any Loan is made or any Letter of Credit is
issued a. to
<PAGE> 81
pay or reimburse the Administrative Agent and BNY Capital Markets for all their
respective out-of-pocket costs and expenses reasonably incurred in connection
with the development, preparation, execution and syndication of, the Loan
Documents and any amendment, supplement or modification thereto (whether or not
executed or effective), any documents prepared in connection therewith and the
consummation of the transactions contemplated thereby, including the reasonable
fees and disbursements of Special Counsel, b. to pay or reimburse each of each
Issuing Bank, the Administrative Agent, the Swing Line Lender and each Lender
for all of its costs and expenses, including reasonable fees and disbursements
of counsel, incurred in connection with (1) any Default or Event of Default and
any enforcement or collection proceedings resulting therefrom or in connection
with the negotiation of any restructuring or "work-out" (whether consummated or
not) of the obligations of the Borrower under any of the Loan Documents and (2)
the enforcement of this Section and c. to pay, indemnify, and hold each of the
Issuing Banks, the Lenders, the Swing Line Lender and the Administrative Agent
harmless from and against, any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any delay in paying, stamp,
excise and other similar taxes, if any, which may be payable or determined to be
payable in connection with the execution and delivery of, or consummation of any
of the transactions contemplated by, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, the Loan
Documents and any such other documents, and d. to pay, indemnify and hold each
of each Issuing Bank, the Swing Line Lender, each Lender and the Administrative
Agent and each of its officers, directors and employees harmless from and
against any and all other liabilities, obligations, claims, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever (including reasonable counsel fees and disbursements)
with respect to the enforcement and performance of the Loan Documents, the use
of the proceeds of the Loans and the Letters of Credit and the enforcement and
performance of the provisions of any subordination agreement involving the
Administrative Agent and the Lenders (all the foregoing, collectively, the
"INDEMNIFIED LIABILITIES") and, if and to the extent that the foregoing
indemnity may be unenforceable for any reason, the Borrower agrees to make the
maximum payment not prohibited under applicable law; PROVIDED, HOWEVER, that the
Borrower shall have no obligation to pay Indemnified Liabilities to the
Administrative Agent, any Issuing Bank, the Swing Line Lender or any Lender
arising from the finally adjudicated gross negligence or willful misconduct of
the Administrative Agent, such Issuing Bank, the Swing Line Lender or such
Lender or claims between one indemnified party and another indemnified party.
The agreements in this Section shall survive the termination of the Commitments
of all of the Lenders, the Letter of Credit Commitment and the payment of all
amounts payable under the Loan Documents.
F. Lending Offices
---------------
1. Each Lender shall have the right at any time and from time
to time to transfer its Loans and Reimbursement Obligations to a different
office, provided that such Lender shall promptly notify the Administrative Agent
and the Borrower of any such change of office. Such office shall thereupon
become such Lender's lending office, provided, however, that no Lender shall be
entitled to receive any greater amount under Sections 3.5, 3.7 and 3.10, as a
result of a transfer of any such Loans and Reimbursement Obligations to a
different office of such Lender
<PAGE> 82
than it would be entitled to immediately prior thereto unless such claim would
have arisen even if such transfer had not occurred.
2. Each Lender agrees that, upon the occurrence of any event
giving rise to any increased cost or indemnity under Sections 3.5, 3.7 and 3.10
with respect to such Lender, it will, if requested by the Borrower, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Loans and Reimbursement Obligations
affected by such event, provided that such designation is made on such terms
that such Lender 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 shall affect
or postpone any of the obligations of the Borrower or the right of any Lender
provided in Sections 3.5, 3.6, 3.7 and 3.10.
G. Successors and Assigns
----------------------
1. This Agreement, the Notes and the other Loan Documents to
which the Borrower is a party shall be binding upon and inure to the benefit of
the Borrower, the Lenders, the Administrative Agent, each Issuing Bank, the
Swing Line Lender, all future holders of the Notes and Reimbursement Obligations
and their respective successors and assigns. The Borrower shall not assign or
delegate any obligation or duty under any Loan Document without the prior
written consent of the Administrative Agent, the Swing Line Lender, each Issuing
Bank and each Lender.
2. Subject to Section 11.7(e), any Lender may at any time
assign all or any portion of its rights under any Loan Document to any Federal
Reserve Bank.
3. In addition to its rights under Section 11.7(b), each
Lender shall have the right to sell, assign, transfer or negotiate (each an
"ASSIGNMENT") one hundred percent, or any lesser percentage, of its Loans, its
Revolving Credit Commitment and its Notes to any Affiliate of such Lender, to
any other Lender or to any Affiliate of any other Lender, or, with the consent
of the Borrower, the Administrative Agent and the Swing Line Lender (which
consents shall not be unreasonably withheld and shall not be required of the
Borrower, if, at the time of such Assignment, an Event of Default shall exist),
to any other bank, insurance company, financial institution, pension fund,
mutual fund or other similar fund, provided that a. each such Assignment shall
be of a constant, and not a varying, percentage of the assignor Lender's rights
and obligations under the Loan Documents, b. the Revolving Credit Commitment
Amount of the Revolving Credit Commitment assigned, shall be not less than
$10,000,000 or such amount plus a whole multiple of $1,000,000 in excess
thereof, or the full Revolving Credit Commitment Amount of such assignor
Lender's Revolving Credit Commitment, c. the assignor Lender's Revolving Credit
Loans and Competitive Bid Loans shall be assigned in equal percentages, and d.
the assignor Lender and such assignee shall deliver to the Administrative Agent
three copies of an Assignment and Acceptance Agreement
<PAGE> 83
executed by each of them, along with an assignment fee in the sum of $3,500 for
the account of the Administrative Agent. Upon receipt of such number of executed
copies of each such Assignment and Acceptance Agreement, together with the
assignment fee therefor, the Administrative Agent shall notify the Swing Line
Lender thereof in writing by telecopy if the consent thereof is required
hereunder. If the Swing Line Lender shall consent thereto, if required (which
consent shall be deemed to have been given if the Administrative Agent shall not
have received a written refusal to so consent from the Swing Line Lender no
later than 2:00 p.m. on the Business Day immediately following the date on which
the Administrative Agent sent such notice), and upon receipt of the Borrower's
consent and to such Assignment, if required, the Administrative Agent shall
record the same and execute not less than two copies of such Assignment and
Acceptance Agreement and deliver one such copy to the assignor and one such copy
to the assignee, and deliver one photocopy thereof, as executed, to the
Borrower. From and after the Assignment Effective Date specified in, and as
defined in, such Assignment and Acceptance Agreement, the assignee thereunder
shall be a party hereto and shall for all purposes of this Agreement and the
other Loan Documents be deemed a "Lender" and, to the extent provided in such
Assignment and Acceptance Agreement, the assignor Lender thereunder shall be
released from its obligations under this Agreement and the other Loan Documents.
The Borrower agrees that, if requested, in connection with each such Assignment,
it shall at its own cost and expense execute and deliver to the Administrative
Agent or such assignee a Revolving Credit Note and a Competitive Bid Note, each
payable to the order of such assignee and dated the Effective Date. The
Administrative Agent shall be entitled to rely upon the representations and
warranties made by the assignee under each Assignment and Acceptance Agreement.
4. In addition to the participations provided for in Section
11.10(b), each Lender may grant participations in all or any part of its Loans,
its Notes and its Commitment to one or more banks, insurance companies,
financial institutions, pension funds, mutual funds or other similar fund,
PROVIDED THAT a. such Lender's obligations under this Agreement and the other
Loan Documents shall remain unchanged, b. such Lender shall remain solely
responsible to the other parties to this Agreement and the other Loan Documents
for the performance of such obligations, c. the Borrower, the Administrative
Agent, the Issuing Bank, the Swing Line Lender and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement and the other Loan
Documents, d. no sub-participations shall be permitted, e. the granting of such
participation does not require that any additional loss, cost or expense be
borne by the Borrower at any time, and (v) the voting rights of any holder of
any participation shall be limited to decisions that in accordance with Section
11.1 require the consent of all of the Lenders.
5. No Lender shall, as between and among the Borrower, the
Swing Line Lender, the Issuing Banks, the Administrative Agent and such Lender,
be relieved of any of its obligations under the Loan Documents as a result of
any assignment of or granting of participations in, all or any part of its
Loans, its Commitment and its Note, except that a Lender shall be relieved of
its obligations to the extent of any such Assignment of all or any part of its
Loans, its Commitment or its Notes pursuant to Section 11.7(c).
<PAGE> 84
H. Indemnity
---------
The Borrower agrees to defend, protect, indemnify, and hold
harmless the Administrative Agent, BNY Capital Markets, the Issuing Banks and
each and all of the Lenders, each of their respective Affiliates and each of the
respective officers, directors, employees and agents of each of the foregoing
(each an "INDEMNIFIED PERSON" and, collectively, the "INDEMNIFIED PERSONS") from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any kind
or nature whatsoever (including the reasonable fees and disbursements of counsel
to such Indemnified Persons in connection with any investigative, administrative
or judicial proceeding, whether direct, indirect or consequential and whether
based on any federal or state laws or other statutory regulations, including
securities and commercial laws and regulations, under common law or at equitable
cause, or on contract or otherwise, including any liabilities and costs under
Environmental Laws, Federal, state or local health or safety laws, regulations,
or common law principles, arising from or in connection with the past, present
or future operations of the Borrower or its predecessors in interest, or the
past, present or future environmental condition of the Property of the Borrower
or any of its Subsidiaries, the presence of asbestos-containing materials at any
such Property, or the release or threatened release of any Hazardous Substance
into the environment from any such Property) in any manner relating to or
arising out of the Loan Documents, any commitment letter or fee letter executed
and delivered by the Borrower or any of its Subsidiaries, the Issuing Banks
and/or the Administrative Agent, the capitalization of the Borrower or any of
its Subsidiaries, the Commitments, the Letter of Credit Commitment, the making
of, issuance of, management of and participation in the Revolving Credit Loans
or the Letters of Credit, or the use or intended use of the Letters of Credit
and the proceeds of the Revolving Credit Loans hereunder, provided that the
Borrower shall have no obligation under this Section to an Indemnified Person
with respect to any of the foregoing to the extent found in a final judgment of
a court having jurisdiction to have resulted from the gross negligence or wilful
misconduct of such Indemnified Person or arising solely from claims between one
such Indemnified Person and another such Indemnified Person. The indemnity set
forth herein shall be in addition to any other obligations or liabilities of the
Borrower to each Indemnified Person under the Loan Documents or at common law or
otherwise, and shall survive any termination of the Loan Documents, the
expiration of the Commitments of all of the Lenders, the Letter of Credit
Commitment and the payment of all Indebtedness of the Borrower under the Loan
Documents.
I. Counterparts
------------
Each Loan Document (other than the Notes) may be executed by
one or more of the parties thereto on any number of separate counterparts and
all of said counterparts taken together shall be deemed to constitute one and
the same document. It shall not be necessary in making proof of any Loan
Document to produce or account for more than one counterpart signed by the party
to be charged. A
<PAGE> 85
counterpart of any Loan Document or to any document evidencing, and of any an
amendment, modification, consent or waiver to or of any Loan Document
transmitted by telecopy shall be deemed to be an originally executed
counterpart. A set of the copies of the Loan Documents signed by all the parties
thereto shall be deposited with each of the Borrower, the Issuing Banks and the
Administrative Agent. Any party to a Loan Document may rely upon the signatures
of any other party thereto which are transmitted by telecopy or other electronic
means to the same extent as if originally signed.
J. Adjustments; Set-off
--------------------
1. If any Lender (a "BENEFITTED LENDER"), shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) on account of its Loans, its Notes or the Reimbursement
Obligations in excess of its Outstanding Percentage of payments then due and
payable on account of the Loans, the Notes and the Reimbursement Obligations
received by all the Lenders, then such Benefitted Lender shall forthwith
purchase, without recourse, for cash, from the other Lenders such participations
in their Loans and Notes as shall be necessary to cause such Benefitted Lender
to share such excess payment with each of them according to their Outstanding
Percentages, PROVIDED, HOWEVER, that if all or any portion of such excess
payment is thereafter recovered from such Benefitted Lender, such purchase from
such other Lenders shall be rescinded, and each such other Lender shall repay to
such Benefitted Lender the purchase price to the extent of such recovery,
together with an amount equal to such other Lender's pro rata share (according
to the proportion of a. the amount of such other Lender's required repayment to
b. the total amount so recovered from such Benefitted Lender) of any interest or
other amount paid or payable by such Benefitted Lender in respect of the total
amount so recovered. The Borrower agrees that such Benefitted Lender so
purchasing a participation from such other Lenders pursuant to this subsection
(a) may exercise such rights to payment (including the right of set-off) with
respect to such participation as fully as such Benefitted Lender were the direct
creditor of the Borrower in the amount of such participation.
2. In addition to any rights and remedies of the Issuing Banks
and the Lenders provided by law, at any time a. after the acceleration of the
obligations owing in connection with the Loan Documents, or b. during the
continuance of an Event of Default under Sections 9.1(a) or (b), each of the
Issuing Banks and the Lenders shall have the right, without prior notice to the
Borrower, any such notice being expressly waived by the Borrower to the extent
not prohibited by applicable law, to set-off and apply against any indebtedness,
whether matured or unmatured, of the Borrower to an Issuing Bank or such Lender,
as the case may be, any amount owing from such Issuing Bank or such Lender, as
the case may be, to the Borrower at, or at any time after, the happening of any
of the above-mentioned events. To the extent not prohibited by applicable law,
the aforesaid right of set-off may be exercised by such Issuing Bank or such
Lender, as the case may be, against the Borrower or against any trustee in
bankruptcy, custodian, debtor in possession, assignee for the benefit of
creditors, receiver, or execution, judgment or attachment creditor of the
Borrower or against anyone else claiming through or against the Borrower or such
trustee in bankruptcy, custodian, debtor in possession, assignee for the benefit
of creditors, receiver, or execution, judgment or attachment creditor,
notwithstanding
<PAGE> 86
the fact that such right of set-off shall not have been exercised by such
Issuing Bank or such Lender, as the case may be, prior to the making, filing or
issuance, or service upon such Issuing Bank or such Lender, as the case may be,
of, or of notice of, any such petition, assignment for the benefit of creditors,
appointment or application for the appointment of a receiver, or issuance of
execution, subpoena, order or warrant. Each of the Issuing Banks and the Lenders
agrees promptly to notify the Borrower and the Administrative Agent after any
such set-off and application made by such Issuing Bank or such Lender, as the
case may be, provided that the failure to give such notice shall not affect the
validity of such set-off and application.
K. Construction
------------
Each party to a Loan Document represents that it has been
represented by counsel in connection with the Loan Documents and the
transactions contemplated thereby and that the principle that agreements are to
be construed against the party drafting the same shall be inapplicable.
L. Governing Law
-------------
The Loan Documents and the rights and obligations of the
parties thereunder shall be governed by, and construed and interpreted in
accordance with, the internal laws of the State of New York, without regard to
principles of conflict of laws, but including Section 5-1401 of the General
Obligations Law.
M. Headings Descriptive
--------------------
Section headings have been inserted in the Loan Documents for
convenience only and shall not be construed to be a part thereof.
N. Severability
------------
Every provision of the Loan Documents is intended to be
severable, and if any term or provision thereof shall be invalid, illegal or
unenforceable for any reason, the validity, legality and enforceability of the
remaining provisions thereof shall not be affected or impaired thereby, and any
invalidity, illegality or unenforceability in any jurisdiction shall not affect
the validity, legality or enforceability of any such term or provision in any
other jurisdiction.
O. Integration
-----------
All exhibits to a Loan Document shall be deemed to be a part
thereof. Except for agreements between the Administrative Agent and/or the
Issuing Banks and the Borrower with respect to certain fees, the Loan Documents
embody the entire agreement and understanding among the Borrower, the
Administrative Agent, the Issuing Banks and the Lenders with respect to the
subject matter thereof and supersede all prior agreements and understandings
among the Borrower, the
<PAGE> 87
Administrative Agent, the Issuing Banks and the Lenders with respect to the
subject matter thereof.
P. Consent to Jurisdiction
-----------------------
Each party to a Loan Document hereby irrevocably submits to
the jurisdiction of any New York State or Federal court sitting in the City of
New York over any suit, action or proceeding arising out of or relating to the
Loan Documents. Each party to a Loan Document hereby irrevocably waives, to the
fullest extent permitted or not prohibited by law, any objection which it may
now or hereafter have to the laying of the venue of any such suit, action or
proceeding brought in such a court and any claim that any such suit, action or
proceeding brought in such a court has been brought in an inconvenient forum.
The Borrower hereby agrees that a final judgment in any such suit, action or
proceeding brought in such a court, after all appropriate appeals, shall be
conclusive and binding upon it.
Q. Service of Process
------------------
Each party to a Loan Document hereby irrevocably consents to
the service of process in any suit, action or proceeding by sending the same by
first class mail, return receipt requested or by overnight courier service, to
the address of such party set forth in Section 11.2 of the applicable Loan
Document executed by such party. Each party to a Loan Document hereby agrees
that any such service (i) shall be deemed in every respect effective service of
process upon it in any such suit, action, or proceeding, and (ii) shall to the
fullest extent enforceable by law, be taken and held to be valid personal
service upon and personal delivery to it.
R. No Limitation on Service or Suit
--------------------------------
Nothing in the Loan Documents or any modification, waiver,
consent or amendment thereto shall affect the right of the Administrative Agent,
any Issuing Bank or any Lender to serve process in any manner permitted by law
or limit the right of the Administrative Agent, any Issuing Bank or any Lender
to bring proceedings against the Borrower in the courts of any jurisdiction or
jurisdictions in which the Borrower may be served.
S. WAIVER OF TRIAL BY JURY
-----------------------
EACH OF THE ADMINISTRATIVE AGENT, THE ISSUING BANKS, THE
LENDERS AND THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING
OUT OF, UNDER OR IN CONNECTION WITH THE LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED THEREIN. FURTHER, THE BORROWER HEREBY CERTIFIES THAT NO
REPRESENTATIVE OR ADMINISTRATIVE AGENT OF THE ISSUING BANKS, THE ADMINISTRATIVE
AGENT, OR THE LENDERS, OR COUNSEL TO THE ISSUING BANKS, THE ADMINISTRATIVE AGENT
OR THE LENDERS, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE ISSUING BANKS,
THE ADMINISTRATIVE AGENT OR THE LENDERS WOULD NOT, IN THE EVENT OF SUCH
LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION. THE
BORROWER ACKNOWLEDGES THAT THE ISSUING BANKS, THE ADMINISTRATIVE AGENT AND THE
LENDERS HAVE BEEN
<PAGE> 88
INDUCED TO ENTER INTO THIS AGREEMENT BY, INTER ALIA, THE PROVISIONS OF THIS
SECTION.
T. Confidentiality
---------------
Each of the Lenders, the Issuing Banks and the Administrative
Agent agrees (on behalf of itself and each of its affiliates, directors,
officers, employees and representatives) to use reasonable precautions to keep
confidential, in accordance with their customary procedures for handling
confidential information of the same nature, all non-public information supplied
by the Borrower or any of its Subsidiaries pursuant to this Agreement which (a)
is identified by such Person as being confidential at the time the same is
delivered to such Lender such Issuing Bank or the Administrative Agent, or (b)
constitutes any trade secret, financial statement, financial projections or
forecasts, budget, compliance certificate, audit report, management letter or
accountants' certification delivered hereunder (collectively, the "CONFIDENTIAL
INFORMATION"), provided, however, that nothing herein shall limit the disclosure
of any Confidential Information a. to the extent required by statute, rule,
regulation or judicial process, b. on a confidential basis, to counsel to any of
the Lenders, the Issuing Banks or the Administrative Agent, c. to bank
examiners, auditors or accountants, and any analogous counterpart thereof, d. to
the Administrative Agent, the Issuing Banks or the Lenders, e. in connection
with any litigation to which any one or more of the Lenders, the Issuing Banks
or the Administrative Agent is a party, f. to any assignee or participant (or
prospective assignee or participant) so long as such assignee or participant (or
prospective assignee or participant) agrees in writing to keep such Confidential
Information confidential on the same basis as set forth in this Section, or g.
to affiliates of the Administrative Agent, each Lender or each Issuing Bank.
Notwithstanding the provisions of clause (vii) above, neither the Administrative
Agent, any Issuing Bank nor any Lender shall disclose any such Confidential
Information to any of its respective affiliates, directors, officers, employees
or representatives except to the extent that it or they have a need to know such
Confidential Information in connection with the structuring or administration of
the Loans, the Letters of Credit or any Loan Document, any assignment or
participation thereof or activities incidental thereto.
<PAGE> 89
IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
OFFICEMAX, INC.
By: /s/ Jeffrey L. Rutherford
-----------------------------
Name: Jeffrey L. Rutherford
--------------------------
Title: Senior Vice President &
--------------------------
Chief Financial Officer
--------------------------
<PAGE> 90
OFFICEMAX, INC.
CREDIT AGREEMENT
THE BANK OF NEW YORK,
Individually, as Administrative
Agent and as Swing Line Lender
By: /s/ Paula Diponzio
-------------------------------
Name: Paula Diponzio
-----------------------------
Title: Vice President
----------------------------
<PAGE> 91
OFFICEMAX, INC.
CREDIT AGREEMENT
KEYBANK NATIONAL ASSOCIATION,
Individually and as Documentation Agent
By: /s/ Frank J. Jancar
-------------------------------
Name: Frank J. Jancar
-----------------------------
Title: Vice President
----------------------------
<PAGE> 92
OFFICEMAX, INC.
CREDIT AGREEMENT
PNC BANK, NATIONAL ASSOCIATION,
Individually and as Co-Agent
By: /s/ C. Joseph Richardson
-------------------------------
Name: C. Joseph Richardson
-----------------------------
Title: Vice President
----------------------------
<PAGE> 93
OFFICEMAX, INC.
CREDIT AGREEMENT
THE FIRST NATIONAL BANK OF CHICAGO,
Individually and as Co-Agent
By: /s/ Debora K. Oberling
-------------------------------
Name: Debora K. Oberling
-----------------------------
Title: Vice President
----------------------------
<PAGE> 94
OFFICEMAX, INC.
CREDIT AGREEMENT
FIRST UNION NATIONAL BANK,
Individually and as Co-Agent
By: /s/ Jane W. Workman
-------------------------------
Name: Jane W. Workman
-----------------------------
Title: Senior Vice President
----------------------------
<PAGE> 95
OFFICEMAX, INC.
CREDIT AGREEMENT
CORESTATES BANK, N.A., Individually
and as Co-Agent
By: /s/ Anne Marie Fitzsimmons
-------------------------------
Name: Anne Marie Fitzsimmons
-----------------------------
Title: Vice President
----------------------------
<PAGE> 96
OFFICEMAX, INC.
CREDIT AGREEMENT
CREDIT LYONNAIS CHICAGO BRANCH,
Individually and as Co-Agent
By: /s/ Julie T. Kanak
-------------------------------
Name: Julie T. Kanak
-----------------------------
Title: Vice President
----------------------------
<PAGE> 97
OFFICEMAX, INC.
CREDIT AGREEMENT
BANK OF AMERICA ILLINOIS,
Individually and as Co-Agent
By: /s/ Sandra S. Ober
-------------------------------
Name: Sandra S. Ober
-----------------------------
Title: Vice President
----------------------------
<PAGE> 98
OFFICEMAX, INC.
CREDIT AGREEMENT
FLEET NATIONAL BANK, Individually
and as Co-Agent
By: /s/ Deanne M. Horn
-------------------------------
Name: Deanne M. Horn
-----------------------------
Title: Assistant Vice President
----------------------------
<PAGE> 99
OFFICEMAX, INC.
CREDIT AGREEMENT
WELLS FARGO BANK, NA, Individually
and as Co-Agent
By: /s/ Edith R. Lim
-------------------------------
Name: Edith R. Lim
-----------------------------
Title: Vice President
----------------------------
By: /s/ Mark Harberecht
-------------------------------
Name: Mark Harberecht
-----------------------------
Title: Assistant Vice President
----------------------------
<PAGE> 100
OFFICEMAX, INC.
CREDIT AGREEMENT
THE BANK OF TOKYO-MITSUBISHI,
CHICAGO BRANCH, Individually and as
Co-Agent
By: /s/ Hajime Watanabe
-------------------------------
Name: Hajime Watanabe
-----------------------------
Title: Deputy General Manager
----------------------------
<PAGE> 101
OFFICEMAX, INC.
CREDIT AGREEMENT
NATIONAL CITY BANK
By: /s/ Timothy G. Healy
-------------------------------
Name: Timothy G. Healy
-----------------------------
Title: Vice President
----------------------------
<PAGE> 102
OFFICEMAX, INC.
CREDIT AGREEMENT
BANK OF HAWAII
By: /s/ Donna R. Parker
-------------------------------
Name: Donna R. Parker
-----------------------------
Title: Vice President
----------------------------
<PAGE> 103
OFFICEMAX, INC.
CREDIT AGREEMENT
COMERICA BANK
By: /s/ Jeffrey J. Judge
-------------------------------
Name: Jeffrey J. Judge
-----------------------------
Title: Assistant Vice President
----------------------------
<PAGE> 104
OFFICEMAX, INC.
CREDIT AGREEMENT
FIRST AMERICAN NATIONAL BANK
By: /s/ Andrew S. Zimberg
-------------------------------
Name: Andrew S. Zimberg
-----------------------------
Title: Vice President
----------------------------
<PAGE> 105
OFFICEMAX, INC.
CREDIT AGREEMENT
HUNTINGTON NATIONAL BANK
By: /s/ Dawn M. Enovitch
-------------------------------
Name: Dawn M. Enovitch
-----------------------------
Title: Portfolio Manager
----------------------------
<PAGE> 106
OFFICEMAX, INC.
CREDIT AGREEMENT
THE NORTHERN TRUST COMPANY
By: /s/ James F. Minbert
-------------------------------
Name: James F. Minbert
-----------------------------
Title: Vice President
----------------------------
<PAGE> 107
OFFICEMAX, INC.
CREDIT AGREEMENT
THE DAI-ICHI KANGYO BANK,
CHICAGO BRANCH
By: /s/ Seiichiro Ino
-------------------------------
Name: Seiichiro Ino
-----------------------------
Title: Vice President
----------------------------
<PAGE> 108
OFFICEMAX, INC.
CREDIT AGREEMENT
BANK ONE, NA
By: /s/ Douglas M. Smith
-------------------------------
Name: Douglas M. Smith
-----------------------------
Title: Credit Officer
----------------------------
<PAGE> 109
OFFICEMAX, INC.
CREDIT AGREEMENT
SUNTRUST BANK, CENTRAL FLORIDA, N.A.
By: /s/ Janet P. Sammons
-------------------------------
Name: Janet P. Sammons
-----------------------------
Title: Vice President
----------------------------
<PAGE> 110
OFFICEMAX, INC.
CREDIT AGREEMENT
BARNETT BANK
By: /s/ Clarissa McElrath
-------------------------------
Name: Clarissa McElrath
-----------------------------
Title: Vice President
----------------------------
<PAGE> 111
OFFICEMAX, INC.
CREDIT AGREEMENT
FIFTH THIRD BANK
By: /s/ Roy Lanctot
-------------------------------
Name: Roy Lanctot
-----------------------------
Title: Vice President
----------------------------
<PAGE> 112
OFFICEMAX, INC.
CREDIT AGREEMENT
MERCANTILE BANK OF ST. LOUIS N.A.
By: /s/ Timothy W. Hassler
-------------------------------
Name: Timothy W. Hassler
-----------------------------
Title: Vice President
----------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-24-1998
<PERIOD-START> JAN-26-1997
<PERIOD-END> OCT-25-1997
<CASH> 80,585
<SECURITIES> 0
<RECEIVABLES> 82,278
<ALLOWANCES> 845
<INVENTORY> 1,097,583
<CURRENT-ASSETS> 1,286,080
<PP&E> 304,755
<DEPRECIATION> 157,480
<TOTAL-ASSETS> 1,960,698
<CURRENT-LIABILITIES> 771,235
<BONDS> 0
0
0
<COMMON> 856,730
<OTHER-SE> 259,784
<TOTAL-LIABILITY-AND-EQUITY> 1,960,698
<SALES> 2,657,149
<TOTAL-REVENUES> 2,657,149
<CGS> 2,050,206
<TOTAL-COSTS> 2,050,206
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 81,068
<INCOME-TAX> 31,453
<INCOME-CONTINUING> 49,615
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 49,615
<EPS-PRIMARY> .40
<EPS-DILUTED> .40
</TABLE>
